Securities and Exchange Commission
Washington, D.C. 20549
-------------------------------
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. __)1
MULTI-MARKET RADIO, INC.
- -------------------------------------------------------------------------------
(Name of issuer)
CLASS A Common Stock, par value $.01 per share
- -------------------------------------------------------------------------------
(Title of class of securities)
625432 10 9
- -------------------------------------------------------------------------------
(CUSIP number)
Michael Burrows
Baker & McKenzie
805 Third Avenue
New York, New York 10022
- -------------------------------------------------------------------------------
(Name, address and telephone number of person
authorized to receive notices and communications)
July 31, 1996
- -------------------------------------------------------------------------------
(Date of event which requires
filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box. |_|
Check the following box if a fee is being paid with this statement |X|. (A fee
is not required only if the filing person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
- --------
1 The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the subject
class of securities, and for any subsequent amendment containing information
which would alter the disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
CUSIP No. 625432 10 9 13D Page 2 of ___ Pages
1 NAME OF REPORTING PERSON ROBERT F.X. SILLERMAN
S.S. OR I.R.S. ID NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER (a) |_|
OF A GROUP (b) |_|
3 SEC USE ONLY
4 SOURCE OF FUNDS PF,00
5 CHECK BOX IF DISCLOSURE OF LEGAL |_|
PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) OR 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION UNITED STATES
NUMBER OF 7 SOLE VOTING POWER 227,000
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED
BY EACH 9 SOLE DISPOSITIVE POWER 107,000
REPORTING
PERSON 10 SHARED DISPOSITIVE POWER
WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED 227,000
BY EACH REPORTING PERSON
12 CHECK IF THE AGGREGATE AMOUNT IN ROW |_|
(11) EXCLUDES CERTAIN SHARES
13 PERCENT OF CLASS REPRESENTED BY 6.9%
AMOUNT IN ROW (11)
14 TYPE OF REPORTING PERSON IN
- -------- ---------------- --------
Page 2 of __ pages
<PAGE>
CUSIP No. 625432 10 9 13D Page 3 of ___ Pages
1 NAME OF REPORTING PERSON MICHAEL G. FERREL
S.S. OR I.R.S. ID NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER (a) |_|
OF A GROUP (b) |_|
3 SEC USE ONLY
4 SOURCE OF FUNDS NOT APPLICABLE
5 CHECK BOX IF DISCLOSURE OF LEGAL |_|
PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) OR 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION UNITED STATES
NUMBER OF 7 SOLE VOTING POWER 66,000
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED
BY EACH 9 SOLE DISPOSITIVE POWER 26,000
REPORTING
PERSON 10 SHARED DISPOSITIVE POWER
WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED 66,000
BY EACH REPORTING PERSON
12 CHECK IF THE AGGREGATE AMOUNT IN ROW |_|
(11) EXCLUDES CERTAIN SHARES
13 PERCENT OF CLASS REPRESENTED BY 2.0%
AMOUNT IN ROW (11)
14 TYPE OF REPORTING PERSON IN
- -------- ---------------- -----------------
Page 3 of __ pages
<PAGE>
CUSIP No. 625432 10 9 13D Page 4 of ___ Pages
1 NAME OF REPORTING PERSON BRUCE MORROW
S.S. OR I.R.S. ID NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER (a) |_|
OF A GROUP (b) |_|
3 SEC USE ONLY
4 SOURCE OF FUNDS NOT APPLICABLE
5 CHECK BOX IF DISCLOSURE OF LEGAL |_|
PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) OR 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION UNITED STATES
NUMBER OF 7 SOLE VOTING POWER 20,000
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED
BY EACH 9 SOLE DISPOSITIVE POWER 10,000
REPORTING
PERSON 10 SHARED DISPOSITIVE POWER
WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED 20,000
BY EACH REPORTING PERSON
12 CHECK IF THE AGGREGATE AMOUNT IN ROW |_|
(11) EXCLUDES CERTAIN SHARES
13 PERCENT OF CLASS REPRESENTED BY 0.6%
AMOUNT IN ROW (11)
14 TYPE OF REPORTING PERSON IN
- -------- ---------------- ----------------
Page 4 of __ pages
<PAGE>
ITEM 1. SECURITY AND ISSUER.
This Schedule 13D is being filed by Robert F.X. Sillerman ("Mr.
Sillerman"), Michael G. Ferrel ("Mr. Ferrel") and Bruce Morrow ("Mr.
Morrow"), all of whom are individuals, with respect to the Class A
Common Stock, par value $.01 per share (the "Class A Common Stock"),
of Multi-Market Radio, Inc., a Delaware corporation (the "Company").
The principal executive offices of the Company are located at 150
East 58th Street, 19th Floor, New York, New York 10155.
The Class A Common Stock is the only class or series of common or
preferred stock of the Company that is registered pursuant to Section
12 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). In addition, the Reporting Persons (as such term is defined in
Item 2(a) of this Schedule 13D) hold shares of Class B Common Stock,
par value $.01 and votes ten votes per share on most matters (the
"Class B Common Stock"), non-voting Class C Common Stock, par value
$.01 per share (the "Class C Common Stock"), non-voting Original
Preferred Stock, par value $.01 per share (the "Original Preferred
Stock"), and non-voting Series B Preferred Stock, par value $.01 per
share (the "Series B Convertible Preferred Stock"), of the Company,
which are convertible, under certain circumstances into shares of
Class A Common Stock, as described herein.
The Company also has outstanding Class A Warrants and Class B
Warrants that are registered pursuant to Section 12 of the Exchange
Act. Each Class A Warrant and Class B Warrant is (i) convertible into
one share of Class A Common Stock at $7.75 per share and $11.50 per
share, respectively, until March 22, 1999; and (ii) is subject to
redemption by the Company at $.01 per Warrant on thirty days prior
written notice provided that the closing sale price of Class A Common
Stock exceeds $10.75 per share and $16.00 per share, respectively,
for 20 consecutive trading days ending within five days of the
notice.
ITEM 2. IDENTITY AND BACKGROUND.
(a) Pursuant to Rule 13d-1(f)(2) promulgated under the Exchange Act,
this Schedule 13D is being filed by Messrs. Sillerman, Ferrel and
Morrow (each a "Reporting Person" and collectively the "Reporting
Persons"). The Reporting Persons are making this single joint filing
because they may be deemed to constitute a "group" within the meaning
of Section 13(d)(3) of the Exchange Act and Rule 13d-5(b) promulgated
thereunder. Each of the Reporting Persons disclaims (i) the existence
of such a group and (ii) beneficial ownership of the shares of Class
A Common Stock held by the other Reporting Persons.
(b)-(c) Robert F.X. Sillerman
Mr. Sillerman is principally employed as the Chairman of the Board and
Chief Executive Officer of SFX Broadcasting, Inc. ("SFX"), a
publicly-held corporation that is an owner and operator of radio
stations and also serves as Chairman of the Board
Page 5 of __ pages
<PAGE>
of Sillerman Communications Management Corporation ("SCMC"), a New York
corporation which makes investments in and provides financial
consulting services to companies engaged in the media business. Mr.
Sillerman's business address is 150 East 58th Street, 19th Floor, New
York, New York 10155. SCMC is an advisor to the Company on a fee
basis.
Mr. Sillerman holds (i) securities in his individual capacity, (ii)
certain options through The Sillerman Companies, Inc., a New York
corporation ("TSC"), of which Mr. Sillerman is the controlling
stockholder and (iii) certain Escrow Shares (as hereinafter defined)
and Series B Convertible Preferred Stock through SCMC, of which Mr.
Sillerman is the controlling stockholder.
Michael G. Ferrel
Mr. Ferrel is principally employed as the President, Chief Executive
Officer and Chief Operating Officer of the Company. Mr. Ferrel's
business address is One Monarch Place, Suite 220, Springfield,
Massachusetts 01144. Mr. Ferrel is, and has been since the Company's
inception, a director of the Company.
Bruce Morrow
Mr. Morrow is principally employed as a radio broadcaster at WCBS-FM
in New York, New York. Mr. Morrow's business address is 51 West 52nd
Street, New York, NY 10019. Mr. Morrow is, and has been since the
Company's inception, the Chairman of the Board of the Company.
Each Reporting Person was a founder of the Company.
(d) Each Reporting Person affirms that he has not, during the last
five years, been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors).
(e) Each Reporting Person affirms that he has not, during the last
five years, been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which he
was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with
respect to such laws.
(f) Each of the Reporting Persons is a citizen of the United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The event resulting in this filing occurred on July 31, 1996 when
170,000 non-voting shares of Series A Convertible Preferred Stock,
par value $.01 per share (the "Series A Convertible Preferred
Stock"), were issued to the Reporting Persons of which Messrs.
Sillerman, Ferrel and Morrow received 120,000 shares (of which 40,000
Page 6 of __ pages
<PAGE>
shares were issued to SCMC), 40,000 shares and 10,000 shares,
respectively. The issuance of the Series A Convertible Preferred
Stock was pursuant to a compensation plan approved by the Company's
stockholders. Pursuant to the Certificate of Designation of the
Series A Preferred Stock, the Series A Convertible Preferred Stock is
automatically convertible into an equal number of shares of Class A
Common Stock since the Company achieved at least $5 million in
Broadcast Cash Flow (as defined in the Certificate of Designation of
the Series A Convertible Preferred Stock) in 1995 and the closing
sales price of Class A Common Stock exceeded $7.50 per share for the
thirty trading days immediately preceding such issuance. Simultaneous
upon the issuance of the 170,000 shares of Series A Convertible
Preferred Stock such shares and the Class A Common Stock into which
such shares are convertible were placed in escrow pursuant to an
escrow agreement pursuant to which each Reporting Person shall be
entitled to vote his shares of Class A Common Stock and which such
shares shall be released from escrow in five equal annual
installments beginning April 30, 1997 (the "Escrow Shares"); provided
that, in the case of Messrs. Sillerman and Ferrel, they provide
substantial services to the Company during the preceding fiscal year
and, in the case of Mr. Morrow, he is available to provide
substantial services to, and serve as a director of, the Company.
Reference is made to paragraph (5) of Item 6 which is incorporated
herein by reference.
In addition to the Escrow Shares, Messrs. Sillerman, Ferrel and
Morrow beneficially own 107,000 shares, 26,000 shares and 10,000
shares of Class A Common Stock, respectively (of which 40,000 shares,
26,000 shares and 10,000 shares, respectively, are issuable upon the
exercise of options which are currently exercisable).
Mr. Sillerman also beneficially owns 360,000 shares of Class C Common
Stock, 133,334 shares of Original Preferred Stock and 120,000 shares
of Series B Convertible Preferred Stock (of which 40,000 shares are
held by SCMC). Mr. Sillerman acquired the 360,000 shares of Class C
Common Stock, on July 23, 1993, in connection with the formation of
the Company as follows: (i) 220,000 shares for $1,240,000, and (ii)
140,000 shares were issued along with $5,250,000 cash as the purchase
price of two radio stations purchased by a wholly-owned subsidiary of
the Company. In connection with the formation of the Company, Mr.
Sillerman acquired 133,334 shares of Original Preferred Stock on July
29, 1993 for $0.05 per share. Mr. Sillerman also has an interest in
the shares of Class B Common Stock held by Mr. Morrow. Reference is
made to paragraph (1) of Item 6 of this Statement which is
incorporated herein by reference.
Mr. Ferrel also beneficially owns 10,000 shares of Class B Common
Stock, 66,666 shares of Original Preferred Stock and 40,000 shares of
Series B Convertible Preferred Stock. In connection with the
formation of the Company, Mr. Ferrel acquired the shares of Class B
Common Stock on April 8, 1993 for $0.01 per share. Mr. Ferrel
acquired the shares of Original Preferred Stock on July 29, 1993, for
$0.05 per share, in connection with his employment agreement with the
Company.
Page 7 of __ pages
<PAGE>
Mr. Morrow also beneficially owns 130,000 shares of Class B Common
Stock and 10,000 shares of Series B Convertible Preferred Stock. In
connection with the formation of the Company, Mr. Morrow acquired the
shares of Class B Common Stock on April 8, 1993 for $0.01 per share.
Mr. Sillerman also has an interest in the shares of Class B Common
Stock held by Mr. Morrow. Reference is made to paragraph (1) of Item
6 of this Statement which is incorporated herein by reference.
All purchases of stock by the Reporting Person were financed with
their personal funds unless otherwise noted. All shares of Series B
Convertible Preferred Stock were issued to the Reporting Persons
pursuant to a compensation plan approved by the Company stockholders.
ITEM 4. PURPOSE OF TRANSACTION.
As founders of the Company, officers and directors of the Company and
as holders of all of the outstanding Class B Common Stock, Mr. Morrow
and Mr. Ferrel have controlled the Company since its inception. As a
founder of the Company and the holder of all of the outstanding
shares of Class C Common Stock and of a majority of the Original
Preferred Stock, Mr. Sillerman has, since the Company's inception,
been in a position, under certain circumstances, to assume control of
the Company. The Company was structured in such a manner so that Mr.
Sillerman's other broadcasting interests, including but not limited
to the radio stations owned by SFX, of which Mr. Sillerman holds a
majority of the voting power and is Chairman of the Board and Chief
Executive Officer, would not be attributable to the Company. At the
time of the Company's formation, the Communications Act of 1934, as
amended, and the rules, regulations, orders or policies promulgated
or adopted thereunder by the Federal Communications Commission (the
"Communications Laws") limited the number of radio stations which any
entity could own to 12 FM and 12 AM stations. Those ownership limits
were based on "attributable" interests, which for a corporation,
included the interest of officers, directors and those who, directly
or indirectly, had the right to vote 5% or more of the corporation's
voting securities. The Company was structured in this manner in order
to maximize its expansion opportunities.
The voting rights and certain conversions features of the Company's
securities are as follows:
Pursuant to the Company's Certificate of Incorporation, the holders
of shares of Class A Common Stock and Class B Common Stock vote as a
single class on all matters submitted to a vote of the Company's
stockholders, with each share of Class A Common Stock entitled to one
vote and each share of Class B Common Stock entitled to ten votes,
except (i) the holders of Class A Common Stock, voting as a separate
class, are entitled to elect two directors, (ii) with respect to any
"going private" transaction, described in Rule 13e-3 under the
Exchange Act, between the Company and any of Messrs. Sillerman or
Morrow, SCMC, and Howard J. Tytel, an executive officer of SCMC, or
any of their affiliates, the Class A Common Stock and
Page 8 of __ pages
<PAGE>
Class B Common Stock vote as a single class, with each share of Class
A Common Stock and Class B Common Stock entitled to one vote per
share and (iii) as otherwise provided by law.
Accordingly, upon consummation of the Company's initial public
offering of equity in 1993, solely by virtue of their holdings of
Class B Common Stock, Mr. Morrow and Mr. Ferrel held 54% and 4%,
respectively, of the combined voting power of the Company.
Pursuant to the Company's Certificate of Incorporation, the holders
of shares of Class C Common Stock and Original Preferred Stock do not
have voting rights other than those required by applicable law. Each
share of Class C Common Stock and Original Preferred Stock is
convertible into a share of Class B Common Stock, subject to receipt
of all necessary prior approvals from the Federal Communications
Commission, if any ("FCC Approval") (a) after May 15, 1996, if the
Company is in default under any obligation for borrowed money or (b)
on and after July 29, 1998, and (c) with respect to the Original
Preferred Stock (i) held by Mr. Ferrel, if Mr. Ferrel is employed by
the Company, and (ii) held by Mr. Sillerman, if Mr. Sillerman's
services are available to the Company through SCMC. Upon consummation
of the Company's initial public equity offering in 1993, if shares of
Class C Common Stock and Original Preferred Stock were converted into
Class B Common Stock, Mr. Sillerman would have held approximately 61%
of the combined voting power of the Company. Shares of Class B Common
Stock, Class C Common Stock and Original Preferred Stock are also
convertible under certain circumstances into shares of Class A Common
Stock. Reference is made to the second, third and fourth paragraphs
of Item 5 which are incorporated herein by reference.
The Communications Laws were amended in February 1996 by the
enactment of the Telecommunications Act of 1996 (the "Recent
Legislation") which eliminated the limit on the number of radio
stations that an entity may own nationally and generally liberalized
the number of radio stations an entity may own locally and thereby
essentially eliminated the concern of aggregating the radio station
interests of Mr. Sillerman, including but not limited to the radio
station interests of SFX, with the radio station interests of the
Company. In addition, since one of the conditions to convert Class C
Common Stock and the Original Preferred Stock into Class B Common
Stock had occurred, i.e. the passage of time through May 15, 1996, an
application for FCC Approval was made and approved on July 1, 1996
which would permit Mr. Sillerman, subject to the expiration of any
applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and certain contractual
obligations, to convert his shares of Class C Common Stock and
Original Preferred Stock into shares of Class B Common Stock and
thereby obtain approximately 50% of the combined voting power of the
Company, on July 29, 1998, or sooner, in the event that the Company
is in default under any obligation for borrowed money.
Page 9 of __ pages
<PAGE>
On April 15, 1996 the Company, SFX and SFX Merger Company, a
wholly-owned subsidiary of SFX ("Acquisition Sub"), entered into an
Agreement and Plan of Merger (as amended, the "Merger Agreement")
pursuant to which it is contemplated that Acquisition Sub will merge
with and into the Company and the Company will become a wholly-owned
subsidiary of SFX (the "Merger"). Mr. Sillerman is Chairman of the
Board and Chief Executive Officer and controls a majority of the
voting power of SFX. Pursuant to the Merger Agreement, upon the
consummation of the Merger, the outstanding securities of the Company
will be converted into securities of SFX as follows: (1) each
outstanding share of Class A Common Stock and Series B Convertible
Preferred Stock will convert into a fraction of a share of Class A
Common Stock, par value $.01 per share, of SFX (the "SFX Class A
Common Stock"), which are publicly traded on the Nasdaq National
Market and (2) each outstanding share of Class B Common Stock, Class
C Common Stock and Original Preferred Stock will convert into a
fraction of a share of Class B Common Stock, par value $.01 per
share, of SFX (the "SFX Class B Common Stock"). The fraction of a
share of SFX Class A Common Stock or SFX Class B Common Stock to be
issued in respect of each outstanding security of the Company will be
valued at $12.00 per share determined by reference to the average
trading price of the SFX Class A Common Stock during a specified
period prior to the Merger, subject to adjustment in the event such
trading price exceeds or is less than certain specified levels.
In the event that the stockholders of the Company fail to approve
amendments to the Certificate of Incorporation of the Company
necessary to permit different classes of Common Stock to receive
different consideration in the Merger (with respect to voting rights)
or the National Association of Securities Dealers, Inc. does not
approve the issuance of additional shares of SFX Class B Common
Stock, then all stock of the Company shall be converted into a
fraction of a share of SFX Class A Common Stock. The economic rights
of each class of Common Stock of SFX are identical, but the voting
rights differ. Like MMR stock, the SFX Class A Common Stock and the
SFX Class B Common Stock vote as a single class with respect to all
matters, with each share of SFX Class A Common Stock entitled to one
vote and each share of SFX Class B Common Stock entitled to ten
votes, except: (i) in the election of directors, with respect to
which the holders of the SFX Class A Common Stock, voting as a
separate class, are entitled to elect two-sevenths of SFX directors
(or if such number is not whole number, the next highest whole
number), (ii) with respect to any "going private" transaction between
SFX and Mr. Sillerman, or any of his affiliates, in which each share
of the SFX Class A Common Stock and SFX Class B Common Stock is
entitled to one vote per share, and (iii) as otherwise provided by
law.
The consummation of the Merger is subject to the satisfaction of a
number of conditions set forth in the Merger Agreement, including but
not limited to, the approval of the holders of a majority of the
Company's outstanding Class A Common Stock and Class B Common Stock,
voting together with each class entitled to one vote per share.
Page 10 of __ pages
<PAGE>
The Merger Agreement provides that Mr. Ferrel is to be named a
director and Chief Executive Officer of SFX at or prior to the
consummation of the Merger (the "Effective Time"). Upon consummation
of the Merger, it is contemplated that the Class A Common Stock will
be (a) delisted from the Nasdaq National Market and (b) will cease to
be registered under Section 12 of the Exchange Act. The Merger
Agreement attached hereto as Exhibit 8 is incorporated herein by
reference.
Each Reporting Person confirmed in writing to the Company on April
11, 1996 (the "April Letters") that he intends to vote in favor of
the Merger and against any competing transaction, should any such
transaction materialize. The Reporting Persons collectively
beneficially own approximately 13.3% of the voting power of the
Company considering the Merger and 36.9% of the voting power of the
Company considering any competing transaction, including options
exercisable within 60 days, the Escrow Shares and excluding any
conversion of any Class C Common Stock or Original Preferred Stock in
the event that the conditions to such conversion were satisfied.
Reference is made to the first paragraph of Item 3 which is
incorporated herein by reference.
Except as set forth above, the Reporting Persons have no current
plans that would result in any of the actions set forth in paragraphs
(a)-(j) of Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
As of July 31, 1996 there were 3,229,890 shares of Class A Common
Stock outstanding, including the Escrow Shares. The percentage set
forth in Item 5(a) of this Schedule 13D were derived using such
number. As of such date, the Company also had issued and outstanding
the following securities:
140,000 Class B Common Stock
360,000 Class C Common Stock
200,000 Original Preferred Stock
200,000 Series B Convertible Preferred Stock
1,826,110 Class A Warrants
1,840,000 Class B Warrants
None of the Reporting Persons beneficially owns any Class A Warrants
or Class B Warrants.
Certain of the Company's stock is convertible into an equal number of
shares of Class A Common Stock pursuant to the Company's Certificate
of Incorporation as follows: Each share of Class B Common Stock and
Class C Common Stock automatically converts into Class A Common
Stock, subject to FCC Approval (i) upon its sale or
Page 11 of __ pages
<PAGE>
other transfer to a person or entity other than an affiliate of any
of Mr. Sillerman, Mr. Morrow, Mr. Ferrel, SCMC and Howard J. Tytel,
an executive officer of SCMC, or (ii) if sold or otherwise
transferred to such an affiliate, upon the death of the transferor.
Class C Common Stock is also convertible into Class A Common Stock
subject to FCC Approval. The holders of Class B Common Stock and
Class C Common Stock are contractually prohibited from transferring
such shares in a manner that would result in such shares being
converted into Class A Common Stock and the holder of Class C Common
Stock is contractually prohibited from converting such stock into
Class A Common Stock prior to July 29, 1998. Reference is made to
paragraph (3) to Item 6 which is incorporated by reference herein.
Pursuant to the Company's Certificate of Incorporation, each share of
Original Preferred Stock converts into Class A Common Stock upon
transfer by Mr. Sillerman or Mr. Ferrel to an unaffiliated third
party under certain circumstances. Each of Mr. Sillerman and Mr.
Ferrel have agreed not to transfer such shares in a manner that would
cause the Original Preferred Stock to convert into Class A Common
Stock prior to July 29, 1998. In addition, such persons are
contractually prohibited from causing such shares to be converted
into Class A Common Stock. Reference is made to paragraphs (2) and
(3) of Item 6 which is incorporated herein by reference.
