<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
June 30, 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
----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(214) 869-9020
--------------
(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: 16,667,586 shares of Class A
Common Stock and 2,077,377 shares of Class B Common Stock as of July 31, 1996.
<PAGE>
EVERGREEN MEDIA CORPORATION
INDEX
Page No.
--------
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets (unaudited)................. 2
Consolidated Statements of Operations (unaudited)....... 4
Consolidated Statements of Cash Flows (unaudited)....... 5
Notes to Consolidated Financial Statements (unaudited).. 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..................... 10
Part II.
Item 1. Legal Proceedings....................................... 15
Item 4. Submission of Matters to a Vote of Security Holders..... 15
Item 5. Other Information....................................... 16
Item 6. Exhibits and Reports on Form 8-K........................ 18
1
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
- -----------------------------
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31, June 30,
1995 1996
------------ --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,430 $ 1,877
Accounts receivable, net 45,413 69,482
Prepaid expenses and other assets 2,146 5,789
-------- --------
Total current assets 50,989 77,148
Assets held for sale - 32,000
Property and equipment, net 37,839 46,293
Intangible assets, net 458,787 779,237
Other assets 4,732 21,866
-------- --------
$552,347 $956,544
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
2
<PAGE>
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS, CONTINUED (UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31, June 30,
1995 1996
------------ --------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 15,892 $ 27,566
Current portion of long-term debt 4,000 29,250
Other current liabilities 541 541
-------- ---------
Total current liabilities 20,433 57,357
-------- ---------
Long-term debt, excluding current portion 197,000 524,750
Deferred tax liability 29,233 86,746
Other liabilities 1,104 1,497
-------- ---------
Total liabilities 247,770 670,350
-------- ---------
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 75,000,000 shares; issued and
outstanding 24,929,529 shares in 1995 and
24,994,929 in 1996. 249 249
Class B common stock, $.01 par value.
Authorized 4,500,000 shares; issued and
outstanding 3,116,066 shares in 1995 and
1996. 31 31
Paid-in capital 317,295 317,823
Accumulated deficit (93,498) (112,409)
-------- ---------
Total stockholders' equity 304,577 286,194
-------- ---------
$552,347 $956,544
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
3
<PAGE>
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in thousands, except for per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1995 1996 1995 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Gross revenues $ 48,250 83,832 $ 77,338 144,614
Less agency commissions 6,258 10,841 9,933 18,252
----------- ----------- ----------- -----------
Net revenues 41,992 72,991 67,405 126,362
Station operating expenses
excluding depreciation
and amortization 24,218 42,887 41,646 80,313
Depreciation and
amortization 10,242 21,336 16,532 44,012
Corporate general and
administrative expenses 919 1,706 1,695 3,198
----------- ----------- ----------- -----------
Operating expenses 35,379 65,929 59,873 127,523
----------- ----------- ----------- -----------
Operating income (loss) 6,613 7,062 7,532 (1,161)
----------- ----------- ----------- -----------
Nonoperating expenses
(income):
Interest expense 5,534 10,061 9,289 19,027
Interest income (15) - (29) -
Other expense, net 101 5 189 12
----------- ----------- ----------- -----------
Nonoperating expenses, net 5,620 10,066 9,449 19,039
----------- ----------- ----------- -----------
Income (loss) before
income taxes 993 (3,004) (1,917) (20,200)
Income tax expense
(benefit) 545 (782) 545 (3,705)
----------- ----------- ----------- -----------
Net income (loss) 448 (2,222) (2,462) (16,495)
Preferred stock dividends (1,207) (1,207) (2,415) (2,415)
----------- ----------- ----------- -----------
Net loss attributable to
common stockholders $ (759) $ (3,429) $ (4,877) $ (18,910)
=========== =========== =========== ===========
Loss per common share $(0.05) $(0.12) $(0.33) $(0.67)
=========== =========== =========== ===========
Weighted average
common shares outstanding 16,171,832 28,081,500 14,639,766 28,069,500
=========== =========== =========== ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
4
<PAGE>
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30, June 30,
1995 1996
---------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net loss $( 2,462) $ (16,495)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation 2,589 3,479
Amortization of goodwill, intangible
assets and other assets 13,943 40,533
Provision for doubtful accounts 157 723
Deferred income tax expense (benefit) 545 (3,705)
Changes in certain assets and liabilities,
net of effects of acquisitions:
Accounts receivable (5,272) ( 9,448)
Prepaid expenses and other current assets (611) (2,798)
Accounts payable and accrued expenses 6,486 5,669
Other assets (258) (604)
Other liabilities 179 11
--------- ---------
Net cash provided by
operating activities 15,296 17,365
--------- ---------
Cash flows from investing
activities:
Acquisitions, net of cash acquired (188,004) (348,826)
Escrow deposits on pending acquisitions - ( 13,000)
Capital expenditures ( 1,823) (1,761)
Other ( 379) (2,382)
--------- ---------
Net cash used by investing
activities (190,206) (365,969)
--------- ---------
Cash flows from financing
activities:
Proceeds from issuance of
long-term debt 186,000 365,750
Principal payments on long-term
debt ( 8,000) (12,750)
Payments on other long-term liabilities ( 526) (227)
Proceeds from issuance of common
stock - 528
Dividend payments on preferred stock ( 2,415) (2,415)
Payments for debt issuance costs - (3,835)
--------- ---------
Net cash provided by
financing activities 175,059 347,051
--------- ---------
Increase (decrease) in cash and
cash equivalents 149 (1,553)
Cash and cash equivalents at
beginning of period 1,216 3,430
--------- ---------
Cash and cash equivalents at end
of period $ 1,365 $ 1,877
========= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
5
<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.
On August 8, 1996, the Company declared a three-for-two stock split
effected in the form of a stock dividend payable on August 26, 1996 to
shareholders of record at the close of business on August 19, 1996. All share
data (other than authorized share data) contained in the accompanying financial
statements have been retroactively adjusted to give effect to the stock
dividend.
Loss per common share is based on the weighted average number of common
shares outstanding during the periods after giving retroactive effect to the
stock split. 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 and incurred
various other direct acquisition costs. The total purchase price, including
closing costs, allocated to net assets acquired was approximately $258.6
million.
6
<PAGE>
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. Under the terms of the agreement between the parties, 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
7
<PAGE>
anniversary of the expiration of the Detroit JSA. Although the Company's option
was not yet exercisable, on August 9, 1996, the Company entered into an
agreement with Chancellor to acquire WWWW-FM and WDFN-AM in Detroit for $30
million in cash. The acquisition of WWWW-FM and WDFN-AM, expected to close in
late 1996 or early 1997, will be financed through additional borrowings of
$30 million under the Senior Credit Facility.
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 June 30, 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. WHTT-FM, WHTT-AM and WSJZ-FM combined net losses
of approximately $123,000 have been excluded from the consolidated statement of
operations for the six months ended June 30, 1996. Interest costs during the
holding period of approximately $602,000 as of June 30, 1996 have been allocated
to the purchase price of the stations. The WHTT-FM and WHTT-AM sale closed on
July 19, 1996, while the sale of WSJZ-FM was completed on August 1, 1996.
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 third quarter of 1996, will be financed through the
aggregate proceeds of $19.5 million from the sale of WHTT-FM and WHTT-AM in
Buffalo as part of a tax-free transaction, as well as through borrowings of
$24.5 million under the Senior Credit Facility of which $5 million was borrowed
by the Company and paid as escrow funds in April 1996 and is held in escrow at
June 30,1996.
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 paid by the Company in
October 1995 and funded from working capital. On June 13, 1996, the Company
entered into separate agreements to swap WKLB-FM in Boston for WGAY-FM (formerly
WEBR-FM) in Washington, D.C. and to purchase WWRC-AM in Washington, D.C. for
$22.5 million in cash. The Company also entered into agreements to operate WGAY-
FM and WWRC-AM and to allow the purchaser to operate WKLB-FM under time
brokerage agreements effective June 17, 1996 pending the completion of the
transactions. The acquisition of WWRC-AM, expected to close in the fourth
quarter of 1996, will be financed through borrowings under the Senior Credit
Facility.
On July 1, 1996, the Company entered into an agreement to acquire WEDR-FM
in Miami for $65 million in cash. The acquisition of WEDR-FM, expected to close
in the fourth quarter of 1996, will be financed through borrowings of $65
million under the Senior Credit Facility of which $3 million was borrowed by the
Company and paid as escrow funds in June 1996 and is held in escrow at June 30,
1996.
On July 18, 1996, the Company entered into an agreement to acquire WPNT-FM
in Chicago for $73 million in cash. The acquisition of WPNT-FM, expected to
close in the first quarter of 1997, will be financed through borrowings of $73
million under the Senior Credit Facility of which $5 million was borrowed by the
Company and paid as escrow funds in June 1996 and is held in escrow at June 30,
1996.
On August 9, 1996, the Company entered into an agreement to acquire WMXD-FM
and WJLB-FM in Detroit for $168.0 million and WFLN-FM in Philadelphia for $37.8
million. The Company also entered into an agreement to operate the stations
under time brokerage agreements effective September 1, 1996. The Company also
entered into an agreement to acquire WQRS-FM in Detroit for $32 million and
concurrently, in a tax-free transaction, swap the station in consideration for
WWRC-AM in Washington, D.C. and $9.5 million in cash. The swap agreement
modifies the June 13, 1996 agreement to acquire WWRC-AM for $22.5 million. The
acquisitions, expected to close in the first quarter of 1997, will be financed
through borrowings under the Senior Credit Facility.
Escrow funds of $13 million paid by the Company in connection with the
pending acquisitions have been classified as other assets in the accompanying
balance sheet.
8
<PAGE>
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. Given the
Company's acquisition strategy, and acquisition opportunities created by the
recent passage of the Telecommunications Act of 1996 (the "1996 Act") the
Company has entered into preliminary discussions with lenders under the Senior
Credit Facility to raise additional debt financing in the form of a revised
Senior Credit Facility.
Summary of Net Assets Acquired
- ------------------------------
The BPI Acquisition, the Pyramid Acquisition and the acquisition of WKLB-FM
in Boston discussed above were accounted for as purchases. Accordingly, the
accompanying 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>
December 31, June 30,
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 10,172
Intangible assets 264,650 357,340
Deferred tax liability (29,712) (61,218)
Other liabilities (420) ( 420) (4,788)
-------- --------
$258,634 $350,343
======== ========
</TABLE>
Pro forma Results of Operations (Unaudited)
- -------------------------------------------
Consolidated condensed pro forma results of operations data for the six months
ended June 30, 1995 and 1996, as if the 1995 common stock offering and the 1995
and 1996 acquisitions and dispositions discussed above occurred at January 1,
1995, follow:
<TABLE>
<CAPTION>
1995 1996
-------- --------
<S> <C> <C>
Net revenues $128,933 $138,413
Operating loss (14,975) (9,840)
Net loss (32,533) (28,858)
Net loss per common share ( 1.16) ( 1.03)
</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 July 1996 agreement
to acquire WPNT-FM in Chicago and the August 1996 agreements to acquire WMXD-FM
and WJLB-FM in Detroit and WFLN-FM in Philadelphia 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.
9
<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 AND SIX MONTHS ENDED JUNE 30, 1996, TO THREE AND SIX MONTHS
ENDED JUNE 30, 1995
Results of operations for the three and six months ended June 30, 1996 are
not comparable to results of operations for the same periods in 1995, in light
of the consummation of the following transactions:
. the BPI Acquisition on May 12, 1995 resulting in the addition of seven FM and
four AM radio stations, eight of which are in the nation's ten largest radio
markets
. the Company's public offering of Class A common stock in July 1995
. the Pyramid Acquisition on January 17, 1996 resulting in the addition of nine
FM and three AM radio stations, six of which are in the nation's ten largest
radio markets
. the Detroit WWWW-FM and WDFN-AM joint sales agreement effective February 14,
1996 and time brokerage agreement effective April 1, 1996
. 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
10
<PAGE>
. the acquisition of WKLB-FM in Boston on May 3, 1996 and subsequent agreements
dated June 13, 1996 to swap WKLB-FM in Boston for WGAY-FM (formerly WEBR-FM)
in Washington, D.C. and to sell substantially all of the WKLB-FM broadcast
time under a time brokerage agreement effective June 17, 1996 pending the
closing of the transaction
. the time brokerage agreements to operate WGAY-FM (formerly WEBR-FM) and WWRC-
AM in Washington, D.C. effective June 17, 1996
In addition, the Company anticipates the results of operations for the remainder
of 1996 will be affected by the expected closing of the acquisition of WEDR-FM
in Miami in the fourth quarter of 1996.
Net revenues for the six months ended June 30, 1996 increased 87.5% to
$126.4 million compared to $67.4 million for the six months ended June 30, 1995.
Net revenues for the three months ended June 30, 1996 increased 73.8% to $73.0
million compared to $42.0 million for the three months ended June 30, 1995.
Station operating expenses excluding depreciation and amortization for the
six months ended June 30, 1996 increased 92.8% to $80.3 million compared to
$41.6 million for six months ended June 30, 1995. Station operating expenses
excluding depreciation and amortization for the three months ended June 30, 1996
increased 77.1% to $42.9 million compared to $24.2 million for the second
quarter of 1995.
Station operating income excluding depreciation and amortization and
corporate, general and administrative expense (broadcast cash flow) for the six
months ended June 30, 1996 increased 78.8% to $46.0 million compared to $25.8
million for the six months ended June 30, 1995. Broadcast cash flow for the
three months ended June 30, 1996 increased 69.4% to $30.1 million compared to
$17.8 million for the second quarter of 1995.
The increase in net revenues, station operating expenses, and broadcast
cash flow for the three and six months ended June 30, 1996 was primarily
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 six months ended June 30, 1996
increased 166.2% to $44.0 million compared to $16.5 million for the same period
in 1995. Depreciation and amortization for the three months ended June 30, 1996
increased 108.3% to $21.3 million compared to $10.2 million for the second
quarter of 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 six months ended June
30, 1996 increased 88.7% to $3.2 million compared to $1.7 million for the same
period in 1995. Corporate general and
11
<PAGE>
administrative expenses for the three months ended June 30, 1996 increased
85.6% to $1.7 million compared to $0.9 million for the second quarter of 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 incurred a $1.2 million
operating loss for the six months ended June 30, 1996 compared to operating
income of $7.5 million for the same period in 1995. The Company realized a $7.1
million operating income for the three months ended June 30, 1996 compared to
$6.6 million for the second quarter of 1995.
Interest expense for the six months ended June 30, 1996 increased 104.8% to
$19.0 million compared to $9.3 million for the same period in 1995. Interest
expense for the three months ended June 30, 1996 increased 81.8% to $10.1
million compared to $5.5 million for the second quarter of 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, (iii)
additional bank borrowings of approximately $34.0 million required to finance
the acquisition of WKLB-FM in Boston in May 1996, offset by; (iv) 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; (v) an overall decline in the Company's borrowing rates.
The income tax benefit for the six and three months ended June 30, 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 six months ended
June 30, 1996 was $18.9 million compared to a $4.9 million net loss for the same
period in 1995. The net loss attributable to common stockholders for the three
months ended June 30, 1996 was $3.4 million compared to a $0.8 million net loss
for the second quarter of 1995. The 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 six months ended June 30, 1996 was
$(0.67) compared to a $(0.33) loss per common share for the same period in 1995.
The loss per common share for the three months ended June 30, 1996 was $(0.12)
compared to a $(0.05) loss per common share for the second quarter of 1995. The
increase in the net loss per common share is a result of the above mentioned
factors.
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
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<PAGE>
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 acquisitions of KYLD-FM in San Francisco, WWRC-AM in
Washington, D.C., WEDR-FM in Miami, WPNT-FM in Chicago, WMXD-FM and WJLB-FM in
Detroit, and WFLN-FM in Philadelphia will be financed in part through additional
borrowings under the New Revolving Loan. Given the Company's acquisition
strategy and acquisition opportunities created by the recent passage of the
1996 Act, it is possible that the Company will complete one or more other
potentially material transactions during the course of the year. 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 a revised Senior Credit Facility
and, from proceeds from the disposition of certain of the Company's radio
stations including $32 million in net proceeds resulting from 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. The Company has
entered into preliminary discussions with lenders under the Senior Credit
Facility to raise additional debt financing in the form of a revised Senior
Credit Facility. 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 June 30, 1996, the Company
had drawn $150.0 million of the Term Loan, $199.0 million of the Revolving Loan,
and $193.0 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 June 30, 1996 was
7.22% on a blended basis, based on Eurodollar rates, and the interest rates on
$185.0 million and $14.0 million of advances outstanding under the Revolving
Loan were 7.26% and 8.875% at June 30, 1996, based on the Eurodollar and prime
rate, respectively. The interest rate on the $193.0 million outstanding under
the New Revolving Loan at June 30, 1996 was 7.27% 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 Senior Credit Facility. At June 30, 1996, interest rate swap
agreements covering a notional balance of $225.0 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
13
<PAGE>
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 six months ended June 30, 1995 and 1996, the Company
recognized charges (income) under its interest rate swap and cap agreements of
($244,000) and $76,000, 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.
Given the Company's acquisition strategy and acquisition opportunities
created by the recent passage of the 1996 Act, the Company has entered into
preliminary discussions with lenders under the Senior Credit Facility to raise
additional debt financing in the form of a revised 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 June 30, 1996, $12.0
million in principal amount of the Senior Notes was outstanding.
Forward Looking Statements
--------------------------
When used in the preceding discussion, the words "expects," "anticipates"
and similar expressions are intended to identify forward looking statements.
Such statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from those expressed in any of the forward
looking statements. Such risks and uncertainties include, but are not limited
to, industrywide market factors and regulatory developments affecting the
Company's operations and the acquisitions and dispositions of broadcast
properties described elsewhere herein.
14
<PAGE>
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' original
complaint alleged claims for breach of contract, indemnification, breach of
fiduciary duty and fraud. Plaintiffs' aggregate prayer for relief in the
original complaint 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 and this order has been
affirmed on appeal. On May 17, 1996, after the close of discovery, the Company
filed a motion for summary judgment seeking the dismissal of the remaining
claims in the original complaint. Plaintiffs have opposed the Company's summary
judgment motion. On July 1, 1996, Plaintiffs moved for leave to amend their
complaint in order to add claims for breach of the covenant of good faith and
fair dealing, tortious interference with business advantage and prima facia
tort. In the proposed amended complaint, Plaintiffs seek compensatory and
punitive damages in excess of $25 million. The Company has opposed Plaintiffs'
motion for leave to amend. The Court has not yet ruled on the Company's motion
for summary judgment or decided whether to permit Plaintiffs to so amend their
complaint. 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 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------- ---------------------------------------------------
(a) The Company held its Annual Meeting of Stockholders on May 15, 1996, in
Irving, Texas.
(b) The stockholders of the Company voted to reelect the eight directors of the
Company as follows:
<TABLE>
<CAPTION>
VOTES
-----
DIRECTORS FOR WITHHELD
--------- ---------- --------
<S> <C> <C>
Scott K. Ginsburg 35,124,470 386,380
James de Castro 35,125,120 385,730
Matthew E. Devine 35,124,520 386,330
Joseph M. Sitrick 35,124,234 386,616
Perry L. Lewis 35,181,125 329,725
Thomas J. Hodson 35,157,086 353,764
Eric L. Bernthal 35,124,085 386,765
Kenneth J. O'Keefe 35,124,450 386,400
</TABLE>
15
<PAGE>
The stockholders of the Company also voted to ratify the appointment of
KPMG Peat Marwick LLP as independent auditors for 1996 as follows:
FOR AGAINST ABSTENTIONS
--- ------- -----------
14,761,852 8,588 4,640
The stockholders of the Company also voted to ratify the approval of the
adoption of the 1995 Option Plan for Executive Officers and Key Employees of
Evergreen Media Corporation, under which options were authorized to purchase up
to 1,500,000 shares of Evergreen Class A Common Stock.
BROKER
FOR AGAINST ABSTENTIONS NON-VOTES
--- ------- ----------- ---------
32,190,472 2,243,242 110,423 966,713
The stockholders of the Company also voted to amend the Company's Restated
Certificate of Incorporation to increase the number of authorized shares of
Class A Common Stock of the Company from 31,000,000 to 75,000,000 and certain
related matters.
BROKER
FOR AGAINST ABSTENTIONS NON-VOTES
--- ------- ----------- ---------
Class A 11,206,647 3,514,350 5,131 48,952
All Common Stock 31,942,417 3,514,350 5,131 48,952
No "broker non-votes" (i.e., shares held by a broker or nominee which were
represented at the meeting but with respect to which such broker or nominee was
not empowered to vote on a particular proposal) were reported at the meeting
except for broker non-votes reported with respect to the 1995 Option Plan for
Executive Officers and Key Employees and to increase the number of authorized
shares.
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 stations 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 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
16
<PAGE>
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.
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.
Recent Acquisitions and Dispositions
- ------------------------------------
On July 1, 1996, the Company entered into an agreement to acquire WEDR-FM
in Miami for $65 million in cash. The acquisition of WEDR-FM, expected to close
in the fourth quarter of 1996, will be financed through borrowings of $65
million under the Senior Credit Facility of which $3 million was borrowed by the
Company and paid as escrow funds in June 1996 and is held in escrow at June 30,
1996.
On July 18, 1996, the Company entered into an agreement to acquire WPNT-FM
in Chicago for $73 million in cash. The acquisition of WPNT-FM, expected to
close in the first quarter of 1997, will be financed through borrowings of $73
million under the Senior Credit Facility of which $5 million was borrowed by the
Company and paid as escrow funds in June 1996 and is held in escrow at June 30,
1996.
On August 9, 1996, the Company entered into an agreement to acquire WMXD-FM
and WJLB-FM in Detroit for $168.0 million and WFLN-FM in Philadelphia for $37.8
million. The Company also entered into an agreement to operate the stations
under time brokerage agreements effective September 1, 1996. The Company also
entered into an agreement to acquire WQRS-FM in Detroit for $32 million and
concurrently, in a tax-free transaction, swap the station in consideration for
WWRC-AM in Washington, D.C. and $9.5 million in cash. The swap agreement
modifies the June 13, 1996 agreement to acquire WWRC-AM for $22.5 million. The
acquisitions, expected to close in the first quarter of 1997, will be financed
through borrowings under the Senior Credit Facility.
Stock Dividend
- --------------
On August 8, 1996, the Company declared a three-for-two stock split
effected in the form of a stock dividend payable on August 26, 1996 to
shareholders of record at the close of business on August 19, 1996. All share
data (other than authorized share data) contained in the accompanying financial
statements have been retroactively adjusted to give effect to the stock
dividend.
17
<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. 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,
18
<PAGE>
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.
(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).
(o)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).
(o)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).
(o)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).
*2.17 Asset Purchase Agreement dated June 13, 1996 between Evergreen
Media Corporation of Los Angeles and Greater Washington Radio, Inc. (see table
of contents for list of omitted exhibits and schedules).
*2.18 Asset Exchange Agreement dated June 13, 1996 among Evergreen
Media Corporation of Los Angeles, Evergreen Media Corporation of the Bay State,
WKLB License Corp., Greater Media Radio, Inc. and Greater Washington Radio, Inc.
(see table of contents for list of omitted exhibits and schedules).
19
<PAGE>
*2.19 Purchase Agreement dated June 27, 1996 between WEDR, Inc., Seller
and Evergreen Media Corporation of Los Angeles, Buyer. (See table of contents
for list of omitted schedules)
*2.20 Time Brokerage Agreement dated July 10, 1996 by and between
Evergreen Media Corporation of Detroit, as Licensee, and Kidstar Interactive
Media Incorporated, as Time Broker.
*2.21 Asset Purchase Agreement dated July 15, 1996 by and among Century
Chicago Broadcasting L.P., an Illinois limited partnership, ("Seller"), Century
Broadcasting Corporation, a Delaware Corporation ("Century"), Evergreen Media
Corporation of Los Angeles, a Delaware Corporation ("Parent"), and Evergreen
Media Corporation of Chicago, a Delaware Corporation ("Buyer").
*2.22 Asset Purchase Agreement dated August 12, 1996 by and among
Chancellor Broadcasting Company, Shamrock Broadcasting, Inc. and Evergreen Media
Corporation of the Great Lakes.
*2.23 Asset Purchase Agreement dated as of August 12, 1996 between
Secret Communications Limited Partnership and Evergreen Media Corporation of Los
Angeles (WQRS-FM). (See table of contents for list of omitted exhibits and
schedules)
*2.24 Asset Purchase Agreement dated as of August 12, 1996 between
Secret Communications Limited Partnership and Evergreen Media Corporation of Los
Angeles. (See table of contents for list of omitted 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.
(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
20
<PAGE>
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.
(a) 4.3 Amended and Restated Note Purchase Agreement, dated November
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.
(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
21
<PAGE>
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.
(o)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 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.
(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 an
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
22
<PAGE>
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, 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 Evergreen Media Corporation of Illinois dated
as of June 30, 1993 (see table of contents for list of omitted exhibits and
schedules).
23
<PAGE>
(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
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
Employment Agreement dated February 9, 1996 by and between Evergreen Media
Corporation and Kenneth J. O'Keefe.
+(o)10.27 Employment Agreement, dated April 15, 1996 by and between
Evergreen Media Corporation and Scott K. Ginsburg, as amended.
+(o)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
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.
(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).
24
<PAGE>
(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.
(o) Incorporated by reference to the identically numbered exhibit to the
company's report on Form 10-Q for quarterly period ending March 31,1996.
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: August 14, 1996
26
<PAGE>
EXHIBIT 2.17
ASSET PURCHASE AGREEMENT
Between
EVERGREEN MEDIA CORPORATION OF LOS ANGELES
and
GREATER WASHINGTON RADIO, INC.
Dated as of June 13, 1996
1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I DEFINITIONS........................................ 1
ARTICLE II PURCHASE OF ASSETS................................. 4
2.1 Closing.................................................. 4
2.2 Transfer of Assets....................................... 5
2.3 Excluded Assets.......................................... 5
2.5 Allocation and Appraisal................................. 6
ARTICLE III ASSUMPTION OF LIABILITIES.......................... 7
ARTICLE IV GOVERNMENTAL CONSENTS.............................. 7
4.1 FCC Consent.............................................. 7
4.2 Compliance with HSRA..................................... 8
4.3 Other Governmental Consents............................. 8
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....................................... 9
5.4 Absence of Conflicting Agreements or Required Consents... 9
5.5 Litigation............................................... 9
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF SELLER........... 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 Owned Real Property...................................... 11
6.6 Real Property Leases..................................... 12
6.7 Title to and Condition of Personal Property.............. 12
6.8 Intellectual Property.................................... 13
6.9 Contracts................................................ 13
6.10 Personnel Information.................................... 14
6.11 Employee Benefit Plans................................... 14
6.12 Litigation............................................... 15
6.13 Compliance with Laws..................................... 15
6.14 Transaction with Affiliates.............................. 15
6.15 Financial Statements..................................... 15
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
6.16 Absence of Changes or Events............................ 16
6.17 Insurance............................................... 16
6.18 Taxes................................................... 16
6.19 Environmental Matters................................... 16
6.20 Bankruptcy.............................................. 17
6.21 Station Assets.......................................... 17
6.22 Foreign Investment in Real Property Tax Act............. 17
6.23 Disclosure.............................................. 17
ARTICLE VII COVENANTS OF SELLER................................ 18
7.1 Interim Operation........................................ 18
7.2 Access to Station........................................ 19
7.3 Third-Party Consents..................................... 19
7.4 Notification............................................. 19
7.5 No Inconsistent Action................................... 19
7.6 Estoppel Certificates; Consent and Waiver................ 19
ARTICLE VIII ADDITIONAL COVENANTS............................... 20
8.1 Reasonable Best Efforts.................................. 20
8.2 Control of Station....................................... 20
8.3 Employees................................................ 20
8.4 Renewal of Contracts..................................... 20
8.5 Post-Closing Covenants................................... 20
ARTICLE IX CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO
CLOSE.............................................. 21
9.1 Representations, Warranties and Covenants................ 21
9.2 Governmental Consents.................................... 21
9.3 Adverse Proceedings...................................... 21
9.4 Deliveries............................................... 22
9.5 WEBR..................................................... 22
ARTICLE X CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO
CLOSE.............................................. 22
10.1 Representations, Warranties and Covenants............... 22
10.2 Governmental Consents................................... 22
10.3 Adverse Proceedings..................................... 22
10.4 Deliveries.............................................. 22
10.5 WEBR.................................................... 23
ARTICLE XI DOCUMENTS TO BE DELIVERED AT THE CLOSING........... 23
11.1 Documents to be Delivered by Seller..................... 23
11.2 Documents to be Delivered by Buyer...................... 24
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
ARTICLE XII TRANSFER TAXES; FEES AND EXPENSES.................. 24
12.1 Transfer Taxes and Similar Charges...................... 24
12.2 Expenses................................................ 25
ARTICLE XIII BROKER'S COMMISSION OR FINDER'S FEE................ 25
13.1 Buyer's Representation and Agreement to Indemnify....... 25
13.2 Seller's Representation and Agreement to Indemnify...... 25
ARTICLE XIV INDEMNIFICATION.................................... 26
14.1 Indemnification by Seller............................... 26
14.2 Indemnification by Buyer................................ 27
14.3 Indemnification Procedures.............................. 28
ARTICLE XV TERMINATION RIGHTS................................. 30
15.1 Termination............................................. 30
15.2 Liability............................................... 31
ARTICLE XVI REMEDIES UPON DEFAULT.............................. 31
16.1 Specific Performance.................................... 31
ARTICLE XVII OTHER PROVISIONS................................... 32
17.1 Risk of Loss............................................ 32
17.2 Publicity............................................... 32
17.3 Benefit and Assignment.................................. 32
17.4 No Third Party Beneficiaries............................ 33
17.5 Nature of Representations and Warranties;
Entire Agreement; Amendments, etc....................... 33
17.6 Interpretation.......................................... 34
17.7 Choice of Law; Jurisdiction............................. 34
17.8 Notices................................................. 34
17.9 Counterparts............................................ 35
17.10 Further Assurances..................................... 35
</TABLE>
iii
<PAGE>
SCHEDULES
4.3 Other Governmental Consents
5.1 Jurisdictions of Qualification
6.1 Jurisdictions of Qualification
6.3 Seller's Required Consents
6.4 Station Licenses and Governmental Consents
6.5 Owned Real Property
6.6 Real Property Leases
6.7 Personal Property
6.8 Intellectual Property
6.9 Contracts
6.10 Personnel Information
6.11 Employee Plans
6.12 Litigation Involving Seller
6.14 Transactions with Affiliates
6.15 Financial Statements
6.16 Absence of Changes or Events
6.17 Insurance
6.21 Station Assets
iv
<PAGE>
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of June 13, 1996, between Greater
Washington Radio, Inc., a Delaware corporation ("Seller"), and Evergreen Media
Corporation of Los Angeles, a Delaware corporation ("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 govern mental
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, agree ments, purchase orders and leases set forth on Schedules 6.6,
--------------
6.7 and 6.8 to this Agreement, but excluding the Real Property Leases and the
- -----------
contract with Research Group, Inc.
1.6 "Cut-Off Time" shall mean 12:01 a.m., local time, on the date on which
Seller actually receives the Purchase Price (as defined in Section 2.4(a)).
1
<PAGE>
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
Seller and Buyer must file with the Federal Communications Commission (the
"FCC") requesting its consent to the assignment of the Station Licenses from
Seller 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 (the "Communications Act"), 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 September 30, 1994 and September 30, 1995, and the related
statements of operations and cash flows for the fiscal years then ended and (ii)
--
the unaudited quarterly balance sheets for the Station as of December 31, 1995
and March 31, 1996, and the related statements of operations and cash flows for
the fiscal quarters then ended.
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 Im provements Act
of 1976, as amended, and the regulations adopted thereunder.
1.14 "Intellectual Property" shall mean all right, title and interest in
and to the United 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,
2
<PAGE>
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.
1.15 "Liens" shall mean all debts, liens, charges, security interests,
mortgages, pledges, judgments, trusts, adverse claims, liabilities, encumbrances
and other impairments of title.
1.16 "Non-LMA Contracts" shall mean those Contracts which are not assigned
to Buyer as of the Commencement Date (as defined in the Time Brokerage
Agreement) because the requisite third party consents had not been obtained by
that date but which will be assigned to Buyer as of the date such third party
consents are obtained.
1.17 "Owned Real Property" shall mean all real property and interests in
real property owned by 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.
1.18 "Permitted Liens" shall mean (i) carriers', materialmen's,
-
mechanics', workmen's, warehousemen's, repairmen's, vendors' or other similar
Liens arising in the ordinary course of business for sums not yet delinquent or
that are being contested in good faith, (ii) Liens for taxes, assessments or
--
governmental charges not yet due and payable, (iii) Liens of landlords arising
---
by operation of law for the payment of sums not yet due and payable and (iv)
--
easements, rights-of-way, encroachments and other similar restrictions, in each
case not materially interfering with the conduct of the business of the Station.
1.19 "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.
1.20 "Personal Property" shall mean all equipment, office furniture and
fixtures, office materials and supplies, inventory, spare parts and other
tangible personal property used in, held for use in connection with or necessary
for the conduct of the business or operations of the Station or the Stations
Assets.
1.21 "Real Property Leases" shall mean the leases, subleases, licenses and
occupancy agreements, including any amendments thereto, relating to real
property used in, held for use in connection with or necessary for the conduct
of the business or
3
<PAGE>
operations of the Station or the Station Assets, together with all easements and
other appurtenances for the benefit thereof.
1.22 "Station" shall mean radio station WWRC(AM), Washington, D.C.
1.23 "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 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.
------------
1.24 "Station Records" shall mean all files, records, logs, program
materials, programs, lists, music libraries, public inspection files that relate
solely to the Station and all proprietary information and data, maps, plans,
diagrams, blueprints, schematics and technical drawings, engineering records,
and FCC applications and filings maintained solely with respect to the Station
pursuant to the rules and regulations of the FCC.
1.25 "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, em ployment, 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).
1.26 "Time Brokerage Agreement" shall mean the Time Brokerage Agreement,
dated as of the date hereof, by and between Seller 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 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 Seller
at least four Business Days prior
4
<PAGE>
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, Seller shall sell, assign,
------------------
transfer and convey or cause to be sold, assigned, transferred or conveyed to
Buyer and Buyer shall purchase from Seller, all of the assets, real, personal
and mixed, tangible and intangible, used in, held for use in connection with or
necessary for the conduct of the business and operations of the Station other
than the Excluded Assets (as defined below), including, but not limited to, all
of Seller's right in and to (a) all accounts receivable arising out of or
-
relating to the operation of the Station after 12:01 a.m., local time, on the
Commencement Date (as defined in the Time Brokerage Agreement), (b) the Owned
-
Real Property, (c) the Real Property Leases, (d) the Station Licenses (including
- -
renewals or modifications of such licenses and applications therefor) and all
its rights in and to the call letters "WWRC", (e) the Personal Property, (f) the
- -
Non-LMA Contracts, (g) the Intellectual Property and (h) the Station Records
- -
(collectively, the "Station Assets") The Station Assets shall be transferred to
Buyer free and clear of all Liens, except for Permitted Liens.
2.3 Excluded Assets. Notwithstanding anything to the contrary set forth
---------------
herein, the Station Assets shall not include the following (collectively, the
"Excluded Assets"):
(a) all accounts receivable arising out of or relating to the operation of
the Station before 12:01 a.m., local time, on the Commencement Date (as
defined in the Time Brokerage Agreement);
(b) all books and records that Seller is required by law to retain, and all
payables records and invoices, provided that, at Buyer's request, Seller shall
provide Buyer, at Seller's expense, with copies of such records covering the
period that Seller was licensee of the Station;
(c) all books, records, and other intangible assets related solely to
Seller's internal corporate matters and not related to the operation of the
Station;
(d) 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 relating to Taxes and fees for which Seller is the responsible
party;
(e) without in any way limiting Buyer's rights under the Time Brokerage
Agreement, Seller's cash on hand as of the Cut-Off Time and all other cash in
any bank account of Seller; any and all cash equivalents,
5
<PAGE>
certificates of deposit, bonds, repurchase agreements, letters of credit, mar
ketable securities, or other similar items;
(f) all insurance policies, except for any rights thereunder that may be
assigned to Buyer pursuant to Section 17.1; and
(g) all Employee Plans, including all trusts and other funding arrange
ments and the assets thereof.
2.4 Purchase Price. (a) In consideration for the sale, assignment,
--------------
transfer and conveyance of the Station Assets by Seller to Buyer, Buyer shall
pay an aggregate amount of $22,500,000 (the "Purchase Price") to Seller at
Closing by wire transfers of immediately available funds to such account of
Seller as Seller shall have designated to Buyer at least two Business Days
before Closing.
(b) In the event (i) the main authorization for the Station issued by the
-
FCC is assigned to any unaffiliated third party, whether as the result of a
stock sale, merger or asset sale (a "Sale Transaction"), within 18 months
following the Closing Date and (ii) the aggregate purchase paid to Buyer,
--
together with any of its Affiliates and any equity holders of Buyer or its
Affiliates, in respect of any such Sale Transaction, including consideration
paid in the form of cash, equity securities and the assumption or repayment of
indebtedness of the Station (the "Aggregate Consideration"), exceeds
$18,000,000, then Buyer shall be obligated to pay to Seller as additional
Purchase Price for the Station Assets an amount equal to 50% of the excess of
(x) the Aggregate Consideration over (y) $18,000,000. Buyer shall promptly
- -
notify Seller in writing after any agreement to effect a Sale Transaction shall
have been reached and shall give Seller at least four Business Days prior
written notice of the closing of such Sale Transaction. Any amount payable to
Seller pursuant to this Section 2.4(b) shall be paid contemporaneously with the
closing of such Sale Transaction by wire transfer of immediately available funds
to such account of Seller as Seller shall have designated to Buyer at least two
Business Days before such closing. The provisions of this Section 2.4(b) are
intended to apply only to a Sale Transaction which is effected on a stand-alone
basis and not as part of a transaction involving the sale of multiple radio
stations of Buyer and its Affiliates or as an exchange of assets for other
property of like kind within the meaning of section 1031 of the Code.
2.5 Allocation and Appraisal. Prior to the Closing, Buyer and Seller
------------------------
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 extent an agreement on such allocation is reached, Buyer and Seller
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
6
<PAGE>
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 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 Seller except for
those arising under Contracts and Real Property Leases assumed by Buyer under
the Time Brokerage Agreement or this Agreement and then with respect to any such
Contract or Real Property Lease 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 or Real Property Lease 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 60 days after the date of this Agreement Buyer and
Seller shall file the FCC Application. Seller 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 party shall have any obligation to satisfy
any complainant or the FCC by taking any steps which would have a material
adverse effect upon such party or upon any of its Affiliates, 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 with any condition that would
- -------
have a material adverse effect upon it or any of its Affiliates. 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.
7
<PAGE>
4.2 Compliance with HSRA. Buyer and Seller shall make or cause to be
--------------------
made in a timely fashion, and in any event within 15 Business Days after the
date of this Agreement, 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 Seller, in each case to the knowledge of
Buyer, as follows:
5.1 Organization and Standing. Buyer is a corporation 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 each
jurisdiction where such qualification is necessary, all of which jurisdictions
are listed on Schedule 5.1, and Buyer 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 of the Station as
proposed to be conducted by Buyer after the Closing Date.
5.2 Authorization and Binding Obligation. Buyer 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 Buyer'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 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.
8
<PAGE>
5.3 FCC Qualifications. There are no facts which, under the
------------------
Communications Act, or the existing rules and regulations of the FCC, would
disqualify Buyer from becoming the assignee of the Station Licenses or from con
summating the transactions contemplated herein or by the Time Brokerage
Agreement within the times contemplated herein or therein. 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 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 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 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 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 SELLER
----------------------------------------
Seller represents and warrants to Buyer, in each case to the knowledge of
Seller (except with respect to the matters set forth in Sections 6.1, 6.2, 6.3,
6.4, 6.5 and 6.21), as follows:
6.1 Organization and Standing. 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 each
jurisdiction where such qualification is necessary, all of which jurisdictions
are listed on Schedule 6.1, and 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.
9
<PAGE>
6.2 Authorization and Binding Obligation. 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 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 duly executed and delivered by 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 6.9, the execution, delivery and performance of this Agreement
- -------------------
and the Time Brokerage Agreement by Seller (a) do not require the consent of any
-
third party; (b) will not violate any provision of 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 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, Real Property Lease 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. Seller is the valid and legal
holder 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. Seller has 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, Seller 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
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 Seller's knowledge, are any such actions threatened. The
Station Licenses were validly issued and are in full force and effect and Seller
has no knowledge that they are impaired by any act or omission of Seller or any
of its Affiliates, or the officers, employees or agents of Seller or any of its
Affiliates. The Station is being operated in all material 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
10
<PAGE>
other reports and documents required to be filed with the FCC by or on behalf of
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. 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 or the existing rules and
regulations of the FCC, would disqualify 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. Seller
maintains 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 Owned Real Property. (a) Schedule 6.5 contains a true and complete
------------------- ------------
list of all Owned Real Property setting forth the address 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 or 6.6 is used
-------------------
in, held for use in connection with or necessary for the conduct of the business
or operations of the Station.
(b) Except as set forth on Schedule 6.5(b), to Seller's knowledge, (i)
--------------- -
the improvements upon each parcel of real property owned by Seller and the
current use and operation of such real property conforms 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 Seller has not received any written notice of
any such nonconformity, (ii) the Owned Real Property is zoned for the purposes
--
for which it is currently being used by Seller, (iii) the improvements upon the
---
Owned Real Property are in adequate operating condition and repair and (iv)
--
there is no pending, threatened, or contemplated action to take by eminent
domain or otherwise to condemn any portion of the Owned Real Property.
(c) Except as set forth on Schedule 6.5(c), Seller has good and marketable
---------------
title to the Owned Real Property in fee simple absolute. Seller has the
exclusive right to use and occupy the Owned Real Property and Seller enjoys
peaceful and undisturbed possession of the Owned Real Property. Except as set
forth on Schedule 6.5(c), the Owned Real Property is free and clear of all
---------------
Liens.
(d) The Station's transmission system (including the ground system)
complies in all material respects with the rules and regulations of the FCC, the
Station Licenses and underlying construction permits, and the standards of good
engineering practice. The Station's ground system is complete and contains the
requisite number
11
<PAGE>
of radials. The Station's ground system is accessible and is fully contained
within the Owned Real Property. The Station operates within licenses parameters
in both daytime and nighttime transmission, and its proofs of performance are
current and complete and indicate such compliance.
6.6 Real Property Leases. (a) Schedule 6.6(a) contains a true and
-------------------- ---------------
complete list of all Real Property Leases.
(b) Except as set forth on Schedule 6.6 (b), (i) the improvements upon
---------------- -
each parcel of real property leased by Seller and the current use and operation
of such real property conforms 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
Seller has not received any written notice of any such nonconformity, (ii) the
--
premises which are the subject of the Real Property Leases are zoned for the
purposes for which they are currently being used by Seller, (iii) the
---
improvements on the premises which are the subject of the Real Property Leases
are in adequate operating condition and repair, (iv) there is no pending,
--
threatened, or contemplated action to take by eminent domain or otherwise to
condemn any portion of any premises which are the subject of the Real Property
Leases, (v) each Real Property Lease is legal, valid, binding, enforceable and
-
in full force and effect and (vi) neither Seller nor any other party is in
--
default, violation or breach under any Real Property Lease where any such
default, violation or breach, either individually or together with any other
such defaults, violations or breaches, would reasonably be expected to have a
material adverse effect on the assets, business or financial condition of the
Station, and no event has occurred and is continuing that constitutes or, with
notice or the passage of time or both, would constitute a material default,
violation or breach thereunder.
6.7 Title to and Condition of Personal Property. Schedule 6.7 lists all
------------------------------------------- ------------
Personal Property which has an individual value of $1,000 or more. Except as
described in Schedule 6.7, 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.
6.8 Intellectual Property. Schedule 6.8 contains a true and complete
--------------------- ------------
list and description of all Intellectual Property. The Intellectual Property is
either owned or validly licensed by Seller and Schedule 6.8 identifies which
------------
Intellectual Property is so owned and which is so licensed. Seller has
delivered to Buyer copies of all material documents regarding any Intellectual
Property, if any, establishing such rights, licenses or other authority. Seller
has no knowledge of any pending or
12
<PAGE>
threatened proceeding or litigation affecting, or with respect to, any
Intellectual Property. Seller is in compliance in all material respects with the
terms of any license of any Intellectual Property and Seller has received no
notice and Seller has no knowledge of any infringement or unlawful use of any
Intellectual Property. The conduct of the business of the Station does not
infringe the rights of any third party in respect of any Intellectual Property.
Seller has not sold, licensed or otherwise disposed of any Intellectual Property
to any Person and Seller has not agreed to indemnify any Person for any patent,
trademark or copyright infringement. Schedule 6.8 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.
6.9 Contracts. (a) Schedule 6.9 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 6.7 and (ii) licenses for Intellectual Property which are described in
- ------------ --
Schedule 6.8.
- ------------
(b) Seller has delivered to Buyer true and complete copies of all written
Contracts, or true and complete memoranda describing the terms of all oral
Contracts. 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, would reasonably be expected to have a
material adverse effect on the assets, business or financial condition of the
Station. Seller has not granted or been granted any material waiver or
forbearance with respect to any of the Contracts. 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, would reasonably be expected to have a material
adverse effect on the assets, business or financial condition of the Station.
Except as set forth in Schedule 6.9, 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.
6.10 Personnel Information. (a) Seller has 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
13
<PAGE>
Schedule 6.11, 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 6.9 and 6.11. Except as described in
----------------------
Schedule 6.10, Seller has no 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 6.11, 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 employees of
Seller at the Station. There are no pending unfair labor practice charges
relating to the Station and there are no pending or threatened strikes,
arbitration proceedings involving labor matters or other labor disputes
affecting the Station.
6.11 Employee Benefit Plans. Schedule 6.11 sets forth a true and
---------------------- -------------
complete list of each employee or retiree benefit or compensation plan within
the meaning 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 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 (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 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' com pensation. Seller has neither incurred nor 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 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. Seller has made all material contributions to all
multiemployer pension and welfare benefit plans within the meaning of Title I of
ERISA.
14
<PAGE>
6.12 Litigation. Seller is not 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
--------
6.12, there is no claim, litigation, proceeding or investigation pending or
- ----
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 Seller in connection with this Agreement or the
Time Brokerage Agreement.
6.13 Compliance with Laws. (a) Seller 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.
(b) (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.
6.14 Transaction with Affiliates. Except as set forth on Schedule 6.14,
--------------------------- -------------
all of the Stations Assets are owned or leased by Seller, and no Affiliate of
Seller or any other Person owns or leases property or is a party, including,
without limitation, as lessor or lessee, to any Contract or Real Property Lease
affecting or relating to the operations of the Station. Neither Seller nor any
Affiliate of Seller 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
Seller and any third party pursuant to which the Station receives, as a result
of its ownership by Seller, discounts, bonuses or other favorable arrangements
that will not be available to the Station after the Closing.
6.15 Financial Statements. Schedule 6.15 contains true and complete
-------------------- -------------
copies of the Financial Statements. The Financial Statements have been prepared
in accordance with United States generally accepted accounting principles
consistently applied. The Financial Statements accurately reflect and fairly
present in all material respects 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 liabilities or obligations (a) as and to the extent
-
expressly reflected or reserved against on the balance sheet of the Station as
of March 31, 1996 included in the Financial Statements, (b) incurred since March
-
31, 1996 in the ordinary course of business, (c)
-
15
<PAGE>
which in the aggregate are not material to Seller or (d) disclosed on Schedule
- --------
6.15, Seller has no liabilities or obligations of any nature, whether accrued,
- ----
absolute, contingent or otherwise, relating to the Station.
6.16 Absence of Changes or Events. Except as disclosed in Schedule 6.16,
---------------------------- -------------
since March 31, 1996, the operations and business of the Station have been
conducted in all material respects only in the ordinary course and Seller has
not, except in the ordinary course of business, purchased, sold, assigned or
otherwise transferred any of the Station Assets.
6.17 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 6.17, which shows all insurance policies held by
-------------
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. All
such insurance policies are in full force and effect.
6.18 Taxes. Except for any Taxes imposed in connection with the Time
-----
Brokerage Agreement, no event has occurred or condition exists that could result
in any liability being imposed on Buyer by any taxing authority for any Taxes
due or to become due of 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.
6.19 Environmental Matters. (a) Except as set forth in the Phase I
---------------------
Environmental Site Assessment for WWRC Radio Transmission Site, 6000 Ager Road,
Hyattsville, Maryland, dated June 1996, prepared by Greenhorne & O'Mara, Inc.
(the "Phase I"), all operations and uses of the Owned Real Property and the
premises which are the subject of the Real Property Leases are in compliance
with all Environmental Laws. Seller has 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 Seller is in compliance with the terms and
conditions of all such permits. Seller has not received any notice, and Seller
is not aware of, any administrative or judicial investigations, proceedings or
actions with respect to violations, alleged or proven, of Environmental Laws by
Seller or any tenants or subtenants of Seller, or otherwise involving the Owned
Real Property or the premises which are the subject of the Real Property Leases.
(b) Except as set forth in the Phase I, there has been no release (nor is
there any substantial threat of a release) of any Hazardous Substance at or from
the Owned Real Property or the premises which are the subject of the Real
Property Leases in amounts or concentrations requiring remediation under or that
would violate
16
<PAGE>
current Environmental Laws. Except as set forth in the Phase I, there are no
Hazardous Substances present on the Owned Real Property or the premises which
are the subject of the Real Property Leases 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, there are no underground storage tanks, or underground piping associated with
such tanks, on the Owned Real Property or the premises which are the subject of
the Real Property Leases. The representations and warranties set forth in
Sections 6.4, 6.12 and 6.13 shall not apply to environmental matters and instead
the representations and warranties set forth in this Section 6.19 shall apply.
6.20 Bankruptcy. No insolvency proceedings of any character, including,
----------
without limitation, bankruptcy, receivership, reorganization, composition or
arrangement with creditors, voluntary or involuntary, affecting Seller or any of
the Station Assets, are pending or threatened, and Seller has not 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.
6.21 Station Assets. Except as set forth in Schedule 6.21, Seller has
-------------- -------------
good and valid title to the Station Assets free and clear of all Liens, except
for Permitted Liens. Seller owns or has the right to use all of the Station
Assets necessary to operate the Station as currently conducted.
6.22 Foreign Investment in Real Property Tax Act. Seller is not a
-------------------------------------------
"foreign person" within the meaning of Section 1445 of the Code, and Seller
shall deliver to Buyer at Closing an affidavit to this effect.
6.23 Disclosure. None of this Agreement or any certificate or other
----------
document delivered in connection with the transactions contemplated by this
Agree ment 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 mis leading.
ARTICLE VII
COVENANTS OF SELLER
-------------------
7.1 Interim Operation. Except (a) as provided by or in furtherance
----------------- -
of the Time Brokerage Agreement, (b) as permitted by this Agreement or (c) with
- -
the prior written consent of Buyer:
17
<PAGE>
(a) Seller shall not take any action which could result in the business or
operations of the Station not being conducted in the ordinary course of
business, consistent with past practices, and Seller shall not take any action
which could adversely effect the ongoing operations and assets of the Station;
(b) Seller shall not 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) Seller shall not create, assume or permit to exist any Lien of any
nature whatsoever (except Permitted Liens) 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) Seller shall operate the Station in all material respects in ac
cordance 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
prose cute 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 proceeding for the suspension, revocation or material
adverse modification of any of the Station Licenses;
(e) Seller shall not waive any material right under any Non-LMA Contract or
Station License;
(f) Seller shall not enter into any Non-LMA Contracts relating to the
Station or the Station Assets;
(g) 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) Seller shall maintain the insurance policies on the Station and the
Station Assets listed in Schedule 6.17 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, 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
18
<PAGE>
this Agreement and the Closing Date, Seller shall give Buyer and Buyer's
counsel, accountants, lenders, engineers and other representatives, reasonable
access during normal business hours to all of 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. Seller at its own cost shall use all reasonable
--------------------
best efforts to obtain the consent of any third parties listed on Schedule 4.3
------------
6.3 or 6.8 necessary for the assignment to Buyer of any Contract to be assigned
- ----------
hereunder or under the Time Brokerage Agreement.
7.4 Notification. At all times prior to the Closing, Seller 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
representation or warranty of Seller made in this Agreement to be true and
complete in all material respects, promptly upon becoming aware of the same.
7.5 No Inconsistent Action. Seller shall not 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.
Seller shall not willfully take any action that would disqualify or impair
Seller as (a) assignor of the Station Licenses or (b) licensee, owner and
- -
operator of the Station.
7.6 Estoppel Certificates; Consent and Waiver. Subject to Section
-----------------------------------------
11.1(c)(v), Seller 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.
ARTICLE VIII
ADDITIONAL COVENANTS
--------------------
Buyer and 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 transactions contemplated by this Agreement.
19
<PAGE>
8.2 Control of Station. Without in any way limiting the rights and
------------------
obligations of the parties under the 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 Seller and, subject to the provisions of Article VII, shall be in its
complete discretion.
8.3 Employees. As of the Commencement Date (as defined in the Time
---------
Brokerage Agreement), Seller shall terminate all of the Station's employees,
except as otherwise provided in the Time Brokerage Agreement. Seller shall be
liable for all severance and other benefits to which those persons employed by
the Station on or prior to the Commencement Date are entitled as a result of
their employment by Seller prior to the Commencement Date under all Employee
Plans, applicable law or otherwise.
8.4 Renewal of Contracts. Prior to the Closing, 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
Agree ment and the Closing Date, provided that any such renewal shall be on
terms and conditions reasonably satisfactory to Buyer.
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.
(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.
20
<PAGE>
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 Seller 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 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 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. Seller shall have made all the deliveries set forth in
----------
Section 11.1.
9.5 WEBR. Buyer or one or more of its Affiliates shall have acquired
----
substantially all of the assets of radio station WEBR (FM), Washington, D.C.
21
<PAGE>
ARTICLE X
CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
----------------------------------------------------
The obligations of Seller 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 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 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 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 WEBR. Seller shall have transferred substantially all of the
----
assets of radio station WEBR (FM), Washington, D.C., to Buyer or one or more of
its Affiliates.
22
<PAGE>
ARTICLE XI
DOCUMENTS TO BE DELIVERED AT THE CLOSING
----------------------------------------
11.1 Documents to be Delivered by Seller. At the Closing, Seller shall
-----------------------------------
deliver or cause to be delivered to Buyer the following:
(a) certificate of 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) opinion of counsel to Seller, dated the Closing Date, in form and
substance reasonably satisfactory to Seller and Buyer;
(c) 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 Real Property Leases;
(iii) assignments of the Station Licenses;
(iv) bills of sale for all Personal Property;
(v) any estoppel certificates, consents and waivers obtained by Seller
pursuant to Section 7.6;
(vi) assignment of the Intellectual Property set forth on Schedule 6.8; and
------------
(vii) assignments of any Non-LMA Contracts;
(d) certified resolutions of the board of directors of Seller, authorizing
the execution, delivery and performance of this Agreement and the Time
Brokerage Agreement;
(e) an affidavit to the effect that Seller is not a "foreign person" within
the meaning of Section 1445 of the Code; and
23
<PAGE>
(f) 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 Seller the following:
(a) certificate of Buyer, dated the Closing Date, in form and substance
reasonably satisfactory to Seller, certifying to the fulfillment of the
conditions specified in Section 10.1;
(b) immediately available wire-transferred funds as provided in Section
2.4(a);
(c) instruments, in form and substance reasonably satisfactory to counsel
to Seller, pursuant to which Buyer assumes pursuant to Article III the
obligations, liabilities, commitments and responsibilities with respect to the
Station Assets;
(d) opinion of counsel to Buyer, dated the Closing Date, in form and
substance reasonably satisfactory to Seller and Buyer;
(e) certified resolutions of the board of directors of Buyer, authorizing
the execution, delivery and performance of this Agreement and the Time
Brokerage Agreement; and
(f) such other documents as may be reasonably requested by Seller's
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) all costs related to title insurance and
-
surveys with respect to the transfer of the Owned Real Property and (ii) any
--
and all Taxes that may be imposed by any taxing authority in the nature of
sales or use Taxes as a result of the transfer of the Station Assets from
Seller to Buyer; and
24
<PAGE>
(b) all other costs and expenses of transferring the Station Assets shall
be divided equally between Buyer and Seller.
As between Buyer and Seller, 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 Seller 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 Seller harmless from and against any and all
claims, losses, liabilities and expenses (in cluding 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 Seller's Representation and Agreement to Indemnify. Seller
--------------------------------------------------
represents and warrants to Buyer 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. 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 Seller.
25
<PAGE>
ARTICLE XIV
INDEMNIFICATION
---------------
14.1 Indemnification by Seller. (a) General. Seller agrees to indemnify
------------------------- -------
and hold harmless Buyer, its Affiliates and the 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 Seller herein
or in any certificate, document or instrument delivered to Buyer pursuant to
Section 11.1;
(ii) any failure of Seller to perform any covenant or agreement here under;
(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 under Article III;
(iv) any liabilities, obligations, commitments, responsibilities of Seller
not expressly assumed by Buyer under Article III;
(v) 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 Seller, or any of its predecessors or Affiliates; and
(vi) any failure of Seller to comply with applicable bulk sales laws (in
consideration of which indemnification obligation Buyer hereby waives
compliance by Seller with any applicable bulk sales laws).
(b) Limitations on Indemnification.
------------------------------
(i) Notwithstanding anything in Section 14.1(a) of this Agreement to the
contrary, Seller 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)
26
<PAGE>
exceeds $200,000; provided that if the aggregate amount of such Losses exceeds
--------
such amount, Seller shall be required to indemnify Buyer Indemnitees for all
Losses indemnifiable under Section 14.1(a)(i) without regard to such $200,000
limitation.
(ii) Seller's 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 Agree ment 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 16.1,
----------------
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 in struments delivered by Seller in connection herewith.
14.2 Indemnification by Buyer. (a) General. Buyer agrees to indemnify
------------------------ -------
and hold harmless Seller, its Affiliates and the officers, directors, em
ployees, agents, advisers and representatives of each such Person ("Seller
Indemnitees") from and against, and pay or reimburse Seller 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 Seller
pursuant to Section 11.2;
(ii) any failure of Buyer to perform any covenant or agreement hereunder;
(iii) any liabilities, obligations, commitments or responsibilities of
Seller expressly assumed by Buyer under Article III; 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 Seller not
expressly assumed by Buyer under Article III or results from any inaccuracy of
any representation or warranty made by Seller herein or in any certificate,
27
<PAGE>
document or instrument delivered to Buyer pursuant to Section 11.2 or any
failure of Seller to perform any covenant or agreement hereunder.
(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 Seller Indemnitees for all
Losses indemnifiable under Section 14.2(a)(i) without regard to such $200,000
limitation.
(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 Seller Indemnitee under this Agreement
for breach of a representation or warranty contained in this Agree ment 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 Seller Indemnitees with respect to any legal, equitable
or other claim for relief based upon this Agreement or the certificates,
documents and in struments 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 Indemnifying 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 indem nification obligation
under this Agreement except to the extent that such omission
28
<PAGE>
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 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 litiga tion 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
-----------
or Seller 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 Seller:
(i) if the Closing has not occurred by June 30, 1997;
29
<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 Seller;
(iii) if any material representation or warranty of Seller made herein or
in any certificate, document or instrument delivered by Seller hereunder is
untrue or incomplete in any material respect and such breach is not cured
within 10 Business Days of Seller's receipt of written notice from Buyer that
such breach exists or has occurred; or
(iv) if 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
Seller's receipt of written notice from Buyer that such default exists or has
occurred.
(c) by Seller:
(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 material respect and such breach is not cured within 10
Business Days of Buyer's receipt of written notice from Seller 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 notice from Seller 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
30
<PAGE>
liability to any Person in respect hereof, except that the provisions of Article
XII, Article XVI and Sections 17.2 and 17.7 shall survive any such termination.
ARTICLE XVI
REMEDIES UPON DEFAULT
---------------------
16.1 Specific Performance. Seller recognizes that, in the event 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, 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
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 Seller 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 Seller is in
material breach or default hereunder, then Buyer shall be entitled to seek
monetary damages.
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 Seller. Seller shall repair,
replace and restore to its prior condition any material damage to or loss of
Station Assets as soon as possible. If Seller is unable or fails 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 Seller shall
assign to Buyer at Closing Seller's rights under any insurance policy or pay
over to Buyer all proceeds of insurance covering such Station Asset's damage,
31
<PAGE>
destruction or loss or (c) delay the Closing Date until a date within 15
-
Business Days after Seller gives written notice to Buyer of completion of the
restoration or re placement 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, Seller and Buyer shall file an
appropriate request with the FCC for an extension of time within which to
complete the Closing.
17.2 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 or
written) regarding the transactions contemplated by this Agreement.
17.3 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 Seller may assign this Agreement
without the prior written consent of Buyer, in the case of any such assignment
by Seller, or Seller, 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 Seller 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) Buyer and Seller may each assign
---
its rights, but not its obligations, under this Agreement to the extent
permitted under subsection (b) of this Section 17.3, provided that any such
assignment does not delay the Closing Date.
(b) Each party acknowledges that the other party may desire to effect this
transaction as a part of an exchange of the Station Assets for other property of
like kind within the meaning of section 1031 of the Code. Buyer and Seller may
each assign its 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 the
- --------
other party and without the other party otherwise incurring any liability
thereby and provided, further, that any such assignment shall not relieve either
-------- -------
party from any of its obligations under this Agreement. Each party shall
cooperate with the other party to effectuate any such exchange, provided that
--------
such cooperation would not result in any additional cost or expense to such
party and such party would not otherwise incur any liability thereby. Without
limiting the generality of this subsection (b), if either party has given notice
of its intention to effect the transactions contemplated by this Agreement as
part of a like-kind exchange within the meaning of section 1031 of the Code, (i)
-
the other party shall promptly provide the first party with written
acknowledgment of such notice and (ii) Seller shall at the Closing accept the
--
payment of the Purchase Price
32
<PAGE>
from the "qualified intermediary" rather than from Buyer (which payment shall
discharge the obligation of Buyer under subsection (a) of Section 2.4, only if
and to the extent Seller actually receives such payment from the "qualified
intermediary" and Seller's right to such payment is not legally or otherwise
impaired), and assign, transfer and convey the Station Assets to Buyer.
17.4 No Third Party Beneficiaries. Except as provided in Article XIV
----------------------------
and Section 17.3(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.
17.5 Nature of Representations and Warranties; Entire Agreement;
------------------------------------------------------------
Amendments, etc. (a) It is the explicit intent and understanding of each of
- ---------------
the parties hereto that neither party nor any of its Affiliates, representatives
or agents is making any representation or warranty whatsoever, oral or written,
express or implied, other than those set forth in Articles V and VI.
(b) This Agreement, the Time Brokerage Agreement, the Confidentiality
Agreement, dated May 29, 1996, among Buyer, Evergreen Media Corporation of the
Bay State, WKLB License Corp., Greater Media, Inc. and Seller, 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 relating to the matters provided for herein or therein.
(c) 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.
17.6 Interpretation. 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. References herein to "Seller's knowledge" or
the "knowledge of Seller" shall mean the actual knowledge of Thomas J. Milewski.
References herein to "Buyer's knowledge" or the "knowledge of Buyer" shall mean
the actual knowledge of Scott K. Ginsburg.
17.7 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.
17.8 Notices. All notices, requests, demands, letters, waivers and
-------
other communications required or permitted to be given under this Agreement
shall be in writing
33
<PAGE>
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 Seller:
Greater Washington Radio, Inc.
P.O. Box 1059
Two Kennedy Boulevard
East Brunswick, New Jersey 08816
Attention: Mr. Thomas J. Milewski
Phone: (908) 247-6161
Fax: (908) 247-4956
Copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Richard D. Bohm, Esq.
Phone: (212) 909-6226
Fax: (212) 909-6836
To Buyer:
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
34
<PAGE>
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.
17.9 Counterparts. This Agreement may be executed in counterparts, both
------------
of which will be deemed an original and both of which together will constitute
one and the same instrument.
17.10 Further Assurances. Seller shall at any time and from time to
------------------
time after the Closing execute and deliver to Buyer such further assignments,
conveyances and other written assurances as Buyer may reasonably request in
order to vest and confirm in Buyer (or its permitted assignees) the title and
rights to and in all of the Station Assets to be and intended to be assigned,
transferred and conveyed hereunder. After the Closing, Buyer and 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 Buyer or Seller, as the case may be, to effectuate this Agreement.
35
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agree ment to be
duly executed as of the date first written above.
EVERGREEN MEDIA CORPORATION
OF LOS ANGELES
By: ____________________________
Name:_______________________
Title:______________________
GREATER WASHINGTON RADIO, INC.
By: ____________________________
Name:_______________________
Title:______________________
36
<PAGE>
EXHIBIT 2.18
================================================================================
ASSET EXCHANGE AGREEMENT
Among
EVERGREEN MEDIA CORPORATION OF LOS ANGELES,
EVERGREEN MEDIA CORPORATION OF THE BAY STATE,
WKLB LICENSE CORP.,
GREATER MEDIA RADIO, INC.
and
GREATER WASHINGTON RADIO, INC.
Dated as of June 13, 1996
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS................................................ 2
ARTICLE II EXCHANGE OF ASSETS......................................... 7
2.1 Exchange of Personal Property and Records.................... 7
2.2 Exchange of Real Property Leases.............................. 7
2.3 Exchange of Non-LMA Contracts................................. 8
2.4 Exchange of Station Licenses.................................. 8
2.5 Exchange of Intellectual Property............................. 8
2.6 Appraisals; Tax Reporting..................................... 8
2.7 Excluded Assets............................................... 9
2.8 Liens......................................................... 11
2.9 Assumption of Liabilities..................................... 11
ARTICLE III CLOSING.................................................... 12
3.1 Closing....................................................... 12
ARTICLE IV GOVERNMENTAL CONSENTS...................................... 12
4.1 FCC Consent................................................... 12
4.2 Compliance with HSRA.......................................... 13
4.3 Other Governmental Consents................................... 13
ARTICLE V REPRESENTATIONS AND WARRANTIES OF GMI...................... 13
5.1 Organization and Standing..................................... 13
5.2 Authorization and Binding Obligation.......................... 13
5.3 Absence of Conflicting Agreements or Required Consents........ 14
5.4 Governmental Authorization.................................... 14
5.5 Washington Real Property Leases............................... 15
5.6 Title to and Condition of Washington Personal Property........ 15
5.7 Washington Intellectual Property.............................. 16
5.8 Washington Contracts.......................................... 16
5.9 Personnel Information......................................... 17
5.10 Employee Benefit Plans........................................ 17
5.11 Litigation.................................................... 18
5.12 Compliance with Laws.......................................... 18
5.13 Transaction with Affiliates................................... 19
5.14 Washington Financial Statements............................... 19
5.15 Absence of Changes or Events.................................. 19
<PAGE>
5.16 Insurance..................................................... 19
5.17 Taxes......................................................... 19
5.18 Environmental Matters......................................... 20
5.19 Bankruptcy.................................................... 20
5.20 Washington Assets............................................. 20
5.21 Foreign Investment in Real Property Tax Act................... 21
5.22 Disclosure.................................................... 21
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF EVERGREEN................ 21
6.1 Organization and Standing..................................... 21
6.2 Authorization and Binding Obligation.......................... 21
6.3 Absence of Conflicting Agreements or Required Consents........ 22
6.4 Governmental Authorization.................................... 22
6.5 Boston Real Property Leases................................... 23
6.6 Title to and Condition of Boston Personal Property............ 23
6.7 Boston Intellectual Property.................................. 24
6.8 Boston Contracts.............................................. 24
6.9 Personnel Information......................................... 25
6.10 Employee Benefit Plans........................................ 25
6.11 Litigation.................................................... 26
6.12 Compliance with Laws.......................................... 26
6.13 Transaction with Affiliates................................... 26
6.14 Boston Financial Statements................................... 27
6.15 Absence of Changes or Events.................................. 27
6.16 Insurance..................................................... 27
6.17 Taxes......................................................... 27
6.18 Environmental Matters......................................... 27
6.19 Bankruptcy.................................................... 28
6.20 Boston Assets................................................. 28
6.21 Foreign Investment in Real Property Tax Act................... 28
6.22 Disclosure.................................................... 28
ARTICLE VII COVENANTS OF THE PARTIES................................... 29
7.1 Interim Operation............................................. 29
7.2 Access to the Stations........................................ 30
7.3 Third-Party Consents.......................................... 30
7.4 Notification.................................................. 31
7.5 No Inconsistent Action........................................ 31
7.6 Estoppel Certificates; Consent and Waiver..................... 31
ARTICLE VIII ADDITIONAL COVENANTS....................................... 32
8.1 Reasonable Best Efforts....................................... 32
8.2 Control of Stations........................................... 32
ii
<PAGE>
8.3 Employees..................................................... 32
8.4 Renewal of Contracts.......................................... 32
8.5 Post-Closing Covenants........................................ 33
8.6 Fairbanks Agreement........................................... 33
ARTICLE IX CONDITIONS PRECEDENT TO GMI'S OBLIGATION TO
CLOSE...................................................... 33
9.1 Representations, Warranties and Covenants..................... 33
9.2 Governmental Consents......................................... 34
9.3 Adverse Proceedings........................................... 34
9.4 Deliveries.................................................... 34
9.5 WWRC.......................................................... 34
ARTICLE X CONDITIONS PRECEDENT TO EVERGREEN'S OBLIGATION TO CLOSE.... 34
10.1 Representations, Warranties and Covenants..................... 34
10.2 Governmental Consents......................................... 35
10.3 Adverse Proceedings........................................... 35
10.4 Deliveries.................................................... 35
10.5 WWRC.......................................................... 35
ARTICLE XI DOCUMENTS TO BE DELIVERED AT THE CLOSING................... 35
11.1 Documents to be Delivered by Evergreen........................ 35
11.2 Documents to be Delivered by GMI.............................. 36
ARTICLE XII TRANSFER TAXES; FEES AND EXPENSES.......................... 38
12.1 Transfer Taxes and Similar Charges............................ 38
12.2 Expenses...................................................... 38
ARTICLE XIII BROKER'S COMMISSION OR FINDER'S FEE........................ 38
13.1 GMI's Representation and Agreement to Indemnify............... 38
13.2 Evergreen's Representation and Agreement to Indemnify......... 39
ARTICLE XIV INDEMNIFICATION............................................ 39
14.1 Indemnification by Evergreen.................................. 39
14.2 Indemnification by GMI........................................ 41
14.3 Indemnification Procedures.................................... 42
ARTICLE XV TERMINATION RIGHTS......................................... 43
15.1 Termination................................................... 43
15.2 Liability..................................................... 45
iii
<PAGE>
ARTICLE XVI REMEDIES UPON DEFAULT...................................... 45
16.1 GMI's Remedies; Specific Performance.......................... 45
16.2 Evergreen's Remedies; Specific Performance.................... 45
ARTICLE XVII OTHER PROVISIONS........................................... 46
17.1 Risk of Loss.................................................. 46
17.2 Publicity..................................................... 47
17.3 Benefit and Assignment........................................ 47
17.4 No Third-Party Beneficiaries.................................. 47
17.5 Nature of Representations and Warranties;
Entire Agreement; Amendments, etc............................. 47
17.6 Interpretation................................................ 48
17.7 Choice of Law; Jurisdiction................................... 48
17.8 Notices....................................................... 48
17.9 Counterparts.................................................. 49
17.10 Further Assurances............................................ 50
iv
<PAGE>
SCHEDULES
4.3 Other Governmental Consents
5.1 Jurisdictions of Qualification
5.3 GMI's Required Consents
5.4 Washington Station Licenses and Governmental Consents
5.5 Washington Real Property Leases
5.6 Washington Personal Property
5.7 Washington Intellectual Property
5.8 Washington Contracts
5.9 Washington Personnel Information
5.10 Washington Employee Plans
5.11 Litigation Involving GMI
5.13 Transactions with Affiliates of GMI
5.14 Washington Financial Statements
5.15 Absence of Changes or Events with respect to Washington Station
5.16 Insurance for Washington Assets
5.18 Washington Environmental Matters
5.20 Washington Assets
6.1 Jurisdictions of Qualification
6.3 Evergreen's Required Consents
6.4 Boston Station Licenses and Governmental Consents
6.5 Boston Real Property Leases
6.6 Boston Personal Property
6.7 Boston Intellectual Property
6.8 Boston Contracts
6.9 Boston Personnel Information
6.10 Boston Employee Plans
6.11 Litigation Involving Evergreen
6.13 Transactions with Affiliates of Evergreen
6.14 Boston Financial Statements
6.15 Absence of Changes or Events with respect to Boston Station
6.16 Insurance for Boston Assets
6.18 Boston Environmental Matters
6.20 Boston Assets
v
<PAGE>
ASSET EXCHANGE AGREEMENT
ASSET EXCHANGE AGREEMENT, dated as of June 13, 1996, among Evergreen Media
Corporation of Los Angeles, a Delaware corporation, Evergreen Media Corporation
of the Bay State, a Delaware corporation, WKLB License Corp., a Delaware
corporation, Greater Media Radio, Inc., a Delaware corporation, and Greater
Washington Radio, Inc., a Delaware corporation.
WHEREAS, Evergreen Media Corporation of the Bay State ("Bay State") owns
all of the assets (other than the Boston Station Licenses (as defined herein))
used in, held for use in connection with or necessary for the conduct of the
business or operations of radio station WKLB (FM), Framingham, Massachusetts
(the "Boston Station"); and
WHEREAS, WKLB License Corp ("Evergreen License Sub") is the licensee of the
Boston Station pursuant to certain licenses and authorizations issued by the
Federal Communications Commission (the "FCC"); and
WHEREAS, Evergreen Media Corporation of Los Angeles ("Evergreen Media")
indirectly owns all of the issued and outstanding stock of both Bay State and
Evergreen License Sub; and
WHEREAS, Greater Washington Radio, Inc. ("Washington Radio") owns all of
the assets used in, held for use in connection with or necessary for the conduct
of the business or operations of radio station WEBR (FM), Washington, D.C. (the
"Washington Station"); and
WHEREAS, Washington Radio is the licensee of the Washington Station
pursuant to certain licenses and authorizations issued by the FCC; and
WHEREAS, Greater Media Radio, Inc. ("Greater Media") owns all of the issued
and outstanding stock of Washington Radio; and
WHEREAS, on the date hereof, Bay State, Evergreen License Sub and
Washington Radio have entered into a Time Brokerage Agreement relating to the
Boston Station (the "Boston Time Brokerage Agreement"), and, on the date hereof,
Evergreen Media and Washington Radio have entered into a Time Brokerage
Agreement relating to the Washington Station (the "Washington Time Brokerage
Agreement" and collectively with the Boston Time Brokerage Agreement, the "Time
Brokerage Agreements"); and
WHEREAS, Evergreen Media, Bay State and Evergreen License Sub
(collectively, "Evergreen") and Greater Media and Washington Radio
(collectively, "GMI") desire to contemporaneously exchange certain property and
assets used in, held
<PAGE>
for use in connection with or necessary for the conduct of the business or
operations of the Boston Station and the Washington Station (collectively, the
"Stations"); and
WHEREAS, Evergreen and GMI intend to transfer the Stations in a transaction
that will qualify as a "like-kind exchange" for nonrecognition of taxable income
under section 1031 of the Code (as defined herein), and Evergreen and GMI are
willing to take such steps as are necessary to enable the transactions
contemplated hereby to so qualify; and
WHEREAS, on the date hereof, Evergreen Media and Washington Radio have
entered into an Asset Purchase Agreement relating to the sale of substantially
all of the assets used in, held for use in connection with or necessary for the
conduct of the business or operations of radio station WWRC(AM), Washington,
D.C. ("WWRC"), and, on the date hereof, Evergreen Media and Washington Radio
have entered into a Time Brokerage Agreement relating to WWRC.
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 "Boston Assets" shall mean the Boston Contracts, the Boston
Intellectual Property, the Boston Personal Property, the Boston Real Property
Leases, the Boston Records and the Boston Station Licenses.
1.3 "Boston 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 Boston Station or the Boston 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 the Boston Real
- --------------------------
Property Leases.
2
<PAGE>
1.4 "Boston FCC Application" shall mean the application or applications
that Evergreen and GMI must file with the FCC requesting its consent to the
assignment of the Boston Station Licenses from Evergreen to GMI.
1.5 "Boston Financial Statements" shall mean the audited balance sheets
for the Boston Station as of December 31, 1995, and the related statements of
income and retained earnings and cash flows for the fiscal year then ended.
1.6 "Boston Intellectual Property" shall mean all right, title and
interest in and to the United 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 Boston Station
or the Boston Assets.
1.7 "Boston Non-LMA Contracts" shall mean those Boston Contracts which are
not assigned to GMI as of the Commencement Date (as defined in the Boston Time
Brokerage Agreement) because the requisite third party consents had not been
obtained by that date but which will be assigned to GMI as of the date such
third party consents are obtained.
1.8 "Boston Personal Property" shall mean all equipment, office furniture
and fixtures, office materials and supplies, inventory, spare parts and other
tangible personal property used in, held for use in connection with or necessary
for the conduct of the business or operations of the Boston Station or the
Boston Assets.
1.9 "Boston Real Property Leases" shall mean the leases, subleases,
licenses and occupancy agreements, including any amendments thereto, relating to
real property used in, held for use in connection with or necessary for the
conduct of the business or operations of the Boston Station or the Boston
Assets, together with all easements and other appurtenances for the benefit
thereof.
1.10 "Boston Records" shall mean all files, records, logs, program
materials, programs, lists, music libraries, public inspection files that relate
solely to the Boston Station and all proprietary information and data, maps,
plans, diagrams, blueprints, schematics and technical drawings, engineering
records, and FCC applications and filings maintained solely with respect to the
Boston Station pursuant to the rules and regulations of the FCC.
3
<PAGE>
1.11 "Boston Station Licenses" shall mean the licenses, permits and other
authorizations issued by the FCC, the Federal Aviation Administration (the
"FAA") and any other federal, state or local governmental or regulatory
authorities in connection with the business or operations of the Boston Station
or the Boston Assets, including, without limitation, those specified in Schedule
6.4.
- ---
1.12 "Business Day" shall mean every day of the week excluding Saturdays,
Sundays and Federal holidays.
1.13 "Closing Date" shall mean the date on which the Closing is completed.
1.14 "Code" shall mean the Internal Revenue Code of 1986, as amended,
together with all regulations and rulings issued thereunder by any govern mental
authority.
1.15 "Contracts" shall mean the Boston Contracts and the Washington
Contracts.