Series B Convertible Preferred Stock is convertible into Class A
Common Stock if the Company achieves at least $10 million in
Broadcast Cash Flow in 1997 and the closing sales price of Class A
Common Stock exceeds $7.50 per share for thirty days immediately
preceding such conversion. Therefore, the following percentages were
calculated assuming that none of the convertible securities were
converted into Class A Common Stock, unless otherwise noted.
(a) Robert F.X. Sillerman
Mr. Sillerman is deemed to beneficially own 227,000 shares of Class A
Common Stock, representing 6.9% of the outstanding shares of the
Class A Common Stock. The 227,000 shares of Class A Common Stock
which Mr. Sillerman beneficially owns includes (i) 120,000 Escrow
Shares and (ii) 40,000 shares issuable upon exercise of options that
are currently exercisable or will be exercisable within 60 days hereof.
Excluding the Escrow Shares, Mr. Sillerman would be deemed to
beneficially own 107,000 shares, representing 3.3% of the outstanding
shares of Class A Common Stock.
Michael G. Ferrel
Mr. Ferrel beneficially owns 66,000 shares of Class A Common Stock,
representing 2.0% of the issued and outstanding shares of Class A
Common Stock. The 66,000 shares of Class A Common Stock which Mr.
Ferrel beneficially owns includes (i) 40,000 Escrow Shares and (ii)
26,000 shares issuable upon exercise of options that are exercisable
or will be exercisable within 60 days hereof. Excluding the Escrow
Page 12 of __ pages
<PAGE>
Shares, Mr. Ferrel would be deemed to beneficially own 26,000 shares,
representing 0.7% of the outstanding shares of Class A Common Stock.
Bruce Morrow
Mr. Morrow beneficially owns 20,000 shares of Class A Common Stock,
representing 0.6% of the issued and outstanding shares of Class A
Common Stock. The 20,000 shares of Class A Common Stock which Mr.
Morrow beneficially owns includes 10,000 Escrow Shares and (ii)
10,000 shares issuable upon exercise of options that are exercisable
or will be exercisable within 60 days hereof. Excluding the Escrow
Shares, Mr. Morrow would be deemed to beneficially own 10,000 shares,
representing 0.3% of the outstanding shares of Class A Common Stock.
Inclusion of Publicly Traded Warrants
Upon the conversion of the publicly traded Class A Warrants and Class
B Warrants which are currently convertible into Class A Common Stock,
none of which are beneficially owned by the Reporting Persons, the
Reporting Persons, which own in the aggregate 313,000 shares, would
represent 4.5% of the Class A Common Stock deemed outstanding.
Voting Power
Including the Class B Common Stock, and assuming each such share has
10 votes per share and excluding the conversion of any other
securities, Messrs. Sillerman, Ferrel and Morrow would be deemed to
beneficially own 4.9%, 3.6% and 28.5%, respectively, of the voting
power of the Company's outstanding voting securities.
Assuming the conversion of Class C Common Stock to Class B Common
Stock and that each share of Class B Common Stock has ten votes per
share, and excluding the conversion of any other securities, Messrs.
Sillerman, Ferrel and Morrow would be deemed to beneficially own 46.3%,
2.0% and 16.0%, respectively, of the voting power of the Company's
voting securities.
Assuming the conversion of Class C Common Stock and the Original
Preferred Stock to Class B Common Stock and that each share of Class
B Common Stock has 10 votes per share, and excluding the conversion
of any other securities, Messrs. Sillerman, Ferrel and Morrow would
be deemed to beneficially own 50.3%, 8.1% and 12.9%, respectively, of
the voting power of the Company's voting securities.
Further assuming the conversion of Class A Warrants and Class B
Warrants into Class A Common Stock, Messrs. Sillerman, Ferrel and
Morrow would be deemed to beneficially own 37.0%, 6.0% and 9.5%,
respectively, of the voting power of the Company's securities.
Page 13 of __ pages
<PAGE>
(b) Each of the Reporting Persons affirms that (i) he has sole power
to dispose of all shares of Class A Common Stock which he
beneficially owns except that Escrow Shares may not be disposed
unless, in the case of Messrs. Sillerman and Ferrel, they provide
substantial services to the Company during the preceding fiscal year
and, in the case of Mr. Morrow, he is available to provide
substantial services to, and serve as a director of, the Company and
(ii) he has the sole power to vote all of the shares of Class A
Common Stock, except that he has agreed to vote for a nominee of Huff
(as hereinafter defined). The Reporting Persons granted certain
proxies, with respect to the Class B Common Stock, Class C Common
Stock, Original Preferred Stock, none of which are registered under
Section 12 of the Exchange Act, which under certain circumstances,
permit Huff to vote such shares and Mr. Sillerman has the power to
vote and share in the proceeds resulting from the disposition of the
Class B Common Stock owned by Mr. Morrow. Reference is made to
paragraph (1), (3) and (5) of Item 6 which is incorporated herein by
reference.
(c) Except for the issuance of the Escrow Shares and any deemed
acquisition resulting from the delivery of the April Letters pursuant
to Rule 13d-5(b) (see paragraph (4) of Item 6 which is incorporated
herein by reference) each of the Reporting Persons affirms that he
has not effected any transactions in the shares of Class A Common
Stock during the past 60 days.
(d) Each of the Reporting Persons affirms that, except as set forth
in Item 6 of this Schedule 13D, no person other than such Reporting
Person has the right to receive or the power to direct the receipt of
dividends from, or the proceeds from the sale of, the shares of Class
A Common Stock owned by such Reporting Person.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Except as set forth in the following paragraphs numbered (1) - (5) of
this Item 6 of this Schedule 13D, the Reporting Persons do not have
any contract, arrangement, understanding or relationship (legal or
otherwise) with any of the other Reporting Persons or with any other
person with respect to any securities of the Company, including, but
not limited to, transfer or voting of any such securities, finders'
fees, joint ventures, loan or option arrangements, puts or calls,
guarantees of profits, division of profits or losses, or the giving
or withholding of proxies.
Copies of all documents discussed in this Item 6 of this Schedule 13D
are attached hereto or incorporated by reference herein as exhibits.
Statements contained in this Item 6 of this Schedule 13D as to the
contents of any such document are not necessarily complete and in
each instance reference is made to the copy of document filed as an
exhibit to this Schedule 13D, each such statement being qualified in
all respects by such reference.
Page 14 of __ pages
<PAGE>
(1) Pursuant to an agreement dated July 29, 1993 between Messrs.
Morrow and Sillerman (the "Morrow/Sillerman Agreement"), Mr. Morrow
has assigned to Mr. Sillerman approximately 53.8% (the "Applicable
Percentage") of all proceeds payable to Mr. Morrow in connection with
any sale or other disposition of, or dividend or other distribution
payable on or with respect to, the 130,000 shares of Class B Common
Stock owned by Mr. Morrow. In addition, Mr. Morrow has also granted
to Mr. Sillerman a right of first refusal with respect to any sale or
other disposition of such shares of Class B Common Stock. In the
event that Mr. Sillerman does not exercise his right of first refusal
and a sale to a third party is consummated, Mr. Sillerman is to
receive an amount equal to the product of (i) the greater of (A) the
third party sales price or (B) the appraised value of the shares so
sold determined by a nationally recognized media investment banking
firm selected by Morrow which firm is satisfactory to Mr. Sillerman,
(ii) multiplied by the Applicable Percentage.
To secure his payment obligations under the Morrow/Sillerman
Agreement, Mr. Morrow has also entered into a pledge agreement, dated
July 29, 1993 (the "Pledge Agreement"), pursuant to which he has
pledged 80,000 of the 130,000 shares of Class B Common Stock (the
"Pledged Shares") to Mr. Sillerman. Pursuant to the terms of the
Pledge Agreement, in the event of any failure by Mr. Morrow to comply
with any of the terms contained in the Morrow/Sillerman Agreement
(principally the right of first refusal, to deliver the Applicable
Percentage of the proceeds upon a sale and to deliver the Applicable
Percentage of dividends upon the payment of dividends), Mr. Sillerman
may cause the Pledged Shares to be registered in his name or the name
of his nominee and thereafter exercise all rights appurtenant to such
Pledged Shares, including but not limited to, the right to vote such
shares and receive dividends and distributions thereon. In addition,
pursuant to the Pledge Agreement, Mr. Morrow granted to Mr. Sillerman
an irrevocable proxy to vote the Pledged Shares if, and only if, Mr.
Morrow fails to comply with any of the terms contained in the
Morrow/Sillerman Agreement, of which the exercise by Mr. Sillerman is
subject to prior FCC Approval.
(2) On December 30, 1994 each of Messrs. Sillerman and Ferrel
confirmed in writing to the Company that he would not convert any
shares of Original Preferred Stock into Class B Common Stock or sell
or otherwise transfer any shares of Original Preferred Stock to a
third party such that in accordance with the Company's Certificate of
Incorporation such Original Preferred Stock would automatically
convert into Class A Common Stock, unless his services were available
to the Company through July 29,1998. The Company's Restated
Certificate of Incorporation provides that Original Preferred Stock
is convertible into Class B Common Stock beginning May 15, 1996 (i)
at any time after July 29, 1998 or earlier in the event that the
Company is in default under any obligation for borrowed money and
(ii) (A) with respect to a conversion by Mr. Sillerman, Mr.
Sillerman's services are available to the Company through SCMC at the
time of such conversion and (B) with respect to a conversion by Mr.
Ferrel, Mr. Ferrel is employed by the Company at the time of such
conversion. The Company's Certificate of Incorporation provides that
Original Preferred Stock is convertible into Class A Common Stock
beginning
Page 15 of __ pages
<PAGE>
December 31, 1994 upon sale or other transfer to a third party under
certain circumstances. SCMC has agreed to provide services to the
Company for a five year period ending July 28, 1998 and Mr. Ferrel
has an employment contract pursuant to which Mr. Ferrel is to serve
as an officer of the Company for a five year period ending July 28,
1998.
On July 31, 1996, Messrs. Sillerman and Ferrel and the Company
entered into an agreement pursuant to which the Original Preferred
Stock was placed in escrow. The agreement provides that each of Mr.
Sillerman and Mr. Ferrel may not sell, transfer or otherwise dispose
of the Original Preferred Stock and any shares in to which such
shares are converted, prior to July 29, 1998, and then, only if such
individual performs substantial services for the Company through July
29, 1998. If such services are not performed then the Original
Preferred Stock or such shares into which the Original Preferred
Stock is converted shall be canceled. Pursuant to the terms of the
agreement, the Original Preferred Stock may be converted into Class B
Common Stock in accordance with the terms of the Company's Restated
Certificate of Incorporation in which case Mr. Sillerman and Mr.
Ferrel will be entitled to vote such shares.
(3) The Company sold its Senior Subordinated Debentures due 2001 (the
"Debentures") and certain warrants to The Huff Alternative Income
Fund, L.P. ("Huff") pursuant to the Securities Purchase Agreement
dated March 27, 1995 between the Company and Huff (the "Securities
Purchase Agreement") to finance a portion of the purchase price of
its acquisition of Southern Starr Broadcasting Group, Inc. In
connection with the sale of the Debentures, each of Mr. Sillerman,
Mr. Ferrel and Mr. Morrow entered into a Stockholders Agreement dated
March 27, 1995 among each such individual, Huff and the Company (the
"Stockholders Agreement"). The Stockholders Agreement prohibits (i)
Mr. Sillerman from converting shares of Class C Common Stock into
shares of Class A Common Stock prior to July 29, 1998; (ii) Messrs.
Sillerman, Ferrel and Morrow from selling or otherwise transferring
shares of Class B Common Stock or Class C Common Stock to a third
party such that pursuant to the Company's Certificate of
Incorporation such sale would result in such shares being converted
into shares of Class A Common Stock and (iii) Messrs. Sillerman and
Ferrel, prior to July 29, 1998, from selling or otherwise
transferring shares of Original Preferred Stock to a third party such
that such shares would, in accordance with the Company's Restated
Certificate of Incorporation, become shares of Class A Common Stock.
In addition, any transfer of stock by a Reporting Person requires the
transferee to agree in writing to be bound by the terms and
conditions of the Stockholders Agreement.
Pursuant to the Stockholders Agreement, each of Messrs. Sillerman,
Ferrel and Morrow granted to Huff an irrevocable proxy (the
"Contingent Proxies") to vote, under certain circumstances, all his
shares of capital stock of the Company on any and all matters as to
which such shares are entitled to vote. Pursuant to the Stockholders
Agreement, Huff may not exercise the Contingent Proxies (and Messrs.
Sillerman, Ferrel and Morrow are entitled to vote the shares subject
to such proxies) unless and
Page 16 of __ pages
<PAGE>
until certain specified events of default of the Company under the
Securities Purchase Agreement shall have occurred (including, among
others, the failure of the Company to pay principal when due or the
failure to pay interest within 30 days of the due date, the failure
of the Company to maintain licenses, declaration of bankruptcy by or
on behalf of the Company, violation by the Company of any provision
of the Certificate of Designations of the Senior Cumulative Preferred
Stock). The exercise by Huff of the rights set forth in the
Contingent Proxies is subject to the prior approval of the FCC. The
Contingent Proxies terminate when the debentures issued pursuant to
the Securities Purchase Agreement have been paid in full. In
addition, each Reporting Person granted Huff an irrevocable proxy
(the "Non-Contingent Proxies") to vote his shares for a single
director designated by Huff, until such time that Huff no longer
holds any Debentures. Each Reporting Person also agreed, among other
things, not to, without Huff's consent, cause the Company to commence
a bankruptcy proceeding. Huff and the Company have entered into an
agreement pursuant to which Huff has agreed to consent to the Merger
and the Company and SFX have agreed to cause the Debenture and Senior
Preferred Stock sold to Huff to be repurchased whereupon all
prohibitions on the transfer of stock shall lapse.
(4) As set forth in Item 4 of this Schedule 13D, in connection with
entering into the Merger Agreement, each of the Reporting Persons on
April 11, 1996 confirmed in writing that he intended to vote his
shares of stock of the Company in favor of the merger transaction
between the Company and SFX approved by the committee of independent
directors of the Company and against any competing transaction. The
Reporting Persons may be deemed to have formed a "group" within the
meaning of Section 13(d)(3) of the Exchange Act and Rule 13d-5(b)
promulgated thereunder by virtue of the delivery of such letters. The
Reporting Persons disclaim the existence of any such group.
(5) On July 31, 1996, each of Messrs. Sillerman, Ferrel and Morrow
and the Company entered into agreements pursuant to which the Series
A Convertible Preferred Stock and Series B Convertible Preferred
Stock and any shares issuable upon the conversion of such securities
were placed in escrow. The agreement provides that each of Mr.
Sillerman, Mr. Ferrel and Mr. Morrow may not sell, transfer or
otherwise dispose of such shares unless such shares vest. Such shares
shall vest in five equal annual installments beginning April 30, 1997
provided that, in the case of Messrs. Sillerman and Ferrel, they
provide substantial services to the Company during the preceding
fiscal year and, in the case of Mr. Morrow, he is available to
provide substantial services to, and serve as a director of, the
Company. In the event that such stockholder does not fulfill such
condition in a particular year, then one-fifth of the total shares
shall be canceled.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS.
1. Agreement between Mr. Sillerman and Mr. Ferrel and Pledge
Agreement related thereto (incorporated by reference to Exhibit 10.1
to Amendment No. 3 to the
Page 17 of __ pages
<PAGE>
Registration Statement on Form SB-2 (Reg No. 33-60741) of the Company
filed with the Commission on July 19, 1993).
2. Securities Purchase Agreement, dated as of March 27, 1995, between
Multi-Market Radio, Inc. and The Huff Alternative Income Fund, L.P.
(incorporated by reference to Exhibit 10.34 to the Form 10-KSB (File
No. 0-22080) of the Company for the year ended December 31, 1994).
3. Stockholders Agreement, dated as of March 27, 1995, between the
Company, Huff, Sillerman, Ferrel and Morrow (incorporated by
reference to Exhibit 10.35 to the Form 10-KSB (File No. 0-22080) of
the Company for the fiscal year ended December 31, 1994).
4. Written confirmation of voting intent, dated April 11, 1996,
executed by Robert F.X. Sillerman.
5. Written confirmation of voting intent, dated April 11, 1996,
executed by Michael G. Ferrel.
6. Written confirmation of voting intent, dated April 11, 1996,
executed by Bruce Morrow.
7. Amended and Restated Agreement and Plan of Merger among SFX, SFX
Merger Company and the Company (composite version).
8. Agreement, dated August 6, 1996, among the Reporting Persons
relating to the filing of a joint statement pursuant to Rule
13d-1(f)(1) under the Exchange Act.
9. Escrow Agreement dated as of July 31, 1996 among Kraig G. Fox,
("Escrow Agent"), the Company and Robert F.X. Sillerman and Michael
Ferrel with respect to the Original Preferred Stock.
10. Escrow Agreement dated as of July 31, 1996 among Kraig G. Fox,
("Escrow Agent"), the Company and the Stockholders listed therein
with respect to the Series A Convertible Preferred Stock.
11. Escrow Agreement dated as of July 31, 1996 among Kraig G. Fox,
("Escrow Agent"), the Company and the Stockholders listed therein
with respect to the Series A Convertible Preferred Stock.
12. Escrow Agreement dated as of July 31, 1996 among Kraig G. Fox,
("Escrow Agent"), the Company and the Stockholders listed therein
with respect to the Series B Convertible Preferred Stock.
Page 18 of __ pages
<PAGE>
13. Escrow Agreement dated as of July 31, 1996 among Kraig G. Fox,
("Escrow Agent"), the Company and the Stockholders listed therein
with respect to the Series B Convertible Preferred Stock.
Page 19 of __ pages
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of our knowledge and belief,
we certify that the information set forth in this statement is true, complete
and correct.
Date: August __, 1996
/s/ Robert F.X. Sillerman
Robert F.X. Sillerman
/s/ Michael G. Ferrel
Michael G. Ferrel
/s/ Bruce Morrow
Bruce Morrow
Page 20 of __ pages
<PAGE>
EXHIBIT INDEX
Sequential
Exhibit No. Description Page No.
1 Agreement between Mr. Sillerman and Mr. Ferrel
and Pledge Agreement related thereto (incorporated
by reference to Exhibit 10.1 to Amendment No. 3 to
the Registration Statement on Form SB-2 (Reg No.
33-60741) of Multi-Market Radio, Inc. filed with the
Commission on July 19, 1993
2 Securities Purchase Agreement, dated as of March
27, 1995, between Multi-Market Radio, Inc. and The
Huff Alternative Income Fund, L.P. (incorporated by
reference to Exhibit 10.34 to the Form 10-KSB (File
No. 0-22080) of Multi-Market Radio, Inc. for the
year ended December 31, 1994)
3 Stockholders Agreement, dated as of March 27,
1995, between Multi-Market Radio, Inc., The Huff
Alternative Income Fund, L.P. Robert F.X.
Sillerman, Michael G. Ferrel and Bruce Morrow
(incorporated by reference to Exhibit 10.35 to the
Form 10-KSB (File No. 0-22080) of Multi-Market
Radio, Inc. for the fiscal year ended December 31,
1994)
4 Written confirmation of voting intent, dated April
11, 1996, executed by Robert F.X. Sillerman
5 Written confirmation of voting intent, dated April
11, 1996 executed by Michael G. Ferrel
6 Written confirmation of voting intent, dated April
11, 1996, executed by Bruce Morrow
7 Amended and Restated Agreement and Plan of Merger
among SFX Broadcasting, Inc., SFX Merger Company
and Multi-Market Radio, Inc. (composite version)
Page 21 of __ pages
<PAGE>
8 Agreement, dated August 6, 1996, among the
Reporting Persons relating to the filing of a joint
statement pursuant to Rule 13d-1(f)(1) under the
Exchange Act
9 Escrow Agreement dated as of July 31, 1996 among
Kraig G. Fox, ("Escrow Agent"), Multi-Market
Radio, Inc. and Robert F.X. Sillerman and Michael
Ferrel with respect to the Original Preferred Stock
10 Escrow Agreement dated as of July 31, 1996 among
Kraig G. Fox, ("Escrow Agent"), Multi-Market
Radio, Inc. and the Stockholders listed therein with
respect to the Series A Convertible Preferred Stock
11 Escrow Agreement dated as of July 31, 1996 among
Kraig G. Fox, ("Escrow Agent"), Multi-Market
Radio, Inc. and the Stockholders listed therein with
respect to the Series A Convertible Preferred Stock
12 Escrow Agreement dated as of July 31, 1996 among
Kraig G. Fox, ("Escrow Agent"), Multi-Market
Radio, Inc. and the Stockholders listed therein with
respect to the Series B Convertible Preferred Stock
13 Escrow Agreement dated as of July 31, 1996 among
Kraig G. Fox, ("Escrow Agent"), Multi-Market
Radio, Inc. and the Stockholders listed therein with
respect to the Series B Convertible Preferred Stock
Page 22 of __ pages
EXHIBIT 4
The undersigned hereby confirms that he intends to vote for the merger
transaction between Multi-Market Radio, Inc. and SFX Broadcasting, Inc.
approved by the Independent Committee and to vote against any competing
transaction.
/s/ Robert F.X. Sillerman
-------------------------
Robert F.X. Sillerman
Dated: April 11, 1996
------------------
4-1
EXHIBIT 5
The undersigned hereby confirms that he intends to vote for the
merger transaction between Multi-Market Radio, Inc. and SFX Broadcasting, Inc.
approved by the Independent Committee and to vote against any competing
transaction.
/s/ Michael G. Ferrel
-------------------------------------
Michael G. Ferrel
Dated: April 11, 1996
5-1
EXHIBIT 6
The undersigned hereby confirms that he intends to vote for the
merger transaction between Multi-Market Radio, Inc. and SFX Broadcasting, Inc.
approved by the Independent Committee and to vote against any competing
transaction.
/s/ Bruce Morrow
-------------------------------------
Bruce Morrow
Dated: April 11, 1996
----------------------------
6-1
EXHIBIT 7
- ------------------------------------------------------------------------------
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
AMONG
SFX BROADCASTING, INC.,
SFX MERGER COMPANY
AND
MULTI-MARKET RADIO, INC.
DATED AS OF APRIL 15, 1996,
AS AMENDED ON MAY 6, 1996 AND JULY [__], 1996
(COMPOSITE VERSION)
- ------------------------------------------------------------------------------
7-1
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
ARTICLE I -- THE MERGER
1.01. The Merger..........................................................B-1
1.02. Effective Time; Closing.............................................B-1
1.03. Effect of the Merger................................................B-2
1.04. Certificate of Incorporation; Bylaws................................B-2
1.05. Directors and Officers..............................................B-2
ARTICLE II -- CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
2.01. Conversion of Securities............................................B-2
2.02. Exchange of MMR Stock Certificates..................................B-4
2.03. Stock Transfer Books................................................B-6
2.04. Stock Options and Stock Appreciation Rights.........................B-6
2.05. Warrants............................................................B-7
ARTICLE III -- REPRESENTATIONS AND WARRANTIES OF MMR
3.01. Organization and Qualification; Subsidiaries........................B-8
3.02. Certificate of Incorporation and Bylaws.............................B-8
3.03. Capitalization......................................................B-8
3.04. Authority Relative to this Agreement................................B-9
3.05. No Conflict; Required Filings and Consents..........................B-9
3.06. Permits; Compliance................................................B-10
3.07. SEC Filings; Financial Statements..................................B-10
3.08. Absence of Certain Changes or Events...............................B-10
3.09. Absence of Litigation..............................................B-11
3.10. Employee Benefit Matters...........................................B-11
3.11. Labor Matters......................................................B-12
3.12. Intellectual Property..............................................B-12
3.13. Taxes..............................................................B-12
3.14. Opinion of Financial Advisor.......................................B-13
3.15. Vote Required......................................................B-13
3.16. Brokers............................................................B-14
3.17. Tangible Property..................................................B-14
3.18. Material Contracts.................................................B-14
3.19. [Intentionally Omitted]............................................B-14
3.20. Certain Business Practices.........................................B-14
3.21. Board Recommendation...............................................B-14
3.22. Change in Control..................................................B-14
3.23. FCC Compliance.....................................................B-15
3.24. Environmental Matters..............................................B-15
3.25. Accounts Receivable................................................B-16
3.26. Insurance..........................................................B-16
3.27. Real Property and Leases...........................................B-16
3.28. Interested Party Transactions......................................B-17
ARTICLE IV -- REPRESENTATIONS AND WARRANTIES OF SFX
AND ACQUISITION SUB
7-2
<PAGE>
4.01. Corporate Organization and Qualification...........................B-17
4.02. Certificate of Incorporation and Bylaws............................B-17
4.03. Capitalization.....................................................B-17
4.04. Authority Relative to this Agreement...............................B-18
4.05. No Conflict; Required Filings and Consents.........................B-18
4.06. SEC Filings; Financial Statements..................................B-19
4.07. Absence of Certain Changes or Events...............................B-19
4.08. Taxes..............................................................B-20
4.09. Permits; Compliance................................................B-21
4.10. Absence of Litigation..............................................B-21
4.11. Employee Benefit Matters...........................................B-21
4.12. Labor Matters......................................................B-21
4.13. Intellectual Property..............................................B-22
4.14. Opinion of Financial Advisor.......................................B-22
4.15. Vote Required......................................................B-22
4.16. Tangible Property..................................................B-22
4.17. Certain Business Practices.........................................B-22
4.18. Board Recommendation...............................................B-22
4.19. FCC Compliance.....................................................B-22
4.20. Interested Party Transactions......................................B-23
ARTICLE V -- CONDUCT OF BUSINESS PENDING THE MERGER
5.01. Conduct of Business by MMR Pending the Merger......................B-23
5.02. Conduct of Business by SFX Pending the Merger......................B-23
ARTICLE VI -- ADDITIONAL AGREEMENTS
6.01. Registration Statement; Proxy Statement............................B-24
6.02. Stockholders' Meetings.............................................B-25
6.03. Appropriate Action; Consents; Filings..............................B-26
6.04. Access to Information..............................................B-27
6.05. Acquisition Proposals.............................................B-27
6.06. Directors' and Officers' Indemnification...........................B-28
6.07. Obligations of Acquisition Sub.....................................B-28
6.08. Public Announcements...............................................B-29
6.09. Delivery of SEC Documents..........................................B-29
6.10. Notification of Certain Matters....................................B-29
6.11. Further Action.....................................................B-29
6.12. Tax Treatment......................................................B-29
6.13. FCC Application(s) and Approval....................................B-29
6.14. Employee Benefit Plans.............................................B-30
6.15. Repayment of Indebtedness; Redemption of MMR Senior Preferred StockB-30
6.16. Warrants; Make Whole Adjustment....................................B-30
6.17. The Exchange Agreement and Related Matters.........................B-31
6.18. Governance.........................................................B-32
6.19. Withdrawal of Registration Statements..............................B-32
6.20. Consulting Arrangement.............................................B-32
ARTICLE VII -- CONDITIONS TO THE MERGER
7.01. Conditions to the Obligations of Each Party........................B-32
7.02. Conditions to the Obligations of SFX and Acquisition Sub...........B-33
7.03. Conditions to the Obligations of MMR...............................B-34
7-3
<PAGE>
ARTICLE VIII -- TERMINATION, AMENDMENT AND WAIVER
8.01. Termination.......................................................B-34
8.02. Fees and Expenses.................................................B-36
8.03. Amendment.........................................................B-37
8.04. Waiver............................................................B-37
ARTICLE IX -- GENERAL PROVISIONS
9.01. Non-Survival of Representations, Warranties and Agreements........B-37
9.02. Notices...........................................................B-37
9.03. Certain Definitions...............................................B-38
9.04. Severability......................................................B-39
9.05. Assignment; Binding Effect; Benefit...............................B-39
9.06. Incorporation of Schedules........................................B-39
9.07. Specific Performance..............................................B-40
9.08. Governing Law.....................................................B-40
9.09. Headings..........................................................B-40
9.10. Counterparts......................................................B-40
9.11. Waiver of Jury Trial..............................................B-40
9.12. Entire Agreement..................................................B-40
9.13. Waiver of Certain Rights..........................................B-40
Exhibit A - [Intentionally omitted]
Exhibit B - Affiliate Agreement [Not Include Herewith]
Exhibit C - Amendments to MMR's Certificate of Incorporation [Not Include
Herewith]
Exhibit D - Amendments to SFX's Certificate of Incorporation [Not
Include Herewith]
Exhibit E-1 - SFX Tax Certificate [Not Include Herewith]
Exhibit E-2 - MMR Tax Certificate [Not Include Herewith]
7-4
<PAGE>
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, AS AMENDED
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as of April
15, 1996, as amended on May 6, 1996 and July [__], 1996 (this "Agreement"), by
and among SFX BROADCASTING, INC., a Delaware corporation ("SFX"), SFX MERGER
COMPANY, a Delaware corporation and a direct wholly-owned subsidiary of SFX
("Acquisition Sub"), and MULTI-MARKET RADIO, INC., a Delaware corporation
("MMR").
W I T N E SS E T H:
WHEREAS, Acquisition Sub, upon the terms and subject to the
conditions of this Agreement and in accordance with the General Corporation
Law of the State of Delaware ("Delaware Law"), intends to merge with and into
MMR (the "Merger");
WHEREAS, the Board of Directors of MMR (a) has determined that the
Merger is in the best interests of MMR and its stockholders and has approved
and adopted this Agreement and the transactions contemplated hereby (the
"Transactions") and (b) has recommended the approval and adoption of this
Agreement and the approval of the Merger by, and directed that this Agreement
and the Merger be submitted to a vote of, the stockholders of MMR;
WHEREAS, the Board of Directors of SFX (a) has determined that the
Merger is in the best interests of SFX and its stockholders and has approved
and adopted this Agreement and the Transactions and (b) has recommended the
approval and adoption of this Agreement and the approval of the Merger by, and
directed that this Agreement and the Merger be submitted to a vote of, the
stockholders of SFX;
WHEREAS, the Board of Directors of Acquisition Sub has determined
that the Merger is in the best interests of Acquisition Sub and its
stockholder and has approved and adopted this Agreement and the Transactions;
and
WHEREAS, SFX and MMR intend that the Merger constitute a
tax-free "reorganization" to the extent of the receipt of stock within the
meaning of Section 368(a)(1)(A) and Section 368(a)(2)(E) of the Internal
Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, SFX, Acquisition Sub and MMR hereby agree as follows:
ARTICLE I -- THE MERGER
SECTION 1.01. THE MERGER. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with Delaware Law,
at the Effective Time (as hereinafter defined), Acquisition Sub shall be
merged with and into MMR, the separate corporate existence of Acquisition Sub
shall cease and MMR shall continue as the surviving corporation of the Merger
(the "Surviving Corporation"). The name of the Surviving Corporation shall be
Multi-Market Radio, Inc.
SECTION 1.02. EFFECTIVE TIME; CLOSING. Unless this Agreement shall
have been terminated and the Transactions abandoned pursuant to Article VIII,
as promptly as practicable (and in any event within five business days)
following the satisfaction or waiver of the conditions set forth in Article
VII (or such other date as may be agreed to in writing by each of the parties
hereto), the parties hereto shall cause the Merger to be consummated by filing
a certificate of merger (the "Certificate of Merger") with the Secretary of
State of the State of Delaware (the "Secretary") in such form as is required
by, and executed in accordance with the relevant provisions of, Delaware Law.
The term "Effective Time" means the date and time of the filing of the
Certificate of Merger with the Secretary (or such later time as may be agreed
to in writing by each of the parties hereto and specified in the Certificate
of Merger). Immediately prior to the filing of the Certificate of Merger, a
closing (the "Closing") will be held at the offices of Baker & McKenzie, 805
Third Avenue, New York, New York (or such other place and time as the parties
hereto may agree).
SECTION 1.03. EFFECT OF THE MERGER. The effect of the Merger shall be
as provided in the applicable provisions of Delaware Law. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all
property, rights, privileges, powers and franchises of MMR and Acquisition Sub
shall vest in the Surviving Corporation,
7-5
<PAGE>
and all debts, liabilities and duties of MMR and Acquisition Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
SECTION 1.04. CERTIFICATE OF INCORPORATION; BYLAWS. (a) The
Certificate of Incorporation of MMR, as in effect at the Effective Time and as
amended as set forth below, shall be the Certificate of Incorporation of the
Surviving Corporation until amended in accordance with applicable law.
"ARTICLE IV
The total number of shares of capital stock which the Corporation
shall have authority to issue is one thousand (1,000), $.01 par
value per share, all of which shall be shares of common stock."
(b) At the Effective Time, the Bylaws of MMR in effect at the
Effective Time shall be the Bylaws of the Surviving Corporation, until duly
amended in accordance with the terms thereof.
SECTION 1.05. DIRECTORS AND OFFICERS. The directors of Acquisition
Sub immediately prior to the Effective Time shall be the initial directors of
the Surviving Corporation, each to hold office in accordance with the
Certificate of Incorporation and Bylaws of the Surviving Corporation until a
successor is elected or appointed and qualified, and the officers of
Acquisition Sub immediately prior to the Effective Time shall be the initial
officers of the Surviving Corporation, in each case until their respective
successors are duly elected or appointed and qualified, or as otherwise
provided in the Bylaws of the Surviving Corporation.
ARTICLE II -- CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. CONVERSION OF SECURITIES. (a) At the Effective Time, by
virtue of the Merger and without any action on the part of Acquisition Sub,
MMR or the holders of any of the following shares of capital stock, and
subject to the other provisions of Sections 2.01 and 2.02:
(i) MMR CLASS A COMMON STOCK -- each share of Class A Common
Stock, $.01 par value, of MMR (the "MMR Class A Common Stock") issued
and outstanding immediately prior to the Effective Time shall be
converted into the right to receive the number of validly issued,
fully paid and non-assessable shares of Class A Common Stock, $.01
par value, of SFX (the "SFX Class A Common Stock") equal to the
Exchange Ratio (as defined in Section 2.01(b));
(ii) MMR CLASS B COMMON STOCK -- each share of Class B Common
Stock, $.01 par value, of MMR (the "MMR Class B Common Stock") issued
and outstanding immediately prior to the Effective Time (other than
Dissenting Shares (as defined in Section 2.01(d))) shall be converted
into the right to receive the number of validly issued, fully paid
and non-assessable shares of Class B Common Stock, $.01 par value, of
SFX (the "SFX Class B Common Stock") equal to the Exchange Ratio;
(iii) MMR CLASS C COMMON STOCK -- each share of Class C Common
Stock, $.01 par value, of MMR (the "MMR Class C Common Stock") issued
and outstanding immediately prior to the Effective Time (other than
Dissenting Shares) shall be converted into the right to receive the
number of validly issued, fully paid and non-assessable shares of SFX
Class B Common Stock equal to the Exchange Ratio;
(iv) MMR ORIGINAL PREFERRED STOCK -- each share of Preferred
Stock, $.01 par value, of MMR (the "MMR Original Preferred Stock")
issued and outstanding immediately prior to theEffective Time (other
than Dissenting Shares) shall be converted into the right to receive
the number of validly issued, fully paid and non-assessable shares of
SFX Class B Common Stock equal to the Exchange Ratio; and
7-6
<PAGE>
(v) MMR SERIES B CONVERTIBLE PREFERRED STOCK -- each share of
Series B Convertible Preferred Stock, $.01 par value, of MMR (the
"MMR Series B Preferred Stock") issued and outstanding immediately
prior to the Effective Time (other than Dissenting Shares) shall be
converted into the right to receive the number of validly issued,
fully paid and non-assessable shares of SFX Class A Common Stock
equal to the Exchange Ratio, which shares of SFX Class A Common Stock
shall be subject to certain mutually acceptable forfeiture
restrictions through February 14, 1998;
provided, however, that in the event that the stockholders of MMR fail to
approve the amendments to the Certificate of Incorporation of MMR as set forth
in Exhibit C, or the National Association of Securities Dealers, Inc. ("NASD")
or the Nasdaq Stock Market does not approve the issuance of SFX Class B Common
Stock in the Merger, then each share of MMR Class B Common Stock, MMR Class C
Common Stock and MMR Original Preferred Stock shall be converted into the
right to receive the number of validly issued, fully paid and non-assessable
shares of SFX Class A Common Stock equal to the Exchange Ratio.
(vi) all shares (other than Dissenting Shares) of MMR Class A
Common Stock, MMR Class B Common Stock, MMR Class C Common Stock, MMR
Original Preferred Stock, and MMR Series B Preferred Stock
(collectively, the "MMR Securities") shall no longer be outstanding
and shall automatically be canceled and cease to exist, and each
certificate previously evidencing any such shares (other than
Dissenting Shares) shall thereafter represent the right to receive a
certificate representing the shares of SFX Class A Common Stock or
SFX Class B Common Stock (collectively, the "SFX Common Stock") into
which such MMR Securities were converted in the Merger. The holders
of certificates previously evidencing such MMR Securities outstanding
immediately prior to the Effective Time shall cease to have any
rights with respect to such MMR Securities except as otherwise
provided herein or by Delaware Law. Such certificates previously
evidencing MMR Securities shall be exchanged for certificates
representing whole shares of SFX Common Stock issued in consideration
therefor upon the surrender of such certificates previously
evidencing MMR Securities in accordance with the provisions of
Section 2.02. No fractional shares of SFX Common Stock shall be
issued, and, in lieu thereof, a cash payment shall be made pursuant
to Section 2.02(e);
(vii) any MMR Securities held in the treasury of MMR and any MMR
Securities owned by SFX or any wholly-owned subsidiary of SFX or of
MMR immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof and no payment shall be
made with respect thereto; and
(viii) each share of common stock, $.01 par value, of
Acquisition Sub (the "Acquisition Sub Common Stock") issued and
outstanding immediately prior to the Effective Time shall be
converted into and become one validly issued, fully paid and
non-assessable share of Common Stock, $.01 par value, of the
Surviving Corporation.
(b) For purposes of this Agreement, subject to adjustments required
by Section 6.16, "Exchange Ratio" shall mean the number of shares of SFX Class
A Common Stock or SFX Class B Common Stock, as the case may be, equal to the
quotient obtained by dividing $12.00 by the average of the Reported Price (as
defined hereafter) for the twenty (20) consecutive trading days ending on the
fifth trading day prior to the Effective Time (such average Reported Price
being the "SFX Class A Common Stock Price") (the fifth trading day prior to
the Effective Time being referred to as the "Determination Date"), on the
primary exchange on which the SFX Class A Common Stock is traded, including
the Nasdaq National Market; provided, however, that (1) in the event that the
SFX Class A Common Stock Price exceeds $42.00 but is equal to or less than
$44.00, then the Exchange Ratio shall be the quotient obtained by dividing (i)
the sum of (A) $12.00, plus (B) the product of (I) twenty-five percent (25%),
multiplied by (II) the difference between the SFX Class A Common Stock Price
and $42.00 by (ii) the SFX Class A Common Stock Price; (2) in the event that
the SFX Class A Common Stock Price exceeds $44.00, then the Exchange Ratio
shall be the quotient obtained by dividing (i) the sum of (A) $12.50, plus (B)
the product of (I) thirty percent (30%), multiplied by (II) the difference
between the SFX Class A Common Stock Price and $44.00 by (ii) the SFX Class A
Common Stock Price; or (3) in the event that the SFX Class A Common Stock
Price is less than $32.00 then the Exchange Ratio shall be .3750. All
arithmetic calculations pursuant to this paragraph shall be made through the
fourth decimal place (i.e., to the closest ten-thousandth). For purposes of
this Agreement, "Reported Price"
7-7
<PAGE>
shall mean, with respect to each trading day, the average of the last
reported bid and asked prices of the SFX Class A Common Stock on such trading
day.
(c) If between the date of this Agreement and the Effective Time,
except as otherwise contemplated herein, the outstanding MMR Securities or SFX
Common Stock shall have been changed into a different number of shares or a
different class, by reason of any stock dividend, reclassification,
recapitalization, split, division, combination or exchange of shares, the
Exchange Ratio shall be correspondingly adjusted to reflect such stock
dividend, reclassification, recapitalization, split, division, combination or
exchange of shares.
(d) If appraisal rights are available under Delaware Law to holders
of shares of MMR Securities in connection with the Merger, any issued and
outstanding share of MMR Securities (other than MMR Class A Common Stock)
which has not been voted for adoption of this Agreement and the Transactions
and with respect to which appraisal shall have been properly demanded in
accordance with Section 262 of Delaware Law ("Dissenting Shares") shall not be
converted into the right to receive the consideration described in Section
2.01(a), and the holders thereof shall have only such rights as are provided
in such Section 262 of Delaware Law, unless and until the holder of any such
share of MMR Securities withdraws such holder's demand for appraisal in
accordance with Section 262(k) of Delaware Law or otherwise loses the right to
such appraisal. If a holder of MMR Securities shall withdraw such holder's
demand for appraisal or shall otherwise lose the right to such appraisal,
then, as of the Effective Time or the occurrence of such event, whichever last
occurs, such holder's MMR Securities shall cease to be Dissenting Shares and
shall be converted into the consideration described in Section 2.01(a),
without interest. Prior to the Effective Time, MMR shall give SFX prompt
notice of any written demands for appraisal or withdrawals of demands for
appraisal received by MMR and, except with the prior written consent of SFX,
shall not settle or offer to settle any such demands.
SECTION 2.02. EXCHANGE OF MMR STOCK CERTIFICATES.
(a) EXCHANGE AGENT. As of or before the Effective Time, SFX shall
deposit, or shall cause to be deposited, with a bank or trust company
organized under the laws of, and having an office in, the United States or any
state thereof (the "Exchange Agent") and designated by SFX and approved by
MMR, which approval shall not be unreasonably withheld, for the benefit of the
holders of MMR Securities, for exchange in accordance with this Article II,
through the Exchange Agent, certificates representing the whole shares of SFX
Common Stock issuable pursuant to Section 2.01 in exchange for outstanding MMR
Securities and cash in an amount sufficient to permit payment of cash payable
in lieu of fractional shares pursuant to Section 2.02(e) (such certificates
for shares of SFX Common Stock, together with any dividends or distributions
with respect thereto, and cash, being hereinafter referred to as the "Exchange
Fund"). The Exchange Agent shall, pursuant to irrevocable instructions from
SFX, be instructed to deliver the SFX Common Stock contemplated to be issued
pursuant to Section 2.01 and cash contemplated by Section 2.02(e) out of the
Exchange Fund.
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable after the
Effective Time, SFX will instruct the Exchange Agent to mail to each holder of
record of a certificate or certificates which immediately prior to the
Effective Time evidenced outstanding MMR Securities (other than Dissenting
Shares) (each a "Certificate" and collectively, the "Certificates") (i) a
letter of transmittal and (ii) instructions for use in effecting the surrender
of the Certificates in exchange for certificates evidencing shares of SFX
Common Stock. Upon surrender of a Certificate for cancellation to the Exchange
Agent together with such letter of transmittal, duly executed, and such other
customary documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange therefor a
certificate representing the number of whole shares of SFX Common Stock which
such holder has the right to receive in respect of the MMR Securities formerly
represented by such Certificate (after taking into account all MMR Securities
then held by such holder), together with cash in lieu of fractional SFX Common
Stock to which such holder is entitled pursuant to Section 2.02(e) and any
dividends or distributions to which such holder is entitled pursuant to
Section 2.02(c), and the Certificate so surrendered shall forthwith be
canceled. Subject to Section 2.02(h), under no circumstances will any holder
of a Certificate be entitled to receive any part of the shares of SFX Common
Stock into which the MMR Securities were converted in the Merger until such
holder shall have surrendered such Certificate. In the event of a transfer of
ownership of MMR Securities which is not registered in the transfer records of
MMR, the shares of SFX Common Stock into which such MMR Securities were
converted in the Merger may be issued in accordance with this Article II to
the transferee if the Certificate evidencing such MMR Securities is presented
to the Exchange Agent, accompanied by all documents required to evidence and
effect such transfer and by evidence that any applicable stock transfer taxes
have been paid. Until surrendered as contemplated by this Section 2.02, each
Certificate shall be deemed at any time after the Effective Time to
7-8
<PAGE>
evidence only the right to receive upon such surrender the certificate
representing the number of whole shares of SFX Common Stock which the holder
has the right to receive in respect of the MMR Securities formerly represented
by such Certificate (after taking into account all MMR Securities then held by
such holder), together with cash in lieu of fractional shares of SFX Common
Stock to which such holder is entitled pursuant to Section 2.02(e) and any
dividends or distributions to which such holder is entitled pursuant to
Section 2.02(c). SFX agrees, from and after the Effective Time, to treat each
holder of Certificates as holding of record the whole number of shares of SFX
Common Stock which such holder has the right to receive pursuant to this
Agreement for purposes of voting and determinations of quorums for voting.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES OF SFX COMMON
STOCK. No dividends or other distributions declared or made after the
Effective Time with respect to SFX Common Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to the shares of SFX Common Stock into which such MMR Securities
were converted in the Merger, until the holder of such Certificate shall
surrender such Certificate for exchange as provided herein. Subject to the
effect of applicable laws, following surrender of any such Certificate, there
shall be paid to the holder of such Certificate, in addition to the
certificates representing shares of SFX Common Stock as provided in Section
2.02(b) (including any cash paid or other distributions pursuant to Section
2.02(e)), without interest, the amount of dividends or other distributions
with a record date after the Effective Time theretofore paid with respect to
the whole shares of SFX Common Stock evidenced by such Certificate.
(d) NO FURTHER RIGHTS IN MMR SECURITIES. All shares of SFX Common
Stock delivered upon conversion of the MMR Securities in accordance with the
terms hereof (including any cash paid or other distributions pursuant to
Sections 2.02(c) and (e)) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such MMR Securities.