1.16 "Cut-Off Time" shall mean 12:01 a.m., local time, on the Closing
Date.
1.17 "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.
1.18 "FCC Applications" shall mean the Boston FCC Application and the
Washington FCC Application.
1.19 "FCC Consents" shall mean the action by the FCC granting each of the
FCC Applications.
1.20 "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 (the "Communications Act"), and the rules
and regulations of the FCC, has expired.
4
<PAGE>
1.21 "Financial Statements" shall mean the Boston Financial Statements and
the Washington Financial Statements.
1.22 "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.
1.23 "HSRA" shall mean the Hart-Scott-Rodino Antitrust Im provements Act
of 1976, as amended, and the regulations adopted thereunder.
1.24 "Liens" shall mean all debts, liens, charges, security interests,
mortgages, pledges, judgments, trusts, adverse claims, liabilities, encumbrances
and other impairments of title.
1.25 "Non-LMA Contracts" shall mean the Boston Non-LMA Contracts and the
Washington Non-LMA Contracts.
1.26 "Permitted Liens" shall mean (i) carriers', materialmen's,
-
mechanics', workmen's, warehousemen's, repairmen's, vendors' or other similar
Liens arising in the ordinary course of business for sums not yet delinquent or
that are being contested in good faith, (ii) Liens for taxes, assessments or
--
governmental charges not yet due and payable and (iii) Liens of landlords
---
arising by operation of law for the payment of sums not yet due and payable.
1.27 "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.
1.28 "Real Property Leases" shall mean the Boston Real Property Leases and
the Washington Real Property Leases.
1.29 "Station Licenses" shall mean the Boston Station Licenses and the
Washington Station Licenses.
1.30 "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,
5
<PAGE>
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).
1.31 "Washington Assets" shall mean the Washington Contracts, the
Washington Intellectual Property, the Washington Personal Property, the
Washington Real Property Leases, the Washington Records and the Washington
Station Licenses.
1.32 "Washington 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 Washington Station or the Washington Assets, including,
without limitation, those contracts, agreements, purchase orders and leases set
forth on Schedules 5.6, 5.7 and 5.8 to this Agreement, but excluding the
--------------------------
Washington Real Property Leases and the contract with Research Group, Inc.
1.33 "Washington FCC Application" shall mean the application or
applications that GMI and Evergreen must file with the FCC requesting its
consent to the assignment of the Washington Station Licenses from GMI to
Evergreen.
1.34 "Washington Financial Statements" shall mean (i) the unaudited
balance sheets for the Washington Station as of September 30, 1994 and September
30, 1995, and the related statements of operations and cash flows for the fiscal
years then ended and (ii) the unaudited quarterly balance sheets for the
--
Washington Station as of December 31, 1995 and March 31, 1996, and the related
statements of operations and cash flows for the fiscal quarters then ended.
1.35 "Washington Intellectual Property" shall mean all right, title and
interest in and to the United 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 Washington
Station or the Washington Assets.
1.36 "Washington Non-LMA Contracts" shall mean those Washington Contracts
which are not assigned to Evergreen as of the Commencement Date (as defined in
the Washington Time Brokerage Agreement) because the requisite third
6
<PAGE>
party consents had not been obtained by that date but which will be assigned to
Evergreen as of the date such third party consents are obtained.
1.37 "Washington Personal Property" shall mean all equipment, office
furniture and fixtures, office materials and supplies, inventory, spare parts
and other tangible personal property used in, held for use in connection with or
necessary for the conduct of the business or operations of the Washington
Station or the Washington Assets.
1.38 "Washington Real Property Leases" shall mean the leases, subleases,
licenses and occupancy agreements, including any amendments thereto, relating to
real property used in, held for use in connection with or necessary for the
conduct of the business or operations of the Washington Station or the
Washington Assets, together with all easements and other appurtenances for the
benefit thereof.
1.39 "Washington Records" shall mean all files, records, logs, program
materials, programs, lists, music libraries, public inspection files that relate
to the Washington Station and all proprietary information and data, maps, plans,
diagrams, blueprints, schematics and technical drawings, engineering records,
and FCC applications and filings maintained with respect to the Washington
Station pursuant to the rules and regulations of the FCC.
1.40 "Washington Station Licenses" shall mean the licenses, permits and
other authorizations issued by the FCC, the FAA and any other federal, state or
local governmental or regulatory authorities in connection with the business or
operations of the Washington Station or the Washington Assets, including,
without limitation, those specified in Schedule 5.4.
------------
ARTICLE II
EXCHANGE OF ASSETS
------------------
2.1 Exchange of Personal Property and Records. At the Closing, (a)
------------------------------------------ -
Evergreen shall assign, transfer, convey and deliver or cause to be assigned,
transferred, conveyed or delivered to GMI (i) the Boston Personal Property and
-
(ii) the Boston Records and (b) GMI shall assign, transfer, convey and deliver
- --- -
or cause to be assigned, transferred, conveyed or delivered to Evergreen (i)
-
the Washington Personal Property and (ii) the Washington Records.
--
2.2 Exchange of Real Property Leases. At the Closing, (a) Evergreen
-------------------------------- -
shall assign or cause to be assigned to GMI all of its rights and privileges
under the Boston Real Property Leases which have not been assigned to GMI under
the Boston
7
<PAGE>
Time Brokerage Agreement and (b) GMI shall assign or cause to be assigned to
-
Evergreen all of its rights and privileges under the Washington Real Property
Leases which have not been assigned to Evergreen under the Washington Time
Brokerage Agreement.
2.3 Exchange of Non-LMA Contracts. At the Closing, (a) Evergreen shall
----------------------------- -
assign or cause to be assigned to GMI all of its rights and privileges under the
Boston Non-LMA Contracts and (b) GMI shall assign or cause to be assigned to
-
Evergreen all of its rights and privileges under the Washington Non-LMA
Contracts.
2.4 Exchange of Station Licenses. At the Closing, (a) Evergreen shall
---------------------------- -
assign or cause to be assigned to GMI all of Evergreen's right, title and
interest in and to the Boston Station Licenses and (b) GMI shall assign or cause
-
to be assigned to Evergreen all of GMI's right, title and interest in and to the
Washington Station Licenses.
2.5 Exchange of Intellectual Property. At the Closing, (a) Evergreen
--------------------------------- -
shall assign or cause to be assigned to GMI the Boston Intellectual Property and
(b) GMI shall assign or cause to be assigned to Evergreen the Washington
-
Intellectual Property.
2.6 Appraisals; Tax Reporting. (a) Evergreen and GMI agree that the
-------------------------
fair market value of each asset included in the Washington Assets and the Boston
Assets will be determined on the basis of the appraisals (the "Appraisals")
prepared by the firm of Bond & Pecaro, whose fee and expenses shall be equally
borne by Evergreen and GMI. The parties shall direct Bond & Pecaro to deliver
Appraisals within 30 days from the Closing and to set forth in the Appraisals
the fair market value of each asset included in the Washington Assets and the
Boston Assets.
(b) Within 30 days of receipt of the Appraisals, GMI shall prepare a draft
schedule (the "Draft Section 1031 Schedule") that sets forth the "exchange
groups" and "residual group" (each within the meaning of Treas. Reg. section
1.1031(j)-1) together with each asset included in the Washington Assets and the
Boston Assets that belongs to the relevant exchange group or residual group, and
send the Draft Section 1031 Schedule to Evergreen for review. Within 30 days of
receipt of the Draft Section 1031 Schedule, Evergreen shall send to GMI written
comments thereon. Evergreen and GMI shall cooperate in good faith to resolve
any issues relating to the Draft Section 1031 Schedule in order to agree on a
single section 1031 schedule (the "Section 1031 Schedule").
(c) Each of Evergreen and GMI shall cause to be prepared in a timely
fashion a draft of IRS Form 8824 for itself on the basis of the Appraisals and
the Section 1031 Schedule. Each of Evergreen and GMI shall deliver drafts of
their
8
<PAGE>
respective IRS Forms 8824 to the other for approval, which approval shall not be
unreasonably withheld or delayed.
(d) Each of Evergreen and GMI shall cause to be prepared in a timely
fashion a draft of IRS Form 8594 for itself in a manner consistent with the
Appraisals, the Section 1031 Schedule and IRS Form 8824 prepared in accordance
with clauses (b) and (c) above, reflecting (x) the allocation of consideration
-
exchanged by it among the assets acquired based on the respective fair market
values of the relevant assets as set forth in the Appraisals and in accordance
with section 1060 of the Code and (y) such other information as required by
-
section 1060 of the Code and IRS Form 8594. Each of Evergreen and GMI shall
deliver drafts of their respective IRS Forms 8594 to the other for approval,
which approval shall not be unreasonably withheld or delayed.
(e) Each of Evergreen and GMI shall report the transactions contemplated
hereby as a "like-kind exchange" to the maximum extent permissible under section
1031 of the Code, consistent with the Appraisals, the Section 1031 Schedule, and
IRS Forms 8594 and 8824 prepared in accordance with clauses (c) and (d) above,
and shall not take, and shall cause their respective Affiliates,
representatives, successors and assigns not to take, any position on any
federal, state or local tax return or report, or in any tax examination, tax
audit or tax litigation, inconsistent with such reporting position, the
Appraisals, the Section 1031 Schedule or such IRS Form 8594 or 8824, provided
--------
that either party may settle any tax audit or litigation if, in the reasonable,
good faith judgment of such party, to do so will be in the best interest of such
party, provided, however, that such party shall in good faith consult the other
-------- -------
party regarding such tax audit or litigation before settling such tax audit or
litigation. Each of Evergreen and GMI shall promptly give the other notice of
any disallowance of or challenge to such reporting by any taxing authority.
(f) Each of Evergreen and GMI shall cooperate with the other, including,
without limitation, in preparing IRS Forms 8594 and 8824 and executing all
necessary agreements and documents, to the extent necessary for Evergreen and
GMI to treat the exchange of the Washington Assets for the Boston Assets and the
exchange of the Boston Assets for the Washington Assets as a "like-kind
exchange" pursuant to section 1031 of the Code.
(g) Notwithstanding any other provision of this Agreement, the provisions
of this Section 2.6 shall survive the Closing without limitation.
2.7 Excluded Assets. (a) Notwithstanding anything to the contrary set
---------------
forth herein, the Boston Assets shall not include the following:
9
<PAGE>
(i) all accounts receivable arising out of or relating to the
operation of the Boston Station before 12:01 a.m., local time, on the
Commencement Date (as defined in the Boston Time Brokerage Agreement);
(ii) all books and records that Evergreen is required by law to
retain, and all payables records and invoices, provided that, at GMI's
request, Evergreen shall provide GMI, at Evergreen's expense, with copies
of such records covering the period that Evergreen was licensee of the
Boston Station;
(iii) all books, records, and other intangible assets related solely
to Evergreen's internal corporate matters and not related to the operation
of the Boston Station;
(iv) 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 what soever relating to Taxes and fees for which Evergreen is the
responsible party;
(v) without in any way limiting GMI's rights under the Time Brokerage
Agreements, Evergreen's cash on hand as of the Cut-Off Time and all other
cash in any bank account of Evergreen; any and all cash equivalents,
certificates of deposit, bonds, repurchase agreements, letters of credit,
mar ketable securities, or other similar items;
(vi) all insurance policies, except for any rights thereunder that may
be assigned to GMI pursuant to Section 17.1; and
(vii) all Boston Employee Plans, including all trusts and other
funding arrangements and the assets thereof.
(b) Notwithstanding anything to the contrary set forth herein, the
Washington Assets shall not include the following:
(i) all accounts receivable arising out of or relating to the
operation of the Washington Station before 12:01 a.m., local time, on the
Commencement Date (as defined in the Washington Time Brokerage Agreement);
(ii) all books and records that GMI is required by law to retain, and
all payables records and invoices, provided that, at Evergreen's request,
GMI shall provide Evergreen, at GMI's expense, with copies of such records
covering the period that GMI was licensee of the Washington Station;
10
<PAGE>
(iii) all books, records, and other intangible assets related solely
to GMI's internal corporate matters and not related to the operation of the
Washington Station;
(iv) 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 what soever relating to Taxes and fees for which GMI is the
responsible party;
(v) without in any way limiting Evergreen's rights under the Time
Brokerage Agreements, GMI's cash on hand as of the Cut-Off Time and all
other cash in any bank account of GMI; any and all cash equivalents,
certificates of deposit, bonds, repurchase agreements, letters of credit,
mar ketable securities, or other similar items;
(vi) all insurance policies, except for any rights thereunder that may
be assigned to Evergreen pursuant to Section 17.1; and
(vii) all Washington Employee Plans, including all trusts and other
funding arrangements and the assets thereof.
2.8 Liens. Evergreen covenants that the Boston Assets shall be assigned
-----
to GMI free and clear of all Liens, except for Permitted Liens. GMI covenants
that the Washington Assets shall be assigned to Evergreen free and clear of all
Liens, except for Permitted Liens.
2.9 Assumption of Liabilities. (a) Evergreen shall not assume or
-------------------------
undertake to pay, satisfy or discharge any liabilities, obligations, commitments
or responsibilities of GMI except for those arising under Washington Contracts
and Washington Real Property Leases assumed by Evergreen under the Washington
Time Brokerage Agreement or this Agreement and then with respect to any such
Washington Contract or Washington Real Property Lease only those liabilities,
obligations, commitments and responsibilities accruing after and relating
exclusively to the operation of the Washington Station after the date on which
such Washington Contract or Washington Real Property Lease was assumed.
(b) GMI shall not assume or undertake to pay, satisfy or discharge any
liabilities, obligations, commitments or responsibilities of Evergreen except
for those arising under Boston Contracts or Boston Real Property Leases assumed
by GMI under the Boston Time Brokerage Agreement or this Agreement and then with
respect to any such Boston Contract or Boston Real Property Lease only those
liabilities, obligations, commitments and responsibilities accruing after and
relating exclusively to the operation of the Boston Station after the date on
which such Boston Contract or Boston Real Property Lease was assumed.
11
<PAGE>
ARTICLE III
CLOSING
-------
3.1 Closing. Subject to the terms and conditions of this Agreement, the
-------
closing of this transaction (the "Closing") shall take place on a Business Day
to be agreed upon by the parties hereto 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 on such other date as the parties may agree.
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.
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 60 days after the date of this Agreement GMI and
Evergreen shall file the FCC Applications. GMI and Evergreen shall thereafter
prosecute the FCC Applications with all reasonable diligence and otherwise use
their reasonable best efforts to obtain the grant of the FCC Applications as
expeditiously as practicable. Neither party shall have any obligation to
satisfy any complainant or the FCC by taking any steps which would have a
material adverse effect upon such party or upon any of its Affiliates, 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 either 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 with any
-------- -------
condition that would have a material adverse effect upon it or any of its
Affiliates. If reconsideration or judicial review is sought with respect to
either 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. GMI and Evergreen shall make or cause to be
--------------------
made in a timely fashion, and in any event within 15 Business Days after the
date of this Agreement, all filings which are required in connection with the
transactions
12
<PAGE>
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 GMI
-------------------------------------
GMI represents and warrants to Evergreen, in each case to the knowledge of
GMI (except with respect to the matters set forth in Section 5.20), as follows:
5.1 Organization and Standing. GMI 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 each jurisdiction where
such qualification is necessary, all of which jurisdictions are listed on
Schedule 5.1, and GMI has all necessary corporate power and authority under its
- ------------
certificate of incorporation and by-laws to own, lease and operate the
Washington Assets and to carry on the business and operations of the Washington
Station as now conducted and as proposed to be conducted by it between the date
hereof and the Closing Date.
5.2 Authorization and Binding Obligation. GMI has all necessary
------------------------------------
corporate power and authority to enter into and perform its obligations under
this Agreement, the Time Brokerage Agreements and the transactions contemplated
hereby and thereby, and GMI's execution, delivery and performance of this
Agreement and the Time Brokerage Agreements have been duly and validly
authorized by all necessary corporate action on its part. This Agreement and
the Time Brokerage Agreements have been duly executed and delivered by GMI 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 Absence of Conflicting Agreements or Required Consents. Except as
------------------------------------------------------
set forth in Article IV with respect to governmental consents or disclosed in
13
<PAGE>
Schedule 5.3 or 5.8, the execution, delivery and performance of this Agreement
- -------------------
and the Time Brokerage Agreements by GMI (a) do not require the consent of any
-
third party; (b) will not violate any provision of GMI'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 GMI is a party or by which it or the Washington 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 Washington Contract, Washington Real Property Lease or Washington
Station License; and (e) will not result in the creation of any Lien on any of
-
the Washington Assets.
5.4 Governmental Authorization. Schedule 5.4 contains a true and
-------------------------- ------------
complete list of the Washington 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 Washington Station in the manner and to the full extent it is now conducted.
GMI is the valid and legal holder of the Washington 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 Washington Station in the manner
and to the full extent it is now conducted. GMI has delivered to Evergreen true
and complete copies of the Washington Station Licenses, including any and all
amendments and other modifications thereto. Except as may be set forth in
Schedule 5.4, GMI 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 Washington Station other than pro ceedings
affecting the broadcasting industry generally or in-market rule makings or other
public proceedings not specifically relating to the Washington Station nor are
any such actions threatened. The Washington Station Licenses were validly
issued and are in full force and effect and GMI has no knowledge that they are
impaired by any act or omission of GMI or any of its Affiliates, or the
officers, employees or agents of GMI or any of its Affiliates. The Washington
Station is being operated in all material respects in accordance with the terms
and conditions of the Washington 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 GMI with respect
to the Washington Station have been timely filed with the FCC, and all such
reports, applications and other documents are true and complete. GMI has no
reason to believe that the FCC will not renew the Washington Station Licenses in
the ordinary course for a full term without any material qualifications. There
are no facts which, under the Communications Act or the existing rules and
regulations of the FCC, would disqualify GMI from assigning the Washington
Station Licenses or from consummating the transactions contemplated herein or by
the Time Brokerage Agreements within the times contemplated herein or therein.
GMI maintains an appropriate public inspection file at the Washington
Station's studio in accordance with
14
<PAGE>
FCC rules. Schedule 5.4 contains a true and complete list of all governmental
------------
and regulatory consents, approvals and waivers required in connection with the
transactions contemplated hereby.
5.5 Washington Real Property Leases. (a) Schedule 5.5(a) contains a
------------------------------- ---------------
true and complete list of all Washington Real Property Leases. No real property
other than that listed on Schedule 5.5(a) is used in, held for use in connection
---------------
with or necessary for the conduct of the business or operations of the
Washington Station.
(b) Except as set forth on Schedule 5.5 (b), (i) the improvements upon
---------------- -
each parcel of real property leased by GMI and the current use and operation of
such real property conforms 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 GMI
has not received any written notice of any such nonconformity, (ii) the premises
--
which are the subject of the Washington Real Property Leases are zoned for the
purposes for which they are currently being used by GMI, (iii) the improvements
---
on the premises which are the subject of the Washington Real Property Leases are
in good working condition and repair, (iv) there is no pending, threatened, or
--
contemplated action to take by eminent domain or otherwise to condemn any
portion of any premises which are the subject of the Washington Real Property
Leases, (v) each Washington Real Property Lease is legal, valid, binding,
-
enforceable and in full force and effect and (vi) neither GMI nor any other
--
party is in default, violation or breach under any Washington Real Property
Lease where any such default, violation or breach, either individually or
together with any other such defaults, violations or breaches, would reasonably
be expected to have a material adverse effect on the assets, business or
financial condition of the Washington Station, and no event has occurred and is
continuing that constitutes or, with notice or the passage of time or both,
would constitute a material default, violation or breach thereunder.
5.6 Title to and Condition of Washington Personal Property. Schedule 5.6
------------------------------------------------------ ------------
lists all Washington Personal Property which has an individual value of $1,000
or more. Except as described in Schedule 5.6, all of the items of Washington
------------
Personal Property included in the Washington 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 Washington Station.
5.7 Washington Intellectual Property. Schedule 5.7 contains a true and
-------------------------------- ------------
complete list and description of all Washington Intellectual Property. The
Washington Intellectual Property is either owned or validly licensed by GMI and
Schedule 5.7
- ------------
15
<PAGE>
identifies which Intellectual Property is so owned and which is so licensed. GMI
has delivered to Evergreen copies of all material documents regarding Washington
Intellectual Property, if any, which establishes such rights, licenses or other
authority. GMI has no knowledge of any pending or threatened proceeding or
litigation affecting, or with respect to, any Washington Intellectual Property.
GMI is in compliance in all material respects with the terms of any license of
any Washington Intellectual Property and GMI has received no notice and GMI has
no knowledge of any infringement or unlawful use of any Washington Intellectual
Property. The conduct of the business of the Washington Station does not
infringe the rights of any third party in respect of any Washington Intellectual
Property. GMI has not sold, licensed or otherwise disposed of any Washington
Intellectual Property to any Person and GMI has not agreed to indemnify any
Person for any patent, trademark or copyright infringement. Schedule 5.7 lists
------------
all of the Washington 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.
5.8 Washington Contracts. (a) Schedule 5.8 lists all (i) employment
-------------------- ------------ -
agreements relating to employees of the Washington Station for which the base
salary payable by the employer exceeds $30,000 per year and (ii) all other
--
Washington Contracts which involve payment to or from the Washington Station in
excess of $50,000 during the term of such Contract, except (i) leases for
-
Washington Personal Property which are described in Schedule 5.6 and (ii)
------------ --
licenses for Washington Intellectual Property which are described in Schedule
--------
5.7.
- ---
(b) GMI has delivered to Evergreen true and complete copies of all written
Washington Contracts, or true and complete memoranda describing the terms of all
oral Washington Contracts. GMI has complied in all material respects with all
Washington Contracts to be assumed by Evergreen hereunder or under the
Washington Time Brokerage Agreement and is not in default under any of the
Washington Contracts to be assumed by Evergreen hereunder or under the
Washington Time Brokerage Agreement where any such default, either individually
or together with any other such defaults, would reasonably be expected to have a
material adverse effect on the assets, business or financial condition of the
Washington Station. GMI has not granted or been granted any material waiver or
forbearance with respect to any of the Washington Contracts. No other
contracting party is in default under any of the Washington Contracts to be
assumed by Evergreen hereunder or under the Washington Time Brokerage Agreement
where such default, either individually or together with any other such
defaults, would reasonably be expected to have a material adverse effect on the
assets, business or financial condition of the Washington Station. Except as set
forth in Schedule 5.8, GMI has full legal power and authority to assign its
------------
rights under the Washington Contracts to be assumed by Evergreen hereunder or
under the Washington Time Brokerage Agreement to Evergreen on terms and
conditions no less favorable than those in effect on the date hereof, and such
assignment will not require
16
<PAGE>
the consent of any third party or affect the validity, enforceability and
continuity of any of the Washington Contracts to be assumed by Evergreen
hereunder or under the Washington Time Brokerage Agreement.
5.9 Personnel Information. (a) GMI has previously delivered to
---------------------
Evergreen a true and complete list of all persons employed at the Washington
Station, each such person's compensation and bonus arrangements and the
Washington Employee Plans listed in Schedule 5.10, if any, applicable to each
-------------
such person. GMI is not a party to any agreement or arrangement, written or
oral, with salaried or non-salaried employees except as described in Schedules
---------
5.8 and 5.10. Except as described in Schedule 5.9, GMI has no knowledge that
- ------------ ------------
any employee of the Washington Station currently plans to terminate employment,
whether by reason of the transactions contemplated by this Agreement, the
Washington Time Brokerage Agreement or otherwise.
(b) Except as disclosed in Schedule 5.10, GMI is not a party to or subject
-------------
to any Washington Contract with any labor organization, nor has GMI 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
GMI at the Washington Station. There are no pending unfair labor practice
charges relating to the Washington Station and there are no pending or
threatened strikes, arbitration proceedings involving labor matters or other
labor disputes affecting the Washington Station.
5.10 Employee Benefit Plans. Schedule 5.10 sets forth a true and
---------------------- -------------
complete list of each employee or retiree benefit or compensation plan within
the meaning 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 Washington Radio is
bound or that is or has been established or maintained or in respect of which
Washington Radio has ever had any obligation to contribute (each, a "Washington
Employee Plan"). Except pursuant to a Washington Employee Plan, Washington
Radio has no fixed or contingent liability or obligation to or in respect of any
person now or formerly employed at the Washington 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' com
pensation. Washington Radio has neither incurred nor reasonably expects to incur
(either directly or indirectly, including as a result of any indemnification
obligation)
17
<PAGE>
any liability that could become a liability of Evergreen 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 no event,
transaction or condition has occurred or exists which could result in any such
liability. Each of the Washington 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. Washington Radio has made all
material contributions to all multiemployer pension and welfare benefit plans
within the meaning of Title I of ERISA.
5.11 Litigation. GMI is not subject to any judgment, award, order, writ,
----------
injunction, arbitration decision or decree affecting the Washington Station or
any of the Washington 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 Agreements. Except as set forth in
Schedule 5.11, there is no claim, litigation, proceeding or investigation
- -------------
pending or threatened, against or affecting the Washington Station or any of the
Washington 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 GMI in connection with this
Agreement or the Time Brokerage Agreements.
5.12 Compliance with Laws. (a) GMI is operating in material compliance
--------------------
with all laws, regulations and governmental orders applicable to the conduct of
the business and operations of the Washington Station, and its use of the
Washington Assets does not violate any such laws, regulations or orders in any
material respect.
(b) (i) the Washington 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 Washington Station's transmissions or the public's
reception of such transmissions.
5.13 Transaction with Affiliates. Except as set forth on Schedule 5.13,
--------------------------- -------------
all of the Washington Assets are owned or leased by GMI, and no Affiliate of GMI
or any other Person owns or leases property or is a party, including, without
limitation, as lessor or lessee, to any Washington Contract or Washington Real
Property Lease affecting or relating to the operations of the Washington
Station. Neither GMI nor any Affiliate of GMI owns, directly or indirectly, on
an individual or joint basis, any material interest in any third party which is
a party to any Washington Contract. There are no agreements, arrangements or
understandings between GMI and any third party pursuant to which the Washington
Station receives, as a result of its ownership by
18
<PAGE>
GMI, discounts, bonuses or other favorable arrangements that will not be
available to the Washington Station after the Closing.
5.14 Washington Financial Statements. Schedule 5.14 contains true and
------------------------------- -------------
complete copies of the Washington Financial Statements. The Washington
Financial Statements have been prepared in accordance with United States
generally accepted accounting principles ("GAAP") consistently applied. The
Washington Financial Statements accurately reflect and fairly present in all
material respects the financial condition and the results of the operations and
cash flows of the Washington Station as of the dates and for the periods
indicated. Except for liabilities or obligations (a) as and to the extent
-
expressly reflected or reserved against on the balance sheet of the Washington
Station as of March 31, 1996 included in the Washington Financial Statements,
(b) incurred since March 31, 1996 in the ordinary course of business, (c) which
- -- -
in the aggregate are not material to GMI or (d) disclosed on Schedule 5.14, GMI
- -------------
has no liabilities or obligations of any nature, whether accrued, absolute,
contingent or otherwise, relating to the Washington Station.
5.15 Absence of Changes or Events. Except as disclosed in Schedule 5.15,
---------------------------- -------------
since March 31, 1996, the operations and business of the Washington Station have
been conducted in all material respects only in the ordinary course and GMI has
not, except in the ordinary course of business, purchased, sold, assigned or
otherwise transferred any of the Washington Assets.
5.16 Insurance. The business, properties (including the Washington
---------
Assets) and employees of the Washington Station are insured against loss, damage
or injury in amounts listed in Schedule 5.16, which shows all insurance policies
-------------
held by GMI 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. All
such insurance policies are in full force and effect.
5.17 Taxes. Except for any Taxes imposed in connection with the
-----
Washington Time Brokerage Agreement, no event has occurred or condition exists
that could result in any liability being imposed on Evergreen by any taxing
authority for any Taxes due or to become due of GMI for any taxable period, or
imposed with respect to the Washington Assets for any taxable period or portion
thereof ending on or before the Cut-Off Time.
5.18 Environmental Matters. (a) Except as set forth in Schedule 5.18,
--------------------- -------------
all operations and uses of the premises which are the subject of the Washington
Real Property Leases are in compliance with all Environmental Laws. GMI has
obtained all environmental, health and safety permits necessary for the
operation of the Washington Station, and all such permits are in full force and
effect and GMI is in compliance with
19
<PAGE>
the terms and conditions of all such permits. GMI has not received any notice,
and GMI is not aware of, any administrative or judicial investigations,
proceedings or actions with respect to violations, alleged or proven, of
Environmental Laws by GMI or any tenants or subtenants of GMI, or otherwise
involving the premises which are the subject of the Washington Real Property
Leases.
(b) Except as set forth in Schedule 5.18, there has been no release (nor
-------------
is there any substantial threat of a release) of any Hazardous Substance at or
from the premises which are the subject of the Washington Real Property Leases
in amounts or concentrations requiring remediation under or that would violate
current Environmental Laws. Except as set forth in Schedule 5.18, there are no
-------------
Hazardous Substances present on the premises which are the subject of the
Washington Real Property Leases 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 Schedule 5.18, there
-------------
are no underground storage tanks, or underground piping associated with such
tanks, on the premises which are the subject of the Washington Real Property
Leases. The representations and warranties set forth in Sections 5.4, 5.11 and
5.12 shall not apply to environmental matters and instead the representations
and warranties set forth in this Section 5.18 shall apply.
5.19 Bankruptcy. No insolvency proceedings of any character, including,
----------
without limitation, bankruptcy, receivership, reorganization, composition or
arrangement with creditors, voluntary or involuntary, affecting GMI or any of
the Washington Assets, are pending or threatened, and GMI has not 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.
5.20 Washington Assets. Except as set forth in Schedule 5.20, GMI has
----------------- -------------
good and valid title to the Washington Assets free and clear of all Liens,
except for Permitted Liens. GMI owns or has the right to use all of the
Washington Assets necessary to operate the Washington Station as currently
conducted.
5.21 Foreign Investment in Real Property Tax Act. GMI is not a "foreign
-------------------------------------------
person" within the meaning of Section 1445 of the Code, and GMI shall deliver to
Evergreen at Closing an affidavit to this effect.
5.22 Disclosure. None of this Agreement or any certificate or other
----------
document delivered in connection with the transactions contemplated by this
Agree ment 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.
20
<PAGE>
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF EVERGREEN
-------------------------------------------
Evergreen represents and warrants to GMI, in each case to the knowledge of
Evergreen (except with respect to the matters set forth in Section 6.20), as
follows:
6.1 Organization and Standing. Evergreen 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 each
jurisdiction where such qualification is necessary, all of which jurisdictions
are listed on Schedule 6.1, and Evergreen has all necessary corporate power and
------------
authority under its certificate of incorporation and by-laws to own, lease and
operate the Boston Assets and to carry on the business and operations of the
Boston 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. Evergreen has all necessary
------------------------------------
corporate power and authority to enter into and perform its obligations under
this Agreement, the Time Brokerage Agreements and the transactions contemplated
hereby and thereby, and Evergreen's execution, delivery and performance of this
Agreement and the Time Brokerage Agreements have been duly and validly
authorized by all necessary corporate action on its part. This Agreement and
the Time Brokerage Agreements have been duly executed and delivered by Evergreen
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 Agreements by Evergreen (a) do not require the consent of
-
any third party; (b) will not violate any provision of Evergreen'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 Evergreen is a party or by which it or the Boston 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 Boston Contract or Boston Station License; and (e) will not result in
-
the creation of any Lien on any of the Boston Assets.
6.4 Governmental Authorization. Schedule 6.4 contains a true and
-------------------------- ------------
complete list of the Boston Station Licenses, and there are no other licenses,
permits or
21
<PAGE>
other authorizations from governmental or regulatory authorities required for
the lawful conduct of the business and operations of the Boston Station in the
manner and to the full extent it is now conducted. Evergreen is the valid and
legal holders of the Boston 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 Boston Station in the manner and to the full
extent it is now conducted. Evergreen has delivered to GMI true and complete
copies of the Boston Station Licenses, including any and all amendments and
other modifications thereto. Except as may be set forth in Schedule 6.4,
------------
Evergreen 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 Boston Station other than proceedings affecting
the broadcasting industry generally or in-market rule makings or other public
proceedings not specifically relating to the Boston Station nor are any such
actions threatened. The Boston Station Licenses were validly issued and are in
full force and effect and Evergreen has no knowledge that they are impaired by
any act or omission of Evergreen or any of its Affiliates, or the officers,
employees or agents of Evergreen or any of its Affiliates. The Boston Station
is being operated in all material respects in accordance with the terms and
conditions of the Boston 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 Evergreen with
respect to the Boston Station have been timely filed with the FCC, and all such
reports, applications and other documents are true and complete. Evergreen has
no reason to believe that the FCC will not renew the Boston Station Licenses in
the ordinary course for a full term without any material qualifications. There
are no facts which, under the Communications Act or the existing rules and
regulations of the FCC, would disqualify Evergreen from assigning the Boston
Station Licenses or from consummating the transactions contemplated herein or by
the Time Brokerage Agreements within the times contemplated herein or therein.
Evergreen maintains an appropriate public inspection file at the Boston
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 Boston Real Property Leases. (a) Schedule 6.5(a) contains a true
--------------------------- ---------------
and complete list of all Boston Real Property Leases. No real property other
than that listed on Schedule 6.5(a) is used in, held for use in connection with
---------------
or necessary for the conduct of the business or operations of the Boston
Station.
(b) Except as set forth on Schedule 6.5 (b), (i) the improvements upon
---------------- -
each parcel of real property leased by Evergreen and the current use and
operation of such real property conforms 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 Evergreen has not received
22
<PAGE>
any written notice of any such nonconformity, (ii) the premises which are the
--
subject of the Boston Real Property Leases are zoned for the purposes for which
they are cur rently being used by Evergreen, (iii) the improvements on the
---
premises which are the subject of the Boston Real Property Leases are in good
working condition and repair, (iv) there is no pending, threatened, or
--
contemplated action to take by eminent domain or otherwise to condemn any
portion of any premises which are the subject of the Boston Real Property
Leases, (v) each Boston Real Property Lease is legal, valid, binding,
-
enforceable and in full force and effect and (vi) neither Evergreen nor any
--
other party is in default, violation or breach under any Boston Real Property
Lease where any such default, violation or breach, either individually or
together with any other such defaults, violations or breaches, would reasonably
be expected to have a material adverse effect on the assets, business or
financial condition of the Boston Station, and no event has occurred and is
continuing that constitutes or, with notice or the passage of time or both,
would constitute a material default, violation or breach thereunder.
6.6 Title to and Condition of Boston Personal Property. Schedule 6.6
-------------------------------------------------- ------------
lists all Boston Personal Property which has an individual value of $1,000 or
more. Except as described in Schedule 6.6, all of the items of Boston Personal
------------
Property included in the Boston 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 Boston Station.
6.7 Boston Intellectual Property. Schedule 6.7 contains a true and
---------------------------- ------------
complete list and description of the Boston Intellectual Property. The Boston
Intellectual Property is either owned or validly licensed by Evergreen and
Schedule 6.7 identifies which Boston Intellectual Property is so owned and which
- ------------
is so licensed. Evergreen has delivered to GMI copies of all material documents
regarding Boston Intellectual Property, if any, which establishes such rights,
licenses or other authority. Evergreen has no knowledge of any pending or
threatened proceeding or litigation affecting, or with respect to, any Boston
Intellectual Property. Evergreen is in compliance in all material respects with
the terms of any license of any Boston Intellectual Property and Evergreen has
not received any notice and Evergreen has no knowledge of any infringement or
unlawful use of any Boston Intellectual Property. The conduct of the business of
the Boston Station does not infringe the rights of any third party in respect of
any Boston Intellectual Property. Evergreen has not sold, licensed or otherwise
disposed of any Boston Intellectual Property to any Person and Evergreen has not
agreed to indemnify any Person for any patent, trademark or copyright
infringement. Schedule 6.7 lists all of the Boston Intellectual Property which
------------
have been duly registered with, filed in or issued by, as the case may be, the
United
23
<PAGE>
States Patent and Trademark Office and United States Copyright Office or other
filing offices, domestic or foreign.
6.8 Boston Contracts. (a) Schedule 6.8 lists all (i) employment
---------------- ------------ -
agreements relating to employees of the Boston Station for which the base salary
payable by the employer exceeds $30,000 per year and (ii) all other Boston
--
Contracts which involve payment to or from the Boston Station in excess of
$50,000 during the term of such Boston Contract, except (i) leases for Boston
-
Personal Property which are described in Schedule 6.6 and (ii) licenses for
------------ --
Boston Intellectual Property which are described in Schedule 6.7.
------------
(b) Evergreen has delivered to GMI true and complete copies of all written
Boston Contracts, or true and complete memoranda describing the terms of all
oral Boston Contracts. Evergreen has complied in all material respects with all
Boston Contracts to be assumed by GMI hereunder or under the Boston Time
Brokerage Agreement and is not in default under any of the Boston Contracts to
be assumed by GMI hereunder or under the Boston Time Brokerage Agreement where
any such default, either individually or together with any other such defaults,
would reasonably be expected to have a material adverse effect on the assets,
business or financial condition of the Boston Station. Evergreen has not
granted or been granted any material waiver or forbearance with respect to any
of the Boston Contracts. No other contracting party is in default under any of
the Boston Contracts to be assumed by GMI hereunder or under the Boston Time
Brokerage Agreement where such default, either individually or together with any
other such defaults, would reasonably be expected to have a material adverse
effect on the assets, business or financial condition of the Boston Station.
Except as set forth in Schedule 6.8, Evergreen has full legal power and
------------
authority to assign its rights under the Boston Contracts to be assumed by GMI
hereunder or under the Boston Time Brokerage Agreement to GMI 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 Boston Contracts to be
assumed by GMI hereunder or under the Boston Time Brokerage Agreement.
6.9 Personnel Information. (a) Evergreen has previously delivered to
---------------------
GMI a true and complete list of all persons employed at the Boston Station, each
such person's compensation and bonus arrangements and the Boston Employee Plans
listed in Schedule 6.10, if any, applicable to each such person. Evergreen is
-------------
not 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, Evergreen has no knowledge that any employee of the
------------
Boston Station currently plans to terminate employment, whether by reason of the
transactions contemplated by this Agreement, the Boston Time Brokerage Agreement
or otherwise.
24
<PAGE>
(b) Except as disclosed in Schedule 6.10, Evergreen is not a party to or
-------------
subject to any Boston Contract with any labor organization, nor has Evergreen
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 Evergreen at the Boston Station. There are no pending unfair labor
practice charges relating to the Boston Station and there are no pending or
threatened strikes, arbitration proceedings involving labor matters or other
labor disputes affecting the Boston Station.
6.10 Employee Benefit Plans. Schedule 6.10 sets forth a true and
---------------------- -------------
complete list of each employee or retiree benefit or compensation 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
Bay State is bound or that is or has been established or maintained or in
respect of which Bay State has ever had any obligation to contribute (each, a
"Boston Employee Plan"). Except pursuant to a Boston Employee Plan, Bay State
has no fixed or contingent liability or obligation to or in respect of any
person now or formerly employed at the Boston 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 Bay State pursuant to section 414 of the Code. Bay State 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 GMI 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 no event, transaction or condition has
occurred or exists which could result in any such liability. Each of the Boston
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. Bay State has made all material contributions to all multiemployer pension
and welfare benefit plans within the meaning of Title I of ERISA.
6.11 Litigation. Evergreen is not subject to any judgment, award, order,
----------
writ, injunction, arbitration decision or decree affecting the Boston Station or
any of the Boston 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 Agreements. Except as set forth in
Schedule 6.11, there is no claim, litigation, proceeding or investigation
- -------------
pending or threatened, against or affecting the Boston Station or any of the
Boston Assets whether or not covered by insurance, which
25
<PAGE>
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
Evergreen in connection with this Agreement or the Time Brokerage Agreements.
6.12 Compliance with Laws. (a) Evergreen is operating in material
--------------------
compliance with all laws, regulations and governmental orders applicable to the
conduct of the business and operations of the Boston Station, and its use of the
Boston Assets does not violate any such laws, regulations or orders in any
material respect.
(b) (i) the Boston 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 Boston 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 Boston Assets are owned or leased by Evergreen, and no Affiliate of
Evergreen or any other Person owns or leases property or is a party, including,
without limitation, as lessor or lessee, to any Boston Contract or Boston Real
Property Lease affecting or relating to the operations of the Boston Station.
Neither Evergreen 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 Boston Contract. There are no agreements, arrangements or
understandings between Evergreen and any third party pursuant to which the
Boston Station receives, as a result of its ownership by Evergreen, discounts,
bonuses or other favorable arrangements that will not be available to the Boston
Station after the Closing.
6.14 Boston Financial Statements. Schedule 6.14 contains true and
--------------------------- -------------
complete copies of the Boston Financial Statements. The Boston Financial
Statements have been prepared in accordance with GAAP consistently applied. The
Boston Financial Statements accurately reflect and fairly present in all
material respects the financial condition and the results of the operations and
cash flows of the Boston Station as of the dates and for the periods indicated.
Except for liabilities or obligations (a) as and to the extent expressly
-
reflected or reserved against on the balance sheet of the Boston Station as of
December 31, 1995 included in the Boston Financial Statements, (b) incurred
-
since December 31, 1995 in the ordinary course of business, (c) which in the
-
aggregate are not material to Evergreen or (d) disclosed on Schedule 6.14,
- -------------
Evergreen has no liabilities or obligations of any nature, whether accrued,
absolute, contingent or otherwise, relating to the Boston Station.
6.15 Absence of Changes or Events. Except as disclosed in Schedule 6.15,
---------------------------- -------------
since December 31, 1995, the operations and business of the Boston Station have
26
<PAGE>
been conducted in all material respects only in the ordinary course and
Evergreen has not, except in the ordinary course of business, purchased, sold,
assigned or otherwise transferred any of the Boston Assets.
6.16 Insurance. The business, properties (including the Boston Assets)
---------
and employees of the Boston Station are insured against loss, damage or injury
in amounts listed in Schedule 6.16, which shows all insurance policies held by
-------------
Evergreen 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. All
such insurance policies are in full force and effect.
6.17 Taxes. Except for any Taxes imposed in connection with the Boston
-----
Time Brokerage Agreement, no event has occurred or condition exists that could
result in any liability being imposed on GMI by any taxing authority for any
Taxes, due or to become due of Evergreen for any taxable period, or imposed with
respect to the Boston Assets for any taxable period or portion thereof ending on
or before the Cut-Off Time.
6.18 Environmental Matters. (a) Except as set forth in Schedule 6.18,
--------------------- -------------
all operations and uses of the premises which is the subject of the Boston Real
Property Leases are in compliance with all Environmental Laws. Evergreen has
obtained all environmental, health and safety permits necessary for the
operation of the Boston Station, and all such permits are in full force and
effect and Evergreen is in compliance with the terms and conditions of all such
permits. Evergreen has not received any notice, and Evergreen is not aware of,
any administrative or judicial investigations, proceedings or actions with
respect to violations, alleged or proven, of Environmental Laws by Evergreen or
any tenants or subtenants of Evergreen, or otherwise involving the premises
which is the subject of the Boston Real Property Leases.
(b) Except as set forth in Schedule 6.18, there has been no release (nor
-------------
is there any substantial threat of a release) of any Hazardous Substance at or
from the premises which are the subject of the Boston Real Property Leases in
amounts or concentrations requiring remediation under or that would violate
current Environmental Laws. Except as set forth in Schedule 6.18, there are no
-------------
Hazardous Substances present on the premises which are the subject of the Boston
Real Property Leases 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 Schedule 6.18, there are no underground
-------------
storage tanks, or underground piping associated with such tanks, on the premises
which are the subject of the Boston Real Property Leases. The representations
and warranties set forth in Sections 6.4, 6.11
27
<PAGE>
and 6.12 shall not apply to environmental matters and instead the
representations and warranties set forth in this Section 6.18 shall apply.
6.19 Bankruptcy. No insolvency proceedings of any character, including,
----------
without limitation, bankruptcy, receivership, reorganization, composition or
arrangement with creditors, voluntary or involuntary, affecting Evergreen or any
of the Boston Assets, are pending or threatened, and Evergreen has not 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.
6.20 Boston Assets. Except as set forth in Schedule 6.20, Evergreen has
------------- -------------
good and valid title to the Boston Assets free and clear of all Liens, except
for Permitted Liens. Evergreen owns or has the right to use all of the Boston
Assets necessary to operate the Boston Station as currently conducted.
6.21 Foreign Investment in Real Property Tax Act. Evergreen is not a
-------------------------------------------
"foreign person" within the meaning of Section 1445 of the Code, and Evergreen
shall deliver to GMI at Closing an affidavit to this effect.
6.22 Disclosure. None of this Agreement or any certificate or other
----------
document delivered in connection with the transactions contemplated by this
Agree ment 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 mis leading.
ARTICLE VII
COVENANTS OF THE PARTIES
------------------------
7.1 Interim Operation. Evergreen, on the one hand, and GMI, on the other
-----------------
hand, agree that, except (a) as provided by or in furtherance of the Time
-
Brokerage Agreements, (b) as permitted by this Agreement or (c) with the prior
- -
written consent of the other party, between the date of this Agreement and the
Closing Date, each party will, with respect to the Station owned by it:
(i) not take any action which could result in the business or
operations of such Station not being conducted in the ordinary course of
business, consistent with past practices, and not take any action which
could adversely effect the ongoing operations and assets of such Station;
(ii) not sell, assign, lease or otherwise transfer or dispose of any
of the Boston Assets, in the case of Evergreen, or the Washington Assets,
in the case
28
<PAGE>
of GMI, unless the same shall be replaced with assets of equal or greater
value and utility;
(iii) not create, assume or permit to exist any Lien of any nature
whatsoever (except Permitted Liens) upon the Boston Assets, in the case of
Evergreen, or the Washington Assets, in the case of GMI, except for those
in existence on the date of this Agreement, all of which will be removed on
or prior to the Closing Date;
(iv) operate the Boston Station, in the case of Evergreen, or the
Washington Station, in the case of GMI, in all material respects in
accordance with the FCC's rules and regulations and the applicable Station
Licenses and with all other laws, regulations, rules and orders; and not
fail to prosecute with due diligence any pending application to the FCC,
and not cause or permit by any act, or failure to act, any of the Boston
Station Licenses, in the case of Evergreen, or the Washington Station
Licenses, in the case of GMI, to expire, be surrendered, adversely
modified, or otherwise terminated, or the FCC to institute any proceeding
for the suspension, revocation or material adverse modification of any such
Station Licenses;
(v) not waive any material right under any Non-LMA Contract or Station
License relating to the Boston Station or the Boston Assets, in the case of
Evergreen, or the Washington Station or the Washington Assets, in the case
of GMI;
(vi) not enter into any Non-LMA Contracts relating to the Boston
Station or the Boston Assets, in the case of Evergreen, or the Washington
Station or the Washington Assets, in the case of GMI;
(vii) 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;
(viii) maintain the insurance policies on the Boston Station and the
Boston Assets, in the case of Evergreen, and the Washington Station and the
Washington Assets, in the case of GMI listed in Schedule 6.16 and 5.16,
----------------------
respectively, or their equivalent; and
(ix) if the broadcast transmissions of the Boston Station or the
Washington Station from its main broadcast antenna at full authorized power
is interrupted or impaired, Evergreen, in the case of the Boston Station,
and GMI, in the case of the Washington Station, shall use its reasonable
best efforts to restore transmissions at full authorized power as soon as
reasonably possible.
29
<PAGE>
7.2 Access to the Stations. Without in any way limiting the rights and
----------------------
obligations of the parties under the Time Brokerage Agreements, between the date
of this Agreement and the Closing Date, each party hereto shall give the other
party and its counsel, accountants, lenders, engineers and other
representatives, reasonable access during normal business hours to all of such
party's properties, records and employees relating exclusively to the Station
being acquired hereunder by such other party, including the data underlying the
related Financial Statements, and shall furnish such other party with all
information that such party reasonably requests concerning such Station. The
rights of any party to access under this Section shall be exercised in such a
manner as to not interfere unreasonably with the business of the Station to be
acquired by it hereunder.
7.3 Third-Party Consents. (a) GMI at its own cost shall use all
--------------------
reasonable best efforts to obtain the consent of any third parties listed on
Schedule 4.3, 5.3 or 5.8 necessary for the assignment to Evergreen of any
- ------------------------
Washington Contract to be assigned hereunder or under the Washington Time
Brokerage Agreement.
(b) Evergreen at its own cost shall use all reasonable best efforts to
obtain the consent of any third parties listed on Schedule 4.3, 6.3 or 6.8
------------------------
necessary for the assignment to GMI of any Boston Contract to be assigned
hereunder or under the Boston Time Brokerage Agreement.
7.4 Notification. At all times prior to the Closing, each party hereto
------------
shall promptly notify the other party in writing of any fact, condition, event
or occurrence that will or could reasonably be expected to result in the failure
of any representation or warranty of such party made in this Agreement to be
true and complete in all material respects, promptly upon becoming aware of the
same.
7.5 No Inconsistent Action. No party 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
party shall willfully take any action that would disqualify or impair such party
as either (a) an assignor of the Station Licenses held by it or (b) a licensee
- -
or an owner and operator of the Station to be acquired by it hereunder.
7.6 Estoppel Certificates; Consent and Waiver. (a) Subject to Section
-----------------------------------------
11.1(c)(iv), Evergreen shall use all reasonable best efforts to obtain estoppel
certificates containing customary provisions and consents and waivers from any
lessor of any material Boston Asset that GMI requests at least 15 Business Days
before the Closing Date.
(b) Subject to Section 11.2(c)(iv), GMI shall use all reasonable best
efforts to obtain estoppel certificates containing customary provisions and
consents and
30
<PAGE>
waivers from any lessor of any material Washington Asset that Evergreen requests
at least 15 Business Days before the Closing Date.
(c) Each estoppel certificate obtained pursuant to this Section 7.6 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 the party
requesting such certificate that the lease is in full force and effect, that
there are no defaults that remain uncured with respect to such lease and that
the lessee has been and is in full compliance with all of such lessee's
obligations thereunder.
ARTICLE VIII
ADDITIONAL COVENANTS
--------------------
GMI and Evergreen 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 transactions contemplated by this Agreement.
8.2 Control of Stations. Without in any way limiting the rights and
-------------------
obligations of the parties under the Time Brokerage Agreements, prior to the
Closing, GMI shall not, directly or indirectly, control, supervise or direct the
operations of the Boston Station and Evergreen shall not, directly or
indirectly, control, supervise or direct the operations of the Washington
Station. Such operations shall be the sole responsibility of Evergreen, in the
case of the Boston Station, and GMI, in the case of the Washington Station, and,
subject to the provisions of Article VII, shall be in their complete discretion.
8.3 Employees. (a) As of the Commencement Date (as defined in the
---------
Washington Time Brokerage Agreement), GMI shall terminate all of the Washington
Station's employees, except as otherwise provided in the Washington Time
Brokerage Agreement. GMI shall be liable for all severance and other benefits
to which those persons employed by the Washington Station on or prior to the
Commencement Date are entitled as a result of their employment by GMI prior to
the Commencement Date under all Washington Employee Plans, applicable law or
otherwise.
31
<PAGE>
(b) As of the Commencement Date (as defined in the Boston Time
Brokerage Agreement), Evergreen shall terminate all of the Boston Station's
employees, except as otherwise provided in the Boston Time Brokerage Agreement.
Evergreen shall be liable for all severance and other benefits to which those
persons employed by the Boston Station on or prior to the Commencement Date are
entitled as a result of their employment by Evergreen prior to the Commencement
Date under all Boston Employee Plans, applicable law or otherwise.
8.4 Renewal of Contracts. Prior to the Closing, each party shall
--------------------
use its reasonable best efforts to renew any Non-LMA Contract to be assumed by
the other party 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 the other party.
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
Stations, the Boston Assets or the Washington 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, ad ministrative, 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
employee of the Station that is the subject of such request. 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.
(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
Boston Assets or the Washington Assets that are being exchanged hereunder, each
party shall give the other party notice of its intended action and an
opportunity for such other party to retain any of the books or records proposed
to be discarded or destroyed by such party.
8.6 Fairbanks Agreement. Following the Closing Date, Evergreen Media
-------------------
shall, upon the request of GMI, proceed diligently to exercise its rights,
including, without limitation, its right to indemnification, under the Asset
Purchase Agreement, dated October 12, 1995, between Evergreen Media and
Fairbanks Communications, Inc. GMI shall be entitled to receive from Evergreen
Media any amount actually received by Evergreen Media with respect to such
rights, less the reasonable fees and costs incurred by Evergreen Media in
exercising such rights.
32
<PAGE>
ARTICLE IX
CONDITIONS PRECEDENT TO GMI'S OBLIGATION TO CLOSE
-------------------------------------------------
The obligations of GMI 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 Evergreen 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 Evergreen 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 with respect to
the Boston Station shall have become a Final Order and shall contain no
condition that has or, in GMI's good faith judgment, will have a material
adverse effect upon the Boston 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. Evergreen shall have made all the deliveries set forth
----------
in Section 11.1.
9.5 WWRC. GMI shall have transferred substantially all of the assets
----
of WWRC to Evergreen or one or more of its Affiliates.
33
<PAGE>
ARTICLE X
CONDITIONS PRECEDENT TO
EVERGREEN'S OBLIGATION TO CLOSE
-------------------------------
The obligations of Evergreen 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 GMI 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 the terms, covenants and conditions to be complied with and
performed by GMI 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 with respect to
the Washington Station shall have become a Final Order and shall contain no
condition that has or, in Evergreen's good faith judgment, will have a material
adverse effect upon the Washington Station.
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 restraining or prohibiting the consummation of the transactions
contemplated by this Agreement shall be in effect.
10.4 Deliveries. GMI shall have made all the deliveries set forth in
----------
Section 11.2.
10.5 WWRC. Evergreen or one or more of its Affiliates shall have
----
acquired substantially all of the assets of WWRC.
34
<PAGE>
ARTICLE XI
DOCUMENTS TO BE DELIVERED AT THE CLOSING
----------------------------------------
11.1 Documents to be Delivered by Evergreen. At the Closing,
--------------------------------------
Evergreen shall deliver or cause to be delivered to GMI the following:
(a) certificates of Evergreen, dated the Closing Date, in form and
substance reasonably satisfactory to GMI, certifying to the fulfillment of
the conditions set forth in Section 9.1;
(b) opinion of counsel to Evergreen, dated the Closing Date, in form
and substance reasonably satisfactory to Evergreen and GMI;
(c) instruments of conveyance and transfer, in form and substance
reasonably satisfactory to counsel to GMI, effecting the assignment,
transfer, conveyance and delivery of the Boston Assets to GMI, including,
but not limited to, the following:
(i) assignments of the Boston Station Licenses;
(ii) bills of sale for all Boston Personal Property;
(iii) assignments of Boston Real Property Leases;
(iv) any estoppel certificates, consents and waivers obtained by
Evergreen pursuant to Section 7.6;
(v) assignment of the Boston Intellectual Property set forth on
Schedule 6.7; and
------------
(vi) assignments of any Boston Non-LMA Contracts;
(d) instruments, in form and substance reasonably satisfactory to
counsel to GMI, pursuant to which Evergreen assumes pursuant to Article II
the liabilities, obligations, commitments and responsibilities with respect
to the Washington Assets set forth in Section 2.9;
(e) certified resolutions of the board of directors of Evergreen,
authorizing the execution, delivery and performance of this Agreement and
the Time Brokerage Agreements;
35
<PAGE>
(f) an affidavit to the effect that Evergreen 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 GMI's
counsel.
11.2 Documents to be Delivered by GMI. At the Closing, GMI shall
--------------------------------
deliver or cause to be delivered to Evergreen the following:
(a) certificate of GMI, dated the Closing Date, in form and substance
reasonably satisfactory to Evergreen, certifying to the fulfillment of the
conditions specified in Section 10.1;
(b) opinion of counsel to GMI, dated the Closing Date, in form and
substance reasonably satisfactory to Evergreen and GMI;
(c) instruments of conveyance and transfer, in form and substance
reasonably satisfactory to counsel to Evergreen, effecting the assignment,
transfer, conveyance and delivery of the Washington Assets to Evergreen,
including, but not limited to, the following:
(i) assignments of the Washington Station Licenses;
(ii) bills of sale for all Washington Personal Property;
(iii) assignments of Washington Real Property Leases;
(iv) any estoppel certificates, consents and waivers obtained by
GMI pursuant to Section 7.6;
(v) assignment of the Washington Intellectual Property set forth
on Schedule 5.7; and
------------
(vi) assignments of any Washington Non-LMA Contracts;
(d) instruments, in form and substance reasonably satisfactory to
counsel to Evergreen, pursuant to which GMI assumes pursuant to Article II
the liabilities, obligations, commitments and responsibilities with respect
to the Boston Assets set forth in Section 2.9;
(e) certified resolutions of the board of directors of GMI,
authorizing the execution, delivery and performance of this Agreement and
the Time Brokerage Agreements;
36
<PAGE>
(f) an affidavit to the effect that GMI 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 counsel to
Evergreen.
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 Boston Assets and the Washington
Assets in accordance with this Agreement shall be allocated among the parties as
follows:
(a) Evergreen shall pay the HSRA filing fee associated with the
transfer of the Washington Station and GMI shall pay the HRSA filing fee
associated with the transfer of the Boston Station;
(b) Evergreen shall pay any and all Taxes that may be imposed by any
taxing authority in the nature of sales or use Taxes as a result of the
transfer of the Washington Assets from GMI to Evergreen, and GMI shall pay
any and all Taxes that may be imposed by any taxing authority in the nature
of sales or use Taxes as a result of the transfer of the Boston Assets from
Evergreen to GMI; and
(c) all other costs and expenses of transferring the Boston Assets and
the Washington Assets shall be divided equally between Evergreen and GMI.
As between Evergreen and GMI, 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.
37
<PAGE>
ARTICLE XIII
BROKER'S COMMISSION OR FINDER'S FEE
-----------------------------------
13.1 GMI's Representation and Agreement to Indemnify. GMI represents
-----------------------------------------------
and warrants to Evergreen 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. GMI further agrees to
indemnify and hold Evergreen 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 GMI.
13.2 Evergreen's Representation and Agreement to Indemnify. Evergreen
-----------------------------------------------------
represents and warrants to GMI 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. Evergreen further agrees
to indemnify and hold GMI 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 Evergreen.
ARTICLE XIV
INDEMNIFICATION
---------------
14.1 Indemnification by Evergreen. (a) General. Evergreen agrees
---------------------------- -------
to indemnify and hold harmless GMI, its Affiliates and the officers, directors,
employees, agents, advisers and representatives of GMI and its Affiliates ("GMI
Indemnitees") from and against, and pay or reimburse each GMI 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:
38
<PAGE>
(i) any inaccuracy of any representation or warranty made by Evergreen
herein or in any certificate, document or instrument delivered to GMI
pursuant to Section 11.1;
(ii) any failure of Evergreen to perform any covenant or agreement
hereunder;
(iii) any claims of third parties with respect to the business and
operations of the Boston Station or the ownership of the Boston Assets
prior to the Closing not expressly assumed by GMI under Section 2.9;
(iv) any liabilities, obligations, commitments or responsibilities of
Evergreen not expressly assumed by GMI under Section 2.9;
(v) the environmental conditions on, under, above, or about any
assets, equipment or facilities (other than the Boston Assets) owned,
leased or operated at any time by Evergreen, or any of its predecessors or
Affiliates;
(vi) any failure of Evergreen to comply with applicable bulk sales
laws (in consideration of which indemnification obligation GMI hereby
waives compliance by Evergreen with any applicable bulk sales laws);
(vii) any liabilities, obligations, commitments or responsibilities of
GMI expressly assumed by Evergreen pursuant to Section 2.9; and
(viii) the ownership of the Washington Assets or the operation of the
Washington Station subsequent to the Closing, except to the extent such
Loss results from any inaccuracy of any representation or warranty made by
GMI herein or in any certificate, document or instrument delivered to
Evergreen pursuant to Section 11.2 or any failure of GMI to perform any
covenant or agreement hereunder.
(b) Limitations on Indemnification.
------------------------------
(i) Notwithstanding anything in Section 14.1(a) of this Agreement to
the contrary, Evergreen 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, Evergreen shall be required to indemnify GMI
Indemnitees for all Losses indemnifiable under Section 14.1(a)(i) without
regard to such $200,000 limitation.
39
<PAGE>
(ii) Evergreen's 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 GMI Indemnitee under this Agreement
for breach of a representation or warranty contained in this Agree ment
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
----------------
16.1, subsequent to the Closing indemnification under this Section 14.1 shall be
the exclusive remedy of GMI Indemnitees with respect to any legal, equitable or
other claim for relief based upon this Agreement or the certificates, documents
and in struments delivered by Evergreen in connection herewith.
14.2 Indemnification by GMI. (a) General. GMI agrees to indemnify
---------------------- -------
and hold harmless Evergreen, its Affiliates and the officers, directors,
employees, agents, advisers and representatives of each such Person ("Evergreen
Indemnitees") from and against, and pay or reimburse each Evergreen Indemnitee
for, any and all Losses resulting from or arising out of:
(i) any inaccuracy in any representation or warranty made by GMI
herein or in any certificate, document or instrument delivered to Evergreen
pursuant to Section 11.2;
(ii) any failure of GMI to perform any covenant or agreement
hereunder;
(iii) any claims of third parties with respect to the business and
operations of the Washington Station or the ownership of the Washington
Assets prior to the Closing not expressly assumed by Evergreen under
Section 2.9;
(iv) any liabilities, obligations, commitments or responsibilities of
GMI not expressly assumed by Evergreen under Section 2.9;
(v) the environmental conditions on, under, above, or about any
assets, equipment or facilities (other than the Washington Assets) owned,
leased or operated at any time by GMI, or any of its predecessors or
Affiliates;
40
<PAGE>
(vi) any failure of GMI to comply with applicable bulk sales laws (in
consideration of which indemnification obligation Evergreen hereby waives
compliance by GMI with any applicable bulk sales laws);
(vii) any liabilities, obligations, commitments or responsibilities of
Evergreen expressly assumed by GMI pursuant to Section 2.9; and
(viii) the ownership of the Boston Assets or the operation of the
Boston Station subsequent to the Closing, except to the extent such Loss
results from any inaccuracy of any representation or warranty made by
Evergreen herein or in any certificate, document or instrument delivered to
GMI pursuant to Section 11.1 or any failure of Evergreen to perform any
covenant or agreement hereunder.
(b) Limitations on Indemnification.
------------------------------
(i) Notwithstanding anything in Section 14.2(a) of this Agreement to
the contrary, GMI 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, GMI shall be required to indemnify Evergreen
Indemnitees for all Losses indemnifiable under Section 14.2(a)(i) without
regard to such $200,000 limitation.
(ii) GMI'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 an Evergreen Indemnitee under this
Agreement for breach of a representation or warranty contained in this
Agree ment 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 Evergreen Indemnitees with respect to any legal,
equitable or other claim for relief based upon this Agreement or the
certificates, documents and instruments delivered by GMI in connection herewith.
41
<PAGE>
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 Indemnifying 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 indem nification
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 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 the
ability of the Indemnified to conduct the business of the Station acquired by
such Indemnified Party hereunder 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 litiga tion subject to this Section 14.3 and the records of each
shall be available to the other with respect to such defense.
42
<PAGE>
ARTICLE XV
TERMINATION RIGHTS
------------------
15.1 Termination. This Agreement may be terminated by either GMI or
-----------
Evergreen, 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 GMI or Evergreen:
(i) if the Closing has not occurred by June 30, 1997;
(ii) if the FCC denies either 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 GMI:
(i) pursuant to Section 17.1;
(ii) if the regular broadcast transmission of the Boston 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 Evergreen;
(iii) if any material representation or warranty of Evergreen made
herein or in any certificate, document or instrument delivered by Evergreen
hereunder is untrue or incomplete in any material respect and such breach
is not cured within 10 Business Days of Evergreen's receipt of written
notice from GMI that such breach exists or has occurred; or
(iv) if Evergreen 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 Evergreen's receipt of written notice from GMI that such default
exists or has occurred.
(c) by Evergreen:
43
<PAGE>
(i) pursuant to Section 17.1;
(ii) if the regular broadcast transmission of the Washington 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 GMI;
(iii) if any material representation or warranty of GMI made herein or
in any certificate, document or instrument delivered by GMI hereunder is
untrue or incomplete in any material respect and such breach is not cured
within 10 Business Days of GMI's receipt of written notice from Evergreen
that such breach exists or has occurred; or
(iv) if GMI 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 GMI's receipt of written notice from Evergreen 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 and 17.7 shall survive any such
termination.
ARTICLE XVI
REMEDIES UPON DEFAULT
---------------------
16.1 GMI's Remedies; Specific Performance. Evergreen recognizes
------------------------------------
that, in the event Evergreen defaults in the performance of its obligations to
close under this Agreement, monetary damages alone will not be adequate.
Therefore, unless GMI is in material default in the performance of its
obligations under this Agreement, GMI 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, Evergreen shall waive the defense that there is
another adequate remedy at law or equity and agrees that GMI shall have the
right to obtain specific performance of Evergreen's obligations under the terms
of this Agreement without being required to prove actual damages, post bond or
furnish other security. In addition, GMI shall be entitled to obtain from
Evergreen court costs and reasonable attorneys' fees incurred by it in enforcing
its rights
44
<PAGE>
hereunder. In the event GMI 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 Evergreen is in material breach or default
hereunder, then GMI shall be entitled to seek any remedy available at law,
including, without limitation, a suit for monetary damages.
16.2 Evergreen's Remedies; Specific Performance. GMI recognizes
------------------------------------------
that, in the event GMI defaults in the performance of its obligations to close
under this Agreement, monetary damages alone will not be adequate. Therefore,
unless Evergreen is in material default in the performance of its obligations
under this Agreement, Evergreen shall be entitled, in addition to any remedy
available at law, including, without limitation, a suit for monetary damages,
and their 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, GMI shall waive the defense that there is another adequate
remedy at law or equity and agrees that Evergreen shall have the right to obtain
specific performance of GMI's obligations under the terms of this Agreement
without being required to prove actual damages, post bond or furnish other
security. In addition, Evergreen shall be entitled to obtain from GMI court
costs and reasonable attorneys' fees incurred by them in enforcing their rights
hereunder. In the event Evergreen elects to terminate this Agreement under any
subsection of Section 15.1(a) or (c) as opposed to seeking specific performance
under this Section 16.2 and GMI is in material breach or default hereunder, then
Evergreen shall be entitled to seek any remedy available at law, including,
without limitation, a suit for monetary damages.
ARTICLE XVII
OTHER PROVISIONS
----------------
17.1 Risk of Loss. (a) The risk of loss or damage to any of the
------------
Boston Assets prior to the Cut-Off Time shall be upon Evergreen. Evergreen
shall repair, replace and restore to its prior condition any material damage to
or loss of Boston Assets as soon as possible. If Evergreen is unable or fails
to restore or replace a lost or damaged material Boston Asset prior to the
Closing Date, GMI may elect (i) to terminate this Agreement, but only if the
-
failure to restore or replace a lost or damaged material Boston 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(a), (ii) to consummate the
--
transactions contemplated by this Agreement on the Closing Date, in which event
Evergreen shall assign to GMI at Closing Evergreen's rights under any insurance
policy or pay over to GMI all proceeds of insurance covering such Boston Asset's
damage, destruction or loss or (iii) delay the Closing Date until a date within
---
45
<PAGE>
15 Business Days after Evergreen gives written notice to GMI of completion of
the restoration or replacement of such Boston Asset. If the delay in the
Closing Date under this Section 17.1(a) would cause the Closing to occur at any
time after the period permitted by the FCC Consent relating to the Boston
Station, Evergreen and GMI shall file an appropriate request with the FCC for an
extension of time within which to complete the Closing.
(b) The risk of loss or damage to any of the Washington Assets prior
to the Cut-Off Time shall be upon GMI. GMI shall repair, replace and restore to
its prior condition any material damage to or loss of Washington Assets as soon
as possible. If GMI is unable or fails to restore or replace a lost or damaged
material Washington Asset prior to the Closing Date, Evergreen may elect (i) to
-
terminate this Agreement, but only if the failure to restore or replace a lost
or damaged material Washington 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), (ii) to consummate the transactions contemplated by this
--
Agreement on the Closing Date, in which event GMI shall assign to Evergreen at
Closing GMI's rights under any insurance policy or pay over to Evergreen all
proceeds of insurance covering such Washington Asset's damage, destruction or
loss, or (iii) delay the Closing Date until a date within 15 Business Days after
---
GMI gives written notice to Evergreen of completion of the restoration or
replacement of such Washington Asset. If the delay in the Closing Date under
this Section 17.1(b) would cause the Closing to occur at any time after the
period permitted by the FCC Consent relating to the Washington Station, GMI and
Evergreen shall file an appropriate request with the FCC for an extension of
time within which to complete the Closing.
17.2 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 or written) regarding the transactions contemplated by this
Agreement.
17.3 Benefit and Assignment. This Agreement shall be binding upon
----------------------
and shall inure to the benefit of the parties hereto and their respective
successors and assigns. Neither GMI nor Evergreen may assign this Agreement
without the prior written consent of GMI, in the case of any such assignment by
Evergreen, or Evergreen, in the case of any such assignment by GMI, except that
(i) GMI may assign its rights and obligations under this Agreement to one or
-
more of its Affiliates designated by GMI in writing to Evergreen prior to the
Closing Date, provided that any such assignment shall not relieve GMI from any
--------
of its obligations under this Agreement and provided that any such assignment
does not delay the Closing Date and (ii) Evergreen may assign its rights and
--
obligations under this Agreement to one or more of their Affiliates designated
by Evergreen in writing to GMI prior to the Closing Date, provided that any such
--------
assignment shall not relieve Evergreen from any of its
46
<PAGE>
obligations under this Agreement and provided that any such assignment does not
delay the Closing Date.
17.4 No Third-Party Beneficiaries. Except as provided in Article XIV
----------------------------
and Section 17.3, 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.
17.5 Nature of Representations and Warranties; Entire Agreement;
------------------------------------------------------------
Amendments, etc. (a) It is the explicit intent and understanding of each of
- ---------------
the parties hereto that neither party nor any of its Affiliates, representatives
or agents is making any representation or warranty whatsoever, oral or written,
express or implied, other than those set forth in Articles V and VI.
(b) This Agreement, the Time Brokerage Agreements, the
Confidentiality Agreement, dated May 29, 1996, among Evergreen, Greater Media,
Inc. and Greater Washington Radio, Inc., 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
relating to the matters provided for herein or therein.
(c) 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.
17.6 Interpretation. 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. References herein to "GMI's knowledge" or
the "knowledge of GMI" shall mean the actual knowledge of Thomas J. Milewski.
References herein to "Evergreen's knowledge" or the "knowledge of Evergreen"
shall mean the actual knowledge of Scott K. Ginsburg. Any reference to a
"party" to this Agreement shall mean, in the case of Greater Media or Washington
Radio, GMI, and, in the case of Evergreen Media, Bay State or Evergreen License
Sub, Evergreen.
17.7 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.
17.8 Notices. All notices, requests, demands, letters, waivers and
-------
other communications required or permitted to be given under this Agreement
shall be in
47
<PAGE>
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 Evergreen:
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
To GMI:
c/o Greater Media Radio, Inc.
P.O. Box 1059
Two Kennedy Boulevard
East Brunswick, New Jersey 08816
Attention: Mr. Thomas J. Milewski
Phone: (908) 247-6161
Fax: (908) 247-4956
Copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Richard D. Bohm, Esq.
Phone: (212) 909-6226
Fax: (212) 909-6836
48
<PAGE>
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.
17.9 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.
17.10 Further Assurances. GMI shall at any time and from time to
------------------
time after the Closing execute and deliver to Evergreen such further
assignments, conveyances and other written assurances as Evergreen may
reasonably request in order to vest and confirm in Evergreen (or its permitted
assignees) the title and rights to and in all of the Washington Assets to be and
intended to be assigned, transferred, conveyed and delivered hereunder.
Evergreen shall at any time and from time to time after the Closing execute and
deliver to GMI such further assignments, conveyances and other written
assurances as GMI may reasonably request in order to vest and confirm in GMI (or
its permitted assignees) the title and rights to and in all of the Boston Assets
to be and intended to be assigned, transferred, conveyed and delivered
hereunder. After the Closing, GMI and Evergreen 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 opera tional 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 GMI or
Evergreen, as the case may be, to effectuate this Agreement.
49
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agree ment to
be duly executed as of the date first written above.
EVERGREEN MEDIA CORPORATION
OF LOS ANGELES
By: ______________________________
Name:_________________________
Title:________________________
EVERGREEN MEDIA CORPORATION
OF THE BAY STATE
By: ______________________________
Name:_________________________
Title:________________________
WKLB LICENSE CORP.
By: ______________________________
Name:_________________________
Title:________________________
GREATER MEDIA RADIO, INC.
By: ______________________________
Name:_________________________
Title:________________________
GREATER WASHINGTON RADIO, INC.
By: ______________________________
Name:_________________________
Title:________________________
50
<PAGE>
EXHIBIT 2.19
PURCHASE AGREEMENT
BETWEEN
WEDR, INC.,
SELLER
AND
EVERGREEN MEDIA CORPORATION OF LOS ANGELES,
BUYER
Sale of Certain Assets and Assignment
of Licenses Used or Held for Use in
the Operation of Station WEDR-FM
Miami, Florida
Dated as of June 27, 1996
<PAGE>
TABLE OF CONTENTS
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<TABLE>
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PAGE
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<S> <C>
ARTICLE 1 ASSETS TO BE CONVEYED............................................................. 1
1.1 Licenses and Authorizations................................................... 1
1.2 Station Equipment............................................................. 1
1.3 Contracts..................................................................... 1
1.4 Real Property................................................................. 2
1.5 Call Signs, Promotional Materials and Intangibles............................. 2
1.6 Records....................................................................... 2
1.7 Accounts Receivable........................................................... 3
1.8 Excluded Assets............................................................... 3
ARTICLE 2 ASSUMPTION OF LIABILITIES......................................................... 4
3.1 Purchase Price................................................................ 4
3.2 Allocation.................................................................... 4
ARTICLE 4 PRORATIONS AND ADJUSTMENTS........................................................ 5
ARTICLE 5 NON-COMPETITION AGREEMENT......................................................... 5
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF SELLER.......................................... 6
6.1 Organization.................................................................. 6
6.2 Authorization................................................................. 6
6.3 No Breach..................................................................... 6
6.4 Station Licenses.............................................................. 6
6.5 Station Applications.......................................................... 7
6.6 Title to Assets............................................................... 7
6.7 Condition of Equipment........................................................ 7
6.8 Condition of Real Property.................................................... 7
6.9 Contracts..................................................................... 9
6.10 Employees..................................................................... 9
6.11 Employee Benefit Plans........................................................ 10
6.12 Litigation.................................................................... 10
6.13 Payment of Taxes.............................................................. 10
6.14 Compliance With Laws.......................................................... 11
6.15 Insolvency Proceedings........................................................ 11
6.16 Citizenship................................................................... 12
6.17 Patents, Trademarks, Copyrights............................................... 12
6.18 Financial Statements.......................................................... 12
</TABLE>
i
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<TABLE>
<S> <C>
6.19 Cashflow...................................................................... 13
6.21 No Misleading Statements...................................................... 13
ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF BUYER........................................... 13
7.1 Organization................................................................... 13
7.2 Authorization.................................................................. 13
7.3 No Breach...................................................................... 13
7.4 Litigation..................................................................... 13
7.5 No Misleading Statements....................................................... 14
7.6 Qualification as Broadcast Licensee............................................ 14
7.7 Financial Capacity............................................................. 14
7.8 Commission or Finder's Fees.................................................... 14
ARTICLE 8 ENVIRONMENTAL MATTERS............................................................. 14
8.1 Definitions................................................................... 14
8.1.1 "Hazardous Materials"................................................. 14
8.1.2 "Environmental Conditions"............................................ 15
8.1.3 "Environmental Noncompliance"......................................... 15
8.1.4 "Claims".............................................................. 15
8.1.5 "Expenses"............................................................ 15
8.2 No Environmental Indemnification by Seller 16
8.3 Seller's Environmental Representations and Warranties......................... 16
8.3.1 No Proceedings........................................................ 16
8.3.2 Environmental Compliance.............................................. 16
8.3.3 Asbestos.............................................................. 16
8.3.4 Hazardous Materials................................................... 16
8.3.5 Releases.............................................................. 16
8.3.6 Underground Storage Tanks............................................. 17
ARTICLE 9 PRE-CLOSING OBLIGATIONS.......................................................... 17
9.1 Application for Commission Consent............................................ 17
9.2 Hart-Scott-Rodino Act......................................................... 17
9.3 Other Governmental Consents................................................... 17
9.4 Financial Information......................................................... 17
9.5 Consents...................................................................... 18
9.6 Environmental Site Assessment; Right of Termination........................... 18
9.7 Title Insurance............................................................... 18
9.8 Surveys....................................................................... 18
9.9 Cashflow Audit................................................................ 18
9.10 Confidentiality............................................................... 18
9.11 Access........................................................................ 19
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
9.12 Employee Matters............................................................. 19
9.13 Operations Prior to Closing.................................................. 19
9.14 Adverse Developments......................................................... 20
9.15 Administrative Violations.................................................... 20
9.16 Bulk Sales Act............................................................... 21
9.17 Control of Station........................................................... 21
9.18 Adverse Developments......................................................... 21
9.19 No Inconsistent Action....................................................... 21
ARTICLE 10 CONDITIONS PRECEDENT............................................................. 21
10.1 Mutual Conditions............................................................ 21
10.1.1 Governmental Consents................................................ 21
10.1.2 Absence of Litigation................................................ 21
10.2 Conditions to Buyer's Obligation............................................. 22
10.2.1 Representations and Warranties....................................... 22
10.2.2 Compliance with Conditions........................................... 22
10.2.3 No Material Adverse Development...................................... 22
10.2.4 Title Commitment and Surveys......................................... 22
10.2.5 Validity of Station Licenses......................................... 22
10.2.7 Third Party Consents................................................. 22
10.2.9 Settlement of Claims................................................. 23
10.2.10 Finality............................................................. 23
10.2.11 Cashflow............................................................. 23
10.3.1 Representations and Warranties....................................... 23
10.3.3 Payment.............................................................. 24
ARTICLE 11 CLOSING.......................................................................... 24
11.1 Closing Date................................................................. 24
11.2 Performance at Closing....................................................... 24
11.2.1 By Seller............................................................ 24
11.2.2 By Buyer............................................................. 25
11.2.3 Other Documents and Acts............................................. 25
ARTICLE 12 POST-CLOSING OBLIGATIONS......................................................... 26
12.1 Indemnification.............................................................. 26
12.1.1 Buyer's Right to Indemnification..................................... 26
12.1.2 Seller's Right to Indemnification.................................... 26
12.1.3 Conduct of Proceedings............................................... 27
12.1.4 Indemnification Not Sole Remedy...................................... 27
12.1.5 Right of Offset...................................................... 27
12.1.6 Limits on and Conditions of Indemnification;
Threshold and Cap.................................................... 27
12.1.7 Post-Closing Access.................................................. 27
</TABLE>
iii
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<TABLE>
<S> <C>
ARTICLE 13 DEFAULT AND REMEDIES............................................................. 28
13.1 Termination by Seller Upon Buyer's Default................................... 28
13.2 Termination by Buyer Upon Seller's Default................................... 28
13.3 Breach and Opportunity to Cure............................................... 29
13.4 Escrow Deposit............................................................... 29
13.5 Seller's Remedies............................................................ 29
13.6 Buyer's Remedies............................................................. 29
ARTICLE 14 TERMINATION...................................................................... 30
14.1 Absence of Commission Consent................................................ 30
14.2 Designation for Hearing...................................................... 30
14.3 Damage....................................................................... 30
14.3.1 Risk of Loss......................................................... 30
14.3.2 Failure of Broadcast Transmission.................................... 31
14.3.3 Resolution of Disagreements.......................................... 31
14.4 Legal Actions................................................................ 31
ARTICLE 15 GENERAL PROVISIONS............................................................... 32
15.1 Brokerage.................................................................... 32
15.2 Expenses..................................................................... 32
15.3 Notices...................................................................... 32
15.4 Attorneys' Fees.............................................................. 33
15.5 Survival of Representations, Warranties and
Indemnification Rights....................................................... 33
15.6 Exclusive Dealings........................................................... 34
15.7 Waiver....................................................................... 34
15.8 Assignment................................................................... 34
15.9 Entire Agreement............................................................. 34
15.10 Counterparts................................................................. 34
15.11 Construction................................................................. 34
15.12 Schedules and Exhibits....................................................... 34
15.13 Severability................................................................. 35
15.14 Choice of Law................................................................ 35
15.15 Counsel...................................................................... 35
15.16 Public Statements............................................................ 35
</TABLE>
iv
<PAGE>
SCHEDULES AND EXHIBITS
Exhibit A Non-competition Agreement
Exhibit B Opinion of Seller's Counsel
Exhibit C Opinion of Buyer's Counsel
Exhibit D Escrow Agreement
Schedule 1.1 Station Licenses
Schedule 1.2 Station Equipment
Schedule 1.3(a) Operating Contracts
Schedule 1.3(c) Sales Agreements
Schedule 1.3(d) Trade Agreements
Schedule 1.3(e) Barter Agreements
Schedule 1.4 Real Property
Schedule 1.5 Intangible Property
Schedule 1.8 Excluded Assets
Schedule 6.1 Addresses of Seller's Business Operations
Schedule 6.6(a) Title to Assets
Schedule 6.6(b) Permitted Liens
Schedule 6.8(c) Assignment of Lease Agreements
Schedule 6.10 Employees
Schedule 6.11 Employee Plans
Schedule 6.12 Litigation
Schedule 6.14(c) FCC Letter Regarding EEO Efforts
Schedule 6.18 Financial Statements Provided to Buyer
Schedule 6.20 Sufficiency of Assets
<PAGE>
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is made and entered this
June 27, 1996, between WEDR, INC., a Florida corporation ("Seller"), and
EVERGREEN MEDIA CORPORATION OF LOS ANGELES, a Delaware corporation ("Buyer").