(e) NO FRACTIONAL SHARES. No certificates or scrip evidencing
fractional shares of SFX Common Stock shall be issued upon the surrender for
exchange of Certificates, but in lieu thereof each holder of MMR Securities
who would otherwise be entitled to receive a fraction of a share of SFX Common
Stock, after aggregating all shares of SFX Common Stock which such holder
would be entitled to receive under Section 2.01, shall receive an amount equal
to the SFX Class A Common Stock Price multiplied by the fraction of a share of
SFX Common Stock to which such holder would otherwise be entitled, without
interest.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the
Exchange Fund which remains undistributed to the holders of MMR Securities for
one year after the Effective Time shall be delivered to SFX, upon demand, and,
subject to Section 2.02(g), any holders of MMR Securities who have not
theretofore complied with this Article II shall thereafter look only to SFX
for the shares of SFX Common Stock, any cash in lieu of fractional shares of
SFX Common Stock and any dividends or other distributions to which they are
entitled pursuant to this Section 2.02.
(g) NO LIABILITY. Neither SFX nor the Surviving Corporation
shall be liable to any holder of MMR Securities for any shares of SFX Common
Stock (or dividends or distributions with respect thereto) or cash delivered
to a public official pursuant to any applicable abandoned property, escheat or
similar law.
(h) LOST CERTIFICATES. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the execution of an indemnity agreement
by such person and/or the posting by such person of a bond in such reasonable
amount as the Surviving Corporation may reasonably direct, as indemnity
against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen
or destroyed Certificate the shares of SFX Common Stock, cash in lieu of
fractional shares of SFX Common Stock and unpaid dividends and distributions on
shares of SFX Common Stock deliverable in respect thereof pursuant to this
Agreement.
SECTION 2.03. STOCK TRANSFER BOOKS. At the Effective Time, the stock
transfer books of MMR shall be closed and there shall be no further
registration of transfers of MMR Securities thereafter on the records of MMR.
At or after the Effective Time, any Certificates presented to the Exchange
Agent or SFX for any reason shall be converted into the right to receive
shares of SFX Common Stock, cash in lieu of fractional shares of SFX Common
Stock and any dividends or other distributions to which they are entitled
pursuant to Section 2.02.
7-9
<PAGE>
SECTION 2.04. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS. (a)
Pursuant to the Multi-Market Radio, Inc. 1993 Stock Option Plan (the "1993
Plan"), the Multi-Market Radio, Inc. 1994 Stock Option Plan (the "1994 Plan")
and the Multi-Market Radio, Inc. 1995 Stock Option Plan (the "1995 Plan" and,
together with the 1993 Plan and the 1994 Plan, the "Option Plans"), all
outstanding options issued thereunder (the "Options") shall, as of the
Effective Time, automatically and without any action on the part of the holder
thereof, be assumed by SFX. The holders of such Options shall continue to
have, and be subject to, the same terms and conditions set forth in the stock
option plans and agreements pursuant to which such Options were issued as in
effect immediately prior to the Effective Time, except that (i) such Options
shall be exercisable for that number of whole shares of SFX Class A Common
Stock equal to the product of the number of shares of MMR Class A Common Stock
covered by the Option immediately prior to the Effective Time multiplied by
the Exchange Ratio rounded up to the nearest whole number of shares of SFX
Class A Common Stock, and (ii) the per share exercise price for the shares of
SFX Class A Common Stock issuable upon the exercise of such assumed Option
shall be equal to the quotient determined by dividing the exercise price per
share of MMR Class A Common Stock specified for such Option under the
applicable stock option plan or agreement in effect immediately prior to the
Effective Time by the Exchange Ratio rounding the resulting exercise price
down to the nearest whole cent. The date of grant for such Option shall be the
date on which the Option was originally granted. At the Effective Time, SFX
shall reserve for issuance the number of shares of SFX Class A Common Stock
that will become issuable upon the exercise of such Options pursuant to this
Section 2.04. Nothing in this Section 2.04 shall affect the schedule of
vesting (or the acceleration thereof) with respect to the Options to be
assumed by SFX as provided in this Section 2.04. As soon as practicable after
the Effective Time, SFX shall file a registration statement or registration
statements on Form S-8 (or any successor form), or another appropriate form
with respect to the shares of SFX Class A Common Stock subject to such
options, and shall use its best efforts to maintain the effectiveness of such
registration statement or registration statements (and maintain the current
status of the prospectus or prospectuses contained therein) for so long as
such Options remain outstanding. It is the intention of the parties that,
subject to applicable law, the Options assumed by SFX qualify following the
Effective Time as "incentive stock options" (as defined in Section 422 of the
Code) to the extent that the Options qualified as incentive stock options
prior to the Effective Time.
(b) At the Effective Time, each outstanding stock appreciation right
("SAR") issued by MMR shall, as of the Effective Time, automatically and
without any action on the part of the holder thereof, be assumed by SFX. The
holders of such SARs shall continue to have, and be subject to, the same terms
and conditions set forth in the agreements pursuant to which such SARs were
issued as in effect immediately prior to the Effective Time, except that (i)
such SARs shall be exercisable for that number of whole shares of SFX Class A
Common Stock equal to the product of the number of shares of MMR Class A
Common Stock covered by the SAR immediately prior to the Effective Time
multiplied by the Exchange Ratio rounded up to the nearest whole number of
shares of SFX Class A Common Stock, and (ii) the per share strike price for
the shares of SFX Class A Common Stock issuable upon the exercise of such
assumed SAR shall be equal to the quotient determined by dividing the strike
price per share of MMR Class A Common Stock specified for such SAR under the
applicable agreement in effect immediately prior to the Effective Time by the
Exchange Ratio, rounding the resulting strike price down to the nearest whole
cent. SFX may elect, in its sole discretion, to pay cash upon exercise of the
SARs in lieu of shares of SFX Class A Common Stock as such amount shall be
determined in accordance with the agreements pursuant to which the SARs were
issued. The date of grant of such SAR shall be the date on which the SAR was
originally granted. At the Effective Time, SFX shall reserve for issuance the
number of shares of SFX Class A Common Stock that will become issuable upon
the exercise of such SARs pursuant to this Section 2.04. Nothing in this
Section 2.04 shall affect the schedule of vesting (or the acceleration
thereof) with respect to the SARs to be assumed by SFX as provided in this
Section 2.04. As soon as practicable after the Effective Time, SFX shall file
a registration statement with respect to the shares of SFX Class A Common
Stock subject to such SARs and shall use its best efforts to maintain the
effectiveness of such registration statement or registration statements (and
maintain the current status of the prospectus contained therein) for so long
as such SARs remain outstanding.
SECTION 2.05. WARRANTS. (a) At the Effective Time, each outstanding
(i) Class A Warrant (the "Class A Warrants") and Class B Warrant (the "Class B
Warrants") issued pursuant to that certain Warrant Agreement dated March 23,
1994 by and among MMR, American Stock Transfer & Trust Company (the "Warrant
Agent"), D.H. Blair Investment Banking Corp. and Americorp Securities, Inc.
(the "Warrant Agreement"), (ii) option issued pursuant to those certain unit
purchase options dated March 23, 1994 (the "Unit Purchase Options"), (iii)
warrant issued to the underwriters of MMR's initial public offering pursuant
to common stock purchase warrants dated July 28, 1993 (the "IPO Warrants"),
(iv) warrant issued to The Huff Alternative Income Fund, L.P. ("Huff") dated
March 27, 1995 and September 26, 1995 and exercisable to purchase 595,000 and
133,201.54 shares, respectively, of MMR Class A Common Stock (subject to
adjustment as therein described) (the "Huff Warrants") and any additional
warrant granted to Huff after the date hereof (the "Additional Huff
7-10
<PAGE>
Warrant"), and (v) option issued to Robert F.X. Sillerman (each a"Warrant" and
collectively, the "Warrants") shall be assumed by SFX. The holders of such
Warrants shall continue to have, and be subject to, the same terms and
conditions set forth in such Warrant (including, without limitation, any
provision contained therein relating to the repurchase or redemption thereof),
except that (i) such Warrants shall be exercisable for that number of shares
of SFX Class A Common Stock equal to the product of the number of shares of
MMR Class A Common Stock covered by the Warrant immediately prior to the
Effective Time multiplied by the Exchange Ratio, and (ii) the per share
exercise price for the shares of SFX Class A Common Stock issuable upon the
exercise of such assumed Warrant shall be equal to the quotient determined by
dividing the exercise price per share of MMR Class A Common Stock specified
for such Warrant under the applicable Warrant immediately prior to the
Effective Time by the Exchange Ratio rounding the resulting exercise price
down to the nearest whole cent. SFX shall also assume the obligations under
the Registration Rights Agreement, dated as of March 27, 1995 between Huff and
MMR and certain obligations of MMR under the Securities Purchase Agreement,
dated as of March 27, 1995, between Huff and MMR, on terms reasonably
satisfactory to Huff. Notwithstanding anything to the contrary, nothing herein
shall prohibit SFX from issuing fractional shares of SFX Class A Common Stock
upon the exercise of any Warrant.
(b) At or prior to the Effective Time, SFX shall deliver to the
holders of the Warrants appropriate and timely notices setting forth such
holders' rights pursuant to the Warrants and the agreements evidencing the
issuance of the Warrants shall continue in effect on the same terms and
conditions (subject to the assumption by SFX as set forth above).
(c) At the Effective Time, SFX shall reserve for issuance the number
of shares of SFX Class A Common Stock that will become issuable upon exercise
of the Warrants assumed by SFX. SFX shall file a registration statement on
Form S-3 or another appropriate form with respect to the shares of SFX Class A
Common Stock subject to the Warrants assumed by SFX and shall use its best
efforts to maintain the effectiveness of such registration statement or
registration statements (and maintain the current status of the prospectus
contained therein) for so long as such Warrants remain outstanding.
ARTICLE III -- REPRESENTATIONS AND WARRANTIES OF MMR
Except as set forth in the disclosure schedule delivered by MMR to
SFX, and signed by MMR and SFX for identification, within ten (10) business
days after the execution and delivery of this Agreement (the "MMR Disclosure
Schedule"), which shall identify exceptions by specific section references,
MMR hereby represents and warrants to SFX and Acquisition Sub that:
SECTION 3.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. MMR is a
corporation, and each subsidiary of MMR (each a "MMR Subsidiary" and
collectively, the "MMR Subsidiaries") is a corporation or a partnership, as
the case may be, in each case duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization and has the
requisite corporate power and authority (or partnership power and authority)
to own, lease and operate its properties and to carry on its business as it is
now being conducted. MMR and each MMR Subsidiary are duly qualified or
licensed as a foreign corporation (or partnership) to do business, and are in
good standing, in each jurisdiction where the character of the properties
owned, leased or operated by them or the nature of their business makes such
qualification or licensing necessary, except for such failures to be so
qualified or licensed and in good standing that would not, individually or in
the aggregate, have a Material Adverse Effect. As used in this Agreement, the
term "Material Adverse Effect" means, with respect to any person, any change or
effect that, individually or when taken together with all other changes or
effects that have occurred on or prior to the date of determination of the
occurrence of the Material Adverse Effect and which are continuing as of that
date, is or is reasonably likely to be materially adverse to the financial
condition, business, results of operations or prospects of such person and its
subsidiaries, taken as a whole. As of the date hereof, a true and correct list
of all MMR Subsidiaries, together with the jurisdiction of organization of
each MMR Subsidiary and the percentage of the outstanding capital stock (or
other ownership interest) of each MMR Subsidiary owned by MMR and each other
MMR Subsidiary, is set forth in Section 3.01 of the MMR Disclosure Schedule.
Except as disclosed in Section 3.01 of the MMR Disclosure Schedule, MMR does
not directly or indirectly own any equity or similar interest in, or any
interest convertible into or exchangeable or exercisable for any equity or
similar interest in, any corporation, partnership, joint venture or other
business association or entity.
SECTION 3.02. CERTIFICATE OF INCORPORATION AND BYLAWS. MMR
has heretofore made available to SFX a complete and correct copy of the
Certificate of Incorporation and Bylaws, each as amended to date, of MMR and
each
7-11
<PAGE>
MMR Subsidiary. Neither MMR nor any MMR Subsidiary is in violation of any
provision of its Certificate of Incorporation or Bylaws or other
organizational document, as applicable.
SECTION 3.03. CAPITALIZATION. The authorized capital stock of MMR
consists of 15,000,000 shares of Class A Common Stock, 1,200,000 shares of
Class B Common Stock, 700,000 shares of Class C Common Stock and 1,200,000
shares of preferred stock. As of the date hereof (a) 3,216,500 shares of MMR
Class A Common Stock were issued and outstanding, (b) 140,000 shares of MMR
Class B Common Stock were issued and outstanding, (c) 360,000 shares of MMR
Class C Common Stock were issued and outstanding, (d) 200,000 shares of MMR
Original Preferred Stock were issued and outstanding, (e) 1,250 shares of
Senior Cumulative Preferred Stock, $.01 par value, of MMR (the "MMR Senior
Preferred Stock") were issued and outstanding, and (f) 200,000 shares of MMR
Series B Preferred Stock were issued and outstanding; all of which are validly
issued, fully paid and non-assessable and not subject to preemptive rights.
Except as set forth in Sections 2.04 and 2.05 hereof or Section 3.03 of the
MMR Disclosure Schedule, there are no options, warrants or other rights,
agreements, arrangements or commitments of any character relating to the
issued or unissued capital stock of, or other equity interests in, MMR or any
MMR Subsidiary obligating MMR or any MMR Subsidiary to issue or sell any
shares of capital stock of, or other equity interests in, MMR or any MMR
Subsidiary. Subject to the terms of Sections 2.02, 2.04 and 2.05, after the
Effective Time, neither SFX nor the Surviving Corporation will have any
obligation to issue, transfer or sell any SFX Common Stock or securities
convertible into SFX Common Stock or common stock or other securities of the
Surviving Corporation or any securities convertible into common stock or other
securities of the Surviving Corporation. Except as contemplated by this
Agreement, there are no outstanding contractual obligations of MMR or any MMR
Subsidiary to repurchase, redeem or otherwise acquire any MMR Securities or
any capital stock of, or any equity interest in, any MMR Subsidiary. Each
outstanding share of capital stock of, or other equity interest in, each MMR
Subsidiary is duly authorized, validly issued, fully paid and nonassessable
and, except as described in Section 3.03 of the MMR Disclosure Schedule, each
such share or interest owned by MMR or another MMR Subsidiary is free and
clear of all security interests, liens, claims, pledges, options, rights of
first refusal, agreements, limitations on MMR's or such other MMR Subsidiary's
voting rights, charges and other encumbrances of any nature whatsoever.
SECTION 3.04. AUTHORITY RELATIVE TO THIS AGREEMENT. MMR has all
necessary corporate power and authority to execute and deliver this Agreement
and, with respect to the Merger, upon the approval and adoption of this
Agreement by MMR's stockholders in accordance with this Agreement and Delaware
Law, to perform its obligations hereunder and to consummate the Transactions.
The execution and delivery of this Agreement by MMR and the consummation by
MMR of the Transactions have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of MMR are
necessary to authorize this Agreement or to consummate the Transactions (other
than, with respect to the Merger, the approval and adoption of this Agreement
by the stockholders of MMR as set forth in Section 3.15 and the filing and
recordation of an appropriate Certificate of Merger with the Secretary as
required by Delaware Law and with respect to certain amendments to the
Certificate of Incorporation of MMR, the approval by the stockholders of MMR
as set forth in Exhibit C). This Agreement has been duly and validly executed
and delivered by MMR and, assuming the due authorization, execution and
delivery of this Agreement by SFX and Acquisition Sub, constitutes a legal,
valid and binding obligation of MMR, enforceable against MMR in accordance
with its terms.
SECTION 3.05. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by MMR do not, and the
performance of this Agreement by MMR will not, subject to, (x) with respect to
the Merger, obtaining the requisite approval and adoption of this Agreement by
MMR's stockholders in accordance with this Agreement and Delaware Law, and (y)
obtaining the consents, approvals, authorizations and permits and making the
filings described in Section 3.05(b) of the MMR Disclosure Schedule, in
Section 3.05(b) or Section 8.01(l)(B) of this Agreement, (i) conflict with or
violate the Certificate of Incorporation or Bylaws of MMR or any MMR
Subsidiary, (ii) conflict with or violate any domestic (federal, state or
local) or foreign law, rule, regulation, order, judgment or decree
(collectively, "Law" or "Laws") applicable to MMR or any MMR Subsidiary or by
which any property or asset of MMR or any MMR Subsidiary is bound or affected,
or (iii) except as specified in Section 3.05(a)(iii) of the MMR Disclosure
Schedule, result in any breach of or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to
others any right of termination, unilateral amendment, acceleration or
cancellation of, or give to others any right to invalidate or terminate any
purchase or other right to acquire property under, or result in the creation
of a lien or other encumbrance on any property or asset of MMR or any MMR
Subsidiary or require the consent of any third party pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which MMR or any MMR Subsidiary
is a party or by which MMR or any MMR Subsidiary or any property or asset of
MMR or
7-12
<PAGE>
any MMR Subsidiary is bound or affected, except for such conflicts, violations,
breaches, defaults, rights, liens and consents which individually or in the
aggregate would not reasonably be expected to have a Material Adverse Effect on
MMR.
(b) The execution and delivery of this Agreement by MMR do not, and
the performance of this Agreement by MMR will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, domestic or foreign, except (i) pursuant
to the Securities Exchange Act of 1934, as amended (the"Exchange Act"), the
Securities Act of 1933, as amended (the "Securities Act"), state securities or
"blue sky" laws ("Blue Sky Laws"), the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), the Communications Act
(as hereinafter defined), and filing and recordation of an appropriate
Certificate of Amendment to MMR's Certificate of Incorporation and Certificate
of Merger with the Secretary as required by Delaware Law, (ii) as specified in
Section 3.05(b) of the MMR Disclosure Schedule and (iii) where failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not reasonably be likely to have a Material
Adverse Effect on MMR and would not prevent or delay consummation of the
Transactions, or otherwise prevent MMR from timely performing its obligations
under this Agreement.
SECTION 3.06. PERMITS; COMPLIANCE. Except as disclosed in
Sections 3.06 and 3.24 of the MMR Disclosure Schedule, each of MMR and the MMR
Subsidiaries is now and on the Effective Time will be in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances,
exceptions, consents, certificates, approvals and orders of any United States
(federal, state or local) or foreign government, or governmental, regulatory
or administrative authority, agency or commission or court of competent
jurisdiction ("Governmental Authority") legally necessary for MMR or any MMR
Subsidiary to own, lease and operate its properties or to carry on its
business as it is now being conducted, except for those which the failure to
possess would not individually or in the aggregate reasonably be expected to
have a Material Adverse Effect on MMR (the "MMR Permits") and, as of the date
hereof, no suspension or cancellation of any of the MMR Permits is pending or,
to the knowledge of MMR, threatened. Except as disclosed in Section 3.06 of
the MMR Disclosure Schedule, neither MMR nor any MMR Subsidiary is in conflict
with, or in default or violation of, or, with the giving of notice or the
passage of time, would be in conflict with, or in default or violation of, (i)
any Law applicable to MMR or any MMR Subsidiary or by which any property or
asset of MMR or any MMR Subsidiary is bound or affected, except in the case of
any such conflict, default or violation which would not reasonably be expected
to have a Material Adverse Effect, or (ii) any of the MMR Permits.
SECTION 3.07. SEC FILINGS; FINANCIAL STATEMENTS. (a) MMR has filed
all forms, reports and documents required to be filed by it with the
Securities and Exchange Commission (collectively, the "MMR SEC Reports"). The
MMR SEC Reports (i) were prepared in all material respects in accordance with
the requirements of the Securities Act and the Exchange Act, as the case may
be, and the rules and regulations thereunder and (ii) did not, at the time
they were filed (or at the effective date thereof in the case of registration
statements), contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. No MMR Subsidiary is currently required to file any form,
report or other document with the Securities and Exchange Commission (the
"SEC").
(b) Each of the financial statements (including, in each case, any
notes thereto) contained in the MMR SEC Reports was prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis ("U.S. GAAP") throughout the periods indicated (except as may
be indicated in the notes thereto and except that financial statements
included with quarterly reports on Form 10-QSB do not contain all U.S. GAAP
notes to such financial statements) and each fairly presented in all material
respects the financial position, results of operations and changes in
stockholders' equity and cash flows of MMR as at the respective dates thereof
and for the respective periods indicated therein (subject, in the case of
unaudited statements, to normal and recurring year-end adjustments which were
not and are not expected, individually or in the aggregate, to have a Material
Adverse Effect on MMR).
(c) Except (i) to the extent set forth on the audited consolidated
balance sheet of MMR as of December 31, 1995, including the notes to the
audited financial statements of which such balance sheet is a part and which
is included in MMR's Form 10-KSB for the year ended December 31, 1995 (the
"MMR December 31, 1995 Balance Sheet"), (ii) as set forth in Section 3.07(c)
of the MMR Disclosure Schedule or (iii) as disclosed in any SEC Report filed
by MMR after December 31, 1995, neither MMR nor any MMR Subsidiary has any
liability or obligation of any nature (whether accrued, absolute, contingent
or otherwise) which would be required to be reflected on a balance sheet, or
in the notes thereto, prepared in accordance with U.S. GAAP, except for
liabilities and obligations incurred in (x) the ordinary
7-13
<PAGE>
course of business consistent with past practice since December 31, 1995 which
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on MMR or (y) connection with this Agreement.
(d) MMR has heretofore made available to SFX complete and correct
copies of all amendments and modifications (if any) that have not been filed
by MMR with the SEC to all agreements, documents and other instruments that
previously had been filed by MMR as exhibits to the MMR SEC Reports and are
currently in effect.
SECTION 3.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December
31, 1995, except in the ordinary course and in a manner consistent with MMR's
past practice or as contemplated by, or disclosed pursuant to, this Agreement,
including Section 3.08 of the MMR Disclosure Schedule, there has not been (a)
any amendment or other change to the Certificate of Incorporation or Bylaws of
MMR or any MMR Subsidiary, (b) any issuance, sale, pledge, disposal, grant,
encumbrance, or authorization of the issuance, sale, pledge, disposition,
grant or encumbrance by MMR or any MMR Subsidiary of (i) any shares of their
capital stock of any class, or any options, warrants, convertible securities
or other rights of any kind to acquire any shares of such capital stock, or
any other ownership interest (including, without limitation, any phantom
interest), of MMR or any MMR Subsidiary (except for the issuance of shares of
capital stock issuable pursuant to Options and Warrants outstanding on
December 31, 1995 and the authorization and issuance of the Additional Huff
Warrant), or (ii) any of their assets, (c) any declaration, setting aside,
making or payment of any dividend or other distribution, payable in cash,
stock, property or otherwise, with respect to any of their capital stock by
MMR or any MMR Subsidiary, (d) any reclassification, combination, split or
division by MMR or any MMR Subsidiary of any of their capital stock or
redemption, purchase or other acquisition, directly or indirectly, of any of
their capital stock or securities or obligations convertible into or
exchangeable or exercisable for such capital stock, (e) any commitment or
incurrence by MMR or any MMR Subsidiary of any capital expenditure in excess
of $100,000, (f) any incurrence of any indebtedness for borrowed money in
excess of $100,000 or issuance of any debt securities or assumption, guarantee
or endorsement, or otherwise becoming responsible as an accommodation, for the
obligations of any person, or making of any loans or advances, (g) any
acquisition by MMR or any MMR Subsidiary (including, without limitation, by
merger, consolidation or acquisition of stock or assets) of any interest in
any corporation, partnership, other business organization or any division
thereof or any assets, (h) any contract or agreement entered into or amended
by MMR or any MMR Subsidiary material to their businesses, results of
operations or financial condition except for advertising, programming, and
similar contracts consistent with past practices, (i) any increase in the
compensation payable or to become payable to any director, officer or other
employee, or consultant or advisor, of MMR or any MMR Subsidiary, or grant of
any bonus to, or grant of any severance or termination pay to, except pursuant
to existing compensation and benefit plans, practices or arrangements that
have been previously disclosed to SFX, or any employment or severance
agreement entered into with, any director, officer or other employee, or
consultant or advisor, of MMR or any MMR Subsidiary that has a potential
duration of more than 90 days or that involves an aggregate payment of more
than $50,000, or any collective bargaining agreement entered into or amended,
(j) any bonus, profit sharing, thrift, compensation, stock option, restricted
stock, pension, retirement, deferred compensation or other plan, trust or fund
established, adopted, entered into or amended for the benefit of any director,
officer or class of employees of MMR or any MMR Subsidiary, (k) any settlement
or compromise by MMR or any MMR Subsidiary of any pending or threatened
litigation which would reasonably be expected to have a Material Adverse
Effect on MMR or which relates to the Transactions, (l) any event or events
(whether or not covered by insurance), individually or in the aggregate,
having a Material Adverse Effect on MMR, or (m) any change by MMR or any MMR
Subsidiary in its accounting methods, principles or practices.
SECTION 3.09. ABSENCE OF LITIGATION. Section 3.09 of the MMR
Disclosure Schedule sets forth each instance in which any of MMR and the MMR
Subsidiaries (i) is subject to any outstanding injunction, judgment, order,
decree, ruling, or charge or (ii) is a party or, to the knowledge of MMR and
the MMR Subsidiaries, is threatened to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator, which has not otherwise been
disclosed in the MMR SEC Reports and which would reasonably be expected to
have a Material Adverse Effect on MMR. Neither MMR nor any MMR Subsidiary nor
any property or asset of MMR or any MMR Subsidiary is in violation of any
order, writ, judgment, injunction, decree, determination or award.
SECTION 3.10. EMPLOYEE BENEFIT MATTERS. Except as set forth in
Section 3.10 of the MMR Disclosure Schedule, there are no material employee
benefit or compensation plans, agreements or arrangements, including "employee
benefit plans" as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and including, but not limited to,
plans, agreements or arrangements relating to former employees to which MMR or
any of
7-14
<PAGE>
the MMR Subsidiaries is a party (together, the "MMR Benefits Plans").
To the best knowledge of MMR, no default exists with respect to the
obligations of MMR or any of the MMR Subsidiaries under such MMR Benefit
Plans, which default, alone or in the aggregate, would have a Material Adverse
Effect on MMR. All MMR Benefit Plans have been administered in accordance, and
are in compliance, with the applicable provisions of ERISA, except where such
failure to administer or comply would not have a Material Adverse Effect on
MMR.
SECTION 3.11. LABOR MATTERS. Neither MMR nor any MMR Subsidiary is a
party to any collective bargaining agreement or other labor union contract
applicable to persons employed by MMR or any MMR Subsidiary.
SECTION 3.12. INTELLECTUAL PROPERTY. MMR and the MMR Subsidiaries own
or have valid, binding and enforceable rights to use each patent, invention,
copyright, trademark, industrial model, process, design and all registrations
and applications for any of the foregoing used, employed or exploited in the
business of MMR or any MMR Subsidiary without any known conflict with the
rights of others.
SECTION 3.13. TAXES. (a) Except as otherwise disclosed in Section
3.13(a) of the MMR Disclosure Schedule: MMR and each of the MMR Subsidiaries
has filed (or received an appropriate extension of time to file) all federal,
state, local, and foreign Tax Returns required to be filed by them prior to
the Effective Time. From 1992 through the Effective Time, MMR and the MMR
Subsidiaries filed consolidated U.S. federal income tax returns as members of
an affiliated group, the common parent of which is MMR. All such Tax Returns
were true and correct in all material respects. MMR and each of the MMR
Subsidiaries has paid all Taxes shown to be due on such Tax Returns, and has
made appropriate provisions in the MMR December 31, 1995 Balance Sheet for any
Taxes not yet due, or which are being contested in good faith. MMR and each of
the MMR Subsidiaries has disclosed on all Tax Returns all positions taken
therein that could give rise to a substantial understatement of federal income
tax within the meaning of Section 6662 of the Code or any similar provision of
state, local or foreign law. MMR and each of the MMR Subsidiaries has withheld
and paid over to the appropriate Governmental Authority all Taxes required by
law to have been withheld and paid in connection with amounts paid or owing to
any employee, independent contractor, creditor, stockholder, or other third
party, except for amounts which would not, individually or in the aggregate,
have a Material Adverse Effect. MMR and each of the MMR Subsidiaries has made
all payments of estimated Taxes required to be made under federal, state,
local or foreign law. All tax deficiencies asserted or assessed against MMR
and each of the MMR Subsidiaries have been paid or finally settled. Neither
MMR nor any of the MMR Subsidiaries expects any federal, state, local or
foreign taxing authority to assess any additional Taxes for any period for
which Tax Returns have been filed. No claims have ever been made by any tax
authority in a jurisdiction where MMR and each of the MMR Subsidiaries do not
file Tax Returns that it is or may be subject to taxation by that
jurisdiction. Neither MMR nor any of the MMR Subsidiaries has waived any
statute of limitations in respect of Taxes or agreed to any extension of time
with respect to a tax assessment or deficiency. There is no pending or, to the
knowledge of MMR, threatened action, audit, proceeding or investigation for
the assessment or collection of any Taxes. There are no requests for rulings,
subpoenas or requests for information pending with respect to any taxing
authority. Any adjustments of Taxes made by any federal taxing authority in
any examination which is required to be reported to a state, local, or foreign
taxing authority has been reported, and any additional Taxes due with respect
thereto have been paid. No power of attorney has been granted by MMR or any of
the MMR Subsidiaries, and is currently in force, with respect to any matter
relating to Taxes. There are no liens (other than liens for Taxes that are not
yet due or which are being contested in good faith) on any assets of MMR or
any of the MMR Subsidiaries that arose in connection with any failure (or
alleged failure) to pay any Tax, except for liens which would not,
individually or in the aggregate, have a Material Adverse Effect.
(b) Except as otherwise disclosed in Section 3.13(b) of the MMR
Disclosure Schedule: Neither MMR nor any of the MMR Subsidiaries has made an
election under Section 341(f) of the Code. Neither MMR nor any of the MMR
Subsidiaries has made any payments, is obligated to make any payments, or is a
party to any agreement that under certain circumstances could obligate it to
make any payments that will not be deductible under Section 280G of the Code.
Neither MMR nor any of the MMR Subsidiaries has been a United States real
property holding company within the meaning of Section 897(c)(2) of the Code
during the applicable period specified in Section 897(c)(1)(A)(ii). No excess
loss account (within the meaning of Treas. Reg. ss. 1.1502-19) exists with
respect to any of the MMR Subsidiaries. Neither MMR nor any of the MMR
Subsidiaries has, or will have, as of the Effective Time, any deferred gain or
loss arising from deferred intercompany transactions within the meaning of
Treas. Reg. ss. 1.1502-13. Neither MMR nor any of the MMR Subsidiaries was
acquired in a "qualified stock purchase" under Section 338(d)(3) of the Code
and no election under Section 338(g) of the Code, protective carryover basis
election, or offset prohibition election is applicable to MMR or any of the
MMR Subsidiaries. Neither MMR nor any of the MMR Subsidiaries has participated
in or cooperated with any international
7-15
<PAGE>
boycott within the meaning of Section 999 of the Code. Neither MMR nor any of
the MMR Subsidiaries is required to include in income any adjustment pursuant
to Section 481(a) of the Code (or any similar provision of law or regulations)
by reason of a change in accounting method, nor is any taxing authority
considering such change in accounting method. Neither MMR nor any of the MMR
Subsidiaries has disposed of any property which has been accounted for tax
purposes under the installment method. Neither MMR nor any of the MMR
Subsidiaries is a party to any interest rate swap, currency swap or similar
transaction. The net operating loss and other carryovers available to MMR and
each of the MMR Subsidiaries as of the most recent practicable date will be
set forth in Section 3.13(b) of the MMR Disclosure Schedule. As of the
Effective Time but prior to the Merger, the ability of MMR and each of the MMR
Subsidiaries to use their net operating losses and carryovers will not have
been affected by Sections 382, 383 or 384 of the Code or by the SRLY or CRCO
limitations of Treas. Reg. ss.ss. 1.1502-21 or 1.1502- 22. Neither MMR nor any
of the MMR Subsidiaries owns any interest in an entity which is characterized
as a partnership for U.S. federal income tax purposes. Neither MMR nor any of
the MMR Subsidiaries would be liable for any increase in Tax under Section 47
of the Code, were such entity to dispose of all of its assets on the Effective
Time. As of the Effective Time, neither MMR nor any of the MMR Subsidiaries
will have sustained an "overall foreign loss" within the meaning of Section
904(f) of the Code. As of the Effective Time, neither MMR nor any of the MMR
Subsidiaries will have any "non-recapture net section 1231 losses" within the
meaning of Section 1231(c) of the Code. No election under Section 1504(d) of
the Code has been made with respect to MMR or any of the MMR Subsidiaries.
(c) Regarding the Merger: Neither MMR nor any of the MMR
Subsidiaries is an investment company as defined in Section 368(a)(2)(F)(iii)
and (iv) of the Code. Except as set forth on Section 3.13(c) of the MMR
Disclosure Schedule, neither MMR nor any of the MMR Subsidiaries is under the
jurisdiction of a court in Title 11 or similar case within the meaning of
Section 368(a)(3)(A) of the Code. Neither MMR or any of the MMR Subsidiaries
holds stock of SFX and will not hold stock of SFX prior to the Merger.
(d) For purposes of this Section 3.13, the following terms will have
the following meanings:
(i) "Tax" or "Taxes" shall mean any and all federal, state,
local, foreign, and other taxes, levies, fees, imposts, duties and
charges of whatever kind (including any interest, penalties or
additions to the tax imposed in connection therewith or with respect
thereto), whether imposed on MMR or any of the MMR Subsidiaries,
including, without limitation, taxes imposed on, or measured by,
income, franchise, profits, or gross receipts, and also ad valorem,
value added, sales, use, service, real or personal property, capital
stock, license, payroll, withholding, employment, social security,
workers' compensation, unemployment compensation, utility, severance,
production, excise, stamp, occupation, premium, windfall profits,
transfer, and gains taxes and customs duties.
(ii) "Tax Return" shall mean returns, reports, information
statements, or other documentation (including any additional or
supporting material) filed or maintained, or required to be filed or
maintained in connection with the calculation, determination,
assessment or collection of any Tax.
SECTION 3.14. OPINION OF FINANCIAL ADVISOR. MMR has received the
written opinion of Oppenheimer & Co., Inc. (the "MMR Banker") on the date of
this Agreement to the effect that, as of the date hereof, the Exchange Ratio
is fair, from a financial point of view, to the holders of MMR's Class A
Common Stock (excluding for purposes of such opinion, Robert F.X. Sillerman,
Bruce Morrow and Michael Ferrel).
SECTION 3.15. VOTE REQUIRED. (a) Assuming the redemption of all
outstanding MMR Senior Preferred Stock at or prior to the Effective Time,
the affirmative vote of the holders of a majority of the voting power of the
then outstanding shares of MMR Class A Common Stock and MMR Class B Common
Stock (with each class entitled to one vote per share in connection with the
Merger) is the only vote of the holders of any class or series of capital
stock of MMR necessary to approve the Merger. (b) The affirmative vote of the
holders of a majority of the outstanding shares of MMR Class A Common Stock,
MMR Class B Common Stock and MMR Class C Common Stock, each voting separately
as a class, is the only vote of the holders of any class or series of capital
stock of MMR necessary to approve the amendments to the Certificate of
Incorporation of MMR as set forth on Exhibit C, which amendments are required
in order to issue SFX Class B Common Stock in respect of the MMR Class B
Common Stock and MMR Class C Common Stock.
SECTION 3.16. BROKERS. No broker, finder or investment banker (other
than the MMR Banker and Sillerman Communications Management Corporation
("SCMC")) is entitled to any brokerage, finder's or other fee or
7-16
<PAGE>
commission in connection with the Transactions based upon arrangements made by
or on behalf of MMR or any MMR Subsidiary.
SECTION 3.17. TANGIBLE PROPERTY. MMR and the MMR Subsidiaries have
good title to, or a valid leasehold interest in, the tangible personal
properties and assets used by them or shown on the MMR December 31, 1995
Balance Sheet or acquired after the date thereof, which are free and clear of
any mortgage, pledge, lien, encumbrance, charge, or other security interest,
other than (a) mechanic's, materialmen's and similar liens, (b) liens for
taxes not yet due and payable or for taxes that the taxpayer is contesting in
good faith through appropriate proceedings, (c) purchase money liens and liens
securing rental payments under capital lease arrangements, (d) liens which
would not reasonably be expected to have a Material Adverse Effect on MMR, (e)
liens and encumbrances identified and reflected on the MMR December 31, 1995
Balance Sheet and (f) mortgages, pledges, liens, encumbrances, charges or
other security interests that do not, individually, or in the aggregate,
adversely affect the current use of such property.
SECTION 3.18. MATERIAL CONTRACTS. Section 3.18 of the MMR Disclosure
Schedule lists each contract which is required by its terms or is currently
expected to result in the payment or receipt by MMR or any MMR Subsidiary of
more than $50,000 per year or $150,000 in the aggregate over the term of the
contract or which is not terminable by MMR without the payment of any penalty
or fine on not more than three months' notice (collectively, "Material
Contracts"), to which MMR or any MMR Subsidiary is a party, other than
contracts which have been filed as an exhibit to or have been incorporated by
reference in any MMR SEC Report. Each Material Contract is in full force and
effect and, to the knowledge of MMR, is enforceable against the parties
thereto (other than MMR or any such MMR Subsidiary) in accordance with its
terms and no condition or state of facts exists that, with notice or the
passage of time, or both, would constitute a default by MMR or any MMR
Subsidiary or, to the best knowledge of MMR, any third party under such
Material Contracts, except for such defaults which individually or in the
aggregate would not reasonably be expected to have a Material Adverse Effect
on MMR. MMR or the applicable MMR Subsidiary has duly complied in all material
respects with the provisions of each Material Contract to which it is a party.
SECTION 3.19. [Intentionally Omitted]
SECTION 3.20. CERTAIN BUSINESS PRACTICES. As of the date of this
Agreement, neither MMR nor any MMR Subsidiary, nor any director, officer, or,
to the knowledge of MMR, any authorized agent or employee of MMR or any MMR
Subsidiary has (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended, (iii)
made any other unlawful payment, or (iv) violated any of the provisions of
Section 999 of the Code or Section 8 of the Export Administration Act, as
amended.
SECTION 3.21. BOARD RECOMMENDATION. At a meeting duly called and held
in compliance with Delaware Law, (a) the Independent Committee of the Board of
Directors of MMR has unanimously adopted a resolution approving the Merger and
recommended that the Board of Directors of MMR approve this Agreement and the
Transactions, (b) the Board of Directors of MMR has unanimously (with one
abstention) adopted a resolution (i) approving the Merger, based on a
determination that the Merger is in the best interests of the MMR
stockholders, and (ii) approving and adopting this Agreement and the
Transactions and recommending approval and adoption of this Agreement and the
Transactions by the stockholders of MMR.
SECTION 3.22. CHANGE IN CONTROL. Except as set forth in Section 3.22
of the MMR Disclosure Schedule, neither MMR nor any MMR Subsidiary is a party
to any contract, agreement or understanding which is currently expected to
result in the payment or receipt by MMR or any MMR Subsidiary of $50,000 or
more individually and $100,000 or more in the aggregate which contains a
"change in control," "potential change in control" or similar provision.
Except as set forth in Section 3.22 of the MMR Disclosure Schedule, the
consummation of the Transactions does not result in any payment (whether of
severance pay or otherwise) becoming due from MMR or any MMR Subsidiary to any
person.
SECTION 3.23. FCC COMPLIANCE. MMR and the MMR Subsidiaries hold, as
of the date of this Agreement, and immediately prior to the Effective Time,
MMR and the MMR Subsidiaries will hold, the Federal Communications Commission
(the "FCC") licenses as set forth in Section 3.23 of the MMR Disclosure
Schedule (the "FCC Licenses"), and such licenses are now and at the Effective
Time will be in full force and effect. The FCC Licenses are the
7-17
<PAGE>
only material FCC licenses, permits and authorizations necessary for or used
in connection with the operation of the radio stations (the "Stations") set
forth in Section 3.23 of the MMR Disclosure Schedule.
Except as set forth in Section 3.23 of the MMR Disclosure Schedule,
the Stations are being operated in all material respects in accordance with
the Communications Act of 1934, as amended (the "Communications Act"), the FCC
rules, regulations and policies (the "FCC Rules"), and FCC and court
interpretations thereof, all as in effect on the date of this Agreement.
Except as set forth in Section 3.23 of the MMR Disclosure Schedule, (i) no
application, action or proceeding is pending or, to the best of MMR's
knowledge, threatened against MMR or the MMR Subsidiaries that may result in
the revocation, nonrenewal or suspension of any of the FCC Licenses, or the
imposition of any administrative sanction with respect thereto, and (ii) to
the best of MMR's knowledge, there is no fact which would disqualify MMR or
any of the MMR Subsidiaries from obtaining the approval of the FCC as provided
for in this Agreement or from completing the transactions contemplated by this
Agreement. All material applications, reports and other disclosures required
by the FCC with respect to the Stations other than the applications to obtain
the FCC consents as provided in Section 6.13 have been duly filed with the
FCC.
SECTION 3.24. ENVIRONMENTAL MATTERS. (a) For purposes of this
Agreement, the following terms shall have the following meanings: (i)
"Hazardous Substances" means (A) those substances defined in or regulated
under the following federal statutes and their state counterparts, as each may
be amended from time to time, and all regulations thereunder: the Hazardous
Materials Transportation Act, the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Clean Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the
Federal Insecticide, Fungicide, and Rodenticide Act, the Toxic Substances
Control Act and the Clean Air Act, (B) petroleum and petroleum products,
byproducts and breakdown products including crude oil and any fractions
thereof, (C) natural gas, synthetic gas, and any mixtures thereof, (D)
polychlorinated biphenyls, (E) any other chemicals, materials or substances
defined or regulated as toxic or hazardous or as a pollutant or contaminant or
as a waste under any applicable Environmental Law, and (F) any substance with
respect to which a federal, state or local agency requires environmental
investigation, monitoring, reporting or remediation, and (ii) "Environmental
Laws" means any federal, state, foreign, or local law, rule or regulation, now
or hereafter in effect and as amended, and any judicial or administrative
interpretation thereof, including any judicial or administrative order,
consent decree or judgment, relating to pollution or protection of the
environment, health, safety or natural resources, including without
limitation, those relating to (A) releases or threatened releases of Hazardous
Substances or materials containing Hazardous Substances or (B) the
manufacture, handling, transport, use, treatment, storage or disposal of
Hazardous Substances or materials containing Hazardous Substances.
(b) Except as described in Section 3.24(b) of the MMR Disclosure
Schedule and except as would not, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect on MMR: (i) MMR and each
MMR Subsidiary are in compliance with all applicable Environmental Laws, (ii)
MMR and each MMR Subsidiary have obtained all permits, approvals,
identification numbers, licenses or other authorizations required under any
applicable Environmental Laws ("Environmental Permits") and are in compliance
with their requirements, (iii) such Environmental Permits are transferable to
the Surviving Corporation pursuant to the Merger without the consent of any
Governmental Authority, (iv) to the best of MMR's knowledge there are no
underground or aboveground storage tanks or any surface impoundments, septic
tanks, pits, sumps or lagoons in which Hazardous Substances are being or have
been treated, stored or disposed of on any owned or leased real property or on
any real property formerly owned, leased or occupied by MMR or any MMR
Subsidiary, (v) there is, to the knowledge of MMR, no friable asbestos or
asbestos- containing material on any owned or leased real property in
violation of applicable Environmental Laws, (vi) MMR and the MMR Subsidiaries
have not released, discharged or disposed of Hazardous Substances on any owned
or leased real property or on any real property formerly owned, leased or
occupied by MMR or any MMR Subsidiary in an amount requiring remediation,
(vii) other than routine operational matters neither MMR nor any of the MMR
Subsidiaries is undertaking, and neither MMR nor any of the MMR Subsidiaries
has completed, any investigation or assessment or remedial or response action
relating to any such release, discharge or disposal of or contamination with
Hazardous Substances at any site, location or operation, either voluntarily or
pursuant to the order of any Governmental Authority or the requirements of any
Environmental Law, and (viii) there are no pending or, to the knowledge of
MMR, past or threatened actions, suits, demands, demand letters, claims,
liens, notices of non-compliance or violation, notices of liability or
potential liability, investigations, proceedings, consent orders or consent
agreements relating in any way to Environmental Laws, any Environmental
Permits or any Hazardous Substances ("Environmental Claims") against MMR or
any MMR Subsidiary or any of their property, and there are no existing
circumstances that can reasonably be expected to form the basis of any such
Environmental Claim, including without
7-18
<PAGE>
limitation with respect to any off-site disposal location presently or
formerly used by MMR or any MMR Subsidiaries or any of their predecessors.
(c) MMR and the MMR Subsidiaries have made available to SFX or
Acquisition Sub copies of any environmental reports, studies or analyses in
its possession or under its control relating to owned or leased real property
or the operations of MMR or the MMR Subsidiaries.
SECTION 3.25. ACCOUNTS RECEIVABLE. All of the accounts receivable
reflected in the MMR December 31, 1995 Balance Sheet or created thereafter, to
MMR's knowledge, are valid receivables subject to no setoffs or counterclaims
(except for such setoffs and counterclaims which would not be reasonably
likely to have a Material Adverse Effect on MMR), are current and collectible
and will be collected in accordance with their terms at their recorded
amounts, subject only to the reserve for bad debts set forth in the MMR
December 31, 1995 Balance Sheet as adjusted for operations and transactions
through the Effective Time in accordance with the past custom and practice of
MMR and the MMR Subsidiaries.