BACKGROUND:
Seller is the licensee, owner and operator of Broadcast Station WEDR-FM,
99.1 MHz, Miami, Florida (the "Station"), pursuant to certain authorizations
issued by the Federal Communications Commission (the "Commission" or "FCC"), and
owns certain assets used or held for use solely in connection with the operation
of the Station. Seller desires to sell and assign and Buyer desires to purchase
and acquire substantially all of the property and assets used or held for use in
the operation of the Station upon the terms set forth in this Agreement (the
"Transaction"). The parties acknowledge that the licenses issued by the
Commission for the operation of the Station may not be assigned without the
prior written consent of the Commission. Accordingly, in consideration of the
foregoing and of the mutual promises, covenants, and conditions set forth below,
the parties agree as follows:
ARTICLE 1
ASSETS TO BE CONVEYED
On the Closing Date (as defined below), subject to and in reliance
upon the covenants, representations, warranties and agreements set forth herein,
and subject to the terms and conditions contained herein, Seller shall sell,
assign, transfer and deliver to Buyer and Buyer shall purchase from Seller, all
of the assets used or held for use in the operation of the Station including,
without limitation, the following (collectively, the "Assets") but specifically
excluding the Excluded Assets (as defined below):
1.1 Licenses and Authorizations. All licenses, permits, permissions and
other authorizations issued to Seller for the operation of the Station by the
Commission or any other governmental agencies, including, but not limited to,
those listed on Schedule 1.1 and the right to use the Station's call letters
(the "Station Licenses"), and all applications for modification, extension or
renewal thereof, and any pending applications for any new licenses, permits or
authorizations pending on the Closing Date (the "Station Applications").
1.2 Station Equipment. Except for Excluded Assets, all the fixed and
tangible personal property used or held for use in the operation of the Station
including, but not limited to, the transmitters, towers, ground system and
studio equipment listed on Schedule 1.2 together with any replacements,
improvements, or additions thereto made between the date hereof and the Closing
Date (the "Station Equipment").
1.3 Contracts. All rights of Seller or others for the benefit of the
Station under (a) all agreements, contracts or leases described on Schedule
1.3(a); (b) such other contracts, agreements or leases entered into (i) with the
written consent of Buyer, or (ii) in the ordinary course
<PAGE>
of business and consistent with past practice, between the date of this
Agreement and the Closing Date, that (x) are approved in writing by Buyer, or
(y) do not, in the aggregate, impose obligations in excess of Ten Thousand
Dollars ($10,000) on Buyer (the contracts, agreements and leases described in
clauses (a) and (b) are collectively referred to as the "Operating Contracts");
(c) all contracts for the sale of time on the Station for cash (i) at rates
substantially in accordance with the Station's past practices with a remaining
term at Closing of six (6) months or less, (ii) set forth on Schedule 1.3(c), or
(iii) entered into with the written consent of Buyer ("Sales Agreements"), (d)
contracts for the sale of time on the Station in exchange for merchandise or
services used or useful for the benefit of the Station to the extent that such
contracts (i) were entered into in the ordinary course of business, (ii) are
preemptible for cash time sales, and (iii) obligate Buyer to provide advertising
time only on a "run of schedule" basis ("Trade Agreements"), and (e) contracts
for the sale of time on the Station in exchange for programming set forth on
Schedule 1.3(e) or entered into after the date of this Agreement with the
written consent of Buyer ("Barter Agreements"). (The Operating Contracts, Sales
Agreements, Trade Agreements, and Barter Agreements are referred to collectively
as the "Contracts.") In the event that the Trade Agreements and Barter
Agreements to be assumed have a Negative Trade Balance (as defined below) of
$20,000 or more on the Closing Date, the Purchase Price (as defined in Section
3) will be reduced by the amount of the Negative Trade Balance. "Trade Balance"
means the difference between the aggregate value of time owed pursuant to the
Trade Agreements and Barter Agreements (based upon the rates for cash sales on
the Station in effect on the Closing Date) on the Closing Date ("Trade
Obligations") and the aggregate value of goods and services to be received after
the Closing Date pursuant to the Trade Agreements and Barter Agreements ("Trade
Assets"). The amount of the Negative Trade Balance, if any, is the amount by
which Trade Obligations exceed Trade Assets.
1.4 Real Property. Except for Excluded Assets, all right, title and
interest in the real property used or held for use or necessary in the operation
of the Station and owned, leased, or licensed by Seller or its affiliates, as
described in Schedule 1.4, or acquired for the benefit of the Station by Seller
or its affiliates with the written consent of Buyer between the date of this
Agreement and Closing Date (the "Real Property").
1.5 Call Signs, Promotional Materials and Intangibles. All of Seller's
or its affiliates' rights in the Station's call signs, copyrights, patents,
trademarks, trade names, slogans, logos, service marks, computer software,
magnetic media, data processing files, systems and programs, business lists,
trade secrets, sales and operating plans, all goodwill of the Station and other
similar intangible property rights used or held for use in the operation of the
Station, including but not limited to the intangible property identified on
Schedule 1.5 (the "Intangible Property").
1.6 Records. All records, including but not limited to all books of
account, customer lists, supplier lists, computer programs and software,
employee personnel files, local public inspection file materials, engineering
data, logs, programming records, consultants' reports, ratings reports, budgets,
marketing and demographic data, financial reports and projections, lists of
advertisers, promotional materials, and sales, operating and business plans,
relating to or used in the operation of the Station or necessary or desirable to
show compliance with any law or regulation applicable to the Station or the
operation of the Station and not pertaining solely to Seller's internal
corporate affairs or Seller's affiliates' other stations or interests (the
"Station Records").
2
<PAGE>
1.7 Accounts Receivable. At the consummation of the transaction
contemplated by this Agreement on the Closing Date, Seller shall assign to
Buyer, for purpose of collection only, all of Seller's accounts receivable
arising from the operation of the Station (the "Receivables"). For a period of
one hundred twenty days (120) after the Closing Date (the "Collection Period"),
Buyer will collect the Receivables for Seller's benefit. Buyer will not adjust,
compromise or settle any dispute concerning the Receivables without prior
written consent of Seller. Buyer will apply funds collected first to Seller's
Receivables. By the tenth (10th) day following the close of each calendar month
following the Closing Date, Buyer shall pay to Seller all amounts collected on
account of the Receivables during the previous calendar month and shall deliver
to Seller an itemized list of the Receivables collected. Within one hundred
thirty days (130) of the Closing Date, Buyer will deliver to Seller the balance
of amounts collected on account of the Receivables. Buyer shall then reassign
to Seller the Receivables that remain uncollected.
1.8 Excluded Assets. It is understood and agreed that the following
assets shall not be among the Assets purchased pursuant to this Agreement:
(a) Seller's cash on hand as of the Closing and any of Seller's
interests in its bank accounts and all of Seller's other cash, cash equivalents,
securities, investments, deposits, prepayments (including prepaid taxes and
insurance), tax refunds and overpayments;
(b) Any insurance policies and proceeds thereof, promissory notes,
amounts due from employees, bonds, letters of credit, certificates of deposits
or other similar items and cash surrender value in regard thereto;
(c) Any pension, profit-sharing, or employee benefit plans,
including all of Seller's interest in any Employee Plan (as defined in Section
6.11), and any collective bargaining agreements;
(d) Any accounts receivable outstanding on the Closing Date
subject to Section 1.7 hereof;
(e) Any agreements not included among the Contracts;
(f) All tax returns and supporting materials, all original
financial statements and supporting materials, all books and records that Seller
is required by law to retain, all corporate minutes and records, and all records
of Seller relating to the sale of the Assets;
(g) Any interest in and to any refunds of federal, state, or local
franchise, income or other taxes for periods prior to the Closing Date; and
(h) All assets specifically enumerated on Schedule 1.8.
3
<PAGE>
ARTICLE 2
ASSUMPTION OF LIABILITIES
Buyer shall not assume or undertake to pay, satisfy or discharge any of
Seller's liabilities, obligations, commitments or responsibilities, except for
those liabilities arising and accruing after and relating exclusively to the
operation of the Station after the closing of the transactions contemplated
herein (the "Closing") under the Contracts to be assigned to Buyer pursuant to
(and as limited by) Section 1.3 above. If any Contract requires the consent of
third parties for assignment, but (i) such consent has not been obtained as of
the Closing Date, as required by Section 10.2.7, and (ii) in the case of
Material Contracts (as defined below), Buyer waives such condition precedent to
the Closing in its sole discretion, then Buyer shall assume Seller's obligations
under such Contract only for the period after Closing during which Buyer
receives the benefits to which Seller is currently entitled under such Contract
(unless consent is subsequently obtained and such delay has not prejudiced
Buyer, and unless the failure of Buyer to receive benefits under such Contract
is due to Buyer's failure to perform Seller's obligations thereunder after
Closing).
ARTICLE 3
PURCHASE PRICE AND PAYMENT
3.1 Purchase Price. The purchase price for the Assets shall be Sixty-
Five Million Dollars ($65,000,000) (the "Purchase Price"). At Closing, Buyer
will pay to Seller by wire transfer of immediately available federal funds
(pursuant to wire instructions that Seller shall deliver to Buyer prior to
Closing) the Purchase Price plus or minus any adjustments, as set forth in
Section 4 hereof, or elsewhere in this Agreement.
3.2 Allocation. The Purchase Price shall be allocated among the Assets
in accordance with an appraisal performed by a qualified appraiser jointly
selected by Seller and Buyer, the fees of which shall be divided equally between
Seller and Buyer. Each of Seller and Buyer agree (i) to jointly complete and
separately file Form 8594 with its federal income tax return for the tax year in
which the Closing occurs and (ii) that neither Seller nor Buyer will take a
position on any income, transfer or gains tax return before any governmental
agency charged with the collection of any such tax or in any judicial proceeding
that is in any manner inconsistent with the terms of any such allocation without
the written consent of the other.
ARTICLE 4
PRORATIONS AND ADJUSTMENTS
The operation of the Station and the income and normal operating
expenses, including without limitation assumed liabilities and prepaid expenses,
attributable thereto through 11:59 p.m. of the day prior to the Closing Date
(the "Adjustment Date") shall be for the account of Seller and thereafter for
the account of Buyer. Expenses for goods or services received both before and
after
4
<PAGE>
the Adjustment Date, taxes and assessments, power and utilities charges, and
rents and similar prepaid and deferred items shall be prorated between Seller
and Buyer as of the Adjustment Date (the "Closing Date Adjustments"). All
special assessments and similar charges or liens imposed against the Real
Property and Station Equipment in respect of any period of time through the
Adjustment 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
Adjustment Date shall be the responsibility of Buyer, and such charges shall be
adjusted as required hereunder. Three (3) days prior to the Closing Date Seller
shall estimate all apportionments pursuant to this Article 4 and shall deliver a
statement of its estimates to Buyer (which statement shall set forth in
reasonable detail the basis for those estimates). At the Closing, Buyer shall
pay to Seller, or Seller shall pay to Buyer, as the case may be, the net amount
due as a result of the estimated apportionments (excluding any item that is in
dispute). Within sixty (60) days after the Closing (the "Payment Date"), Buyer
shall deliver to Seller a statement of any adjustments to Seller's estimate of
the apportionments, and Buyer shall pay to Seller, or Seller shall pay to Buyer,
as the case may be, any amount due as a result of the adjustment (or, if there
is any dispute, the undisputed amount). If Seller disputes Buyer's
determinations, or if at any time after delivery of Buyer's statement of
determinations, either party determines that any item included in the
apportionments is inaccurate, or that an additional item should be included in
the apportionments, the party shall confer with regard to the mater and an
appropriate adjustment and payment shall be made as agreed upon by the parties
(or, if they are unable to resolve the matter, they shall select a firm of
independent certified public accountants to resolve the matter, whose decision
on the matter shall be rendered in writing within thirty (30) days following
submission of the dispute to them and whose fees and expenses shall be borne
equally by the parties. Such decision shall be binding upon the parties). All
amounts due pursuant to this subsection that are not paid on the Closing Date or
the Payment Date shall bear interest until paid at a rate per annum equal to
generally prevailing prime interest rate (as reported by The Wall Street
Journal) plus five percent (5%).
ARTICLE 5
NON-COMPETITION AGREEMENT
At Closing, Seller and Buyer shall enter into a Non-Competition
Agreement in the form set forth in Exhibit A (the "Covenant").
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller makes the following representations and warranties, all of which
have been relied upon by Buyer in entering into this Agreement and, except as
otherwise specifically provided, all of which shall be true and correct at
Closing.
6.1 Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida, is duly
qualified to do business in, and is in good standing under, the laws of the
State of Florida and has full power and authority to own, lease
5
<PAGE>
and operate the Assets and to conduct the business and operations of the Station
as currently conducted and proposed to be conducted and to enter into and
perform this Agreement. The address of Seller's chief executive offices, all of
Seller's additional places of business, and the locations of all tangible
personal property included in the Assets are listed in Schedule 6.1. Except as
set forth in Schedule 6.1, during the past five (5) years, Seller has not, nor
to the best of Seller's knowledge, has any prior owner of the Station been known
by or used any corporate, partnership, fictitious or other name in the conduct
of the Station's business or in connection with the use or operation of the
Assets.
6.2 Authorization. The execution and delivery of this Agreement by
Seller has been duly authorized by all necessary corporate action on its part.
Seller will deliver evidence of such authorization at Closing. This Agreement
has been duly executed by Seller and delivered to Buyer and constitutes the
legal, valid and binding obligation of Seller, enforceable against Seller in
accordance with its terms, except as limited by laws affecting the enforcement
of creditors' rights generally or equitable principles.
6.3 No Breach. None of (i) the execution, delivery and performance of
this Agreement by Seller, (ii) the consummation of this Agreement and all other
documents or instruments related thereto or executed in connection therewith or
in contemplation of the Transaction, or (iii) Seller's compliance with the terms
and conditions hereof will, with or without the giving of notice or the lapse of
time or both, conflict with, breach the terms and conditions of, constitute a
default under, or violate Seller's certificate of incorporation or bylaws, any
judgment, decree, order, injunction, agreement, lease or other instrument to
which Seller is a party or by which Seller is legally bound, or any law, rule,
or regulation applicable to Seller or the operation of the Station.
6.4 Station Licenses. The Station Licenses are all of the licenses,
permits, and other authorizations used or necessary to lawfully operate the
Station in the manner and to the full extent as it is now operated, and the
Station Licenses are validly issued in the name of Seller. Seller has delivered
to Buyer true and complete copies of the Station Licenses, including any and all
amendments and other modifications thereto. The Station Licenses are in full
force and effect, are valid for the period ending at 3:00 a.m. Eastern Standard
Time ("E.S.T.") on February 1, 2003, are unimpaired by any acts or omissions of
Seller or any of its affiliates, or the employees, agents, officers, directors,
or shareholders 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 restrictions
under the terms of the licenses themselves). There are no applications,
proceedings, or complaints pending or, to the knowledge of Seller, threatened
which may have a material adverse effect on the business or operation of the
Station (other than rulemaking proceedings that apply to the radio broadcasting
industry generally). Seller is not aware of any reason why any of the Station
Licenses might be revoked. The Station is in material compliance with the
Commission's policy on exposure to radio frequency radiation. No renewal of any
Station License would constitute a major environmental action under the rules of
the Commission. Seller is qualified under the Communications Act of 1934, as
amended, and the existing rules of the Commission, to assign the Station
Licenses and consummate the Transaction. Seller maintains a public inspection
file at the Station's main studio.
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6.5 Station Applications. All information contained in any Station
Application (as described on Schedule 1.1 hereto) and which are pending with the
Commission is true, complete and accurate in all material respects.
6.6 Title to Assets. Except for current real estate taxes and those
other matters set forth on Schedule 6.6(a), Seller has good and marketable title
to the Assets, in the case of owned Assets, and a valid leasehold interest, in
the case of leased Assets, in each case free and clear of all debts, liens,
charges, security interests, mortgages, deeds of trust, pledges, judgments,
trusts, adverse claims, liabilities, collateral assignments, leases, easements,
covenants, encumbrances and other impairments of title ("Liens"), other than as
set forth on Schedule 6.6(a). At Closing, Seller shall convey to Buyer good and
marketable title to the Assets free and clear of all Liens other than those set
forth on Schedule 6.6(b) ("Permitted Liens").
6.7 Condition of Equipment. The Station Equipment listed on Schedule 1.2
constitutes all of material tangible the personal property that is used, held by
the Seller or others for use by the Station, or necessary to operate the Station
as it is now operated, except for that equipment necessary to operate and
located at the Back-up Site and items of equipment valued at One Hundred Dollars
($100) or less. The Station Equipment is in good operating condition and repair
(reasonable wear and tear excepted) and is sufficient to permit the Station to
operate in accordance with the Station Licenses and the rules and regulations of
the Commission. All Station Equipment is type-approved or type-accepted where
such type-approval or type-acceptance is required.
6.8 Condition of Real Property.
(a) The Real Property listed on Schedule 1.4(a) constitutes all
the real property (the "Real Property") owned or leased by Seller or others in
connection with the operation of the Station as it is now operated.
(b) There are no encroachments upon the Real Property by any
buildings, structures, or improvements located on adjoining real estate, the
presence of which has a material adverse effect on the Seller's use of such Real
Property. None of the buildings , structures, or improvements (including without
limitation any ground radials, guy wires or guy anchors) constructed on the Real
Property encroach upon adjoining real estate, the presence of which has a
material adverse effect on the Seller's use of such Real Property, and all such
buildings, structures, and improvements are constructed in conformity with or
are "grandfathered" with respect to all "setback" lines, easements, and other
restrictions, or rights of record, or that have been established by any
applicable building or safety code or zoning ordinance. Such "grandfathered"
approvals shall survive indefinitely the transfer of the Real Property to Buyer.
No utility lines serving the Real Property pass over the lands of others except
where appropriate easements have been obtained. There are no pending or, to the
best of Seller's knowledge, threatened or contemplated condemnation or eminent
domain proceedings that may affect the Real Property. There exists no material
writ, injunction, decree, order or judgment, nor any litigation, pending, or to
the best of Seller's knowledge, threatened, relating to the ownership, use,
lease, occupancy or operation of any of the Real Property. Seller's use and
occupancy of the Real Property complies in all material respects with all
regulations, codes, ordinances, and statutes of all applicable governmental
authorities,
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occupational safety and health regulations, and electrical codes. There are no
material structural defects in the buildings, structures, and improvements
located on the Real Property. Roofs are in good condition and repair, and all
plumbing equipment, heating, ventilating and air conditioning equipment,
electrical wiring, and water and sewage systems are operating properly and are
free of any material defects, ordinary wear and tear and normal maintenance
requirements excluded.
(c) The leased premises are leased at the rates and for terms
ending on the dates shown on Schedule 1.4(c) pursuant to the agreements
described in Schedule 1.4 (the "Lease Agreements"), which are the sole and
complete agreements concerning Seller's use of the leased premises. Each Lease
Agreement is legal, valid, binding, enforceable and in full force and effect.
Neither Seller nor any other party is in default, violation or breach in any
respect under any Lease Agreement, 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 Lease Agreement is past due. Seller has not received any notice of a
default, offset or counterclaim under any Lease Agreement or any other
communication asserting non-compliance with any Lease Agreement. Except as
provided on Schedule 6.8(c), Seller has the exclusive right to use and occupy
the premises leased under each Lease Agreement. Seller enjoys peaceful and
undisturbed possession of the premises leased by Seller under the Lease
Agreement. Except as set forth on Schedule 6.8(c), the Lease Agreements are free
and clear of all Liens, except for lessors' interests in the leases. Seller has
delivered to Buyer, true and complete copies of the Lease Agreements, together,
in the case of any subleases or similar occupancy agreements, with copies of all
overleases. Except as disclosed in Schedule 6.8(c), Seller has full legal power
and authority to assign its rights under the Lease Agreements to Buyer in
accordance with this Agreement on terms and conditions no less favorable than
those in effect on the date hereof, and such assignment will not affect the
validity, enforceability and continuity of any such lease.
(d) All utilities that are required for the full and complete
occupancy and use of the Real Property for the purposes for which such
properties are presently being used by Seller, including without limitation
electric, water, sewer, telephone and similar services, have been connected and
are in good working order. By the Closing Date, Seller will have paid all
charges for such utilities, including without limitation any "tie-in" charges or
connection fees, except for those charges that will not become due until after
the Closing Date and that are to be prorated between Seller and Buyer pursuant
to Section 4.
6.9 Contracts. The Contracts are assignable to Buyer on terms and
conditions no less favorable than those in effect on the date hereof without
consent, or, if consent of the other contracting party to the assignment is
required, such consent will be secured at Seller's sole expense prior to the
Closing Date. Each Contract is in full force and effect and is unimpaired by
any acts or omissions of Seller, Seller's employees, agents, officers, directors
or shareholders. Seller has complied in all material respects will all
Contracts to be assigned to Buyer hereunder, and there has not occurred as to
any Contract any material default by Seller or any event that, with notice or
the lapse of time or otherwise, could become a material default by Seller.
Seller has not granted or been granted any waiver or forbearance with respect to
any of the Contracts. To the best knowledge of Seller, there has not occurred
as to any Contract any default by any other party thereto or any event that,
with notice or the lapse of time or at the election of any person other than
Seller, could become
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a material default by such party. Those Contracts whose stated duration extends
beyond the Closing Date will, at Closing, be in full force and effect and will
be unimpaired by any acts or omissions of Seller, Seller's agents, employees,
officers, directors or shareholders. Seller has provided to Buyer true and
correct copies of all written Contracts, as modified to date, or true and
complete memoranda describing the terms of all oral Contracts, and all
liabilities and obligations under such Contracts can be ascertained from such
copies or memoranda. The Contracts as amended through the date of this Agreement
will not be modified without Buyer's written consent, which consent shall not be
unreasonably withheld. The Contracts are all of the agreements, contracts,
leases or other undertakings that are material to the operation of the Station.
6.10 Employees.
(a) Schedule 6.10 contains 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 6.11, 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 6.10
and 6.11 or included among the Operating Contracts. Except as described in
Schedule 6.10, Seller has no knowledge that any employee identified in Schedule
6.10 currently plans to terminate employment, whether by reason of the
transactions contemplated by this Agreement or otherwise.
(b) Except as disclosed in Schedule 6.10, 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. To Seller's knowledge, there are
no unfair labor practice charges pending or, 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.
6.11 Employee Benefit Plans. Seller has no employee or retiree
benefit or compensation plan within the meaning 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 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 (each,
an "Employee Plan"). Seller has no 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
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or business (whether or not incorporated) is or has been as of any date within
the preceding six (6) 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 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 Seller, no event, transaction or condition has
occurred or exists which could result in any such liability. It is expressly
understood that Buyer is not assuming any obligation of Seller under or with
request to any Employee Plan.
6.12 Litigation. Except as set forth on Schedule 6.12, there is no
unsatisfied judgment outstanding and no litigation, proceeding, claim or
investigation of any nature pending or, to Seller's best knowledge, threatened
against Seller or any of the Assets which might have a material adverse effect
on the continued operation of the Station or impair the value of the Assets or
which might adversely affect Seller's ability to perform in accordance with the
terms of this Agreement. Seller has no knowledge of any facts that could
reasonably result in any such proceedings. With respect to each matter set
forth therein, Schedule 6.12 sets forth a description of the forum for the
matter, the parties thereto and the type and amount of relief sought.
6.13 Payment of Taxes. Seller has, or by the Closing Date will have,
duly filed all tax returns and forms required to be filed in respect of the
Station and paid in full or discharged all taxes, assessments, excises,
interest, penalties, deficiencies and other levies relating to the Assets,
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 Buyer
pursuant to Section 4. No event has occurred that could impose on Buyer any
liability for any taxes, penalties, or interest due or to become due from Seller
from any taxing authority.
6.14 Compliance With Laws. Seller has complied in all material
respects with, and is not in material violation of any federal, state or local
laws, regulations or orders (including any applicable statutes, ordinances or
codes relating to zoning and land use, health and sanitation, occupational
safety, and the use of electrical power) affecting the Assets, Seller's
business, or the operation of the Station. No representation is made in this
Section 6.14 as to environmental matters which are subject to the provisions of
Article 8 hereof. Without limiting the generality of the foregoing:
(a) The Station's transmitting and studio equipment is operating in
material accordance with the terms and conditions of the Station Licenses and
all underlying construction permits, and the rules, regulations and policies of
the Commission, including without limitation all regulations concerning
equipment authorization and human exposure to radio frequency radiation. To the
best of Seller's knowledge, (i) the Station is not causing interference in
violation of Commission 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 Commission rules to the Station's
transmissions.
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(b) Seller has, in the conduct of the Station's business, complied
in all material respects with all applicable laws, rules and regulations
relating to the employment of labor, including those concerning wages, hours,
equal employment opportunity, collective bargaining, pension and welfare benefit
plans, and the payment of Social Security and similar taxes, and Seller is not
liable for any arrearages of wages or any tax penalties due to any failure to
comply with any of the foregoing.
(c) Except for a letter dated April 9, 1996, from the FCC, a copy
of which is attached as Schedule 6.14(c), Seller has received no notification
from the Commission that Seller's affirmative action program for the Station or
Seller's other employment practices fail to comply with Commission rules and
policies.
(d) All material ownership reports, employment reports, tax
returns and other documents required to be filed by Seller with the Commission
or other governmental authorities have been filed, except for such materials the
failure of which to file would not have a material adverse effect on the Station
or any material Asset. Such items as are required to be placed in the Station's
local public inspection files have been placed in such files. All proofs of
performance and measurements that are required to be made by Seller with respect
to the Station's transmission facilities have been completed and filed at the
Station. All information contained in the foregoing documents is true, complete
and accurate in all material respects.
6.15 Insolvency Proceedings. Neither Seller nor the 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 or 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, 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 Buyer
pursuant to the terms of this Agreement. Seller is not insolvent nor will it
become insolvent as a result of entering onto this Transaction.
6.16 Citizenship. Seller is not a "foreign person" as defined in
Section 1445(f)(3) of the Code. On the Closing Date, Seller will deliver to
Buyer an affidavit to that effect, verified as true and sworn to under penalty
of perjury by a duly-authorized officer of Seller. The affidavit shall also set
forth Seller's name, address, taxpayer identification number, and such
additional information as may be required to exempt the Transaction from the
withholding provisions of Section 1445 of the Code. Buyer shall have the right
to furnish copies of the affidavit to the Internal Revenue Service.
6.17 Patents, Trademarks, Copyrights. The call sign and all slogans,
logos, copyrights, patents, trademarks, trade names, service marks, and other
similar intangible property rights, including registrations and applications to
register or renew the registration of any of the foregoing, currently used to
promote or identify the Station, or otherwise used in connection with
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the Station's business, are listed or described on Schedule 1.5 (the
"Promotional Rights"). The Promotional Rights are either owned or validly
licensed by Seller, and Schedule 1.5 identifies which Promotional Rights are so
owned and which are licensed, and if licensed, the royalties paid thereon and
the parties paid thereunder. Seller does not have any knowledge, nor has Seller
received any notice to the effect that its use of any of the Promotional Rights
may or are claimed to infringe on the right of another. Seller has no knowledge
of any infringement or unlawful or unauthorized use of such Promotional Rights,
including without limitation the use of any call sign, slogan or logo by any
broadcast or cable station in the Miami, Florida metropolitan area that may be
confusingly similar to the call sign, slogans, and logos currently used by the
Station. To Seller's best knowledge, the operation of the Station does not
infringe any copyright, patent, trademark, trade name, service mark, or other
similar right of any third party. Seller has not sold, licensed or otherwise
disposed of any Promotional Rights to any person or entity and Seller has not
agreed to indemnify any person or entity for any patent, trademark or copyright
infringement. Schedule 1.5 lists all of the Promotional Rights 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.
6.18 Financial Statements. Seller has furnished Buyer with the
financial statements listed or described on Schedule 6.18 (the "Financial
Statements"). The year-end Financial Statements: (i) have been prepared in
accordance with United States Generally Accepted Accounting Principles ("GAAP")
on a consistent basis throughout the periods involved and as compared with prior
periods and (ii) fairly and accurately reflect the financial condition and the
results of operations and cash flows of the Station as of the dates and for the
periods indicated. The monthly and other interim Financial Statements: (i) have
been prepared in accordance with GAAP on a consistent basis throughout the
periods involved (except to the extent noted thereon) and on a basis consistent
with the year-end Financial Statements, and (ii) fairly and accurately reflect
the financial condition and the results of operations and cash flows of the
Station as of the dates and for the periods indicated in all material respects.
Except as reflected in the Financial Statements or otherwise disclosed to Buyer
in writing, no event has occurred since the preparation of the most recent
Financial Statements that would make such Financial Statements misleading in any
respect.
6.19 Cashflow. Seller's broadcast cashflow generated from the
operations of the Station for the year ending December 31, 1995 (the "1995 BCF")
was not less than Four Million Nine Hundred Thousand Dollars ($4,900,000.00).
6.20 Sufficiency of Assets. Except as set forth on Schedule 6.20, the
Assets are sufficient to operate the Station as it is now operated.
6.21 No Misleading Statements. To Seller's best knowledge, no
statement made by Seller to Buyer and no information provided or to be provided
by Seller to Buyer pursuant to this Agreement or in connection with the
negotiations covering the Transaction, 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 statements or information not misleading.
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ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer makes the following representations and warranties, all of which have
been relied upon by Seller in entering into this Agreement and, except as
otherwise specifically provided, all of which shall be true and correct at
Closing.
7.1 Organization. Buyer is a corporation duly organized, validly
existing, and in good standing, under the laws of the State of Delaware, and is
duly qualified to do business in the State of Florida.
7.2 Authorization. The execution and delivery of this Agreement by
Buyer has been duly authorized by all necessary corporate action on the part of
Buyer. Evidence of such authorizations shall be delivered to Seller at Closing.
This Agreement has been duly executed by Buyer and delivered to Seller and
constitutes a valid and binding agreement of Buyer, enforceable in accordance
with its terms.
7.3 No Breach. None of (i) the execution, delivery and performance of
this Agreement by Buyer, (ii) the consummation of the Transaction, or (iii)
Buyer's compliance with the terms and conditions hereof will, with or without
the giving of notice or the lapse of time or both, conflict with, breach the
terms and conditions of, constitute a default under, or violate Buyer's articles
of incorporation, bylaws, any judgment, decree, order, agreement, lease or other
instrument to which Buyer is a party or by which Buyer is legally bound, or any
law, rule or regulation applicable to Buyer.
7.4 Litigation. There is no action, suit, investigation or other
proceedings pending or, to Buyer's best 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.
7.5 No Misleading Statements. To Buyer's knowledge, no statement made
by Buyer to Seller and no information provided or to be provided by Buyer to
Seller pursuant to this Agreement or in connection with the negotiations
covering the Transaction contemplated herein 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 statements or information not misleading.
7.6 Qualification as Broadcast Licensee. Buyer is legally and otherwise
qualified under the Communications Act of 1934, as amended, and the rules,
regulations and policies of the FCC, to become the licensee of the Station and
consummate the Transaction. There are no proceedings, complaints, notices of
forfeiture, claims, investigations pending or, to the knowledge of Buyer,
threatened against any or in respect of any of the broadcast stations licensed
to Buyer or its affiliates that would materially impair the qualifications of
Buyer to become a licensee of the Station.
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7.7 Financial Capacity. Buyer has the financial capacity to satisfy all
of Buyer's obligations under this Agreement and the documents to be executed and
exchanged at the Closing, and to perform all of Buyer's obligations at the
Closing.
7.8 Commission or Finder's Fees. Neither Buyer nor any entity acting on
behalf of Buyer has agreed to pay a commission, finder's fee, or similar payment
to any persons or entity in connection with this Agreement or any matter related
hereto.
ARTICLE 8
ENVIRONMENTAL MATTERS
8.1 Definitions.
8.1.1 "Hazardous Materials" means hazardous wastes, hazardous
substances, hazardous constituents, toxic substances or related materials,
whether solids, liquids or gases, including but not limited to substances
defined as "hazardous wastes," "hazardous substances," "toxic substances,"
"pollutants," "contaminants," "radioactive materials," "petroleum or any
fraction thereof," or other similar designations in, or otherwise subject to
regulation under, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986 ("CERCLA"), 42 U.S.C. (SS) 9601 et seq.; the Toxic
-- ---
Substance Control Act ("TSCA"), 15 U.S.C.(SS) 2601 et seq.; the
-- ---
Hazardous Materials Transportation Act, 49 U.S.C. (S) 1802; the Resource
Conservation and Recovery Act ("RCRA"), 42 U.S.C. (SS) 9601 et seq.; the Clean
-- ---
Water Act ("CWA"), 33 U.S.C. (SS) 1251 et seq.; the Safe Drinking Water Act,
-- ---
42 U.S.C. (SS) 300f et seq.; the Clean Air Act ("CAA"), 42 U.S.C. (SS) 7401 et
-- --- --
seq.; or any similar state law; and in the plans, rules, regulations or
- ---
ordinances adopted, or other criteria and guidelines promulgated pursuant to the
preceding laws or other similar laws, regulations, rules or ordinances in effect
as of the Closing Date (collectively the "Environmental Laws"); and any other
substances, constituents or wastes subject to environmental regulations under
any applicable federal, state or local law, regulation or ordinance in effect as
of the Closing Date.
8.1.2 "Environmental Conditions" means conditions of the environment,
including the ocean, natural resources (including flora and fauna), soil,
surface water, ground water, any present or potential drinking water supply,
subsurface strata or the ambient air, relating to or arising out of the use,
handling, storage, treatment, recycling, generation, transportation, release,
spilling, leaking, pumping, pouring, emptying, discharging, injecting, escaping,
leaching, disposal, dumping or threatened release of Hazardous Materials by
Seller or Seller's predecessors in interest. With respect to claims by
employees, Environmental Conditions also includes the exposure of persons to
Hazardous Materials introduced to the environment prior to the Closing Date,
within a work place on the Real Property.
8.1.3 "Environmental Noncompliance" means, but is not limited to: (a)
the release or threatened release of any Hazardous Materials into the
environment, any storm drain, sewer, septic system or publicly owned treatment
works, in violation of any effluent or emission
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limitations, standards or other criteria or guidelines established by any
federal, state or local law, regulation, rule, ordinance, plan or order; (b) any
noncompliance of physical structure, equipment, process or facility with the
requirements of building or fire codes, zoning or land use regulations or
ordinances, conditional use permits and the like; (c) any noncompliance with
Environmental Laws; (d) any facility operations, procedures, designs, etc. which
do not conform to the statutory or regulatory requirements of the CAA, the CWA,
the TSCA, the RCRA or any other Environmental Laws intended to protect public
health, welfare and the environment; (e) the failure to have obtained permits,
variances or other authorizations required under Environmental Laws for the
operation of any equipment, process, facility or any other activity; (f) the
operation of any facility or equipment in violation of any permit condition,
schedule of compliance, administrative or court order and the like.
8.1.4 "Claims" include without limitation; claims, demands, suits,
causes of action for personal injury or property damage (including any
depreciation of property values, lost use of property, consequential damages
arising directly or indirectly out of Environmental Conditions or violations of
or obligations under any lease between Seller and its lessors); actual or
threatened damages to natural resources; claims for the recovery of response
costs, or administrative or judicial orders directing the performance of
investigations, response or remedial actions under CERCLA, RCRA, or other
Environmental Laws; a requirement to implement "corrective action" pursuant to
any order or permit issued pursuant to RCRA; claims for restitution,
contribution or equitable indemnity from third parties or any governmental
agency; fines, penalties, liens against property; claims for injunctive relief
or other orders or notices of violation from federal, state or local agencies or
courts; and, with regard to any present or former employees, exposure to or
injury from Environmental Conditions.
8.1.5 "Expenses" includes any liability, loss, cost or expense
including, without limitation, costs of investigation, cleanup, remedial or
response action, the costs associated with posting financial assurances for the
completion of response, remedial or corrective actions, the preparation of any
closure or other necessary or required plans or analyses, or other reports or
analyses submitted to or prepared by regulating agencies, including the cost of
health assessments, epidemiological studies and the like, retention of engineers
and other expert consultants, legal counsel, capital improvements, operation and
maintenance testing and monitoring costs, power and utility costs and pumping
taxes or fees, and administrative costs incurred by governmental agencies.
8.2 No Environmental Indemnification by Seller. Other than the rights
granted to Buyer in Section 9.6 hereof, Seller shall have no obligation to
indemnify Seller for any Environmental Noncompliance.
8.3 Seller's Environmental Representations and Warranties. The matters
set forth in this Section constitute representations and warranties of Seller
which shall be true and accurate as of the Closing Date. In the event that,
during the period between the execution of this Agreement and the Closing Date,
Seller learns, or has reason to believe, that any of the following
representations and warranties may cease to be true, Seller hereby covenants to
give notice thereof to Buyer immediately. Seller hereby represents and warrants
that:
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8.3.1 No Proceedings. To Seller's best knowledge, there are no pending
or threatened actions, suits, claims, legal proceedings or any other proceedings
based on Environmental Conditions or Environmental Noncompliance at the Real
Property, or any part thereof, or otherwise arising from Seller's activities at
the Real Property involving Hazardous Materials, including but not limited to
proceedings under CERCLA, RCRA, or any other Environmental Laws based on the
off-site transportation, treatment, storage, recycling or disposal of Hazardous
Materials generated by Seller;
8.3.2 Environmental Compliance. To Seller's best knowledge, there are no
conditions, facilities, procedures or any other facts or circumstances at the
Real Property which constitute Environmental Noncompliance;
8.3.3 Asbestos. There are no structures, improvements, equipment,
activities, fixtures or facilities on the Real Property which are constructed
with, use or otherwise contain asbestos-containing construction materials. For
the purposes of this subsection: (1) "asbestos" means fibrous forms of various
hydrated minerals, including chrysotile (fibrous serpentine), crocidolite
(fibrous reibecktite), amosite (fibrous cummingtonite-grunerite), fibrous
tremolite, fibrous actinolite, and fibrous anthophyllite; (2) "asbestos-
containing construction materials" means any manufactured construction material
which contains more than one-tenth of one percent asbestos by weight;
8.3.4 Hazardous Materials. To Seller's best knowledge, neither the Real
Property nor any structure, improvements, equipment, fixtures, activities or
facilities thereon uses Hazardous Materials or equipment containing
polychlorinated biphenyls;
8.3.5 Releases. To Seller's best knowledge, there are no processes,
facilities, operations, equipment or any other activities on the Real Property
which currently result in the release or threatened release of Hazardous
Materials into the environment, or which otherwise contribute to Environmental
Conditions, except to the extent that such releases or threatened releases do
not constitute a condition of Environmental Noncompliance; and
8.3.6 Underground Storage Tanks. To Seller's best knowledge, there are
no underground storage tanks, or underground piping associated with tanks, used
for the management of Hazardous Materials at the Real Property which do not have
a full secondary containment system in place, and there are no abandoned
underground storage tanks at the Real Property which have not been either
abandoned in place or removed pursuant to a permit issued by a Governmental
Entity.
ARTICLE 9
PRE-CLOSING OBLIGATIONS
The parties covenant and agree as follows with respect to the period
prior to the Closing Date:
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9.1 Application for Commission Consent. Within five (5) business days
after the date of this Agreement, Seller and Buyer shall join in and file an
application or applications requesting the Commission's written consent to the
assignment of the Station Licenses from Seller to Buyer (the "Assignment
Application"), and they will diligently take all steps necessary or desirable
and proper to prosecute expeditiously the Assignment Application and to obtain
the Commission's determination that approval of the Assignment Application will
serve the public interest, convenience, and necessity, including, without
limitation, compliance with the public notice requirements of the Communications
Act of 1934, as amended. The failure by either party to timely file or
diligently prosecute its portion of the Assignment Application shall be deemed a
material breach of this Agreement.
9.2 Hart-Scott-Rodino Act. Within thirty (30) business days after the
date of this Agreement, each party shall submit to the United States Department
of Justice and the United States Federal Trade Commission all forms and
information applicable to the transaction required under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules promulgated
thereunder (the "HSR Act"), and shall furnish to the other party all information
that the other reasonably requests in connection with such filings.
9.3 Other Governmental Consents. Promptly following the execution of
this Agreement, Seller and Buyer shall proceed to prepare and file with the
appropriate governmental authorities (other than the Commission) such requests,
if any, for approval or waiver as may be required from such governmental
authorities in connection with the Transaction, and shall jointly, 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. Any filing or similar fees
associated with compliance with the HSR Act shall be borne equally by Seller and
Buyer.
9.4 Financial Information. Between the date hereof and the Closing Date,
Seller shall furnish Buyer with monthly financial statements within thirty (30)
days after the end of each calendar month, and with such additional data
concerning the Station's financial condition as are prepared by Seller in the
ordinary course of business, in the same form as the Financial Statements
contained in Schedule 6.19.
9.5 Consents. Seller shall use its best efforts to obtain the consents
of the other contracting parties to the assignment of the Contracts requiring
such consent (a "Required Consent"). The delivery of Required Consents to the
assignment of Contracts that are identified on Schedule 1.3 to be material to
the operation of the Station ("Material Contracts") shall be a condition to
Buyer's obligation to close under Section 10.2.7.
9.6 Environmental Site Assessment; Right of Termination. Buyer shall be
entitled to obtain, at Buyer's expense, a Phase I and, if necessary, a Phase II
environmental audit of the Real Property (the "Environmental Assessment"). In
the event that the Environmental Assessment discloses material noncompliance
with an Environmental Law, the Buyer shall be entitled to elect, upon written
notice to Seller within thirty (30) days after receipt of the Environmental
Assessment, either to require Seller to undertake remedial action to correct the
noncompliance (where the
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estimated cost of likely remediation required to bring the Real Property into
compliance with Environmental Laws does not, in the opinion of Seller and its
environmental consultants, exceed an aggregate amount of One Hundred Thousand
Dollars ($100,000)) or terminate this Agreement. In the event Buyer does not
terminate this Agreement, Buyer shall be deemed to have accepted the Real
Property subject to any such Environmental Noncompliance and shall not have any
rights of indemnity or other claim against Seller on the grounds of
noncompliance with any Environmental Law.
9.7 Title Insurance. Within sixty (60) days of the date of this
Agreement, Seller shall deliver to Buyer the commitment of a title insurance
company reasonably satisfactory to Buyer agreeing to issue to Buyer, at standard
rates, ALTA 1975 Form extended coverage title insurance policies, insuring
Buyer's interest in the Real Property (the "Title Commitment"). The costs of
the Title Commitment shall be paid by Seller, and the policy to be issued
pursuant to the Title Commitment shall be paid by Buyer.
9.8 Surveys. Within sixty (60) days of the date of this Agreement,
Seller shall deliver to Buyer surveys of the Real Property sufficient to remove
any "survey exception" from the title insurance policies to be issued pursuant
to the Title Commitments.
9.9 Cashflow Audit. Within thirty (30) days of the date of this
Agreement, Seller shall retain an accountant (the "BCF Accountant") mutually
acceptable to the parties promptly to verify the accuracy of the 1995 BCF. On
or prior to the Closing Date, Seller shall deliver to Buyer an updated report of
the BCF Accountant to verify that the broadcast cashflow generated from the
operation of the Station for the twelve (12) month period ending on the last day
of the month immediately preceding the Closing Date (the "Closing BCF") was at
least equal to the 1995 BCF.
9.10 Confidentiality. Each party agrees that any and all information
learned or obtained by it from the other (and that is not otherwise public or
known in the radio broadcast industry) shall be confidential and agrees not to
disclose any such information to any person whatsoever other than as is
necessary for the purpose of effecting the Transaction or as otherwise required
by law. In the event this Agreement is terminated, all confidential information
provided by Seller to Buyer shall be returned to Seller, unless same is
reasonably retained in connection with litigation or other proceedings between
the parties relating to this Agreement.
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9.11 Access. Between the date hereof and the Closing Date, Seller shall
give, upon prior notice, Buyer or representatives of Buyer (including
underwriters, lenders, consultants and investors) reasonable access to the
Assets and to the books and records of Seller relating to the business and
operation of the Station. It is expressly understood that, pursuant to this
Section, Buyer, at its sole expense, shall be entitled to make such engineering
inspections of the Station and surveys of the Real Property, and such audits of
the Station's financial records as Buyer may desire, so long as the same do not
unreasonably interfere with Seller's operation of the Station.
9.12 Employee Matters.
(a) As set forth on Schedule 6.10, Seller has provided 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 and their
duties as of the date of this Agreement. Seller shall promptly notify Buyer of
any changes that occur prior to Closing with respect to such information.
(b) Buyer shall, within thirty (30) days following the execution of
this Agreement, advise Seller as to which of Seller's employees Buyer will offer
employment (such employees are hereinafter referred to as the "Hired
Employees"), which offers shall be on terms and conditions that Buyer shall
determine in its sole discretion. Nothing in this Agreement shall obligate Buyer
to hire any employee of Seller. Seller waives any claims against Buyer or any of
the Hired Employees arising from such employment, including without limitation
any claims arising from any employment agreement or non-competition agreement.
On or prior to Closing, Seller shall compensate each of the Station's employees
for all accrued commissions, accrued vacations, sick leave and other accrued
benefits. Seller shall terminate the employment of all employees effective on
the Closing Date and shall cooperate with, and use its best efforts to assist,
Buyer in its efforts to secure satisfactory employment arrangements with the
Hired Employees to whom Buyer makes offers of employment.
(c) 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 the right of Buyer to terminate the
employment of any of the Hired Employees at any time, with or without cause.
9.13 Operations Prior to Closing. Between the date of this Agreement and
the Closing Date:
(a) Seller shall operate the Station in the normal and usual
manner, consistent with Seller's past practice and the rules, regulations, and
policies of the Commission, and shall conduct the Station's business only in the
ordinary course. To the extent consistent with such operations, Seller shall use
its best efforts to: (i) maintain the present character and entertainment format
of the Station and the quality of its programs; (ii) keep available for Buyer
the services and number of the Station's present employees reasonably necessary
for the operation of the Station; (iii) preserve the Station's present customers
and business relations; (iv) continue to make expenditures and engage in
activities designed to promote the Station; (v) continue making capital
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expenditures in accordance with the capital expenditure budget for the Station
and otherwise consistent with past station practice; and (vi) undertake to
collect its accounts receivable in accordance with Seller's normal and customary
collection practices.
(b) Seller shall: (i) subject to Section 14.3, maintain the Assets
in their present condition (reasonable wear and tear in normal use excepted);
and (ii) maintain all inventories of supplies, tubes, and spare parts at levels
consistent with the Station's prior practices.
(c) Seller shall maintain its books and records in the usual and
ordinary manner, on a basis consistent with prior periods.
(d) Seller shall comply in all material respects with all laws,
rules, ordinances and regulations applicable to it, to the Assets and to the
business and operation of the Station.
(e) Seller shall perform in all material respects all Contracts
without default and shall pay all of Seller's trade accounts payable in a timely
manner; provided, however, that Seller may dispute, in good faith, any alleged
obligation of Seller.
(f) Seller shall not, without the express written consent of Buyer
which shall not be unreasonably withheld, and which shall be deemed given in the
event Buyer has not responded to a written request therefor within ten (10)
days: (i) sell or agree to sell or otherwise dispose of any of the Assets (A)
other than in the ordinary course of business, and (B) unless such Assets are
replaced prior to Closing by assets of equal or greater worth, quality and
utility; (ii) acquiesce in any infringement, unauthorized use or impairment of
the Intangible Property or change the Station's call sign; (iii) enter into any
employment contract on behalf of the Station unless the same is terminable at
will and without penalty; or (iv) enter into any other contract, lease or
agreement that will be binding on Buyer after Closing.
9.14 Adverse Developments. Seller shall promptly notify Buyer of any
unusual or materially adverse developments that occur prior to Closing with
respect to the Assets or the operation of the Station; provided, however, that
Seller's compliance with the disclosure requirements of this Section 9.14 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.
9.15 Administrative Violations. If Seller receives any finding, order,
complaint, citation or notice prior to the Closing Date which states that any
aspect of the Station's operations violates any rule or regulation of the
Commission or of any other governmental authority (an "Administrative
Violation"), including without limitation any rule or regulation concerning
environmental protection, the employment of labor, or equal employment
opportunity, Seller shall promptly notify Buyer of the Administrative Violation,
remove or correct the Administrative Violation, and be responsible for the
payment of all costs associated therewith, including any fines or back pay that
may be assessed.
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9.16 Bulk Sales Act. Seller agrees to indemnify, defend, and hold Buyer
harmless against any claims, liabilities, costs, or expenses, including
reasonable attorneys' fees, that Buyer may incur as a result of the failure to
comply with the bulk sales provisions of the Uniform Commercial Code or similar
laws.
9.17 Control of Station. This Agreement shall not be consummated until
after the Commission has given its written consent thereto, and notwithstanding
anything herein to the contrary, between the date of this Agreement and the
Closing Date, Buyer shall not directly or indirectly control, supervise or
direct, or attempt to control, supervise or direct the operation of the Station.
Such operations shall be the sole responsibility of Seller.
9.18 Adverse Developments. Buyer shall notify Seller in writing of any
litigation, arbitration or administrative proceeding pending, or to Buyer's
knowledge, threatened against Buyer that could have a material adverse effect on
the Transaction contemplated hereby.
9.19 No Inconsistent Action. Buyer shall not take any other action which
is materially inconsistent with its obligations under this Agreement.
ARTICLE 10
CONDITIONS PRECEDENT
10.1 Mutual Conditions. The obligation of both Seller and Buyer to
consummate this Agreement is subject to the satisfaction of each of the
following conditions:
10.1.1 Governmental Consents. The Commission shall have granted its
consent to the Assignment Application (the "FCC Consent"). Any applicable
waiting period under the HSR Act 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 Transaction.
10.1.2 Absence of Litigation. As of the Closing Date, no action,
claim, suit or proceeding seeking to enjoin, restrain, or prohibit the
consummation of the Transaction shall be pending before any court, the
Commission, or any other governmental authority; provided, however, that this
condition may not be invoked by a party if any such action, suit, or proceeding
was solicited or encouraged by, or instituted as a result of any act or omission
of, such party.
10.2 Conditions to Buyer's Obligation. In addition to satisfaction of
the mutual conditions contained in Section 10.1, the obligation of Buyer to
consummate this Agreement is subject to the satisfaction of each of the
following conditions, any of which may be waived by Buyer in its sole
discretion:
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10.2.1 Representations and Warranties. The representations and
warranties of Seller to Buyer shall be true, complete, and correct in all
material respects as of the Closing Date with the same force and effect as if
then made.
10.2.2 Compliance with Conditions. All of the terms, conditions and
covenants to be complied with or performed by Seller on or before the Closing
Date shall have been timely complied with and performed in all material
respects.
10.2.3 No Material Adverse Development. No material adverse
development shall have occurred with respect to the Station that results in a
significant impairment to the ability of the Station to operate as it is
currently operated or represents a substantial impairment of the aggregate value
of the Station or Assets being conveyed. Notwithstanding anything to the
contrary in the foregoing, any decrease in the Station's audience rating shall
not by itself be deemed a material adverse development.
10.2.4 Title Commitment and Surveys. Buyer shall have timely
received the Title Commitment and Surveys, which shall reveal nothing
inconsistent with Seller's representations and warranties hereunder.
10.2.5 Validity of Station Licenses. On the Closing Date, Seller
shall be the owner and holder of the Station Licenses to the extent that such
authorizations can be owned or held by Seller under the Communications Act of
1934, as amended; the Station Licenses shall be in unconditional full force and
effect, valid for the balance of the current license term expiring at 3:00 a.m.,
E.S.T., February 1, 2003, and the Station Licenses shall be unimpaired by any
acts or omissions of Seller or Seller's employees, agents, officers, directors
or shareholders.
10.2.6 Closing Documents. Seller shall deliver to Buyer all of the
closing documents specified in Section 11.2.1, all of which documents shall be
dated as of the Closing Date, duly executed, and in a form customary in the
state where the Assets are located and reasonably acceptable to Buyer.
10.2.7 Third Party Consents. Seller shall have obtained all
consents to the assignment of the Contracts, identified as "required" on
Schedule 1.3 (a "Required Consent") such that Buyer will enjoy all of the rights
and privileges of Seller under the Contracts subject only to the same
obligations as are binding on Seller thereunder, pursuant to the present terms
thereof. In the event Seller fails to obtain any consent necessary to validly
assign a Contract (other than a "Required Consent"), such Contract shall not be
assigned to Buyer at Closing; provided, however, that Buyer may elect to require
that Seller provide Buyer the benefits under such Contract until such necessary
consent is obtained and such Contract is then assigned to Buyer; provided
further, that Buyer shall reimburse Seller for amounts paid by Seller pursuant
to the terms of such Contracts to the extent Buyer receives benefits thereunder.
10.2.8 Estoppel Certificates. Seller shall have obtained such fee
owner's consents and mortgagee's estoppel and non-disturbance agreements with
respect to the Lease
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Agreements for the leased premises as are reasonably requested by Buyer not less
than thirty (30) days prior to the Closing Date.
10.2.9 Settlement of Claims. Seller shall have settled any and all
claims against Seller that affect or concern the Assets.
10.2.10 Finality. The FCC Consent shall have become a Final Order
(as defined below). Final Order means an order or action of the Commission that,
by reason of expiration of time or exhaustion of remedies, is no longer subject
to administrative or judicial reconsideration or review.
10.2.11 Cashflow. The Closing BCF shall be greater than or equal to
the 1995 BCF.
10.2.12 Renewal. The FCC's grant of the Station's application for
renewal license (File No. BRH-950928B4) shall have become a Final Order (as
defined herein).
10.3 Conditions to Seller's Obligation. In addition to satisfaction of
the mutual conditions contained in Section 10.1, the obligation of Seller to
consummate this Agreement is subject to satisfaction of each of the following
conditions, any of which Seller may be waived by Seller in its sole discretion:
10.3.1 Representations and Warranties. The representations and
warranties of Buyer to Seller shall be true, complete and correct in all
material respects as of the Closing Date with the same force and effect as if
then made.
10.3.2 Compliance with Conditions. All of the terms, conditions and
covenants to be complied with or performed by Buyer on or before the Closing
Date shall have been timely complied with and performed in all material
respects.
10.3.3 Payment. Buyer shall pay Seller the Purchase Price as
provided in Section 3.
10.3.4 Closing Documents. Buyer shall deliver to Seller all the
closing documents specified in Section 11.2.2, all of which documents shall be
dated as of the Closing Date, duly executed, and in a form customary in
transactions of this type and reasonably satisfactory to Seller.
ARTICLE 11
CLOSING
11.1 Closing Date. The Closing hereunder shall occur on a date mutually
agreeable to Buyer and Seller (the "Closing Date") no later than ten (10) days
after the latter of (i) the date of the Commission's action granting its consent
to the Assignment Application has become a Final
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Order or, at the election of the Buyer, the date of the Commission's action
granting its consent and (ii) the date on which the applicable waiting period
under the HSR Act has 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
Transaction. The Closing shall take place at the offices of Buyer's counsel in
Washington, D.C., commencing at 10:00 a.m. on the Closing Date. If, as of the
Closing Date, any condition precedent described in Section 10 has not been
satisfied, the party who is entitled to require such condition be satisfied may
(in its sole discretion) notify the other party of the absence of such condition
precedent at or before the Closing and simultaneously therewith postpone the
Closing until a date ten (10) days after all such conditions have been (or are
able to be) performed, and such postponed date shall constitute the new Closing
Date for all purposes hereunder. Each of the parties shall use its reasonable
best efforts to obtain any FCC authority necessary to schedule the Closing Date
as contemplated in this Section.
11.2 Performance at Closing. The following documents shall be executed
and delivered at Closing:
11.2.1 By Seller. Seller shall deliver to Buyer:
(a) A certificate executed by Seller attesting to Seller's
compliance with the matters set forth in Sections 10.2.1, 10.2.2, 10.2.3 and
10.2.11 together with certified copies of (1) the Certificate of Incorporation
of Seller and (ii) appropriate evidence of Seller's authorization to enter into
and consummate this Agreement.
(b) One or more assignments transferring to Buyer all of the
interests of Seller in and to the Station Licenses, the Station Applications,
and all other licenses, permits, and authorizations issued by any other
governmental authorities that are used in or necessary for the lawful operation
of the Station.
(c) One or more bills of sale conveying to Buyer the Station
Equipment.
(d) One or more assignments, together with all required consents,
assigning to Buyer all of the Contracts, the Station Records and the Intangible
Property.
(e) One or more assignments, warranty deeds or other appropriate
instruments conveying to Buyer all rights of Seller in the Real Property and all
consents to such assignments necessary for the legally enforceable assignment of
such interests.
(f) The Covenant.
(g) Opinions of Seller's Counsel and/or Special Counsel
substantially in the form of Exhibit B, subject to customary qualifications.
(h) The affidavit described in Section 6.16 above.
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11.2.2 By Buyer. Buyer shall deliver to Seller:
(a) A certificate executed by Buyer attesting to Buyer's compliance
with the matters set forth in Sections 10.3.1 and 10.3.2, together with
certified copies of (1) the Certificate of Incorporation of Buyer and (2)
appropriate evidence of Buyer's authorization to enter into and consummate this
Agreement.
(b) The Purchase Price.
(c) Such assumption agreements and other instruments and documents
as are required to make, confirm, and evidence Buyer's assumption of and
obligation to pay, perform, or discharge Seller's obligations under the
Contracts to the extent the same are to be assumed by Buyer pursuant to the
terms of this Agreement.
(d) An opinion of Buyer's Counsel relating to the matters described
in and substantially in the form of Exhibit C, subject to customary
qualifications.
11.2.3 Other Documents and Acts. The parties will also execute such
other documents and perform such other acts, before and after the Closing Date,
as may be necessary for the complete implementation and consummation of this
Agreement.
ARTICLE 12
POST-CLOSING OBLIGATIONS
The parties covenant and agree as follows with respect to the period
subsequent to the Closing Date:
12.1 Indemnification.
12.1.1 Buyer's Right to Indemnification. Seller undertakes and
agrees to indemnify, defend by counsel reasonably acceptable to Buyer, and hold
harmless Buyer, its parent, affiliates, successors and assigns and their
respective directors, officers, employees, shareholders, representatives and
agents (hereinafter referred to collectively as "Buyer Indemnitees") from and
against and in respect of any and all losses, costs, liabilities, claims,
obligations, diminution in value and expenses, including reasonable attorneys'
fees, incurred or suffered by a Buyer Indemnitee arising from (i) the claims of
third parties with respect to operation of the Station or ownership of the
Assets prior to Closing not expressly assumed by Buyer pursuant to this
Agreement or otherwise consented to by Buyer in writing; (ii) a breach,
misrepresentation, or other violation of any of Seller's covenants, warranties
or representations contained in this Agreement; (iii) all liabilities of Seller
or the Station not expressly assumed by Buyer pursuant to this Agreement or
otherwise consented to by Buyer in writing; (iv) all liens, charges, or
encumbrances on any of the Assets which are not expressly permitted by this
Agreement or otherwise consented to by Buyer in writing; (v) all
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Administrative Violations and alleged Administrative Violations occurring prior
to Closing; and (vi) any breach or default by Seller under any Contract prior to
Closing. The foregoing indemnity is intended by Seller to cover all acts, suits,
proceedings, claims, demands, assessments, adjustments, diminution in value,
costs, and expenses with respect to any and all of the specific matters in this
indemnity set forth.
12.1.2 Seller's Right to Indemnification. Buyer undertakes and
agrees to indemnify, defend by counsel reasonably acceptable to Seller, and hold
harmless Seller, its subsidiaries, affiliates, successors and assigns and their
respective directors, officers, employees, shareholders, representatives and
agents (hereinafter referred to collectively as "Seller Indemnitees") from and
against and in respect of any and all losses, costs, liabilities, claims,
obligations, diminution in value and expenses, including reasonable attorneys'
fees, incurred or suffered by a Seller Indemnitee arising from (i) the operation
of the Station or ownership of the Assets after Closing; (ii) a breach,
misrepresentation, or other violation of any of Buyer's covenants, warranties
and representations contained in this Agreement; (iii) all liabilities under the
Contracts to the extent specifically assumed by Buyer pursuant to this
Agreement; and (iv) any breach or default by Buyer under any Contract after
Closing. The foregoing indemnity is intended by Buyer to cover all acts, suits,
proceedings, claims, demands, assessments, adjustments, costs, and expenses with
respect to any and all of the specific matters in this indemnity set forth.
12.1.3 Conduct of Proceedings. If any claim or proceeding covered
by the foregoing agreements to indemnify and hold harmless shall arise, the
party who seeks indemnification (the "Indemnified Party") shall give written
notice thereof to the other party (the "Indemnitor") promptly after the
Indemnified Party learns of the existence of such claim or proceeding; provided,
however, that the Indemnified Party's failure to give the Indemnitor prompt
notice shall not bar the Indemnified Party's right to indemnification unless
such failure has materially prejudiced the Indemnitor's ability to defend the
claim or proceeding. The Indemnitor shall have the right to employ counsel
reasonably acceptable to the Indemnified Party to defend against any such claim
or proceeding, or to compromise, settle or otherwise dispose of the same, if the
Indemnitor deems it advisable to do so, all at the expense of the Indemnitor;
provided that the Indemnitor shall not have the right to control the defense of
any such claim or proceeding unless it has acknowledged in writing its
obligation to indemnify the Indemnified Party fully from all liabilities
incurred as a result of such claim or proceeding and then and periodically
thereafter provides the Indemnified Party with reasonably sufficient evidence of
the ability of the Indemnitor to satisfy any such liabilities. The parties will
fully cooperate in any such action, and shall make available to each other any
books or records useful for the defense of any such claim or proceeding. If the
Indemnitor fails to acknowledge in writing its obligation to defend against or
settle such claim or proceeding within twenty (20) days after receiving notice
thereof from the Indemnified Party (or such shorter time specified in the notice
as the circumstances of the matter may dictate), the Indemnified Party shall be
free to dispose of the matter, at the expense of the Indemnitor, in any way in
which the Indemnified Party deems to be in its best interest.
12.1.4 Indemnification Not Sole Remedy. The right to
indemnification hereunder shall not be the exclusive remedy of any party in
connection with any breach by another party of its representations, warranties,
or covenants, nor shall such indemnification be deemed
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to prejudice or operate as a waiver of any remedy to which any party may
otherwise be entitled as a result of any such breach.
12.1.5 Right of Offset. Each of Buyer and Seller shall have the
right to offset against amounts owing to the other any amounts owing to such
party pursuant to this Section 12.
12.1.6 Limits on and Conditions of Indemnification; Threshold and
Cap. Notwithstanding any other provision hereof, no Indemnified Party shall be
entitled to make a claim against an Indemnitor in respect of any breach of this
Agreement except to the extent that the aggregate amount of such Damages exceeds
the amount of Ten Thousand Dollars ($10,000) (the "Threshold Amount"); provided,
however, that once such aggregate has been exceeded, such Indemnitor shall only
be liable for the amount that such Damages exceed the Threshold Amount.
Notwithstanding any other provision of the Agreement, neither the indemnity
obligation of Seller nor the indemnity obligation of Buyer will exceed Six
Million Five Hundred Thousand Dollars ($6,500,000).
12.1.7 Post-Closing Access. Buyer, for a period of five (5) years
following the Closing Date, shall make available during normal business hours,
for audit and inspection by Seller and its representatives, for any reasonable
purpose and upon reasonable notice, all records, files, documents and
correspondence transferred to it hereunder with respect to taxes, regulations
and litigations. Buyer shall at no time dispose of or destroy any such records,
files, documents and correspondence without first giving (30) days prior notice
to Seller to permit Seller, at its expense, to examine, duplicate or take
possession of and title to such records, files, documents and correspondence.
All personnel records shall be maintained as confidential if required by any
applicable or federal law.
ARTICLE 13
DEFAULT AND REMEDIES
13.1 Termination by Seller Upon Buyer's Default. This Agreement may be
terminated by Seller and the purchase and sale of the Station abandoned, if
Seller is not then in material default, upon written notice to Buyer, upon the
occurrence of any of the following:
(a) Conditions. If on the date that would otherwise be the Closing
Date (subject to the right of Buyer to cure provided in Section 13.3 hereof) any
of the conditions precedent to the obligations of Seller set forth in this
Agreement have not been satisfied in all material respects or waived in writing
by Seller.
(b) Judgments. If there shall be in effect on the date that would
otherwise be the Closing Date any judgment, decree or order that would prevent
or make unlawful the Closing.
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(c) Upset Date. If the Closing shall not have occurred within nine
(9) months after the after the Assignment Application has been filed with the
FCC.
13.2 Termination by Buyer Upon Seller's Default. This Agreement may be
terminated by Buyer and the purchase and sale of the Station abandoned, if Buyer
is not then in material default, upon written notice to Seller, upon the
occurrence of any of the following:
(a) Conditions. If on the date that would otherwise be the Closing
Date (subject to the right of Seller to cure provided in Section 13.3 hereof)
any of the conditions precedent to the obligations of Buyer set forth in this
Agreement have not been satisfied in all material respects or waived in writing
by Buyer.
(b) Judgments. If there shall be in effect on the date that would
otherwise be the Closing Date any judgment, decree or order that would prevent
or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred within nine
(9) months after the Assignment Application has been filed with the FCC.
13.3 Breach and Opportunity to Cure. If either party believes the other
to be in default hereunder, the non-defaulting party shall provide the
defaulting party with notice specifying in reasonable detail the nature of such
default. If such default has not been cured by the earlier of: (i) the Closing
Date, or (ii) within thirty (30) days after delivery of such notice, then the
party giving such notice may (x) terminate this Agreement, (y) extend the
Closing Date under Section 11.1 (but no such extension shall constitute a waiver
of such non-defaulting party's right to terminate as a result of such default),
and/or (z) exercise the remedies available to such party pursuant to Section
13.5 or 13.6, subject to the right of the other party to contest such action
through appropriate proceedings.
13.4 Escrow Deposit. Simultaneously with the execution and delivery of
this Agreement, Buyer has deposited with the escrow account of Media Venture
Partners (the "Escrow Agent") $3,000,000 in the form of cash or a letter of
credit in accordance with an escrow agreement among Buyer, Seller and the Escrow
Agent (the "Escrow Agreement") attached hereto as Exhibit D. All funds
deposited with the Escrow Agent shall be held and disbursed in accordance with
the terms of the Escrow Agreement and the following provisions:
(a) Upon Closing, Buyer and Seller shall jointly instruct the
Escrow Agent to disburse all amounts held by the Escrow Agent pursuant to the
Escrow Agreement, including any interest or other proceeds from the investment
of funds held by the Escrow Agent, to Buyer.
(b) If this Agreement is terminated pursuant to Section 13.2 or
Article 14 and Section 13.4(c) does not apply and Buyer is not in material
breach of this Agreement, Buyer and Seller shall jointly instruct the Escrow
Agent to disburse all amounts held by the Escrow Agent pursuant to the Escrow
Agreement, including any interest or other proceeds from the investment of funds
held by the Escrow Agent, to Buyer.
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(c) If this Agreement is terminated pursuant to Section 13.1 or
otherwise on account of a breach by Buyer, and Seller is not in material breach
of this Agreement, then Buyer and Seller shall jointly instruct the Escrow Agent
to disburse all amounts held by the Escrow Agent pursuant to the Escrow
Agreement to Seller, excluding any interest or other proceeds from the
investment of funds held by the Escrow Agent, which the parties shall instruct
be released to Buyer.
13.5 Seller's Remedies. If this Agreement is terminated by Seller and
Section 13.4(c) applies, then the payment to Seller pursuant to Section 13.4(c)
shall be liquidated damages and shall constitute full payment and the exclusive
remedy for any damages suffered by Seller. Seller and Buyer agree in advance
that actual damages would be difficult to ascertain and that the amount of the
payment to be made to Seller pursuant to Section 13.4(c) is a fair and equitable
amount to reimburse Seller for damages sustained due to Buyer's breach of this
Agreement.
13.6 Buyer's Remedies. The parties recognize that if, prior to Closing,
Seller breaches this Agreement and refuses to perform under the provisions of
this Agreement, monetary damages alone would not be adequate to compensate Buyer
for its injury. Buyer shall therefore be entitled, in addition to any other
remedies that may be available (including but not limited to the provisions of
Article 12 (relating to Indemnification)), to obtain specific performance of the
terms of this Agreement prior to Closing. If any action is brought by Buyer to
enforce this Agreement prior to Closing, Seller shall waive the defense that
there is an adequate remedy at law. Following the Closing, Buyer shall be
entitled, in addition to any other remedies that may be available, to seek
specific performance of the terms of this Agreement if such remedy is available
at equity. In the event Buyer elects to terminate this Agreement as a result of
Seller's default instead of seeking specific performance, Buyer shall be
entitled to recover Buyer's damages.
ARTICLE 14
TERMINATION
14.1 Absence of Commission Consent. This Agreement may be terminated at
the option of either party upon notice to the other if a Final Order approving
the Assignment Applications has not been obtained within nine (9) months after
the date of this Agreement; provided, however, that neither party may terminate
this Agreement if such party is in default hereunder, or if a delay in any
decision or determination by the Commission respecting the Assignment
Applications has been caused or materially contributed to by such party's action
or inaction with respect to the Assignment Applications. In the event of
termination pursuant to this Section, the parties shall be released and
discharged from any further obligation hereunder unless the failure to obtain
such Final Order is attributable to Buyer, as provided in this Section, and
Seller is not in default and has otherwise complied with its obligations under
this Agreement, in which case Seller shall be entitled to the Liquidated Damages
as provided in Section 13.2.
14.2 Designation for Hearing. The time for Commission approval provided
in Section 14.1 notwithstanding, either party may terminate this Agreement upon
notice to the other, if, for any reason, the Assignment Applications is
designated for hearing by the Commission,
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provided, however, that notice of termination must be given with twenty (20)
days after release of the hearing designation order and that the party giving
such notice is not in default and has otherwise complied with its obligations
under this Agreement. Upon termination pursuant to this Section 14.2, the
parties shall be released and discharged from any further obligation hereunder.
14.3 Damage.
14.3.1 Risk of Loss. The risk of loss or damage to the Assets shall
be upon Seller at all times prior to the Closing. In the event of loss or
damage, Seller shall promptly notify Buyer thereof and shall repair, replace and
restore the lost or damaged property to its former condition as soon as
possible. If such repair, replacement and restoration has not been completed
prior to the Closing Date, Buyer may, at its option:
(a) elect to terminate this Agreement, but only if the failure to
repair, replace and restore the lost or damaged property continues for a period
in excess of sixty (60) days from the Closing Date without consideration of this
Section 14.5;
(b) elect to consummate the Transaction on the Closing Date in
which event Seller shall pay to Buyer the amount necessary to restore the lost
or damaged property to its former condition and against such obligation shall
assign to Buyer all of Seller's rights under any applicable insurance policies;
or
(c) elect to postpone the Closing Date, with prior consent of the
Commission if necessary, which consent both parties will use their reasonable
best efforts to obtain, until a date within fifteen (15) business days after
Seller gives written notice to Buyer of completion of the repair, replacement
and restoration of such lost or damaged property. If, after the expiration of
that extension period, the lost or damaged property has not been adequately
repaired, replaced or a restored, Buyer may terminate this Agreement, and the
parties shall be released and discharged from any further obligation hereunder.
14.3.2 Failure of Broadcast Transmission. Seller shall give prompt
written notice to Buyer if either of the following (a "Specified Event") shall
occur: (i) the regular broadcast transmissions of the Station in the normal and
usual manner is interrupted or discontinued; or (ii) the Station is operated at
less than its licensed antenna height above average terrain or at less than
ninety percent (90%) of its licensed effective radiated power. If any Specified
Event persists for more than seventy-two (72) hours (or, in the event of force
majeure or utility failure affecting generally the market served by the Station,
one hundred twenty (120) hours), whether or not consecutive, during any period
of thirty (30) consecutive days, then Buyer may, at its option: (i) terminate
this Agreement by written notice given to Seller not more than ten (10) days
after the expiration of such thirty (30) day period, or (ii) proceed in the
manner set forth in Section 14.3.1. In the event of termination of this
Agreement by Buyer pursuant to this Section, the parties shall be released and
discharged from any further obligation hereunder.
14.3.3 Resolution of Disagreements. If the parties are unable to
agree upon the extent of any loss or damage, the cost to repair, replace or
restore any lost or damaged property,
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the adequacy of any repair, replacement, or restoration of any lost or damaged
property, or any other matter arising under this Section 14.5, the disagreement
shall be referred to a qualified consulting communications engineer mutually
acceptable to Seller and Buyer who is a member of the Association of Federal
Communications Consulting Engineers, whose decision shall be final, binding upon
and non-appealable by the parties, and whose fees and expenses shall be paid
one-half by Seller and one-half by Buyer.
14.4 Legal Actions. If, prior to the Closing Date, any action, suit, or
proceeding shall have been instituted by or before any court or other
governmental authority (other than the Commission) to enjoin, restrain, or
prohibit the consummation of the Transaction, the Closing may be adjourned at
the option of either party, with prior consent of the Commission if necessary,
which consent both parties will use their reasonable best efforts to obtain, for
a period of up to ninety (90) days, and if, at the end of such period, the
action, suit, or proceeding shall not have been favorably resolved, either party
may, by written notice to the other, terminate this Agreement; provided,
however, that if such action, suit, or proceeding shall have been solicited or
encouraged by, or instituted as a result of any act or omission of, Seller or
Buyer, then such party shall not have any right of adjournment or termination
pursuant to this Section. In the event of termination pursuant to this Section,
the parties shall be released and discharged from any further obligation
hereunder.
ARTICLE 15
GENERAL PROVISIONS
15.1 Brokerage. Seller represents to Buyer that except for its agreement
with Media Venture Partners, 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 such payment could be based. Any commission, fee or payment
due Media Venture Partners in connection with the Transaction shall be paid in
full by Seller on or prior to the Closing. 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 Seller.
15.2 Expenses. Except as otherwise provided herein, all expenses
involved in the preparation and consummation of this Agreement shall be borne by
the party incurring the same whether or not the Transaction is consummated. All
Commission filing fees for the Assignment Applications shall be shared equally
by Buyer and Seller. All filing fees required to be paid under the HSR Act shall
be shared equally by Buyer and Seller. All recording costs for instruments of
transfer, and all stamp, sales, use and transfer taxes shall be paid by Seller.
The first $50,000 of fees of the BCF Accountant shall be paid by Seller and any
fees in excess of such amount shall be paid by Buyer.
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15.3 Notices. All notices, requests, demands, and other communications
pertaining to this Agreement shall be in writing and shall be deemed duly given
when delivered personally (which shall include delivery by Federal Express or
other nationally recognized, reputable overnight courier service that issues a
receipt or other confirmation of delivery) to the party for whom such
communication is intended, or three (3) business days after the date mailed by
certified or registered U.S. mail, return receipt requested, postage prepaid,
addressed as follows:
(a) If to Seller:
Rex B. Rivers
WEDR, Inc.
Executive Offices
Box 626
Stuart, FL 34995
with a copy (which shall not constitute notice) to:
Gary S. Smithwick, Esq.
Smithwick & Belendiuk, P.C.
1990 M Street, N.W.
Suite 510
Washington, D.C. 20036
(b) If to Buyer:
Evergreen Media Corporation of Los Angeles
c/o Evergreen Media Corporation
433 E. Las Colinas Boulevard, Suite 1130
Irving, Texas 75039
Attn: Scott K. Ginsburg, President
with a copy (which shall not constitute notice) to:
Eric L. Bernthal, Esq.