SECTION 3.26. INSURANCE. Section 3.26 of the MMR Disclosure Schedule
sets forth a list of each insurance policy (including policies providing
property, casualty, liability, and workers' compensation coverage and bond and
surety arrangements) to which any of MMR or any MMR Subsidiary has been a
party, a named insured, or otherwise the beneficiary of coverage at any time
within the past one year. With respect to each such insurance policy
designated as "current": (a) the policy is in full force and effect, (b) MMR
has not received notice from any insurance carrier of the intention of such
carrier to discontinue any such policy, (c) neither any of MMR or any MMR
Subsidiary nor, to the knowledge of MMR, any other party to the policy is in
breach or default (including with respect to the payment of premiums or the
giving of notices), and no event has occurred which, with notice or the lapse
of time, would constitute such a breach or default, or permit termination,
modification, or acceleration, under the policy, and (d) no party to the
policy has repudiated any provision thereof. Section 3.26 of the MMR
Disclosure Schedule lists any self-insurance arrangements affecting any of MMR
and the MMR Subsidiaries. All material assets and risks of MMR and each MMR
Subsidiary are covered by valid and currently effective insurance policies in
such types and amounts as are consistent with customary practices and
standards of companies engaged in business and operations similar to those of
MMR or such MMR Subsidiary.
SECTION 3.27. REAL PROPERTY AND LEASES.
(a) Section 3.27(a) of the MMR Disclosure Schedule lists and
describes briefly all real property that any of MMR and each MMR Subsidiary
owns. With respect to each such parcel of owned real property and except as
noted in Section 3.27(a) of the MMR Disclosure Schedule: (i) the identified
owner has good and marketable title to the parcel of real property, free and
clear of any liens or encumbrances, easement, covenant, or other restriction,
except for installments of special assessments not yet delinquent, recorded
easements, covenants, and other restrictions, and utility easements, building
restrictions, zoning restrictions, and other easements and restrictions
existing generally with respect to properties of a similar character which do
not affect materially and adversely the current use, occupancy, or value, or
the marketability of title, of the property subject thereto, (ii) there are no
leases, subleases, licenses, concessions, or other agreements, written or
oral, granting to any party or parties the right of use or occupancy of any
portion of the parcel of real property that would interfere with MMR's use of
such property, and (iii) there are no outstanding options or rights of first
refusal to purchase, lease or occupy the parcel of real property, or any
portion thereof or interest therein which would interfere with MMR's use of
such property.
(b) Section 3.27(b) of the MMR Disclosure Schedule lists and
describes briefly all real property leased or subleased to any of MMR and any
MMR Subsidiary. With respect to each lease and sublease (i) the lease or
sublease is legal, valid, binding and enforceable against MMR or such MMR
Subsidiary, and in full force and effect in all material respects, (ii) except
as set forth in Section 3.27(b) of the MMR Disclosure Schedule to the
knowledge of MMR, no party to the lease or sublease is in material breach or
default, and no event has occurred which, with notice or lapse of time, would
constitute a material breach or default or permit termination, modification,
or acceleration thereunder, (iii) to the knowledge of MMR, no party to the
lease or sublease has repudiated any material provision thereof, (iv) there
are no material disputes, oral agreements, or forbearance programs in effect
as to the lease or sublease, (v) none of MMR or any MMR Subsidiary has
assigned, transferred, conveyed, mortgaged, deeded in trust, or encumbered any
interest in the leasehold or subleasehold, and (vi) all facilities leased or
subleased thereunder have received all approvals of governmental
7-19
<PAGE>
authorities (including material licenses and permits) legally required in
connection with the operation thereof, and have been operated and maintained
in accordance with applicable laws, rules, and regulations in all material
respects.
SECTION 3.28. INTERESTED PARTY TRANSACTIONS. Except as set
forth in Section 3.28 of the MMR Disclosure Schedule, between the MMR December
31, 1995 Balance Sheet and the date hereof, no event has occurred that would
be, and has not been, required to be reported as a "Certain Relationship or
Related Transaction" pursuant to Item 404 of Regulation S-K promulgated by the
SEC.
ARTICLE IV -- REPRESENTATIONS AND WARRANTIES OF SFX
AND ACQUISITION SUB
Except as set forth in the Disclosure Schedules delivered by SFX to
MMR, and signed by MMR and SFX for identification, within ten (10) business
days after the execution and delivery of this Agreement (the "SFX Disclosure
Schedules"), which shall identify exceptions by specific section references,
SFX and Acquisition Sub hereby, jointly and severally, represent and warrant
to MMR that:
SECTION 4.01. CORPORATE ORGANIZATION AND QUALIFICATION. SFX and
Acquisition Sub are corporations duly organized, validly existing and in good
standing under the laws of the jurisdiction of their incorporation and have
the requisite corporate power and authority and all necessary governmental
approvals to own, lease and operate their properties and to carry on their
respective businesses as they are now being conducted, except where the
failure to have such governmental approvals would not, individually or in the
aggregate, have a Material Adverse Effect on SFX. SFX and Acquisition Sub are
duly qualified or licensed as a foreign corporation to do business, and are in
good standing, in each jurisdiction where the character of the properties
owned, leased or operated by them or the nature of their respective businesses
makes such qualification or licensing necessary, except for such failures to
be so qualified or licensed and in good standing as would not, individually or
in the aggregate, have a Material Adverse Effect on SFX.
SECTION 4.02. CERTIFICATE OF INCORPORATION AND BYLAWS. SFX has
heretofore made available to MMR a complete and correct copy of the
Certificate of Incorporation and Bylaws of SFX, and the Certificate of
Incorporation and Bylaws of Acquisition Sub, each as amended to date. Neither
SFX nor Acquisition Sub is in violation of any provision of its Certificate of
Incorporation or Bylaws.
SECTION 4.03. CAPITALIZATION. The authorized capital stock of SFX
consists of 10,000,000 shares of SFX Class A Common Stock, 1,000,000 shares of
SFX Class B Common Stock, 1,200,000 shares of SFX Class C Common Stock, par
value $.01 per share, and 10,010,000 shares of preferred stock, par value $.01
per share. As of the date of this Agreement, (a) 6,458,215 shares of SFX Class
A Common Stock were issued and outstanding, all of which are validly issued
fully paid and nonassessable and not subject to preemptive rights, (b)
1,000,000 shares of SFX Class B Common Stock were issued and outstanding, all
of which are validly issued, fully paid and nonassessable and not subject to
preemptive rights, (c) no shares of SFX Class C Common Stock were issued and
outstanding, (d) 2,000 shares of Series B Redeemable Preferred Stock were
issued and outstanding, and (e) 2,000 shares of Series C Redeemable Preferred
Stock were issued and outstanding. The authorized capital stock of Acquisition
Sub consists of 1,000 shares of common stock, of which, as of the date of this
Agreement, 100 shares are issued and outstanding and held by SFX. Except as
contemplated by this Agreement or as set forth in Section 4.03 of the SFX
Disclosure Schedule, as of the date of this Agreement, there are no options,
warrants or other rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of SFX or any
subsidiary of SFX, including Acquisition Sub (each a "SFX Subsidiary" and
collectively, "SFX Subsidiaries"), obligating SFX or any SFX Subsidiary to
issue or sell any shares of capital stock of, or other equity interests in,
SFX or any SFX Subsidiary. There are no outstanding contractual obligations of
SFX or any SFX Subsidiary to repurchase, redeem or otherwise acquire any
shares of SFX Common Stock, or any capital stock of, or any equity interests
in, any SFX Subsidiary. The shares of SFX Common Stock to be issued pursuant
to the Merger will be duly authorized, validly issued, fully paid and
non-assessable and not subject to preemptive rights created by statute, SFX's
Certificate of Incorporation or Bylaws or any agreement to which SFX is a
party or by which SFX is bound and will, when issued, be registered under the
Securities Act and the Exchange Act and registered or exempt from registration
under applicable Blue Sky Laws.
SECTION 4.04. AUTHORITY RELATIVE TO THIS AGREEMENT. Each of SFX and
Acquisition Sub has all necessary corporate power and authority to execute and
deliver this Agreement and, with respect to the Merger, to perform
7-20
<PAGE>
its obligations hereunder and to consummate the Transactions. The execution
and delivery of this Agreement by SFX and Acquisition Sub and the consummation
by SFX and Acquisition Sub of the Transactions have been duly and validly
authorized by all necessary corporate action and no other corporate
proceedings on the part of SFX or Acquisition Sub are necessary to authorize
this Agreement or to consummate the Transactions (other than, with respect to
the issuance of SFX Common Stock pursuant to the Merger, the applicable rules
and regulations of the Nasdaq Stock Market, and with respect to the Merger,
the filing and recordation of an appropriate Certificate of Merger with the
Secretary as required by Delaware Law and with respect to certain amendments
in the Certificate of Incorporation of SFX, the approval by the stockholders
of SFX as set forth in Exhibit D). This Agreement has been duly and validly
executed and delivered by SFX and Acquisition Sub and, assuming the due
authorization, execution and delivery of this Agreement by MMR, constitutes a
legal, valid and binding obligation of each of SFX and Acquisition Sub
enforceable against each of SFX and Acquisition Sub in accordance with its
terms.
SECTION 4.05. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) The
execution and delivery of this Agreement by SFX and Acquisition Sub do not,
and the performance of this Agreement by SFX and Acquisition Sub will not,
subject to obtaining the consents, approvals, authorizations and permits and
making the filings described in Section 4.05(b) of the SFX Disclosure Schedule
or in Section 4.05(b) of this Agreement, and subject to obtaining the
approval of the stockholders of SFX with respect to the amendments to the
Certificate of Incorporation of SFX as set forth in Exhibit D, (i) conflict
with or violate the Certificate of Incorporation or Bylaws of either SFX or
any SFX Subsidiary, (ii) conflict with or violate any Law applicable to SFX or
any SFX Subsidiary or by which any property or asset of any of them is bound
or affected or (iii) except as specified in Section 4.05(a)(iii) of the SFX
Disclosure Schedule, result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on
any property or asset of SFX or any SFX Subsidiary or require the consent of
any third party pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which SFX or any SFX Subsidiary is a party or by which SFX or any SFX
Subsidiary or any property or asset of any of them is bound or affected,
except for any such conflicts, violations, breaches, defaults or other
occurrences which would not, individually or in the aggregate, reasonably be
likely to have a Material Adverse Effect on SFX or prevent SFX and Acquisition
Sub from timely performing their respective obligations under this Agreement
and consummating the Transactions.
(b) The execution and delivery of this Agreement by SFX and
Acquisition Sub do not, and the performance of this Agreement by SFX and
Acquisition Sub will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or regulatory
authority, domestic or foreign, except (i) pursuant to the Exchange Act, the
Securities Act, Blue Sky Laws, the HSR Act, the Communications Act and FCC
Rules and filing and recordation of an appropriate Certificate of Amendment to
SFX's Certificate of Incorporation and Certificate of Merger with the
Secretary as required by Delaware Law, (ii) as specified in Section 4.05(b) of
the SFX Disclosure Schedule, and (iii) where failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or
notifications, would not reasonably be likely to have a Material Adverse
Effect on SFX and would not prevent or delay consummation of the Transactions,
or otherwise prevent SFX or Acquisition Sub from performing their respective
obligations under this Agreement.
(c) On the Closing Date, SFX will be legally and financially
qualified under the Communications Act and the FCC Rules, and as of the date
hereof has neither knowledge nor reason to know of any fact, event, condition,
occurrence or circumstance, pertaining to SFX, that would cause any material
delay in the FCC's grant of the transfer of control applications.
SECTION 4.06. SEC FILINGS; FINANCIAL STATEMENTS. (a) SFX has filed
all forms, reports and documents required to be filed by it with the SEC
(collectively, the "SFX SEC Reports"). The SFX SEC Reports (i) were prepared
in all material respects in accordance with the requirements of the Securities
Act and the Exchange Act, as the case may be, and the rules and regulations
thereunder and (ii) did not, at the time they were filed (or at the effective
date thereof in the case of registration statements), contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading. No SFX
Subsidiary is currently required to file any form, report or other document
with the SEC under Section 12 of the Exchange Act.
7-21
<PAGE>
(b) Each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the SFX SEC Reports was prepared in
accordance with U.S. GAAP throughout the periods indicated (except as may be
indicated in the notes thereto and except that financial statements included
with interim reports do not contain all U.S. GAAP notes to such financial
statements) and each fairly presented in all material respects the
consolidated financial position, results of operations and changes in
stockholders' equity and cash flows of SFX and its consolidated subsidiaries
as at the respective dates thereof and for the respective periods indicated
therein (subject, in the case of unaudited statements, to normal and recurring
year-end adjustments which were not and are not expected, individually or in
the aggregate, to have a Material Adverse Effect on SFX).
SECTION 4.07. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December
31, 1995, except in the ordinary course and in a manner consistent with SFX's
past practice or as contemplated by, or disclosed pursuant to, this Agreement,
including Section 4.07 of the SFX Disclosure Schedule, or disclosed in any SFX
SEC Report filed since December 31, 1995, there has not been (a) any event or
events (whether or not covered by insurance), individually or in the
aggregate, having a Material Adverse Effect on SFX, (b) any material change by
SFX in its accounting methods, principles or practices, (c) any entry by SFX
or any SFX Subsidiary into any commitment or transaction material to SFX
or any SFX Subsidiary, (d) any declaration, setting aside or payment of any
dividend or distribution in respect of any capital stock of SFX or any
redemption, purchase or other acquisition of any of its securities or (e)
other than pursuant to SFX's benefit plans, any increase in or establishment
of any bonus, insurance, severance, deferred compensation, pension,
retirement, profit sharing, stock option, stock purchase or other employee
benefit plan.
(b) As of the date hereof and the Effective Time, except for
obligations or liabilities incurred in connection with its incorporation or
organization and the Transactions and except for this Agreement and any other
agreements or arrangements contemplated by this Agreement, Acquisition Sub has
not and will not have incurred, directly or indirectly, through any subsidiary
or affiliate, any obligations or liabilities or engaged in any business
activities of any type or kind whatsoever or entered into any agreements or
arrangements with any person.
SECTION 4.08. TAXES. (a) Except as otherwise disclosed in Section
4.08(a) of the SFX Disclosure Schedule: SFX and each of the SFX Subsidiaries
has filed (or received an appropriate extension of time to file) all federal,
state, local, and foreign Tax Returns required to be filed by them prior to
the Effective Time. From 1992 through the Effective Time, SFX and the SFX
Subsidiaries filed consolidated U.S. federal income tax returns as members of
an affiliated group, the common parent of which is SFX. All such Tax Returns
were true and correct in all material respects. SFX and each of the SFX
Subsidiaries has paid all Taxes shown to be due on such Tax Returns, and has
made appropriate provisions in the audited consolidated balance sheet of SFX
as of December 31, 1995 including the notes to the audited financial
statements of which such balance sheet is a part (the "SFX December 31, 1995
Balance Sheet") for any Taxes not yet due or which are being contested in good
faith. SFX and each of the SFX Subsidiaries has disclosed on all Tax Returns
all positions taken therein that could give rise to a substantial
understatement of federal income tax within the meaning of Section 6662 of the
Code or any similar provision of state, local or foreign law. SFX and each of
the SFX Subsidiaries has withheld and paid over to the appropriate
Governmental Authority all Taxes required by law to have been withheld and
paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party, except for amounts
which would not, individually or in the aggregate, have a Material Adverse
Effect. SFX and each of the SFX Subsidiaries have made all payments of
estimated Taxes required to be made under federal, state, local or foreign
law. All tax deficiencies asserted or assessed against SFX and each of the SFX
Subsidiaries has been paid or finally settled. Neither SFX nor any of the SFX
Subsidiaries expects any federal, state, local or foreign taxing authority to
assess any additional Taxes for any period for which Tax Returns have been
filed. No claims have ever been made by any tax authority in a jurisdiction
where SFX and each of the SFX Subsidiaries do not file Tax Returns that it is
or may be subject to taxation by that jurisdiction. Neither SFX nor any of the
SFX Subsidiaries has waived any statute of limitations in respect of Taxes or
agreed to any extension of time with respect to a tax assessment or
deficiency. There is no pending or, to the knowledge of SFX, threatened
action, audit, proceeding or investigation for the assessment or collection of
any Taxes. There are no requests for rulings, subpoenas or requests for
information pending with respect to any taxing authority. Any adjustments of
Taxes made by any federal taxing authority in any examination which is
required to be reported to a state, local, or foreign taxing authority have
been reported, and any additional Taxes due with respect thereto have been
paid. No power of attorney has been granted by SFX or any of the SFX
Subsidiaries, and is currently in force, with respect to any matter relating
to Taxes. There are no liens (other than liens for Taxes that are not yet due,
or which are being contested in good faith) on any assets of SFX or any of the
SFX Subsidiaries that arose in connection with any failure (or alleged
failure) to pay any tax, except for liens which would not, individually or in
the aggregate, have a Material Adverse Effect.
7-22
<PAGE>
(b) Except as otherwise disclosed in Section 4.08(b) of the SFX
Disclosure Schedule: Neither SFX nor any of the SFX Subsidiaries has made an
election under Section 341(f) of the Code. Neither SFX nor any of the SFX
Subsidiaries has participated in or cooperated with any international boycott
within the meaning of Section 999 of the Code. Neither SFX nor any of the SFX
Subsidiaries is required to include in income any adjustment pursuant to
Section 481(a) of the Code (or any similar provision of law or regulations) by
reason of a change in accounting method, nor is any taxing authority
considering such change in accounting method. Neither SFX nor any of the SFX
Subsidiaries has disposed of any property which has been accounted for tax
purposes under the installment method. As of the Effective Time but prior to
the Merger, the ability of SFX and each of the SFX Subsidiaries to use their
net operating losses and carryovers will not have been affected by Sections
382, 383 or 384 of the Code or by the SRLY or CRCO limitations of Treas. Reg.
ss.ss. 1.1502-21 or 1.1502-22. As of the Effective Time, neither SFX nor any
of the SFX Subsidiaries will have sustained an "overall foreign loss" within
the meaning of Section 904(f) of the Code.
(c) Regarding the Merger:
(i) Neither SFX nor any of the SFX Subsidiaries is an investment
company as defined in Section 368(a)(2)(F)(iii) and (iv) of the Code.
(ii) Neither SFX nor any of the SFX Subsidiaries is under the
jurisdiction of a court in Title 11 or similar case within the meaning of
Section 368(a)(3)(A) of the Code.
(iii) Neither SFX or any of the SFX Subsidiaries holds stock of
MMR and will not hold stock of SFX prior to the Merger.
(d) For purposes of this Section 4.08, the following terms will have
the following meanings:
(i) "Tax" or "Taxes" shall mean any and all federal, state,
local, foreign, and other taxes, levies, fees, imposts, duties and charges of
whatever kind (including any interest, penalties or additions to the tax
imposed in connection therewith or with respect thereto), whether imposed on
SFX or any of the SFX Subsidiaries, including, without limitation, taxes
imposed on, or measured by, income, franchise, profits, or gross receipts, and
also ad valorem, value added, sales, use, service, real or personal property,
capital stock, license, payroll, withholding, employment, social security,
workers' compensation, unemployment compensation, utility, severance,
production, excise, stamp, occupation, premium, windfall profits, transfer,
and gains taxes and customs duties.
(ii) "Tax Return" shall mean returns, reports, information
statements, or other documentation (including any additional or supporting
material) filed or maintained, or required to be filed or maintained in
connection with the calculation, determination, assessment or collection of
any Tax.
SECTION 4.09. PERMITS; COMPLIANCE. Except as disclosed in Section
4.09 of the SFX Disclosure Schedule, each of SFX and the SFX Subsidiaries is
now and as of the Effective Time will be in possession of all franchises,
grants, authorizations, licenses, permits, easements, variances, exceptions,
consents, certificates, approvals and orders of any Governmental Authority
legally necessary for SFX or any SFX Subsidiary to own, lease and operate its
properties or to carry on its business as it is now being conducted, except
for those which the failure to possess would not individually or in the
aggregate reasonably be expected to have a Material Adverse Effect on SFX (the
"SFX Permits") and, as of the date hereof, no suspension or cancellation of
any of the SFX Permits is pending or, to the knowledge of SFX, threatened.
Except as disclosed in Section 4.09 of the SFX Disclosure Schedule, neither
SFX nor any SFX Subsidiary is in conflict with, or in default or violation of,
or, with the giving of notice or the passage of time, would be in conflict
with, or in default or violation of, (i) any Law applicable to SFX or any SFX
Subsidiary or by which any property or asset of SFX or any SFX Subsidiary is
bound or affected, except in the case of any such conflict, default or
violation which would not reasonably be expected to have a Material Adverse
Effect, or (ii) any of the SFX Permits.
SECTION 4.10. ABSENCE OF LITIGATION. Section 4.10 of the SFX
Disclosure Schedule sets forth each instance in which any of SFX and the SFX
Subsidiaries (i) is subject to any outstanding injunction, judgment, order,
decree, ruling, or charge or (ii) is a party or, to the knowledge of SFX and
the SFX Subsidiaries, is threatened to be made a party
7-23
<PAGE>
to any action, suit, proceeding, hearing, or investigation of, in, or before
any court or quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator, which has not
otherwise been disclosed in the SFX SEC Reports and which would reasonably be
expected to have a Material Adverse Effect on SFX. Neither SFX nor any SFX
Subsidiary nor any property or asset of SFX or any SFX Subsidiary is in
violation of any order, writ, judgment, injunction, decree, determination or
award.
SECTION 4.11. EMPLOYEE BENEFIT MATTERS. Except as set forth in
Section 4.11 of the SFX Disclosure Schedule, there are no material employee
benefit or compensation plans, agreements or arrangements, including "employee
benefit plans" as defined in Section 3(3) of ERISA, and including, but not
limited to, plans, agreements or arrangements relating to former employees to
which SFX or any of the SFX Subsidiaries is a party (together, the "SFX
Benefit Plans"). To the best knowledge of SFX, no default exists with respect
to the obligations of SFX or any of the SFX Subsidiaries under such SFX
Benefit Plans, which default, alone or in the aggregate, would have a Material
Adverse Effect on SFX. All SFX Benefit Plans have been administered in
accordance, and are in compliance, with the applicable provisions of ERISA,
except where such failure to administer or comply would not have a Material
Adverse Effect on SFX.
SECTION 4.12. LABOR MATTERS. Neither SFX nor any SFX Subsidiary is a
party to any collective bargaining agreement or other labor union contract
applicable to persons employed by SFX or any SFX Subsidiary.
SECTION 4.13. INTELLECTUAL PROPERTY. SFX and the SFX Subsidiaries own
or have valid, binding and enforceable rights to use each patent, invention,
copyright, trademark, industrial model, process, design and all registrations
and applications for any of the foregoing used, employed or exploited in the
business of SFX or any SFX Subsidiary without any known conflict with the
rights of others.
SECTION 4.14. OPINION OF FINANCIAL ADVISOR. SFX has received the
written opinion of Furman Selz L.L.C. (the "SFX Banker") on the date of this
Agreement to the effect that the Exchange Ratio to be offered by SFX in the
Merger is fair from a financial point of view to SFX's stockholders (other
than Robert F.X. Sillerman and his affiliates) as of the date thereof.
SECTION 4.15. VOTE REQUIRED. The affirmative vote of the holders of a
majority of the voting power of the then outstanding shares of SFX Class A
Common Stock and SFX Class B Common Stock is the only vote of the holders of
any class or series of capital stock of SFX necessary to approve the Merger.
The affirmative vote of the holders of a majority of the outstanding shares of
SFX Class A Common Stock and SFX Class B Common Stock, voting separately as a
class, is the only vote of the holders of any class or series of capital stock
of SFX necessary to approve the amendments to the Certificate of Incorporation
of SFX as set forth on Exhibit D which amendments are required in order to
increase the authorized shares of SFX Class A Common Stock and SFX Class B
Common Stock to be issued in exchange for the MMR Securities or to be reserved
for issuance upon the exercise of the Options and Warrants.
SECTION 4.16. TANGIBLE PROPERTY. SFX and the SFX Subsidiaries have
good title to, or a valid leasehold interest in, the tangible personal
properties and assets used by them or shown on the SFX December 31, 1995
Balance Sheet or acquired after the date thereof, which are free and clear of
any mortgage, pledge, lien, encumbrance, charge, or other security interest,
other than (a) mechanic's, materialmen's and similar liens, (b) liens for
taxes not yet due and payable or for taxes that the taxpayer is contesting in
good faith through appropriate proceedings, (c) purchase money liens and liens
securing rental payments under capital lease arrangements, (d) liens which
would not reasonably be expected to have a Material Adverse Effect on SFX, (e)
liens and encumbrances identified and reflected on the SFX December 31, 1995
Balance Sheet, and (f) mortgages, pledges, liens, encumbrances, charges or
other security interests that do not individually, or in the aggregate,
adversely affect the current use of such property.
SECTION 4.17. CERTAIN BUSINESS PRACTICES. As of the date of this
Agreement, neither SFX nor any SFX Subsidiary, nor any director, officer, or,
to the knowledge of SFX, any agent or employee of SFX or any SFX Subsidiary
has (i) used any funds for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity, (ii) made any unlawful
payment to foreign or domestic government officials or employees or to foreign
or domestic political parties or campaigns or violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended, (iii) made any other
unlawful payment, or (iv) violated any of the provisions of Section 999 of the
Code or Section 8 of the Export Administration Act, as amended.
7-24
<PAGE>
SECTION 4.18. BOARD RECOMMENDATION. At a meeting duly called
and held in compliance with Delaware Law, (a) the Independent Committee of the
Board of Directors of SFX has unanimously adopted a resolution approving the
Merger and recommended that the Board of Directors of SFX approve the Merger,
(b) the Board of Directors of SFX has unanimously adopted a resolution (i)
approving the Merger, based on a determination that the Merger is in the best
interests of the SFX stockholders, and (ii) approving and adopting this
Agreement and the Transactions and recommending approval and adoption of this
Agreement and the Transactions by the stockholders of SFX.
SECTION 4.19. FCC COMPLIANCE. SFX and the SFX Subsidiaries hold, as
of the date of this Agreement, and immediately prior to the Effective Time,
SFX and the SFX Subsidiaries will hold, the FCC licenses as
set forth in Section 4.19 of the SFX Disclosure Schedule (the "SFX FCC
Licenses"), and such licenses are now and at the Effective Time will be in
full force and effect. The SFX FCC Licenses are the only material FCC
licenses, permits and authorizations necessary for or used in connection with
the operation of the radio stations (the "SFX Stations") set forth in Section
4.19 of the SFX Disclosure Schedule. Except as set forth in Section 4.19 of
the SFX Disclosure Schedule, the SFX Stations are being operated in all
material respects in accordance with the Communications Act, the FCC Rules and
FCC and court interpretations thereof, all as in effect on the date of this
Agreement. Except as set forth in Section 4.19 of the SFX Disclosure Schedule
(i) no application, action or proceeding is pending or, to the best of SFX's
knowledge, threatened against SFX or the SFX Subsidiaries that may result in
the revocation, nonrenewal or suspension of any of the SFX FCC Licenses, or
the imposition of any administrative sanction with respect thereto, and (ii)
to the best of SFX's knowledge there is no fact which would disqualify SFX or
any of the SFX Subsidiaries from obtaining the approval of the FCC as provided
for in this Agreement or from completing the transactions contemplated by this
Agreement. All material applications, reports and other disclosures required
by the FCC with respect to the SFX Stations have been duly filed with the FCC.
SECTION 4.20. INTERESTED PARTY TRANSACTIONS. Except as set forth in
Section 4.20 of the SFX Disclosure Schedule, between the SFX December 31, 1995
Balance Sheet and the date hereof, no event has occurred that would be
required to be, and has not been, reported as a "Certain Relationship or
Related Transaction" pursuant to Item 404 of Regulation S-K promulgated by the
SEC
ARTICLE V -- CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01. CONDUCT OF BUSINESS BY MMR PENDING THE MERGER. MMR
covenants and agrees that, between the date of this Agreement and until the
earlier of the (x) date on which this Agreement is terminated and (y)
Effective Time, except as set forth in Section 5.01 of the MMR Disclosure
Schedule or as contemplated in this Agreement, including but not limited to
Section 5.03 below, unless SFX shall otherwise agree in writing (which
agreement shall not be unreasonably withheld and shall not be exercised in a
manner inconsistent with the Communications Act and FCC Rules), (a) the
business of MMR and the MMR Subsidiaries shall be conducted only in, and MMR
and the MMR Subsidiaries shall not take any action except in, the ordinary
course of business consistent with past practice and in accordance with all
applicable Laws, (b) MMR shall use all reasonable efforts to preserve
substantially intact its business organization, to keep available the services
of the current officers, employees and consultants of MMR and the MMR
Subsidiaries and to preserve the current relationships of MMR and the MMR
Subsidiaries with customers, suppliers and other persons with which MMR or any
MMR Subsidiary has significant business relations, and (c) MMR shall not and
shall not permit any MMR Subsidiary to engage in any practice, take any
action, or enter into any transaction of the kind described in Section 3.08
above, except as otherwise contemplated herein.
SECTION 5.02. CONDUCT OF BUSINESS BY SFX PENDING THE MERGER. SFX
covenants and agrees that, between the date of this Agreement and until the
earlier of the (x) date on which this Agreement is terminated and (y)
Effective Time, except as set forth in Section 5.02 of the SFX Disclosure
Schedule or as contemplated in this Agreement, unless MMR shall otherwise
agree in writing (which agreement shall not be unreasonably withheld and shall
not be exercised in a manner inconsistent with the Communications Act and FCC
Rules), (a) the businesses of SFX and Acquisition Sub shall be conducted only
in, and SFX shall not, and shall cause Acquisition Sub not to, take any
action, except in the ordinary course of business consistent with past
practice and in accordance with all applicable Laws, and (b) SFX shall use all
reasonable efforts to preserve substantially intact its business organization
and to preserve the current relationships of SFX and the SFX Subsidiaries with
customers, suppliers and other persons with which SFX or any SFX Subsidiary
has significant business relations, and (c) SFX shall not and shall not permit
any SFX Subsidiary to amend, supplement or otherwise modify the Termination
and Assignment Agreement dated as of the date hereof between SFX and SCMC or
enter into any other arrangement with SCMC, engage in any practice, take any
action, or enter into any transaction of the kind described in
7-25
<PAGE>
Section 4.07, except as otherwise contemplated herein. Notwithstanding
anything herein to the contrary, nothing contained in this Agreement shall
prohibit SFX from (i) consummating the Asset Purchase Agreements and other
acquisitions with respect to which definitive agreements have been executed as
of the date hereof, (ii) entering into transactions, on an arm's length basis,
in connection with the consummation of such acquisitions, including, without
limitation, debt and/or equity financing, (iii) entering into local market
agreements or radio station swaps on an arm's length basis, or (iv) entering
into severance, employment or related agreements with executive officers of
SFX in connection with the Transactions including, without limitation, with R.
Steven Hicks and Geoff Armstrong.
SECTION 5.03. CONTROL OF STATIONS. Between the date of this Agreement
and the Closing Date, MMR will supervise, or direct, the operations of the
Stations, including programming, employees, finances, and operational
policies. Such operations shall be the sole responsibility of, and in the
complete discretion of, MMR and the MMR Subsidiaries, subject to Section 5.01
above.
ARTICLE VI -- ADDITIONAL AGREEMENTS
SECTION 6.01. REGISTRATION STATEMENT; PROXY STATEMENT. (a) Within 120
days after the execution of this Agreement, SFX and MMR shall prepare and file
with the SEC a preliminary proxy statement or a registration statement on Form
S-4 (together with all amendments thereto, the "Registration Statement")
including therein a combined proxy statement to be sent to the stockholders of
MMR and SFX (the "Proxy Statement") and prospectus, in connection with the
registration under the Securities Act of the shares of SFX Common Stock to be
issued to the holders of the MMR Securities pursuant to the Merger. SFX and
MMR shall cooperate with each other in connection with any other filings with
the SEC that either is obligated to make as a result of the Transactions. SFX
and MMR each shall use all reasonable efforts to cause the Registration
Statement to become effective as promptly as practicable, and, prior to the
effective date of the Registration Statement, SFX shall take all or any action
required under any applicable federal or state securities laws in connection
with the issuance of shares of SFX Common Stock pursuant to the Merger. Each
of MMR and SFX shall pay its own expenses incurred in connection with the
Registration Statement, Proxy Statement, SFX's Stockholders' Meeting (as
defined hereinafter) and MMR's Stockholders' Meeting (as defined hereinafter),
including, without limitation, the fees and disbursements of their respective
counsel, accountants and other representatives, except that MMR and SFX each
shall pay one-half of any printing expenses incurred in connection therewith.
MMR shall furnish all information concerning MMR as SFX may reasonably request
in connection with such actions and the preparation of the Registration
Statement and Proxy Statement. As promptly as practicable after the
Registration Statement shall have become effective, SFX and MMR shall mail the
Proxy Statement to their respective stockholders. The Proxy Statement shall
include the unanimous recommendation of the Independent Committees and the
recommendation of the Boards of Directors of MMR and SFX in favor of the
Merger, unless otherwise required by the applicable fiduciary duties of the
directors as determined by such directors in good faith after consultation
with independent legal counsel.
No amendment or supplement to the Proxy Statement or the
Registration Statement will be made by SFX or MMR without the approval of the
other party, which shall not be unreasonably withheld. SFX and MMR each will
advise the other, promptly after it receives notice thereof, of the time when
the Registration Statement has become effective or any supplement or amendment
has been filed, the issuance of any stop order, the suspension of the
qualification of the SFX Common Stock issuable in connection with the Merger
for offering or sale in any jurisdiction, or any request by the SEC for
amendment of the Proxy Statement or the Registration Statement or comments
thereon and responses thereto or requests by the SEC for additional
information.
SFX shall promptly prepare and submit to the Nasdaq Stock Market a
listing application covering the shares of SFX Class A Common Stock issuable
in the Merger, and shall use its reasonable best efforts to obtain, prior to
the Effective Time, approval for the listing of such SFX Class A Common Stock,
subject to official notice of issuance, and MMR shall cooperate fully with SFX
with respect to such listing. SFX shall use its reasonable best efforts to
list, prior to the Effective Time, shares of SFX Class A Common Stock issuable
upon exercise of the Warrants on the Nasdaq National Market.
(b) SFX represents, warrants and agrees that the information supplied
by SFX for inclusion in the Registration Statement and the Proxy Statement
shall not, at (i) the time the Registration Statement is declared effective,
(ii) the time the Proxy Statement (or any amendment thereof or supplement
thereto) is first mailed to the stockholders of MMR, (iii) the time of MMR's
Stockholder Meeting, (iv) the Effective Time, contain any statement which, at
such time and in light
7-26
<PAGE>
of the circumstances under which it is made, is false or misleading with
respect to any material fact, or omit to state any material fact required to
be stated therein, or necessary in order to make the statements therein not
false or misleading. If at any time prior to the Effective Time any event or
circumstance relating to SFX or any SFX Subsidiary, or their respective
officers or directors, should be discovered by SFX which should be set forth
in an amendment or a supplement to the Registration Statement or Proxy
Statement, SFX shall promptly inform MMR. Notwithstanding the foregoing, SFX
and Acquisition Sub make no representation or warranty with respect to any
information supplied by MMR or any of its representatives which is contained
in the Registration Statement or Proxy Statement. All documents that SFX is
responsible for filing with the SEC in connection with the Transactions will
comply as to form and substance in all material aspects with the applicable
requirements of the Securities Act and the rules and regulations promulgated
thereunder and the Exchange Act and the rules and regulations promulgated
thereunder.
(c) MMR represents, warrants and agrees that the information supplied
by MMR for inclusion in the Registration Statement and the Proxy Statement
shall not, at (i) the time the Registration Statement is declared effective,
(ii) the time the Proxy Statement (or any amendment thereof or supplement
thereto) is first mailed to the stockholders of SFX, (iii) the time of SFX's
Stockholder Meeting, and (iv) the Effective Time, contain any statement which,
at such time and in light of the circumstances under which it is made, is
false or misleading with respect to any material fact, or omit to state any
material fact required to be stated therein, or necessary in order to make the
statements therein not false or misleading. If at any time prior to the
Effective Time any event or circumstance relating to MMR or any MMR
Subsidiary, or their respective officers or directors, should be discovered by
MMR which should be set forth in an amendment or a supplement to the
Registration Statement or Proxy Statement, MMR shall promptly inform SFX.
Notwithstanding the foregoing, MMR makes no representation or warranty with
respect to any information supplied by SFX or Acquisition Sub or any of their
representatives in the Registration Statement or Proxy Statement. All
documents that MMR is responsible for filing with the SEC in connection with
the Transactions will comply as to form and substance in all material respects
with the applicable requirements of the Securities Act and the rules and
regulations promulgated thereunder and the Exchange Act and the rules and
regulations promulgated thereunder.
(d) MMR, SFX and Acquisition Sub each hereby (i) consents to the use
of its name and, on behalf of its subsidiaries and affiliates, the names of
such subsidiaries and affiliates, and to the inclusion of financial statements
and business information relating to such party and its subsidiaries and
affiliates (in each case, to the extent required by applicable securities
laws), in the Registration Statement and the Proxy Statement, (ii) agrees to
use all reasonable efforts to obtain the written consent of any person or
entity retained by it which may be required to be named (as an expert or
otherwise) in the Registration Statement or the Proxy Statement, and (iii)
agrees to cooperate fully, and agrees to use all reasonable efforts to cause
its subsidiaries and affiliates to cooperate fully, with any legal counsel,
investment banker, accountant or other agent or representative retained by any
of the parties specified in clause (i) above in connection with the
preparation of any and all information required, as determined after
consultation with each party's counsel, to be disclosed by applicable
securities laws in the Registration Statement or the Proxy Statement.
SECTION 6.02. STOCKHOLDERS' MEETINGS. (a) MMR shall call a meeting of
its stockholders ("MMR's Stockholder Meeting") as promptly as practicable for
the purpose of voting upon the approval of this Agreement, the Merger and the
matters set forth on Exhibit C hereto, and MMR shall use all commercially
reasonable efforts to hold MMR's Stockholder Meeting as soon as practicable
after the date on which the Registration Statement becomes effective. Unless
otherwise required under applicable fiduciary duties of MMR's directors, as
determined in good faith after consultation with independent legal counsel,
MMR shall use all commercially reasonable efforts to solicit from its
stockholders proxies in favor of the approval of this Agreement, the Merger
and the matters set forth on Exhibit C hereto, and shall take all other action
reasonably necessary or advisable to secure the vote or consent of
stockholders required by Delaware Law to obtain such approvals.
(b) SFX shall call a meeting of its stockholders ("SFX's Stockholder
Meeting") as promptly as practicable for the purpose of voting upon the
approval of this Agreement, the Merger and the matters set forth on Exhibit D
hereto, and SFX shall use all commercially reasonable efforts to hold SFX's
Stockholder Meeting as soon as practicable after the date on which the
Registration Statement becomes effective. Unless otherwise required under
applicable fiduciary duties of SFX's directors, as determined in good faith
after consultation with independent legal counsel, SFX shall use all
commercially reasonable efforts to solicit from its stockholders proxies in
favor of the approval of this Agreement, the Merger and the matters set forth
on Exhibit D hereto, and shall take all other action reasonably necessary or
advisable to secure the vote or consent of stockholders required by Delaware
Law to obtain such approvals.
7-27
<PAGE>
(c) Each of MMR and SFX shall use commercially reasonable
efforts to hold their respective Stockholders' Meetings on the same day (and
at or about the same time of day).
SECTION 6.03. APPROPRIATE ACTION; CONSENTS; FILINGS. (a) MMR, SFX and
Acquisition Sub shall use their commercially reasonable efforts to (i) take,
or cause to be taken, all appropriate action, and do, or cause to be done, all
things necessary, proper or advisable under applicable Laws or required to be
taken by any Governmental Authority or otherwise to consummate and make
effective the Transactions as promptly as practicable, (ii) obtain from all
applicable Governmental Authorities all consents, licenses, permits, waivers,
approvals, authorizations or orders legally required to be obtained or made by
SFX or MMR or any of their subsidiaries in connection with the authorization,
execution and delivery of this Agreement and the consummation of the
Transactions, including, without limitation, the Merger, and (iii) as promptly
as practicable, make all necessary filings, and thereafter make any other
required submissions, with respect to this Agreement and the Merger required
under (A) the Securities Act and the Exchange Act, and any other applicable
federal or state securities Laws, (B) the rules and regulations of the Nasdaq
National Market, (C) Delaware Law, (D) the HSR Act and any related
governmental request thereunder, (E) the Communications Act, and (F) all other
applicable Laws; provided that SFX and MMR shall cooperate fully with each
other in connection with the making of all such filings, including providing
copies of all such documents to the non-filing party and its advisors prior to
filing and, if requested, accepting all reasonable additions, deletions or
changes suggested in connection therewith. MMR and SFX shall use reasonable
best efforts to furnish to each other all information required for each
application or other filing to be made pursuant to the rules and regulations
of all applicable Laws (including all information required to be included in
the Proxy Statement and the Registration Statement) in connection with the
Transactions.
(b) (i) Each of SFX and MMR shall give (or shall cause their
respective subsidiaries to give) any notices to third parties, and use, and
cause their respective subsidiaries to use, their commercially reasonable
efforts to obtain any third party consents (including those set forth in
Section 3.05(a)(iii) of the MMR Disclosure Schedule and Section 4.05(a)(iii)
of the SFX Disclosure Schedule), (A) legally necessary to consummate the
Transactions, (B) disclosed or required to be disclosed in the MMR Disclosure
Schedule or the SFX Disclosure Schedule or (C) required to prevent a Material
Adverse Effect from occurring prior to or after the Effective Time; provided,
however, that as used in this Agreement "commercially reasonable efforts"
shall not require any party to undertake extraordinary or unreasonable
measures to obtain any approvals or consents, including, without limitation,
the initiation or prosecution of legal proceedings.
(ii) In the event that SFX or MMR shall fail to obtain any third
party consent described in subsection (b)(i) above, it shall use its
commercially reasonable efforts, and shall take any such actions reasonably
requested by the other party, to minimize any adverse effect upon MMR and SFX,
their respective subsidiaries, and their respective businesses resulting, or
which could reasonably be expected to result after the Effective Time, from
the failure to obtain such consent.
(iii) With respect to the consents which may be required from
Huff in connection with the consummation of the Transactions and the Merger,
it is acknowledged that Huff has not granted any such consents nor waived any
other rights it may have and has notified MMR to that effect. Without limiting
the generality of the foregoing, no action (or abstention from action) of the
Huff designee to the MMR Board of Directors is, or shall be construed to be,
such a consent or waiver.
(c) From the date of this Agreement until the earlier of the (x)
termination of this Agreement and (y) Effective Time, each party shall
promptly notify the other party of any, or to the best knowledge of the first
party, threatened, action, proceeding or investigation by or before any
Governmental Authority or any other person (i) challenging or seeking material
damages in connection with the Merger, the conversion of MMR Securities into
SFX Common Stock pursuant to the Merger or the Transactions or (ii) seeking to
restrain or prohibit the consummation of the Merger, the Transactions or
otherwise limit the right of SFX to own or operate all or any portion of the
businesses or assets of MMR, which in either case is reasonably likely to have
a Material Adverse Effect on MMR prior to the Effective Time, or a Material
Adverse Effect on SFX and the Acquisition Sub (including the Surviving
Corporation) after the Effective Time.
SECTION 6.04. ACCESS TO INFORMATION. (a) From the date hereof until
the earlier of the (x) termination of this Agreement and (y) Effective Time,
SFX and MMR will each provide to the other, during normal business hours and
upon reasonable notice, access to all information and documents which the
other may reasonably request regarding the
7-28
<PAGE>
business, assets, liabilities, employees and other aspects of the other party,
other than information and documents that in the opinion of such other party's
counsel may not be disclosed under applicable Law.
(b) Each of the parties hereto shall provide to the other monthly
unaudited financial statements to the extent that such financial statements
are currently prepared. Such monthly financial statements shall be provided
within 15 days of the end of each month.
(c) MMR shall cooperate fully (with SFX responsible for all
reasonable costs and expenses) with SFX in connection with certain finances
SFX will undertake. In connection therewith, at the request of SFX, MMR (with
SFX responsible for all reasonable costs and expenses) will cause its
officers, directors, employees, representatives, consultants and advisors to
assist in the preparation of offering memoranda and pro forma financial
information and to participate in any road show presentations SFX shall
undertake in connection therewith, provided that such assistance shall not
unreasonably interfere with the performance by any of such officers,
directors, employees, representatives, consultants or advisors of services for
MMR. In furtherance of the foregoing, MMR shall cause its auditors to provide
and allow the filing of consents and "comfort letters" and other documentation
as may be required for the inclusion of any financial statements of MMR
prepared at the request of SFX, to allow such financial statements to be used
in public or private financing documents.