Kevin C. Boyle, Esq.
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, D.C. 20004
Any party may change its address for notices by notice to the others given
pursuant to this Section.
15.4 Attorneys' Fees. If any party initiates any litigation against any
other party involving this Agreement, the prevailing party in such action shall
be entitled to receive
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reimbursement from the other party for all reasonable attorneys' fees and other
costs and expenses incurred by the prevailing party in respect of that
litigation, including any appeal, and such reimbursement may be included in the
judgment or final order issued in that proceeding.
15.5 Survival of Representations, Warranties and Indemnification Rights.
The several representations and warranties of the parties contained herein, and
the parties respective indemnification rights pursuant to Section 12, shall
survive the Closing for a period of two (2) years, at which time the same shall
expire (except for claims asserted during such two (2) year period); provided,
however, that representations and warranties with respect to title and
authorization matters shall survive in perpetuity.
15.6 Exclusive Dealings. For so long as this Agreement remains in
effect, neither Seller, its officers, directors, employees, nor any person
acting on Seller's behalf, shall, directly or indirectly, solicit or initiate
any offer from, or conduct any negotiations with, any person other than Buyer or
Buyer's assignee(s) concerning the acquisition of the Station.
15.7 Waiver. Unless otherwise specifically agreed in writing to the
contrary: (i) the failure of any party at any time to require performance by
any other of any provision of this Agreement shall not affect such party's right
thereafter to enforce the same; (ii) no waiver by any party of any default by
any other shall be valid unless in writing and acknowledged by an authorized
representative of the non-defaulting party, and no such waiver shall be taken or
held to be a waiver by such party of any other preceding or subsequent default;
and (iii) no extension of time granted by any party for the performance of any
obligation or act by any other party shall be deemed to be an extension of time
for the performance of any other obligation or act hereunder.
15.8 Assignment. No party may assign its rights or obligations hereunder
without the prior written consent of the other parties except: (i) Buyer may
assign its rights and obligations to a corporation, partnership or other
business entity that controls, is controlled by, or is under common control with
Buyer, and (ii) Buyer may make a collateral assignment of its rights under this
Agreement to any lender who provides funds to Buyer for the acquisition or
operation of the Station. Seller agrees to execute acknowledgements of such
assignment(s) and collateral assignment(s) in such forms as Buyer or Buyer's
lender(s) may from time to time request. Subject to the foregoing, this
Agreement shall be binding upon, inure to the benefit of, and be enforceable by
the parties hereto and their respective successors and assignees.
15.9 Entire Agreement. This Agreement and the Exhibits and Schedules
hereto (which are incorporated by reference herein) constitute the entire
agreement between the parties with respect to the subject matter hereof and
referenced herein, supersede and terminate any prior agreements between the
parties (written or oral). This Agreement may not be altered or amended except
by an instrument in writing signed by the party against whom enforcement of any
such change is sought.
15.10 Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures on each such counterpart
were on the same instrument.
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15.11 Construction. The Section headings of this Agreement are for
convenience only and in no way modify, interpret or construe the meaning of
specific provisions of the Agreement. As used herein, the neuter gender shall
also denote the masculine and feminine, and the masculine gender shall also
denote the neuter and feminine, where the context so permits.
15.12 Schedules and Exhibits. The Schedules and Exhibits to this
Agreement are a material part of this Agreement.
15.13 Severability. If any one or more of the provisions contained in
this Agreement should be found invalid, illegal or unenforceable in any respect,
the validity, legality, and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby. Any illegal or
unenforceable term shall be deemed to be void and of no force and effect only to
the minimum extent necessary to bring such term within the provisions of
applicable law and such term, as so modified, and the balance of this Agreement
shall then be fully enforceable.
15.14 Choice of Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida, without regard to the
choice of law rules utilized in that jurisdiction.
15.15 Counsel. Each party has been represented by its own counsel in
connection with the negotiation and preparation of this Agreement and,
consequently, each party hereby waives the application of any rule of law that
would otherwise be applicable in connection with the interpretation of this
Agreement, including but not limited to 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.
15.16 Public Statements. Prior to the Closing Date, neither Seller nor
Buyer shall, without the prior written approval of the other party, make any
press release or other public announcement concerning the transactions
contemplated by this Agreement except (i) Seller and Buyer shall issue a
mutually agreeable public announcement press release promptly after the signing
of this Agreement; and (ii) to the extent that either party shall be so
obligated by law, in which case the other party shall be so advised and the
parties shall use their best efforts to cause a mutually agreeable release or
announcement to be issued.
15.17 Like Kind Exchange Election. Buyer 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 and Seller agrees to cooperate in all respects to
effectuate such exchange, provided that the exchange shall be made without any
cost or liability to Seller, and the Closing shall not be delayed by reason of
the exchange.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed by a respective duly authorized officer as of the date first written
above.
SELLER:
------
WEDR, INC.
By: ________________________________
Rex B. Rivers
President
BUYER:
-----
EVERGREEN MEDIA CORPORATION OF LOS
ANGELES
By: _________________________________
Scott K. Ginsburg
President
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EXHIBIT A
NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT ("Agreement") is made as of this ____
day of ______________, by and among WEDR, INC., a Florida corporation, with an
address at Box 626, Stuart, Florida 34995 ("Seller"), Jerry Rushin, an
individual residing at ___________________ ("Rushin"), and EVERGREEN MEDIA
CORPORATION OF LOS ANGELES, a Delaware corporation, with an address at 433 E.
Las Colinas Boulevard, Suite 1130, Irving, Texas 75039 ("Buyer"). Seller and
Rushin are referred to herein as the "Covenantors."
RECITALS
WHEREAS, Seller is the licensee of Station WEDR-FM, 99.1 MHz, Miami,
Florida (the "Station"); and
WHEREAS, Rushin is a key management employee of Seller with special
experience and knowledge in the operation of the Station; and
WHEREAS, Buyer and Seller have entered into a Purchase Agreement dated
June ___, 1996 pursuant to which Seller has agreed to sell and assign and Buyer
has agreed to purchase and acquire substantially all of the property and assets
used or useful in the operation of the Station; and
WHEREAS, on ____________________ the Federal Communications Commission
(the "Commission" or "FCC") granted its consent to the assignment of the Station
Licenses (as defined in the Purchase Agreement) from Seller to Buyer; and
WHEREAS, Buyer and Seller intend to consummate the transaction
contemplated by the Purchase Agreement by executing such documents and
instruments and by otherwise fulfilling their respective obligations under the
Purchase Agreement on the Closing Date of even date herewith; and
WHEREAS, the parties hereto wish to enter into a non-competition
agreement with respect to the Station and the area surrounding the Station, upon
the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises set forth herein, the parties hereto agree as follows:
1. Consideration. In consideration of Covenantors' obligations
hereunder, Buyer has paid Seller on the date of this Agreement the sum of Five
Hundred Thousand Dollars ($500,000.00), which sum is part of the Total
Consideration under the Purchase Agreement. Seller has paid a portion of such
consideration to Rushin in consideration of his agreement hereto.
<PAGE>
2. Non-competition/Non-interference.
a. For a period of two (2) years from the date of this
Agreement (the "Non-competition Period"), the Covenantors agree that neither
they nor, in the case of Seller, Seller's Affiliates (as defined below) shall,
directly or indirectly, (i) own, manage, operate, control, join, assist, lend
money to, guarantee the obligation of, or participate in the ownership,
management, operation or control of, or be connected as consultant, stockholder,
director, officer, employee, or partner with, or participate in any manner with
the start-up or set-up of, any Competitive Business (as defined below), or (ii)
solicit or induce any employee of Buyer to terminate such employment or assist,
advise or counsel any such employee in becoming employed by any person or entity
other than Buyer. "Competitive Business" means any FM radio station, as defined
in Part 73 of the FCC's rules and regulations, the transmitter, studio site or
city of license of which is located within, or the 1mV/m contour of which
encompasses in whole or part, the Restricted Region (as defined below) providing
programming in the same or substantially the same format as that of the Station
as of the Closing Date; provided, however, notwithstanding anything herein to
the contrary, that information delivery and other activities not using voice
signals shall not be deemed to be Competitive Business, nor shall the
Covenantors or Seller's Affiliates be deemed to be prohibited from engaging in
any of the following: AM radio, television, cable TV, cable TV programming,
data transfer and transmission using radio or other frequencies and their
subcarriers, cellular radio, paging and distribution of signals by satellites.
"Restricted Region" means the area encompassing a seventy (70) mile radius of
the Station's current FM transmitter site. An "Affiliate" means any other
person or entity that controls or is controlled by the Seller. Notwithstanding
anything herein to the contrary, the restrictions of this Non-competition
Agreement shall not (x) preclude Seller or Rushin from owning up to five (5%) of
any publicly-held company; or (y) prevent Seller's or its Affiliates' or
Rushin's acquisition of or entering into a joint venture or other similar
arrangement with a business less than ten percent (10%) of the revenues of which
derive from a Competitive Business; provided, however, that they agree to divest
or cause the divestment of such Competitive Business within one (1) year of the
date of the acquisition or entry into such joint venture or other similar
arrangement. Notwithstanding anything herein to the contrary, this Agreement
shall not preclude Rushin from (i) making voice-overs or otherwise preparing
and/or recording radio commercials provided that such services are not provided
to or for the benefit of any similarly-formatted radio station in the Miami-Ft.
Lauderdale market or (ii) advising third parties regarding employment
opportunities in radio, so long as such parties are not employees of the
Station, and such services are not to or for the benefit of any similarly-
formatted radio station in the Miami-Ft. Lauderdale market.
b. Covenantors acknowledge and agree that the provisions of
this Section 2 have been specifically negotiated and carefully tailored with a
view to preventing the serious and irreparable injury that Buyer will suffer in
the event of competition by Covenantors with Buyer in the Restricted Region
during the Non-competition Period. Buyer is providing the benefits set forth in
this Agreement in reliance on Covenantors' representation that the restrictions
on them set forth in this Section 2 will not impose an undue hardship on
Covenantors because of the availability of other opportunities with respect to
the operation of FM radio stations. Covenantors further acknowledge that their
breach of this Section 2 will cause irreparable injury and damage to Buyer, the
exact amount of which will be difficult to ascertain, and that the remedies at
law for any such breach would be inadequate. Accordingly, if either Covenantor
breaches this Section 2, then Buyer
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shall be entitled to injunctive relief without posting bond or other security.
If either Covenantor violates this Section 2 and Buyer brings legal action for
injunctive or other relief, Buyer shall not, as a result of the time involved in
obtaining such relief, be deprived of the benefit of the full period of non-
competition set forth in this Section 2. Accordingly, the covenant set forth in
this Section 2 shall be deemed to have the duration set forth herein, computed
from the date such relief is granted but reduced by the time expired between the
date the Non-competition Period began to run and the date of the first violation
of Section 2 by either Covenantor.
c. In the event that, despite the express agreement of Buyer
and Covenantors, any provision of this Section 2 shall be determined by any
court or other tribunal of competent jurisdiction to be unenforceable for any
reason whatsoever, the parties agree that this Section 2 shall be interpreted to
extend only over the maximum period of time for which it may be enforceable,
and/or over the maximum geographical areas as to which it may be enforceable,
and/or to the maximum extent in any and all other respects as to which it may be
enforceable, all as determined by such court or tribunal.
3. Non-Assignment. The duties of each party hereunder shall not be
assignable; provided, however, that Buyer may assign its rights under this
Agreement to, and this Agreement shall thereafter be binding upon and inure to
the benefit of, any subsequent licensee of the Station and such assignee shall
thereupon be deemed substituted for Buyer upon the terms and subject to the
conditions hereof.
4. Notices. All notices, requests, demands, and other
communications pertaining to this Agreement shall be in writing and shall be
deemed duly given when delivered personally (which shall include delivery by
Federal Express or other nationally recognized, reputable overnight courier
service that issues a receipt or other confirmation of delivery) to the party
for whom such communication is intended, or three (3) business days after the
date mailed by certified or registered U.S. mail, return receipt requested,
postage prepaid, addressed as follows:
If to Buyer, to:
Evergreen Media Corporation of Los Angeles
c/o Evergreen Media Corporation
433 E. Las Colinas Boulevard, Suite 1130
Irving, Texas 75039
Attn: Scott K. Ginsburg, President
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with copy to:
Eric L. Bernthal, Esq.
Kevin C. Boyle, Esq.
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, D.C. 20004
If to Seller:
Rex B. Rivers
President
WEDR, Inc.
Executive Offices
Box 626
Stuart, Florida 34995
with copy to:
Gary S. Smithwick, Esq.
Smithwick & Belendiuk, P.C.
1990 M Street, N.W.
Suite 510
Washington, D.C. 20036
If to Rushin:
____________________
____________________
____________________
Any party may change the address to which such notices are to be addressed by
notice thereof to the other parties in the manner set forth above.
5. Applicable Law. This Agreement shall be interpreted and enforced
under the laws of the State of Florida, without regard to the choice of law
rules utilized in that jurisdiction.
6. Entire Agreement. This Agreement contains the entire agreement
among the parties with respect to the subject matter hereof and supersedes all
prior oral and written agreements, understandings and commitments between the
parties with respect to the subject matter hereof. No amendments to this
Agreement may be made except by a writing signed by all parties hereto.
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7. No Waiver. No failure or delay of Buyer to exercise any of its
rights or remedies hereunder for breach of any provision hereof shall constitute
a waiver of such rights or remedies or any waiver in connection with any
subsequent breach thereof. No waiver of any provision of this Agreement shall
be effective unless in writing and signed by the party against which such waiver
is sought to be enforced.
8. Acknowledgment. Covenantors hereby acknowledge that they have
had the opportunity to consult independent counsel of their choosing in
connection with the execution of this Agreement.
9. Counterparts. This Agreement may be signed in multiple
counterparts, all of which together shall constitute one agreement binding on
the parties hereto, notwithstanding that all of the parties have not signed the
same counterpart.
10. Attorney's Fees. If any action in law or in equity is necessary
to enforce or interpret the provisions of this Agreement, the prevailing party
shall be entitled to reasonable attorney's fees, costs, and necessary
disbursements, in addition to any other relief to which it may be entitled.
11. Construction. The Section headings of this Agreement are for
convenience only and in no way modify, interpret or construe the meaning of
specific provisions of the Agreement. As used herein, the neuter gender shall
also denote the masculine and feminine, and the masculine gender shall also
denote the neuter and feminine, where the context so permits.
5
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SELLER:
------
WEDR, INC.
By:
---------------------------------
Rex B. Rivers
President
RUSHIN
By:
---------------------------------
Jerry Rushin
BUYER:
-----
EVERGREEN MEDIA CORPORATION OF LOS ANGELES
By:
___________________________________
Scott K. Ginsburg
President
1
<PAGE>
EXHIBIT B
OPINION OF SELLER'S COUNSEL
Seller shall deliver to Buyer the written opinion of Seller's counsel
and/or special counsel, dated the Closing Date, in scope and form reasonably
satisfactory to Buyer, to the following effect:
(1) Seller is a corporation duly organized and validly existing, under
the laws of the jurisdiction of its organization, with full power under its
partnership agreement to enter into and perform its respective obligations under
the Agreement. Based solely on certificates from public officials, such counsel
shall confirm that Seller is qualified to do business in the State of Florida.
(2) The Agreement and the other documents executed by Seller pursuant
thereto (the "Related Documents") have been duly executed by Seller and such
action has been duly authorized by all necessary corporate action. The
Agreement and the Related Documents, other than the Covenant, constitute the
legal, valid, and binding obligations of Seller enforceable in accordance with
their terms except as their enforceability may be limited by bankruptcy,
insolvency, moratorium or other laws relating to or affecting creditors' rights
generally and the exercise of judicial discretion in accordance with general
equitable principles.
(3) None of (i) the execution and delivery of the Agreement or the
Related Documents by Seller, (ii) the sale of the Station by Seller, or (iii)
compliance with the terms and conditions of the Agreement or the Related
Documents on the Closing Date will conflict with, breach the terms and
conditions of, constitute a default under, or violate Seller's Certificate of
Incorporation and Bylaws, or any judgment, decree, order, agreement, lease or
other instrument known to counsel to which Seller is a party or by which Seller
is legally bound.
(4) To the knowledge of counsel no suit, action or proceeding is
pending or threatened that questions or may affect the validity of any action to
be taken by Seller pursuant to this Agreement or the Related Documents or that
seeks to restrain Seller from carrying out the Transaction or Seller's
obligations hereunder.
(5) To the knowledge of counsel, following reasonable inquiry, there
is no outstanding judgment, or any suit, action or claim pending, threatened or
deemed by Seller to be probable of assertion, or any governmental proceeding or
investigation in progress (other than proceedings affecting radio broadcasters
generally) that could reasonably be expected to have an adverse effect upon the
Assets or upon the business or operation of the Station after Closing.
(6) The Station Licenses are all the authorizations, licenses and
permits issued by the FCC with respect to the operation of the Station, such
Station Licenses are in full force and effect, and none of the Station Licenses
is the subject of a pending license renewal application;
(7) The Commission has granted its consent to the assignment to Buyer
of the Station Licenses (the "FCC Approval") and such consent has become a Final
Order;
<PAGE>
(8) Other than rulemaking proceedings concerning the radio
broadcasting industry generally, (i) there is no FCC judgment, decree or order
that has been issued against or in respect of the Station or any of the Station
Licenses that would materially impair the operation of the Station, and (ii)
there is no notice of violation, proceeding, claim, investigation or other
action by or before the FCC, or on appeal from an order of the FCC, pending or
threatened against or in respect of the Station or any of the Station Licenses
that would materially impair the operation of the Station.
(9) Except for the FCC Approval, no consent, approval or authorization
of, or declaration, registration or filing with, the FCC is required in
connection with the execution and delivery of the Agreement or the performance
of Seller's obligations under the Agreement; and
(10) The execution and delivery by Seller of the Agreement and the
performance of its obligations under the Agreement do not violate any provision
of the Communications Act of 1934, as amended, or the FCC Rules.
The foregoing opinions shall be for the benefit of and may be relied
on by Buyer, Buyer's counsel, and any institutional lender who provides funds to
Buyer for the acquisition or operation of the Station. In rendering such
opinions, Seller's counsel may rely upon such partnership records of Seller,
such certificates of public officials and officers of Seller, and such opinions
of special or associate counsel as Seller's counsel deems appropriate.
2
<PAGE>
EXHIBIT C
OPINION OF BUYER'S COUNSEL
Buyer shall deliver to Seller the written opinion of Buyer's counsel,
dated the Closing Date, in scope and form reasonably satisfactory to Seller,
subject to customary qualifications, to the following effect:
(1) Buyer is a corporation duly incorporated and validly existing,
under the laws of the jurisdiction of its incorporation, with full power under
its respective articles of incorporation and by-laws to enter into and perform
its respective obligations under the Agreement. Based solely on certificates
from public officials, such counsel shall confirm that Buyer is qualified to do
business in the State of Florida.
(2) The Agreement and the other documents executed by Buyer at Closing
pursuant thereto (the "Related Documents") have been duly executed by Buyer, and
such action has been duly authorized by all necessary corporate action.
(3) None of (i) the execution and delivery of the Agreement or the
Related Documents by Buyer, (ii) the purchase of the Station by Buyer, or (iii)
compliance with the terms and conditions of the Agreement or the Related
Documents on the Closing Date will conflict with, breach the terms and
conditions of, constitute a default under, or violate Buyer's or articles of
incorporation or bylaws, respectively, or any judgment, decree, order,
agreement, lease or other instrument known to counsel to which Buyer is a party
or by which Buyer is legally bound.
(4) To the knowledge of counsel, no suit, action or proceeding is
pending or threatened that questions or may affect the validity of any action to
be taken by Buyer pursuant to this Agreement or the Related Documents, or that
seeks to restrain Buyer from carrying out the Transaction or Buyer's obligations
hereunder.
In rendering such opinions, Buyer's counsel may rely upon such
corporate records of Buyer, such certificates of public officials and officers
of Buyer, and such opinions of special or associate counsel as Buyer's counsel
deems appropriate.
<PAGE>
EXHIBIT D
ESCROW AGREEMENT
This Escrow Agreement ("Agreement") is entered into this ___th day of
June, 1996, by and among WEDR, Inc. ("Seller"), Evergreen Media Corporation of
Los Angeles ("Buyer"), and Media Venture Partners, acting jointly, as escrow
agent ("Escrow Agent").
Seller and Buyer have entered into a Purchase Agreement ("Purchase
Agreement") dated June ___, 1996 for the sale by Seller to Buyer of certain
property and assets used and useful in the operation of station WEDR-FM, Miami,
Florida (the "Station"). Pursuant to the Purchase Agreement, Buyer is required
on this date to deposit Three Million Dollars ($3,000,000) in escrow to secure
its obligations under the Purchase Agreement. Buyer and Seller desire that
Escrow Agent hold these funds as provided in this Agreement.
Accordingly, in consideration of the mutual covenants contained
herein, the parties, intending to be legally bound, hereby agree as follows:
1. Receipt of Escrow Deposit. By its signature below, Escrow Agent
acknowledges receipt of Three Million Dollars ($3,000,000) (the "Escrow
Deposit") from Buyer.
2. Investment of Escrow Deposit. The Escrow Deposit shall be
invested by Escrow Agent in interest bearing bank accounts or certificates of
deposit of federally insured financial institutions or in treasury bills or such
other investments as may be directed by the joint written instructions of Seller
and Buyer. All interest earned on the Escrow Deposit prior to the Closing Date
(or in the event the transactions contemplated by the Purchase Agreement are not
consummated, the date that would have been the Closing Date (the "Deemed Closing
Date")) shall be the property of, and shall be paid to, Buyer. All interest
earned on the Escrow Deposit after the Deemed Closing Date shall be the property
of, and shall be paid to Seller.
3. Release of Escrow Deposit. Escrow Agent shall release the Escrow
Deposit only upon receipt of (1) joint written instructions executed by Seller
and Buyer, or (2) a final order of a court of competent jurisdiction. An order
shall be deemed "final" when, by a lapse of time or otherwise, it is no longer
subject to administrative or judicial reconsideration or review. Unless the
Escrow Deposit is released prior to the Closing Date (as defined in the Purchase
Agreement) pursuant to this Agreement, the Escrow Deposit shall be applied in
favor of Buyer against the Purchase Price (as defined in the Purchase Agreement)
due on the Closing Date. Escrow Agent shall be authorized to act on any
document believed to be genuine and to be signed by the proper party or parties,
and will incur no liability in so acting. In the event of any disagreement or
presentation of adverse claims or demands in connection with the Escrow Deposit,
Escrow Agent may act as stake-holder and deposit the item in dispute with the
registry of the court having jurisdiction over the dispute.
4. Indemnity. Seller and Buyer agree to indemnify and hold Escrow
Agent harmless against any loss, claim, damage, liability, or expense incurred
in connection with any
2
<PAGE>
action, suit, proceeding, claim or alleged liability arising from this
Agreement; provided, however, that Escrow Agent shall not be so indemnified or
held harmless for its gross negligence or acts in bad faith by it or any of its
agents or employees, nor for its breach of this Agreement.
5. Expenses. All expenses incurred by Escrow Agent in the
administration of this Agreement, including reasonable legal costs incurred by
Escrow Agent, shall be shared equally by Seller and Buyer. Any expenses
incurred by Seller or Buyer in connection with this Agreement shall be borne by
the parties incurring the expenses. If there arises a dispute concerning a
party's entitlement to some or all of the Escrow Deposit, the prevailing party
shall be entitled to recover its reasonable costs (including attorneys' fees)
incurred in connection with such dispute.
6. Notices. All notices and other communications required or
permitted pursuant to this Escrow Agreement shall be in writing and be deemed to
have been duly given and delivered if mailed by certified mail, return receipt
requested, postage prepaid, as follows:
If to Seller:
Rex B. Rivers
President
WEDR, Inc.
Executive Offices
Box 626
Stuart, Florida 34995
with copy to:
Gary S. Smithwick, Esq.
Smithwick & Belendiuk, P.C.
1990 M Street, N.W.
Washington, D.C. 20036
If to Buyer:
Evergreen Media Corporation of Los Angeles
c/o Evergreen Media Corporation
433 East Los Colinas Boulevard
Suite 1130
Irving, Texas 75039
Attention: Scott K. Ginsburg, President
3
<PAGE>
with copy to:
Eric L. Bernthal, Esq.
Kevin C. Boyle, Esq.
Latham & Watkins
Suite 1300
1001 Pennsylvania Avenue., N.W.
Washington, D.C. 20004
If to Escrow Agent:
Charles Giddens
Media Venture Partners
1650 Tysons Boulevard, Suite 790
McLean, Virginia 22102
or to such other address as such party shall specify by written notice to the
other parties hereto. Any notice sent to Escrow Agent shall also be sent to the
other party to this Agreement.
7. Duties of Escrow Agent. The duties and responsibilities of
Escrow Agent shall be limited to those expressly set forth herein.
8. Assignment. Buyer and Seller may assign their rights under this
Agreement to the same extent they are permitted to assign their rights and
obligations under the Purchase Agreement.
9. Miscellaneous. This Agreement, and with respect to Buyer and
Seller, the Purchase Agreement embody the entire agreement and understanding of
the parties concerning the Escrow Deposit. This Agreement may be amended only
by a writing signed by the party against whom enforcement is sought. The
headings in this Agreement are intended solely for convenience or reference and
shall be given no effect in the construction or interpretation of this
Agreement. This Agreement shall be governed by and construed in accordance with
the laws of the State of Florida, without regard to the choice of law rules
utilized in that state. This Agreement shall bind and inure to the benefit of
the parties hereto and their respective, heirs, personal representatives,
successors and permitted assigns.
4
<PAGE>
To evidence their agreement, the parties have caused this Agreement to
be executed on the date first written above.
EVERGREEN MEDIA CORPORATION OF
LOS ANGELES
By: _________________________________
Scott K. Ginsburg
President
WEDR, INC.
By: _________________________________
Rex B. Rivers
President
MEDIA VENTURE PARTNERS
By: _________________________________
Charles Giddens
5
<PAGE>
EXHIBIT 2.20
====================================
TIME BROKERAGE AGREEMENT
BY AND BETWEEN
EVERGREEN MEDIA CORPORATION OF DETROIT, AS LICENSEE,
AND
KIDSTAR INTERACTIVE MEDIA INCORPORATED,
AS TIME BROKER
DATED AS OF JULY 10, 1996
====================================
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
----
ARTICLE 1 SALE OF TIME........................................... 1
1.1 Broadcast of Programming............................... 1
1.2 Payment................................................ 1
1.3 Holding Payments....................................... 2
1.4 Term................................................... 2
ARTICLE 2 PROGRAMMING AND OPERATING STANDARDS AND PRACTICES...... 2
2.1 Compliance with Standards.............................. 2
2.2 Political Broadcasts................................... 2
2.3 Handling of Communications............................. 2
2.4 Preemption............................................. 3
2.5 Rights in Programs..................................... 3
2.6 "Payola" and "Plugola"................................. 3
2.7 Advertising and Programming............................ 4
2.8 Advertising Inventory.................................. 4
2.9 Compliance with Laws................................... 4
2.10 Certifications......................................... 4
ARTICLE 3 RESPONSIBILITY FOR EMPLOYEES AND EXPENSES.............. 4
3.1 Time Broker's Employees................................ 4
3.2 Licensee's Employees................................... 4
3.3 Time Broker's Expenses................................. 5
3.4 Operating Expenses..................................... 5
ARTICLE 4 PAYMENT OF STATION OBLIGATIONS......................... 6
ARTICLE 5 SPORT PROGRAM CONTRACTS................................ 6
ARTICLE 6 OPERATION OF STATION................................... 6
ARTICLE 7 OPTION TO PURCHASE; RIGHT OF FIRST REFUSAL............. 7
ARTICLE 8 INDEMNIFICATION........................................ 7
8.1 Indemnification Rights................................. 7
8.2 Procedures............................................. 8
i
<PAGE>
PAGE
----
ARTICLE 9 DEFAULT................................................ 9
9.1 Events of Default...................................... 9
9.2 Cure Periods........................................... 9
ARTICLE 10 TERMINATION............................................ 9
10.1 Expiration of Term..................................... 9
10.2 Termination Upon Default............................... 9
10.3 Change in FCC Rules.................................... 9
10.4 Consummation of Option Exercise........................ 10
10.5 Termination Pursuant to Section 3.4.................... 10
10.6 Certain Matters Upon Termination....................... 10
ARTICLE 11 REMEDIES............................................... 11
ARTICLE 12 CERTAIN REPRESENTATIONS AND WARRANTIES OF THE PARTIES.. 11
12.1 Representations and Warranties of Time Broker.......... 11
12.2 Organization........................................... 11
12.3 Authorization; Enforceability.......................... 11
12.4 No Consent............................................. 11
12.5 No Breach.............................................. 11
12.6 Actions and Proceedings................................ 12
12.7 Representations, Warranties and Covenants of Licensee.. 12
12.8 Corporate Organization................................. 12
12.9 Authorization; Enforceability.......................... 12
12.10 No Consent............................................. 12
12.11 No Breach.............................................. 12
12.12 Actions and Proceedings................................ 12
12.13 Maintenance of Current Coverage........................ 13
12.14 Insurance.............................................. 13
ARTICLE 13 MISCELLANEOUS.......................................... 13
13.1 Modification and Waiver................................ 13
13.2 No Waiver; Remedies Cumulative......................... 13
13.3 Construction........................................... 13
13.4 Headings............................................... 14
13.5 Successors and Assigns; Exclusive Dealings............. 14
13.6 Force Majeure.......................................... 14
13.7 Broker................................................. 14
13.8 Counterpart Signatures................................. 14
ii
<PAGE>
PAGE
----
13.9 Notices................................................ 14
13.10 Entire Agreement....................................... 15
13.11 Severability........................................... 15
13.12 No Joint Venture....................................... 16
13.13 Damage to Station...................................... 16
13.14 Noninterference........................................ 16
13.15 Regulatory Changes..................................... 16
13.16 Station Revenue........................................ 16
13.17 Confidentiality........................................ 16
iii
<PAGE>
TABLE OF SCHEDULES AND EXHIBITS
-------------------------------
Schedule 1.1 Programming
Schedule 12.12 Actions and Proceedings
Schedule 13.18 Non-Competition Covenant Exceptions
<PAGE>
TIME BROKERAGE AGREEMENT
This Time Brokerage Agreement (this "Agreement") is made as of the
July 10, 1996, by and between EVERGREEN MEDIA CORPORATION OF DETROIT, a Delaware
corporation, with an address at 433 E. Las Colinas Blvd., Suite 1130, Irving, TX
75039 ("Evergreen"), and KIDSTAR INTERACTIVE MEDIA, INC., a _________
corporation, with an address at 1334 First Ave., Suite 150, Seattle, WA 98101
("Time Broker").
BACKGROUND
WKQI\WDOZ\WNIC License Corp. ("Licensee"), the licensee of the license
of AM Broadcast Station WDOZ-AM, 1310 KHz, Detroit, Michigan, (the "Station"),
is a wholly owned subsidiary of Evergreen. Time Broker and Evergreen, on behalf
of Licensee, desire to enter into an agreement providing for the sale of
substantially all of the broadcast time of the Station to Time Broker, subject
to the rules and policies of the Federal Communications Commission (the "FCC").
In consideration of the foregoing and of the mutual promises, covenants, and
conditions set forth below, the parties agree as follows:
ARTICLE 1
SALE OF TIME
1.1 Broadcast of Programming. Effective as of August 1, 1996 (the
"Commencement Date"), Licensee shall broadcast on the Station, or cause to be
broadcast on the Station, programs which are presented to it by Time Broker as
described in greater detail on Schedule 1.1 (the "Programming"). Time Broker
shall deliver at its own cost the Programming to Licensee's transmitter sites.
1.2 Payment. Time Broker shall pay Licensee for broadcast of the
Programming the monthly rate of $30,000 (the "Monthly Payment") for the first
year, with the rate increasing 10% on each anniversary of the Commencement Date.
In the event that the Commencement Date occurs on a day other than the first day
of a month, the initial monthly payment made by Time Broker shall be an amount
equal to the Monthly Payment as determined above multiplied by a ratio, the
numerator of which is the number of days between the Commencement Date and the
end of the month in which the Commencement Date occurs and the denominator of
which is the number of days in the month in which the Commencement Date occurs;
and in the event the termination date of the Agreement occurs other than on the
last day of a month, the Monthly Payment for the month in which such termination
occurs shall be similarly prorated. The initial monthly payment shall be due
upon execution hereof. All other Monthly Payments shall be paid by wire
transfer of immediately-available funds on the earlier of (a) the first business
day of the month or (b) in the event the first day of the month is not a
business day, the last business day of the preceding month.
<PAGE>
1.3 Holding Payments. Time Broker shall pay Licensee One Hundred
Thousand Dollars ($100,000) upon the execution of this Agreement (the "Holding
Payments"). The Holding Payments shall be applied to the purchase price due upon
the consummation of a purchase of the Station by Time Broker pursuant to Article
7 of this Agreement.
1.4 Term. Unless terminated earlier in accordance with the express
provisions hereof, this Agreement shall continue for a term of five years from
August 1, 1996.
ARTICLE 2
PROGRAMMING AND OPERATING STANDARDS AND PRACTICES.
2.1 Compliance with Standards. All Programming delivered by Time
Broker and all programming supplied by Licensee during the term of this
Agreement shall be in accordance with applicable statutes and FCC requirements.
Licensee reserves the right to refuse to broadcast any Programming containing
matter which the Licensee reasonably believes is not in the public interest or
may be violative of any right of any third party, or which may constitute a
"personal attack" as that term is and has been defined by the FCC or which
Licensee reasonably determines is, or in the reasonable opinion of Licensee may
be deemed to be, indecent or obscene by the FCC or any court or other regulatory
body with authority over Licensee or the Station. If Time Broker does not
adhere to the foregoing requirements, Licensee may suspend or cancel any
specific program not so in compliance, without any reduction or offset in the
payments due Licensee under this Agreement.
2.2 Political Broadcasts. Time Broker shall maintain and deliver to
Licensee all records and information required by the FCC to be placed in the
public inspection files of the Station pertaining to the broadcast of political
programming and advertisements, in accordance with the provisions of Sections
73.1940 and 73.3526 of the FCC's rules, and agrees to broadcast sponsored
programming addressing political issues or controversial subjects of public
importance, in accordance with the provisions of Section 73.1212 of the FCC's
rules. Time Broker shall consult with Licensee and adhere to all applicable
statutes and the rules, regulations and policies of the FCC, as announced from
time to time, with respect to the carriage of political advertisements and
programming (including, without limitation, the rights of candidates and, as
appropriate, others to "equal opportunities" and the carriage of contrasting
points of view as mandated by any "fairness" rule with respect to such "issue-
oriented" advertising or programming as may be broadcast) and the charges
permitted therefor. Time Broker shall provide to Licensee such documentation
relating to such programming as Licensee shall reasonably request.
2.3 Handling of Communications. Time Broker shall cooperate with
Licensee in promptly responding to all mail, cables, telegrams or telephone
calls directed to the Station in connection with the Programming provided by
Time Broker or any other matter relevant to its responsibilities hereunder.
Time Broker shall provide copies of all such correspondence to Licensee. Time
Broker shall promptly advise Licensee of any public or FCC complaint or inquiry
known to Time Broker concerning such Programming, and shall provide Licensee
with copies of any letters to Time Broker from the public, including complaints
concerning such Programming.
2
<PAGE>
Notwithstanding the foregoing, Licensee shall handle all matters or inquiries
relating to FCC complaints and any other matters required to be handled by
Licensee under the rules and regulations of the FCC.
2.4 Preemption. Licensee may, from time to time, preempt portions of
the Programming to broadcast emergency information or programs it deems would
better serve the public interest, and may refuse to broadcast any program or
announcement of Time Broker should Licensee deem such program or announcement to
be contrary to the public interest as set forth in Section 2.1. Time Broker
shall be notified at least one week in advance of any preemption of any of the
Programming for the purpose of broadcasting programs Licensee deems necessary to
serve the public interest unless such advance notice is impossible or
impractical, upon which Licensee shall notify Time Broker promptly upon making
such determination. In the event of any such preemption, Time Broker shall be
entitled to deduct from the Monthly Payment, as described in Section 1.2, for
the month in which such preemption occurs an amount equal to (i) the percentage
of the total programming hours per month brokered to Time Broker which were
preempted during such month times (ii) the Monthly Payment. Licensee represents
and covenants that preemption shall only occur to the extent Licensee deems
necessary to carry out its obligations as an FCC licensee, and expressly agrees
that its right of preemption shall not be exercised in an arbitrary manner or
for the commercial advantage of Licensee or others. In the event that Licensee
preempts more than three (3) hours in any calendar day, or more than seven (7)
hours over any seven (7) consecutive calendar days, or more than thirty (30)
hours over any consecutive thirty (30) day period, then Time Broker shall be
entitled at its sole option to terminate this Agreement without further
obligation to Licensee except for payments (if any) already due to Licensee and
to pursue all other legal remedies available to it.
2.5 Rights in Programs. All right, title and interest in and to the
Programming, and the right to authorize the use of the Programming in any manner
and in any media whatsoever, shall be and remain vested at all times solely in
Time Broker, except for sports programming provided by Licensee as provided in
Schedule 1.1.
2.6 "Payola" and "Plugola". Time Broker agrees that it will take
steps, including the continuation of Licensee's system for periodic execution of
affidavits, reasonably designed to assure that neither it nor its employees or
agents will accept any gift, gratuity or other consideration, directly or
indirectly, from any person or company for the playing of records, the
presentation of any programming or the broadcast of any commercial announcement
over the Station without such broadcast being announced as sponsored. It is
further understood and agreed that no commercial message, plugs, or undue
reference shall be made in programming presented over the Station to any
business venture, profit-making activity or other interest (other than non-
commercial announcements for bona fide charities, church activities or other
public service activities) without such broadcast being announced as sponsored.
2.7 Advertising and Programming. Beginning with the Commencement
Date, Time Broker shall be entitled to all revenue from the sale of advertising
or program time on the Station. Licensee shall remain entitled to all revenue
from the sale of advertising or program time on the Station for all days prior
to the Commencement Date. Except as otherwise provided
3
<PAGE>
herein, Time Broker does not assume any obligation of Licensee under any
contract or advertising arrangement entered into by Licensee on or after the
Commencement Date. Time Broker will advise Licensee of its lowest unit charge
for political advertising, and Licensee shall not do anything that would lower
Time Broker's lowest unit charge.
2.8 Advertising Inventory. Time Broker will make available to
Licensee five percent (5%) of Time Broker's Run of Schedule commercial inventory
(in 60 second segments) for Licensee's cross promotional use with Licensee's
advertisers and clients, and Licensee will make available to Time Broker
reciprocal cross-promotional inventory of equal value on its FM station WNIC-FM.
Time Broker has the right to reject use of this inventory by Licensee if Time
Broker reasonably believes that the use would be objectionable to its target
audience or target advertisers, and Licensee has the right to reject use of this
inventory by Time Broker if Licensee reasonably believes that the use would be
objectionable to its target audience or target advertisers.
2.9 Compliance with Laws. At all times during the term of this
Agreement, Time Broker and Licensee shall comply in all material respects with
all applicable federal, state and local laws, rules and regulations, including
the use of FCC-licensed operators where such are required.
2.10 Certifications. Pursuant to Section 73.3555(a)(2)(ii) of the
FCC's rules, Licensee certifies that it maintains ultimate control over the
Station's facilities, including specifically control over station finances,
personnel and programming, and Time Broker certifies that this Agreement
complies with the provisions of Sections 73.3555(a)(1) and (e)(1) of the FCC's
rules.
ARTICLE 3
RESPONSIBILITY FOR EMPLOYEES AND EXPENSES
3.1 Time Broker's Employees. Time Broker shall employ and be
responsible for the payment of salaries, taxes, insurance and all other costs
related to all Time Broker personnel used in the production of the Programming.
3.2 Licensee's Employees.
(a) Licensee shall employ and be responsible for the payment of
salaries, taxes, insurance and all other costs related to the personnel
necessary to fulfill its obligations as Licensee and to transmit the
Programming.
(b) Licensee will not incur any liability on account of Time
Broker's employees in connection with the transactions contemplated by this
Agreement including, without limitation, any liability on account of
unemployment insurance contributions, termination payments, accrued sick leave
or accrued vacation.
4
<PAGE>
(c) Time Broker shall have no authority over and shall not
supervise persons in the employ of Licensee after the Commencement Date.
3.3 Time Broker's Expenses. Time Broker shall pay for all costs
associated with the production and delivery of the Programming, including but
not limited to, all ASCAP, BMI, SESAC and other copyright fees. It is expressly
agreed and understood that Time Broker will produce the Programming entirely
within its own studio facilities, will rent off-premises space for its sales and
marketing team, and will be responsible for payment of all fees and expenses
relating to the operation and maintenance of such studio facilities and off-
premises space. Licensee shall be responsible for all ASCAP, BMI, SESAC and
other copyright fees attributable to Licensee's programming on the station.
3.4 Operating Expenses. Licensee shall be responsible for the
payment of all fees and expenses relating to operation and maintenance of the
Station as necessary for Licensee to maintain the licensed transmitting
capability of the Station and fulfill its obligations as an FCC licensee,
including but not limited to salaries, commissions, insurance on the Station's
equipment, insurance and benefits for employees of Licensee, federal, state and
local taxes, and rents and utilities at the Station's transmitter sites. Time
Broker shall reimburse Licensee for its non-capital ordinary reasonable and
customary expenses (excluding salary, benefits and similar expenses for
Licensee's employees, rent and utilities at the transmitter sites for the
Station, and federal, state and local income taxes) incurred in operating the
Station (the "Operating Expenses"), including but not limited to, maintenance of
the tower and transmitter equipment, electrical maintenance, security,
insurance, insurance deductibles on claims, federal, state and local taxes (but
not Licensee's income taxes), and sales tax on the payment due under this
Agreement (if any). Licensee shall bill Time Broker for such expenses as they
are incurred by delivery of a statement in reasonable detail with back-up
invoices, payment for which shall be due within thirty (30) days of such
billing. In addition, Time Broker shall pay Licensee a monthly facility fee of
$ 1,100 in the same manner as provided for payment of the Monthly Payment (the
"Facility Fee"). In the event the annual sum of the Operating Expenses and the
Facility Fee (together the "Expenses") exceeds $65,000, Time Broker may elect
not to reimburse Licensee for the amount of the Expenses that exceeds $65,000
per year (the "Excess Expenses"), provided however that if Time Broker makes
such election, Licensee shall have the option to terminate this Agreement. If
Time Broker reimburses Licensee for the Excess Expenses, the amount of the
Excess Expenses that Time Broker pays to Licensee shall be applied against the
purchase price if Time Broker purchases the Station pursuant to Article 7 of
this Agreement.
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ARTICLE 4
PAYMENT OF STATION OBLIGATIONS
Licensee shall promptly pay when due and satisfy all obligations owing
to, or reach a settlement with, all third parties with respect to the operation
of the Station prior to the Commencement Date, to the extent required to grant
Time Broker the full enjoyment of its rights hereunder.
ARTICLE 5
SPORT PROGRAM CONTRACTS
Notwithstanding any provision of this Agreement to the contrary, Time
Broker agrees to carry and include in the Programming Licensee's sport contracts
which expire on December 31, 1996 (the "Sport Program Contracts"). Licensee
retains its right to receive all revenue from the commercials broadcast during
Programming presented pursuant to the Sport Program Contracts. Time Broker
shall not be liable to pay Licensee for the portion of the Operating Expenses
that is attributable to the broadcast of the Sport Program Contracts (the "Sport
Program Operating Expenses"). For each thirty-day period, the Sport Program
Operating Expenses shall equal the amount of Operating Expenses for such thirty-
day period multiplied by a fraction the numerator of which equals (i) the number
of hours, or fractions thereof, that Time Broker broadcasts Programming pursuant
to the Sport Program Contracts for such thirty-day period and the denominator of
which equals (ii) the number of hours that Programming is broadcast over the
Station for such thirty-day period. Licensee shall provide to Time Broker a
sport programming schedule that contains the time and dates of programming that
must be carried pursuant to the Sport Program Contracts thirty (30) days prior
to the time such programming must be carried and will provide Time Broker with
seven (7) days notice of any scheduling changes. Time Broker has the right to
reject sponsor involvement if the specific sponsor is inappropriate (within
reasonable limits) for placement in children's format.
ARTICLE 6
OPERATION OF STATION
Notwithstanding any provision of this Agreement to the contrary,
Licensee shall retain full authority and power with respect to the operation of
the Station during the term of this Agreement. The parties agree and
acknowledge that Licensee's continued control of the Station is an essential
element of the continuing validity and legality of this Agreement. Accordingly,
Licensee shall employ the General Manager of the Station and such other
personnel (not less than one) as Licensee determines may be necessary to fulfill
its obligations as a licensee under the Communications Act of 1934, as amended
(the "Communications Act"). Licensee shall retain full authority and control
over the policies, programming and operations of the Station, including, without
limitation, the decision whether to preempt Programming in accordance with
Section 2.4
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hereof. Licensee shall have full responsibility to effectuate compliance with
the Communications Act and with FCC rules, regulations and policies.
ARTICLE 7
OPTION TO PURCHASE; RIGHT OF FIRST REFUSAL
Time Broker shall have the option to purchase the Station as set forth
in this Article (the "Option"). The Option may be exercised by written notice
given to Licensee at any time during the thirty-sixth (36th), forty-eighth
(48th) or sixtieth (60th) months of the term of this Agreement provided this
Agreement is in effect and Time Broker is not in material breach of its
obligations under this Agreement at the time of such notice. If Time Broker
notifies Licensee that it desires to exercise the Option, the parties shall
negotiate in good faith for up to thirty (30) days to determine a price and
other terms for the sale of the Station by Licensee to Time Broker. If after
such negotiations, the parties are unable to reach an agreement, Time Broker
shall have a right of first refusal to purchase the Station as follows (the
"Right of First Refusal"): If Licensee receives a bona fide offer to purchase
the Station from a third party or if Licensee makes a bona fide offer to sell
the Station to a third party, prior to Licensee entering into an agreement to
sell the Station (or after entering into such an agreement which must be
contingent upon Time Broker's election not to exercise its rights hereunder),
Licensee shall submit the terms of the bona fide offer to Time Broker. During
the life of Time Broker's Right of First Refusal, any contract(s) or written
agreement(s) to sell all or substantially all of the assets of, or equity in,
the Station and to which Licensee, but not Time Broker, is a party, shall
expressly recognize and be subject to Time Broker's Right of First Refusal. If
Time Broker does not advise Licensee in writing that it will purchase the
Station upon the terms of such offer within ten (10) days of receipt of such
offer, Licensee shall have thirty (30) days for good faith negotiations with
third parties to enter into an agreement to sell the Station upon terms
substantially similar to those presented to Time Broker. If Licensee, in good
faith, does not sell the Station upon such terms within such time period, the
Right of First Refusal shall remain in effect. Time Broker's Right of First
Refusal shall terminate upon the termination of this Agreement.
ARTICLE 8
INDEMNIFICATION
8.1 Indemnification Rights. Each party will indemnify and hold
harmless the other party, and the directors, officers, partners, employees,
agents and affiliates of such other party, from and against any and all
liability, including without limitation reasonable attorneys' fees arising out
of or incident to (i) any breach by such party of a representation, warranty or
covenant made herein, (ii) the programming produced or furnished by such party
hereunder, or (iii) the conduct of such party, its employees, contractors or
agents (including negligence) in performing its or their obligations hereunder.
Without limiting the generality of the foregoing, each party will indemnify and
hold harmless the other party, and the directors, officers, partners, employees,
agents and affiliates of such other party, from and against any and all
liability for libel, slander, infringement of trademarks, trade names, or
program titles, violation of rights of privacy, and
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infringement of copyrights and proprietary rights resulting from the programming
produced or furnished by it hereunder. The parties' indemnification obligations
hereunder shall survive any termination or expiration of this Agreement for a
period of two years; provided, however, that if this Agreement terminates as a
result of the Section 10.4 of this Agreement, the indemnification rights in this
Section shall terminate.
8.2 Procedures. The party seeking indemnification under this Section
("Indemnitee") shall give the party from whom it seeks indemnification
("Indemnitor") prompt notice, in accordance with Section 13.9, of the assertion
of any such claim; provided, however, that the failure to give notice of a claim
within a reasonable time shall only relieve the Indemnitor of liability to the
extent it is materially prejudiced thereby. Promptly after receipt of written
notice, as provided herein, of a claim by a person or entity not a party to this
Agreement, the Indemnitor shall assume the defense of such claim; provided,
however, that (i) if the Indemnitor fails, within a reasonable time after
receipt of written notice of such claim, to assume the defense, compromise, and
settlement of such claim on behalf of and for the account and risk of the
Indemnitor, subject to the right of the Indemnitor (upon notifying the
Indemnitee of its election to do so) to assume the defense of such claim at any
time prior to the settlement, compromise, judgment, or other final determination
thereof, or if in the reasonable judgment of the Indemnitee, based on the advice
of its counsel, a direct or indirect conflict of interest exists between the
Indemnitee and the Indemnitor, the Indemnitee shall (upon notifying the
Indemnitor of its election to do so) have the right to undertake the defense,
compromise, and settlement of such claim on behalf of and for the account and
risk of the Indemnitor (it being understood and agreed that the Indemnitor shall
not be entitled to assume the defense of such claim), and (ii) if the Indemnitee
in its sole discretion so elects, it shall (upon notifying the Indemnitor of its
election to do so) be entitled to employ separate counsel and to participate in
the defense of such claim, but the fees and expenses of counsel so employed
shall (except as contemplated by clause (i) above) be borne solely by the
Indemnitee. The Indemnitor shall not settle or compromise (x) any claim or
consent to the entry of any judgment that does not include as an unconditional
term thereof the grant by the claimant or plaintiff to each Indemnitee of a
release from any and all liability in respect thereof, or (y) any claim in any
manner, or consent to the entry of any judgment, that could reasonably be
expected to have a material adverse effect on the Indemnitee. If upon
presentation of a claim for indemnity hereunder, the Indemnitor does not agree
that all, or part, of such claim is subject to the indemnification obligations
imposed upon it pursuant to this Agreement, it shall promptly so notify the
Indemnitee. Thereupon, the parties shall attempt to resolve their dispute,
including where appropriate, reaching an agreement as to that portion of the
claim, if any, which both concede is subject to indemnification. To the extent
that the parties are unable to reach some compromise, either party may
unilaterally submit the matter for determination by a court of competent
jurisdiction.
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ARTICLE 9
DEFAULT
9.1 Events of Default. The following, after the expiration of the
applicable cure periods specified in the next subsection, shall constitute
Events of Default under the Agreement:
(a) Non-Payment. Time Broker's failure to timely pay the
consideration provided for in Section 1.2;
(b) Default in Covenants. Time Broker's or Licensee's default in
the observance or performance of any material covenant, condition or agreement
contained herein;
(c) Breach of Representation. Time Broker's or Licensee's
material breach of any representation or warranty made by it herein, or in any
certificate or document furnished pursuant to the provisions hereof, which shall
prove to have been false or misleading in any material respect as of the time
made or furnished; or
9.2 Cure Periods. An Event of Default shall not be deemed to have
occurred until thirty (30) days (or in the event of a payment default, ten (10)
days) after the non-defaulting party has provided the defaulting party with
written notice specifying the event or events that if not cured would constitute
an Event of Default, and such an event of default has not been cured. If a
payment default has already occurred twice during any 12 month period, then an
Event of Default shall be deemed to have occurred, in the event of a further
payment default, upon receipt of the written notice described above.
ARTICLE 10
TERMINATION
10.1 Expiration of Term. This Agreement shall terminate upon
the expiration of the term hereof as set forth in Section 1.4.
10.2 Termination Upon Default. In addition to other remedies
available at law or equity, this Agreement may be terminated as set forth below
by either Licensee or Time Broker by written notice to the other if the party
seeking to terminate is not then in material default or breach hereof, upon the
occurrence of an uncured Event of Default.
10.3 Change in FCC Rules. This Agreement may be terminated by
Licensee upon written notice to Time Broker if, upon any change in FCC rules,
policies or precedent that would cause this Agreement to be in violation thereof
and such change is final, in effect and has not been stayed, the parties are
unable, after negotiating in good faith for at least thirty (30) days, to modify
this Agreement to comply with the change in FCC rules, policies or precedent.
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10.4 Consummation of Option Exercise. If then still in effect,
this Agreement shall terminate upon the consummation of the acquisition of the
Station by Time Broker pursuant to Section 7.1 of this Agreement.
10.5 Termination Pursuant to Section 3.4. This Agreement may be
terminated by Licensee upon written notice to Time Broker if Time Broker elects
not to reimburse Licensee for any Excess Expenses.
10.6 Certain Matters Upon Termination.
(a) Upon any termination or expiration of this Agreement,
Licensee shall be under no further obligation to make available to Time Broker
any further broadcast time or broadcast transmission facilities and Time Broker
shall be responsible for all debts and obligations of Time Broker resulting from
the use of air time and transmission facilities prior to the termination date
including without limitation accounts payable and net trade balances to the
extent the value (at current rates for time on the Station as of the date of
such termination or expiration) of unfilled obligations of the Time Broker under
any Trade Agreements entered into by Time Broker after the Commencement Date
exceeds in the aggregate the reasonable fair market value of any consideration
yet to be received by Licensee in exchange for the provision of time on the
Station.
(b) If the termination of this Agreement is other than pursuant
to Section 10.4, Time Broker shall (i) assign to Licensee and Licensee shall
assume the Contracts in effect on the date of such termination or expiration;
(ii) be responsible for only those obligations under the Contracts arising on or
after the Commencement Date and prior to the termination of this Agreement; and
(iii) be responsible for collecting the accounts receivable arising from Time
Broker's operation of the Station after the Commencement Date ("Time Broker's
Receivables"). Licensee shall reimburse Time Broker for sales commissions paid
by Time Broker to Time Broker's employees for sales relating to time sale
contracts to the extent that the revenue from such sales relates to programming
delivered after the termination of this Agreement.
(c) Notwithstanding anything in Section 8.1 to the contrary, no
expiration or termination of this Agreement shall terminate the obligation of
each party to indemnify the other for claims under the Indemnification Section
hereof or limit or impair any party's rights to receive payments due and owing
hereunder on or before the date of such termination.
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ARTICLE 11
REMEDIES
In addition to a party's rights of termination hereunder (and in
addition to any other remedies available to it or provided under law), in the
event of an uncured Event of Default with respect to either party, the other may
seek specific performance of this Agreement, in which case the defaulting party
shall waive the defense in any such suit that the other party has an adequate
remedy at law and interpose no opposition, legal or otherwise, as to the
propriety of specific performance as a remedy hereunder.
ARTICLE 12
CERTAIN REPRESENTATIONS AND WARRANTIES OF THE PARTIES
12.1 Representations and Warranties of Time Broker. Time Broker
hereby represents and warrants to Licensee as follows:
12.2 Organization. Time Broker is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and duly qualified to do business in the State of Michigan.
12.3 Authorization; Enforceability. This Agreement has been
duly executed and delivered by Time Broker, and is valid, binding and
enforceable against Time Broker in accordance with its terms. Time Broker has
full right, power, authority and legal capacity to enter into and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery or performance of this Agreement and the
consummation of the transactions provided for hereby have been duly authorized
by all necessary corporate action on the part of Time Broker, and no corporate
or other proceedings on the part of Time Broker are necessary to authorize the
execution or delivery of this Agreement or the transactions contemplated hereby.
12.4 No Consent. No consent of any other party and no consent,
license, approval or authorization of, or exemption by, or filing, restriction
or declaration with, any governmental authority, bureau, agency or regulatory
authority, other than the filing of this Agreement with the FCC, is required in
connection with the execution, delivery or performance of this Agreement by Time
Broker or will effect the validity or performance of this Agreement.
12.5 No Breach. Neither the execution or delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
constitute or result in the breach of any term, condition or provision of, or
constitute a default under, or result in the creation of any lien, charge or
encumbrance upon any property or assets of Time Broker pursuant to the articles
of incorporation of Time Broker, its bylaws, any agreement or other instrument
to which Time
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Broker is a party or by which any part of its property is bound, or violate any
law, regulation, judgment or order binding upon Time Broker.
12.6 Actions and Proceedings. No proceeding is pending against
Time Broker or, to the knowledge of Time Broker, threatened before any court or
governmental agency to restrain or prohibit, or to obtain damages, or other
relief in connection with, this Agreement, or the consummation of the
transactions contemplated hereby or thereby or that might adversely affect Time
Broker's performance under this Agreement.
12.7 Representations, Warranties and Covenants of Licensee.
Licensee hereby represents, warrants and covenants to Time Broker as follows:
12.8 Corporate Organization. Licensee is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, is duly authorized to conduct business in the State of Michigan and
has full power and authority to conduct its business as currently conducted and
proposed to be conducted and to enter into and perform this Agreement.
12.9 Authorization; Enforceability. This Agreement has been
duly executed and delivered by Licensee, and is valid, binding and enforceable
against Licensee in accordance with its terms. Licensee has full right, power,
authority and legal capacity to enter into and perform its obligations under
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions provided for hereby have been duly authorized by all necessary
corporate action on the part of Licensee, and no other corporate or other
proceedings on the part of Licensee are necessary to authorize the execution or
delivery of this Agreement or the transactions contemplated hereby.
12.10 No Consent. No consent, license, approval or authorization
of or exemption by, or filing, restriction or declaration with, any governmental
authority, bureau, agency or regulatory authority, other than the filing of this
Agreement with the FCC, is required in connection with the execution, delivery
or performance of this Agreement or will affect the validity or enforceability
of this Agreement.
12.11 No Breach. Except to the extent any of the Pre-Commencement Time
Sale Contracts require consent to assignment, neither the execution or delivery
of this Agreement nor the consummation of the transactions contemplated hereby
will constitute or result in the breach of any term, condition or provision of,
or constitute a default under, or result in the creation of any lien, charge or
encumbrance upon any property or assets of Licensee pursuant to the articles of
incorporation of Licensee, its bylaws, any agreement or other instrument to
which Licensee is a party or by which any part of its property is bound, or
violate any law, regulation, judgment or order binding upon Licensee.
12.12 Actions and Proceedings. Except as set forth on Schedule
12.12, there is no judgment outstanding and no litigation, claim, investigation
or proceeding pending against Licensee or, to the knowledge of Licensee,
threatened before any court or governmental agency
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to restrain or prohibit, or to obtain damages or other relief in connection with
this Agreement or the consummation of the transactions contemplated hereby or
that might affect the continued operation of the Station or materially impair
the value of the assets used or useful in operation of the Station (the
"Assets").
12.13 Maintenance of Current Coverage. During the term hereof,
Licensee shall take no action to modify the authorizations pursuant to which the
Station operates which would have the effect of reducing the currently
authorized coverage of the Station.
12.14 Insurance. During the term hereof, Licensee shall maintain
casualty insurance covering the assets used in the operation of the Station upon
such terms and conditions as are standard for a prudent operator in the radio
business, provided that coverage is in such amount as have been historically
maintained by Licensee over twelve (12) months preceding this Agreement and that
such terms shall include replacement cost coverage for the transmitter system
used in the operation of the Station. Said insurance policy or policies shall be
written by one or more responsible, reputable, and financially secure insurance
companies and shall name Licensee as the insured and the entity to which the
proceeds from and loss or losses covered thereby shall be paid, but shall name
Time Broker as an additional insured.
ARTICLE 13
MISCELLANEOUS
13.1 Modification and Waiver. No modification or waiver of any
provision of this Agreement shall in any event be effective unless the same
shall be in writing signed by the party against whom the waiver is sought to be
enforced, and then such waiver and consent shall be effective only in the
specific instance and for the purpose for which given.
13.2 No Waiver; Remedies Cumulative. No failure or delay on the
part of Licensee or Time Broker in exercising any right or power hereunder shall
operate as a waiver thereof, nor any single or partial exercise of any such
right or power, or any abandonment or discontinuance of steps to enforce such a
right or power, shall preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of Licensee and
Time Broker herein provided are cumulative and are not exclusive of any rights
or remedies which they may otherwise have.
13.3 Construction. This Agreement shall be construed in accordance
with the laws of the State of Michigan without reference to conflict of laws
principles, and the obligations of the parties hereto are subject to all federal
state or municipal laws or regulations now or hereafter in force and to the
regulations of the FCC and all other governmental bodies or authorities
presently or hereafter duly constituted. Any litigation seeking to enforce any
provision of, or based on any right arising out of this Agreement shall be
brought either in a court of the State of Michigan that has jurisdiction over
the matter in question or in the United States District Court for Eastern
District of Michigan if it has or can acquire jurisdiction. The parties agree
that
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those courts shall be the exclusive forums for all such actions, and hereby
waive any objection to venue in those courts based on the doctrine of forum non
----- ---
conveniens or otherwise.
- ----------
13.4 Headings. The headings contained in this Agreement are
included for convenience only and no such heading shall in any way alter the
meaning of any provision.
13.5 Successors and Assigns; Exclusive Dealings. Time Broker
may not assign this Agreement without the prior written consent of Licensee,
except (i) to a wholly-owned subsidiary of, or an affiliate under common control
and with the same ultimate owners as, Time Broker or (ii) pursuant to a
collateral assignment to Time Broker's lenders for the purpose of securing Time
Broker's obligations to such lenders; provided, however, that no such assignment
-------- -------
shall relieve Time Broker of its obligations hereunder. This Agreement may not
be assigned by Licensee without the consent of Time Broker except pursuant to a
collateral assignment to Licensee's lenders for the purpose of securing
Licensee's obligations to such lenders. Subject to the foregoing, this
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns. For so long as this Agreement remains
in effect neither Licensee nor Time Broker nor any party acting as Licensee's or
Time Broker's agent shall directly or indirectly solicit or initiate any offer
from, or conduct any negotiations with, or provide any information to any person
(other than to Licensee or Time Broker, as the case may be) concerning the
acquisition of the Station.
13.6 Force Majeure. Both parties acknowledge and agree that a
party will not be liable for any failure to timely perform any of its
obligations under this Agreement if such failure is due, in whole or in part,
directly or indirectly, to accidents, fires, floods, governmental actions, war,
civil disturbances, other causes beyond such party's control or any other
occurrence which would generally be considered an event of force majeure.
----- -------
13.7 Broker. The parties agree to indemnify and hold each other
harmless against any claims from any broker or finder based upon any agreement,
arrangement, or understanding alleged to have been made by the indemnifying
party.
13.8 Counterpart Signatures. This Agreement may be signed in
one or more counterparts.
13.9 Notices. All notices, requests, demands, and other
communications pertaining to this Agreement shall be in writing and shall be
deemed duly given when delivered personally (which shall include delivery by
Federal Express or other nationally recognized, reputable overnight courier
service that issues a receipt or other confirmation of delivery) to the party
for whom such communication is intended, or three (3) business days after the
date mailed by certified or registered U.S. mail, return receipt requested,
postage prepaid, addressed as follows:
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If the notice is to Time Broker:
KidStar Interactive Media Inc.
1334 First Ave.
Suite 150
Seattle, WA 98101
With a copy to:
Whalen & Firestone
1221 Second Avenue
Suite 410
Seattle, WA 98101
Attn: Bruce Firestone, Esq.
If the notice is to Licensee:
Evergreen Media Corporation of Detroit
433 E. Las Colinas Blvd.
Suite 1130
Irving, TX 75039
Attn: Scott Ginsburg, Chief Executive Officer
With a copy to:
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, D.C. 20004
Attn: Kevin C. Boyle, Esq.
Either party may change its address for notices by notice to such effect to the
other party.
13.10 Entire Agreement. This Agreement(including all
attachments, exhibits and schedules) embody the entire agreement between the
parties and there are no other agreements, representations, warranties, or
understandings, oral or written, between them with respect to the subject matter
hereof.
13.11 Severability. Except as expressly set forth in section on
regulatory changes Section 13.15, if any provision contained in this Agreement
is held to be invalid, illegal or unenforceable in any respect by any court or
other authority, then such provision shall be deemed limited to the extent that
such court or other authority deems it reasonable and enforceable, and as so
limited shall remain in full force and effect. In the event that such court or
other authority shall deem any such provision wholly unenforceable, this shall
not affect any other provision hereof,
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and this Agreement shall be construed as if such invalid, illegal or
unenforceable provision or provisions had not been contained herein unless the
invalidity or unenforceability of such provision or provisions causes the terms
of this Agreement to conflict with the underlying business agreement of the
parties as reflected in this Agreement as written.
13.12 No Joint Venture. The parties agree that nothing herein
shall constitute a joint venture between them. The parties acknowledge that
call letters, trademarks and other intellectual property shall at all times
remain the property of the respective parties and that neither party shall
obtain any ownership interest in the other party's intellectual property by
virtue of this Agreement.
13.13 Damage to Station. In the event of damage to the Station
that prevents the Station from operating as normal, Licensee shall take
commercially reasonable steps to promptly restore the operations of the Station;
provided, however, that Licensee shall not be required to expend amounts in
excess of insurance proceeds (other than any applicable deductible) on such
restoration.
13.14 Noninterference. During the term of this Agreement,
neither Licensee nor any of its employees shall take any actions that might
impair the operations of Time Broker conducted hereunder, except to the extent
expressly contemplated by this Agreement or as otherwise required by law.
13.15 Regulatory Changes. In the event of any order or decree of
an administrative agency or court of competent jurisdiction, including without
limitation any material change or clarification in FCC rules, policies, or
precedent, that would cause this Agreement to be invalid or violate any
applicable law, and such order or decree has become effective and has not been
stayed, the parties will use their respective best efforts and negotiate in good
faith to modify this Agreement to the minimum extent necessary so as to comply
with such order or decree without material economic detriment to either party,
and this Agreement, as so modified, shall then continue in full force and
effect. In the event that the parties are unable to agree upon a modification
of this Agreement so as to cause it to comply with such order or decree without
material economic detriment to either party, then this Agreement shall be
terminated.
13.16 Station Revenue. Throughout the Term of this Agreement,
all revenues, direct and indirect, that result from or relate to, Time Broker's
Programming (excluding revenue from the commercials broadcast during Programming
presented pursuant to the Sport Program Contracts), including but not limited to
the sale by Time Broker of advertising time and/or programs, including all
accounts receivable, shall belong to and be the property of Time Broker.
13.17 Confidentiality. Each party agrees that any and all non-
public information learned or obtained by it from the other shall be
confidential and agrees not to disclose any such information to any person
whatsoever other than as is necessary or prudent for the purpose of effecting
this Agreement or as otherwise required by law.
13.18 Non-Competition Covenant.
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(a) Except as disclosed on Schedule 13.18 and as provided for in
Section 13.18(b) of this Agreement, throughout the Term of this Agreement,
neither Licensee, nor any affiliate thereof shall, directly or indirectly,
whether or not for profit, be engaged in, or have any financial interest greater
than five percent (5%) equity in, the business of radio broadcasting as owner,
operator, partner, consultant or employee of a radio station (i) the transmitter
of which is within a radius of 50 miles from the transmitter site of the
Station, and (ii) the format of which targets children six to twelve years of
age (a "Children's Radio Station"). Licensee, or any affiliates thereof, shall
be deemed to be engaged in or to have a financial interest in such a business if
Licensee, or its affiliates, is a partner with any person that is engaged in
such a business, or if Licensee or its affiliates directly or indirectly
performs services for such a person, or beneficially owns an equity interest or
interest convertible into equity, in any such entity, provided, however, that
the foregoing shall not prohibit Licensee or its affiliates from owning for the
purpose of passive investment less than five percent (5%) of any class of
securities of a publicly held corporation.
(b) Licensee, and any affiliate thereof, may acquire a
Children's Radio Station the ownership of which would otherwise violate Section
13.18(a) of this Agreement, provided (i) the Children's Radio Station is
acquired in connection with the acquisition of interests in other radio stations
and (ii) the broadcast cash flow of the Children's Radio Station equals ten
percent (10%) or less of the aggregate broadcast cash flow of the radio
station(s) that were acquired in connection with the Children's Radio Station.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
KIDSTAR INTERACTIVE MEDIA INC.
By: ____________________________________
Name: _________________________________
Title: _________________________________
EVERGREEN MEDIA CORPORATION OF DETROIT
By: ____________________________________
Name: _________________________________
Title: _________________________________
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SCHEDULE 1.1
PROGRAMMING
A. The Programming shall consist of one hundred sixty-five (165)
hours per week on the Station in an entertainment format to be chosen by Time
Broker, subject to Article 1 of this Agreement and subsection C of this
schedule. The Programming shall include (a) news and weather information; (b)
public service announcements (including, at Licensee's directive from time to
time, a reasonable number of public service announcements of local interest
supplied by Licensee or produced by Time Broker under Licensee's supervision);
(c) an announcement in form sufficient to meet the station identification
requirements of the FCC at the beginning of each hour; (d) an announcement at
the beginning of each segment of Programming to indicate that program time has
been purchased by Time Broker; and (e) any other announcement that may be
required by applicable law or regulation (including but not limited to EBS
tests). Time Broker shall maintain and deliver to Licensee copies of all
operating and programming information including without limitation information
concerning portions of the Programming that are responsive to issues of public
importance identified to Time Broker by Licensee, EBS announcements, and station
operating logs, necessary for Licensee to maintain its FCC Public File, and all
other records required to be kept by FCC rule or policy. Time Broker shall have
the sole and exclusive right to sell advertising to be included in the
Programming and shall be entitled to retain all the revenues derived from the
sale thereof.
B. Time Broker shall produce under Licensee's supervision and
present three (3) hours a week on the Station public affairs programming that
responds to the needs and interests of listeners in the Station's community of
license. Time Broker may present such public affairs programming between 6:00
A.M. and 9:00 A.M. on Sundays or at such other times as the public interest
calls for.
C. Time Broker will carry and include in its Programming the sports
programming, identified on Attachment A to this Schedule 1.1 as provided in the
Sport Program Contracts, through December 31, 1996.
<PAGE>
SCHEDULE 12.12
ACTIONS AND PROCEEDINGS
None
<PAGE>
SCHEDULE 13.18
NON-COMPETITION COVENANT EXCEPTIONS
Radio Stations
- --------------
None
<PAGE>
EXHIBIT 2.21
ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of July 15, 1996,
by and among CENTURY CHICAGO BROADCASTING L.P., an Illinois limited partnership
("Seller"), CENTURY BROADCASTING CORPORATION, a Delaware corporation
("Century"), EVERGREEN MEDIA CORPORATION OF LOS ANGELES, a Delaware corporation
("Parent"), and EVERGREEN MEDIA CORPORATION OF CHICAGO, a Delaware corporation
("Buyer").
RECITALS:
WHEREAS, Seller is the licensee of FM Radio Broadcast Station WPNT-FM,
100.3 mHz, Chicago, Illinois; and
WHEREAS, pursuant to an option agreement (the "Option") memorialized in a
letter dated July 1, 1996, Parent paid Seller $5,000,000 as a non-refundable
option payment (the "Option Payment") for an option to acquire the Station; and
WHEREAS, Parent has exercised the Option and assigned the Option to Buyer
and the parties are entering into this Agreement to memorialize the terms of the
Acquisition; and
WHEREAS, Buyer desires to acquire substantially all of the assets used or
useful or intended to be used in the operation of such station and to obtain an
assignment of the licenses and other authorizations issued by the Federal
Communications Commission (the "Commission" or "FCC") for the operation of such
station (collectively the "FCC Licenses"), and Seller desires to sell, transfer,
and assign such assets and licenses to Buyer, upon the terms and conditions
hereinafter set forth; and
WHEREAS, the FCC Licenses may not be assigned to Buyer without the prior
consent of the Commission; and
WHEREAS, Seller and Buyer mutually agree that consummation of this
transaction will serve the public interest, convenience, and necessity; and
WHEREAS, Buyer is a wholly owned subsidiary of Parent; and
WHEREAS, Century is the sole general partner of Seller; and
<PAGE>
WHEREAS, as a material inducement for Seller and Buyer to enter this
Agreement, each of Parent and Century has agreed to become a party to this
Agreement.
NOW, THEREFORE, in consideration of the covenants and agreements herein set
forth and in reliance on the representations and warranties contained herein,
the parties agree as follows:
(S) 1. Definitions. As used herein, the following terms have the following
-----------
meanings:
(S) 1.1. The Station means FM Broadcast Station WPNT, 100.3 mHz, Chicago,
-----------
Illinois, and the licenses, franchises, business, properties, and assets
(tangible and intangible, real, personal, and mixed) associated therewith.
(S) 1.2. Assignment Application means the application which the parties
----------------------
will join in and file with the Commission requesting its written consent to the
assignment of the FCC Licenses for the Station from Seller to Buyer.
(S) 1.3. Closing Date means the third business day after a Final Order
------------
granting approval of the Assignment Application, or such other date as the
parties may agree upon, but in no event before January 2, 1997 or later than
July 15, 1997.
(S) 1.4. Acquisition means the sale and conveyance of the Station by the
-----------
Seller to the Buyer pursuant to the terms of this Agreement.
(S) 1.5. Accounts Receivable Factor means a dollar amount determined as of
--------------------------
the Closing Date which is the aggregate of all accounts receivable relating to
the Station on such date initially invoiced within one hundred fifty (150) days
of the Closing Date, which are net of all commissions relating thereto,
multiplied by 96%. For purposes of ascertaining those accounts receivable which
are within one hundred fifty (150) days of the Closing Date, all payments shall
be applied to the oldest invoice(s) outstanding.
(S) 1.6. Final Order means an action by the FCC as to which: (a) no
-----------
request for stay by the FCC is pending, no such stay is in effect, and any
deadline for filing a request for any such stay has passed; (b) no appeal,
petition for rehearing or reconsideration, or application for review is pending
before the FCC and the deadline for filing any such appeal, petition or
application has passed; (c) the FCC has not initiated reconsideration or review
on its own motion and
-2-
<PAGE>
the time in which such reconsideration or review is permitted has passed; and
(d) no appeal to a court, or request for stay by a court, of the FCC's action is
pending or in effect, and the deadline for filing any such appeal or request has
passed.
(S) 2. Purchase and Sale of Assets.
---------------------------
(S) 2.1. Conveyance of Assets. On the Closing Date, Seller will
--------------------
sell, transfer, assign, and convey to Buyer by instruments of conveyance in form
reasonably satisfactory to Buyer the assets (tangible and intangible, real,
personal, and mixed) used or useful or intended to be used in the operation of
the Station, except the Excluded Assets, as defined in Section 2.2 hereinbelow
(the "Assets") including, without limitation, the following:
(a) The FCC Licenses listed in Schedule 2.1(a);
(b) All of the physical assets, machinery, equipment, and
tangible personal property listed in Schedule 2.1(b), together with any
replacements thereof or additions thereto made between the date hereof and the
Closing Date, less any items used, consumed, or expended in the ordinary course
of business between the date hereof and the Closing Date which are replaced by
items of similar value and utility, free and clear of all liens, claims, and
encumbrances;
(c) All accounts receivable as of the Closing Date
pertaining to the Station or its operation except for those excluded pursuant to
(S) 2.2(c);
(d) All pertinent files, records, documents, and logs
specifically pertaining to the Station or its operations, but excluding Seller's
corporate records;
(e) All leases of real and personal property relating to
or pertaining to the operation of the Station except for the lease described in
Section 2.2(b), including those listed and described in Schedule 2.1(d);
(f) All of the contracts relating or pertaining to the
Station, including but not limited to, those listed in Schedule 2.1(e), all
contracts for the sale of time on the Station for cash, goods, or services which
are outstanding on the Closing Date and which comply with the provisions of
Section 3.7(d) below, and new contracts entered
-3-
<PAGE>
into between the date hereof and the Closing Date which comply with the
provisions of Section 5.6(f) below;
(g) All of Seller's right, title and interest in and to
the call letters "WPNT-FM", all trademarks, trade names, service marks,
copyrights, jingles, visual materials, logos, permits, computer programs and
program rights or other materials owned by Seller and used or useful in the
operation of the Station listed in Schedule 2.1(f) hereto;
(h) Any and all prepaid operating expenses, deposits, and
warranty rights on the Closing Date which relate to the business of the Station;
(i) Any and all franchises, materials, supplies,
inventories, spare parts, easements, rights of way, permits or consents relating
to the business of the Station; and
(j) Any and all authorizations (in addition to the FCC
Licenses listed in Schedule 2.1(a) hereto) from any governmental authority
necessary for the operation of the Station, as described in Schedule 2.1(i)
hereto.
(S) 2.2. Excluded Assets. Notwithstanding Section 2.1, Seller is
---------------
not selling, transferring or conveying to Buyer any of the following assets,
collectively referred to herein as the "Excluded Assets":
(a) Seller's cash and cash equivalents pertaining to the
Station or its operations.
(b) The leasehold interest for Seller's corporate offices.
(c) All accounts receivable relating to the Station which
are more than one hundred fifty (150) days old from the invoice date.
(S) 2.3. Aggregate Purchase Price and Method of Payment. The
----------------------------------------------
purchase price for the assets acquired hereunder shall be Sixty-Eight Million
Seven Hundred Fifty Thousand Dollars ($68,750,000.00) plus the Accounts
Receivable Factor (collectively the "Aggregate Purchase Price"), payable by
Buyer to Seller as follows:
(a) Within three (3) days of the execution of this
Agreement, Buyer shall deposit the sum of Five Hundred Thousand Dollars
$500,000.00) in certified funds or by confirmed Federal Reserve wire transfer
(the "Deposit") with American National Bank and Trust Company of Chicago, a
-4-
<PAGE>
National Banking corporation, as Escrow Agent, to be held in escrow and
distributed as provided in the Escrow Agreement attached as Exhibit A hereto
(the "Escrow Agreement"). Before the Closing Date, interest on the Deposit
shall be for the benefit of Buyer and thereafter for the benefit of Seller.
(b) At Closing, the Deposit and all interest accrued
thereon (the "Escrowed Funds") shall be delivered to Seller as specified in the
Escrow Agreement and applied toward the Aggregate Purchase Price. The Aggregate
Purchase Price, less the Escrowed Funds, shall be paid by Buyer to Seller at
Closing by confirmed Federal Reserve wire transfer, as specified by Seller in
writing.
(c) The Option Payment is non-refundable and does not
apply towards, and is not a credit to, the Aggregate Purchase Price.
(S) 2.4. Disposition of the Escrowed Funds in the Event of
-------------------------------------------------
Termination. If this Agreement expires or is terminated, the Escrowed Funds
- -----------
shall be disposed of as follows:
(a) If this Agreement is terminated by Seller due to a
material breach hereof by Buyer, the Escrowed Funds shall be paid to Seller to
be applied towards its damages, if any; provided, however, that Seller shall not
-------- -------
be entitled to the Escrowed Funds if it is also in material breach of this
Agreement;
(b) If this Agreement is terminated by Buyer due to a
material breach hereof by Seller, the Escrowed Funds shall be returned to Buyer;
provided, however, that Buyer shall be entitled to the Escrowed Funds if it
- -------- -------
elects to pursue specific performance of this Agreement pursuant to Section 9 or
Buyer is also in material breach of this Agreement;
(c) If this Agreement expires or is terminated due to the
passage of time (as provided in Section 5.2 hereof), the Escrowed Funds shall be
paid to Buyer, provided, however, that if the failure to close within the time
-------- -------
contemplated by Section 5.2 is due to (i) the FCC finding Buyer unqualified to
be the licensee of the Station, or (ii) a designation by the FCC of the
Assignment Application for hearing on issues relating to Buyer's qualifications
to be the licensee of the Station, or (iii) Buyer's failure to sell or otherwise
dispose of a sufficient number of radio stations to be eligible as of the
Closing Date (such Closing Date being determined without regard to any condition
in the grant
-5-
<PAGE>
of the Assignment Application relating to Parent and its affiliates disposition
of one or more of its existing radio broadcast stations) and in any event, not
later than March 15, 1997, to consummate the Acquisition and hold the FCC
Licenses consistent with applicable FCC Rules (including limitations on
ownership of broadcast stations within a given market and limitations on the
aggregate number, nationwide, of broadcast stations owned by a single entity),
the Escrowed Funds shall be paid to Seller to be applied towards its damages;
(d) If this Agreement is terminated under any other
circumstances, the Escrowed Funds shall be paid to Buyer.
(S) 2.5. Accounts Receivable Factor. Seller will deliver a
--------------------------
certificate at the Closing as to the amount of the Accounts Receivable Factor
which will be net of all agency commissions. Absent manifest error, such
certificate shall be presumptively correct for determining the Aggregate
Purchase Price on the Closing Date. Seller will pay all sales commission with
respect to its accounts receivable. Any adjustments in the amount of the
Accounts Receivable Factor shall be made post-closing pursuant to (S) 2.8. No
adjustment shall be made at Closing or post-closing to reflect a reserve for
uncollectible accounts receivable or a recovery for actual write-offs by the
Buyer after the Closing. Seller shall retain and have the right to collect for
its account all unpaid invoices relating to accounts receivable which as of the
Closing Date are more than one hundred fifty (150) days old and Buyer shall
promptly remit to Seller any amounts it collects relating to such accounts.
(S) 2.6. Allocation of Aggregate Purchase Price. The Aggregate
--------------------------------------
Purchase Price shall be allocated among the Assets by Buyer, which shall base
its allocation upon the appraisal of a nationally-recognized broadcast appraiser
applying customary appraisal methodology. Seller agrees to be bound by such
appraisal and to execute and file appropriate forms with the Internal Revenue
Service and other governmental authorities as may be requested by Buyer. Buyer's
allocation shall be memorialized in a memorandum initialled by Buyer and Seller
and delivered at the Closing.
(S) 2.7. Assumption of Liabilities. Buyer shall assume and shall
-------------------------
be obligated to pay only those liabilities and obligations of Seller with
respect to the leases and contracts to be assigned to Buyer pursuant to Sections
2.1(d) and 2.1(e) arising or accruing on or after the Closing Date (the "Assumed
Liabilities"). Seller agrees to indemnify and hold harmless Buyer and its
successors and assigns from and
-6-
<PAGE>
against all liabilities other than the Assumed Liabilities in accordance with
the terms and conditions of Section 5.11(a).
(S) 2.8. Adjustments. Operation of the Station and the income and
-----------
expenses attributable thereto up through the close of business on the day before
the Closing Date shall be for the account of Seller and thereafter for the
account of Buyer. Such items as employee salaries and fringe benefits, power and
utilities charges, insurance, real and personal property taxes, prepaid
expenses, deposits, music license fees, and rents and payments pertaining to the
leases and contracts being assigned hereunder (including any contracts for the
sale of time for cash, trade or barter so assigned) shall be prorated between
Seller and Buyer as of the Closing Date in accordance with the foregoing
principle. Contractual arrangements that do not reflect an equal rate of
compensation to the Station over the term of the agreement shall be equitably
adjusted as of the Closing Date. The prorations and adjustments hereunder shall
be made and paid insofar as feasible on the Closing Date, with a final
settlement (including any adjustments to the Accounts Receivable Factor) and for
severance payments paid by Buyer pursuant to (S) 5.19 being made ninety (90)
days after the Closing Date.
(S) 2.9. No Post-Closing Escrow. No portion of the Aggregate
----------------------
Purchase Price will be held in escrow after the Closing.
(S) 3. Representations and Warranties of Seller and of Century.
-------------------------------------------------------
Seller and Century, jointly and severally, represent and warrant that:
(S) 3.1. Organization of and Qualification of Seller and of
--------------------------------------------------
Century.
- -------
(a) Seller is a limited partnership duly organized,
validly existing, and in good standing under the laws of Illinois and is duly
qualified to do business in Illinois.
(b) Century is a corporation duly organized, validly
existing, and in good standing under the laws of Delaware.
(c) The character and location of the properties used in
the operation of the Station and the nature of the business conducted by the
Station do not require Seller to qualify to do business in any jurisdiction
other than Illinois.
-7-
<PAGE>
(d) Seller has the authority to own the properties used in
the operation of the Station, to lease the properties held by it under lease and
used in the operation of the Station, and to carry on the business of the
Station as now being conducted.
(S) 3.2. Due Authorization by Seller and by Century. The execution
------------------------------------------
and delivery of this Agreement and the performance of the transactions
contemplated hereby have been duly authorized and approved by all necessary
action of Seller and Century; each of Seller and Century has full authority to
enter into and to perform this Agreement and the transactions contemplated
hereby; and this Agreement constitutes a valid and binding Agreement of Seller
and of Century enforceable in accordance with its terms.
(S) 3.3. Accounts Receivable. The accounts receivable as of the
-------------------
Closing Date will have arisen in the ordinary course of Seller's business.
Seller has made reasonable and regular efforts to collect the accounts
receivable consistent with its own past practices.
(S) 3.4. Commission Licenses and Compliance with Commission
--------------------------------------------------
Requirements.
- ------------
(a) All licenses, permits, authorizations, franchises,
certificates of compliance, and consents of governmental bodies, including,
without limitation, the FCC Licenses, used or useful in the operation of the
Station as it is now being operated are detailed in Schedules 2.1(a) and 2.1(i)
and are in full force and effect for the terms specified therein, are unimpaired
by any acts or omissions of Seller or Seller's employees or agents, and are free
and clear of any restrictions which might limit the full operation of the
Station. Except as set forth in Schedule 2.1(a), no condition exists or event
has occurred that permits, or after notice or lapse of time, or both, would
permit, the revocation or termination of any such license, permit, consent,
franchise, or authorization (other than pursuant to their express expiration
date) or the imposition of any material restriction or limitation upon the
operation of the Station as now conducted. Except as set forth in Schedule
2.1(a), Seller is not aware of any reason (i) why the FCC licenses might not be
renewed in the ordinary course or revoked, (ii) which would cause the FCC to
delay the grant of the 1996 renewal application for the Station, or (iii) why
the FCC would not consent to the Acquisition in the ordinary course of
processing the application.
(b) The Station is in compliance with the FCC's policy on
exposure to radio frequency radiation. No
-8-
<PAGE>
renewal of any FCC License would constitute a major environmental action under
the FCC's rules or policies. Access to the Station's transmission facilities is
restricted in accordance with the policies of the FCC. The Station is operating
in compliance with the rules, regulations and policies of the FCC in all
material respects and with the terms and conditions of its FCC Licenses and all
underlying construction permits.
(c) Except as set forth in Schedule 2.1(a), to the best of
Seller's knowledge, Seller is not the subject of any FCC or other governmental
investigation or any notice of violation or order, or any material complaint,
objection, petition to deny, or opposition issued by or filed with the FCC or
any other governmental authority in connection with the operation of or
authorization for the Station, and there are no proceedings (other than
rulemaking proceedings of general applicability) before the FCC or any other
governmental authority that could adversely affect any of the FCC Licenses or
the authorizations listed in Schedule 2.1(i).
(d) Seller has filed with the FCC and all other
governmental authorities having jurisdiction over the Station all material
reports, applications, documents, instruments, and other information required to
be filed, and will continue to make such filings through the Closing Date.
(S) 3.5. Real and Personal Property Leases.
---------------------------------
(a) Seller does not own fee simple title to any real
property.
(b) With respect to the leases of real and personal
property listed in Schedule 2.1(d), Seller has, or will have as of the Closing
Date, good title to the leasehold interest in such real and personal property,
free and clear of all liens, claims, and encumbrances. With respect to each such
lease, except as set forth in Schedule 2.1(d), (i) the lease is in full force
and effect; (ii) all accrued and payable rents have been paid; (iii) Seller has
been in peaceable possession since the beginning of the original term of such
lease and is not in default thereunder, and no waiver, indulgence, or
postponement of Seller's obligations have been granted by the lessor; (iv) no
event of default, and no event that with the giving of notice, the lapse of
time, or the happening of any further event would become a default, under any
such lease has occurred; (v) Seller has not violated any term or condition under
any such lease in any material respect; and (vi) each covenant to be performed
by Seller under such lease has been fully performed in all material respects.
-9-
<PAGE>
(S) 3.6. Personal Property. Seller is the owner of and has, or
-----------------
will have as of the Closing Date, good and marketable title to all of the
physical assets, machinery, equipment, and tangible personal property listed in
Schedule 2.1(b) hereto free and clear of all liens, claims, and encumbrances.
Except as set forth in Schedule 3.6, all physical assets are in good operating
condition, reasonable wear and tear excepted.
(S) 3.7. Contracts.
---------
(a) The contracts listed in Schedules 2.1(d) and 2.1(e) or
referenced in Sections 2.1(d) and 2.1(e) constitute all of the material
contracts to which Seller is a party and which are required to conduct the
business of the Station as it is presently being conducted (except contracts for
the sale of time on the Station).
(b) Except as otherwise set forth in the Schedules, with
respect to each contract listed in Schedules 2.1(d) and 2.1(e) to the best of
Seller's knowledge: (i) a true and correct copy of such contract has heretofore
been delivered to Buyer; (ii) such contract is in full force and effect; (iii)
Seller is not in default under such contract and knows of no default by any
other party thereto; (iv) Seller has not received a notice of termination with
respect to such contract; and (v) no condition exists or event has occurred
that, with the giving of notice, the lapse of time or the happening of any
further event would become a default or permit early termination under any such
contract.
(c) Except as set forth in Schedule 3.7(c) hereto, no
consent or approval of any other party to any contract listed in Schedules
2.1(d) and 2.1(e) is required for the assignment of any material contract to
Buyer or for the consummation of the transactions contemplated herein.
(d) With respect to contracts for the sale of time on the
Station for cash, goods or services: such contract has been entered into in the
ordinary course of business at Seller's usual and customary rates or practices.
(S) 3.8. Employee Agreements and Benefits.
--------------------------------
(a) Seller is not a party to or bound by any pension,
annuity, retirement, stock option, stock purchase, savings, profit sharing or
deferred compensation plan or agreement, or any retainer, consultant, bonus,
group insurance, welfare, health and disability plans, or other incentive or
benefit contract, plan or arrangement applicable to the Station, and no employee
or spouse of an employee is
-10-
<PAGE>
entitled to any benefits which would be payable pursuant to any of those plans
except as provided for by the provisions of such plan. Except as set forth on
Schedule 3.8(a) hereto, no employee of Seller is party to an employment contract
with or pertaining to the Station. No employee of Seller or the Station is
represented by any union or other collective bargaining agent and there are no
collective bargaining or other labor agreements with respect to those employees.
(b) Seller has, prior to the date hereof, delivered to
Buyer a list showing the names of all persons employed by the Station, the
compensation earned by each such employee, and all material employee fringe
benefits and policies in effect with respect to such employees.
(S) 3.9. Insurance. Seller has in full force and effect adequate
---------
insurance on the assets listed in Schedule 2.1(b) hereto and on the assets held
by it under the leases listed in Schedule 2.1(d) hereto, and Seller will
continue to maintain such insurance in full force and effect up to and including
the Closing Date.
(S) 3.10. Litigation. Except as set forth in Schedule 3.10 hereto,
----------
neither Seller nor Century is a party to, and, to the knowledge of Seller and
Century, neither is threatened with, any legal action or other proceeding before
any court, tribunal or administrative agency which pertains to the Station or
the Assets to be transferred hereunder.
(S) 3.11. Restrictive Documents. Except as set forth in Schedule
---------------------
3.11 hereto, the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby will not conflict with or result in the
termination or breach of or constitute a default under the terms of any
indenture, mortgage, deed of trust, covenant, agreement or other instrument to
which Seller or Century is a party or to which any of their respective
properties are subject.
(S) 3.12. Patents, Trademarks, Etc. Except for the FCC Licenses
and the authorizations listed in Schedule 2.1(i) hereto, Schedule 2.1(f) hereto
contains a true and complete listing of all trademarks, trade names, service
marks, franchises, copyrights, and applications therefor, owned or licensed by
or registered in the name of Seller and used or held for use in the business and
operations of the Station, all of which are transferable to Buyer by the sole
act and deed of Seller. Except as set forth on Schedule 3.12 hereto, Seller
owns, or is licensed to use and is able to convey to Buyer free and clear of all
liens, claims and encumbrances, all trademarks, trade names, service marks,
franchises,
-11-
<PAGE>
copyrights, jingles, and other intangible property rights listed in Schedule
2.1(f).
(S) 3.13. Compliance with Applicable Laws. Seller has all material
-------------------------------
required permits, certificates, licenses, approvals, and other authorizations
required to carry on the business of the Station and to own, lease, use, and
operate the properties associated with the Station at the places and in the
manner in which the business of the Station is now being conducted. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not result in the violation by Seller of
any laws, ordinances, regulations, rules, or orders.
(S) 3.14. Payment of Taxes. Except for taxes contested in good
----------------
faith and which are identified in Schedule 3.14, Seller has fully paid all
federal, state, and local taxes that have been assessed against Seller with
respect to the Station and its operation, including, without limitation, all
payroll, sales, license, franchise, property, and income taxes.
(S) 3.15. Environmental Matters.
---------------------
(a) There are no actions, suits, claims or proceedings
based on environmental conditions (including the exposure of persons to
hazardous materials within Seller's work place) pending or, to the best of
Seller's knowledge, threatened against Seller;
(b) No equipment conveyed hereunder, or used by Seller at
Seller's studios, offices or at the Site, uses or contains hazardous materials
or polychlorinated biphenyls, or, if so, such hazardous materials or
polychlorinated biphenyls will be removed or contained to Buyer's satisfaction
as of the Closing Date;
(S) 3.16. Financial Statements. Seller represents and warrants that
--------------------
its statement of income and expenses and balance sheet for the most recent three
(3) years were prepared in the ordinary course of business consistent with past
practices and reflect the operation of the Station in all material respects for
such periods, subject to such adjustments as may be typically required in the
preparation of audited financial statements. No financial statements relating to
the Station, Seller or Century were delivered to Buyer, Parent or Evergreen
Media Corporation prior to the grant of the Option or the execution of this
Agreement. Copies of the Station's statement of income and expenses for each of
the most three recent annual periods will be
-12-
<PAGE>
delivered to Buyer within three (3) days of execution of this Agreement and are
being submitted for informational purposes only, and are without any
representation or warranty except as set forth in the first sentence of this
paragraph.
(S) 3.17. Disclosure. The representations of Seller in this
----------
Agreement or in any schedule, exhibit, or other document delivered pursuant
hereto do not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained therein or
herein not misleading.
(S) 4. Representations and Warranties of Buyer and Parent. Buyer
--------------------------------------------------
and Parent hereby, jointly and severally, represent and warrant to Seller that:
(S) 4.1. Organization of Buyer and Parent. Each of Buyer and
--------------------------------
Parent is a corporation duly organized validly existing, and in good standing
under the laws of Delaware, and Buyer is, or as of the Closing Date will be,
qualified to do business in Illinois.
(S) 4.2. Due Authorization by Buyer and Parent. The execution and
-------------------------------------
delivery of this Agreement and the performance of the transactions contemplated
hereby have been duly authorized and approved by the Board of Directors of Buyer
and of Parent; each of Buyer and Parent has full corporate power to enter into
and perform this Agreement and the transactions contemplated hereby; and this
Agreement constitutes a valid and binding agreement of Buyer and of Parent
enforceable in accordance with its terms.
(S) 4.3. Restrictive Documents. The execution and delivery of this
---------------------
Agreement and the consummation of the transactions contemplated hereby will not
conflict or be inconsistent with or result in the termination of or result in
any breach of or constitute a default under the terms of any indenture,
mortgage, deed of trust, covenant, agreement, or other instrument to which Buyer
or Parent is a party or to which any of their respective properties are subject.
(S) 4.4. Buyer's FCC Qualifications. On the Closing Date and in
--------------------------
any event not later than March 15, 1997, Buyer will be legally qualified to
become the licensee of the Station. Buyer knows of no reason why the Commission
would not grant its consent to the assignment of the FCC Licenses to Buyer.
(S) 4.5. Litigation. Except as set forth in Schedule 4.5 hereto,
----------
neither Buyer nor Parent is a party to, and to the knowledge of Buyer and
Parent, neither is threatened
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<PAGE>
with, any legal action or other proceeding before any court, tribunal or
administrative agency which might materially adversely affect Buyer's or
Parent's ability to consummate the transaction contemplated hereby.
(S) 4.6. Buyer's Financial Qualifications. Buyer has and will have
--------------------------------
on the Closing Date the requisite financial resources (including binding
commitments for any necessary financing, whether from a commercial lender or
otherwise) to undertake and perform Buyer's obligations under this Agreement,
including payment of the Aggregate Purchase Price to Seller.
(S) 5. Covenants and Further Representations and Agreements.
----------------------------------------------------
(S) 5.1. Application for Commission Consent and Approval. Promptly
after the date hereof, but in no event later than July 31, 1996 Seller and Buyer
shall join in and file the Assignment Application with the Commission. The
parties will cooperate and take all steps as may be necessary or proper to
prosecute the Assignment Application diligently and expeditiously to a favorable
conclusion.
Parent covenants to take all steps necessary to permit the
consummation of the Acquisition under applicable FCC Rules (including
limitations on ownership of broadcast stations within a given market and
limitations on the aggregate number, nationwide, of broadcast stations owned by
a single entity). Parent further agrees that it will (including causing any
direct or indirect subsidiary to) place under contract, file with the FCC by
August 31, 1996 applications seeking its consent to the sale of, and
subsequently sell, such radio station(s) as may be necessary to permit timely
consummation of the Acquisition under FCC Rules. FCC application fees shall be
borne equally by the Company and Parent. Parent agrees that Buyer shall be
qualified under FCC Rules to consummate the Acquisition and hold the FCC
Licenses in any event as of March 15, 1997 and on the Closing Date.
(S) 5.2. Time for Closing. If the Closing hereunder has not
----------------
occurred by July 15, 1997 (the "Final Closing Date"), either Seller or Buyer may
thereafter terminate this Agreement upon ten (10) days' written notice to the
other, provided that the party desiring to terminate this Agreement is not in
default hereunder.
(S) 5.3. Control of Station. The transactions contemplated by this
------------------
Agreement shall not be consummated until after the Commission has given its
consent and approval to
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<PAGE>
the Assignment Application. Between the date of this Agreement and the Closing
Date, Buyer and its employees or agents shall not directly or indirectly
control, supervise, or direct, or attempt to control, supervise, or direct, the
operation of the Station, and such operation shall be the sole responsibility of
and in the complete discretion of Seller.
(S) 5.4. Consultation. Subject to the provisions of (S) 5.3,
------------
between the date hereof and the Closing, Seller will consult with Buyer's
management with a view to informing such management as to the operation,
management, and business of the Station.
(S) 5.5. Inspection of the Station. Before the Closing, Buyer may
-------------------------
through its representatives make such investigation of the properties, books,
and records of the Station, and of its financial and legal condition as Buyer
deems necessary or advisable to familiarize itself with such properties and
other matters. Seller agrees that such representatives shall have reasonable
access during normal business hours to the premises, documents, books, records,
and affairs of the Station and shall cause the employees of the Station to
furnish Buyer with such financial and operating data and other information with
respect to the business and properties of the Station as Buyer shall from time
to time reasonably request. Access to such information is for informational
purposes only. All information provided to Buyer is subject to the provisions of
Section 5.16.
(S) 5.6. Operation of the Station Before the Closing. Between the
-------------------------------------------
date hereof and the Closing Date:
(a) The business of the Station shall be conducted only in
the ordinary course.
(b) The personal property of the Station shall be
maintained in normal operating condition and repair consistent with post
practices;
(c) Seller will not, without the prior written consent of
Buyer, enter into any agreements with employees of the Station or effect any
changes in the compensation, employee benefits, or personnel policies applicable
to the employees of the Station, except in accordance with existing employment
practices;
(d) Seller will not create or permit to exist any lien,
claim, or encumbrance against any of the Assets except those which will be
discharged and released at the Closing;
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<PAGE>
(e) Seller shall not sell, lease, or dispose of any of the
Assets, except for immaterial dispositions in the ordinary course of business,
or except in connection with the replacement of such assets with assets of
similar value and utility, which replacements shall be paid for in full before
the Closing Date;
(f) Seller will not without the prior written consent of
Buyer amend, change, or modify any of the contracts listed in Schedules 2.1(d)
and 2.1(e) in any material respect. Seller will not without prior written
consent of Buyer enter into any new contracts respecting the Station or its
properties, except (i) contracts for the sale of time on the Station for cash,
goods or services which comply with the representations and warranties
pertaining to such contracts set forth in (S) 3.7(d) above and which are
cancelable on not more than thirty (30) days' notice, (ii) contracts entered
into in the ordinary course of business which are cancelable on not more than
thirty-one (31) days' notice without penalty or premium, and (iii) contracts
entered into in the ordinary course of business each of which does not involve
more than Ten Thousand Dollars ($10,000) or all of which do not involve more
than Fifty Thousand Dollars ($50,000) in the aggregate. New contracts entered
into in compliance with this (S) 5.6(f) shall be included in the contracts
assigned to Buyer under (S) 2.1 above and shall constitute Assumed Liabilities
pursuant to Section 2.7 hereof;
(g) The Station shall be operated in material compliance
with the FCC Licenses, the Communications Act and the rules and regulations of
the Commission. Seller shall file with the FCC all material reports,
applications, documents, instruments and other information required to be filed
in connection with the operation of the Station; and Seller will take all
reasonable steps to protect the integrity of the Stations's signal and will
timely file and prosecute the 1996 renewal application for the Licenses.
(h) Seller will follow its usual and customary policies
with respect to extending credit for sales of time on the Station and with
respect to collecting accounts receivable arising from such extension of credit.
(i) Seller shall use reasonable efforts to satisfy its air
time obligations under its agreements for sale of time on the Station for goods
or services ("Trade Contracts") such that the outstanding aggregate balance
owing under all of such contracts as of the Closing Date be zero. On the Closing
Date Seller shall deliver to Buyer a schedule, certified by an officer of
Seller, reflecting the aggregate
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<PAGE>
outstanding balances under all such agreements in existence as of the Closing
Date. Buyer will discharge such air time obligations on the Trade Contracts
after the Closing. In the event that the aggregate balance exceeds Fifty
Thousand Dollars ($50,000) as of the Closing Date, Buyer shall receive a dollar
for dollar adjustment in an amount equal to the amount of outstanding Trade
Contracts in excess of Fifty Thousand Dollars ($50,000).
(j) Seller shall deliver to Buyer, for Buyer's
informational purposes only, monthly unaudited statements of operating revenues
and operating expenses of the Station within ten (10) days after each such
statement is prepared by or for Seller.
(S) 5.7. Expenses. Seller and Buyer shall each pay one half of any
--------
and all filing or other fees required to be paid to the Commission in connection
with the Assignment Application or the transactions contemplated by this
Agreement, and all sales, documentary, transfer, grantor, or other taxes
assessed or levied in connection with the transfer of the assets hereunder. All
other expenses incurred in connection with the negotiation, preparation,
execution, and performance of this Agreement shall be paid by the party
incurring such expenses.
(S) 5.8. Brokerage Commission. Seller and Buyer represent and
--------------------
warrant to each other that the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not give rise to any
valid claim against any of the parties hereto for a finder's fee, brokerage
commission, or other like payment except for the brokerage commission payable to
Broadcasting Asset Management Corporation ("BAMC"), which has served as
exclusive broker in connection with this transaction. The commission due to BAMC
shall be paid by Seller at Closing by cashier's check or confirmed wire
transfer.
(S) 5.9. Survival of Representations and Warranties. The
------------------------------------------
representations, warranties, covenants, and agreements of the parties shall
survive the Closing Date for a period of six (6) months.
(S) 5.10. Further Assurances. The parties hereto agree to execute
------------------
and deliver or cause to be executed and delivered at the Closing and at other
reasonable times and places such additional instruments as another party hereto
may reasonably request for the purpose of carrying out this Agreement and
closing the transactions contemplated hereby.
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<PAGE>
(S) 5.11. Indemnification.
---------------
(a) Seller agrees to defend, indemnify, and hold harmless
Buyer from and against any loss, claim, damage, liability, or expense (including
reasonable attorneys' fees) (i) incurred or sustained by Buyer on account of any
and all liabilities of Seller (except liabilities and obligations arising or
accruing after the Closing Date with respect to the Assumed Liabilities); (ii)
incurred or sustained by Buyer on account of any misrepresentation or breach of
any representation, warranty, or agreement of Seller contained in this Agreement
or in any schedule, exhibit, or other document delivered pursuant hereto; or
(iii) incurred or sustained by Buyer on account of any breach of any covenant of
Seller contained in this Agreement; provided, however, that Seller shall be
-------- -------
required to indemnify and hold harmless under this Section 5.11(a)(i) and (ii)
only to the extent that the aggregate amount of liquidated losses, claims,
damages, liabilities, or expenses incurred by Buyer exceeds One Hundred Fifty
Thousand Dollars ($150,000); and provided, further, that Seller's obligation to
-------- -------
indemnify Buyer pursuant to this Section 5.11(a) shall not exceed the sum of Ten
Million Dollars ($10,000,000) for the total of all claims made pursuant to this
Section 5.11(a), or any other claim, demand, liability, or expense arising under
this Agreement. Notwithstanding the foregoing, the requirement that the
aggregate amount of liquidated losses, claims, damages, liabilities, or expenses
incurred by Buyer exceeds One Hundred Fifty Thousand Dollars ($150,000) before
Seller shall have the obligation to indemnify Buyer pursuant to clause 5.1(a)(i)
shall not apply with respect to liabilities which have been disclosed by Seller
on any schedule delivered by Seller to Buyer herewith and which are not included
in the Assumed Liabilities. If any claim is asserted against Buyer for which
indemnification may be sought under the provisions of this (S) 5.11(a), Buyer
shall promptly notify Seller and Century of such claim and thereafter shall
permit Seller and Century at their expense to participate in the negotiation and
settlement of any such claim and to join in the defense of any legal action
arising therefrom.
(b) Buyer agrees to defend, indemnify, and hold harmless
Seller from and against any loss, claim, damage, liability, or expense
(including reasonable attorneys' fees) (i) incurred or sustained by Seller on
account of liabilities and obligations arising or accruing after the Closing
Date under the Assumed Liabilities, or (ii) incurred or sustained by Seller on
account of any misrepresentation or breach of any representation, warranty,
covenant, or agreement of Buyer contained in this Agreement or in any schedule,
exhibit, or other document delivered
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<PAGE>
pursuant hereto, provided, however, that Buyer shall be required to indemnify
-------- -------
and hold harmless under this Section 5.11(b) only to the extent that the
aggregate amount of liquidated losses, claims, damages, liabilities, or expenses
incurred by Seller exceeds One Hundred Fifty Thousand Dollars ($150,000); and
provided, further, that Buyer's obligation to indemnify Seller pursuant to this
- -------- -------
Section 5.11(b) shall not exceed the sum of Ten Million Dollars ($10,000,000)
for the total of all claims made pursuant to this Section 5.11(b), or any other
claim, demand, liability, or expense arising under this Agreement. If any claim
is asserted against Seller for which indemnification may be sought under the
provisions of this (S) 5.11(b), Seller shall promptly notify Buyer and Parent of
such claim and thereafter shall permit Buyer and Parent at their expense to
participate in the negotiation and settlement of any such claim and to join in
the defense of any legal action arising therefrom.
(c) Indemnification as Exclusive Remedy. Subject to the
-----------------------------------
provisions of Section 9 herein, and except for remedies that cannot be waived as
a matter of law, the indemnifications provided in this Section 5.11 shall be the
sole and exclusive post-closing remedy for damages available to any party hereto
for any claim hereunder or arising in connection with the transactions
contemplated hereby.
(S) 5.12. Risk of Loss. The risk of loss, damage, or destruction
------------
to any of the Assets to be transferred to Buyer hereunder shall remain with
Seller until the Closing of this Agreement. In the event of any such loss,
damage, or destruction, Seller will promptly notify Buyer of all particulars
thereof, stating the cause thereof if known and the extent to which the cost of
restoration, replacement and repair of the Assets lost, damaged or destroyed
will be reimbursed under any insurance policy with respect thereto. Buyer may
choose to and accept the property in its "then" condition, in which event Seller
shall assign or cause to be assigned to Buyer all rights under any insurance
claims covering the loss, damage or destruction and pay over or cause to be paid
over to Buyer any proceeds under any such insurance policies received by Seller
with respect thereto or Buyer may elect to have Seller repair or replace such
Assets as soon as possible after loss, damage or destruction thereof and Seller
shall use its best efforts to restore as promptly as possible transmissions as
authorized in the FCC Licenses. In the event Buyer elects to have Seller make
the repair or replacement, the Closing Date shall be extended, with FCC consent,
if necessary, to permit such repair or replacement.
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<PAGE>
In the event the Closing Date is postponed pursuant to this Section 5.12,
the parties hereto will cooperate to
extend the time during which this Agreement must be closed as specified in the
consent of the FCC.
(S) 5.13. Consent and Approvals. Seller shall obtain the consent
---------------------
of the landlord to the assignment of the studio and tower leases at the Hancock
Building to Buyer, provided, however, if landlord refuses to consent to an
assignment because Buyer or a related entity is in default on its leases to such
landlord, Seller shall not be obligated to obtain such consent. Seller shall use
its reasonable efforts to obtain or to assist Buyer in obtaining, on or prior to
the Closing Date all other third-party consents or approvals required for the
assignment by Seller to Buyer of the contracts listed on Schedule 3.7(c) in
writing prior to the Closing Date. If Seller shall be unable, on or prior to the
Closing Date, to obtain a consent necessary for the assignment of its title to,
interest in and rights under any contract to be assigned hereunder, then Seller
and Buyer will cooperate in any reasonable arrangement designed to enable Seller
to perform its obligations thereunder, and to provide for the assumption by
Buyer of the benefits, risks and burdens of, any such contract, including
enforcement at the cost and for the account of Buyer of any and all rights of
Seller against the other party thereto arising out of the future cancellation
thereof after the Closing Date by such other party. As and when, after the
Closing Date, title to, interest in and rights under any such contract become
transferable, the assignment to the Buyer by the Seller of any title to,
interest in and rights under any contract shall be deemed effective at the time
such consent or approval is effective, without any further action by Buyer or
Seller, and all such contracts when assigned shall become Assumed Liabilities
hereunder.
(S) 5.14. Confidentiality. Buyer and Seller each shall keep
---------------
confidential all information obtained by it with respect to the other in
connection with this Agreement, and if the transactions contemplated hereby are
not consummated for any reason, each shall return to the other, without
retaining a copy thereof, any confidential schedules, documents or other written
information obtained from the other in connection with this Agreement and the
transactions contemplated hereby, except where such information is known or
available through other lawful sources or where and to the extent that such
party is advised by counsel that its disclosure is required in accordance with
the terms of agreements in effect on the date hereof or the provisions of
applicable law and the disclosing party notifies the other party of the persons
to whom disclosure is to be made and the
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<PAGE>
information to be disclosed. Neither Buyer nor Seller shall make any public
statement or press release with respect to this Agreement or the transactions
contemplated hereby except in one or more joint press releases in form and
substance acceptable to both Buyer and Seller.
(S) 5.15. Antitrust Law Compliance. As promptly as practicable
------------------------
after the date hereof, the ultimate parent of Buyer and of Seller, as
applicable, shall file with the Federal Trade Commission and the Antitrust
Division of the Department of Justice the notifications and other information
required to be filed under the Hart-Scott-Rodino Anti-trust Improvements Act of
1967, as amended (the "Improvements Act"), or any rules and regulations
promulgated thereunder, with respect to the transactions contemplated hereby.
Each of Buyer and Seller covenants to cause its ultimate parent, as applicable,
to file, as promptly as practicable, such additional information as may be
requested and to cooperate and take all steps as may be necessary or proper to
obtain an expeditious and favorable disposition of such filings. Each of Buyer
and Seller warrants that all such filings by it or its ultimate parent will be,
as of the date filed, true and accurate and in accordance with the requirements
of the Improvements Act and any such rules and regulations. Buyer shall pay all
fees required to be paid by any person to any governmental entity in connection
with performing this Section 5.16.
(S) 5.16. Disclaimer. The parties acknowledge that the
----------
Acquisition has been made on a facility or "stick" basis and not on the basis of
historic operations or cash flow of the Station. To the extent that Seller
supplies Parent or Buyer with financial or other information relating to the
Station it is only as an accommodation and Seller does not warrant or represent
the accuracy of such information or the future financial performance of the
Station.
(S) 5.17. Audit of Historical Books and Records by Buyer. After
----------------------------------------------
the filing of the FCC application for transfer of the Licenses from Seller to
Buyer, Buyer may cause its auditors to conduct an audit of the books and
accounts of Seller, at the sole cost and expense of Buyer, for the sole purpose
of reflecting the historical results of the Station in the consolidated
financial information of Evergreen Media Corporation and its consolidated
subsidiaries. Seller and Buyer will coordinate the timing of such audit so as to
minimize the inconvenience to Seller.
(S) 5.18. Capital Leases. Seller will pay off each of he capital
--------------
leases listed on Schedule 5.18 annexed hereto and obtain a quit-claim bill of
sale from each such lessor.
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<PAGE>
(S) 5.19. Employee Matters. Buyer is assuming the obligations of
----------------
Seller to Seller's employees under the employment agreements listed in Schedule
2.1(f). As to all of Seller's other employees ("At-Will Employees"), Buyer will
offer probationary employment to all the At-Will Employees as of the Closing
Date on an at-will basis. In the event Buyer elects to terminate any such
employee within sixty (60) days of the Closing Date, Seller will make severance
payments to such employees in accordance with the provisions of Schedule 5.19,
and Seller will reimburse Buyer for such amounts pursuant to (S) 2.8.
(S) 6. Conditions to the Obligations of Buyer. The obligations of Buyer
--------------------------------------
to consummate the transactions herein contemplated are subject to the
satisfaction on or before the Closing Date of the following conditions, unless
waived in writing by Buyer (except the conditions provided in Section 6.1 which
must by waived, if at all, by both Buyer and Seller and Section 6.7 which may
not be waived):
(S) 6.1. FCC Approval. The Commission shall have consented to the
------------
Assignment Application, and such consent shall have become a Final Order;
provided, however, that Buyer and Seller may mutually waive the condition that
such consent shall have become a Final Order.
(S) 6.2. Truth of Representations and Warranties. The
---------------------------------------
representations and warranties of Seller contained in this Agreement and in any
schedule, exhibit, or other document delivered pursuant hereto shall be true and
correct in all material respects on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
such date, and Buyer shall have received a certificate to this effect dated the
Closing Date and signed by an officer of Seller.
(S) 6.3. Performance of Agreements. Each agreement of Seller to be
-------------------------
performed on or before the Closing Date pursuant to the terms hereof or as
contemplated herein shall have been duly performed, and Buyer shall have
received a certificate to this effect dated the Closing Date and signed by an
officer of Seller.
(S) 6.4. Opinion of Seller's and Century's Counsel. Seller shall
-----------------------------------------
have furnished Buyer with a favorable opinion, dated the Closing Date, of Wiley,
Rein & Fielding, counsel for Seller and Century, in form and substance
satisfactory to counsel for Buyer, that:
(1) Seller is a limited partnership duly organized,
validly existing, and in good standing under the
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laws of Illinois and is duly qualified to do business in Illinois.
(2) Century is a corporation duly organized, validly
existing, and in good standing under the laws of Delaware.
(3) The character and location of the properties used
in the operation of the Station and the nature of the business conducted by it
do not require Seller to qualify to do business as a foreign corporation in any
jurisdiction other than Illinois. In expressing this opinion, counsel may rely
on a certificate of an officer of Seller describing the properties and business
of the Station.
(4) The execution and delivery of this Agreement and
the performance of the transactions contemplated hereby have been duly
authorized by all necessary action of Seller and of Century, and this Agreement
constitutes a legal, valid, and binding obligation of Seller and of Century.
(5) The instruments of conveyance, assignment, and
transfer delivered by Seller pursuant to this Agreement constitute legal, valid,
and binding obligations of Seller and are effective to vest in Buyer all of the
right, title, and interest of Seller in and to the properties, assets, and
franchises to which they relate.
(S) 6.5. Delivery of Documents. Seller shall have delivered to
---------------------
Buyer on or before the Closing Date all agreements, instruments and documents
required to be delivered by Seller to Buyer pursuant to Section 8.1 hereinbelow.
(S) 6.6. No Restraint or Litigation. Any applicable waiting period
--------------------------
under the Improvements Act shall have expired or been terminated, and no
injunction or restraining order shall have been issued by any court of competent
jurisdiction and be in effect which restrains or prohibits the closing of the
transactions contemplated hereby.
(S) 6.7 FCC Licenses. The FCC shall have granted the application
------------
filed by Seller for renewal of the licenses to operate the Station and renewed
the licenses to operate the Station for a term expiring no earlier than midnight
December 1, 2003 without any condition materially adverse to the Station. An EEO
reporting condition shall not be a materially adverse condition relating to the
Station.
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<PAGE>
(S) 7. Conditions to the Obligations of Seller. The obligations of
---------------------------------------
Seller to consummate the transactions herein contemplated are subject to the
satisfaction on or before the Closing Date of the following conditions, unless
waived in writing by Seller (except the conditions provided in Section 7.1 and
Section 7.6, which may not be waived):
(S) 7.1. FCC Approval. The Commission shall have consented to the
------------
Assignment Application.
(S) 7.2. Truth of Representations and Warranties. The
---------------------------------------
representations and warranties of Buyer contained in this Agreement and in any
schedule, exhibit, or other document delivered pursuant hereto shall be true and
correct in all material respects on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
such date, and Seller shall have received a certificate to this effect dated the
Closing Date and signed by an officer of Buyer.
(S) 7.3. Performance of Agreements. Each agreement of Buyer to be
-------------------------
performed on or before the Closing Date pursuant to the terms hereof or as
contemplated herein shall have been duly performed, and Seller shall have
received a certificate to this effect dated the Closing Date and signed by an
officer of Buyer.
(S) 7.4. Opinion of Buyer's and Parent's Counsel. Buyer and Parent
---------------------------------------
shall have furnished Seller with a favorable opinion, dated the Closing Date, of
Latham & Watkins, counsel for Buyer and Parent, in form and substance
satisfactory to counsel for Seller that:
(1) Each of Buyer and Parent is a corporation duly
organized, validly existing, and in good standing under the laws of Illinois,
and Buyer is duly qualified to do business in Illinois.
(2) The execution and delivery of this Agreement and
the performance of the transactions contemplated hereby have been duly
authorized by all necessary corporate action of Buyer and of Parent, and this
Agreement constitutes a legal, valid, and binding obligation of Buyer and of
Parent.
(S) 7.5. Delivery of Documents. Buyer shall have delivered to
---------------------
Seller on or before the Closing Date all agreements, instruments and documents
required to be delivered by Buyer to Seller pursuant to Section 8.2 hereinbelow.
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(S) 7.6. No Restraint or Litigation. Any applicable waiting period
--------------------------
under the Improvements Act shall have expired or been terminated, and no
injunction or restraining order shall have been issued by any court of competent
jurisdiction and be in effect which restrains or prohibits the closing of the
transactions contemplated hereby.
(S) 8. The Closing. The Closing of this Agreement and the deliveries
-----------
hereunder shall take place at 10:00 a.m. on the Closing Date at the offices of
the Station at Wiley, Rein & Fielding, 1776 K Street, N.W., Washington, D.C. or
at such other place as the parties may mutually agree.
(S) 8.1. Deliveries by Seller and Century. At the Closing, Seller
--------------------------------
and/or Century, as the case may be, shall execute and deliver to Buyer:
(a) Bills of sale and assignments in form satisfactory to
Buyer, dated the Closing Date, executed by Seller, conveying to Buyer all of
Seller's right, title, and interest in and to all the Assets other than the FCC
Licenses, contracts and leases;
(b) An assignment in form satisfactory to Buyer, dated the
Closing Date, executed by Seller, conveying to Buyer all of Seller's right,
title, and interest in and to the FCC Licenses;
(c) Assignments to Buyer of all contracts and leases
described in Sections 2.1(d) and 2.1(e);
(d) Certificate(s), dated as of the Closing Date, signed
by the general partner of Seller and an officer of Century certifying, pursuant
to Section 6.2 of this Agreement, that the representations and warranties of
Seller and of Century set forth in this Agreement and in the other instruments
delivered by Seller to Buyer in connection with this Agreement are true and
correct in all material respects as of the Closing Date;
(e) A certificate, dated as of the Closing Date, signed by
the general partner of Seller certifying, pursuant to Section 6.3 of this
Agreement, that each agreement to be performed by Seller has been duly
performed;
(f) The files and records referred to in Section 2.1(c) of
this Agreement;
(g) An Opinion of Seller's Counsel in accordance with
Section 6.5 hereof;
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<PAGE>
(h) A certificate as to the Accounts Receivable Factor;
and
(i) Such other documents as may reasonably be requested by
Buyer's counsel.
(S) 8.2. Deliveries by Buyer and Parent. At the Closing, Buyer
------------------------------
and/or Parent, as the case may be, shall execute and deliver to Seller:
(a) Certificate(s), dated as of the Closing Date, signed
by an officer of Buyer and an officer of Parent, certifying, pursuant to Section
7.2 of this Agreement, that the representations and warranties of Buyer and of
Parent set forth in this Agreement and in the other instruments delivered by
Buyer to Seller in connection with this Agreement are true and correct as of the
Closing Date;
(b) A certificate, dated as of the Closing Date, signed by
an officer of Buyer, certifying, pursuant to Section 7.3 of this Agreement, that
each agreement to be performed by Buyer has been duly performed;
(c) The Aggregate Purchase Price specified in Section 2.3
of this Agreement;
(d) An Assumption of Liabilities instrument in form and
substance satisfactory to Seller pursuant to which Buyer shall assume the
Assumed Liabilities;
(e) An Opinion of Buyer's Counsel in accordance with
Section 7.4 hereof; and
(f) Such other documents as may reasonably be requested by
Seller's counsel.
(S) 9. Specific Performance. Seller agrees that the Assets include unique
--------------------
property that cannot be readily obtained on the open market and that Buyer will
be irreparably injured if this Agreement is not specifically enforced.
Therefore, notwithstanding the provisions of Section 5.11, Buyer shall have the
right to enforce specifically Seller's performance under this Agreement, and
Seller agrees to waive the defense in any such suit that Buyer has an adequate
remedy at law and to interpose no opposition, legal or otherwise, as to the
propriety of specific performance as a remedy. This right of specific
performance shall be in addition to, and not in lieu of, any other remedies that
Buyer may elect to pursue.
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(S) 10. Guarantees of Parent and Century.
--------------------------------
(S) 10.1. Parent's Guarantee. Parent hereby unconditionally
------------------
guarantees to Seller the full and timely performance of all the obligations and
agreements of Buyer pursuant hereto. The foregoing guarantee shall include the
guarantee of the payment of all damages, costs and expenses incurred or
otherwise recoverable by Seller as a result of the nonperformance of any of the
obligations or agreements so guaranteed or as a result of the non-performance of
this guarantee. Seller may proceed against Parent for the performance of any
such obligation or agreement, or for damages for default in the performance
thereof, without proceeding first against Buyer. Parent further agrees that, if
any payment made by Buyer is at any time annulled, set aside, rescinded,
invalidated, declared to be fraudulent or preferential or otherwise required to
be refunded or repaid by Seller to Buyer, its estate, trustee, receiver or any
other party, including, without limitation, Parent, under any bankruptcy law,
state or federal law, common law or equitable cause, then, to the extent of such
payment or repayment, Parent's liability hereunder shall be and remain in full
force and effect, as fully as if such payment had never been made. Parent
further agrees that its guarantee shall be an irrevocable guarantee and shall
continue in effect notwithstanding any extension or modification of any
guaranteed obligation by any other party, or any other act or thing which might
otherwise operate as a legal or equitable discharge of a guarantor. Parent
hereby waives any requirements of diligence or promptness of the part of Seller,
and any and all suretyship defenses and notice requirements. Parent hereby
assumes responsibility for keeping itself informed of the financial condition of
Buyer and of all other circumstances bearing upon the risk of nonperformance of
Buyer's obligations and agreements hereunder and agrees that Seller shall not
have any duty to advise Parent of information known to Seller regarding such
condition or any such circumstances.
(S) 10.2. Century's Guarantee. Century hereby unconditionally
-------------------
guarantees to Buyer the full and timely performance of all the obligations and
agreements of Seller pursuant hereto. The foregoing guarantee shall include the
guarantee of the payment of all damages, costs and expenses incurred or
otherwise recoverable by Buyer as a result of the nonperformance of any of the
obligations or agreements so guaranteed or as a result of the non-performance of
this guarantee. Buyer may proceed against Century for the performance of any
such obligation or agreement, or for damages for default in the performance
thereof, without proceeding first against Seller. Century further agrees
-27-
<PAGE>
that, if any payment made by Seller is at any time annulled, set aside,
rescinded, invalidated, declared to be fraudulent or preferential or otherwise
required to be refunded or repaid by Buyer to Seller, its estate, trustee,
receiver or any other party, including, without limitation, Century, under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or repayment, Century's liability hereunder shall be
and remain in full force and effect, as fully as if such payment had never been
made. Century further agrees that its guarantee shall be an irrevocable
guarantee and shall continue in effect notwithstanding any extension or
modification of any guaranteed obligation by any other party, or any other act
or thing which might otherwise operate as a legal or equitable discharge of a
guarantor. Century hereby waives any requirements of diligence or promptness of
the part of Buyer, and any and all suretyship defenses and notice requirements.
Century hereby assumes responsibility for keeping itself informed of the
financial condition of Seller and of all other circumstances bearing upon the
risk of nonperformance of Seller's obligations and agreements hereunder and
agrees that Buyer shall not have any duty to advise Century of information known
to Buyer regarding such condition or any such circumstances.
(S) 11. Notice of Breach; Cure Period; Termination Due to Breach.
--------------------------------------------------------
Notwithstanding any other provision contained herein to the contrary:
(a) In the event of a breach or alleged breach of any
representation, warranty or covenant hereunder by either party hereto (the
"Offending Party"), the party asserting the breach shall notify the Offending
Party in writing of the alleged breach, including the facts and circumstances
thereof to the extent known. The Offending Party shall have thirty (30) days
from receipt of such notice in which to cure the alleged breach; provided,
however, that said cure period shall not extend beyond the Final Closing Date
hereunder; and
(b) In the event of a material breach of a representation,
warranty or covenant hereunder which may reasonably be expected to prevent a
timely Closing hereunder and which is not cured by the earlier of (i) the
expiration of the aforementioned 30-day cure period or (ii) the Final Closing
Date, the party asserting the breach may, by written notice to the Offending
Party, terminate this Agreement. Such termination shall be without prejudice to
the terminating party's rights to pursue its damages as a result of such breach.
-28-
<PAGE>
(c) Time is of the essence of this Agreement.
(S) 12. Notices. Any notice or other communication required or permitted
-------
hereunder shall be deemed to have been sufficiently given when delivered
personally, by telecopier, telex, telegram, or by such other method (including
air courier) which provides for a signed receipt upon delivery, or if sent by
United States mail, three business days after being mailed by registered or
certified mail, addressed as follows:
(a) If to Seller or Century, addressed to:
George A. Collias, President
Century Broadcasting Corporation
875 N. Michigan Avenue
Chicago, Illinois 60611
[Fax number (312) 337-5570]
With a copy to:
Stuart F. Carwile, Esq.
Wiley, Rein & Fielding
1776 K Street, N.W.
Washington, D.C. 20006
[Fax number 202-429-7207]
(b) If to Buyer or Parent, addressed to:
Scott K. Ginsburg, President
Evergreen Media Corporation of San
Francisco
433 E. Las Colinas
Suite 1140
Irving, Texas 75039
[Fax number (214) 869-3671]
With a copy to:
Eric L. Bernthal, Esq.
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, DC 20004
[Fax number (202) 637-2201]
or to such other address or person as may be specified by either party in a
written notice to the other party.
(S) 13. Parties in Interest. This Agreement and the rights of the parties
-------------------
hereunder may not be assigned (except
-29-
<PAGE>
by operation of law and except by Buyer to an entity under common control with
Buyer, provided that Parent shall in no event be released from its obligations
hereunder) and shall be binding upon and shall inure to the benefit of the
parties hereto and their successors.
(S) 14. Entire Agreement. The schedules and exhibits hereto are an
----------------
integral part of this Agreement. All understandings and agreements between the
parties are merged into this Agreement which fully and completely expresses
their agreement and supersedes any prior agreement or understanding relating to
the subject matter. Neither Parent nor Buyer are relying upon any oral
representations or warranties with respect to the Station made by any person or
entity.
(S) 15. Governing Law. This Agreement and the agreements contemplated
-------------
hereby shall be construed in accordance with and governed by the laws of the
State of Illinois, without regard to its principles of conflicts of law.
(S) 16. Counterparts. This Agreement may be executed in several
------------
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute one instrument.
(S) 17. Descriptive Headings. The descriptive headings of the several
--------------------
sections of this Agreement are inserted for convenience only and shall not be
deemed to affect the meaning or construction of any of the provisions hereof.
[SIGNATURE PAGE FOLLOWS]
-30-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective duly authorized officers, all as of the day and
year first above written.
SELLER:
CENTURY CHICAGO
BROADCASTING L.P.
By: Century Broadcasting
Corporation, its general
partner
ATTEST:
By:_____________________ By:____________________________
Title:__________________ Title:_________________________
CENTURY:
CENTURY BROADCASTING
CORPORATION
ATTEST:
By:_____________________ By:____________________________
Title:__________________ Title:_________________________
BUYER:
EVERGREEN MEDIA CORPORATION OF
CHICAGO
ATTEST:
By:______________________ By:____________________________
Title:___________________ Title:_________________________
PARENT:
EVERGREEN MEDIA CORPORATION OF
LOS ANGELES
ATTEST:
By:______________________ By:____________________________
Title:___________________ Title:_________________________
-31-
<PAGE>
Exhibit 2.22
ASSET PURCHASE AGREEMENT
BY AND AMONG
CHANCELLOR BROADCASTING COMPANY,
SHAMROCK BROADCASTING, INC.
AND
EVERGREEN MEDIA CORPORATION
OF THE GREAT LAKES
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
----
<S> <C>
ARTICLE 1
PURCHASE OF ASSETS.......................... 1
------------------
1.1 Transfer of Assets............................................... 1
------------------
1.2 Excluded Assets.................................................. 3
---------------
1.3 Nonassignable Contracts.......................................... 4
-----------------------
ARTICLE 2
ASSUMPTION OF OBLIGATIONS........................ 5
-------------------------
2.1 Assumption of Obligations........................................ 5
-------------------------
2.2 Retained Liabilities............................................. 5
--------------------
ARTICLE 3
CONSIDERATION............................. 5
-------------
3.1 Delivery of Consideration........................................ 5
-------------------------
3.2 Escrow Deposits.................................................. 6
---------------
3.3 Allocation of Purchase Price..................................... 6
----------------------------
3.4 Allocations and Prorations....................................... 6
--------------------------
ARTICLE 4
CLOSING................................ 8
-------
4.1 Closing.......................................................... 8
-------
ARTICLE 5
GOVERNMENTAL CONSENTS......................... 8
---------------------
5.1 FCC Consent...................................................... 8
-----------
5.2 FCC Application.................................................. 9
---------------
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER................. 9
---------------------------------------
6.1 Organization and Standing........................................ 9
-------------------------
6.2 Authorization and Binding Obligation............................. 9
------------------------------------
6.3 Qualification.................................................... 10
-------------
6.4 Absence of Conflicting Agreements or Required
---------------------------------------------
Consents......................................................... 10
--------
6.5 Litigation; Compliance with Law.................................. 10
-------------------------------
</TABLE>
(i)
<PAGE>
<TABLE>
<S> <C>
6.6 Financial Capacity............................................... 10
------------------
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF SELLER................ 11
----------------------------------------
7.1 Organization and Standing........................................ 11
-------------------------
7.2 Authorization and Binding Obligation............................. 11
------------------------------------
7.3 Absence of Conflicting Agreements or Required
---------------------------------------------
Consents..........................................
--------
7.4 Compliance with FCC Regulations.................................. 12
-------------------------------
7.5 Personal Property................................................ 12
-----------------
7.6 Real Property.................................................... 13
-------------
7.7 Contracts........................................................ 13
---------
7.8 Status of Contracts.............................................. 13
-------------------
7.9 Environmental.................................................... 13
-------------
7.10 Intellectual Property........................................... 14
---------------------
7.11 Personnel Information........................................... 14
---------------------
7.12 Litigation...................................................... 14
----------
7.13 Employee Benefit Plans.......................................... 14
----------------------
7.14 Commissions or Finder's Fees.................................... 15
----------------------------
7.15 Knowledge....................................................... 15
---------
ARTICLE 8
COVENANTS OF BUYER........................... 15
------------------
8.1 Closing.......................................................... 15
-------
8.2 Notification..................................................... 15
------------
8.3 No Inconsistent Action........................................... 15
----------------------
8.4 Seller's Post-Closing Access..................................... 15
----------------------------
8.5 Accounts Receivable.............................................. 16
-------------------
8.6 Employee Matters................................................. 17
----------------
ARTICLE 9
COVENANTS OF SELLER.......................... 17
-------------------
9.1 Seller's Pre-Closing Covenants................................... 17
------------------------------
9.2 No Inconsistent Action........................................... 18
----------------------
9.3 Closing Covenant................................................. 18
----------------
9.4 License.......................................................... 18
-------
ARTICLE 10
JOINT COVENANTS............................ 18
---------------
10.1 Confidentiality................................................. 18
---------------
</TABLE>
(ii)
<PAGE>
<TABLE>
<S> <C>
10.2 Cooperation..................................................... 19
-----------
10.3 Control of Stations............................................. 19
-------------------
10.4 Filings......................................................... 19
-------
10.5 Bulk Sales Laws................................................. 19
---------------
10.6 Public Announcements............................................ 20
--------------------
ARTICLE 11
CONDITIONS OF CLOSING BY BUYER..................... 20
------------------------------
11.1 Representations, Warranties and Covenants....................... 20
-----------------------------------------
11.2 Governmental Consents........................................... 20
---------------------
11.3 Adverse Proceedings............................................. 21
-------------------
11.4 Closing Documents............................................... 21
-----------------
11.5 Pre-Merger Notification......................................... 21
-----------------------
ARTICLE 12
CONDITIONS OF CLOSING BY SELLER.................... 21
-------------------------------
12.1 Representations, Warranties and Covenants....................... 21
-----------------------------------------
12.2 Governmental Consents........................................... 22
---------------------
12.3 Adverse Proceedings............................................. 22
-------------------
ARTICLE 13
TRANSFER TAXES; FEES AND EXPENSES................... 22
---------------------------------
13.1 Expenses........................................................ 22
--------
13.2 Transfer Taxes and Similar Charges.............................. 22
----------------------------------
13.3 Governmental Filing or Grant Fees............................... 22
---------------------------------
ARTICLE 14
DOCUMENTS TO BE DELIVERED AT CLOSING................. 22
------------------------------------
14.1 Seller's Documents.............................................. 22
------------------
14.2 Buyer's Documents............................................... 23
-----------------
ARTICLE 15
INDEMNIFICATION............................ 24
---------------
15.1 Indemnification by Parent and Seller............................ 24
------------------------------------
15.2 Indemnification by Buyer........................................ 24
------------------------
15.3 Survival of Representations and Warranties...................... 25
------------------------------------------
15.4 Procedures...................................................... 25
----------
15.5 Limits on and Conditions of Indemnification..................... 26
-------------------------------------------
</TABLE>
(iii)
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
ARTICLE 16
TERMINATION RIGHTS............................ 28
------------------
16.1 Termination..................................................... 28
-----------
16.2 Liability....................................................... 28
---------
ARTICLE 17
MISCELLANEOUS PROVISIONS......................... 29
------------------------
17.1 Liquidated Damages; Specific Performance........................ 29
----------------------------------------
17.2 Certain Interpretive Matters and Definitions
--------------------------------------------
17.3 Further Assurances.............................................. 30
------------------
17.4 Benefit and Assignment.......................................... 30
----------------------
17.5 Amendments...................................................... 30
----------
17.6 Headings........................................................ 30
--------
17.7 Governing Law................................................... 30
-------------
17.8 Notices......................................................... 31
-------
17.9 Counterparts.................................................... 31
------------
17.10 No Third Party Beneficiaries................................... 32
----------------------------
17.11 Severability................................................... 32
------------
17.12 Entire Agreement............................................... 32
----------------
</TABLE>
(iv)
<PAGE>
ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into this ______ day of August, 1996 by and among Chancellor Broadcasting
Company, a Delaware corporation ("Parent"), Shamrock Broadcasting, Inc., a
Delaware corporation and indirect wholly-owned subsidiary of Parent ("Seller"),
and Evergreen Media Corporation, a Delaware corporation ("Buyer").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Seller owns and operates radio stations WWWW-FM and WDFN-AM
(the "Stations") in Detroit, Michigan pursuant to a license issued by the
Federal Communications Commission ("FCC");
WHEREAS, Parent and Buyer are parties to a certain Option Agreement,
dated as of January 9, 1996 (the "Option Agreement"), pursuant to which Buyer
was granted the option and right to purchase from Seller certain assets
associated with the ownership and operation of the Stations (the "Call Option")
on the terms and conditions set forth herein; and
WHEREAS, Buyer has delivered notice of its exercise of the Call
Option, thereby obligating the parties to execute and deliver this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements hereinafter set forth, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE 1
PURCHASE OF ASSETS
------------------
<PAGE>
1.1 Transfer of Assets. On the terms and subject to the conditions
------------------
hereof and subject to Section 1.2, on the Closing Date (as hereinafter defined),
Seller shall sell, assign, transfer, convey and deliver to Buyer, and Buyer
shall purchase and assume from Seller, all of the right, title and interest of
Seller in and to all of the following assets, properties, interests and rights
of Seller (the "Station Assets"):
1.1.1 all of Seller's rights in and to the licenses, permits and
other authorizations issued to Seller by any governmental authority including
those issued by the FCC (the latter are hereafter referred to as the "Station
Licenses") used in connection with the operation of the Stations, along with
renewals or modifications of such items between the date of the Option Agreement
and the Closing Date as well as all of Seller's rights in and to the call
letters "WWWW-FM" and "WDFN-AM";
1.1.2 all equipment, office furniture and fixtures, office
materials and supplies, inventory, spare parts and all other tangible personal
property of every kind and description, and Seller's rights therein, owned,
leased or held by Seller and used in connection with the operations of the
Stations, including but not limited to those items described or listed in
Schedule 7.6 hereto, together with any replacements thereof and additions
thereto, made between the date of the Option Agreement and the Closing Date, and
less any retirements or dispositions thereof made between the date of the Option
Agreement and the Closing Date in the ordinary course of business of Seller;
1.1.3 all of Seller's rights in and under contracts, agreements,
leases and legally binding contractual rights of any kind, written or oral,
relating to the operation of the Stations ("Contracts"), listed in Schedules 7.7
and 7.8 hereto or entered into by Seller
2
<PAGE>
between the date of the Option Agreement and the Closing Date in the ordinary
course of business of Seller;
1.1.4 all of Seller's rights in and to all trademarks, trade
names, service marks, franchises, copyrights, including registrations and
applications for registration of any of them, computer software, programs and
programming material of whatever form or nature, jingles, slogans, the Stations'
logos and all other logos or licenses to use same and all other intangible
property rights of Seller, which are used exclusively in connection with the
operation of the Stations, including but not limited to those listed in Schedule
7.10 hereto (collectively, the "Intellectual Property") together with any
associated good will and any additions thereto between the date of the Option
Agreement and the Closing Date;
1.1.5 all of Seller's rights in and to all the files, documents,
records, and books of account relating to the operation of the Stations or to
the Station Assets, including, without limitation, the Station's public file,
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 filings with the FCC, copies of all written Contracts to
be assigned hereunder, logs, software programs and books and records relating to
employees, financial, accounting and operation matters; but excluding records
relating solely to any Excluded Asset (as hereinafter defined);
1.1.6 all of Seller's rights under manufacturers' and vendors'
warranties relating to items included in the Station Assets and all similar
rights against third parties relating to items included in the Station Assets;
3
<PAGE>
1.1.7 all real property owned in fee by Seller together with all
appurtenant easements thereunto and all structures, fixtures and improvements
located thereon as more fully described in Schedule 7.6 hereto, together with
any additions thereto between the date of the Option Agreement and the Closing
Date ("Real Estate"); and
1.1.8 except for Excluded Assets, such other assets, properties,
interests and rights owned by Seller that are used exclusively in connection
with the operation of the Stations or that are located as of the Closing Date on
the Real Estate.
1.2 Excluded Assets. Notwithstanding anything to the contrary
---------------
contained herein, it is expressly understood and agreed that the Station Assets
shall not include the following assets along with all rights, title and interest
therein (the "Excluded Assets"):
1.2.1 all cash and cash equivalents of Seller on hand and/or in
banks;
1.2.2 all accounts receivable or notes receivable of Seller;
1.2.3 all tangible and intangible personal property of Seller
disposed of or consumed in the ordinary course of business of Seller between the
date of the Option Agreement and the Closing Date, or as permitted under the
terms hereof;
1.2.4 all Contracts that have terminated or expired prior to the
Closing Date in the ordinary course of business of Seller and as permitted
hereunder;
1.2.5 Seller's corporate seal, minute books, charter documents,
corporate stock record books and such other books and records as pertain to the
organization,
4
<PAGE>
existence or share capitalization of Seller and duplicate copies of such records
as are necessary to enable Seller to file its tax returns and reports as well as
any other records or materials relating to Seller generally and not involving or
relating to the Station Assets or the operation or operations of the Stations;
1.2.6 Contracts of insurance, and all insurance proceeds or
claims made by Seller;
1.2.7 all pension, profit sharing or cash or deferred (Section
401(k)) plans and trusts and the assets thereof and any other employee benefit
plan or arrangement and the assets thereof, if any, maintained by Seller; and
1.2.8 any right, property or asset described in Schedule 1.2.8
hereto.
1.3 Nonassignable Contracts.
-----------------------
1.3.1 Nonassignability. Without limiting or otherwise affecting
----------------
the rights of Buyer pursuant to Articles XI or XV, to the extent that any
Contract to be assigned pursuant to the terms of Section 1.1.3 is not capable of
being assigned without the consent, approval or waiver of a third person or
entity, nothing in this Agreement will constitute an assignment or require the
assignment thereof except to the extent provided in this Section 1.3.
1.3.2 Seller to Use Reasonable Efforts. Notwithstanding
--------------------------------
anything contained in this Agreement to the contrary, Seller will not be
obligated to assign to Buyer any of its rights and obligations in and to any of
the Contracts referred to in Section 1.3.1 without first having obtained all
consents, approvals and waivers necessary for such assignment; provided,
however, that Seller shall use reasonable efforts to obtain all such consents,
approvals
5
<PAGE>
and waivers prior to and, if the Closing occurs, after the Closing
Date (as defined in Section 4.1).
1.3.3 If Waivers or Consents Cannot Be Obtained. To the extent
-----------------------------------------
that the consents, approvals and waivers referred to in Section 1.3.1 are not
obtained by Seller, Seller shall use its best efforts to (a) provide to Buyer
the financial and business benefits of any Contract referred to in Section 1.3.1
and (b) enforce, at the request of Buyer, for the account of Buyer, any rights
of Seller arising from any such Contract (including without limitation the right
to elect to terminate in accordance with the terms thereof upon the advice of
Buyer).
ARTICLE 2
ASSUMPTION OF OBLIGATIONS
-------------------------
2.1 Assumption of Obligations. Subject to the provisions of this
-------------------------
Section 2.1, Section 2.2 and Section 3.4, on the Closing Date, Buyer shall
assume the obligations of Seller arising or to be performed on or after the
Closing Date under all Contracts, including without limitation (i) the Contracts
listed in Schedule 2.1 hereto; (ii) all Contracts for the sale of advertising
time; and (iii) all Contracts for consideration other than cash, such as
merchandise, services or promotional consideration ("Trade Agreements"). All of
the foregoing liabilities and obligations shall be referred to herein
collectively as the "Assumed Liabilities."
2.2 Retained Liabilities. Notwithstanding anything contained in this
--------------------
Agreement to the contrary, Buyer expressly does not, and shall not, assume or
agree to pay, satisfy, discharge or perform and will not be deemed by virtue of
the execution and delivery of this Agreement to have assumed or to have agreed
to pay, satisfy, discharge or perform, any liabilities, obligations or
commitments of
6
<PAGE>
Seller of any nature whatsoever whether accrued, absolute,
contingent or otherwise and whether or not disclosed to Buyer, other than the
Assumed Liabilities. All of such liabilities and obligations shall be referred
to herein collectively as the "Retained Liabilities."
ARTICLE 3
CONSIDERATION
-------------
3.1 Delivery of Consideration. In consideration for the sale of the
-------------------------
Station Assets, in addition to the assumption of certain obligations of Seller
pursuant to Section 2.1 above, Buyer shall, subject to Article 11 hereof, at the
Closing (as hereinafter defined) deliver to Seller $30,000,000 by wire transfer
of immediately available funds (the "Cash Payment"), subject to adjustment
pursuant to the provisions of Sections 3.2 and 3.4 below (collectively, the
"Purchase Price").
3.2 Escrow Deposits. Concurrently with the execution and delivery of
---------------
the Option Agreement, Buyer, Parent, and Star Media Group, Inc., as Escrow Agent
(the "Escrow Agent"), entered into an Escrow Agreement dated as of December 22,
1995 (the "Escrow Agreement") pursuant to which Buyer deposited $1,500,000 in an
escrow account as a deposit on the Purchase Price (the "Escrow Deposit"). At
the Closing, the Escrow Deposit, plus the interest accrued thereon and not
previously disbursed, shall be applied to the amount of the Cash Payment to be
paid to Seller. In the event the parties hereto fail to close the purchase of
the Station Assets hereunder for any reason other than Buyer's breach of this
Agreement, the Escrow Deposit, plus the interest accrued thereon, shall be paid
to Buyer.
3.3 Allocation of Purchase Price. Seller and Buyer mutually agree
----------------------------
upon the allocation of the Purchase Price among the Station Assets as set forth
on Schedule 3.3
7
<PAGE>
hereto (the "Allocation"). Buyer and Seller agree to prepare
and file all income tax returns (including, if applicable, Form 8594) in a
manner consistent with the Allocation and will not in connection with the filing
of such returns make any allocation of the Purchase Price which is contrary to
the respective Allocation. Buyer and Seller agree to consult with each other
with respect to all issues related to the Allocation in connection with any tax
audits, controversy or litigation. No party hereto shall take or agree to any
position inconsistent with the Allocation in connection with any tax audit,
controversy or litigation which would adversely affect the taxes of any other
party hereto to any material extent without the prior written consent of such
other party. Such consent shall not be unreasonably withheld, and shall not be
necessary to the extent the party which takes or agrees to such inconsistent
position has indemnified the other party against the effects of such action.
3.4 Allocations and Prorations.
--------------------------
3.4.1 For purposes of calculating the net payment to be made
pursuant to Section 3.4.2, the following items shall be allocated between Seller
and Buyer as follows:
(a) All security deposits and prepayments paid by Seller
under the Contracts that are attributable to periods following the Closing Date
shall be allocated to Seller.
(b) All prepayments of income for broadcast time not yet
aired or goods and services not yet delivered as of the Closing Date shall be
allocated to Buyer.
8
<PAGE>
(c) All real property and personal property taxes with
respect to the Station Assets for the current tax year will be prorated as of
the Closing Date.
3.4.2 Allocation and proration of the items set forth in
Subsection 3.4.1 above shall be made by Buyer and a statement thereof given to
Seller within thirty (30) days after the Closing Date. Seller shall give written
notice of any objection thereto within twenty (20) days after delivery of such
statement, detailing the reason for such objection. If timely objection is made
and the parties cannot reach agreement within thirty (30) days thereafter as to
amounts claimed by one of the parties which total at least $2,000 in the
aggregate, the parties shall confer with regard to the matter and an appropriate
adjustment and payment shall be made as agreed upon by the parties (or, if they
are unable to resolve the matter, they shall select a firm of independent
certified public accountants to resolve the matter). If the parties cannot agree
on an accountant, each party shall select an accounting firm, both of which
shall review the apportionment and agree on an appropriate adjustment, and
payment shall be made as agreed upon by the accounting firms. If the two
accounting firms selected by the parties are unable to resolve the matter, the
two accounting firms shall select a third firm of independent certified public
accountants, which shall review the apportionments and make a determination of
an appropriate adjustment, and whose decision will be final and binding on the
parties, and whose fees and expenses shall be borne by Buyer and Seller in
accordance with the following sentence; provided, however, in no event shall the
adjustment resulting from such third accountant's review fall outside the range
of adjustments proposed by the accountants chosen by the parties. Payment of the
fees and expenses of all accounting firms shall be apportioned between the
parties as follows: each party shall pay an amount equal to the sum of all fees
and expenses of the accounting firm multiplied by a fraction, the numerator of
which is equal to (i) the net
9
<PAGE>
difference between the amount claimed by such party and the amount owed
by or awarded to such party divided by (ii) the sum of (A) the net difference
between the amount claimed by the successful party and the amount awarded to
such party, plus (B) the net difference between the amount claimed by the
unsuccessful party and the amount awarded to the successful party. The net cash
payment to Buyer or Seller, as the case may be, shall be made within ten (10)
days after the statement is delivered, if no timely objection is made, or
otherwise within ten (10) days after the parties reach agreement as to all
disputed amounts.
ARTICLE 4
CLOSING
-------
4.1 Closing. Except as otherwise mutually agreed upon by Buyer and
-------
Seller, the consummation of the transactions contemplated herein (the "Closing")
shall occur within five (5) business days after the FCC Consent has become a
Final Order (as hereinafter defined) or such other date as may be mutually
agreed to by the parties ("Closing Date"). For purposes of the Agreement,
"Final Order" means action by the FCC consenting to the assignments contemplated
by this Agreement which is not reversed, stayed, enjoined, set aside, annulled
or suspended, and with respect to which action no timely request for stay,
petition for rehearing, or appeal is pending, and as to which the time for
filing any such request, petition or appeal or reconsideration by the FCC on its
own motion has expired. The Closing shall be held at the offices of Weil,
Gotshal & Manges, 100 Crescent Court, Suite 1300, Dallas, Texas unless Buyer's
lenders request that the Closing be held in New York, New York or Washington,
D.C., in which case the Closing shall be held at the offices and in the city
designated by Evergreen's lenders.
ARTICLE 5
10
<PAGE>
GOVERNMENTAL CONSENTS
---------------------
5.1 FCC Consent. It is specifically understood and agreed by Buyer
-----------
and Seller that the Closing and the assignment of the Station Licenses and the
transfer of the Station Assets are expressly conditioned on and are subject
to the prior consent and approval of the FCC ("FCC Consent").
5.2 FCC Application. Within five days after the execution of this
---------------
Agreement or such earlier time as shall be agreed to by all of the parties
hereto, Buyer and Seller shall file the application with the FCC for the FCC
Consent ("FCC Application"). Buyer and Seller shall prosecute the FCC
Application with all reasonable diligence and otherwise use their best efforts
to obtain the FCC Consent as expeditiously as practicable (but neither Buyer nor
Seller shall have any obligation to satisfy complainants or the FCC by taking
any steps which would have a material adverse effect upon Buyer or Seller or
upon any of their Affiliates). If the FCC Consent imposes any condition on
Buyer or Seller, such party shall use its best efforts to comply with such
condition; provided, however, that neither Buyer nor Seller shall be required
hereunder to comply with any condition that would have a material adverse effect
upon it or any of its Affiliates. If reconsideration or judicial review is
sought with respect to the FCC Consent, the party affected shall vigorously
oppose such efforts for reconsideration or judicial review; provided, however,
that nothing herein shall be construed to limit either party's right to
terminate this Agreement pursuant to Article 16 hereof.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
11
<PAGE>
Buyer hereby makes the following representations and warranties to
Seller.
6.1 Organization and Standing. Buyer is a corporation duly
-------------------------
organized, validly existing and in good standing under the laws of the state of
its incorporation.
6.2 Authorization and Binding Obligation. Buyer has all necessary
------------------------------------
corporate power and authority to enter into and perform this Agreement and the
transactions contemplated hereby, and to own or lease the Station Assets and to
carry on the business of the Stations upon the consummation of the transactions
contemplated by this Agreement. Buyer's execution, delivery and performance of
this Agreement and the transactions contemplated hereby have been duly and
validly authorized by all necessary action on its part. This Agreement has been
duly executed and delivered by Buyer and, assuming the due authorization,
execution and delivery of this Agreement by Seller, this Agreement constitutes
the valid and binding obligation of Buyer, enforceable against it in accordance
with its terms, except as limited by laws affecting creditors' rights or
equitable principles generally.
6.3 Qualification. Except as set forth on Schedule 6.3 hereto, there
-------------
are no facts which, under the Communications Act of 1934, as amended, or the
existing rules and regulations of the FCC, would disqualify or prohibit Buyer as
an assignee of the Station Licenses.
6.4 Absence of Conflicting Agreements or Required Consents. Except
------------------------------------------------------
as set forth in Article 5 hereof with respect to governmental consents or
otherwise disclosed in Schedule 6.4 hereto, the execution, delivery and
performance of this Agreement by Buyer: (a) do not violate or conflict with any
of the terms, conditions or provisions of the certificate of incorporation or
by-laws of Buyer; (b) do not require the consent of any third party not
affiliated with
12
<PAGE>
Buyer; (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; 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, any agreement, instrument, license or permit to
which Buyer is now subject.
6.5 Litigation; Compliance with Law. There is no litigation,
-------------------------------
administrative actions, arbitration or other proceeding, or petition, complaint
or investigation before any court or governmental body, pending against Buyer
that would adversely affect Buyer's ability to perform its obligations pursuant
to this Agreement or the agreements to be executed by Buyer in connection
herewith. Buyer has committed no violation of any applicable law, regulation or
ordinance or any other requirement of any governmental body or court which would
have a material adverse effect on Buyer or its ability to perform its
obligations pursuant to this Agreement or the agreements to be executed in
connection herewith.
6.6 Financial Capacity. Buyer has the financial capacity to satisfy
------------------
all of its obligations under this Agreement.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller makes the following representations and warranties to Buyer:
7.1 Organization and Standing. Seller is a corporation duly
-------------------------
organized, validly existing and in good standing under the laws of the state of
its incorporation
13
<PAGE>
and has the corporate power and authority to own, lease and
operate the Station Assets and to carry on the business of the Stations as now
being conducted.
7.2 Authorization and Binding Obligation. Seller has the corporate
------------------------------------
power and authority to enter into and perform this Agreement and the
transactions contemplated hereby, and the execution, delivery and performance of
this Agreement, and the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on behalf of Seller. This
Agreement has been duly executed and delivered by Seller and, assuming the due
authorization, execution and delivery of this Agreement by Buyer, constitutes
the valid and binding obligation of Seller enforceable against it in accordance
with its terms, except as limited by laws affecting the enforcement of
creditor's rights or equitable principles generally.
7.3 Absence of Conflicting Agreements or Required Consents. Except
------------------------------------------------------
as set forth in Article 5 with respect to governmental consents, and Section
10.4 hereof and as set forth in Schedule 7.8 with respect to consents required
in connection with the assignment of certain Contracts, the execution, delivery
and performance of this Agreement by Seller: (a) will not conflict with, result
in a breach of, or constitute a violation of or default under, the provisions of
Seller's certificate of incorporation or by-laws or any applicable law,
judgment, order, injunction, decree, rule, regulation or ruling of any
governmental authority to which Seller is a party or by which Seller or any of
the Station Assets are bound; or (b) 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 material Contract, Trade Agreement,
agreement, instrument, license or permit to which either Seller or any of the
Station Assets is now subject; other than in the case of (a) or (b) any
14
<PAGE>
such conflicts, violations or defaults which would not, individually or in the
aggregate have a material adverse effect on the Station.
7.4 Compliance with FCC Regulations. (a) The operation of the
-------------------------------
Stations and all of the Station Assets are in compliance in all material
respects with (i) all applicable engineering standards required to be met under
applicable FCC rules, and (ii) all other applicable federal, state and local
rules, regulations, requirements and policies, including, but not limited to,
equal employment opportunity policies of the FCC, all applicable painting and
lighting requirements of the FCC and the Federal Aviation Administration and
ANSI Radiation Standards C95.1 - 1982 to the extent required to be met under
applicable FCC rules and regulations.
(b) Seller is the legally authorized holder of the Station Licenses,
each of which is in full force and effect. The Station has been operated in all
material respects in accordance with the terms of the Station Licenses. Except
for proceedings affecting the radio broadcast industry generally, there are no
proceedings pending or, to Seller's knowledge, threatened with respect to
Seller's ownership or operation of the Station which reasonably may be expected
to result in the revocation, material adverse modification, non-renewal or
suspension of any of the Station Licenses, the denial of any pending
applications for Station Licenses, the issuance against Seller of any cease and
desist order, or the imposition of any administrative actions by the FCC or any
domestic or foreign court, government, governmental agency, authority, entity or
instrumentality with respect to the Station Licenses. Seller has taken no
actions under the Communications Act or the rules, regulations or written
policies of the FCC in effect on the date of this Agreement that reasonably may
be expected to disqualify the Seller from transferring control of the Station
Licenses to Buyer
15
<PAGE>
or that would prevent the consummation by them of the transactions contemplated
by this Agreement.
7.5 Personal Property. Schedule 7.5 hereto contains a list of all
-----------------
material tangible personal property and assets owned or held by Seller and used
or useful in the conduct of the business and operations of the Stations. Except
as disclosed in Schedule 7.5, Seller owns and has, and following the Closing,
Buyer will have, good and indefeasible title to all such property (and to all
other tangible personal property and assets to be transferred to Buyer
hereunder), and none of such property is, or at the Closing will be, subject to
any material security interest, mortgage, pledge, conditional sales agreement,
lease, license, or other lien or encumbrance other than Permitted Encumbrances
(as hereinafter defined).
7.6 Real Property.
-------------
7.6.1 Schedule 7.6.1 hereto contains a complete and accurate
list and description of all material real property owned and leased by Seller
and used by the Stations and all agreements, leases and contracts of Seller
relating to the tower, transmitter, studio site and offices of the Stations
(collectively the "Real Estate Contracts"). The Real Estate Contracts requiring
the consent of a third party to assignment are identified by an asterisk in
Schedule 7.6.2.
7.6.2 The Real Estate Contracts listed on Schedule 7.6.2 are in
full force and effect and are valid, binding and enforceable in accordance with
their terms.
7.6.3 Seller has and shall convey to Buyer good and indefeasible
fee simple title to the owned Real Estate free and clear of any mortgages,
liens, charges and encumbrances, except the liens and encumbrances described in
Schedule 7.6.3 hereto and such other liens and encumbrances
16
<PAGE>
which, in the aggregate, will not have a material adverse effect on the Station
Assets or the operation of the Stations ("Permitted Encumbrances").
7.7 Contracts. Schedule 7.7 hereto lists all material Contracts to
---------
which Seller is a party as of the date of this Agreement. Those Contracts
requiring the consent of a third party to assignment are identified by an
asterisk in Schedule 7.7.
7.8 Status of Contracts. Except as set forth in Schedule 7.8, Seller
-------------------
is not in default under any of the Contracts set forth on Schedule 7.7, except
such defaults which, in the aggregate, will not have a material adverse effect
on the Station Assets or the operation of the Stations.
7.9 Environmental. Except as set forth in Schedule 7.9 hereto,
-------------
Seller has complied in all material respects with all federal, state and local
environmental laws, rules and regulations as in effect on the date hereof
applicable to the Stations and their operations, including but not limited to
the FCC's guidelines regarding RF radiation.
7.10 Intellectual Property. Schedule 7.10 hereto is a true and
---------------------
complete list of all material Intellectual Property applied for, issued to or
owned by Seller or under which Seller is a licensee and used exclusively in the
conduct of the business and operations of any of the Stations. To the knowledge
of Seller, the operation of the Stations as now conducted does not conflict with
any valid patents, trademarks, trade name, service marks or copyrights of others
in any way which is reasonably likely to have a material adverse effect on the
Station Assets or the operation of the Station.
17
<PAGE>
7.11 Personnel Information. Seller is not a party to any Contract
---------------------
with any labor organization, nor has Seller agreed to recognize any union or
other collective bargaining unit, nor has, any union or other collective
bargaining unit been certified as representing any of employees of Seller.
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.
7.12 Litigation. Except as set forth in Schedule 7.12 hereto, Seller
----------
is not subject to any judgment, award, order, writ, injunction, arbitration
decision or decree relating to the conduct of the business or the operation of
the Stations or any of the Station Assets, and there is no litigation,
administrative action, proceeding or investigation pending or, to the knowledge
of Seller, threatened against Seller or either of the Stations in any federal,
state or local court, or before any administrative agency or arbitrator
(including, without limitation, any proceeding which seeks the forfeiture of, or
opposes the renewal of, any of the Station Licenses), or before any other
tribunal duly authorized to resolve disputes which, if determined adversely,
will have a material adverse effect on the Station Assets or the operation of
the Stations.
7.13 Employee Benefit Plans. Schedule 7.13 hereto contains a true
----------------------
and complete list as of the date of this Agreement of all employee benefit plans
applicable to the employees of Seller employed at the Stations (the "Plans").
Seller does not maintain any other employee benefit plan as the term is defined
in Section 3 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), applicable to the employees of Seller employed at the Stations.
7.14 Commissions or Finder's Fees. Neither Seller nor any person or
----------------------------
entity acting on behalf of Seller
18
<PAGE>
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, except
to Star Media Group, Inc., whose fee will be paid entirely by Seller.
7.15 Knowledge. As used in this Article 7, the terms "to Seller's
---------
knowledge" and "to the knowledge of Seller" shall mean the actual knowledge of
the persons listed on Schedule 7.15.
ARTICLE 8
COVENANTS OF BUYER
------------------
8.1 Closing. Subject to Article 11 hereof, on the Closing Date,
-------
Buyer shall purchase the Station Assets from Seller as provided in Article 1
hereof and shall assume the Assumed Liabilities of Seller as provided in Article
2 hereof.
8.2 Notification. Buyer shall notify Seller of any litigation,
------------
arbitration or administrative proceeding pending or, to its knowledge,
threatened against Buyer which challenges the transactions contemplated hereby.
8.3 No Inconsistent Action. Buyer shall not take any other action
----------------------
which is materially inconsistent with its obligations under this Agreement.
8.4 Seller's Post-Closing Access. Buyer, for a period of five (5)
----------------------------
years following the Closing Date, shall make available during normal business
hours for audit and inspection by Seller and its representatives for any
reasonable purpose and upon reasonable notice all records, files, documents and
correspondence transferred to it hereunder with respect to taxes, regulations,
and litigations. Buyer shall at no time dispose of or destroy any such records,
files, documents and correspondence
19
<PAGE>
without giving thirty (30) days prior notice to Seller to permit Seller, at its
expense, to examine, duplicate or take possession of and title to such records,
files, documents and correspondence. All personnel records shall be maintained
as confidential if required by any applicable state or federal law.
Buyer shall make available to Seller during normal business hours upon
reasonable notice in writing: (i) personnel of Buyer to assist Seller in
locating and obtaining records and files with respect to the Stations for
periods prior to the Closing Date; and (ii) any personnel of Buyer whose
assistance or participation is reasonably required by Seller in anticipation of,
preparation for, or the prosecution or defense of existing or future litigation,
tax returns or other matters, in which Seller is involved with respect to the
Stations; provided, however, that nothing in this Section 8.4 shall obligate
Buyer to take actions that would unreasonably disrupt the normal course of its
business, violate the terms of any contract or agreement to which it is a party
or to which it or any of its assets is subject or grant access to any of its
proprietary, confidential or classified information.
8.5 Accounts Receivable. (a) Buyer acknowledges that all accounts
-------------------
receivable arising out of Seller's sale of advertising time prior to the Closing
Date in connection with the operation of the Stations, including but not limited
to accounts receivable for advertising revenues for programs and announcements
performed prior to the Closing Date and other broadcast revenues for services
performed prior to the Closing Date, shall remain the property of Seller (the
"Seller Accounts Receivable") and that Buyer shall not acquire any beneficial
right or interest therein or responsibility therefor. For a period not to
exceed one hundred and twenty days from the Closing Date, Buyer agrees to use
its best efforts to assist Seller in collection of the Seller Accounts
Receivable in the normal and ordinary
20
<PAGE>
course of business and will apply all such amounts collected to the debtor's
oldest account receivable first. Buyer's obligation and authority shall not
extend to the institution of litigation, employment of counsel or a collection
agency or any other extraordinary means of collection. Buyer agrees to
reasonably cooperate with Seller, at Seller's expense, as to any litigation or
other collection efforts instituted by Seller to collect delinquent Seller
Accounts Receivable.
(b) Buyer and Seller agree that Buyer shall remit the Seller Accounts
Receivable on or prior to the 120th day following the Closing Date. Thereafter,
all rights and responsibilities with respect to the uncollected Seller Accounts
Receivable shall revert to Seller.
8.6 Employee Matters. (a) Buyer acknowledges and agrees that Buyer
----------------
shall hire each employee of the Stations at the same or comparable position and
on terms not materially less favorable than those covering such employee on the
Closing Date.
(b) No portion of the assets of any Plan, fund, program or
arrangement, written or unwritten, heretofore sponsored or maintained by Seller
(and no amount attributable to any such plan, fund, program or arrangement)
shall be transferred to Buyer, and Buyer shall not be required to continue, nor
shall Buyer assume any obligation under, any such plan, fund, program or
arrangements after the Closing Date.
ARTICLE 9
COVENANTS OF SELLER
-------------------
9.1 Seller's Pre-Closing Covenants. Seller covenants and agrees
------------------------------
with respect to the Stations that between the date hereof and the Closing Date,
except as
21
<PAGE>
expressly permitted by this Agreement or with the prior written consent of
Buyer, it shall act in accordance with the following:
9.1.1 Seller shall conduct the business and operations of the
Stations in the ordinary course of business.
9.1.2 Seller shall operate the Stations in all material respects
in accordance with FCC rules and regulations and the Station Licenses and with
all other laws, regulations, rules and orders.
9.1.3 Seller shall give or cause the Stations to give Buyer and
Buyer's counsel, accountants, engineers and other representatives, with Seller's
prior consent (which consent shall not be unreasonably withheld), full and
reasonable access during normal business hours to all of Seller's properties,
books, Contracts, Trade Agreements, reports and records including financial
information and tax returns relating to the Stations, and to all real estate,
buildings and equipment relating to the Stations, in order that Buyer may have
full opportunity to make such investigation as it desires of the affairs of the
Stations and to furnish Buyer with information, and copies of all documents and
agreements including but not limited to financial and operating data and other
information concerning the financial condition, results of operations and
business of the Station, that Buyer may reasonably request. The rights of Buyer
under this Section shall not be exercised in such a manner as to interfere
unreasonably with the business of the Stations.
9.1.4 Consents. Seller will use reasonable efforts to obtain
--------
the third-party consents listed on Schedule 9.1.4.
22
<PAGE>
9.2 No Inconsistent Action. Seller shall not take any action which
----------------------
is materially inconsistent with its obligations under this Agreement.
9.3 Closing Covenant. On the Closing Date, Seller shall transfer,
----------------
convey, assign and deliver to Buyer the Station Assets and the Assumed
Liabilities as provided in Articles 1 and 2 of this Agreement.
9.4 License. Seller shall grant to Buyer, a non-exclusive, royalty
-------
free, assignable license with respect to the proprietary rights listed on
Schedule 9.4.
ARTICLE 10
JOINT COVENANTS
---------------
Buyer and Seller covenant and agree that between the date hereof and
the Closing Date, they shall act in accordance with the following:
10.1 Confidentiality. Each of Buyer and Seller shall each keep
---------------
confidential all information obtained by it with respect to the other parties
hereto in connection with this Agreement and the negotiations preceding this
Agreement, and will use such information solely in connection with the
transactions contemplated by this Agreement, and if the transactions
contemplated hereby are not consummated for any reason, each shall return to
each other party hereto, without retaining a copy thereof, any schedules,
documents or other written information obtained from such other party in
connection with this Agreement and the transactions contemplated hereby.
Notwithstanding the foregoing, no party shall be required to keep confidential
or return any information which (i) is known or available through other lawful
sources, not bound by a confidentiality agreement with the disclosing party, or
(ii) is or becomes publicly known through no fault of the receiving party or
23
<PAGE>
its agents, (iii) is required to be disclosed pursuant to an order or request of
a judicial or governmental authority (provided the disclosing party is given
reasonable prior notice), or (iv) is developed by the receiving party
independently of the disclosure by the disclosing party.
10.2 Cooperation. Buyer and Seller shall cooperate fully with one
-----------
another in taking any actions, including actions to obtain the required consent
of any governmental instrumentality or any third party necessary or helpful to
accomplish the transactions contemplated by this Agreement; provided, however,
that no party shall be required to take any action which would have a material
adverse effect upon it or any Affiliate.
10.3 Control of Stations. Buyer shall not, directly or indirectly,
-------------------
control, or direct the operations of the Stations. Such operations, including
complete control over the Stations' programming, employees and policies, shall
be the sole responsibility of Seller.
10.4 Filings. In addition to the covenants of the parties set forth
-------
in Article 5 hereto, as promptly as practicable after the execution of this
Agreement, Buyer and Seller shall use their reasonable efforts to obtain, and to
cooperate with each other in obtaining, all authorizations, consents, orders and
approvals of any governmental authority that may be or become necessary in
connection with the consummation of the transactions contemplated by this
Agreement, and to take all reasonable actions to avoid the entry of any order or
decree by any governmental authority prohibiting the consummation of the
transactions contemplated hereby, including without limitation, any reports or
notifications that may be required to be filed by it under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act") with the Federal Trade
Commission and the Antitrust Division of the Department of Justice, and each
shall furnish to one another all such information in
24
<PAGE>
its possession as may be necessary for the completion of the reports or
notifications to be filed by the other.
10.5 Bulk Sales Laws. Buyer hereby waives compliance by Seller with
---------------
the provisions of the "bulk sales" or similar laws of any state. Seller agrees
to indemnify the Buyer and hold it harmless from any and all loss, cost, damage
and expense (including but not limited to, reasonable attorney's fees) sustained
by Buyer as a result of any failure of Seller to comply with any "bulk sales" or
similar laws.
10.6 Public Announcements. Neither Buyer nor Seller shall issue any
--------------------
press release or make any disclosure with respect to the transaction
contemplated by this Agreement without the prior written approval of the other
party, except as may be required by applicable law or by obligations pursuant to
any listing agreement with any securities exchange or any stock exchange
regulations.
ARTICLE 11
CONDITIONS OF CLOSING BY BUYER
------------------------------
The obligations of Buyer hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
11.1 Representations, Warranties and Covenants.
-----------------------------------------
11.1.1 All representations and warranties of Seller made in this
Agreement or in any Exhibit, Schedule or document delivered pursuant hereto,
shall be true and complete as of the date hereof and on and as of the Closing
Date as if made on and as of that date, except for changes expressly permitted
or contemplated by the terms of this Agreement and for such breaches of
representations and warranties that, in the aggregate, will not have a material
25
<PAGE>
adverse effect on the Station Assets or the operation of the Stations.
11.1.2 All of the terms, covenants and conditions to be complied
with and performed by Seller on or prior to the Closing Date shall have been
complied with or performed in all material respects.
11.1.3 Buyer shall have received a certificate, dated as of the
Closing Date, from Seller, executed by an officer of Seller to the effect that
the conditions set forth in Sections 11.1.1 and 11.1.2 have been fulfilled.
11.2 Governmental Consents. The conditions specified in Section 5.1
---------------------
of this Agreement shall have been satisfied.
11.3 Adverse Proceedings. No order, decree or judgment of any court,
-------------------
agency or other governmental authority shall have been rendered against any
party hereto which would render it unlawful, as of the Closing Date, to effect
the transactions contemplated by this Agreement in accordance with its terms.
11.4 Closing Documents. Seller shall have delivered or caused to be
-----------------
delivered to Buyer, on the Closing Date, all deeds, bills of sale, endorsements,
assignment and other instruments of conveyance and transfer consistent with the
terms hereof and otherwise reasonably satisfactory in form and substance to
Buyer, effecting the sale, transfer, assignment and conveyance of the Station
Assets to Buyer, including, without limitation, each of the documents required
to be delivered pursuant to Article 14.
11.5 Pre-Merger Notification. Any waiting period under the HSR Act
-----------------------
with respect to the transactions contemplated by this Agreement shall have
elapsed.
26
<PAGE>
ARTICLE 12
CONDITIONS OF CLOSING BY SELLER
-------------------------------
The obligations of Seller hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
12.1 Representations, Warranties and Covenants.
-----------------------------------------
12.1.1 All representations and warranties of Buyer shall be true
and complete on and as of the Closing Date, except for changes expressly
permitted or contemplated by the terms of this Agreement and for such breaches
of representations and warranties that, in the aggregate, will not have a
material adverse effect on the ability of Buyer to discharge its obligations
hereunder.
12.1.2 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 in all material respects.
12.1.3 Seller shall have received a certificate, dated as of the
Closing Date, executed by an officer of Buyer, to the effect that the conditions
set forth in Sections 12.1.1 and 12.1.2 have been fulfilled.
12.2 Governmental Consents. The conditions specified in Section 5.1
---------------------
of this Agreement shall have been satisfied. For purposes of this Section 12.2,
the condition specified in Section 5.1 shall be deemed to be satisfied whether
or not the FCC Consent has become a Final Order, unless a petition to deny has
been filed against the FCC assignment applications for the proposed transaction.
12.3 Adverse Proceedings. No order, decree or judgment of any court,
-------------------
agency or other governmental
27
<PAGE>
authority shall have been rendered against, any party hereto which would render
it unlawful, as of the Closing Date, to effect the transactions contemplated by
this Agreement in accordance with its terms.
ARTICLE 13
TRANSFER TAXES; FEES AND EXPENSES
---------------------------------
13.1 Expenses. Except as set forth in Sections 13.2, 13.3 and 16.2
--------
hereof, each party hereto shall be solely responsible for all costs and expense
incurred by it in connection with the negotiation, preparation and performance
of and compliance with the terms of this Agreement, including, but not limited
to, the costs and expenses incurred pursuant to Article 5 hereof.
13.2 Transfer Taxes and Similar Charges. All costs of transferring
----------------------------------
the Station Assets in accordance with this Agreement, including recordation,
transfer and documentary taxes and fees, and any excise, sales or use taxes,
shall be borne by Buyer.
13.3 Governmental Filing or Grant Fees. Any filing or grant fees
---------------------------------
imposed by any governmental authority the consent of which is required for the
consummation of the transactions contemplated hereby shall be borne by Buyer.
ARTICLE 14
DOCUMENTS TO BE DELIVERED AT CLOSING
------------------------------------
14.1 Seller's Documents. At the Closing, Seller shall deliver or
------------------
cause to be delivered to Buyer the following:
14.1.1 Certified resolutions of the Board of Directors of Seller
approving the execution and delivery of
28
<PAGE>
this Agreement and each of the other documents and authorizing the consummation
of the transactions contemplated hereby and thereby;
14.1.2 Certificates, dated the Closing Date, by Seller in the
form described in Section 11.1.3;
14.1.3 Bills of Sale, general warranty deed, assignments and
other good and sufficient instruments of conveyance, transfer and assignment,
all in form and substance consistent with the terms hereof and otherwise
reasonably satisfactory to Buyer, as shall be effective to vest in Buyer or its
permitted assignees, good and marketable title in and to the Station Assets
transferred pursuant to this Agreement in accordance with the terms of this
Agreement;
14.1.4 The consents listed on Schedule 9.1.4; and
14.1.5 A certificate of the Secretary of State of the State of
Delaware showing that each of Parent and Seller is duly incorporated and in good
standing certified as of a recent date.
14.2 Buyer's Documents. At the Closing, Buyer shall deliver or cause
-----------------
to be delivered to Seller the following:
14.2.1 The Purchase Price in accordance with Section 3.1 hereof;
14.2.2 A certificate, dated the Closing Date, by Buyer in the
form described in Section 12.1.3;
14.2.3 Long-Form Certificate of Good Standing (including tax
certification) and certified charter
29
<PAGE>
of Buyer from the State of Delaware dated not more than forty-five (45) days
before the Closing Date;
14.2.4 An assignment and assumption agreement or agreements
reasonably satisfactory in form and substance to counsel to Seller effecting the
assumption of the Assumed Liabilities; and
14.2.5 Certified resolutions of the Board of Directors of Buyer
approving the execution and delivery of this Agreement and each of the other
documents and agreements referred to herein and authorizing the consummation of
the transactions contemplated hereby and thereby.
ARTICLE 15
INDEMNIFICATION
---------------
15.1 Indemnification by Parent and Seller. Parent and Seller hereby
------------------------------------
agree to indemnify, defend and hold harmless Buyer, with respect to any and all
demands, claims, actions, suits, proceedings, assessments, judgments, costs,
losses, damages, liabilities and expenses (including, without limitation,
interest, penalties, court costs and reasonable attorneys' fees) ("Damages")
asserted against, resulting from, imposed upon or incurred by Buyer directly or
indirectly relating to or arising out of:
15.1.1 The breach by Seller of any of its representations or
warranties, or failure by Seller to perform any covenants or agreements of
Seller, set forth in this Agreement or in any certificate, or in any document or
schedule delivered hereunder;
15.1.2 The Retained Liabilities; and
30
<PAGE>
15.1.3 The use or ownership of the Station Assets or operation
of the Stations prior to the Closing Date.
15.2 Indemnification by Buyer. Buyer hereby agrees to indemnify,
------------------------
defend and hold harmless Parent and Seller with respect to any and all Damages
asserted against, resulting from, imposed upon or incurred by Parent or Seller
directly or indirectly relating to or arising out of:
15.2.1 The breach by Buyer of any of its representations or
warranties, or failure by Buyer to perform any covenants or agreements of Buyer
set forth in this Agreement;
15.2.2 The Assumed Liabilities;
15.2.3 The use or ownership of the Station Assets or operation
of the Stations after the Closing Date; and
15.2.4 A claim by any person or entity based on any arrangement
or agreement to pay a commission, finder's fee or similar payment in connection
with this Agreement made or alleged to have been made by Buyer.
15.3 Survival of Representations and Warranties. The representations
------------------------------------------
and warranties contained herein shall survive the Closing and remain in full
force and effect for nine months after the Closing Date. Any claim for
indemnification with respect to any of such matters which is not asserted by
notice given as herein provided which specifically identifies a particular
breach and the underlying facts and Damages relating thereto within such
specified period of survival may not be pursued and is hereby irrevocably waived
after such time.
15.4 Procedures.
----------
31
<PAGE>
15.4.1 Promptly (within ten days) after the receipt by any party
(the "Indemnified Party") of notice of (a) any claim or (b) the commencement of
any action or proceeding which may entitle such party to indemnification under
this Article 15, such party shall give the party from whom indemnification may
be sought (the "Indemnifying Party") written notice of such claim or the
commencement of such action or proceeding and shall permit the Indemnifying
Party to assume the defense of any such claim or any litigation resulting from
such claim.
15.4.2 If the Indemnifying Party assumes the defense of any such
claim or litigation resulting therefrom with counsel reasonably acceptable to
the Indemnified Party, the obligations of the Indemnifying Party as to such
claim shall be limited to taking all steps necessary in the defense or
settlement of such claim or litigation resulting therefrom and to holding the
Indemnified Party harmless from and against any losses, damages and liabilities
caused by or arising out of any settlement approved by the Indemnifying Party or
any judgment in connection with such claim or litigation resulting therefrom;
however, the Indemnified Party may participate, at its expense, in the defense
of such claim or litigation provided that the Indemnifying Party shall direct
and control the defense of such claim or litigation. The Indemnified Party shall
cooperate and make available all books and records reasonably necessary and
useful in connection with the defense. The Indemnifying Party shall not, in the
defense of such claim or any litigation resulting therefrom, consent to entry of
any judgment, except with the written consent of the Indemnified Party, or enter
into any settlement, except with the written consent of the Indemnified Party.
Any settlement must include as an unconditional term thereof the giving by the
claimant or the plaintiff to the Indemnified Party of a release from all
liability in respect of such claim or litigation.
32
<PAGE>
15.4.3 If the Indemnifying Party shall not assume the defense of
any such claim or litigation resulting therefrom, the Indemnified Party may, but
shall have no obligation to, defend against such claim or litigation in such
manner as it may deem appropriate, and the Indemnified Party may compromise or
settle such claim or litigation without the Indemnifying Party's consent. The
Indemnifying Party shall promptly reimburse the Indemnified Party for the amount
of all expenses, legal or otherwise, incurred by the Indemnified Party in
connection with the defense against or settlement of such claim or litigation.
If no settlement of the claim or litigation is made, the Indemnifying Party
shall promptly reimburse the Indemnified Party for the amount of any judgment
rendered with respect to such claim or in such litigation and of all expenses,
legal or otherwise, incurred by the Indemnified Party in the defense against
such claim or litigation.
15.5 Limits on and Conditions of Indemnification.
-------------------------------------------
15.5.1 Threshold Amount; Cap. Notwithstanding any other
---------------------
provision hereof, no Indemnified Party shall be entitled to make a claim against
an Indemnifying Party in respect of any breach of a representation or warranty
under Sections 15.1.1 or 15.2.1 except to the extent that the aggregate amount
of such Damages exceeds the amount of $100,000 (the "Threshold Amount");
provided, however, that once such aggregate has been exceeded, such Indemnifying
Party shall only be liable for the amount that such Damages exceed the Threshold
Amount. Notwithstanding any other provision of the Agreement, the indemnity
obligation of Parent and Seller on one hand, or Buyer on the other hand under
Section 15.1 or 15.2, respectively, will not exceed $1,350,000.
15.5.2 Assignment of Claims. In the event that any of the
--------------------
Damages for which an Indemnifying Party is responsible or allegedly responsible
hereunder are
33
<PAGE>
recoverable or potentially recoverable against any third party at the time when
payment is due under this Article 15, then, the Indemnified Party shall assign
any and all rights that it may have that are related in any fashion to the
Damages or the facts or circumstances giving rise thereto to the Indemnifying
Party as a condition to any payment due under this Article 15, or, if such
rights are not assignable under applicable law or otherwise, the Indemnified
Party hereunder shall attempt in good faith to collect any and all damages and
losses on account thereof from such third party for the benefit of, and at the
expense and direction of, the Indemnifying Party.
15.5.3 Indemnity Payments. The parties agree that any payments
------------------
made pursuant to this Article 15 will be treated by the parties on all
applicable tax returns as an adjustment to the purchase price payable hereunder.
15.5.4 Known Matters. Notwithstanding anything to the contrary
-------------
herein contained, if the Closing occurs, (i) no claim for indemnification may be
asserted under Section 15.1 with respect to any matter discovered by or known to
Buyer on or before the Closing Date and (ii) no claim for indemnification may be
asserted under Section 15.2 with respect to any matter discovered by or known to
Seller on or before the Closing Date.
As between any Seller, on the one hand, and Buyer, on the other hand,
after the Closing the rights and obligations set forth in this Article 15 will
be the exclusive rights and obligations with respect to this Agreement, the
events giving rise to this Agreement and the transaction provided for herein or
contemplated thereby. Without limiting the generality or effect of the
foregoing, as a material inducement to the other parties hereto entering into
this Agreement, and in light of, among other factors, each of the parties to
this Agreement hereby (i) waives any claim or cause of action which it otherwise
34
<PAGE>
might assert, including without limitation under the common law or federal or
state securities, trade regulation or other laws, by reason of this Agreement,
the event giving rise to this Agreement and the transactions provided for herein
or contemplated hereby or thereby, except for claims or causes of action brought
under and subject to the terms and conditions of this Article 15 and (ii) agrees
that, regardless of the foregoing provisions, no party will have any liability
in respect of any claim of cause of action that is or may be brought except in
respect of damages, and then only to the extent expressly provided in this
Article 15.
ARTICLE 16
TERMINATION RIGHTS
------------------
16.1 Termination. This Agreement may be terminated at any time prior
-----------
to Closing as follows:
(a) by written notice of the Buyer to Seller if Seller breaches
in any material respect any of its representations or warranties or defaults in
any material respect in the observance or in the due and timely performance of
any of its covenants or agreements herein contained and such breach or default
shall not be cured within thirty (30) days of the date of notice of breach or
default served by Buyer or by written notice of Seller to the Buyer if Buyer
breaches in any material respect any of its representations or warranties or
defaults in any material respect in the observance or in the due and timely
performance of any of its covenants or agreements herein contained and such
breach or default shall not be cured within thirty (30) days of the date of
notice of breach or default served by Buyer; or
35
<PAGE>
(b) by written notice of Buyer to Seller, or by Seller to Buyer,
if the FCC denies the FCC Application or designates it for a trial-type hearing;
or
(c) by written notice of Buyer to Seller, or by Seller to Buyer,
if there shall be in effect any judgment, final decree or order that would
prevent or make unlawful the consummation of the transactions contemplated by
this Agreement; or
(d) by written notice of Buyer to Seller, or by Seller to the
Buyer, if the Closing shall not have been consummated on or before August 1,
1997.
Notwithstanding the foregoing, no party hereto may effect a termination hereof
if such party is in material default or breach of this Agreement.
16.2 Liability. Except as set forth in Section 17.1 below, the
---------
termination of this Agreement under Section 16.1 shall not relieve any party of
any liability for breach of this Agreement prior to the date of termination.
ARTICLE 17
MISCELLANEOUS PROVISIONS
------------------------
17.1 Liquidated Damages; Specific Performance. In the event this
----------------------------------------
Agreement is terminated as a result of Buyer's breach of this Agreement, then
Seller shall be entitled to retain the Escrow Deposit, which amount shall
constitute liquidated damages. In the event this Agreement is terminated for
any reason other than Buyer's breach of this Agreement, Buyer shall be entitled
to return of the Escrow Deposit. In the event this Agreement is terminated as a
result of Seller's breach of this Agreement, Buyer shall be entitled to receive
$1,350,000 from Seller, which amount shall constitute liquidated damages. It is
36
<PAGE>
understood and agreed that such liquidated damage amount represent Buyer's and
Seller's reasonable estimate of actual damages and does not constitute a
penalty. Except as set forth in Section 17.1(b), recovery of liquidated damages
shall be the sole and exclusive remedy of Seller against Buyer and of Buyer
against Seller for failing to consummate this Agreement on the Closing Date and
shall be applicable regardless of the actual amount of damages sustained and,
subject to Section 17.1(b), all other remedies are deemed waived by each of
Buyer and Seller.
(b) Prior to the termination of this Agreement, Buyer shall be
entitled to obtain specific performance of the terms of this Agreement. The
parties hereto agree that in the event Buyer seeks to enforce its right to
specific performance in accordance with this Section 17.1 (b), Seller shall then
be entitled to obtain specific performance of the terms of this Agreement. In
the event of a default by either Buyer or Seller which results in the filing of
a lawsuit for liquidated damages or specific performance, the successful party
in such lawsuit shall be entitled to reimbursement by the unsuccessful party of
reasonable legal fees and expenses incurred by the successful party.
17.2 Certain Interpretive Matters and Definitions. Unless the
--------------------------------------------
context otherwise requires, (i) all references to Sections, Articles or
Schedules are to Sections, Articles or Schedules of or to this Agreement, (ii)
each term defined in this Agreement has the meaning assigned to it, (iii) each
accounting term not otherwise defined in this Agreement has the meaning assigned
to it in accordance with generally accepted accounting principles as in effect
on the date hereof, (iv) "or" is disjunctive but not necessarily exclusive, (v)
words in the singular include the plural and vice versa, and (vii) the term
"Affiliate" has the meaning given it in Rule 12b-2 of Regulation 12B under the
Securities Exchange Act of 1934, as amended. All
37
<PAGE>
references to "$" or dollar amounts will be to lawful currency of the United
States of America.
17.3 Further Assurances. After the Closing, Seller shall from time
------------------
to time, at the request of and without further cost or expense to Buyer, execute
and deliver such other instruments of conveyance and transfer and take such
other actions as may reasonably be requested in order to more effectively
consummate the transactions contemplated hereby to vest in Buyer good and
marketable title to the assets being transferred hereunder, and Buyer shall from
time to time, at the request of and without further cost or expense to Seller,
execute and deliver such other instruments and take such other actions as may
reasonably be requested in order to more effectively relieve Seller of any
obligations being assumed by Buyer hereunder.
17.4 Benefit and Assignment. This Agreement shall be binding upon
----------------------
and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. No party may voluntarily or involuntarily
assign its interest under this Agreement without the prior written consent of
the other parties hereto, except for any assignment to an Affiliate of Buyer or
Seller in which case Buyer or Seller, as appropriate, shall remain fully
obligated under this Agreement as an assignor.
17.5 Amendments. No amendment, waiver of compliance with any
----------
provision or condition hereof or consent pursuant to this Agreement shall be
effective unless evidenced by an instrument in writing signed by the party
against whom enforcement of any waiver, amendment, change, extension or
discharge is sought.
17.6 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.
38
<PAGE>
17.7 Governing Law. The construction and performance of this
-------------
Agreement shall be governed by the laws of the State of Texas without giving
effect to the choice of law provisions thereof.
17.8 Notices. Any notice, demand or request required or permitted to
-------
be given under the provisions of this Agreement shall be in writing, including
by telecopy, and shall be deemed to have been duly delivered and received on the
date of personal delivery, on the third day after deposit in the U.S. mail if
mailed by registered or certified mail, postage prepaid and return receipt
requested, on the day after delivery to a nationally recognized overnight
courier service if sent by an overnight delivery service for next morning
delivery or when dispatched by facsimile transmission and shall be addressed to
the following addresses, or to such other address as any party may request, in
the case of Seller, by notifying Buyer, and in the case of Buyer, by notifying
Seller:
To Seller: Chancellor Broadcasting Company
12655 North Central Expressway
Suite 321
Dallas, Texas 75243
Attention: Steven Dinetz
Fax: (214) 239-0220
Copy to: Weil, Gotshal & Manges
100 Crescent Court
Suite 1300
Dallas, Texas 75201
Attention: R. Scott Cohen
Fax: (214) 746-7777
To Buyer: Evergreen Media Corporation
433 East Las Colinas Blvd.
Suite 1130
Irving, Texas 75036
39
<PAGE>
Attention: Scott K. Ginsburg
Fax: (214) 869-3671
Copy to: Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, D.C. 20004
Attention: Eric L. Bernthal
Fax: (202) 637-2393
17.9 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.
17.10 No Third Party Beneficiaries. Nothing herein expressed or
----------------------------
implied is intended or shall be construed to confer upon or give to any person
or entity other than the parties hereto and their successors or permitted
assigns, any rights or remedies under or by reason of this Agreement.
17.11 Severability. The parties agree that if one or more provisions
------------
contained in this Agreement shall be deemed or held to be invalid, illegal or
unenforceable in any respect under any applicable law, this Agreement shall be
construed with the invalid, illegal or unenforceable provision deleted, and the
validity, legality and enforceability of the remaining provisions contained
herein shall not be affected or impaired thereby.
17.12 Entire Agreement. This Agreement and the exhibits hereto
----------------
embody the entire agreement and understanding of the parties hereto and
supersede any and all prior agreements, arrangements and understandings relating
to the matters provided for herein.
40
<PAGE>
[INTENTIONALLY LEFT BLANK]
41
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
CHANCELLOR BROADCASTING COMPANY
By:_________________________________
Name:_______________________________
Title:______________________________
SHAMROCK BROADCASTING, INC.
By:________________________________
Name:______________________________
Title:_____________________________
EVERGREEN MEDIA CORPORATION OF
THE GREAT LAKES
By:________________________________
Name:______________________________
Title:_____________________________
42
<PAGE>
EXHIBIT 2.23
WQRS - FM
ASSET PURCHASE AGREEMENT
DATED AS OF AUGUST 12, 1996
BETWEEN
SECRET COMMUNICATIONS LIMITED PARTNERSHIP
AND
EVERGREEN MEDIA CORPORATION
OF LOS ANGELES
<PAGE>
ARTICLE I
PURCHASE AND SALE OF PURCHASED ASSETS....................... 1
1.1. Purchase and Sale of Purchased Assets................ 1
1.2. Excluded Assets...................................... 2
1.3. Purchase Price....................................... 4
1.4. Assumption of Liabilities............................ 4
1.5. Excluded Liabilities................................. 4
1.6. Closing Date; Deliveries............................. 5
1.7. Further Assurances................................... 5
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER.................... 6
2.1. Organization of Seller............................... 6
2.2. Subsidiaries and Investments......................... 6
2.3. Authority of Seller.................................. 6
2.4. Financial Statements................................. 7
2.5. Operations Since Balance Sheet Date.................. 7
2.6. Taxes................................................ 8
2.7. Availability of Assets............................... 9
2.8. Governmental Permits................................. 9
2.9. Real Property........................................ 10
2.10. Real Property Leases................................. 10
2.11. Condemnation......................................... 11
2.12. Personal Property.................................... 11
2.13. Personal Property Leases............................. 11
2.14. Intellectual Property................................ 11
2.15. Title to Purchased Assets............................ 12
2.16. Contracts............................................ 12
2.17. Status of Contracts.................................. 13
2.18. No Violation, Litigation or Regulatory Action........ 14
2.19. Hazardous Materials.................................. 14
2.20. Finder............................................... 15
2.21. No Interference...................................... 15
2.22. Foreign Investment in Real Property Tax Act.......... 15
2.23. Bankruptcy........................................... 15
2.24. Employee Benefit Plans............................... 15
2.25. ARS Agreement........................................ 16
2.26. Full Disclosure...................................... 16
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER..................... 16
3.1. Organization of Buyer................................ 16
3.2. Authority of Buyer................................... 17
3.3. Absence of Knowledge as to Certain Facts............. 17
3.4. Financial Capability................................. 18
3.5. No Finder............................................ 18
ii
<PAGE>
ARTICLE IV
ACTION PRIOR TO THE CLOSING DATE............................ 18
4.1. In estigation of the Station by Buyer................ 18
4.2. Preserve Accuracy of Representations and Warranties.. 18
4.3. FCC Consent; Improvements Act Approval; Other
Consents and Approvals............................... 19
4.4. Operations Prior to the Closing Date................. 20
4.5. Buyer's Right to Assign Rights with Respect
to WQRS-FM........................................... 22
ARTICLE V
ADDITIONAL AGREEMENTS....................................... 22
5.1. Taxes; Sales, Use and Transfer Taxes;
Title Insurance...................................... 22
5.2. Audit of Financial Statements of Station............. 23
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER................ 24
6.1. No Misrepresentation or Breach of Covenants and
Warranties........................................... 24
6.2. Opinion of Counsel for Seller........................ 24
6.3. Partnership Action................................... 24
6.4. No Restraint or Litigation........................... 25
6.5. FCC Consent.......................................... 25
6.6. Necessary Consents................................... 25
6.7. No Material Adverse Change........................... 25
6.8. FIRPTA Certificate................................... 25
6.10. Completion of Audit.................................. 25
6.11. Three Stations Transaction........................... 25
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER............... 26
7.1. No Misrepresentation or Breach of Covenants and
Warranties........................................... 26
7.2. Opinion of Counsel for Buyer......................... 26
7.3. Corporate Action..................................... 26
7.4. No Restraint......................................... 26
7.5. FCC Consent.......................................... 26
7.6. ARS Transaction...................................... 27
7.7. Three Stations Transaction........................... 27
ARTICLE VIII
INDEMNIFICATION............................................. 27
8.1. Indemnification by Seller............................ 27
8.2. Indemnification by Buyer............................. 27
8.3. Limitations of Indemnification Obligations........... 28
iii
<PAGE>
8.4. Notice of Claims..................................... 29
8.5. Third Party Claims................................... 30
8.6. Exclusive Remedy..................................... 31
ARTICLE IX
TERMINATION................................................. 31
9.1. Termination.......................................... 31
9.2. Notice of Termination................................ 32
ARTICLE X
GENERAL PROVISIONS.......................................... 32
10.1. No Announcement...................................... 32
10.2. Confidential Nature of Information................... 33
10.3. Governing Law; Submission to Jurisdiction............ 34
10.4. Notices.............................................. 34
10.5. Successors and Assigns............................... 35
10.6. Access to Records after Closing...................... 36
10.7. Entire Agreement; Amendments......................... 37
10.8. Interpretation; Disclosure Schedules................. 37
10.9. Waivers.............................................. 37
10.10. Expenses............................................. 38
10.11. Partial Invalidity................................... 38
10.12. Execution in Counterparts............................ 38
10.13. Definitions.......................................... 38
10.14. Allocation of Purchase Price......................... 42
10.15. Specific Performance; Other Rights and Remedies...... 43
10.16. Risk of Loss......................................... 43
10.17. Assignment of Rights Under ARS Agreement............. 44
iv
<PAGE>
EXHIBIT DESCRIPTION
- ------- -----------
A Undertaking and Assumption
B Bill of Sale and Assignment
SCHEDULE DESCRIPTION
- -------- -----------
1.2(k) -- Excluded Software
1.4 -- Assumed Liabilities
2.3 -- Conflicts; Consents of Seller
2.4 -- Financial Statements
2.5(a)&(b)-- Changes in Operations
2.7 -- Unavailable Assets
2.8 -- Governmental Permits
2.10 -- Real Property Leases
2.12 -- Personal Property
2.13 -- Personal Property Leases
2.14 -- Intellectual Property
2.15 -- Title to Property
2.16 -- Contracts
2.17 -- Status of Contracts
2.18 -- Legal Proceedings
2.19 -- Environmental Matters
2.24 -- Employee Benefit Plans
3.2 -- Conflicts; Consents of Buyer
3.3 -- Absence of Knowledge of Certain Facts
4.4(b) -- Conduct of Business
6.6 -- Necessary Consents
v
<PAGE>
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of August 12,
---------
1996, between Secret Communications Limited Partnership, a Delaware limited
partnership ("Seller"), and Evergreen Media Corporation of Los Angeles, a
------
Delaware corporation ("Buyer").
-----
W I T N E S S E T H :
-------------------
WHEREAS, upon the consummation of the transactions contemplated by the
Asset Exchange Agreement (the "ARS Agreement") dated as of May 30, 1996 by and
-------------
between Seller and American Radio Systems Corporation ("ARS"), Seller will
---
become the licensee of and have the right to operate WQRS-FM in Detroit,
Michigan (the "Station"); and
-------
WHEREAS, simultaneously herewith, Buyer and Seller have entered into
an Asset Purchase Agreement (the "Three Stations Agreement") providing for the
------------------------
sale of substantially all of the assets, properties and business relating to
WJLB-FM, WMXD-FM and WFLN-FM by Seller to Buyer;
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to
purchase from Seller, substantially all of the assets, properties and business
relating to the Station, all on the terms and subject to the conditions set
forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, it is hereby agreed between Seller and Buyer
as follows:
ARTICLE I
PURCHASE AND SALE OF PURCHASED ASSETS
-------------------------------------
1.1. PURCHASE AND SALE OF PURCHASED ASSETS. Upon the terms and
-------------------------------------
subject to the conditions of this Agreement, on the Closing Date, Seller shall
sell, transfer, assign, convey and deliver to Buyer, and Buyer shall purchase
from Seller, free and clear of all Encumbrances (except for Permitted
Encumbrances), all of the assets, properties and business (excepting only the
Excluded Assets) of every kind and description, wherever located, real, personal
or mixed, tangible or intangible, owned or held by Seller relating to the
Station as the same shall exist on the Closing Date (herein collectively called
the "Purchased Assets"), including, without limitation, all right, title and
----------------
interest of Seller in, to and under:
<PAGE>
(a) The broadcast licenses for the Station (including the right to
use the call letters "WQRS-FM") issued by the FCC and all other Governmental
Permits listed in Schedule 2.8;
------------
(b) The real property leases and leasehold improvements listed or
described in Schedule 2.10;
-------------
(c) All machinery, equipment (including computers and office
equipment), auxiliary and translator facilities, trans mitting towers,
transmitters, broadcast equipment, antennae, inventory (including all records,
tapes, recordings, compact discs and music cassettes), vehicles, furniture and
other personal property of the Station listed or referred to in Schedule 2.12;
-------------
(d) The personal property leases listed in Schedule 2.13;
-------------
(e) All trademarks, trade names, service marks and copyrights (and
all goodwill associated therewith), registered or unregistered, of Seller
relating to the Station, and the applications for registration thereof and the
licenses relating to any of the foregoing listed in Schedule 2.14;
-------------
(f) The contracts, agreements or understandings listed or described
in Schedule 2.16;
-------------
(g) All advertising customer lists, mailing lists, processes, trade
secrets, know-how and other proprietary or confidential information used in or
relating to the Station;
(h) All of Seller's rights, claims or causes of action against third
parties arising under warranties from manufacturers, vendors and others in
connection with the Purchased Assets;
(i) All jingles, slogans and promotional materials used in or
relating to the Station; and
(j) All books and records (including all computer programs) of Seller
relating to the assets, business and operations of the Station, including,
without limitation, all files, logs, programming information and studies and
news and advertising studies.
1.2. EXCLUDED ASSETS. Notwithstanding the foregoing, the Purchased
---------------
Assets shall not include the following (herein referred to as the "Excluded
--------
Assets"):
- ------
(a) All cash and cash equivalents (including any marketable
securities or certificates of deposit) of Seller or ARS relating to the Station
and all notes and accounts receivable
2
<PAGE>
or other evidences of indebtedness owed to Seller or its Affiliates or ARS or
its Affiliates relating to the Station;
(b) All notes and accounts receivable or other evidences of
indebtedness owed to Seller by any of its Affiliates;
(c) All claims, rights and interests of Seller 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 Closing Date;
(d) Except as otherwise provided in Section 1.1(i), any of Seller's
--------------
rights, claims or causes of action against third parties relating to the assets,
properties, business or operations of the Station arising out of transactions
occurring prior to the Closing Date;
(e) All bonds held, contracts or policies of insurance and prepaid
insurance with respect to such contracts or policies;
(f) All records prepared in connection with the sale of the Station,
including bids received from others and analyses relating to the Station and the
Purchased Assets;
(g) The partnership name of Secret;
(h) All records and documents relating to Excluded Assets or to
liabilities other than Assumed Liabilities;
(i) Seller's employee benefit agreements, plans or arrangements
maintained by Seller on behalf of persons employed by Seller;
(j) All rights, claims or causes of action against third Persons
relating to the assets, business or operation of the Station which may arise in
connection with the discharge by Seller of the Excluded Liabilities;
(k) Software programs and other assets at Seller's principal
executive offices set forth on Schedule 1.2(k) used to provide certain financial
---------------
and accounting services for the Station;
(l) All rights of Seller under the ARS Agreement and all related
agreements not otherwise assigned to Buyer herein; and
(m) Any of Seller's rights under or pursuant to this Agreement or the
other agreements with Buyer contemplated hereby.
3
<PAGE>
1.3. PURCHASE PRICE. The purchase price for the Purchased Assets
--------------
(the "Purchase Price") shall be equal to $32,000,000.
--------------
1.4. ASSUMPTION OF LIABILITIES. On the Closing Date, Buyer shall
-------------------------
deliver to Seller an undertaking and assumption, in the form of Exhibit A,
---------
pursuant to which Buyer shall assume and be obligated for, and shall agree to
pay, perform, defend and discharge in accordance with their terms, (a) all
liabilities and obligations of Seller arising after the Closing Date under (i)
the Seller Agreements, (ii) the leases, contracts and other agreements not
required by the terms of Section 2.16 to be listed in a Schedule to this
------------
Agreement and (iii) the leases, contracts and other agreements entered into by
Seller with respect to the Station after the date hereof consistent with the
terms of this Agreement, except, in each case, to the extent such liabilities
and obligations have accrued prior to the Closing Date and (b) the obligations
set forth in Schedule 1.4. All of the foregoing liabilities and obligations to
------------
be assumed by Buyer hereunder (excluding any Excluded Liabilities) are referred
to herein as the "Assumed Liabilities."
-------------------
1.5. EXCLUDED LIABILITIES. Buyer shall not assume or be obligated
--------------------
to pay, perform or otherwise discharge any liability or obligation of Seller not
expressly assumed by Buyer pursuant to the undertaking and assumption referred
to in Section 1.4 (all such liabilities and obligations not being assumed being
-----------
herein called the "Excluded Liabilities") and, notwithstanding anything to the
--------------------
contrary in Section 1.4, none of the following shall be "Assumed Liabilities"
-----------
for purposes of this Agreement:
(i) any liabilities in respect of any Taxes of Seller for which
Seller is liable pursuant to Section 5.1(a);
--------------
(ii) any intercompany payables and other liabilities or obligations
of Seller to any of its Affiliates;
(iii) any costs and expenses incurred by Seller incident to its
negotiation and preparation of this Agreement and its performance and
compliance with the agreements and conditions contained herein;
(iv) any liabilities or obligations in respect of any Excluded
Assets; or
(v) any liabilities arising from the operation of the Station prior
to the Closing regardless of whether operated by Seller or any predecessor
owner of the Station.
1.6. CLOSING DATE; DELIVERIES. (a) The Closing shall be
------------------------
consummated at 10:00 A.M., local time, on a date to be
4
<PAGE>
mutually agreed upon by Buyer and Seller with not less than three weeks prior
written notice to each party, which date shall be on or after January 3, 1997,
at the offices of Sidley & Austin, One First National Plaza, Chicago, Illinois
60603 or at such other place as shall be agreed upon by Buyer and Seller (the
date and time on which the Closing is actually held being hereinafter referred
to as the "Closing Date").
------------
(b) On the Closing Date, Seller shall deliver to Buyer (i) a bill of
sale and assignment, in the form of Exhibit B, of all of the Purchased Assets
---------
and (ii) all of the documents, instruments and opinions required to be delivered
by Seller pursuant to Article VI.
----------
(c) On the Closing Date, Buyer shall deliver to Seller (i) by bank
wire transfer of immediately available funds to an account number to be
designated by Seller in writing at least two business days prior to Closing an
amount equal to the Purchase Price and (ii) all of the documents, instruments
and opinions required to be delivered by Buyer pursuant to Section 1.4 and
-----------
Article VII.
- -----------
1.7. FURTHER ASSURANCES. On the Closing Date, Seller shall (a)
------------------
deliver to Buyer such other bills of sale, deeds, endorsements, assignments and
other good and sufficient instruments of conveyance and transfer as Buyer may
reasonably request or as may be otherwise reasonably necessary to vest in Buyer
all the right, title and interest of Seller in, to or under any or all of the
Purchased Assets and (b) take all steps as may be reasonably necessary to put
Buyer in actual possession and control of all the Purchased Assets. From time
to time following the Closing, Seller shall execute and deliver, or cause to be
executed and delivered, to Buyer such other instruments of conveyance and
transfer as Buyer may reasonably request or as may be otherwise necessary to
more effectively convey and transfer to, and vest in, Buyer and put Buyer in
possession of, any part of the Purchased Assets, and, in the case of licenses,
certificates, approvals, authorizations, agreements, contracts, leases,
easements and other commitments included in the Purchased Assets which cannot be
transferred or assigned effectively without the consent of third parties which
consent has not been obtained prior to the Closing, to cooperate with Buyer at
its reasonable request in endeavoring to obtain such consent.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, Seller represents and warrants
to Buyer and agrees as follows:
5
<PAGE>
2.1. ORGANIZATION OF SELLER. Seller is a limited partnership duly
----------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and is duly qualified and in good standing as a foreign limited
partnership in the States of Michigan and Pennsylvania. Seller has full
partnership power and authority, or will have full partnership power and
authority upon consummation of the transactions contemplated by the ARS
Agreement (the "ARS Transaction"), to own or lease and to operate and use the
---------------
Purchased Assets and to carry on the business of the Station as now conducted.
2.2. SUBSIDIARIES AND INVESTMENTS. Seller does not, directly or
----------------------------
indirectly, own, of record or beneficially, any outstanding voting securities or
other equity interests in any corporation, partnership, joint venture or other
entity which is involved in or relates to the Station.
2.3. AUTHORITY OF SELLER. Seller has the partnership power and
-------------------
authority to execute, deliver and perform, or will have the partnership power
and authority upon consummation of the ARS Transaction to perform, this
Agreement and all of the other agreements and instruments to be executed and
delivered by Seller to Buyer pursuant hereto (collectively, the "Seller
------
Ancillary Agreements").
- --------------------
The execution, delivery and performance of this Agreement and the
Seller Ancillary Agreements by Seller have been duly authorized and approved by
all necessary partnership action on behalf of Seller and its general partners.
This Agreement is, and each Seller Ancillary Agreement when executed and
delivered by Seller and the other parties thereto will be, a legal, valid and
binding agreement of Seller enforceable in accordance with its respective terms,
subject to bankruptcy, insolvency, reorganization, moratorium and similar laws
of general application relating to or affecting creditors' rights and general
equity principles.
Except as set forth in Schedule 2.3, neither the execution and
------------
delivery by Seller of this Agreement or any of the Seller Ancillary Agreements
or the consummation by Seller of any of the transactions contemplated hereby or
thereby nor compliance by Seller with or fulfillment by Seller of the terms,
conditions and provisions hereof or thereof will:
(a) result in a breach of the terms, conditions or provisions of, or
constitute a default, an event of default or an event creating rights of
acceleration, termination or cancellation or a loss of rights under, or result
in the creation or imposition of any Encumbrance upon any of the Purchased
Assets under, the partnership agreement of Seller, any Seller Agreement or any
judgment, order, award or decree to which Seller is a party or any of the
Purchased Assets is subject or by which
6
<PAGE>
Seller is bound or any Requirements of Law affecting Seller or the Purchased
Assets; or
(b) require the approval, consent, authorization or act of, or the
making by Seller of any declaration, filing or registration with, any Person,
except for such of the foregoing as are necessary pursuant to the Improvements
Act or the Communications Act.
2.4. FINANCIAL STATEMENTS. Schedule 2.4 contains (i) the unaudited
-------------------- ------------
balance sheet of the Station as of December 31, 1995 and the related statement
of income for the year then ended, in the form provided to Seller by ARS
pursuant to the ARS Agreement, and (ii) the unaudited balance sheet (the
"Station Balance Sheet") of the Station as of June 30, 1996 (the "Balance Sheet
- ---------------------- -------------
Date") and the related statement of income for the six months then ended. To
- ----
the knowledge of Seller, except as set forth therein, the balance sheet and
statement of income as of December 31, 1995 and for the year then ended present
fairly the financial position and results of operations of the Station as of
such date and for the period covered thereby subject to the absence of
footnotes. Except as set forth therein, the balance sheet and statement of
income as of June 30, 1996 and for the six months then ended present fairly the
financial position and results of operations of the Station as of such date and
for the period covered thereby subject to the absence of footnotes and a
statement of cash flows and to normal year-end adjustments.
2.5. OPERATIONS SINCE BALANCE SHEET DATE. (a) Except as set forth
-----------------------------------
in Schedule 2.5(a), during the period from the Balance Sheet Date to the date
---------------
hereof, inclusive, to the knowledge of Seller, there has been no material
adverse change in the financial condition and the results of operations of the
Station.
(b) Except as set forth in Schedule 2.5(b), since the Balance Sheet
--------------
Date, to the knowledge of Seller, the business of the Station has only been
conducted in the ordinary course. Without limiting the generality of the
foregoing, since the Balance Sheet Date, except as set forth in such Schedule,
to the knowledge of Seller, there has not been with respect to the Station:
(i) sold, leased (as lessor), transferred or otherwise disposed of
(including any transfers from Seller to any of its Affiliates), or
mortgaged or pledged, or imposed or suffered to be imposed any Encumbrance
on, any of the assets reflected on the Station Balance Sheet or any assets
acquired after the Balance Sheet Date relating to the Station, other than
personal property having an aggregate value of less than $50,000 sold or
otherwise disposed of in the ordinary course of the business of the Station
which
7
<PAGE>
would not reasonably be expected to have a material adverse effect on the
business or operations of the Station and except for Permitted
Encumbrances;
(ii) created, incurred, or assumed, or agreed to create, incur, or
assume, any indebtedness for borrowed money (other than money borrowed or
advances from any of its Affiliates in the ordinary course of the business
of the Station) or entered into (as lessee) any capitalized leases; or
(iii) granted or instituted any material increase in any rate of
salary or compensation of any employee of the Station or any profit
sharing, bonus, incentive, deferred compensation, insurance, pension,
retirement, medical, hospital, disability, welfare or other employee
benefit plan.
2.6. TAXES. In respect of the Station, to the knowledge of Seller,
-----
either Seller, ARS or Marlin Broadcasting Company, Inc. ("Marlin") has filed or
------
obtained or will file or obtain extensions for filing pursuant to applicable law
all Tax Returns due on or prior to the Closing Date and either Seller, ARS or
Marlin has or will have paid or made provision for the payment of all Taxes
which have become due pursuant to such Tax Returns or pursuant to any
assessments which have become payable and which are not being contested in good
faith. To the knowledge of Seller, monies required to be withheld from
employees of the Station for income Taxes, social security and other payroll
Taxes have been collected or withheld, and either paid to the respective
governmental agencies, set aside in accounts of Seller, ARS or Marlin for such
purpose, or accrued, reserved against and entered upon the books of Seller, ARS
or Marlin. To the knowledge of Seller, no Taxing authority has asserted in
writing against Seller, ARS or Marlin any deficiency or claim for additional
Taxes in respect of the Station.
2.7. AVAILABILITY OF ASSETS. Except as set forth in Schedule 2.7
---------------------- ------------
and except for the Excluded Assets, the Purchased Assets constitute all the
assets used in the conduct of the business of the Station (including, without
limitation, all books, records, computers and computer programs and data
processing systems). All tangible Purchased Assets are in good repair and
operating condition, ordinary wear and tear excepted. Except as set forth in
Schedule 2.7, the Purchased Assets are sufficient to operate the Station as it
- ------------
is now operated. ALL OF THE TANGIBLE PURCHASED ASSETS ARE SOLD TO BUYER WITHOUT
ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR INTENDED USE OR OTHERWISE.
2.8. GOVERNMENTAL PERMITS. Seller owns, holds or possesses, or upon
--------------------
consummation of the ARS Transaction will own, hold or possess, the FCC
Authorizations and all other
8
<PAGE>
governmental licenses, franchises, permits, privileges, immunities, approvals
and other authorizations which are necessary to entitle it to own or lease,
operate and use the Purchased Assets and to carry on and conduct the business of
the Station as currently conducted (herein collectively called "Governmental
------------
Permits"), except for such Governmental Permits which the failure to so own,
- -------
hold or possess would not have a material adverse effect on the operations and
financial condition of the Station. Schedule 2.8 sets forth a list and brief
------------
description of each such Governmental Permit disclosed to Seller by ARS pursuant
to the ARS Agreement or otherwise with respect to the Station, except for such
incidental licenses, permits and other authorizations which would be readily
obtainable by any qualified applicant without undue burden in the event of any
lapse, termination, cancellation or forfeiture thereof. To the knowledge of
Seller, Schedule 2.8 includes a list of all FCC Authorizations with respect to
------------
the Station.
Except as set forth in Schedule 2.8, (i) Seller has fulfilled and
------------
performed its obligations under each of such Governmental Permits, and no event
has occurred or condition or state of facts exists which constitutes or, after
notice or lapse of time or both, would constitute a breach or default under any
such Governmental Permit, (ii) no notice of cancellation, of default or of any
dispute concerning any Governmental Permit, or of any event, condition or state
of facts described in the preceding clause (i), has been received by Seller,
(iii) each of the Governmental Permits is valid, subsisting and in full force
and effect and, subject to the receipt of the FCC Consent and consummation of
the ARS Transaction, may be assigned and transferred to Buyer in accordance with
this Agreement and will continue in full force and effect thereafter, in each
case without (A) the occurrence of any breach, default or forfeiture of rights
thereunder or (B) the consent, approval, or act of, or the making of any filing
with, any governmental body, regulatory commission or other party (other than
the FCC as contemplated by Section 4.3); and (iv) the Station is being operated
-----------
in accordance with the FCC Authorizations. Except as set forth in Schedule 2.8,
------------
Seller is not aware of any reason why the FCC Authorizations would not be
renewed in the ordinary course for a full term without material qualifications
or of any reason why any of the FCC Authorizations might be revoked. No renewal
of any FCC Authorization would constitute a major environmental action under the
rules of the FCC. There are no facts which, under the Communications Act or the
existing rules of the FCC, would disqualify Seller from assigning the FCC
Authorizations or from consummating the transactions contemplated herein within
the times contemplated herein. To the knowledge of Seller, appropriate public
inspection files are maintained at the Station's studio, in accordance with FCC
rules.
9
<PAGE>
2.9. REAL PROPERTY. Seller will not be acquiring title to any real
-------------
property, or any options to acquire title to real property, upon consummation of
the ARS Transaction.
2.10. REAL PROPERTY LEASES. Schedule 2.10 sets forth a list and
-------------------- -------------
brief description of each lease or similar agreement under which Seller is
lessee of, or holds or operates, or upon the consummation of the ARS Transaction
will be lessee of, or hold or operate, any real property owned by any third
party and used in or relating to the Station. To the knowledge of Seller, the
Leased Real Property is zoned for the purposes for which it is currently being
used by the Station. To the knowledge of Seller, except as set forth in
Schedule 2.10, there are no structural defects in the buildings, structures and
- -------------
improvements located on the Leased Real Property. To the knowledge of Seller,
the roofs of such buildings are in good condition and repair, and all plumbing
equipment, heating, ventilating and air conditioning equipment, electrical
wiring, and water and sewage systems located on the Leased Real Property are
operating properly, ordinary wear and tear excepted and normal maintenance
requirements excluded. To the knowledge of Seller, there are no encroachments
upon the Leased Real Property by any buildings, structures or improvements
located on adjoining real estate. To the knowledge of Seller, none of the
buildings, structures or improvements (including, without limitation, any guy
wires or guy anchors) constructed on the Leased Real Property encroach upon
adjoining real estate, and, to the knowledge of Seller, all such buildings,
structures and improvements are constructed in conformity with or are
"grandfathered" with respect to all "setback" lines, easements and other
restrictions or rights of
record, or that have been established by any applicable building or safety code
or zoning ordinance. To the knowledge of Seller, any such "grandfathered"
approvals shall survive indefinitely the transfer of the Leased Real Property to
Buyer and no utility lines serving the Leased Real Property pass over the lands
of others except where appropriate easements have been obtained. To the
knowledge of Seller, the Leased Real Property, together with any real property
owned by ARS relating to the Station, is sufficient to operate the Station as
now operated.
2.11. CONDEMNATION. As of the date of the Agreement, (a) neither the
------------
whole nor any part of any real property owned, leased, used or occupied by
Seller, or to be owned, leased or occupied by Seller upon consummation of the
ARS Transaction, in connection with the Station is subject to any pending suit
for condemnation or other taking by any public authority and (b) to the
knowledge of Seller, no such condemnation or other taking is threatened.
2.12. PERSONAL PROPERTY. Schedule 2.12 contains the list of material
----------------- -------------
items of fixed assets and equipment of the Station furnished to Seller by ARS as
part of the ARS Agreement.
2.13. PERSONAL PROPERTY LEASES. Schedule 2.13 contains a list of
------------------------ -------------
each lease or other agreement or right, whether
10
<PAGE>
written or oral, under which Seller is lessee of, or holds or operates any
machinery, equipment, vehicle or other tangible personal property owned by a
third party and used in or relating to the business of the Station and which is
not terminable by Seller without penalty on 60 days' notice or less and which
provides for annual rentals in excess of $6,000.
2.14. INTELLECTUAL PROPERTY. Schedule 2.14 contains a list of: (i)
--------------------- -------------
to the knowledge of Seller, all trademarks, service marks, trade names and
copyrights related to the Station, for which registrations have been issued to
ARS or Marlin or applications for registrations have been made by ARS or Marlin
and (ii) all licenses, agreements or other arrangements under which Seller, in
connection with the Station, has the right, or upon the consummation of the ARS
Transaction will have the right, to use any trademark, service mark, trade name
or copyright (other than such as are included in the Seller Agreements). To the
knowledge of Seller, no proceedings have been instituted, are pending or, to the
knowledge of Seller, are threatened which challenge the validity of the
ownership or use by Seller of any trademarks, service marks, trade names or
copyrights related to the Station. Except as set forth in Schedule 2.14, Seller
-------------
has not licensed anyone to use any trademarks, service marks, trade names or
copyrights relating to the Station, and to the knowledge of Seller, there has
been no infringement by any Person of any trademarks, service marks, trade names
or copyrights owned or used by it, or which it will own or have the right to use
upon consummation of the ARS Transaction, relating to the Station. Except as set
forth in Schedule 2.14, to the knowledge of Seller, the operations of the
-------------
Station do not infringe upon the trademarks, service marks, trade names or
copyrights of any other Person.
2.15. TITLE TO PURCHASED ASSETS. Except as set forth in Schedule
------------------------- --------
2.15, Seller has, or upon the consummation of the ARS Transaction will have,
- ----
good and marketable title to all of the other tangible Purchased Assets, free
and clear of all Encumbrances except for Permitted Encumbrances. Upon delivery
to Buyer on the Closing Date of the bill of sale and assignment contemplated by
Section 1.6(b), Seller will thereby transfer to Buyer good and marketable title
- --------------
to such other tangible Purchased Assets and all intellectual property relating
to the Station owned by Seller listed in Schedule 2.14, subject to no
-------------
Encumbrances, except for Permitted Encumbrances.
2.16. CONTRACTS. (a) Except as set forth in Schedule 2.16 or any
--------- -------------
other Schedule hereto, as of the date of this Agreement, Seller is not and, upon
the consummation of the ARS Transaction, will not be, with respect to the
Station, a party to or bound by:
(i) Any contract for the purchase or sale of real property;
11
<PAGE>
(ii) Any contract for the purchase, rental or use of any radio
programming or programming services which is not terminable by Seller without
penalty on 60 days' notice or less, provides for performance over a period of
more than 90 days and which involves the payment after the date hereof of more
than $50,000;
(iii) Any contract for the purchase of merchandise, supplies or
personal property or for the receipt of services (other than services referred
to in clause (b) above) which is not terminable by Seller on 60 days' notice or
less and involves the payment after the date hereof of more than $25,000;
(iv) Any employment contract, consulting agreement or collective
bargaining agreement;
(v) Any contract for the sale of broadcast time for advertising which
was not made in the ordinary course of the business of the Station;
(vi) Any guarantee by Seller of the obligations of customers,
suppliers, officers, directors, employees, Affiliates or others; or
(vii) Any other contract which is material to the business of the
Station.
(b) The contracts and agreements included in the Purchased Assets to
be assigned to Buyer on the Closing Date pursuant to this Agreement (other than
the contracts and agreements listed on Schedule 2.10 and the contracts between
-------------
Seller and The Arbitron Company and Concept Music Broadcasting, Inc.) do not
involve payments of more than $50,000 in the aggregate from the Closing Date
until the end of their current terms.
2.17. STATUS OF CONTRACTS. Except as set forth in Schedule 2.17 or
------------------- -------------
in any other Schedule hereto, each of the leases, contracts and other agreements
listed in Schedules 2.10, 2.13, 2.14 and 2.16 (the "Seller Agreements")
-------------- ---- ---- ---- -----------------
constitutes, or upon consummation of the ARS Transaction will constitute, a
valid and binding obligation of Seller and, to the knowledge of Seller, the
other parties thereto (subject to bankruptcy, insolvency, reorganization or
other laws relating to or affecting the enforcement of creditors' rights and
general equity principles) and is, or upon consummation of the ARS Transaction
will be, in full force and effect and (except as set forth in Schedule 2.3 and
------------
except for those Seller Agreements which by their terms will expire prior to the
Closing Date or will be otherwise terminated prior to the Closing Date in
accordance with the provisions thereof) may be transferred to Buyer pursuant to
this Agreement and will continue in full force and effect thereafter, in each
case without breaching the terms thereof or resulting in the for-
12
<PAGE>
feiture or impairment of any rights thereunder and without the consent, approval
or act of, or the making of any filing with, any other party. With respect to
the Seller Agreements relating to the Station, (i) each of Seller and, to the
knowledge of Seller, ARS and Marlin has fulfilled and performed in all material
respects its respective obligations, if any, under each such Seller Agreement,
(ii) neither Seller nor, to the knowledge of Seller, ARS or Marlin is in, or
alleged to be in, material breach or material default under any such Seller
Agreement, (iii) to the knowledge of Seller, no other party to any such Seller
Agreement is in material breach nor material default thereunder, and (iv) no
event has occurred and no condition or state of facts exists which, with the
passage of time or giving of notice or both, would constitute such a default or
breach by Seller or, to the knowledge of Seller, ARS, Marlin or by any such
other party. Seller has not and, to the knowledge of Seller, neither ARS nor
Marlin has granted any material waiver or forbearance with respect to any of the
Seller Agreements. Complete and correct copies of each of the Seller Agreements
have been made available to Buyer by Seller.
2.18. NO VIOLATION, LITIGATION OR REGULATORY ACTION. Except as set
---------------------------------------------
forth in Schedule 2.18 or in any other Schedule hereto:
-------------
(a) Seller has complied with all material Requirements of Laws which
are applicable to the Purchased Assets or the business of the Station;
(b) As of the date of this Agreement, there are no lawsuits, claims,
suits, proceedings or investigations pending against Seller or, to the knowledge
of Seller, threatened against Seller, in respect of the Station or, to the
knowledge of Seller, pending or threatened against ARS or Marlin in respect of
the Station or the Purchased Assets; and
(c) As of the date of this Agreement, there is no action, suit or
proceeding pending against Seller or, to the knowledge of Seller, threatened
against Seller which questions the legality or propriety of the transactions
contemplated by this Agreement.
2.19. HAZARDOUS MATERIALS. Except as permitted by or consistent with
-------------------
applicable Environmental Laws or as set forth in Schedule 2.19:
-------------
(a) Seller's use of the Leased Real Property relating to the Station
is in compliance with all Environmental Laws;
(b) Seller has never generated, transported, used, stored or disposed
of on the Leased Real Property any Hazardous Material and, to Seller's
knowledge, there has never been any
13
<PAGE>
Hazardous Material generated, transported, used, stored or disposed of on the
Leased Real Property;
(c) no Hazardous Material has ever been spilled, released or disposed
of on, under or about the Leased Real Property by Seller or, to Seller's
knowledge, has ever come to be located in the soil or groundwater of the Leased
Real Property; and
(d) to the knowledge of Seller, no underground storage tanks, or
underground piping associated with such tanks, are located on or under any
Leased Real Property.
Except as set forth in Schedule 2.19, Seller has never and, to the
-------------
knowledge of Seller, neither ARS nor Marlin has 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 the Leased Real Property.
2.20. FINDER. Neither Seller nor any party acting on its behalf has
------
paid or become obligated to pay any fee or commission to any broker, finder or
intermediary for or on account of the transactions contemplated by this
Agreement other than to Star Media Group, Inc., whose fees or commissions, to
the extent payable, shall be paid by or on behalf of Seller.
2.21. NO INTERFERENCE. To the knowledge of Seller, the Station is
---------------
not causing interference in violation of FCC rules to the transmission of any
other broadcast station or communications facility and, to the knowledge of
Seller, since August 1, 1994 neither ARS, Marlin nor Seller has received any
complaints with respect thereto. To the knowledge of Seller, 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.
2.22. FOREIGN INVESTMENT IN REAL PROPERTY TAX ACT. Seller is not a
-------------------------------------------
"foreign person" within the meaning of Section 1445 of the Code.
2.23. BANKRUPTCY. No insolvency proceedings of any character,
----------
including, without limitation, bankruptcy, receivership, reorganization,
composition or arrangement with creditors, voluntary or involuntary, of Seller,
are pending or, to the knowledge of Seller, threatened against Seller or its
general partners, and neither Seller nor either of its general partners 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.
14
<PAGE>
2.24. EMPLOYEE BENEFIT PLANS. Except as set forth in Schedule 2.24,
---------------------- -------------
with respect to the employees of the Station, there are no employee or retiree
benefit or compensation plans within the meaning 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 Seller is bound, or will be bound upon consummation of the ARS
Transaction, or that is or has been established or maintained or in respect of
which Seller has ever had an obligation to contribute, or will have an
obligation to contribute upon consummation of the ARS Transaction. Seller has
neither incurred nor 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 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 no event, transaction or condition has occurred or exists
which could result in any such liability. Each plan, program, agreement,
arrangement, trust or other funding arrangement listed in Schedule 2.24 has been
-------------
operated and administered in all material respects in accordance with all
Requirements of Law, including but not limited to ERISA and the Code.
2.25. ARS AGREEMENT. Seller has entered into the ARS Agreement with
-------------
ARS pursuant to which Seller, upon the consummation of the transactions
contemplated by the ARS Agreement, will acquire the assets defined therein as
the "Detroit Assets" and will assume the liabilities of ARS with respect to the
ownership and operations of the Station other than the "Nonassumed Obligations"
of American (as defined therein) relating thereto. As indicated in the ARS
Agreement, ARS was acquiring the Station through the acquisition of Marlin
Broadcasting Company, Inc. ARS has informed Seller that such acquisition was
consummated on May 30, 1996. As contemplated by the ARS Agreement, Seller and
ARS have entered into a Time Brokerage Agreement dated as of June 1, 1996 with
respect to the Station. Complete copies of the ARS Agreement and the Time
Brokerage Agreement relating to the Station have been made available to Buyer by
Seller, and Seller has made available to Buyer a copy of the Agreement and Plan
of Merger dated as of March 15, 1996 among ARS, ARS Acquisition Company and
Marlin in the form furnished to Seller by ARS.
2.26. FULL DISCLOSURE. To the knowledge of Seller, neither this
---------------
Agreement nor any certificate delivered pursuant hereto 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.
15
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
As an inducement to Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, Buyer hereby represents and
warrants to Seller and agrees as follows:
3.1. ORGANIZATION OF BUYER. Buyer is a corporation duly organized,
---------------------
validly existing and in good standing under the laws of the State of Delaware.
Buyer has full corporate power and authority to own or lease and to operate and
use its properties and assets and to carry on its business as now conducted.
3.2. AUTHORITY OF BUYER. Buyer has the corporate power and
------------------
authority to execute, deliver and perform this Agreement and all of the other
agreements and instruments to be executed and delivered by Buyer pursuant hereto
(collectively, the "Buyer Ancillary Agreements").
--------------------------
The execution, delivery and performance of this Agreement and the
Buyer Ancillary Agreements by Buyer have been duly authorized and approved by
all necessary corporate action on behalf of Buyer. This Agreement is, and each
Buyer Ancillary Agreement when executed and delivered by Buyer and the other
parties thereto will be, the legal, valid and binding agreement of Buyer
enforceable in accordance with its respective terms, subject to bankruptcy,
insolvency, moratorium and similar laws of general application relating to or
affecting creditors' rights and general equity principles.
Except as set forth in Schedule 3.2, neither the execution and
------------
delivery of this Agreement or any Buyer Ancillary Agreement by Buyer or the
consummation by Buyer of any of the transactions contemplated hereby or thereby
nor compliance by Buyer with or fulfillment by Buyer of the terms, conditions
and provisions hereof or thereof will:
(a) result in a breach of the terms, conditions or provisions of, or
constitute a default, an event of default or an event creating rights of
acceleration, termination or cancellation or a loss of rights under, the charter
or By-laws of Buyer or any material agreement, judgment, order, award or decree
to which Buyer is a party or any of its properties is subject or by which Buyer
is bound or any Requirements of Law affecting Buyer; or
(b) require the approval, consent, authorization or act of, or the
making by Buyer of any declaration, filing or registration with, any Person,
except for such of the foregoing
16
<PAGE>
as are necessary pursuant to the Improvements Act or the Communications Act.
3.3. ABSENCE OF KNOWLEDGE AS TO CERTAIN FACTS. Except as set forth
----------------------------------------
in Schedule 3.3, Buyer has no knowledge of any fact which could, under the
------------
Communications Act, the existing rules, regulations and practices of the FCC or
otherwise disqualify Buyer as an assignee of the FCC Authorizations or as the
owner and operator of the Station or the Purchased Assets.
3.4. FINANCIAL CAPABILITY. Buyer has or on the Closing Date will
--------------------
have sufficient financial capabilities to pay the Purchase Price in accordance
with this Agreement.
3.5. NO FINDER. Neither Buyer nor any party acting on its behalf
---------
has paid or become obligated to pay any fee or commission to any broker, finder
or intermediary for or on account of the transactions contemplated by this
Agreement.
ARTICLE IV
ACTION PRIOR TO THE CLOSING DATE
--------------------------------
The respective parties hereto covenant and agree to take the following
actions between the date hereof and the Closing Date:
4.1. INVESTIGATION OF THE STATION BY BUYER. From the date hereof
-------------------------------------
until the Closing Date, upon the request of Buyer, Seller shall afford, and
prior to the consummation of the ARS Transaction Seller will use its reasonable
efforts to cause ARS to afford, to the officers, employees and authorized
representatives of Buyer and the Station Purchaser(including, without
limitation, independent public accountants and attorneys) reasonable access
during normal business hours upon reasonable advance notice to the offices,
properties, employees and business and financial records (including computer
files, retrieval programs and similar documentation) of the Station to the
extent Buyer or the Station Purchaser shall reasonably deem necessary or
desirable and shall furnish to Buyer, the Station Purchaser or their respective
authorized representatives such additional information concerning the Purchased
Assets and the Station as shall be reasonably requested; provided, however, that
-------- -------
Seller shall not be required to violate any obligation of confidentiality to
which it is subject in discharging its obligations pursuant to this Section 4.1.
-----------
Buyer agrees that such investigation shall be conducted in such a manner as not
to interfere unreasonably with the operations of Seller. If in the course of
any investigation pursuant to this Section 4.1, Buyer's or the Station
-----------
Purchaser's officers, employees or authorized representatives discover any
breach of any representation or warranty contained in this Agreement, or any
circumstance or
17
<PAGE>
condition that upon Closing would constitute such a breach, Buyer covenants that
it will promptly so inform Seller.
4.2. PRESERVE ACCURACY OF REPRESENTATIONS AND WARRANTIES. From the
---------------------------------------------------
date hereof until the Closing Date, each of the parties hereto shall refrain
from taking any action which would
render any representation or warranty contained in Article II or III inaccurate
---------- ---
as of the Closing Date. Each party shall promptly notify the other of any
action, suit or proceeding that shall be instituted or threatened against such
party to restrain, prohibit or otherwise challenge the legality of any
transaction contemplated by this Agreement. Seller shall promptly notify Buyer
of any lawsuit, claim, proceeding or investigation that may be threatened,
brought, asserted or commenced against Seller which would have been listed in
Schedule 2.18 if such lawsuit, claim, proceeding or investigation had arisen
- -------------
prior to the date hereof.
4.3. FCC CONSENT; IMPROVEMENTS ACT APPROVAL; OTHER CONSENTS AND
----------------------------------------------------------
APPROVALS. (a) Within 10 business days of the date hereof, Buyer and Seller
- ---------
shall file with the FCC applications requesting its consent to the assignment of
the FCC Authorizations (and any extensions or renewals thereof) from Seller to
Buyer. Buyer and Seller will cooperate in the preparation of such applications
and will diligently take, or cooperate in the taking of, all necessary,
desirable and proper steps, provide any additional information reasonably
required and otherwise use their reasonable best efforts to obtain promptly the
requested consent, approval and waiver of the FCC. Any fees assessed by the FCC
incident to the filing of such applications shall be split equally between Buyer
and Seller. Seller and Buyer shall each make available to the other, promptly
after the filing thereof, copies of all reports filed on or prior to the Closing
Date with the FCC by Seller or Buyer, as the case may be, in respect of the
Station.
(b) As promptly as practicable after the date hereof, Buyer and
Seller shall file with the Federal Trade Commission and the Antitrust Division
of the Department of Justice the notifications and other information required to
be filed by such party under the Improvements Act, or any rules and regulations
promulgated thereunder, with respect to the transactions contemplated hereby.
Each of Buyer and Seller covenants to file as promptly as practicable such
additional information as may be requested to be filed by such party. Each of
Buyer and Seller warrants that all such filings by it, as of the date filed,
will be true and accurate and in accordance with the requirements of the
Improvements Act and any such rules and regulations. Each of Buyer and Seller
agrees to make available to the other such information as each of them may
reasonably request relative to its business, assets and property as may be
required by each of them
18
<PAGE>
to file any additional information requested by such agencies under the
Improvements Act and such rules and regulations. Each party hereto shall
promptly inform the other of any material communication from the Federal Trade
Commission, the Department of Justice or any other governmental authority
regarding any of the transactions contemplated hereby. Each party hereto will
advise the other promptly in respect of any understandings, undertakings or
agreements (oral or written) that such party proposes to make or enter into with
the Federal Trade Commission, the Department of Justice or any other
governmental authority in connection with the transactions contemplated hereby.
Buyer and Seller shall split equally the cost of any filing fees payable under
the Improvements Act in connection with the notifications and information
described in this Section 4.3(b).
--------------
(c) Buyer and Seller shall each use their reasonable best efforts
promptly to obtain all consents and amendments from parties to the Seller
Agreements and all consents, amendments or permits from governmental
authorities, which are required by the terms thereof or this Agreement for the
due and punctual consummation of the transactions contemplated by this
Agreement; provided, that neither Buyer nor Seller shall have any obligation to
--------
offer or pay any consideration in order to obtain any such consents or
amendments.
4.4. OPERATIONS PRIOR TO THE CLOSING DATE. (a) From the date hereof
------------------------------------
until the Closing Date, Seller shall use its best efforts to cause the Station
to be operated and carried on, only in the ordinary course and substantially as
currently operated. Consistent with the foregoing, Seller shall keep and
maintain the Purchased Assets in good operating condition and repair and shall
use its reasonable efforts consistent with good business practice to preserve
the goodwill of the customers and others having business relations with the
Station.
(b) Notwithstanding Section 4.4(a), except as expressly contemplated
--------------
by this Agreement, except as set forth in Schedule 4.4(b) or except with the
--------------
express prior written approval of Buyer, Seller shall not:
(i) make any material change in the business or the operations of the
Station;
(ii) make any capital expenditure relating to the Station, or enter
into any contract or commitment therefor, in excess of $50,000 in the
aggregate;
(iii) sell, lease, transfer or otherwise dispose of or mortgage or
pledge, or impose or suffer to be imposed any Encumbrance on, any of the
Purchased Assets, other than (A) minor amounts of personal property having
an aggregate value of less than $50,000 sold or otherwise disposed of in
the ordinary course of the
19
<PAGE>
business of the Station which would not reasonably be expected to have a
material adverse effect on the business or operations of the Station, (B)
minor amounts of personal property which are replaced due to defect or
obsolescence with personal property of substantially the same nature and
of equal or greater quality in the ordinary course of the business of the
Station and (C) Permitted Encumbrances; or
(iv) enter into any agreement providing for annual payments by the
Station in excess of $25,000.
(c) From the date hereof until the Closing Date, Seller shall:
(i) use its reasonable best efforts to cause the Station to be
operated, in all material respects in accordance with the FCC's rules and
regulations and the FCC Authorizations;
(ii) use its reasonable best efforts to cause insurance policies to be
maintained on the Station and the related Purchased Assets, on terms and
conditions and with insurers substantially identical to or better than
those in effect immediately prior to the date hereof;
(iii) if the broadcast transmissions of the Station from its main
broadcast antennae at authorized power are interrupted or impaired, use its
reasonable best efforts to restore transmissions at full authorized power
as soon as reasonably possible;
(iv) its reasonable best efforts to cause the protection and defense
of the FCC Authorizations, broadcast coverage area and signal integrity
relating to the Station;
(v) use its reasonable best efforts to consummate the ARS Transaction
and shall proceed diligently to exercise its rights with respect to the
Station;
(vi) not modify, waive or amend any provision of or right under the
ARS Agreement or the Time Brokerage Agreement (the "WQRS TBA"), dated as of
--------
June 1, 1996, between Seller and ARS relating to the Station without the
prior written consent of Buyer; and
(vii) 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.
20
<PAGE>
4.5. BUYER' RIGHT TO ASSIGN RIGHTS WITH RESPECT TO WQRS-FM. Prior
-----------------------------------------------------
the Closing, Buyer may enter into an agreement to assign Buyer's rights
hereunder to a Person who is either a "qualified intermediary" (as defined in
Treas. Req. (S)1.1031 (k-l(g)(4)) or a qualified purchaser pursuant to the
Communications Act and the rules and regulations of the FCC (the "Station
-------
Purchaser") or sell or exchange the Purchased Assets with such Station
- ---------
Purchaser; provided, however, that assignment of its rights hereunder or sale or
-------- -------
exchange of the Purchased Assets pursuant to this Section 4.5 shall not release
-----------
Buyer of its obligations pursuant to this Agreement and if Buyer fails to assign
its rights with respect to the Station pursuant to this Section 4.5 or the
-----------
Station Purchaser fails to perform its obligations pursuant to such assignment,
sale or exchange and this Agreement, Buyer shall remain liable for performance
of such obligations, including payment of the Purchase Price.
ARTICLE V
ADDITIONAL AGREEMENTS
---------------------
5.1. TAXES; SALES, USE AND TRANSFER TAXES; TITLE INSURANCE.
-----------------------------------------------------
(a) Seller shall be liable for and shall pay all Taxes (whether
assessed or unassessed) applicable to the Station or the Purchased Assets, in
each case attributable to periods (or portions thereof) ending on or prior to
the Closing Date. Buyer shall be liable for and shall pay all Taxes (whether
assessed or unassessed) applicable to the Station or the Purchased Assets, in
each case attributable to periods (or portions thereof) beginning after the
Closing Date. For purposes of this Section 5.1(a), any period beginning before
--------------
and ending after the Closing Date shall be treated as two partial periods, one
ending on the Closing Date and the other beginning after the Closing Date;
provided, however, that Taxes (such as property Taxes) imposed on a periodic
- -------- -------
basis shall be allocated on a daily basis. Notwithstanding the preceding
sentence, if the transactions contemplated by this Agreement result in the
reassessment of the value of any of the Purchased Assets for property Tax
purposes, or the imposition of any property Taxes on such Purchased Assets at a
rate which is different than the rate that would have been imposed if such
transactions had not occurred, then (y) the portion of such property Taxes for
the portion of the period ending on the Closing Date shall be determined on a
daily basis, using the assessed value and Tax rate that would have applied had
such transactions not occurred, and (z) the portion of such property Taxes for
the portion of such period beginning after the Closing Date shall be the total
property Taxes for the period minus the amount described in clause (y) of this
sentence.
(b) Notwithstanding Section 5.1(a), any sales, use or other transfer
--------------
Taxes payable by reason of transfer and conveyance of the Purchased Assets
hereunder and any documentary stamp or
21
<PAGE>
transfer Taxes payable by reason of the real estate or interests therein
included in the Purchased Assets shall be split equally between Buyer and
Seller. All fees relating to any filing with any governmental or regulatory
body required for transfer and conveyance of the Purchased Assets hereunder
shall be split equally between Buyer and Seller.
(c) Seller or Buyer, as the case may be, shall provide reimbursement
for any Tax paid by one party all or a portion of which is the responsibility of
the other party in accordance with the terms of this Section 5.1. Within a
-----------
reasonable time prior to the payment of any said Tax, the party paying such Tax
shall give notice to the other party of the Tax payable and the portion which is
the liability of each party, although failure to do so will not relieve the
other party from its liability.
(d) Each party shall promptly notify the other in writing upon
receipt by such party or any of its Affiliates of notice of any pending or
threatened federal, state, local or foreign Tax audits, examinations or
assessments which may materially affect the Tax liabilities for which the other
party would be required to indemnify such party pursuant to Section 5.1. The
-----------
party that would be responsible for the relevant Taxes under Section 5.1(a)
--------------
shall have the sole right to control any Tax audit or administrative or court
proceeding, and to employ counsel of its choice at its expense. In the case of
a taxable period beginning before and ending after the Closing Date, Seller
shall be entitled to participate at its expense in any Tax audit or
administrative or court proceeding relating in whole or in part to Taxes
attributable to the portion of such period ending on the Closing Date and, with
the written consent of Buyer, and at Seller's sole expense, may assume the
entire control of such audit or proceeding. Neither party nor any of its
Affiliates may settle any Tax claim for any taxable year or period ending at or
before the Closing Date (or for the portion of any taxable year or period ending
on the Closing Date) which may be the subject of indemnification by the other
party under Section 5.1(a) without the prior written consent of the other party.
-------------
(e) Any payments made pursuant to this Section 5.1 shall be treated
-----------
for income tax purposes by Buyer and Seller as an adjustment to the Purchase
Price.
5.2. AUDIT OF FINANCIAL STATEMENTS OF STATION. Seller shall
----------------------------------------
cooperate and use its reasonable best efforts to cause ARS and each of Seller's
and ARS' independent accountants to cooperate with Buyer, at Buyer's expense, in
order to enable Buyer to have its independent accountants prepare audited
financial statements for the Station. Without limiting the generality of the
foregoing, Seller agrees that it will (i) consent to the use of such audited
financial statements in any registration statement or other document filed by
Buyer (or any of its subsidiaries) under the Securities Act of 1933, as
22
<PAGE>
amended, or the Securities Exchange Act of 1934, as amended, and (ii) execute
and deliver, and cause its partners and officers to execute and deliver, such
"representation" letters as are customarily delivered in connection with audits
and as Buyer's independent accountants may reasonably request under the
circumstances.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
--------------------------------------------
The obligations of Buyer to effect the Closing in accordance with this
Agreement shall, at the option of Buyer, be subject to the satisfaction, on or
prior to the Closing Date, of the following conditions:
6.1. NO MISREPRESENTATION OR BREACH OF COVENANTS AND WARRANTIES.
----------------------------------------------------------
There shall have been no material breach by Seller in the performance of any of
its covenants and agreements herein; each of the representations and warranties
of Seller contained or referred to herein shall be true and correct in all
material respects on the Closing Date as though made on the Closing Date (except
to the extent that they expressly speak as of a specific date or time other than
the Closing Date, in which case they need only have been true and correct in all
material respects as of such specified date or time), except to the extent any
inaccuracy or breach results from any transaction specifically permitted by this
Agreement, any transaction expressly consented to in writing by Buyer or any
transaction permitted by Section 4.4; and there shall have been delivered to
-----------
Buyer a certificate or certificates to such effect dated the Closing Date,
signed by and on behalf of Seller by the President or any Vice President of a
general partner of Seller.
6.2. OPINION OF COUNSEL FOR SELLER. Counsel for Seller shall have
-----------------------------
delivered to Buyer an opinion, dated the Closing Date, in form and substance
reasonably satisfactory to Buyer and its counsel.
6.3. PARTNERSHIP ACTION. Seller shall have taken all partnership
------------------
action necessary to approve the transactions contemplated by this Agreement.
6.4. NO RESTRAINT OR LITIGATION. Any applicable waiting period
--------------------------
under the Improvements Act shall have expired or have been terminated and no
injunction or restraining order shall have been issued by any court of competent
jurisdiction and be in effect which restrains or prohibits any material
transaction contemplated hereby.
6.5. FCC CONSENT. The FCC Consent shall have been granted, without
-----------
any condition or qualification which has a
23
<PAGE>
materially adverse effect on the operations and financial condition of the
Station (it being agreed that an EEO reporting obligation shall not constitute
such a condition or qualification), and shall have become a Final Order.
6.6. NECESSARY CONSENTS. Seller shall have received consents, in
------------------
form and substance reasonably satisfactory to Buyer, to the assignment to Buyer
of the Seller Agreements specified in Schedule 6.6.
------------
6.7. NO MATERIAL ADVERSE CHANGE. Between the date hereof and the
--------------------------
Closing Date, there shall have been no material adverse change in the Purchased
Assets or the Station.
6.8. FIRPTA CERTIFICATE. There shall have delivered to Buyer a
------------------
certificate to the effect that Seller is not a "foreign person" within the
meaning of Section 1445 of the Code, dated the Closing Date signed by and on
behalf of Seller by the President or any Vice President of a general partner of
Seller.
6.9. ARS TRANSACTION. The purchase by Seller of the Station pursuant
---------------
to the ARS Agreement shall have been consummated.
6.10. COMPLETION OF AUDIT. The audit of the financial statements of
-------------------
the Station referred to in Section 5.3 shall have been completed.
-----------
6.11. THREE STATIONS TRANSACTION. The transactions contemplated by
--------------------------
the Three Stations Agreement shall have been consummated.
Notwithstanding the failure of any one or more of the foregoing
conditions, Buyer may proceed with the Closing without satisfaction, in whole or
in part, of any one or more of such conditions and without written waiver. To
the extent that at the Closing Seller delivers to Buyer a written notice
specifying in reasonable detail the failure of any of such conditions or the
breach by Seller of any of the representations or warranties of Seller herein,
and Buyer nevertheless proceeds with the Closing, Buyer shall be deemed to have
waived for all purposes any rights or remedies it may have against Seller by
reason of the failure of any such conditions or the breach of any such
representations or warranties to the extent described in such notice.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
---------------------------------------------
The obligations of Seller to effect the Closing in accordance with
this Agreement shall, at the option of Seller, be
24
<PAGE>
subject to the satisfaction on or prior to the Closing Date, of the following
conditions:
7.1. NO MISREPRESENTATION OR BREACH OF COVENANTS AND WARRANTIES.
----------------------------------------------------------
There shall have been no material breach by Buyer in the performance of any of
its covenants and agreements herein; each of the representations and warranties
of Buyer contained or referred to in this Agreement shall be true and correct on
the Closing Date as though made on the Closing Date, except to the extent any
inaccuracy or breach results from any transactions specifically permitted by
this Agreement, any transaction expressly consented to in writing by Seller or
any transaction contemplated by this Agreement; and there shall have been
delivered to Seller a certificate or certificates to such effect, dated the
Closing Date and signed on behalf of Buyer by its President or any Vice
President.
7.2. OPINION OF COUNSEL FOR BUYER. Counsel for Buyer shall have
----------------------------
delivered to Seller an opinion, dated the Closing Date, in form and substance
reasonably satisfactory to Seller and its counsel.
7.3. CORPORATE ACTION. The board of directors of Buyer shall have
----------------
taken all corporate action necessary to approve the transactions contemplated by
this Agreement.
7.4. NO RESTRAINT. Any applicable waiting period under the
------------
Improvements Act shall have expired or been terminated and no injunction or
restraining order shall have been issued by any court of competent jurisdiction
and be in effect which restrains or prohibits any material transaction
contemplated hereby.
7.5. FCC CONSENT. The FCC Consent shall have been granted, without
-----------
any condition or qualification which is materially adverse to Seller, and shall
have become a Final Order.
7.6. ARS TRANSACTION. The purchase by Seller of the Station
---------------
pursuant to the ARS Agreement shall have been consummated.
7.7. THREE STATIONS TRANSACTION. The transactions contemplated by
--------------------------
the Three Stations Agreement shall have been consummated.
Subject to compliance by Seller with its covenants contained in
Section 4.4(c)(v), notwithstanding the failure of any one or more of the
- -----------------
foregoing conditions, Seller may proceed with the Closing without satisfaction,
in whole or in part, of any one or more of such conditions and without written
waiver. To the extent that at the Closing Buyer delivers to Seller a written
notice specifying in reasonable detail the failure of any
25
<PAGE>
of such conditions or the breach by Buyer of any of the representations or
warranties of Buyer herein, and Seller nevertheless proceeds with the Closing,
Seller shall be deemed to have waived for all purposes any rights or remedies it
may have against Buyer by reason of the failure of any such conditions or the
breach of any such representations or warranties to the extent described in such
notice.
ARTICLE VIII
INDEMNIFICATION
---------------
8.1. INDEMNIFICATION BY SELLER. Seller agrees to indemnify and hold
-------------------------
harmless Buyer from and against any and all (a) Losses and (b) Expenses incurred
by Buyer in connection with or arising from:
(i) any breach by Seller of, or any other failure of Seller to
perform, any of its covenants, agreements or obligations in this Agreement
or in any Seller Ancillary Agreement;
(ii) any breach of any warranty or the inaccuracy of any
representation of Seller contained or referred to in this Agreement or any
certificate delivered by or on behalf of Seller pursuant hereto; or
(iii) the failure of Seller to perform any of the Excluded
Liabilities.
8.2. INDEMNIFICATION BY BUYER. Buyer agrees to indemnify and hold
------------------------
harmless Seller from and against any and all Losses and Expenses incurred by
Seller in connection with or arising from:
(i) any breach by Buyer of, or other failure of Buyer to perform, any
of its covenants, agreements or obligations in this Agreement or any Buyer
Ancillary Agreement;
(ii) any breach of any warranty or the inaccuracy of any
representation of Buyer contained or referred to in this Agreement or in
any certificate delivered by or on behalf of Buyer pursuant hereto; or
(iii) the failure of Buyer to perform any of the Assumed Liabilities.
8.3. LIMITATIONS OF INDEMNIFICATION OBLIGATIONS. Anything contained
------------------------------------------
in this Agreement to the contrary notwithstanding:
26
<PAGE>
(a) no amount shall be payable by an indemnifying party with respect
to any claim by an indemnified party for any Loss or Expense incurred in
connection with, resulting from or arising out of the breach of any warranty or
the inaccuracy of any representation contained in this Agreement if the
indemnifying party is first notified of such claim pursuant to Section 8.4 on
-----------
or after the first anniversary of the Closing Date (except with respect to (i)
the representation made in Section 2.6 as to which the indemnifying party must
-----------
be notified by the sixth anniversary of the Closing Date and (ii) the
representation made in Section 2.15 as to which no time limitation shall apply);
------------
provided, however, that if the indemnifying party is first notified of such a
- -------- -------
claim prior to the applicable notice period, such claim may continue to be
maintained until the final determination of such claim;
(b) the aggregate amount required to be paid by Seller pursuant to
Section 8.1 shall not, under any circumstances, exceed the Purchase Price;
- -----------
(c) an indemnifying party shall not be required to provide
indemnification hereunder until the aggregate amount of Losses and Expenses
incurred by the other party exceeds $250,000, at which point the indemnifying
party shall be required to provide indemnification for all Losses and Expenses,
including the first $250,000 of such Losses and Expenses, up to the maximum
amount set forth in Section 8.3(b); provided, that indemnification provided in
-------------- --------
respect of failures described in Section 8.2(iii) shall be required without
----------------
regard to this Section 8.3(c);
--------------
(d) Buyer shall be obligated to prosecute diligently and in good
faith any claim for any Loss or Expense with any applicable insurer prior to
collecting any indemnification payment under this Article VIII, and shall only
------------
be indemnified under this Article VIII to the extent that Buyer's Loss or
------------
Expense exceeds the proceeds received by Buyer in respect of any such claim;
(e) in calculating the amount of any Loss or Expense there shall be
deducted the amount of any Tax benefit to the indemnified party (or any of its
Affiliates) with respect to such Loss or Expense (after giving effect to the Tax
effect of receipt of the indemnification payments);
(f) in any case where an indemnified party recovers from third
parties any amount in respect of a matter with respect to which an indemnifying
party has indemnified it pursuant to this Article VIII, such indemnified party
------------
shall promptly pay over to the indemnifying party the amount so recovered (after
deducting therefrom the full amount of the expenses incurred by it in procuring
such recovery), but not in excess of the sum of (i) any amount previously so
paid by the indemnifying party to or
27
<PAGE>
on behalf of the indemnified party in respect of such matter and (ii) any amount
expended by the indemnifying party in pursuing or defending any claim arising
out of such matter;
(g) no party hereto shall be indemnified for special, exemplary or
consequential damages, including, without limitation, loss of future profit or
future revenue or interference with operations; and
(h) Any payment by Buyer or Seller under this Section 8.3 will be an
-----------
adjustment for income tax purposes to the Purchase Price.
8.4. NOTICE OF CLAIMS. (a) A party seeking indemnification
----------------
hereunder shall give to the indemnifying party a notice describing in reasonable
detail the facts giving rise to any claim for indemnification hereunder and
shall include in such notice (if then known) the amount or the method of
computation of the amount of such claim, and a reference to the provision of
this Agreement or any other agreement, document or instrument executed hereunder
or in connection herewith upon which such claim is based; provided, that a
--------
notice in respect of any action at law or suit in equity by or against a third
Person as to which indemnification will be sought shall be given promptly after
the action or suit is commenced.
(b) The amount to which an indemnified party shall be entitled under
this Article VIII shall be determined: (i) by written agreement between Seller
------------
and Buyer, (ii) by a final judgment or decree of any court of competent
jurisdiction or (iii) by any other means to which Seller and Buyer shall agree.
The judgment or decree of a court shall be deemed final when the time for
appeal, if any, shall have expired and no appeal shall have been taken or when
all appeals taken have been finally determined. The indemnified party shall have
the burden of proof in establishing the amount of the Loss and Expense suffered
by it.
8.5. THIRD PARTY CLAIMS. (a) Subject to Section 8.5(b), the
------------------ --------------
indemnified party shall have the right to conduct and control, through counsel
of its choosing, the defense, compromise or settlement of any third Person
claim, action or suit against such indemnified party as to which indemnification
will be sought by such indemnified party from any party hereunder, and in any
such case the indemnifying party shall cooperate in connection therewith and
shall furnish such records, information and testimony and attend such
conferences, discovery proceedings, hearings, trials and appeals as may be
reasonably requested by the indemnified party in connection therewith; provided,
--------
that the indemnifying party may participate, through counsel chosen by it and at
its own expense, in the defense of any such claim, action or suit as to which
the indemnified party has so elected to conduct and control the defense thereof;
and provided, further, that the indemnified party shall not, without the written
-------- -------
consent
28
<PAGE>
of the indemnifying party (which written consent shall not be unreasonably
withheld), pay, compromise or settle any such claim, action or suit, except that
no such consent shall be required if, following a written request from the
indemnified party, the indemnifying party shall fail, within 14 days after the
making of such request, to acknowledge and agree in writing that, if such claim,
action or suit shall be adversely determined, such indemnifying party has an
obligation to provide indemnification hereunder to such indemnified party.
Notwithstanding the foregoing, the indemnified party shall have the right to
pay, settle or compromise any such claim, action or suit, provided that in such
--------
event the indemnified party shall waive any right to indemnity therefor
hereunder.
(b) If any third Person claim, action or suit against any indemnified
party is solely for money damages or, where Seller is the indemnifying party,
will have no continuing effect or any material adverse impact on the Station or
the Purchased Assets, then the indemnifying party shall have the right to
conduct and control, through counsel of its choosing and at its expense, the
defense, compromise or settlement of any such third Person claim, action or suit
against the indemnified party as to which indemnification will be sought from
the indemnifying party if the indemnifying party has acknowledged and agreed in
writing that, if the same is adversely determined, the indemnifying party has an
obligation to provide indemnification to the indemnified party in respect
thereof, and in any such case the indemnified party shall cooperate in
connection therewith and shall furnish such records, information and testimony
and attend such conferences, discovery proceedings, hearings, trials and appeals
as may be reasonably requested by the indemnifying party in connection
therewith; provided, that the indemnified party may participate, through counsel
--------
chosen by it and at its own expense, in the defense of any such claim, action or
suit as to which the indemnifying party has so elected to conduct and control
the defense thereof. Notwithstanding the foregoing, the indemnified party shall
have the right to pay, settle or compromise any such claim, action or suit,
provided that in such event the indemnified party shall waive any right to
- --------
indemnification therefor hereunder.
(c) If there are any conflicts between the provisions of this Section
-------
8.5 and Section 5.1(d), the provisions of Section 5.1(d) shall control with
- --- -------------- --------------
respect to Tax contests.
8.6. EXCLUSIVE REMEDY. Any other provision of this Agreement to the
----------------
contrary notwithstanding, from and after the Closing, the sole and exclusive
liability and responsibility of Seller to Buyer, or of Buyer to Seller, under or
in connection with this Agreement or the transactions contemplated hereby
(including, without limitation, for any breach or inaccuracy of any
representation or warranty or for any breach of any covenant or for any other
reason), and the sole and exclusive remedy of
29
<PAGE>
Buyer and Seller vis-a-vis each other with respect to any of the foregoing,
---------
shall be as set forth in this Article VIII; provided, however, that each party
------------ -------- -------
hereto shall retain all non-monetary equitable remedies available to it in
respect of any breach by any other party of any covenant or other agreement of
such other party contained in or made pursuant to this Agreement and required to
be performed after the Closing Date. To the extent that a party hereto has any
Loss or Expense for which it may assert against the other party hereto any other
right to indemnification, contribution or recovery (whether under this
Agreement, under common law or any statute or otherwise), such party with such
Loss or Expense hereby waives, releases and agrees not to assert such right.
ARTICLE IX
TERMINATION
9.1. TERMINATION. (a) Notwithstanding anything contained in this
-----------
Agreement to the contrary, this Agreement may be terminated at any time prior to
the Closing: (i) by Buyer in the event of a material breach by Seller of any of
its agreements, representations or warranties contained in this Agreement or the
Three Stations Agreement and the failure of Seller to cure such breach within 14
days after receipt of notice from Buyer requesting such to be cured or (ii) by
Seller in the event of a material breach by Buyer of any of its agreements,
representations or warranties contained in this Agreement or the Three Stations
Agreement and the failure of Buyer to cure such breach within 14 days after
receipt of notice from Seller requesting such to be cured, and at any time prior
to the Closing (A) by the mutual consent of Buyer and of Seller; (B) by Buyer or
Seller if the Closing shall not have occurred on or before June 30, 1997 (or
such later date as may be agreed to by Buyer and Seller); or (C) by Buyer or
Seller if any court of competent jurisdiction in the United States or any United
States governmental or regulatory body shall have issued an order, decree or
ruling or taken any other action permanently restraining, enjoining or otherwise
prohibiting the consummation of the transactions contemplated hereby or (D) by
Buyer or Seller if the ARS Agreement or the Three Stations Agreement is
terminated.
(b) In the event that this Agreement shall be terminated pursuant to
this Article IX, all further obligations of the parties under this Agreement
----------
(other than Sections 10.1, 10.2 and 10.10) shall be terminated without further
-------- ---- ---- -----
liability of any party to the other; provided, however, that if this Agreement
-------- -------
is terminated by either party because of a material breach by the other party of
any of its agreements, representations or warranties contained in this Agreement
and the failure of the breaching party to cure such breach as provided in
Section 9.1(a) or if this Agreement is terminated by Buyer because of a material
- ---------------
30
<PAGE>
breach by Seller of any of its agreements, representations or warranties
contained in the ARS Agreement and the failure of Seller to cure such breach as
provided in Section 7.1 of the ARS Agreement, nothing herein shall prohibit the
terminating party from recovering its actual damages as a result of such breach
and termination of this Agreement, except that the amount required to be paid by
the breaching party to the terminating party as damages for such breach shall
not, under any circumstances, exceed $5,000,000.
9.2. NOTICE OF TERMINATION. Any party desiring to terminate this
---------------------
Agreement pursuant to Section 9.1 shall give notice of such termination to the
-----------
other party to this Agreement.
ARTICLE X
GENERAL PROVISIONS
------------------
10.1. NO ANNOUNCEMENT. Neither Buyer nor Seller shall, without the
---------------
approval of the other, make any press release or other announcement concerning
the transactions contemplated by this Agreement, except as and to the extent
that any such party shall be so obligated by law or by the rules, regulations or
policies of any national securities exchange or association, in which case the
other party shall be advised and the parties shall use their best efforts to
cause a mutually agreeable release or announcement to be issued.
10.2. CONFIDENTIAL NATURE OF INFORMATION. Each party agrees that it
----------------------------------
will treat in confidence all documents, materials and other information which it
shall have obtained regarding the other party during the course of the
negotiations leading to the consummation of the transactions contemplated hereby
(whether obtained before or after the date of this Agreement), the investigation
provided for herein and the preparation of this Agree ment and other related
documents, and, in the event the transactions contemplated hereby shall not be
consummated, each party will return to the other party all copies of nonpublic
documents and materials which have been furnished in connection therewith. Such
documents, materials and information shall not be communicated to any third
Person (other than, in the case of Buyer, to its counsel, accountants, financial
advisors, lenders or the Station Purchaser and its counsel, accountants,
financial advisors or lenders, and in the case of the Seller, to its counsel,
accountants or financial advisors). The obligation of each party to treat such
documents, materials and other information in confidence shall not apply to any
information which (a) such party can demonstrate was already lawfully in its
possession prior to the disclosure thereof by the other party, (b) is known to
the public and did not become so known through any violation of a legal
obligation, (c) became known to the public through no fault of such party, (d)
such party is required
31
<PAGE>
to disclose any such information pursuant to judicial order or, in the opinion
of counsel, pursuant to applicable law (but only to the extent it must be so
disclosed), or (e) such party reasonably deems necessary to disclose to obtain
any of the consents or approvals contemplated hereby. Without limiting the
right of either party to pursue all other legal and equitable rights available
to it for violation of this Section 10.2 by the other party, it is agreed that
------------
other remedies cannot fully compensate the aggrieved party for such a violation
of this Section 10.2 and that the aggrieved party shall be entitled to
------------
injunctive relief to prevent a violation or continuing violation hereof.
10.3. GOVERNING LAW; SUBMISSION TO JURISDICTION. (a) This Agreement
-----------------------------------------
shall be governed by and construed in accordance with the internal laws (as
opposed to the conflict of laws provisions) of the State of Illinois.
(b) Buyer and Seller agree that all actions, suits or proceedings
arising out of or based upon this Agreement or the subject matter hereof shall
be brought and maintained exclusively in the federal and state courts of the
State of Illinois. Each of Buyer and Seller, by execution hereof, (i)
irrevocably submits to the jurisdiction of the federal and state courts in the
State of Illinois for the purpose of any such action, suit or proceeding and
(ii) hereby waives to the extent not prohibited by applicable law, and agrees
not to assert, by way of motion, as a defense or otherwise, in any such action,
suit or proceeding, any claim that it is not subject personally to the
jurisdiction of the above-named courts, that it is immune from extraterritorial
injunctive relief or other injunctive relief, that its property is exempt or
immune from attachment or execution, that any such action, suit or proceeding
may not be brought or maintained in one of the above-named courts, that any such
action, suit or proceeding brought or maintained in one of the above-named
courts should be dismissed on grounds of forum non conveniens, should be
----- --- ----------
transferred to any court other than one of the above-named courts, should be
stayed by virtue of the pendency of any other action, suit or proceeding in any
court other than one of the above-named courts, or that this Agreement or the
subject matter hereof may not be enforced in or by any of the above-named
courts. Each of Buyer and Seller hereby consents to service of process in any
such suit, action or proceeding in any manner permitted by the laws of the State
of Illinois, agrees that service of process by registered or certified mail,
return receipt requested, at the address specified in or pursuant to Section
-------
10.4, is reasonably calculated to give actual notice and waives and agrees not
- ----
to assert by way of motion, as a defense or otherwise, in any such action, suit
or proceeding any claim that service of process made in accordance with Section
-------
10.4 does not constitute good and sufficient service of process. The provisions
- ----
of this Section 10.3(b) shall not restrict the ability
---------------
32
<PAGE>
of Buyer or Seller to enforce in any court any judgment obtained in a federal or
state court of the State of Illinois.
10.4. NOTICES. All notices or other communications required or
-------
permitted hereunder shall be in writing and shall be deemed given or delivered
when delivered personally, by messenger or by private courier or 72 hours after
having been sent by registered or certified mail addressed as follows:
If to Seller, to:
Secret Communications Limited Partnership
312 Walnut Street, Suite 3350
Cincinnati, Ohio 45202
Attention: Frank E. Wood,
Chief Executive Officer
and
1200 Shermer Road, 4th Floor
Northbrook, Illinois 60062
Attention: Arthur J. Schiller,
Esq., General Counsel
with a copy to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Dennis V. Osimitz, Esq.
If to Buyer, to:
Evergreen Media Corporation of Los Angeles
40 Evergreen Media Corporation
433 Los Colinas Boulevard
Irving, Texas 75039
Attention: 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.
or to such other address as such party may indicate by a notice delivered to the
other parties hereto in accordance with this Section 10.4.
------------
33
<PAGE>
10.5. SUCCESSORS AND ASSIGNS. (a) The rights of either party under
----------------------
this Agreement shall not be assignable by such party hereto prior to the Closing
without the written consent of the other; provided, however, that (i) the rights
-------- -------
of Buyer hereunder may be assigned prior to Closing pursuant to Section 4.5
-----------
(including Buyer's right to indemnification under Article VIII and Buyer's
------------
rights under Section 10.17), without Buyer being released from any of its
-------------
obligations hereunder, (ii) the rights of Buyer hereunder may be assigned prior
to Closing, without the consent of Seller, to a wholly-owned subsidiary of
Buyer without Buyer being released from any of its obligations hereunder and
(iii) if Seller or Buyer subsequently determines to qualify the transfer of any
or all of the Purchased Assets as a like-kind exchange under Section 1031 of the
Code, such party shall be entitled to assign its rights (but not its
obligations) under this Agreement to a "qualified intermediary" (as defined in
Treas. Reg. (S) 1.1031 (k)-1(g)(4)). In the event described in clause (iii)
above, Buyer or Seller, as the case may be, agrees to (A) consent to and
acknowledge the assignment of this Agreement (or such portions thereof as the
other party shall determine) by the other party to such qualified intermediary,
(B) pay the Purchase Price directly to such qualified intermediary, (C) make
appropriate filings with the FCC and to amend any FCC filings theretofore made
and (D) otherwise cooperate with the other party in order to enable such party
to effect a like-kind exchange under Section 1031 of the Code. Following the
Closing, either party may assign any of its rights hereunder, but no such
assignment shall relieve it of its obligations hereunder.
(b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their successors and per mitted assigns. The successors
and permitted assigns hereunder shall include, without limitation, in the case
of Buyer, any permitted assignee as well as the successors in interest to such
permitted assignee (whether by merger, liquidation (including successive mergers
or liquidations) or otherwise). Nothing in this Agreement, expressed or
implied, is intended or shall be construed to confer upon any Person other than
the parties and successors and assigns permitted by this Section 10.5 any right,
------------
remedy or claim under or by reason of this Agreement.
10.6. ACCESS TO RECORDS AFTER CLOSING. For a period of six years
-------------------------------
after the Closing Date, Seller and its representatives shall have reasonable
access to all of the books and records relating to the Station transferred to
Buyer hereunder to the extent that such access may reasonably be required by
Seller in connection with matters relating to or affected by the operations of
the Station prior to the Closing Date. Such access shall be afforded by Buyer
upon receipt of reasonable advance notice and during normal business hours.
Seller shall be solely responsible for any costs or expenses incurred by it
pursuant to this Section 10.6. If Buyer shall desire to dispose of any of such
------------
books and records prior to the expiration of such six-year
34
<PAGE>
period, Buyer shall, prior to such disposition, give Seller a reasonable
opportunity, at Seller's expense, to segregate and remove such books and records
as Seller may select.
For a period of six years after the Closing Date, Buyer and its
representatives shall have reasonable access to all of the books and records
relating to the Station which Seller or any of its Affiliates may retain after
the Closing Date. Such access shall be afforded by Seller and its Affiliates
upon receipt of reasonable advance notice and during normal business hours.
Buyer shall be solely responsible for any costs and expenses incurred by it
pursuant to this Section 10.6. If Seller or any of its Affiliates shall desire
------------
to dispose of any of such books and records prior to the expiration of such six-
year period, Seller shall, prior to such disposition, give Buyer a reasonable
opportunity, at Buyer's expense, to segregate and remove such books and records
as Buyer may select.
10.7. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the Three
----------------------------
Stations Agreement and the Exhibits and Schedules referred to herein and therein
and the documents delivered pursuant hereto and thereto contain the entire
understanding of the parties hereto and thereto with regard to the subject
matter contained herein or therein, and supersede all prior agreements,
understandings or intents between or among any of the parties hereto. This
Agreement may not be amended, modified and supplemented except by a written
instruction signed by an authorized representative of each of the parties
hereto.
10.8. INTERPRETATION; DISCLOSURE SCHEDULES. Article titles and
------------------------------------
headings to sections herein are inserted for convenience of reference only and
are not intended to be a part of or to affect the meaning or interpretation of
this Agreement. The Schedules and Exhibits referred to herein shall be construed
with and as an integral part of this Agreement to the same extent as if they
were set forth verbatim herein. Disclosure of any fact or item in any Schedule
hereto referenced by a particular section in this Agreement shall be deemed to
have been disclosed with respect to every other section in this Agreement. The
specification of any dollar amount in the representations or warranties
contained in this Agreement or the inclusion of any specific item in any
Schedules hereto is not intended to imply that such amounts, or higher or lower
amounts, or the items so included or other items, are or are not material, and
neither party shall use the fact of the setting of such amounts or the inclusion
of any such item in any dispute or controversy between the parties as to whether
any obligation, item or matter not described herein or included in a Schedule is
or is not material for purposes of this Agreement.
10.9. WAIVERS. Any term or provision of this Agreement may be
-------
waived, or the time for its performance may be extended, by the party or
parties entitled to the benefit thereof.
35
<PAGE>
The failure of any party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the right of
any party thereafter to enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach.
10.10. EXPENSES. Except as herein provided, each party hereto will
--------
pay all of its own costs and expenses incident to its negotiation and
preparation of this Agreement and to its performance and compliance with all
agreements and conditions contained herein on its part to be performed or
complied with, including the fees, expenses and disbursements of its counsel and
accountants.
10.11. PARTIAL INVALIDITY. Wherever possible, each provision hereof
------------------
shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provisions of this Agreement, and this Agreement shall be construed as if
such invalid, illegal or unenforceable provision or provisions had never been
contained herein unless the deletion of such provision or provisions would
result in such a material change as to cause completion of the transactions
contemplated hereby to be unreasonable.
10.12. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
-------------------------
one or more counterparts, each of which shall be considered an original
instrument, but all of which shall be considered one and the same agreement, and
shall become binding when one or more counterparts have been signed by each of
the parties and delivered to each of Seller and Buyer.
10.13. DEFINITIONS. As used in this Agreement, the following terms
-----------
have the meanings specified or referred to in this Section 10.13:
-------------
"Affiliate" means, with respect to any Person, any other Person which
---------
directly or indirectly controls, is controlled by or is under common control
with such Person.
"Allocation Schedule" has the meaning specified in Section 10.14.
------------------- -------------
"ARS" has the meaning specified in the first recital to this
---
Agreement.
"ARS Agreement" has the meaning specified in the first recital to this
-------------
Agreement.
36
<PAGE>
"ARS Transaction" has the meaning specified in Section 2.1.
--------------- -----------
"Assumed Liabilities" has the meaning specified in Section 1.4.
------------------- -----------
"Balance Sheet Date" has the meaning specified in Section 2.4.
------------------ -----------
"Buyer" has the meaning specified in the first paragraph of this
-----
Agreement.
"Buyer Ancillary Agreements" has the meaning specified in Section 3.2.
-------------------------- -----------
"Closing" means the closing of the transfer of the Purchased Assets
-------
from Seller to Buyer and the assumption of the Assumed Liabilities by Buyer.
"Closing Date" has the meaning specified in Section 1.6(a).
------------ --------------
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Communications Act" means the Communications Act of 1934, as amended.
------------------
"Encumbrance" means any lien, claim, charge, security interest,
-----------
mortgage, pledge, easement, conditional sale or other title retention agreement,
defect in title, covenant or other restrictions of any kind.
"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 the Comprehensive Environmental
Response Compensation and Liability Act, the Resources Conservation and Recovery
Act, any other "Superfund" or "Superlien" law, the Toxic Substances Control Act,
the Hazardous Materials Transportation Act, their implementing regulations or
any other similar federal, state or local statutes or regulations.
"ERISA" has the meaning specified in Section 2.24.
----- ------------
"Event of Loss" has the meaning specified in Section 10.16.
------------- -------------
37
<PAGE>
"Excluded Assets" has the meaning specified in Section 1.2.
--------------- -----------
"Excluded Liabilities" has the meaning specified in Section 1.5.
-------------------- -----------
"Expenses" means any and all reasonable expenses incurred in
--------
connection with investigating, defending or asserting any claim, action, suit or
proceeding incident to any matter indemnified against hereunder (including,
without limitation, court filing fees, court costs, arbitration fees or costs,
witness fees, and reasonable fees and disbursements of legal counsel,
investigators, expert witnesses, accountants and other professionals).
"FCC" means the Federal Communications Commission.
---
"FCC Authorizations" means those Governmental Permits issued by the
------------------
FCC for the Station.
"FCC Consent" means action by the FCC granting its consent to the
-----------
assignment of the (a) FCC Authorizations as contemplated by this Agreement
pursuant to appropriate applications filed by the parties with the FCC and (b)
FCC authorizations as contemplated by the Three Stations Agreement relating to
WJLB-FM, WMXD-FM and WFLN-FM.
"Final Order" means the FCC Consent, (a) which has not been reversed,
-----------
stayed, enjoined, set aside, annulled or suspended, and (b) with respect to
which (i) no requests have been filed for administrative or judicial review,
reconsideration, appeal or stay and the time for filing any such requests, and
the time for the FCC to set aside the action on its own motion, has expired, or
(ii) in the event of review, reconsideration or appeal, the FCC's order has been
affirmed and become final by expiration of the time for further review,
reconsideration or appeal.
"Governmental Permits" has the meaning specified in Section 2.8.
-------------------- -----------
"Hazardous Materials" means substances defined as "hazardous
-------------------
substances," "hazardous materials," "hazardous wastes" or "toxic substances" in
the Comprehensive Environmental Response Compensation and Liability Act, the
Resource Conservation and Recovery Act or any analogous federal, state or local
laws, and shall specifically include, without limitation, petroleum (including
crude oil or any fraction thereof).
"Improvements Act" means the Hart-Scott-Rodino Antitrust Improvements
----------------
Act of 1976, as amended.
38
<PAGE>
"Knowledge of Seller" means the actual knowledge of Frank E. Wood,
-------------------
John R. Crabb and Arthur J. Schiller, after due inquiry of the appropriate
management level personnel of the Station.
"Leased Real Property" has the meaning specified in Section 2.9.
-------------------- -----------
"Losses" means any and all losses, costs, obligations, liabilities,
------
settlement payments, awards, judgments, fines, penalties, damages, expenses,
deficiencies or other charges.
"Marlin" has the meaning specified in Section 2.6.
------ -----------
"Permitted Encumbrances" means (a) liens for taxes and other
----------------------
governmental charges and assessments which are not yet due and payable, (b)
liens of landlords and liens of carriers, warehousemen, mechanics and
materialmen and other like liens arising in the ordinary course of business for
sums not yet due and payable and (c) other liens or imperfections on property
which are not material in amount or do not materially detract from the value of
or materially impair the existing use of the property affected by such lien or
imperfection.
"Person" means any person, employee, individual, corporation, limited
------
liability company, partnership, trust, or any other non-governmental entity or
any governmental or regulatory authority or body.
"Purchased Assets" has the meaning specified in Section 1.1.
---------------- -----------
"Purchase Price" has the meaning specified in Section 1.3.
-------------- -----------
"Release" means any release, spill, emission, leaking, pumping,
-------
injection, deposit, disposal discharge, dispersal, leaching or migration into
the indoor or outdoor environment or into or out of any property, including the
movement of Contaminants through or in the air, soil, surface water,
groundwater or property.
"Requirements of Law" means any federal, state or local law, rule or
-------------------
regulation, Governmental Permit or other binding determination of any
governmental or regulatory authority or body.
"Seller" has the meaning specified in the first paragraph of this
------
Agreement.
"Seller Ancillary Agreements" has the meaning specified in Section
--------------------------- -------
2.3.
- ---
39
<PAGE>
"Seller Agreements" has the meaning specified in Section 2.17.
----------------- ------------
"Station" has the meaning specified in first recital to this
-------
Agreement.
"Station Balance Sheet" has the meaning specified in Section 2.4.
--------------------- -----------
"Station Purchaser" has the meaning specified in Section 4.5.
----------------- -----------
"Tax" means any federal, state, local or foreign net income,
---
alternative or add-on minimum, gross income, gross receipts, property, sales,
use, transfer, gains, license, excise, employment, payroll, withholding or
minimum tax, or any other tax custom, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or any
penalty, addition to tax or additional amount imposed on Seller by any federal,
state, local, foreign or other governmental authority or regulatory body.
"Tax Return" means any return, report or similar statement of Seller
----------
required to be filed with respect to any Taxes (including any attached
schedules), including, without limitation, any information return, claim for
refund, amended return and declaration of estimated Tax.
"Three Stations Agreement" has the meaning specified in the third
------------------------
recital of this Agreement.
"WQRS TBA" has the meaning specified in Section 4.4(c)(v).
-------- -----------------
10.14. ALLOCATION OF PURCHASE PRICE. Within 30 days following the
----------------------------
Closing, Buyer and Seller shall use their respective best efforts to negotiate
and draft a schedule (the "Allocation Schedule") allocating the Purchase Price
-------------------
(including, for purposes of this Section 10.14, any other consideration paid to
-------------
Seller, including the Assumed Liabilities) among the Station and the Purchased
Assets. The Allocation Schedule shall be reasonable and shall be prepared in
accordance with Section 1060 of the Code and the regulations thereunder. Buyer
and Seller each agrees that promptly upon receiving said Allocation Schedule it
shall return an executed copy thereof to the other party. Buyer and Seller each
agrees to file Internal Revenue Service Form 8594, and all federal, state, local
and foreign Tax Returns, in accordance with the Allocation Schedule. Buyer and
Seller each agrees to provide the other promptly with any other information
required to complete Form 8594. Notwithstanding the foregoing, if Buyer and
Seller are unable to agree on an Allocation Schedule each party shall be
entitled to take its own
40
<PAGE>
position on Form 8594 and such Tax Returns as to the allocation of the Purchase
Price.
10.15. SPECIFIC PERFORMANCE; OTHER RIGHTS AND REMEDIES. Subject to
-----------------------------------------------
Section 8.6, each party agrees that each party shall, in addition to such other
- -----------
remedies as may be available to it at law, be entitled to injunctive relief and
to enforce its rights by an action for specific performance to the extent
permitted by applicable Requirements of Law. Each party hereby waives any
requirement for security or the posting of any bond or other surety in
connection with any temporary or permanent award of injunctive, mandatory or
other equitable relief.
10.16. RISK OF LOSS. The risk of loss or damage to any of the
------------
Purchased Assets shall be on Seller prior to the Closing Date and thereafter
shall be on Buyer. If any of the Purchased Assets is damaged or destroyed prior
to the Closing Date (any such event being referred to as an "Event of Loss"),
-------------
Seller, at its expense, shall use reasonable efforts to replace or repair the
item with comparable property of like value and quality as soon as practicable
before the Closing Date. If any Event of Loss shall materially affect the
operations of the Station and repair or replacement cannot be accomplished by
the scheduled Closing Date but can be accomplished within 60 days after that
date, the Closing Date shall be postponed for such 60-day period; if, however,
the repair or replacement cannot be accomplished within such 60-day period,
Buyer may elect by written notice to Seller within 20 days after Buyer has
received notice that any Event of Loss has occurred:
(a) To postpone the Closing until a date within 15 business days
after Seller gives written notice to Buyer that the Purchased Assets which are
the subject of the Event of Loss have been substantially restored to their
condition immediately prior to the Event of Loss, which date shall not be more
than 60 days beyond the date specified in Section 9.1(a)(ii);
------------------
(b) To consummate the Closing on the scheduled Closing Date and
accept all of the Purchased Assets as is, in which event Seller shall assign to
Buyer at the Closing all of its rights under any insurance policies and to all
insurance proceeds covering that Event of Loss, including property damage, loss
of income and continuing expenses (less amounts due to the Seller for repairs or
replacements of the property prior to the Closing); or
(c) To terminate this Agreement without liability on the part of
Seller or Buyer.
If the Closing Date is postponed beyond the time specified in Section
-------
9.1(a)(ii), the parties shall amend their
- ----------
41
<PAGE>
application to the FCC to request an extension of the date of Closing.
10.17. ASSIGNMENT OF RIGHTS UNDER ARS AGREEMENT. Seller shall use its
----------------------------------------
reasonable best efforts to obtain the written consent of ARS to the assignment
to Buyer or, at Buyer's option, the Station Purchaser, on or immediately after
the Closing Date, of its rights arising under Article 8 of the ARS Agreement
with respect to the Station and its right to indemnification under the WQRS TBA
and, after such assignment has been consummated, shall take all actions
reasonably requested by Buyer to enforce any of such rights with respect to the
Station for the benefit of Buyer (it being the intent of the parties that
pursuant to this provision Seller shall transfer to Buyer to the maximum extent
possible the benefits of all representations and warranties and covenants of ARS
contained in the ARS Agreement). If Seller is unable to obtain the consent of
ARS to the assignment of the rights arising under Article 8 of the ARS Agreement
or Seller's right to indemnification under the WQRS TBA, Seller shall, upon the
request of Buyer, proceed diligently to exercise Seller's right to
indemnification under the ARS Agreement or the WQRS TBA with respect to the
Station and Buyer shall be entitled to receive from Seller any amount actually
received by Seller with respect to such rights, less reasonable out of pocket
fees and expenses incurred by Seller in exercising such rights. Notwithstanding
the foregoing, Seller shall retain such rights against ARS under the ARS
Agreement and the WQRS TBA (to the extent such rights exist under such
agreements) as shall be necessary to recover from ARS with respect to any
liability for which Seller makes payment to Buyer pursuant to Seller's
indemnification obligation under this Agreement.
42
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
SECRET COMMUNICATIONS LIMITED
PARTNERSHIP
By: Broadcast Alchemy, L.P.,
a General Partner
By: Lane Broadcasting, Inc.
Its: General Partner
By: ___________________________________
Its: __________________________________
EVERGREEN MEDIA CORPORATION
OF LOS ANGELES
By: ___________________________________
Its: __________________________________
43
<PAGE>
EXHIBIT 2.24
ASSET PURCHASE AGREEMENT
DATED AS OF AUGUST 12, 1996
BETWEEN
SECRET COMMUNICATIONS LIMITED PARTNERSHIP
AND
EVERGREEN MEDIA CORPORATION
OF LOS ANGELES
<PAGE>
ARTICLE I
PURCHASE AND SALE OF PURCHASED ASSETS............................ 1
1.1. Purchase and Sale of Purchased Assets..................... 1
1.2. Excluded Assets........................................... 3
1.3. Purchase Price............................................ 4
1.4. Assumption of Liabilities................................. 4
1.5. Excluded Liabilities...................................... 4
1.6. Closing Date; Deliveries.................................. 5
1.7. Further Assurances........................................ 5
1.8. Closing of WFLN-FM Transaction............................ 6
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER......................... 7
2.1. Organization of Seller.................................... 7
2.2. Subsidiaries and Investments.............................. 7
2.3. Authority of Seller....................................... 7
2.4. Financial Statements...................................... 8
2.5. Operations Since Balance Sheet Date....................... 9
2.6. Taxes..................................................... 10
2.7. Availability of Assets.................................... 10
2.8. Governmental Permits...................................... 11
2.9. Real Property............................................. 12
2.10. Real Property Leases...................................... 13
2.11. Condemnation.............................................. 13
2.12. Personal Property......................................... 14
2.13. Personal Property Leases.................................. 14
2.14. Intellectual Property..................................... 14
2.15. Title to Purchased Assets................................. 15
2.16. Contracts................................................. 15
2.17. Status of Contracts....................................... 16
2.18. No Violation, Litigation or Regulatory Action............. 17
2.19. Hazardous Materials....................................... 17
2.20. Finder.................................................... 18
2.21. No Interference........................................... 18
2.22. Foreign Investment in Real Property Tax Act............... 18
2.23. Bankruptcy................................................ 18
2.24. Employee Benefit Plans.................................... 18
2.25. ARS Agreement............................................. 19
2.26. Full Disclosure........................................... 19
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER.......................... 20
3.1. Organization of Buyer..................................... 20
3.2. Authority of Buyer........................................ 20
3.3. Absence of Knowledge as to Certain Facts.................. 21
3.4. Financial Capability...................................... 21
3.5. No Finder................................................. 21
ii
<PAGE>
ARTICLE IV
ACTION PRIOR TO THE CLOSING DATE................................. 21
4.1. Investigation of the Stations by Buyer.................... 22
4.2. Preserve Accuracy of Representations and Warranties....... 22
4.3. FCC Consent; Improvements Act Approval; Other
Consents and Approvals................................... 22
4.4. Operations Prior to the Closing Date...................... 23
ARTICLE V
ADDITIONAL AGREEMENTS............................................ 25
5.1. Taxes; Sales, Use and Transfer Taxes;
Title Insurance.......................................... 25
5.2. Time Brokerage Agreements................................. 27
5.3. Audit of Financial Statements of Stations................. 28
5.4. WFLN-FM Tower Relocation.................................. 28
5.5. Covenant Not to Compete................................... 28
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER..................... 29
6.1. No Misrepresentation or Breach of Covenants and
Warranties............................................... 29
6.2. Opinion of Counsel for Seller............................. 29
6.3. Partnership Action........................................ 29
6.4. No Restraint or Litigation................................ 30
6.5. FCC Consent............................................... 30
6.6. Necessary Consents........................................ 30
6.7. No Material Adverse Change................................ 30
6.8. FIRPTA Certificate........................................ 30
6.9. ARS Transaction........................................... 30
6.10. Completion of Audit....................................... 30
6.11. WQRS-FM Transaction....................................... 30
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER.................... 31
7.1. No Misrepresentation or Breach of Covenants and
Warranties............................................... 31
7.2. Opinion of Counsel for Buyer.............................. 31
7.3. Corporate Action.......................................... 31
7.4. No Restraint.............................................. 31
7.5. FCC Consent............................................... 31
7.6. ARS Transaction........................................... 32
7.7. WQRS-FM Transaction....................................... 32
ARTICLE VIII
INDEMNIFICATION.................................................. 32
8.1. Indemnification by Seller................................. 32
8.2. Indemnification by Buyer.................................. 32
iii
<PAGE>
8.3. Limitations of Indemnification Obligations................ 33
8.4. Notice of Claims.......................................... 34
8.5. Third Party Claims........................................ 35
8.6. Exclusive Remedy.......................................... 36
ARTICLE IX
TERMINATION...................................................... 36
9.1. Termination............................................... 36
9.2. Notice of Termination..................................... 37
ARTICLE X
GENERAL PROVISIONS............................................... 38
10.1. No Announcement........................................... 38
10.2. Confidential Nature of Information........................ 38
10.3. Governing Law; Submission to Jurisdiction................. 39
10.4. Notices................................................... 39
10.5. Successors and Assigns.................................... 40
10.6. Access to Records after Closing........................... 41
10.7. Entire Agreement; Amendments.............................. 42
10.8. Interpretation; Disclosure Schedules...................... 42
10.9. Waivers................................................... 42
10.10. Expenses.................................................. 43
10.11. Partial Invalidity........................................ 43
10.12. Execution in Counterparts................................. 43
10.13. Definitions............................................... 43
10.14. Allocation of Purchase Price.............................. 47
10.15. Specific Performance; Other Rights and Remedies........... 48
10.16. Risk of Loss.............................................. 48
10.17. Assignment of Rights Under ARS Agreement.................. 49
iv
<PAGE>
EXHIBIT DESCRIPTION
- ------- -----------
A Undertaking and Assumption
B Bill of Sale and Assignment
C-1 WJLB-FM Time Brokerage Agreement
C-2 WMXD-FM Time Brokerage Agreement
SCHEDULE DESCRIPTION
- -------- -----------
1.2(k) -- Excluded Software
1.4 -- Assumed Liabilities
2.3 -- Conflicts; Consents of Seller
2.4(a)&(b)-- Financial Statements
2.5(a)&(b)-- Changes in Operations
2.7 -- Unavailable Assets
2.8 -- Governmental Permits
2.9 -- Real Property
2.10 -- Real Property Leases
2.12 -- Personal Property
2.13 -- Personal Property Leases
2.14 -- Intellectual Property
2.15 -- Title to Property
2.16 -- Contracts
2.17 -- Status of Contracts
2.18 -- Legal Proceedings
2.19 -- Environmental Matters
2.24 -- Employee Benefit Plans
3.2 -- Conflicts; Consents of Buyer
3.3 -- Absence of Knowledge of Certain Facts
4.4(b) -- Conduct of Business
6.6 -- Necessary Consents
v
<PAGE>
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of August 12,
---------
1996, between Secret Communications Limited Partnership, a Delaware limited
partnership ("Seller"), and Evergreen Media Corporation of Los Angeles, a
------
Delaware corporation ("Buyer").
-----
W I T N E S S E T H :
-------------------
WHEREAS, Seller is the licensee of and operates WJLB-FM and WMXD-FM in
Detroit, Michigan (the "Owned Stations") and, upon the consummation of the
--------------
transactions contemplated by the Asset Exchange Agreement (the "ARS Agreement")
-------------
dated as of May 30, 1996 by and between Seller and American Radio Systems
Corporation ("ARS"), Seller will become the licensee of and have the right to
---
operate WFLN-FM in Philadelphia, Pennsylvania (the "Purchased Station") (the
-----------------
Owned Stations and the Purchased Station being collectively referred to herein
as the "Stations"); and
--------
WHEREAS, pursuant to the ARS Agreement, Seller will become the
licensee of and have the right to operate WQRS-FM in Detroit, Michigan ("WQRS-
----
FM");
WHEREAS, simultaneously herewith, Buyer and Seller have entered into
an Asset Purchase Agreement (the "WQRS Agreement") providing for the sale of
--------------
substantially all of the assets, properties and business relating to WQRS-FM;
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to
purchase from Seller, substantially all of the assets, properties and business
relating to the Stations, all on the terms and subject to the conditions set
forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, it is hereby agreed between Seller and Buyer
as follows:
ARTICLE I
PURCHASE AND SALE OF PURCHASED ASSETS
-------------------------------------
1.1. PURCHASE AND SALE OF PURCHASED ASSETS. Upon the terms and
-------------------------------------
subject to the conditions of this Agreement, on the Closing Date, Seller shall
sell, transfer, assign, convey and deliver to Buyer, and Buyer shall purchase
from Seller, free and clear of all Encumbrances (except for Permitted
Encumbrances), all of the assets, properties and business (excepting only the
Excluded Assets) of every kind and description, wherever located, real, personal
or mixed, tangible or intangible, owned or held by Seller relating to the
Stations as the same shall exist on the
<PAGE>
Closing Date (herein collectively called the "Purchased Assets"), including,
----------------
without limitation, all right, title and interest of Seller in, to and under:
(a) The broadcast licenses for the Stations (including the right to
use the call letters "WJLB-FM", "WMXD-FM" and "WFLN-FM") issued by the FCC and
all other Governmental Permits listed in Schedule 2.8;
------------
(b) The Owned Real Property listed in Schedule 2.9;
------------
(c) The real property leases and leasehold improvements listed or
described in Schedule 2.10;
-------------
(d) All machinery, equipment (including computers and office
equipment), auxiliary and translator facilities, transmitting towers,
transmitters, broadcast equipment, antennae, inventory (including all records,
tapes, recordings, compact discs and music cassettes), vehicles, furniture and
other personal property of the Stations listed or referred to in Schedule 2.12;
-------------
(e) The personal property leases listed in Schedule 2.13;
-------------
(f) All trademarks, trade names, service marks and copyrights (and
all goodwill associated therewith), registered or unregistered, of Seller
relating to the Stations, and the applications for registration thereof and the
licenses relating to any of the foregoing listed in Schedule 2.14;
-------------
(g) The contracts, agreements or understandings listed or described
in Schedule 2.16;
-------------
(h) All advertising customer lists, mailing lists, processes, trade
secrets, know-how and other proprietary or confidential information used in or
relating to the Stations;
(i) All of Seller's rights, claims or causes of action against third
parties arising under warranties from manufacturers, vendors and others in
connection with the Purchased Assets;
(j) All jingles, slogans and promotional materials used in or
relating to the Stations; and
(k) All books and records (including all computer programs) of Seller
relating to the assets, business and operations of the Stations, including,
without limitation, all files, logs, programming information and studies and
news and advertising studies.
2
<PAGE>
1.2. EXCLUDED ASSETS. Notwithstanding the foregoing, the Purchased
---------------
Assets shall not include the following (herein referred to as the "Excluded
--------
Assets"):
- ------
(a) All cash and cash equivalents (including any marketable
securities or certificates of deposit) of Seller or ARS relating to the Stations
and all notes and accounts receivable or other evidences of indebtedness owed to
Seller or its Affiliates or ARS or its Affiliates relating to the Stations;
(b) All notes and accounts receivable or other evidences of
indebtedness owed to Seller by any of its Affiliates;
(c) All claims, rights and interests of Seller 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 Closing Date;
(d) Except as otherwise provided in Section 1.1(i), any of Seller's
--------------
rights, claims or causes of action against third parties relating to the assets,
properties, business or operations of the Stations arising out of transactions
occurring prior to the Closing Date;
(e) All bonds held, contracts or policies of insurance and prepaid
insurance with respect to such contracts or policies;
(f) All records prepared in connection with the sale of the Stations,
including bids received from others and analyses relating to the Stations and
the Purchased Assets;
(g) The partnership name of Secret;
(h) All records and documents relating to Excluded Assets or to
liabilities other than Assumed Liabilities;
(i) Seller's employee benefit agreements, plans or arrangements
maintained by Seller on behalf of persons employed by Seller;
(j) All rights, claims or causes of action against third Persons
relating to the assets, business or operation of the Stations which may arise in
connection with the discharge by Seller of the Excluded Liabilities;
(k) Software programs and other assets at Seller's principal
executive offices set forth on Schedule 1.2(k) used to provide certain financial
---------------
and accounting services for the Stations;
3
<PAGE>
(l) All rights of Seller under the ARS Agreement and all related
agreements not otherwise assigned to Buyer herein; and
(m) Any of Seller's rights under or pursuant to this Agreement or the
other agreements with Buyer contemplated hereby.
1.3. PURCHASE PRICE. The purchase price for the Purchased Assets
--------------
(the "Purchase Price") shall be equal to $205,750,000.
--------------
1.4. ASSUMPTION OF LIABILITIES. On the Closing Date, Buyer shall
-------------------------
deliver to Seller an undertaking and assumption, in the form of Exhibit A,
---------
pursuant to which Buyer shall assume and be obligated for, and shall agree to
pay, perform, defend and discharge in accordance with their terms, (a) all
liabilities and obligations of Seller arising after the Closing Date under (i)
the Seller Agreements, (ii) the leases, contracts and other agreements not
required by the terms of Section 2.16 to be listed in a Schedule to this
------------
Agreement and (iii) the leases, contracts and other agreements entered into by
Seller with respect to the Stations after the date hereof consistent with the
terms of this Agreement, except, in each case, to the extent such liabilities
and obligations have accrued prior to the Closing Date and (b) the obligations
set forth in Schedule 1.4. All of the foregoing liabilities and obligations to
------------
be assumed by Buyer hereunder (excluding any Excluded Liabilities) are referred
to herein as the "Assumed Liabilities."
-------------------
1.5. EXCLUDED LIABILITIES. Buyer shall not assume or be obligated
--------------------
to pay, perform or otherwise discharge any liability or obligation of Seller not
expressly assumed by Buyer pursuant to the undertaking and assumption referred
to in Section 1.4 (all such liabilities and obligations not being assumed being
-----------
herein called the "Excluded Liabilities") and, notwithstanding anything to the
--------------------
contrary in Section 1.4, none of the following shall be "Assumed Liabilities"
-----------
for purposes of this Agreement:
(i) any liabilities in respect of any Taxes of Seller for which
Seller is liable pursuant to Section 5.1(a);
--------------
(ii) any intercompany payables and other liabilities or obligations
of Seller to any of its Affiliates;
(iii) any costs and expenses incurred by Seller incident to its
negotiation and preparation of this Agreement and its performance and
compliance with the agreements and conditions contained herein;
(iv) any liabilities or obligations in respect of any Excluded
Assets; or
4
<PAGE>
(v) any liabilities arising from the operation of the Stations prior
to the Closing regardless of whether operated by Seller or any predecessor
owner of the Station.
1.6. CLOSING DATE; DELIVERIES. (a) Subject to Section 1.8, the
------------------------ -----------
Closing shall be consummated at 10:00 A.M., local time, on a date to be mutually
agreed upon by Buyer and Seller with not less than three weeks prior written
notice to each party, which date shall be on or after January 3, 1997, at the
offices of Sidley & Austin, One First National Plaza, Chicago, Illinois 60603 or
at such other place as shall be agreed upon by Buyer and Seller (the date and
time on which the Closing is actually held being hereinafter referred to as the
"Closing Date").
------------
(b) On the Closing Date, Seller shall deliver to Buyer (i) a bill of
sale and assignment, in the form of Exhibit B, of all of the Purchased Assets
---------
and (ii) all of the documents, instruments and opinions required to be delivered
by Seller pursuant to Article VI.
----------
(c) On the Closing Date, Buyer shall deliver to Seller (i) by bank
wire transfer of immediately available funds to an account number to be
designated by Seller in writing at least two business days prior to Closing an
amount equal to the Purchase Price and (ii) all of the documents, instruments
and opinions required to be delivered by Buyer pursuant to Section 1.4 and
-----------
Article VII.
- -----------
1.7. FURTHER ASSURANCES. On the Closing Date, Seller shall (a)
------------------
deliver to Buyer such other bills of sale, deeds, endorsements, assignments and
other good and sufficient instruments of conveyance and transfer as Buyer may
reasonably request or as may be otherwise reasonably necessary to vest in Buyer
all the right, title and interest of Seller in, to or under any or all of the
Purchased Assets and (b) take all steps as may be reasonably necessary to put
Buyer in actual possession and control of all the Purchased Assets. From time
to time following the Closing, Seller shall execute and deliver, or cause to be
executed and delivered, to Buyer such other instruments of conveyance and
transfer as Buyer may reasonably request or as may be otherwise necessary to
more effectively convey and transfer to, and vest in, Buyer and put Buyer in
possession of, any part of the Purchased Assets, and, in the case of licenses,
certificates, approvals, authorizations, agreements, contracts, leases,
easements and other commitments included in the Purchased Assets which cannot be
transferred or assigned effectively without the consent of third parties which
consent has not been obtained prior to the Closing, to cooperate with Buyer at
its reasonable request in endeavoring to obtain such consent.
5
<PAGE>
1.8. CLOSING OF WFLN-FM TRANSACTION. (a) If the FCC Consent with
------------------------------
respect to WFLN-FM becomes a Final Order prior to the time when the FCC Consents
relating to the other Stations become Final Orders and the other conditions to
closing of each party contained herein (other than those contained in Sections
--------
6.11 and 7.7), as they relate only to WFLN-FM, have been satisfied or waived, at
- ---- ---
Buyer's option the closing of the purchase and sale of the Purchased Assets
relating to WFLN-FM shall be consummated at 10:00 A.M., local time, at the
offices of Sidley & Austin, One First National Plaza, Chicago, Illinois 60603,
or at such other place as shall be agreed upon by Buyer and Seller, on the date
set forth in a written notice from Buyer to Seller, which date shall be not less
than three weeks after the receipt of such notice.
(b) At such closing, Seller shall deliver to Buyer (i) a bill of sale
and assignment, in the form of Exhibit B, of all of the Purchased Assets
---------
relating to WFLN-FM and (ii) all of the documents, instruments and opinions
required to be delivered by Seller pursuant to Article VI; provided, however,
---------- -------- -------
that such documents, instruments and opinions shall relate solely to the
purchase and sale of the Purchased Assets relating to WFLN-FM. At such closing,
Buyer shall deliver to Seller (i) by bank wire transfer of immediately available
funds to an account number to be designated by Seller in writing at least two
business days prior to such closing the amount of $37,750,000 and (ii) all of
the documents, instruments and opinions required to be delivered by Buyer
pursuant to Section 1.4 and Article VII; provided, however, that such documents,
----------- ----------- -------- -------
instruments and opinions shall relate solely to the purchase and sale of the
Purchased Assets relating to WFLN-FM.
(c) Upon the consummation of the closing contemplated by this Section
-------
1.8, and for purposes of such closing, with respect to WFLN-FM only, all
- ---
references herein to "Closing" and "Closing Date" shall refer to the
consummation of the purchase and sale of the Purchased Assets relating to WFLN-
FM and the date of such closing, respectively. Upon the consummation of the
closing contemplated by this Section 1.8, the "Purchase Price" to be paid by
-----------
Buyer at the Closing of the purchase and sale of the Purchased Assets relating
to WJLB-FM and WMXD-FM shall become $168,000,000.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, Seller represents and warrants
to Buyer and agrees as follows:
6
<PAGE>
2.1. ORGANIZATION OF SELLER. Seller is a limited partnership duly
----------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and is duly qualified and in good standing as a foreign limited
partnership in the States of Michigan and Pennsylvania. Seller has full
partnership power and authority, or will have full partnership power and
authority upon consummation of the transactions contemplated by the ARS
Agreement (the "ARS Transaction"), to own or lease and to operate and use the
---------------
Purchased Assets and to carry on the business of the Stations as now conducted.
2.2. SUBSIDIARIES AND INVESTMENTS. Seller does not, directly or
----------------------------
indirectly, own, of record or beneficially, any outstanding voting securities or
other equity interests in any corporation, partnership, joint venture or other
entity which is involved in or relates to the Stations.
2.3. AUTHORITY OF SELLER. Seller has the partnership power and
-------------------
authority to execute, deliver and perform, or will have the partnership power
and authority upon consummation of the ARS Transaction to perform, this
Agreement and all of the other agreements and instruments to be executed and
delivered by Seller to Buyer pursuant hereto (collectively, the "Seller
------
Ancillary Agreements").
- --------------------
The execution, delivery and performance of this Agreement and the
Seller Ancillary Agreements by Seller have been duly authorized and approved by
all necessary partnership action on behalf of Seller and its general partners.
This Agreement is, and each Seller Ancillary Agreement when executed and
delivered by Seller and the other parties thereto will be, a legal, valid and
binding agreement of Seller enforceable in accordance with its respective terms,
subject to bankruptcy, insolvency, reorganization, moratorium and similar laws
of general application relating to or affecting creditors' rights and general
equity principles.
Except as set forth in Schedule 2.3, neither the execution and
------------
delivery by Seller of this Agreement or any of the Seller Ancillary Agreements
or the consummation by Seller of any of the transactions contemplated hereby or
thereby nor compliance by Seller with or fulfillment by Seller of the terms,
conditions and provisions hereof or thereof will:
(a) result in a breach of the terms, conditions or provisions of, or
constitute a default, an event of default or an event creating rights of
acceleration, termination or cancellation or a loss of rights under, or result
in the creation or imposition of any Encumbrance upon any of the Purchased
Assets under, the partnership agreement of Seller, any Seller Agreement or any
judgment, order, award or decree to which Seller is a party or any of the
Purchased Assets is subject or by which
7
<PAGE>
Seller is bound or any Requirements of Law affecting Seller or the Purchased
Assets; or
(b) require the approval, consent, authorization or act of, or the
making by Seller of any declaration, filing or registration with, any Person,
except for such of the foregoing as are necessary pursuant to the Improvements
Act or the Communications Act.
2.4. FINANCIAL STATEMENTS. (a) Schedule 2.4(a) contains (i) the
-------------------- ---------------
unaudited balance sheets of the Owned Stations as of December 31, 1995 and the
related statements of income for the year then ended and (ii) the unaudited
balance sheets (the "Balance Sheet") of the Owned Stations as of June 30, 1996
-------------
(the "Balance Sheet Date") and the related statement of income for the six
------------------
months then ended. Except as set forth therein, such balance sheets and
statements of income have been prepared in accordance with generally accepted
accounting principles and present fairly the financial position and results of
operations of the Owned Stations as of their respective dates and for the
respective periods covered thereby subject to the absence of footnotes and
statements of cash flows and to normal year-end adjustments.
(b) Schedule 2.4(b) contains (i) the unaudited balance sheet of the
---------------
Purchased Station as of December 31, 1995 and the related statement of income
for the year then ended, in the form provided to Seller by ARS pursuant to the
ARS Agreement, and (ii) the unaudited balance sheet of the Purchased Station as
of June 30, 1996 (the "Purchased Station Balance Sheet") and the related
-------------------------------
statement of income for the six months then ended. To the knowledge of Seller,
except as set forth therein, the balance sheet and statement of income as of
December 31, 1995 and for the year then ended present fairly the financial
position and results of operations of the Purchased Station as of such date and
for the period covered thereby subject to the absence of footnotes. Except as
set forth therein, the balance sheet and statement of income as of June 30, 1996
and for the six months then ended present fairly the financial position and
results of operations of the Purchased Station as of such date and for the
period covered thereby subject to the absence of footnotes and a statement of
cash flows and to normal year-end adjustments.
2.5. OPERATIONS SINCE BALANCE SHEET DATE. (a) Except as set forth
-----------------------------------
in Schedule 2.5(a), during the period from the Balance Sheet Date to the date
---------------
hereof, inclusive, there has been no material adverse change in the financial
condition and the results of operations of the Owned Stations and, to the
knowledge of Seller, there has been no material adverse change in the financial
condition and the results of operations of the Purchased Station.
(b) Except as set forth in Schedule 2.5(b), since the Balance Sheet
--------------
Date, Seller has conducted the business of the
8
<PAGE>
Owned Stations and, to the knowledge of Seller, the business of the Purchased
Station has only been conducted in the ordinary course. Without limiting the
generality of the foregoing, since the Balance Sheet Date, except as set forth
in such Schedule, Seller has not, in respect of the Owned Stations and, to the
knowledge of Seller, the Purchased Station:
(i) sold, leased (as lessor), transferred or otherwise disposed of
(including any transfers from Seller to any of its Affiliates), or
mortgaged or pledged, or imposed or suffered to be imposed any Encumbrance
on, any of the assets reflected on the Balance Sheet or the Purchased
Station Balance Sheet or any assets acquired after the Balance Sheet Date
relating to the Stations, other than personal property having an aggregate
value of less than $50,000 sold or otherwise disposed of in the ordinary
course of the business of the Stations which would not reasonably be
expected to have a material adverse effect on the business or operations of
the Stations and except for Permitted Encumbrances;
(ii) created, incurred, or assumed, or agreed to create, incur, or assume,
any indebtedness for borrowed money (other than money borrowed or advances from
any of its Affiliates in the ordinary course of the business of the Stations) or
entered into (as lessee) any capitalized leases; or
(iii) granted or instituted any material increase in any rate of salary or
compensation of any employee of the Stations or any profit sharing, bonus,
incentive, deferred compensation, insurance, pension, retirement, medical,
hospital, disability, welfare or other employee benefit plan.
2.6. TAXES. (a) Seller has, in respect of the Owned Stations,
-----
either filed or obtained extensions for filing pursuant to applicable law all
Tax Returns due on or prior to the date of this Agreement and has paid or made
provision for the payment of all Taxes which have become due pursuant to such
Tax Returns or pursuant to any assessments which have become payable and which
are not being contested in good faith. All monies required to be withheld by
Seller from employees of the Owned Stations for income Taxes, social security
and other payroll Taxes have been collected or withheld, and either paid to the
respective governmental agencies, set aside in accounts for such purpose, or
accrued, reserved against and entered upon the books of Seller.
(b) In respect of the Purchased Station, to the knowledge of Seller,
either Seller, ARS or Marlin Broadcasting Company, Inc. ("Marlin") has filed or
------
obtained extensions for filing pursuant to applicable law all Tax Returns due on
or prior
9
<PAGE>
to the date of this Agreement and either Seller, ARS or Marlin has paid or made
provision for the payment of all Taxes which have become due pursuant to such
Tax Returns or pursuant to any assessments which have become payable and which
are not being contested in good faith. To the knowledge of Seller, monies
required to be withheld from employees of the Purchased Station for income
Taxes, social security and other payroll Taxes have been collected or withheld,
and either paid to the respective governmental agencies, set aside in accounts
of Seller, ARS or Marlin for such purpose, or accrued, reserved against and
entered upon the books of Seller, ARS or Marlin. To the knowledge of Seller, no
Taxing authority has asserted in writing against Seller, ARS or Marlin any
deficiency or claim for additional Taxes in respect of the Purchased Station.
2.7. AVAILABILITY OF ASSETS. Except as set forth in Schedule 2.7
---------------------- ------------
and except for the Excluded Assets, the Purchased Assets constitute all the
assets used in the conduct of the business of the Stations (including, without
limitation, all books, records, computers and computer programs and data
processing systems). All tangible Purchased Assets are in good repair and
operating condition, ordinary wear and tear excepted. Except as set forth in
Schedule 2.7, the Purchased Assets are sufficient to operate the Stations as
- ------------
they are now operated. ALL OF THE TANGIBLE PURCHASED ASSETS ARE SOLD TO BUYER
WITHOUT ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR INTENDED USE OR
OTHERWISE.
2.8. GOVERNMENTAL PERMITS. Seller owns, holds or possesses, or upon
--------------------
consummation of the ARS Transaction will own, hold or possess, the FCC
Authorizations and all other governmental licenses, franchises, permits,
privileges, immunities, approvals and other authorizations which are necessary
to entitle it to own or lease, operate and use the Purchased Assets and to carry
on and conduct the business of the Stations as currently conducted (herein
collectively called "Governmental Permits"), except for such Governmental
--------------------
Permits which the failure to so own, hold or possess would not have a material
adverse effect on the operations and financial condition of the Stations taken
as a whole. Schedule 2.8 sets forth a list and brief description of each such
------------
Governmental Permit held by Seller as of the date of this Agreement with respect
to the Owned Station and each such Governmental Permit disclosed to Seller by
ARS pursuant to the ARS Agreement or otherwise with respect to the Purchased
Station, except for such incidental licenses, permits and other authorizations
which would be readily obtainable by any qualified applicant without undue
burden in the event of any lapse, termination, cancellation or forfeiture
thereof. Schedule 2.8 includes a list of all FCC Authorizations with respect to
------------
the Owned Stations and, to the knowledge of Seller, all FCC Authorizations with
respect to the Purchased Station.
10
<PAGE>
Except as set forth in Schedule 2.8, (i) Seller has fulfilled and
------------
performed its obligations under each of such Governmental Permits, and no event
has occurred or condition or state of facts exists which constitutes or, after
notice or lapse of time or both, would constitute a breach or default under any
such Governmental Permit, (ii) no notice of cancellation, of default or of any
dispute concerning any Governmental Permit, or of any event, condition or state
of facts described in the pre ceding clause (i), has been received by Seller,
(iii) each of the Governmental Permits is valid, subsisting and in full force
and effect and, subject to the receipt of the FCC Consent and consummation of
the ARS Transaction, may be assigned and transferred to Buyer in accordance with
this Agreement and will continue in full force and effect thereafter, in each
case without (A) the occurrence of any breach, default or forfeiture of rights
thereunder or (B) the consent, approval, or act of, or the making of any filing
with, any governmental body, regulatory commission or other party (other than
the FCC as contemplated by Section 4.3); and (iv) the Stations are being
-----------
operated in accordance with the FCC Authorizations. Except as set forth in
Schedule 2.8, Seller is not aware of any reason why the FCC Authorizations would
- ------------
not be renewed in the ordinary course for a full term without material
qualifications or of any reason why any of the FCC Authorizations might be
revoked. No renewal of any FCC Authorization would constitute a major
environmental action under the rules of the FCC. There are no facts which,
under the Communications Act or the existing rules of the FCC, would disqualify
Seller from assigning the FCC Authorizations or from consummating the
transactions contemplated herein within the times contemplated herein. Seller
maintains appropriate public inspection files at the Owned Stations' studios,
and to the knowledge of Seller, appropriate public inspection files are
maintained at the Purchased Station's studio, in accordance with FCC rules.
2.9. REAL PROPERTY. Schedule 2.9 contains a brief description of
------------- ------------
each parcel of real property owned by Seller and used in or relating to the
Owned Stations (the "Owned Real Property") (showing the record title holder,
-------------------
location, and any indebtedness secured by a mortgage or other lien thereon) and
of each option, right or contract to purchase held by Seller to acquire any real
property for use in connection with the Owned Stations. Seller will not be
acquiring title to any real property, or any options to acquire title to real
property, upon consummation of the ARS Transaction. The Owned Real Property is
zoned for the purposes for which it is currently being used by Seller. Except
as set forth in Schedule 2.9, to the knowledge of Seller, there are no
------------
structural defects in the buildings, structures and improvements located on the
Owned Real Property. The roofs of such buildings are in good condition and
repair, and all plumbing equipment, heating, ventilating and air conditioning
equipment, electrical wiring, and water and sewage systems located on the Owned
Real Property are operating properly,
11
<PAGE>
ordinary wear and tear excepted and normal maintenance requirements excluded.
There are no encroachments upon the Owned Real Property by any buildings,
structures or improvements located on adjoining real estate. None of the
buildings, structures or improvements (including, without limitation, any guy
wires or guy anchors) constructed on the Owned Real Property encroach upon
adjoining real estate, and all such buildings, structures and improvements are
constructed in conformity with or are "grandfathered" with respect to all
"setback" lines, easement and other restrictions or rights of record, or that
have been established by any applicable building or safety code or zoning
ordinance. To the knowledge of Seller, any such "grandfathered" approvals shall
survive indefinitely the transfer of the Owned Real Property to Buyer and no
utility lines serving the Owned Real Property pass over the lands of others
except where appropriate easements have been obtained. The Owned Real Property,
together with all leases of real property set forth in Schedule 2.10 (the
-------------
"Leased Real Property"), are sufficient to operate the Stations as they are now
- ---------------------
operated.
2.10. REAL PROPERTY LEASES. Schedule 2.10 sets forth a list and
-------------------- -------------
brief description of each lease or similar agreement under which (i) Seller is
lessee of, or holds or operates, or upon the consummation of the ARS Transaction
will be lessee of, or hold or operate, any real property owned by any third
party and used in or relating to the Stations or (ii) Seller is the lessor of
any of the Owned Real Property. To the knowledge of Seller, the Leased Real
Property is zoned for the purposes for which it is currently being used by
Seller. To the knowledge of Seller, except as set forth in Schedule 2.10, there
-------------
are no structural defects in the buildings, structures and improvements located
on the Leased Real Property. To the knowledge of Seller, the roofs of such
buildings are in good condition and repair, and all plumbing equipment, heating,
ventilating and air conditioning equipment, electrical wiring, and water and
sewage systems located on the Leased Real Property are operating properly,
ordinary wear and tear excepted and normal maintenance requirements excluded.
To the knowledge of Seller, there are no encroachments upon the Leased Real
Property by any buildings, structures or improvements located on adjoining real
estate. To the knowledge of Seller, none of the buildings, structures or
improvements (including, without limitation, any guy wires or guy anchors)
constructed on the Leased Real Property encroach upon adjoining real estate,
and, to the knowledge of Seller, all such buildings, structures and improvements
are constructed in conformity with or are "grandfathered" with respect to all
"setback" lines, easements and other restrictions or rights of record, or that
have been established by any applicable building or safety code or zoning
ordinance. To the knowledge of Seller, any such "grandfathered" approvals shall
survive indefinitely the transfer of the Leased Real Property to Buyer and no
utility lines serving the Leased Real Property pass over the lands of others
except where appropriate easements have been obtained. To
12
<PAGE>
the knowledge of Seller, the Leased Real Property, together with any real
property owned by ARS relating to the Purchased Station, is sufficient to
operate the Purchased Station as now operated.
2.11. CONDEMNATION. As of the date of the Agreement, (a) neither the
------------
whole nor any part of any real property owned, leased, used or occupied by
Seller, or to be owned, leased or occupied by Seller upon consummation of the
ARS Transaction, in connection with the Stations is subject to any pending suit
for condemnation or other taking by any public authority and (b) to the
knowledge of Seller, no such condemnation or other taking is threatened.
2.12. PERSONAL PROPERTY. Schedule 2.12 contains (i) the existing
----------------- -------------
records as of March 31, 1996 of all machinery, equipment, vehicles, furniture
and other personal property owned by Seller having an original cost of $5,000 or
more and used in or relating to the business of the Owned Stations and (ii) the
list of material items of fixed assets and equipment of the Purchased Station
furnished to Seller by ARS as part of the ARS Agreement.
2.13. PERSONAL PROPERTY LEASES. Schedule 2.13 contains a list of
------------------------ -------------
each lease or other agreement or right, whether written or oral, under which
Seller is lessee of, or holds or operates any machinery, equipment, vehicle or
other tangible personal property owned by a third party and used in or relating
to the business of the Stations and which is not terminable by Seller without
penalty on 60 days' notice or less and which provides for annual rentals in
excess of $6,000.
2.14. INTELLECTUAL PROPERTY. Schedule 2.14 contains a list of: (i)
--------------------- -------------
all trademarks, service marks, trade names and copyrights related to the Owned
Stations and, to the knowledge, of Seller, all trademarks, service marks, trade
names and copyrights related to the Purchased Station, for which registrations
have been issued to Seller, in the case of the Owned Stations, or ARS or Marlin,
in the case of the Purchased Station, or applications for registrations have
been made by Seller, in the case of the Owned Stations, or ARS or Marlin, in the
case of the Purchased Station, and (ii) all licenses, agreements or other
arrangements under which Seller, in connection with the Stations, has the right,
or upon the consummation of the ARS Transaction will have the right, to use any
trademark, service mark, trade name or copyright (other than such as are
included in the Seller Agreements). No proceedings have been instituted, are
pending or, to the knowledge of Seller, are threatened which challenge the
validity of the ownership or use by Seller of any trademarks, service marks,
trade names or copyrights related to the Owned Stations and, to the knowledge of
Seller, no such proceedings have been instituted, are pending or are threatened
which challenge the validity of the ownership or right of use to be obtained by
Seller upon consummation of the ARS Transaction with
13
<PAGE>
respect to any trademarks, service marks, trade names or copyrights related to
the Purchased Station. Except as set forth in Schedule 2.14, Seller has not
-------------
licensed anyone to use any trademarks, service marks, trade names or copyrights
relating to the Stations, and to the knowledge of Seller, there has been no
infringement by any Person of any trademarks, service marks, trade names or
copyrights owned or used by it, or which it will own or have the right to use
upon consummation of the ARS Transaction, relating to the Stations. Except as
set forth in Schedule 2.14, to the knowledge of Seller, the operations of the
-------------
Stations do not infringe upon the trademarks, service marks, trade names or
copyrights of any other Person.
2.15. TITLE TO PURCHASED ASSETS. Except as set forth in Schedule
------------------------- --------
2.15, Seller owns all Owned Real Property, free and clear of all Encumbrances
- ----
except Permitted Encumbrances, and Seller has, or upon the consummation of the
ARS Transaction will have, good and marketable title to all of the other
tangible Purchased Assets, free and clear of all Encumbrances except for
Permitted Encumbrances. Upon delivery to Buyer on the Closing Date of the bill
of sale and assignment contemplated by Section 1.6(b), Seller will thereby
--------------
transfer to Buyer good and marketable title to such other tangible Purchased
Assets and all intellectual property relating to the Stations owned by Seller
listed in Schedule 2.14, subject to no Encumbrances, except for Permitted
-------------
Encumbrances.
2.16. CONTRACTS. Except as set forth in Schedule 2.16 or any other
--------- -------------
Schedule hereto, as of the date of this Agreement, Seller is not and, upon the
consummation of the ARS Transaction, will not be, with respect to the Stations,
a party to or bound by:
(a) Any contract for the purchase or sale of real property;
(b) Any contract for the purchase, rental or use of any radio
programming or programming services which is not terminable by Seller without
penalty on 60 days' notice or less, provides for performance over a period of
more than 90 days and which involves the payment after the date hereof of more
than $50,000;
(c) Any contract for the purchase of merchandise, supplies or
personal property or for the receipt of services (other than services referred
to in clause (b) above) which is not terminable by Seller on 60 days' notice or
less and involves the payment after the date hereof of more than $25,000;
(d) Any employment contract, consulting agreement or collective
bargaining agreement;
14
<PAGE>
(e) Any contract for the sale of broadcast time for advertising which
was not made in the ordinary course of the business of the Stations;
(f) Any guarantee by Seller of the obligations of customers,
suppliers, officers, directors, employees, Affiliates or others; or
(g) Any other contract which is material to the business of the Owned
Stations or the Purchased Station, as the case may be.
2.17. STATUS OF CONTRACTS. Except as set forth in Schedule 2.17 or
------------------- -------------
in any other Schedule hereto, each of the leases, contracts and other agreements
listed in Schedules 2.10, 2.13, 2.14 and 2.16 (the "Seller Agreements")
-------------- ---- ---- ---- -----------------
constitutes, or upon consummation of the ARS Transaction will constitute, a
valid and binding obligation of Seller and, to the knowledge of Seller, the
other parties thereto (subject to bankruptcy, insolvency, reorganization or
other laws relating to or affecting the enforcement of creditors' rights and
general equity principles) and is, or upon consummation of the ARS Transaction
will be, in full force and effect and (except as set forth in Schedule 2.3 and
------------
except for those Seller Agreements which by their terms will expire prior to the
Closing Date or will be otherwise terminated prior to the Closing Date in
accordance with the provisions thereof) may be transferred to Buyer pursuant to
this Agreement and will continue in full force and effect thereafter, in each
case without breaching the terms thereof or resulting in the forfeiture or
impairment of any rights thereunder and without the consent, approval or act of,
or the making of any filing with, any other party. With respect to the Seller
Agreements relating to the Owned Stations, Seller has fulfilled and performed
its obligations under such Seller Agreements, and Seller is not in, or, to the
knowledge of Seller, alleged to be in, breach or default under any such Seller
Agreement and, to the knowledge of Seller, no other party to any such Seller
Agreement is in breach or default thereunder, and to the knowledge of Seller, no
event has occurred and no condition or state of facts exists which, with the
passage of time or the giving of notice or both, would constitute such a default
or breach by Seller or by any such other party. With respect to the Seller
Agreements relating to the Purchased Station, (i) each of Seller and, to the
knowledge of Seller, ARS and Marlin has fulfilled and performed in all material
respects its respective obligations, if any, under each such Seller Agreement,
(ii) neither Seller nor, to the knowledge of Seller, ARS or Marlin is in, or
alleged to be in, material breach or material default under any such Seller
Agreement, (iii) to the knowledge of Seller, no other party to any such Seller
Agreement is in material breach nor material default thereunder, and (iv) no
event has occurred and no condition or state of facts exists which, with the
passage of time or giving of notice or both, would constitute such a default or
breach by Seller or, to
15
<PAGE>
the knowledge of Seller, ARS, Marlin or by any such other party. Seller has not
and, to the knowledge of Seller, neither ARS nor Marlin has granted any material
waiver or forbearance with respect to any of the Seller Agreements. Complete
and correct copies of each of the Seller Agreements have been made available to
Buyer by Seller.
2.18. NO VIOLATION, LITIGATION OR REGULATORY ACTION. Except as set
---------------------------------------------
forth in Schedule 2.18 or in any other Schedule hereto:
-------------
(a) Seller has complied with all material Requirements of Laws which
are applicable to the Purchased Assets or the business of the Stations;
(b) As of the date of this Agreement, there are no lawsuits, claims,
suits, proceedings or investigations pending against Seller or, to the knowledge
of Seller, threatened against Seller, in respect of the Stations or, to the
knowledge of Seller, pending or threatened against ARS or Marlin in respect of
the Purchased Station; and
(c) As of the date of this Agreement, there is no action, suit or
proceeding pending against Seller or, to the knowledge of Seller, threatened
against Seller which questions the legality or propriety of the transactions
contemplated by this Agreement.
2.19. HAZARDOUS MATERIALS. Except as permitted by or consistent with
-------------------
applicable Environmental Laws or as set forth in Schedule 2.19:
-------------
(a) Seller's use of the Owned Real Property and the Leased Real
Property relating to the Stations is in compliance with all Environmental Laws;
(b) Seller has never generated, transported, used, stored or disposed
of on any Owned Real Property or the Leased Real Property any Hazardous Material
and, to Seller's knowledge, there has never been any Hazardous Material
generated, transported, used, stored or disposed of on any Owned Real Property
or the Leased Real Property;
(c) no Hazardous Material has ever been spilled, released or disposed
of on, under or about any Owned Real Property or Leased Real Property by Seller
or, to Seller's knowledge, has ever come to be located in the soil or
groundwater of any Owned Real Property or Leased Real Property; and
(d) no underground storage tanks, or underground piping associated
with such tanks, are located on or under any Owned Real Property or, to the
knowledge of Seller, any Leased Real Property.
16
<PAGE>
Except as set forth in Schedule 2.19, Seller has never and, to the
-------------
knowledge of Seller, neither ARS nor Marlin has 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 the Owned Real Property or the Leased
Real Property.
2.20. FINDER. Neither Seller nor any party acting on its behalf has
------
paid or become obligated to pay any fee or commission to any broker, finder or
intermediary for or on account of the transactions contemplated by this
Agreement other than to Star Media Group, Inc., whose fees or commissions, to
the extent payable, shall be paid by or on behalf of Seller.
2.21. NO INTERFERENCE. To the knowledge of Seller, the Stations are
---------------
not causing interference in violation of FCC rules to the transmission of any
other broadcast station or communications facility and, since August 1, 1994
Seller has not received any complaints with respect thereto. To the knowledge
of Seller, no other broadcast station or communications facility is causing
interference in violation of FCC rules to the Stations' transmissions or the
public's reception of such transmissions.
2.22. FOREIGN INVESTMENT IN REAL PROPERTY TAX ACT. Seller is not a
-------------------------------------------
"foreign person" within the meaning of Section 1445 of the Code.
2.23. BANKRUPTCY. No insolvency proceedings of any character,
----------
including, without limitation, bankruptcy, receivership, reorganization,
composition or arrangement with creditors, voluntary or involuntary, of Seller,
are pending or, to the knowledge of Seller, threatened against Seller or its
general partners, and neither Seller nor either of its general partners 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.
2.24. EMPLOYEE BENEFIT PLANS. Except as set forth in Schedule 2.24,
---------------------- -------------
with respect to the employees of the Stations, there are no employee or retiree
benefit or compensation plans within the meaning 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 Seller is bound, or will be bound upon consummation of the ARS
Transaction, or that is or has been established or maintained or in respect of
which Seller has ever
17
<PAGE>
had an obligation to contribute, or will have an obligation to contribute upon
consummation of the ARS Transaction. Seller has neither incurred nor 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 Closing, remain a liability of the Stations 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 no event,
transaction or condition has occurred or exists which could result in any such
liability. Each plan, program, agreement, arrangement, trust or other funding
arrangement listed in Schedule 2.24 has been operated and administered in all
-------------
material respects in accordance with all Requirements of Law, including but not
limited to ERISA and the Code.
2.25. ARS AGREEMENT. Seller has entered into the ARS Agreement with
-------------
ARS pursuant to which Seller, upon the consummation of the transactions
contemplated by the ARS Agreement, will acquire the assets defined therein as
the "Philadelphia Assets" and will assume the liabilities of ARS with respect to
the ownership and operations of the Purchased Station other than the "Nonassumed
Obligations" of American (as defined therein) relating thereto. As indicated in
the ARS Agreement, ARS was acquiring the Purchased Station through the
acquisition of Marlin Broadcasting Company, Inc. ARS has informed Seller that
such acquisition was consummated on May 30, 1996. As contemplated by the ARS
Agreement, Seller and ARS have entered into a Time Brokerage Agreement dated as
of June 1, 1996 with respect to the Purchased Station. Complete copies of the
ARS Agreement and the Time Brokerage Agreement relating to the Purchased Station
have been made available to Buyer by Seller, and Seller has made available to
Buyer a copy of the Agreement and Plan of Merger dated as of March 15, 1996
among ARS, ARS Acquisition Company and Marlin in the form furnished to Seller by
ARS.
2.26. FULL DISCLOSURE. To the knowledge of Seller, neither this
---------------
Agreement nor any certificate delivered pursuant hereto 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 III
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
As an inducement to Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, Buyer hereby represents and
warrants to Seller and agrees as follows:
18
<PAGE>
3.1. ORGANIZATION OF BUYER. Buyer is a corporation duly organized,
---------------------
validly existing and in good standing under the laws of the State of Delaware.
Buyer has full corporate power and authority to own or lease and to operate and
use its properties and assets and to carry on its business as now conducted.
3.2. AUTHORITY OF BUYER. Buyer has the corporate power and
------------------
authority to execute, deliver and perform this Agreement and all of the other
agreements and instruments to be executed and delivered by Buyer pursuant hereto
(collectively, the "Buyer Ancillary Agreements").
--------------------------
The execution, delivery and performance of this Agreement and the
Buyer Ancillary Agreements by Buyer have been duly authorized and approved by
all necessary corporate action on behalf of Buyer. This Agreement is, and each
Buyer Ancillary Agreement when executed and delivered by Buyer and the other
parties thereto will be, the legal, valid and binding agreement of Buyer
enforceable in accordance with its respective terms, subject to bankruptcy,
insolvency, moratorium and similar laws of general application relating to or
affecting creditors' rights and general equity principles.
Except as set forth in Schedule 3.2, neither the execution and
------------
delivery of this Agreement or any Buyer Ancillary Agreement by Buyer or the
consummation by Buyer of any of the transactions contemplated hereby or thereby
nor compliance by Buyer with or fulfillment by Buyer of the terms, conditions
and provisions hereof or thereof will:
(a) result in a breach of the terms, conditions or provisions of, or
constitute a default, an event of default or an event creating rights of
acceleration, termination or cancellation or a loss of rights under, the charter
or By-laws of Buyer or any material agreement, judgment, order, award or decree
to which Buyer is a party or any of its properties is subject or by which Buyer
is bound or any Requirements of Law affecting Buyer; or
(b) require the approval, consent, authorization or act of, or the
making by Buyer of any declaration, filing or registration with, any Person,
except for such of the foregoing as are necessary pursuant to the Improvements
Act or the Communications Act.
3.3. ABSENCE OF KNOWLEDGE AS TO CERTAIN FACTS. Except as set forth
----------------------------------------
in Schedule 3.3, Buyer has no knowledge of any fact which could, under the
------------
Communications Act, the existing rules, regulations and practices of the FCC or
otherwise disqualify Buyer as an assignee of the FCC Authorizations or as the
owner and operator of the Stations or the Purchased Assets.
19
<PAGE>
3.4. FINANCIAL CAPABILITY. Buyer has or on the Closing Date will
--------------------
have sufficient financial capabilities to pay the Purchase Price in accordance
with this Agreement.
3.5. NO FINDER. Neither Buyer nor any party acting on its behalf
---------
has paid or become obligated to pay any fee or commission to any broker, finder
or intermediary for or on account of the transactions contemplated by this
Agreement.
ARTICLE IV
ACTION PRIOR TO THE CLOSING DATE
--------------------------------
The respective parties hereto covenant and agree to take the following
actions between the date hereof and the Closing Date:
4.1. INVESTIGATION OF THE STATIONS BY BUYER. From the date hereof
--------------------------------------
until the Closing Date, upon the request of Buyer, Seller shall afford, and
prior to the consummation of the ARS Transaction Seller will use its reasonable
efforts to cause ARS to afford, to the officers, employees and authorized
representatives of Buyer (including, without limitation, independent public
accountants and attorneys) reasonable access during normal business hours upon
reasonable advance notice to the offices, properties, employees and business and
financial records (including computer files, retrieval programs and similar
documentation) of the Stations to the extent Buyer shall reasonably deem
necessary or desirable and shall furnish to Buyer or its authorized
representatives such additional information concerning the Purchased Assets and
the Stations as shall be reasonably requested; provided, however, that Seller
-------- -------
shall not be required to violate any obligation of confidentiality to which it
is subject in discharging its obligations pursuant to this Section 4.1. Buyer
-----------
agrees that such investigation shall be conducted in such a manner as not to
interfere unreasonably with the operations of Seller. If in the course of any
investigation pursuant to this Section 4.1, Buyer's officers, employees or
-----------
authorized representatives discover any breach of any representation or warranty
contained in this Agreement, or any circumstance or condition that upon Closing
would constitute such a breach, Buyer covenants that it will promptly so inform
Seller.
4.2. PRESERVE ACCURACY OF REPRESENTATIONS AND WARRANTIES. From the
---------------------------------------------------
date hereof until the Closing Date, each of the parties hereto shall refrain
from taking any action which would render any representation or warranty
contained in Article II or III inaccurate as of the Closing Date. Each party
---------- ---
shall promptly notify the other of any action, suit or proceeding that shall be
20
<PAGE>
instituted or threatened against such party to restrain, prohibit or otherwise
challenge the legality of any transaction contemplated by this Agreement. Seller
shall promptly notify Buyer of any lawsuit, claim, proceeding or investigation
that may be threatened, brought, asserted or commenced against Seller which
would have been listed in Schedule 2.18 if such lawsuit, claim, proceeding or
-------------
investigation had arisen prior to the date hereof.
4.3. FCC CONSENT; IMPROVEMENTS ACT APPROVAL; OTHER CONSENTS AND
----------------------------------------------------------
APPROVALS. (a) Within 10 business days of the date hereof, Buyer and Seller
- ---------
shall file with the FCC applications requesting its consent to the assignment of
the FCC Authorizations (and any extensions or renewals thereof) from Seller to
Buyer. Buyer and Seller will cooperate in the preparation of such applications
and will diligently take, or cooperate in the taking of, all necessary,
desirable and proper steps, provide any additional information reasonably
required and otherwise use their reasonable best efforts to obtain promptly the
requested consent, approval and waiver of the FCC. Any fees assessed by the FCC
incident to the filing of such applications shall be split equally between Buyer
and Seller. Seller and Buyer shall each make available to the other, promptly
after the filing thereof, copies of all reports filed on or prior to the Closing
Date with the FCC by Seller or Buyer, as the case may be, in respect of the
Stations.
(b) As promptly as practicable after the date hereof, Buyer and
Seller shall file with the Federal Trade Commission and the Antitrust Division
of the Department of Justice the notifications and other information required to
be filed by such party under the Improvements Act, or any rules and regulations
promulgated thereunder, with respect to the transactions contemplated hereby.
Each of Buyer and Seller covenants to file as promptly as practicable such
additional information as may be requested to be filed by such party. Each of
Buyer and Seller warrants that all such filings by it, as of the date filed,
will be true and accurate and in accordance with the requirements of the
Improvements Act and any such rules and regulations. Each of Buyer and Seller
agrees to make available to the other such information as each of them may
reasonably request relative to its business, assets and property as may be
required by each of them to file any additional information requested by such
agencies under the Improvements Act and such rules and regulations. Each party
hereto shall promptly inform the other of any material communication from the
Federal Trade Commission, the Department of Justice or any other governmental
authority regarding any of the transactions contemplated hereby. Each party
hereto will advise the other promptly in respect of any understandings,
undertakings or agreements (oral or written) that such party proposes to make or
enter into with the Federal Trade Commission, the Department of Justice or any
other governmental authority in connection with the transactions contemplated
hereby. Buyer and
21
<PAGE>
Seller shall split equally the cost of any filing fees payable under the
Improvements Act in connection with the notifications and information described
in this Section 4.3(b).
--------------
(c) Buyer and Seller shall each use their reasonable best efforts
promptly to obtain all consents and amendments from parties to the Seller
Agreements and all consents, amendments or permits from governmental
authorities, which are required by the terms thereof or this Agreement for the
due and punctual consummation of the transactions contemplated by this
Agreement; provided, that neither Buyer nor Seller shall have any obligation to
--------
offer or pay any consideration in order to obtain any such consents or
amendments.
4.4. OPERATIONS PRIOR TO THE CLOSING DATE. (a) From the date hereof
------------------------------------
until the Closing Date, Seller shall operate and carry on the business of the
Owned Stations, and use its best efforts to cause the Purchased Station to be
operated and carried on, only in the ordinary course and substantially as
currently operated. Consistent with the foregoing, Seller shall keep and
maintain the Purchased Assets in good operating condition and repair and shall
use its reasonable efforts consistent with good business practice to preserve
the goodwill of the customers and others having business relations with the
Stations.
(b) Notwithstanding Section 4.4(a), except as expressly contemplated
--------------
by this Agreement, except as set forth in Schedule 4.4(b) or except with the
--------------
express prior written approval of Buyer, Seller shall not:
(i) make any material change in the business or the operations of the
Stations;
(ii) make any capital expenditure relating to the Stations, or enter
into any contract or commitment therefor, in excess of $50,000 in the
aggregate;
(iii) sell, lease, transfer or otherwise dispose of or mortgage or
pledge, or impose or suffer to be imposed any Encumbrance on, any of the
Purchased Assets, other than (A) minor amounts of personal property having
an aggregate value of less than $50,000 sold or otherwise disposed of in
the ordinary course of the business of the Stations which would not
reasonably be expected to have a material adverse effect on the business or
operations of the Stations, (B) minor amounts of personal property which
are replaced due to defect or obsolescence with personal property of
substantially the same nature and of equal or greater quality in the
ordinary course of the business of the Stations and (C) Permitted
Encumbrances; or
22
<PAGE>
(iv) enter into any agreement providing for annual payments by the
Stations in excess of $25,000.
(c) From the date hereof until the Closing Date, Seller shall:
(i) operate the Owned Stations, and use its reasonable best efforts to
cause the Purchased Station to be operated, in all material respects in
accordance with the FCC's rules and regulations and the FCC Authorizations
and shall not fail to prosecute with due diligence any pending application
to the FCC, including, without limitation, the renewal applications
relating to the FCC Authorizations for the Owned Stations, and shall not
cause or permit by any act, or failure to act, any of the FCC
Authorizations to expire, be surrendered, adversely modified, or otherwise
terminated, or the FCC to institute any proceeding for the suspension,
revocation or material adverse modification of any of the FCC
Authorizations;
(ii) maintain insurance policies on the Owned Stations and the related
Purchased Assets, and use its reasonable best efforts to cause insurance
policies to be maintained on the Purchased Station and the related
Purchased Assets, on terms and conditions and with insurers substantially
identical to or better than those in effect immediately prior to the date
hereof, in each case, except to the extent otherwise provided in the
Stations Time Brokerage Agreements;
(iii) if the broadcast transmissions of the Stations from their main
broadcast antennae at authorized power are interrupted or impaired, use its
reasonable best efforts to restore transmissions at full authorized power
as soon as reasonably possible; and
(iv) protect and defend the FCC Authorizations, broadcast coverage
area and signal integrity relating to each of the Owned Stations and use
its reasonable best efforts to cause the protection and defense of the FCC
Authorizations, broadcast coverage area and signal integrity relating to
the Purchased Station;
(v) timely file and prosecute the 1996 FCC renewal applications
relating to the Owned Stations;
(vi) make all capital expenditures contemplated by the capital budget
of each of the Owned Stations;
(vii) not modify, waive or amend any provision of or right under the
ARS Agreement or the Assumed Time
23
<PAGE>
Brokerage Agreement without the prior written consent of Buyer;
(viii) use its reasonable best efforts to consummate the ARS
Transaction and shall proceed diligently to exercise its rights with
respect to the Purchased Station; and
(ix) keep its books and accounts, records and files relating to the
Stations in the ordinary course of business and in a manner consistent with
past practice.
ARTICLE V
ADDITIONAL AGREEMENTS
---------------------
5.1. TAXES; SALES, USE AND TRANSFER TAXES; TITLE INSURANCE. (a)
-----------------------------------------------------
Seller shall be liable for and shall pay all Taxes (whether assessed or
unassessed) applicable to the Stations or the Purchased Assets, in each case
attributable to periods (or portions thereof) ending on or prior to the Closing
Date. Buyer shall be liable for and shall pay all Taxes (whether assessed or
unassessed) applicable to the Stations or the Purchased Assets, in each case
attributable to periods (or portions thereof) beginning after the Closing Date.
For purposes of this Section 5.1(a), any period beginning before and ending
--------------
after the Closing Date shall be treated as two partial periods, one ending on
the Closing Date and the other beginning after the Closing Date; provided,
--------
however, that Taxes (such as property Taxes) imposed on a periodic basis shall
- -------
be allocated on a daily basis. Notwithstanding the preceding sentence, if the
transactions contemplated by this Agreement result in the reassessment of the
value of any of the Purchased Assets for property Tax purposes, or the
imposition of any property Taxes on such Purchased Assets at a rate which is
different than the rate that would have been imposed if such transactions had
not occurred, then (y) the portion of such property Taxes for the portion of the
period ending on the Closing Date shall be determined on a daily basis, using
the assessed value and Tax rate that would have applied had such transactions
not occurred, and (z) the portion of such property Taxes for the portion of such
period beginning after the Closing Date shall be the total property Taxes for
the period minus the amount described in clause (y) of this sentence.
(b) Notwithstanding Section 5.1(a), any sales, use or other transfer
--------------
Taxes payable by reason of transfer and conveyance of the Purchased Assets
hereunder and any documentary stamp or transfer Taxes payable by reason of the
real estate or interests therein included in the Purchased Assets shall be split
equally between Buyer and Seller. The costs of any commitments for title
24
<PAGE>
insurance and surveys for the Owned Real Property shall be split equally between
Buyer and Seller. All fees relating to any filing with any governmental or
regulatory body required for transfer and conveyance of the Purchased Assets
hereunder shall be split equally between Buyer and Seller.
(c) Seller or Buyer, as the case may be, shall provide reimbursement
for any Tax paid by one party all or a portion of which is the responsibility of
the other party in accordance with the terms of this Section 5.1. Within a
-----------
reasonable time prior to the payment of any said Tax, the party paying such Tax
shall give notice to the other party of the Tax payable and the portion which is
the liability of each party, although failure to do so will not relieve the
other party from its liability hereunder.
(d) Each party shall promptly notify the other in writing upon
receipt by such party or any of its Affiliates of notice of any pending or
threatened federal, state, local or foreign Tax audits, examinations or
assessments which may materially affect the Tax liabilities for which the other
party would be required to indemnify such party pursuant to Section 5.1. The
------- ---
party that would be responsible for the relevant Taxes under Section 5.1(a)
--------------
shall have the sole right to control any Tax audit or administrative or court
proceeding relating to taxable periods ending at the time of or before the
Closing Date, and to employ counsel of its choice at its expense. In the case
of a taxable period beginning before and ending after the Closing Date, Seller
shall be entitled to participate at its expense in any Tax audit or
administrative or court proceeding relating in whole or in part to Taxes
attributable to the portion of such period ending on the Closing Date and, with
the written consent of Buyer, and at Seller's sole expense, may assume the
entire control of such audit or proceeding. Neither party nor any of its
Affiliates may settle any Tax claim for any taxable year or period ending at or
before the Closing Date (or for the portion of any taxable year or period ending
on the Closing Date) which may be the subject of indemnification by the other
party under Section 5.1(a) without the prior written consent of the other party.
-------------
(e) Any payments made pursuant to this Section 5.1 shall be treated
-----------
for income tax purposes by Buyer and Seller as an adjustment to the Purchase
Price.
5.2. TIME BROKERAGE AGREEMENTS. (a) Buyer and Seller shall execute
-------------------------
and deliver time brokerage agreements with respect to WJLB-FM and WMXD-FM, each
effective as of September 1, 1996 substantially in the forms of Exhibit C1 and
----------
C2, respectively, (collectively, the "Owned Stations Time Brokerage Agreements")
- -- ----------------------------------------
and effective as of September 1, 1996, but subject to obtaining the prior
consent of ARS, Buyer shall assume the obligations of Seller under the Time
Brokerage Agreement as of June 1, 1996
25
<PAGE>
between Seller and ARS relating to WFLN-FM (the "Assumed Time Brokerage
----------------------
Agreement").
- ---------
(b) Anything in this Agreement to the contrary notwithstanding, (i)
Seller shall not be liable in any respect to the extent any of its
representations and warranties or covenants or agreements contained in Article
-------
II or IV, and Buyer shall not be liable in any respect to the extent any of its
- -- --
representations and warranties or covenants or agreements contained in Article
-------
III or IV, are not true and correct, or performed, as the case may be, in any
- --- --
material respect on and as of the Closing Date due solely to the existence and
operation of the Owned Stations Time Brokerage Agreements or the Assumed Time
Brokerage Agreement (collectively, the "Stations Time Brokerage Agreements",
----------------------------------
(ii) the condition set forth in Section 6.7 shall not be deemed to be not
-----------
satisfied solely as a result of any action or failure to act of Buyer pursuant
to the provisions of the Stations Time Brokerage Agreements, and (iii) the
certificates to be delivered to Buyer and Seller pursuant to the provisions of
Section 6.1 and Section 7.1, respectively, shall not be required to address any
- ----------- -----------
of such representations and warranties or covenants or agreements that are not
true and correct, or performed, as the case may be, in any material respect on
and as of the Closing Date due solely to the existence and operation of such
agreements.
5.3. AUDIT OF FINANCIAL STATEMENTS OF STATIONS. Seller shall
-----------------------------------------
cooperate and use its reasonable best efforts to cause ARS and each of Seller's
and ARS' independent accountants to cooperate with Buyer, at Buyer's expense, in
order to enable Buyer to have its independent accountants prepare audited
financial statements for the Stations. Without limiting the generality of the
foregoing, Seller agrees that it will (i) consent to the use of such audited
financial statements in any registration statement or other document filed by
Buyer (or any of its subsidiaries) under the Securities Act of 1933, as amended,
or the Securities Exchange Act of 1934, as amended, and (ii) execute and
deliver, and cause its partners and officers to execute and deliver, such
"representation" letters as are customarily delivered in connection with audits
and as Buyer's independent accountants may reasonably request under the
circumstances.
5.4. WFLN-FM TOWER RELOCATION. (a) Seller shall bear all costs
------------------------
related to obtaining a construction permit from the FCC to permit relocation of
the WFLN-FM tower to the site described in Schedule 2.10.
-------------
(b) In addition to the costs described in Section 5.4(a), Seller shall
--------------
bear one-half of all additional costs related to relocation of WFLN-FM's tower
to the site described in Schedule 2.10, including the construction and equipment
-------------
costs relating to building such facility; provided, however, that the
-------- -------
26
<PAGE>
amount to be paid by Seller pursuant to this Section 5.4(b) shall not, under any
--------------
circumstances, exceed $75,000.
(c) Seller shall cooperate with Buyer to ensure that the terms of the
lease covering the new WFLN-FM tower site are reasonably acceptable to Buyer.
5.5. COVENANT NOT TO COMPETE. In furtherance of the sale of the
-----------------------
Purchased Assets to Buyer hereunder by virtue of the transactions contemplated
hereby and more effectively to protect the value and goodwill of the Stations,
Seller covenants and agrees that neither Seller nor any of its Affiliates
(including Frank E. Wood) will directly or indirectly (whether as principal,
agent, independent contractor, partner or otherwise) own, manage, operate,
control or otherwise carry on (a) for a period beginning on the Closing Date and
ending on the third anniversary thereafter, a radio station business in the
Detroit, Michigan radio market as determined by The Arbitron Company and (b) for
a period beginning on the Closing Date and ending on the first anniversary
thereafter, a radio station business in the Philadelphia, Pennsylvania radio
market as determined by The Arbitron Company.
Notwithstanding the foregoing, nothing set forth in Section 5.5 shall
-----------
prohibit Seller or its Affiliates (including Frank E. Wood) from (i) directly or
indirectly owning, managing, operating, controlling or otherwise carrying on a
radio station business with a classical musical format in the Philadelphia,
Pennsylvania radio market or (ii) owning not in excess of 5% in the aggregate of
any class of capital stock of any corporation if such stock is publicly traded
and listed on any national or regional stock exchange or quoted on the Nasdaq
Stock Market.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
--------------------------------------------
The obligations of Buyer to effect the Closing in accordance with this
Agreement shall, at the option of Buyer, be subject to the satisfaction, on or
prior to the Closing Date, of the following conditions:
6.1. NO MISREPRESENTATION OR BREACH OF COVENANTS AND WARRANTIES.
----------------------------------------------------------
There shall have been no material breach by Seller in the performance of any of
its covenants and agreements herein; each of the representations and warranties
of Seller contained or referred to herein shall be true and correct in all
material respects on the Closing Date as though made on the Closing Date (except
to the extent that they expressly speak as of a specific date or time other than
the Closing Date, in which case they need only have been true and correct in all
material respects as of such specified date or time), except to the extent any
inaccuracy or breach results from any transaction specifically permitted by
27
<PAGE>
this Agreement, any transaction expressly consented to in writing by Buyer or
any transaction permitted by Section 4.4; and there shall have been delivered to
-----------
Buyer a certificate or certificates to such effect dated the Closing Date,
signed by and on behalf of Seller by the President or any Vice President of a
general partner of Seller.
6.2. OPINION OF COUNSEL FOR SELLER. Counsel for Seller shall have
-----------------------------
delivered to Buyer an opinion, dated the Closing Date, in form and substance
reasonably satisfactory to Buyer and its counsel.
6.3. PARTNERSHIP ACTION. Seller shall have taken all partnership
------------------
action necessary to approve the transactions contemplated by this Agreement.
6.4. NO RESTRAINT OR LITIGATION. Any applicable waiting period
--------------------------
under the Improvements Act shall have expired or have been terminated and no
injunction or restraining order shall have been issued by any court of competent
jurisdiction and be in effect which restrains or prohibits any material
transaction contemplated hereby.
6.5. FCC CONSENT. (a) The FCC Consent shall have been granted,
-----------
without any condition or qualification which has a materially adverse effect on
the operations and financial condition of the Owned Stations, the Purchased
Station or WQRS-FM (it being agreed that an EEO reporting obligation shall not
constitute such a condition or qualification), and shall have become a Final
Order with respect to each Station, and (b) the renewal of the FCC
Authorizations for each Owned Station shall have been approved for a full
renewal term and each such approval shall have become a Final Order.
6.6. NECESSARY CONSENTS. Seller shall have received consents, in
------------------
form and substance reasonably satisfactory to Buyer, to the assignment to Buyer
of the Seller Agreements specified in Schedule 6.6.
------------
6.7. NO MATERIAL ADVERSE CHANGE. Between the date hereof and the
--------------------------
Closing Date, there shall have been no material adverse change in the Purchased
Assets, the Owned Stations or the Purchased Station, as the case may be.
6.8. FIRPTA CERTIFICATE. There shall have delivered to Buyer a
------------------
certificate to the effect that Seller is not a "foreign person" within the
meaning of Section 1445 of the Code, dated the Closing Date signed by and on
behalf of Seller by the President or any Vice President of a general partner of
Seller.
6.9. ARS TRANSACTION. The purchase by Seller of the Purchased
---------------
Station pursuant to the ARS Agreement shall have been consummated.
28
<PAGE>
6.10. COMPLETION OF AUDIT. The audit of the financial statements of
-------------------
the Stations referred to in Section 5.3 shall have been completed.
-----------
6.11. WQRS-FM TRANSACTION. The transactions contemplated by the
--------------------
WQRS Agreement shall have been consummated.
Notwithstanding the failure of any one or more of the foregoing
conditions, Buyer may proceed with the Closing without satisfaction, in whole or
in part, of any one or more of such conditions and without written waiver. To
the extent that at the Closing Seller delivers to Buyer a written notice
specifying in reasonable detail the failure of any of such conditions or the
breach by Seller of any of the representations or warranties of Seller herein,
and Buyer nevertheless proceeds with the Closing, Buyer shall be deemed to have
waived for all purposes any rights or remedies it may have against Seller by
reason of the failure of any such conditions or the breach of any such
representations or warranties to the extent described in such notice.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
---------------------------------------------
The obligations of Seller to effect the Closing in accordance with
this Agreement shall, at the option of Seller, be subject to the satisfaction on
or prior to the Closing Date, of the following conditions:
7.1. NO MISREPRESENTATION OR BREACH OF COVENANTS AND WARRANTIES.
----------------------------------------------------------
There shall have been no material breach by Buyer in the performance of any of
its covenants and agreements herein; each of the representations and warranties
of Buyer contained or referred to in this Agreement shall be true and correct on
the Closing Date as though made on the Closing Date, except to the extent any
inaccuracy or breach results from any transactions specifically permitted by
this Agreement, any transaction expressly consented to in writing by Seller or
any transaction contemplated by this Agreement; and there shall have been
delivered to Seller a certificate or certificates to such effect, dated the
Closing Date and signed on behalf of Buyer by its President or any Vice
President.
7.2. OPINION OF COUNSEL FOR BUYER. Counsel for Buyer shall have
----------------------------
delivered to Seller an opinion, dated the Closing Date, in form and substance
reasonably satisfactory to Seller and its counsel.
7.3. CORPORATE ACTION. The board of directors of Buyer shall have
----------------
taken all corporate action necessary to approve the transactions contemplated by
this Agreement.
29
<PAGE>
7.4. NO RESTRAINT. Any applicable waiting period under the
------------
Improvements Act shall have expired or been terminated and no injunction or
restraining order shall have been issued by any court of competent jurisdiction
and be in effect which restrains or prohibits any material transaction
contemplated hereby.
7.5. FCC CONSENT. The FCC Consent shall have been granted, without
-----------
any condition or qualification which is materially adverse to Seller, and shall
have become a Final Order.
7.6. ARS TRANSACTION. The purchase by Seller of the Purchased
---------------
Station pursuant to the ARS Agreement shall have been consummated.
7.7. WQRS-FM TRANSACTION. The transactions contemplated by the WQRS
-------------------
Agreement shall have been consummated.
Subject to compliance by Seller with its covenant contained in Section
-------
4.4(c)(viii), notwithstanding the failure of any one or more of the foregoing
- ------------
conditions, Seller may proceed with the Closing without satisfaction, in whole
or in part, of any one or more of such conditions and without written waiver. To
the extent that at the Closing Buyer delivers to Seller a written notice
specifying in reasonable detail the failure of any of such conditions or the
breach by Buyer of any of the representations or warranties of Buyer herein, and
Seller nevertheless proceeds with the Closing, Seller shall be deemed to have
waived for all purposes any rights or remedies it may have against Buyer by
reason of the failure of any such conditions or the breach of any such
representations or warranties to the extent described in such notice.
ARTICLE VIII
INDEMNIFICATION
---------------
8.1. INDEMNIFICATION BY SELLER. Seller agrees to indemnify and hold
-------------------------
harmless Buyer from and against any and all (a) Losses and (b) Expenses incurred
by Buyer in connection with or arising from:
(i) any breach by Seller of, or any other failure of Seller to
perform, any of its covenants, agreements or obligations in this Agreement
or in any Seller Ancillary Agreement;
(ii) any breach of any warranty or the inaccuracy of any
representation of Seller contained or referred to in this Agreement or any
certificate delivered by or on behalf of Seller pursuant hereto; or
30
<PAGE>
(iii) the failure of Seller to perform any of the Excluded
Liabilities.
8.2. INDEMNIFICATION BY BUYER. Buyer agrees to indemnify and hold
------------------------
harmless Seller from and against any and all Losses and Expenses incurred by
Seller in connection with or arising from:
(i) any breach by Buyer of, or other failure of Buyer to perform, any
of its covenants, agreements or obligations in this Agreement or any Buyer
Ancillary Agreement;
(ii) any breach of any warranty or the inaccuracy of any
representation of Buyer contained or referred to in this Agreement or in
any certificate delivered by or on behalf of Buyer pursuant hereto; or
(iii) the failure of Buyer to perform any of the Assumed Liabilities.
8.3. LIMITATIONS OF INDEMNIFICATION OBLIGATIONS. Anything contained
------------------------------------------
in this Agreement to the contrary notwithstanding:
(a) no amount shall be payable by an indemnifying party with respect
to any claim by an indemnified party for any Loss or Expense incurred in
connection with, resulting from or arising out of the breach of any warranty or
the inaccuracy of any representation contained in this Agreement if the
indemnify ing party is first notified of such claim pursuant to Section 8.4 on
-----------
or after the first anniversary of the Closing Date (except with respect to (i)
the representation made in Section 2.6 as to which the indemnifying party must
-----------
be notified by the sixth anniversary of the Closing Date and (ii) the
representation made in Section 2.15 as to which no time limitation shall apply);
------------
provided, however, that if the indemnifying party is first notified of such a
- -------- -------
claim prior to the applicable notice period, such claim may continue to be
maintained until the final determination of such claim;
(b) the aggregate amount required to be paid by Seller pursuant to
Section 8.1 shall not, under any circumstances, exceed the Purchase Price;
- -----------
(c) an indemnifying party shall not be required to provide
indemnification hereunder until, and then only to the extent that, the aggregate
amount of Losses and Expenses incurred by the other party exceeds $250,000;
provided, that indemnification provided in respect of failures described in
- --------
Section 8.2(iii) shall be required without regard to this Section 8.3(c);
- ---------------- --------------
31
<PAGE>
(d) Buyer shall be obligated to prosecute diligently and in good
faith any claim for any Loss or Expense with any applicable insurer prior to
collecting any indemnification payment under this Article VIII, and shall only
------------
be indemnified under this Article VIII to the extent that Buyer's Loss or
------------
Expense exceeds the proceeds received by Buyer in respect of any such claim;
(e) in calculating the amount of any Loss or Expense there shall be
deducted the amount of any Tax benefit to the indemnified party (or any of its
Affiliates) with respect to such Loss or Expense (after giving effect to the Tax
effect of receipt of the indemnification payments);
(f) in any case where an indemnified party recovers from third
parties any amount in respect of a matter with respect to which an indemnifying
party has indemnified it pursuant to this Article VIII, such indemnified party
------------
shall promptly pay over to the indemnifying party the amount so recovered (after
deducting therefrom the full amount of the expenses incurred by it in procuring
such recovery), but not in excess of the sum of (i) any amount previously so
paid by the indemnifying party to or on behalf of the indemnified party in
respect of such matter and (ii) any amount expended by the indemnifying party in
pursuing or defending any claim arising out of such matter;
(g) no party hereto shall be indemnified for special, exemplary or
consequential damages, including, without limitation, loss of future profit or
future revenue or interference with operations; and
(h) Any payment by Buyer or Seller under this Section 8.3 will be an
-----------
adjustment for income tax purposes to the Purchase Price.
8.4. NOTICE OF CLAIMS. (a) A party seeking indemnification
----------------
hereunder shall give to the indemnifying party a notice describing in reasonable
detail the facts giving rise to any claim for indemnification hereunder and
shall include in such notice (if then known) the amount or the method of
computation of the amount of such claim, and a reference to the provision of
this Agreement or any other agreement, document or instrument executed hereunder
or in connection herewith upon which such claim is based; provided, that a
--------
notice in respect of any action at law or suit in equity by or against a third
Person as to which indemnification will be sought shall be given promptly after
the action or suit is commenced.
(b) The amount to which an indemnified party shall be entitled under
this Article VIII shall be determined: (i) by written agreement between Seller
------------
and Buyer, (ii) by a final judgment or decree of any court of competent
jurisdiction or (iii) by any other means to which Seller and Buyer shall agree.
The judg-
32
<PAGE>
ment or decree of a court shall be deemed final when the time for appeal, if
any, shall have expired and no appeal shall have been taken or when all appeals
taken have been finally determined. The indemnified party shall have the burden
of proof in establishing the amount of the Loss and Expense suffered by it.
8.5. THIRD PARTY CLAIMS. (a) Subject to Section 8.5(b), the
------------------ --------------
indemnified party shall have the right to conduct and control, through counsel
of its choosing, the defense, compromise or settlement of any third Person
claim, action or suit against such indemnified party as to which indemnification
will be sought by such indemnified party from any party hereunder, and in any
such case the indemnifying party shall cooperate in connection therewith and
shall furnish such records, information and testimony and attend such
conferences, discovery proceedings, hearings, trials and appeals as may be
reasonably requested by the indemnified party in connection therewith; provided,
--------
that the indemnifying party may participate, through counsel chosen by it and at
its own expense, in the defense of any such claim, action or suit as to which
the indemnified party has so elected to conduct and control the defense thereof;
and provided, further, that the indemnified party shall not, without the written
-------- -------
consent of the indemnifying party (which written consent shall not be
unreasonably withheld), pay, compromise or settle any such claim, action or
suit, except that no such consent shall be required if, following a written
request from the indemnified party, the indemnifying party shall fail, within 14
days after the making of such request, to acknowledge and agree in writing that,
if such claim, action or suit shall be adversely determined, such indemnifying
party has an obligation to provide indemnification hereunder to such indemnified
party. Notwithstanding the foregoing, the indemnified party shall have the
right to pay, settle or compromise any such claim, action or suit, provided that
--------
in such event the indemnified party shall waive any right to indemnity therefor
hereunder.
(b) If any third Person claim, action or suit against any indemnified
party is solely for money damages or, where Seller is the indemnifying party,
will have no continuing effect or any material adverse impact on the Stations or
the Purchased Assets, then the indemnifying party shall have the right to
conduct and control, through counsel of its choosing and at its expense, the
defense, compromise or settlement of any such third Person claim, action or suit
against the indemnified party as to which indemnification will be sought from
the indemnifying party if the indemnifying party has acknowledged and agreed in
writing that, if the same is adversely determined, the indemnifying party has an
obligation to provide indemnification to the indemnified party in respect
thereof, and in any such case the indemnified party shall cooperate in
connection therewith and shall furnish such records, information and testimony
and attend such conferences, discovery proceedings, hearings, trials and appeals
as may be reasonably requested by the indemnifying party in
33
<PAGE>
connection therewith; provided, that the indemnified party may participate,
--------
through counsel chosen by it and at its own expense, in the defense of any such
claim, action or suit as to which the indemnifying party has so elected to
conduct and control the defense thereof. Notwithstanding the foregoing, the
indemnified party shall have the right to pay, settle or compromise any such
claim, action or suit, provided that in such event the indemnified party shall
--------
waive any right to indemnification therefor hereunder.
(c) If there are any conflicts between the provisions of this Section
-------
8.5 and Section 5.1(d), the provisions of Section 5.1(d) shall control with
- --- -------------- --------------
respect to Tax contests.
8.6. EXCLUSIVE REMEDY. Any other provision of this Agreement to the
----------------
contrary notwithstanding, from and after the Closing, the sole and exclusive
liability and responsibility of Seller to Buyer, or of Buyer to Seller, under or
in connection with this Agreement or the transactions contemplated hereby
(including, without limitation, for any breach or inaccuracy of any
representation or warranty or for any breach of any covenant or for any other
reason), and the sole and exclusive remedy of Buyer and Seller vis-a-vis each
---------
other with respect to any of the foregoing, shall be as set forth in this
Article VIII; provided, however, that each party hereto shall retain all non-
- ------------ -------- -------
monetary equitable remedies available to it in respect of any breach by any
other party of any covenant or other agreement of such other party contained in
or made pursuant to this Agreement and required to be performed after the
Closing Date. To the extent that a party hereto has any Loss or Expense for
which it may assert against the other party hereto any other right to
indemnification, contribution or recovery (whether under this Agreement, under
common law or any statute or otherwise), such party with such Loss or Expense
hereby waives, releases and agrees not to assert such right.
ARTICLE IX
TERMINATION
9.1. TERMINATION. (a) Notwithstanding anything contained in this
-----------
Agreement to the contrary, this Agreement may be terminated at any time prior to
the Closing: (i) by Buyer in the event of a material breach by Seller of any of
its agreements, representations or warranties contained in this Agreement or the
WQRS Agreement and the failure of Seller to cure such breach within 14 days
after receipt of notice from Buyer requesting such to be cured or (ii) by Seller
in the event of a material breach by Buyer of any of its agreements,
representations or warranties contained in this Agreement or the WQRS Agreement
and the failure of Buyer to cure such breach within 14 days after receipt of
notice from Seller requesting such to be cured, and at any time
34
<PAGE>
prior to the Closing (A) by the mutual consent of Buyer and of Seller; (B) by
Buyer or Seller if the Closing shall not have occurred on or before June 30,
1997 (or such later date as may be agreed to by Buyer and Seller); or (C) by
Buyer or Seller if any court of competent jurisdiction in the United States or
any United States governmental or regulatory body shall have issued an order,
decree or ruling or taken any other action permanently restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated hereby
or (D) by Buyer or Seller if the ARS Agreement or the WQRS Agreement is
terminated.
(b) In the event that this Agreement shall be terminated pursuant to
this Article IX, all further obligations of the parties under this Agreement
----------
(other than Sections 10.1, 10.2 and 10.10) shall be terminated without further
-------- ---- ---- -----
liability of any party to the other; provided, however, that if this Agreement
-------- -------
is terminated by either party because of a material breach by the other party of
any of its agreements, representations or warranties contained in this Agreement
and the failure of the breaching party to cure such breach as provided in
Section 9.1(a) or if this Agreement is terminated by Buyer because of a material
- ---------------
breach by Seller of any of its agreements, representations or warranties
contained in the ARS Agreement and the failure of Seller to cure such breach as
provided in Section 7.1 of the ARS Agreement, nothing herein shall prohibit the
terminating party from recovering its actual damages as a result of such breach
and termination of this Agreement, except that the amount required to be paid by
the breaching party to the terminating party as damages for such breach shall
not, under any circumstances, exceed $35,000,000, except that, if the separate
closing of the purchase and sale of the Purchased Assets relating to WFLN-FM
contemplated by Section 1.8 occurs prior to termination of this Agreement, the
-----------
amount required to be paid by the breaching party pursuant to this Section
-------
9.1(b) shall not, under any circumstances, exceed $30,000,000.
- ------
9.2. NOTICE OF TERMINATION. Any party desiring to terminate this
---------------------
Agreement pursuant to Section 9.1 shall give notice of such termination to the
-----------
other party to this Agreement.
ARTICLE X
GENERAL PROVISIONS
------------------
10.1. NO ANNOUNCEMENT. Neither Buyer nor Seller shall, without the
---------------
approval of the other, make any press release or other announcement concerning
the transactions contemplated by this Agreement, except as and to the extent
that any such party shall be so obligated by law or by the rules, regulations or
policies of any national securities exchange or association, in which case the
other party shall be advised and the parties shall
35
<PAGE>
use their best efforts to cause a mutually agreeable release or announcement to
be issued.
10.2. CONFIDENTIAL NATURE OF INFORMATION. Each party agrees that it
----------------------------------
will treat in confidence all documents, materials and other information which it
shall have obtained regarding the other party during the course of the
negotiations leading to the consummation of the transactions contemplated hereby
(whether obtained before or after the date of this Agreement), the investigation
provided for herein and the preparation of this Agreement and other related
documents, and, in the event the transactions contemplated hereby shall not be
consummated, each party will return to the other party all copies of nonpublic
documents and materials which have been furnished in connection therewith. Such
documents, materials and information shall not be communicated to any third
Person (other than, in the case of Buyer, to its counsel, accountants, financial
advisors or lenders, and in the case of the Seller, to its counsel, accountants
or financial advisors). The obligation of each party to treat such documents,
materials and other information in confidence shall not apply to any information
which (a) such party can demonstrate was already lawfully in its possession
prior to the disclosure thereof by the other party, (b) is known to the public
and did not become so known through any violation of a legal obligation, (c)
became known to the public through no fault of such party, (d) such party is
required to disclose any such information pursuant to judicial order or, in the
opinion of counsel, pursuant to applicable law (but only to the extent it must
be so disclosed), or (e) such party reasonably deems necessary to disclose to
obtain any of the consents or approvals contemplated hereby. Without limiting
the right of either party to pursue all other legal and equitable rights
available to it for violation of this Section 10.2 by the other party, it is
------------
agreed that other remedies cannot fully compensate the aggrieved party for such
a violation of this Section 10.2 and that the aggrieved party shall be entitled
------------
to injunctive relief to prevent a violation or continuing violation hereof.
10.3. GOVERNING LAW; SUBMISSION TO JURISDICTION. (a) This Agreement
-----------------------------------------
shall be governed by and construed in accordance with the internal laws (as
opposed to the conflict of laws provisions) of the State of Illinois.
(b) Buyer and Seller agree that all actions, suits or proceedings
arising out of or based upon this Agreement or the subject matter hereof shall
be brought and maintained exclusively in the federal and state courts of the
State of Illinois. Each of Buyer and Seller, by execution hereof, (i)
irrevocably submits to the jurisdiction of the federal and state courts in the
State of Illinois for the purpose of any such action, suit or proceeding and
(ii) hereby waives to the extent not prohibited by applicable law, and agrees
not to assert, by way of motion, as a defense or otherwise, in any such action,
suit or proceeding, any
36
<PAGE>
claim that it is not subject personally to the jurisdiction of the above-named
courts, that it is immune from extraterritorial injunctive relief or other
injunctive relief, that its property is exempt or immune from attachment or
execution, that any such action, suit or proceeding may not be brought or
maintained in one of the above-named courts, that any such action, suit or
proceeding brought or maintained in one of the above-named courts should be
dismissed on grounds of forum non conveniens, should be transferred to any court
----- --- ----------
other than one of the above-named courts, should be stayed by virtue of the
pendency of any other action, suit or proceeding in any court other than one of
the above-named courts, or that this Agreement or the subject matter hereof may
not be enforced in or by any of the above-named courts. Each of Buyer and
Seller hereby consents to service of process in any such suit, action or
proceeding in any manner permitted by the laws of the State of Illinois, agrees
that service of process by registered or certified mail, return receipt
requested, at the address specified in or pursuant to Section 10.4, is
------------
reasonably calculated to give actual notice and waives and agrees not to assert
by way of motion, as a defense or otherwise, in any such action, suit or
proceeding any claim that service of process made in accordance with Section
-------
10.4 does not constitute good and sufficient service of process. The provisions
- ----
of this Section 10.3(b) shall not restrict the ability of Buyer or Seller to
---------------
enforce in any court any judgment obtained in a federal or state court of the
State of Illinois.
10.4. NOTICES. All notices or other communications required or
-------
permitted hereunder shall be in writing and shall be deemed given or delivered
when delivered personally, by messenger or by private courier or 72 hours after
having been sent by registered or certified mail addressed as follows:
If to Seller, to:
Secret Communications Limited Partnership
312 Walnut Street, Suite 3350
Cincinnati, Ohio 45202
Attention: Frank E. Wood,
Chief Executive Officer
and
1200 Shermer Road, 4th Floor
Northbrook, Illinois 60062
Attention: Arthur J. Schiller,
Esq., General Counsel
with a copy to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Dennis V. Osimitz, Esq.
37
<PAGE>
If to Buyer, to:
Evergreen Media Corporation of Los Angeles
40 Evergreen Media Corporation
433 Los Colinas Boulevard
Irving, Texas 75039
Attention: 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.
or to such other address as such party may indicate by a notice delivered to the
other parties hereto in accordance with this Section 10.4.
------------
10.5. SUCCESSORS AND ASSIGNS. (a) The rights of either party under
----------------------
this Agreement shall not be assignable by such party hereto prior to the Closing
without the written consent of the other; provided, however, that (i) the rights
-------- -------
of Buyer hereunder may be assigned prior to Closing, without the consent of
Seller, to a wholly-owned subsidiary of Buyer without Buyer being released from
any of its obligations hereunder and (ii) if Seller or Buyer subsequently
determines to qualify the transfer of any or all of the Purchased Assets as a
like-kind exchange under Section 1031 of the Code, such party shall be entitled
to assign its rights (but not its obligations) under this Agreement to a
"qualified intermediary" (as defined in Treas. Reg. (S) 1.1031 (k)-1(g)(4)). In
the event described in clause (ii) above, Buyer or Seller, as the case may be,
agrees to (A) consent to and acknowledge the assignment of this Agreement (or
such portions thereof as the other party shall determine) by the other party to
such qualified intermediary, (B) pay the Purchase Price directly to such
qualified intermediary, (C) make appropriate filings with the FCC and to amend
any FCC filings theretofore made and (D) otherwise cooperate with the other
party in order to enable such party to effect a like-kind exchange under Section
1031 of the Code. Following the Closing, either party may assign any of its
rights hereunder, but no such assignment shall relieve it of its obligations
hereunder.
(b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their successors and permitted assigns. The successors
and permitted assigns hereunder shall include, without limitation, in the case
of Buyer, any permitted assignee as well as the successors in interest to such
permitted assignee (whether by merger, liquidation (including successive mergers
or liquidations) or otherwise). Nothing in this Agreement, expressed or
implied, is intended or shall be construed to confer upon any Person other than
the parties and
38
<PAGE>
successors and assigns permitted by this Section 10.5 any right, remedy or claim
------------
under or by reason of this Agreement.
10.6. ACCESS TO RECORDS AFTER CLOSING. For a period of six years
-------------------------------
after the Closing Date, Seller and its representatives shall have reasonable
access to all of the books and records relating to the Stations transferred to
Buyer hereunder to the extent that such access may reasonably be required by
Seller in connection with matters relating to or affected by the operations of
the Stations prior to the Closing Date. Such access shall be afforded by Buyer
upon receipt of reasonable advance notice and during normal business hours.
Seller shall be solely responsible for any costs or expenses incurred by it
pursuant to this Section 10.6. If Buyer shall desire to dispose of any of such
------------
books and records prior to the expiration of such six-year period, Buyer shall,
prior to such disposition, give Seller a reasonable opportunity, at Seller's
expense, to segregate and remove such books and records as Seller may select.
For a period of six years after the Closing Date, Buyer and its
representatives shall have reasonable access to all of the books and records
relating to the Stations which Seller or any of its Affiliates may retain after
the Closing Date. Such access shall be afforded by Seller and its Affiliates
upon receipt of reasonable advance notice and during normal business hours.
Buyer shall be solely responsible for any costs and expenses incurred by it
pursuant to this Section 10.6. If Seller or any of its Affiliates shall desire
------------
to dispose of any of such books and records prior to the expiration of such six-
year period, Seller shall, prior to such disposition, give Buyer a reasonable
opportunity, at Buyer's expense, to segregate and remove such books and records
as Buyer may select.
10.7. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the WQRS
----------------------------
Agreement and the Exhibits and Schedules referred to herein and therein and the
documents delivered pursuant hereto and thereto contain the entire understanding
of the parties hereto and thereto with regard to the subject matter contained
herein or therein, and supersede all prior agreements, understandings or
intents between or among any of the parties hereto. This Agreement may not be
amended, modified and supplemented except by a written instruction signed by an
authorized representative of each of the parties hereto.
10.8. INTERPRETATION; DISCLOSURE SCHEDULES. Article titles and
------------------------------------
headings to sections herein are inserted for convenience of reference only and
are not intended to be a part of or to affect the meaning or interpretation of
this Agreement. The Schedules and Exhibits referred to herein shall be construed
with and as an integral part of this Agreement to the same extent as if they
were set forth verbatim herein. Disclosure of any fact or item in any Schedule
hereto referenced by a particular section in this Agreement shall be deemed to
have been disclosed
39
<PAGE>
with respect to every other section in this Agreement. The specification of any
dollar amount in the representations or warranties contained in this Agreement
or the inclusion of any specific item in any Schedules hereto is not intended to
imply that such amounts, or higher or lower amounts, or the items so included or
other items, are or are not material, and neither party shall use the fact of
the setting of such amounts or the inclusion of any such item in any dispute or
controversy between the parties as to whether any obligation, item or matter not
described herein or included in a Schedule is or is not material for purposes of
this Agreement.
10.9. WAIVERS. Any term or provision of this Agreement may be
-------
waived, or the time for its performance may be extended, by the party or
parties entitled to the benefit thereof. The failure of any party hereto to
enforce at any time any provision of this Agreement shall not be construed to
be a waiver of such provision, nor in any way to affect the validity of this
Agreement or any part hereof or the right of any party thereafter to enforce
each and every such provision. No waiver of any breach of this Agreement shall
be held to constitute a waiver of any other or subsequent breach.
10.10. EXPENSES. Except as herein provided, each party hereto will
--------
pay all of its own costs and expenses incident to its negotiation and
preparation of this Agreement and to its performance and compliance with all
agreements and conditions contained herein on its part to be performed or
complied with, including the fees, expenses and disbursements of its counsel and
accountants.
10.11. PARTIAL INVALIDITY. Wherever possible, each provision hereof
------------------
shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provisions of this Agreement, and this Agreement shall be construed as if
such invalid, illegal or unenforceable provision or provisions had never been
contained herein unless the deletion of such provision or provisions would
result in such a material change as to cause completion of the transactions
contemplated hereby to be unreasonable.
10.12. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
-------------------------
one or more counterparts, each of which shall be considered an original
instrument, but all of which shall be considered one and the same agreement, and
shall become binding when one or more counterparts have been signed by each of
the parties and delivered to each of Seller and Buyer.
40
<PAGE>
10.13. DEFINITIONS. As used in this Agreement, the following terms
-----------
have the meanings specified or referred to in this Section 10.13:
-------------
"Affiliate" means, with respect to any Person, any other Person which
---------
directly or indirectly controls, is controlled by or is under common control
with such Person.
"Allocation Schedule" has the meaning specified in Section 10.14.
------------------- -------------
"ARS" has the meaning specified in the first recital to this
---
Agreement.
"ARS Agreement" has the meaning specified in the first recital to this
-------------
Agreement.
"ARS Transaction" has the meaning specified in Section 2.1.
--------------- -----------
"Assumed Liabilities" has the meaning specified in Section 1.4.
------------------- -----------
"Balance Sheet" has the meaning specified in Section 2.4.
------------- -----------
"Balance Sheet Date" has the meaning specified in Section 2.4.
------------------ -----------
"Buyer" has the meaning specified in the first paragraph of this
-----
Agreement.
"Buyer Ancillary Agreements" has the meaning specified in Section 3.2.
-------------------------- -----------
"Closing" means the closing of the transfer of the Purchased Assets
-------
from Seller to Buyer and the assumption of the Assumed Liabilities by Buyer.
"Closing Date" has the meaning specified in Section 1.6(a).
------------ --------------
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Communications Act" means the Communications Act of 1934, as amended.
------------------
"Encumbrance" means any lien, claim, charge, security interest,
-----------
mortgage, pledge, easement, conditional sale or other title retention agreement,
defect in title, covenant or other restrictions of any kind.
41
<PAGE>
"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 the Comprehensive Environmental
Response Compensation and Liability Act, the Resources Conservation and Recovery
Act, any other "Superfund" or "Superlien" law, the Toxic Substances Control Act,
the Hazardous Materials Transportation Act, their implementing regulations or
any other similar federal, state or local statutes or regulations.
"ERISA" has the meaning specified in Section 2.24.
----- ------------
"Event of Loss" has the meaning specified in Section 10.16.
------------- -------------
"Excluded Assets" has the meaning specified in Section 1.2.
--------------- -----------
"Excluded Liabilities" has the meaning specified in Section 1.5.
-------------------- -----------
"Expenses" means any and all reasonable expenses incurred in
--------
connection with investigating, defending or asserting any claim, action, suit or
proceeding incident to any matter indemnified against hereunder (including,
without limitation, court filing fees, court costs, arbitration fees or costs,
witness fees, and reasonable fees and disbursements of legal counsel,
investigators, expert witnesses, accountants and other professionals).
"FCC" means the Federal Communications Commission.
---
"FCC Authorizations" means those Governmental Permits issued by the
------------------
FCC for each of the Stations.
"FCC Consent" means action by the FCC granting its consent to the
-----------
assignment of the (a) FCC Authorizations as contemplated by this Agreement
pursuant to appropriate applications filed by the parties with the FCC and (b)
FCC authorizations as contemplated by the WQRS Agreement relating to WQRS-FM.
"Final Order" means the FCC Consent, (a) which has not been reversed,
-----------
stayed, enjoined, set aside, annuled or suspended, and (b) with respect to which
(i) no requests have been filed for administrative or judicial review,
reconsideration, appeal or stay and the time for filing any such requests, and
the time for the FCC to set aside the action on its own motion, has expired, or
(ii) in the event of review, reconsideration or appeal, the FCC's order has been
affirmed and become final by
42
<PAGE>
expiration of the time for further review, reconsideration or appeal.
"Governmental Permits" has the meaning specified in Section 2.8.
-------------------- -----------
"Hazardous Materials" means substances defined as "hazardous
-------------------
substances," "hazardous materials," "hazardous wastes" or "toxic substances" in
the Comprehensive Environmental Response Compensation and Liability Act, the
Resource Conservation and Recovery Act or any analogous federal, state or local
laws, and shall specifically include, without limitation, petroleum (including
crude oil or any fraction thereof).
"Improvements Act" means the Hart-Scott-Rodino Antitrust Improvements
----------------
Act of 1976, as amended.
"Knowledge of Seller" means the actual knowledge of Frank E. Wood,
-------------------
John R. Crabb and Arthur J. Schiller, after due inquiry of the appropriate
management level personnel of each Station.
"Leased Real Property" has the meaning specified in Section 2.9.
-------------------- -----------
"Losses" means any and all losses, costs, obligations, liabilities,
------
settlement payments, awards, judgments, fines, penalties, damages, expenses,
deficiencies or other charges.
"Marlin" has the meaning specified in Section 2.6(b).
------ --------------
"Owned Real Property" has the meaning specified in Section 2.9.
------------------- -----------
"Owned Stations" has the meaning specified in the first recital to
--------------
this Agreement.
"Permitted Encumbrances" means (a) liens for taxes and other
----------------------
governmental charges and assessments which are not yet due and payable, (b)
liens of landlords and liens of carriers, warehousemen, mechanics and
materialmen and other like liens arising in the ordinary course of business for
sums not yet due and payable and (c) other liens or imperfections on property
which are not material in amount or do not materially detract from the value of
or materially impair the existing use of the property affected by such lien or
imperfection.
"Person" means any person, employee, individual, corporation, limited
------
liability company, partnership, trust, or any other non-governmental entity or
any governmental or regulatory authority or body.
43
<PAGE>
"Purchased Assets" has the meaning specified in Section 1.1.
---------------- -----------
"Purchased Station" has the meaning specified in the first recital to
-----------------
this Agreement.
"Purchased Station Balance Sheet" has the meaning specified in Section
------------------------------- -------
2.4(b).
- ------
"Purchase Price" has the meaning specified in Section 1.3.
-------------- -----------
"Release" means any release, spill, emission, leaking, pumping,
-------
injection, deposit, disposal discharge, dispersal, leaching or migration into
the indoor or outdoor environment or into or out of any property, including the
movement of Contaminants through or in the air, soil, surface water,
groundwater or property.
"Requirements of Law" means any federal, state or local law, rule or
-------------------
regulation, Governmental Permit or other binding determination of any
governmental or regulatory authority or body.
"Seller" has the meaning specified in the first paragraph of this
------
Agreement.
"Seller Ancillary Agreements" has the meaning specified in Section
--------------------------- -------
2.3.
"Seller Agreements" has the meaning specified in Section 2.17.
----------------- ------------
"Stations" has the meaning specified in first recital to this
--------
Agreement.
"Stations Time Brokerage Agreements" has the meaning specified in
----------------------------------
Section 5.2.
- -----------
"Tax" means any federal, state, local or foreign net income,
---
alternative or add-on minimum, gross income, gross receipts, property, sales,
use, transfer, gains, license, excise, employment, payroll, withholding or
minimum tax, or any other tax custom, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or any
penalty, addition to tax or additional amount imposed on Seller by any federal,
state, local, foreign or other governmental authority or regulatory body.
"Tax Return" means any return, report or similar statement of Seller
----------
required to be filed with respect to any Taxes (including any attached
schedules), including, without
44
<PAGE>
limitation, any information return, claim for refund, amended return and
declaration of estimated Tax.
"WQRS Agreement" has the meaning specified in the third recital to
--------------
this Agreement.
"WQRS-FM" has the meaning specified in the second recital to this
-------
Agreement.
10.14. ALLOCATION OF PURCHASE PRICE. Within 30 days following the
----------------------------
Closing, Buyer and Seller shall use their respective best efforts to negotiate
and draft a schedule (the "Allocation Schedule") allocating the Purchase Price
-------------------
(including, for purposes of this Section 10.14, any other consideration paid to
-------------
Seller, including the Assumed Liabilities) among the Stations and the Purchased
Assets. The Allocation Schedule shall be reasonable and shall be prepared in
accordance with Section 1060 of the Code and the regulations thereunder. Buyer
and Seller each agrees that promptly upon receiving said Allocation Schedule it
shall return an executed copy thereof to the other party. Buyer and Seller each
agrees to file Internal Revenue Service Form 8594, and all federal, state, local
and foreign Tax Returns, in accordance with the Allocation Schedule. Buyer and
Seller each agrees to provide the other promptly with any other information
required to complete Form 8594. Notwithstanding the foregoing, if Buyer and
Seller are unable to agree on an Allocation Schedule each party shall be
entitled to take its own position on Form 8594 and such Tax Returns as to the
allocation of the Purchase Price.
10.15. SPECIFIC PERFORMANCE; OTHER RIGHTS AND REMEDIES. Subject to
-----------------------------------------------
Section 8.6, each party agrees that each party shall, in addition to such other
- -----------
remedies as may be available to it at law, be entitled to injunctive relief and
to enforce its rights by an action for specific performance to the extent
permitted by applicable Requirements of Law. Each party hereby waives any
requirement for security or the posting of any bond or other surety in
connection with any temporary or permanent award of injunctive, mandatory or
other equitable relief.
10.16. RISK OF LOSS. The risk of loss or damage to any of the
------------
Purchased Assets shall be on Seller prior to the Closing Date and thereafter
shall be on Buyer. If any of the Purchased Assets is damaged or destroyed prior
to the Closing Date (any such event being referred to as an "Event of Loss"),
-------------
Seller, at its expense, shall use reasonable efforts to replace or repair the
item with comparable property of like value and quality as soon as practicable
before the Closing Date. If any Event of Loss shall materially affect the
operations of the Stations and repair or replacement cannot be accomplished by
the scheduled Closing Date but can be accomplished within 60 days after that
date, the Closing Date shall be postponed for such 60-
45
<PAGE>
day period; if, however, the repair or replacement cannot be accomplished within
such 60-day period, Buyer may elect by written notice to Seller within 20 days
after Buyer has received notice that any Event of Loss has occurred:
(a) To postpone the Closing until a date within 15 business days
after Seller gives written notice to Buyer that the Purchased Assets which are
the subject of the Event of Loss have been substantially restored to their
condition immediately prior to the Event of Loss, which date shall not be more
than 60 days beyond the date specified in Section 9.1(a)(ii);
------------------
(b) To consummate the Closing on the scheduled Closing Date and
accept all of the Purchased Assets as is, in which event Seller shall assign to
Buyer at the Closing all of its rights under any insurance policies and to all
insurance proceeds covering that Event of Loss, including property damage, loss
of income and continuing expenses (less amounts due to the Seller for repairs or
replacements of the property prior to the Closing); or
(c) To terminate this Agreement without liability on the part of
Seller or Buyer.
If the Closing Date is postponed beyond the time specified in Section
-------
9.1(a)(ii), the parties shall amend their application to the FCC to request an
- ----------
extension of the date of Closing.
10.17. ASSIGNMENT OF RIGHTS UNDER ARS AGREEMENT. Seller shall use its
----------------------------------------
reasonable best efforts to obtain the written consent of ARS to the assignment
to Buyer, on or immediately after the Closing Date, of its rights arising under
Article 8 of the ARS Agreement with respect to the Purchased Station and, after
such assignment has been consummated, shall take all actions reasonably
requested by Buyer to enforce any of such rights with respect to the Purchased
Station for the benefit of Buyer (it being the intent of the parties that
pursuant to this provision Seller shall transfer to Buyer to the maximum extent
possible the benefits of all representations and warranties and covenants of ARS
contained in the ARS Agreement). If Seller is unable to obtain the consent of
ARS to the assignment of the rights arising under Article 8 of the ARS
Agreement, Seller shall, upon the request of Buyer, proceed diligently to
exercise Seller's right to indemnification under the ARS Agreement with respect
to the Purchased Station and Buyer shall be entitled to receive from Seller any
amount actually received by Seller with respect to such rights, less reasonable
out of pocket fees and expenses incurred by Seller in exercising such rights.
Notwithstanding the foregoing, Seller shall retain such rights against ARS under
the ARS Agreement (to the extent such rights exist under the ARS Agreement) as
shall be necessary to recover from ARS with respect to any liability for which
46
<PAGE>
Seller makes payment to Buyer pursuant to Seller's indemnification obligation
under this Agreement.
47
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above writ ten.
SECRET COMMUNICATIONS LIMITED
PARTNERSHIP
By: Broadcast Alchemy, L.P.,
a General Partner
By: Lane Broadcasting, Inc.
Its: General Partner
By: ___________________________________
Its: __________________________________
EVERGREEN MEDIA CORPORATION
OF LOS ANGELES
By: ___________________________________
Its: __________________________________
48
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 6/30/96 FORM
10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,877
<SECURITIES> 0
<RECEIVABLES> 70,796
<ALLOWANCES> 1,314
<INVENTORY> 0
<CURRENT-ASSETS> 77,148
<PP&E> 69,624
<DEPRECIATION> 23,331
<TOTAL-ASSETS> 956,544
<CURRENT-LIABILITIES> 57,357
<BONDS> 524,750
80,500
0
<COMMON> 280
<OTHER-SE> 205,414
<TOTAL-LIABILITY-AND-EQUITY> 956,544
<SALES> 126,362
<TOTAL-REVENUES> 126,362
<CGS> 18,252
<TOTAL-COSTS> 127,523
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,027
<INCOME-PRETAX> (20,200)
<INCOME-TAX> (3,705)
<INCOME-CONTINUING> (16,495)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (18,910)
<EPS-PRIMARY> (0.67)
<EPS-DILUTED> (0.67)
</TABLE>