SECTION 6.05. ACQUISITION PROPOSALS. Neither MMR nor any MMR Subsidiary shall
initiate, solicit or encourage (including by way of furnishing information or
assistance), or take any other action to facilitate, any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Competing Transaction (as hereinafter defined), or enter into
discussions or negotiate with any person or entity in furtherance of such
inquiries to obtain a Competing Transaction, or enter into an agreement with
respect to any Competing Transaction or agree to or endorse any Competing
Transaction, or authorize or permit any of the officers, directors or
employees of MMR or any MMR Subsidiary or any investment banker, financial
advisor, attorney, accountant or other representative retained by MMR or any
MMR Subsidiary to take any such action, and MMR shall promptly notify SFX of
all relevant terms and conditions of any such inquiries and proposals received
by MMR or any MMR Subsidiary or by any such officer, director, investment
banker, financial advisor or attorney (including the identity of the person
from whom such inquiry or proposal was received), and if such inquiry or
proposal is in writing, MMR shall deliver or cause to be delivered to SFX a
copy of such inquiry or proposal; provided, however, that nothing contained in
this Agreement shall prohibit the Board of Directors of MMR or its
representatives from (i) furnishing information to, or entering into
discussions or negotiations with, any person or entity in connection with an
unsolicited bona fide proposal in writing by such person or entity to acquire
MMR pursuant to a merger, consolidation, share exchange, business combination
or other similar transaction or to acquire all or substantially all of the
assets of MMR or any MMR Subsidiary, if, and only to the extent that (A) the
Board of Directors of MMR, after consultation with independent legal counsel
and the MMR Banker, determines in good faith that such action is required for
the Board of Directors of MMR to comply with its fiduciary duties to
stockholders imposed by Delaware Law and (B) prior to furnishing such
information to, or entering into discussions or negotiations with, such person
or entity MMR (x) provides as promptly as practicable written notice to SFX of
MMR's intention to furnish such information to, or begin such discussions or
negotiations with, such person or entity and (y) obtains from such person or
entity a confidentiality agreement, or (ii) complying with Rule 14e-2
promulgated under the Exchange Act with regard to a Competing Transaction. For
purposes of this Agreement, "Competing Transaction" shall mean any of the
following involving MMR or any MMR Subsidiary: (i) any merger, consolidation,
share exchange, business combination, or other similar transaction (other than
the transactions contemplated by this Agreement), (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of 25% or more of
the assets of MMR and the MMR Subsidiaries, taken as a whole, in a single
transaction or series of transactions, (iii) any tender offer or exchange
offer for 25% or more of any outstanding class of capital stock of MMR or the
filing of a registration statement under the Securities Act in connection
therewith, (iv) the acquisition by any person of "beneficial ownership" or the
right to acquire beneficial ownership of, or the formation of any "group" (as
such terms are defined under Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder) which beneficially owns, or has the
right to acquire beneficial ownership of, 30% or more of the then outstanding
shares of any class of capital stock of MMR (other than persons affiliated
with Robert F.X. Sillerman), or (v) any public announcement of a proposal,
plan or intention to do any of the foregoing.
SECTION 6.06. DIRECTORS' AND OFFICERS' INDEMNIFICATION. (a)
From and after the Effective Time, the Surviving Corporation shall indemnify,
defend and hold harmless each person who is now, or has been at any time prior
to the date of this Agreement or who becomes prior to the Effective Time, an
officer or director of MMR or any of the MMR
7-29
<PAGE>
Subsidiaries, or an employee of MMR or any of the MMR Subsidiaries who acts as
a fiduciary under any employee benefit plan of MMR or any of the MMR
Subsidiaries (collectively, the "Indemnified Parties") against all losses,
expenses (including reasonable attorneys' fees), claims, damages, liabilities
or amounts that are paid in settlement of, or otherwise in connection with,
any threatened or actual claim, action, suit, proceeding or investigation (a
"Claim"), based in whole or in part on or arising in whole or in part out of
the fact that the Indemnified Party (or the person controlled by the
Indemnified Party) is or was a director, officer or such an employee of MMR or
any of the MMR Subsidiaries and pertaining to any matter existing or arising
out of actions or omissions occurring at or prior to the Effective Time
(including, without limitation, any Claim arising out of this Agreement or any
of the Transactions), whether asserted or claimed prior to, at or after the
Effective Time, in each case to the fullest extent permitted under Delaware
Law or the Surviving Corporation's charter and by-laws, and shall pay any
expenses, as incurred, in advance of the final disposition of any such action
or proceeding to each Indemnified Party to the fullest extent permitted under
Delaware Law or the Surviving Corporation's charter and by-laws; provided,
however, that the Surviving Corporation shall not be liable for any settlement
effected without its written consent (which shall not be unreasonably
withheld). Without limiting the foregoing, in the event any such claim is
brought against any of the Indemnified Parties, such Indemnified Parties may
retain counsel (including local counsel) satisfactory to them and which shall
be reasonably satisfactory to SFX, and the Surviving Corporation shall pay all
fees and expenses of such counsel for such Indemnified Parties. The
Indemnified Parties as a group shall retain only one law firm (plus
appropriate local counsel) to represent them with respect to each such Claim
unless there is, as determined by counsel to the Indemnified Parties, under
applicable standards of professional conduct, a conflict or a reasonable
likelihood of a conflict on any significant issue between the positions of any
two or more Indemnified Parties, in which event each such Indemnified Party
shall be entitled to retain separate legal counsel at the expense of the
Surviving Corporation. SFX hereby unconditionally and irrevocably guarantees
the full and prompt payment and performance of any and all of the Surviving
Corporation's obligations under this Section 6.06.
(b) For a period of six (6) years after the Effective Time, the
Surviving Corporation shall cause to be maintained in effect the current
policies of directors' and officers' liability insurance maintained by MMR
covering all of the individuals currently covered thereby (provided that the
Surviving Corporation may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions which are no less
advantageous to such officers and directors) with respect to claims arising
from facts or events which occurred at or prior to the Effective Time;
provided, however, that the Surviving Corporation shall not be required to pay
annual premiums for such insurance in excess of 200% in the aggregate of MMR's
current annual premium unless SFX continues to maintain its directors' and
officers' liability insurance despite a comparable increase; and provided
further, that if the premium for such coverage exceeds such amount, the
Surviving Corporation shall purchase a policy with the greatest coverage
available for such 200% of the annual premium.
SECTION 6.07. OBLIGATIONS OF ACQUISITION SUB. SFX shall take all
action necessary to cause Acquisition Sub to perform its obligations under
this Agreement and to consummate the Merger on the terms and subject to
conditions set forth in this Agreement and hereby irrevocably and
unconditionally guarantees all such obligations of Acquisition Sub.
SECTION 6.08. PUBLIC ANNOUNCEMENTS. (a) SFX and MMR shall consult
with each other before issuing any press release or otherwise making any
public statements with respect to this Agreement or any Transaction and shall
not issue any such press release or make any such public statement prior to
such consultation and (b) prior to the Effective Time, MMR will not issue any
other press release or otherwise make any public statements regarding its
business, except, in each case, as may be required by Law or any listing
agreement with the Nasdaq Stock Market to which MMR or SFX is a party.
SECTION 6.09. DELIVERY OF SEC DOCUMENTS. Each of MMR and SFX shall
promptly deliver to the other true and correct copies of any report, statement
or schedule filed with the SEC subsequent to the date of this Agreement.
SECTION 6.10. NOTIFICATION OF CERTAIN MATTERS. MMR shall give prompt
notice to SFX, and SFX shall give prompt notice to MMR, of (i) the occurrence,
or non-occurrence, of any event the occurrence, or non-occurrence, of which
would be likely to cause any representation or warranty contained in this
Agreement to be untrue or inaccurate and (ii) any failure of MMR, SFX or
Acquisition Sub, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section
6.10 shall not limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
7-30
<PAGE>
SECTION 6.11. FURTHER ACTION. At any time and from time to time, each
party to this Agreement agrees, subject to the terms and conditions
of this Agreement, to take such actions and to execute and deliver such
documents as may be necessary to effectuate the purposes of this Agreement at
the earliest practicable time; provided, however, that this Section shall not
require either party to undertake extraordinary or unreasonable measures in
connection therewith, including, without limitation, the initiation or
prosecution of legal proceedings.
SECTION 6.12. TAX TREATMENT. (a) Section 6.12 of the MMR Disclosure
Schedule lists the names and addresses of those persons who are, in MMR's
reasonable judgment, "affiliates" of MMR within the meaning of Rule 145 under
the Securities Act (each, an "MMR Affiliate"). MMR shall use all commercially
reasonable efforts to obtain Affiliate Agreements in the form of Exhibit B
hereto ("Affiliate Agreements") from (i) at least 30 days prior to the
Effective Time, each of the officers, directors and stockholders of MMR
specified in Section 6.12 of the MMR Disclosure Schedule and (ii) any person
who may be deemed to have become an MMR Affiliate (under Rule 145 under the
Securities Act) after the date of this Agreement and on or prior to the
Effective Time as soon as practicable after the date on which such person
attains such status. Each party hereto shall use its best efforts to cause the
Merger to qualify as a reorganization qualifying under the provisions of
Section 368(a) of the Code, including, without limitation, that SFX agrees
that it will cause MMR, in its new capacity as a subsidiary of SFX, to (i)
continue MMR's historic business and (ii) use a significant portion of its
historic business assets in such business.
(b) Both on the date that is two days prior to the date the Proxy
Statement is first mailed to stockholders of SFX and MMR and on the date that
the Merger is consummated, SFX and MMR shall receive an opinion of Baker &
McKenzie, reasonably satisfactory in form and substance to MMR, its counsel
Paul, Hastings, Janofsky & Walker and SFX, based, in each case, upon
representation letters substantially in the form of Exhibits E-1 and E-2,
dated on or about the date of such opinion, and such other facts and
representations as counsel may reasonably deem relevant, to the effect that
(i) the Merger will be treated for federal income tax purposes as a
reorganization qualifying under the provisions of Section 368(a) of the Code,
(ii) SFX, Acquisition Sub and MMR will each be a party to that reorganization
within the meaning of Section 368(b) of the Code, and (iii) the stockholders
of MMR shall not recognize any gain or loss for U.S. federal income tax
purposes as a result of the Merger, other than to the extent such stockholders
receive cash in lieu of fractional shares or payments pursuant to dissenter's
rights.
SECTION 6.13. FCC APPLICATION(S) AND APPROVAL.
(a) COMMISSION ORDER. Consummation of the Transactions is subject to and
conditioned upon prior receipt from the FCC of its consent in writing to the
transfer of control of the license of the Stations from MMR to SFX, which
consent shall have become final before the date of the Merger, provided that
the parties may mutually agree in writing to waive this finality requirement.
Notwithstanding all other provisions in this Agreement to the contrary, if
any, however, except as to finality, such requirement of receiving FCC consent
shall not be waiveable by the parties. The FCC's consent(s) shall be deemed to
have become final when each such consent has been granted and published, has
not been vacated, reversed, stayed, set aside, annulled or suspended, the time
for the filing by anyone other than the FCC of any protest, petition to deny,
request for stay, petition for rehearing or reconsideration, application for
review or appeal of each such consent has expired, no such protest, petition
to deny, request for stay, petition for rehearing or reconsideration,
application for review or appeal is pending before the FCC or a court of
competent jurisdiction and the statutory or regulatory time within which the
FCC may review each such consent on its own motion has expired and the FCC has
not undertaken such review, and in the event of review, reconsideration, or
appeal that does not result in such FCC consent being reversed, stayed,
enjoined, set aside, annulled or suspended, the statutory or regulatory time
for further review, reconsideration, or appeal has expired. As used in this
Agreement, the term "Commission Order" refers to either (i) such FCC
consent(s) (collectively as to all such consents) when they are deemed to have
become final or, (ii) if such finality has been waived by agreement of all the
parties in writing, such FCC consent(s) (collectively as to all such consents)
without finality.
(b) APPLICATION(S) FOR CONSENT. The parties to this Agreement agree
to proceed as expeditiously as practicable to file or cause to be filed an
application or applications requesting FCC consent (collectively, the "Consent
Application") to the transfer of control of the licenses of the Stations from
MMR to SFX, as contemplated by this Agreement. The parties agree that the
Consent Application shall be duly filed with the FCC not later than forty-five
(45) business days after the date of this Agreement, and that such Consent
Application shall be prosecuted in good faith and with due diligence. The
failure of either party to timely file or prosecute in good faith and with due
diligence its portion of the Consent
7-31
<PAGE>
Application shall be deemed a material breach of this Agreement. MMR and SFX
each agree to pay, when due, one-half (1/2) of the filing fee(s) for the
Consent Application.
(c) CONDITIONS. If the Consent Application as approved by the FCC
imposes any condition on any party hereto, such party shall use its best
efforts to comply with such condition; provided, however, that none of the
parties hereto shall be required hereunder to comply with any conditions that
would have a Material Adverse Effect upon it, except for any Equal Employment
Opportunity conditions. If administrative or judicial reconsideration or
review is sought with respect to the FCC Consents, MMR and SFX shall oppose
such efforts to obtain reconsideration or review.
SECTION 6.14. EMPLOYEE BENEFIT PLANS. SFX and MMR agree that the MMR
Benefits Plans in effect at the date of this Agreement shall, to the extent
practicable, remain in effect until otherwise determined after the Effective
Time and, to the extent such MMR Benefit Plans are not continued, it is the
current nonbinding intent of the parties that employee benefit plans of SFX
which are no less favorable, in the aggregate, to the employees covered by
such plans shall be provided.
SECTION 6.15. REPAYMENT OF INDEBTEDNESS; REDEMPTION OF MMR SENIOR
PREFERRED STOCK. On or prior to the Effective Time, MMR shall use its best
efforts to (a) repay all amounts outstanding under the Loan Agreement (the
"Finova Loan") dated March 27, 1995 between Finova Capital Corporation and
certain MMR Subsidiaries, and (b) repay all amounts due under the Senior
Subordinated Debentures due 2001 ("Subordinated Debentures") issued to Huff
and redeem all shares of the MMR Senior Preferred Stock.
SECTION 6.16. WARRANTS; MAKE WHOLE ADJUSTMENT. (a) Subject to
applicable laws, MMR shall, at the request of SFX, use all commercially
reasonable efforts to (a) commence an offer to exchange MMR Class A Common
Stock for all outstanding Class B Warrants, which offer shall not be greater
than 0.2 (two-tenths) shares of MMR Class A Common Stock for each such Class B
Warrant and (b) cooperate with SFX in connection with the solicitation of the
purchase of all of the outstanding Unit Purchase Options and IPO Warrants. Any
documents prepared by MMR to effectuate such offer to exchange and
solicitations shall be in form and substance reasonably satisfactory to SFX
and its counsel.
In the event that MMR is unsuccessful in obtaining the exchange of at
least 50% of the outstanding Class B Warrants at the ratio set forth above on
or prior to the Determination Date, the Exchange Ratio set forth in Section
2.01(b) above shall be adjusted downward to the extent necessary to reduce the
total dollar value of the SFX Class A Common Stock and SFX Class B Common
Stock that would have otherwise been received by MMR security holders on the
Effective Date (in each case calculated with reference to the SFX Class A
Common Stock Price) by a dollar amount equal to the product of $2.50 times the
number of Class B Warrants outstanding immediately after such exchange in
excess of such 50% number. In calculating the total value of SFX Class A
Common Stock and SFX Class B Common Stock received by MMR security holders,
each share of SFX Class B Common Stock shall be deemed to have the same value
as a share of SFX Class A Common Stock.
(b) In the event that SFX delivers the Make Whole Notice (as defined
in and subject to the conditions of Section 8.01(l)) to MMR and does not
deliver a Make Whole Rescission Notice (as defined in Section 8.01(l)), the
Exchange Ratio (x) shall be determined pursuant to Section 2.01(b) if the SFX
Class A Common Stock Price equals or exceeds $27.33, and (y) if the SFX Class
A Common Stock Price is less than $27.33, shall be increased such that, on the
Determination Date, the product of the (a) Exchange Ratio as so adjusted,
multiplied by (b) SFX Class A Common Stock Price shall be an amount equal to
$10.25 (such amount being referred to as the "Minimum Per Share Amount").
SECTION 6.17. THE EXCHANGE AGREEMENT AND RELATED MATTERS. (a) SFX and
MMR hereby agree that the exchange contemplated by that certain Exchange
Agreement dated November 13, 1995 between SFX and MMR (the "Letter Agreement")
is hereby canceled effective on and as of the date hereof and, except as
provided herein, all rights and obligations arising thereunder are hereby
terminated without any further action or liability on the part of either
party. Each of MMR and Multi-Market Radio Acquisition Corporation ("MMRAC")
shall use all commercially reasonable efforts to obtain consents and shall
assign its rights under the following agreements to SFX or a wholly-owned
subsidiary of SFX, and SFX or such subsidiary shall assume any and all
obligations under such agreements and shall relieve MMR of all obligations
thereunder: (i) the Asset Purchase Agreement dated as of December 27, 1995
between Texas Coast Broadcasters, Inc. and MMR, (ii) the Asset Purchase
Agreement dated as of January 26, 1996 between Lewis Broadcasting Corporation
and MMRAC, (iii) the Asset Purchase Agreement dated January 22, 1996 between
ABS Greenville Partners,
7-32
<PAGE>
L.P. and MMRAC and (iv) the Asset Purchase Agreement dated January 18, 1996
between HMW Communications, Inc. and MMRAC (collectively, the "Asset Purchase
Agreements"). SFX shall reimburse MMR for any costs and expenses incurred by
MMR in connection with obtaining such consents.
(b) Upon consummation of SFX's acquisition of all of the capital
stock of Liberty Broadcasting, Incorporated ("Liberty"), pursuant to that
certain Stock Purchase Agreement (as such agreement may be amended,
supplemented or otherwise modified from time to time), dated as of November
15, 1995 among SFX, Liberty and the stockholders thereof, SFX and MMR shall
enter into a local marketing agreement (the "Liberty LMA") pursuant to which
MMR shall, among other things, provide programming to and sell advertising on
radio stations WHCN(FM), Hartford, Connecticut; WMRQ(FM), Waterbury,
Connecticut; WPOP-AM, Hartford, Connecticut; WSNE(FM), Taunton, Massachusetts;
WHJY(FM), Providence, Rhode Island; WHJJ-AM, Providence, Rhode Island;
WGNA(FM), Albany, New York; WPYX(FM), Albany, New York; WTRY-AM, Troy, New
York; WGNA-AM, Albany, New York; WYSR(FM), Rotterdam, New York and WMXB(FM),
Richmond, Virginia (collectively, the "Liberty Stations"). The Liberty LMA
shall provide for the payment by MMR to SFX of a monthly fee, in arrears, in
an amount equal to the broadcast cash flow of the Liberty Stations. The
Liberty LMA shall terminate at the earlier of (i) the Effective Time or (ii)
the date this Agreement is terminated pursuant to Section 8.01(e) or (c)(i)
(except in the event such termination is due to the occurrence of an event
described in Section 8.01(g), (h), (j), (l), (m) or (n)). In the event that
this Agreement is terminated pursuant to Section 8.01(a), (b), (c)(ii),
(c)(iii), (f), (g), (h), (j), (l), (m) or (n), MMR will have the right but not
the obligation to acquire, subject to FCC approval, the Liberty Stations for
$100 million in cash payable in full at the closing. To exercise its right to
purchase the Liberty Stations, MMR shall give written notice of such exercise
to SFX within forty-five (45) days following the termination of this
Agreement. Such notice shall be accompanied by a $1.0 million cash deposit to
secure its obligation to purchase the Liberty Stations. MMR shall further
deposit $2.0 million cash within twenty (20) business days thereafter. In the
event that MMR exercises its right to acquire the Liberty Stations, the
parties shall use their best efforts to cause such acquisition to be
consummated as soon as practicable and in any event within nine months
following the termination of this Agreement. In the event that this Agreement
is terminated pursuant to Section 8.01(a), (b), (f), (h), (j) or (l), SFX
shall have the right to structure an exchange of stations (the "Exchange") for
the Liberty Stations, intended to qualify as a like-kind exchange under
Section 1031 of the Code and MMR and SFX shall use their best efforts to
consummate the Exchange as soon as practicable and in any event within nine
months following the termination of this Agreement. In the event that SFX does
not acquire Liberty and this Agreement is terminated pursuant to a section
other than Section 8.01(e) or (c)(i) (except in the event such termination is
due to the occurrence of an event described in Section 8.01(g), (h), (j), (l),
(m) or (n)), SFX shall pay MMR liquidated damages in the amount of $3.5
million. Notwithstanding the foregoing, the parties acknowledge that, in the
event MMR acquires radio station WYSR(FM) under this Section 6.17, such
acquisition will be of an interest in a joint sales agreement with respect to
WYSR(FM) rather than that station itself.
If requested by MMR, SFX shall negotiate in good faith to enter into
an agreement to advance up to $18 million to MMR to enable MMR to acquire
WKSS-FM, Hartford, Connecticut and up to $5 million to MMR for working capital
and other general operating expenses.
SECTION 6.18. GOVERNANCE. At or prior to the Effective Time, SFX's
Board of Directors shall amend SFX's Bylaws to increase the number of
directors constituting the entire Board of Directors by two. At or prior to
the Effective Time, SFX shall take all action necessary to cause (i) Michael
Ferrel to be named a director and Chief Executive Officer of SFX, and (ii) an
additional Independent Director (as defined in SFX's Certificate of
Incorporation) to be appointed to the Board of Directors of SFX.
SECTION 6.19. WITHDRAWAL OF REGISTRATION STATEMENTS. Upon written
request of SFX, MMR shall cause its Registration Statement on Form SB-2 (Reg.
No. 333-1712) in respect of 5,750,000 shares of MMR Class A Common Stock and
its Registration Statement on Form SB-2 (Reg. No. 333-1892) in respect of
$110,000,000 Senior Subordinated Notes due 2006 to be withdrawn in accordance
with the rules of the SEC.
SECTION 6.20. CONSULTING ARRANGEMENT. Commencing July __, 1996 and
continuing until the earlier of the (x) termination of this Agreement and (y)
the Effective Time, MMR will make available to SFX the services of Michael G.
Ferrel, the President and Chief Executive Officer of MMR, on a consulting
basis to the extent that such services do no conflict with Mr. Ferrel's
obligations to MMR. Neither Mr. Ferrel nor MMR shall receive any compensation
for such services.
7-33
<PAGE>
ARTICLE VII -- CONDITIONS TO THE MERGER
SECTION 7.01. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The
obligations of MMR, SFX and Acquisition Sub to consummate the Merger are
subject to the satisfaction of the following conditions:
(a) this Agreement and the Transactions contemplated hereby
shall have been approved and adopted by the affirmative vote of the
stockholders of MMR in accordance with Delaware Law and MMR's Certificate of
Incorporation and Bylaws;
(b) this Agreement and the Transactions contemplated hereby shall
have been approved and adopted by the affirmative vote of the stockholders of
SFX in accordance with Delaware Law and SFX's Certificate of Incorporation and
By-laws and the rules of the Nasdaq Stock Market.
(c) the Certificate of Incorporation of SFX shall have been amended
as set forth in Exhibit D, provided, however, that SFX may waive this
condition only with the approval of the Independent Committee of SFX;
(d) no Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any order, executive order, stay, decree,
judgment or injunction (each an "Order") or statute, rule or regulation which
is in effect and which has the effect of making the Merger illegal or
otherwise prohibiting consummation of the Merger;
(e) the Registration Statement shall have been declared effective,
and no stop order suspending the effectiveness of the Registration Statement
shall be in effect;
(f) SFX and MMR shall have received from the Nasdaq Stock Market
evidence that the shares of SFX Class A Common Stock to be issued to the
stockholders of MMR in the Merger shall be listed on the Nasdaq National
Market immediately following the Effective Time;
(g) any applicable waiting period under the HSR Act relating to the
Merger shall have expired or been terminated;
(h) all applicable consents to the Merger from the FCC shall have
been received and be final, or SFX and MMR shall have agreed in writing to
waive the finality requirement pursuant to Section 6.13(a) above;
(i) SFX and MMR shall have received the tax opinions provided for in
Section 6.12;
(j) SFX shall have entered into an agreement to amend the employment
agreement of D. Geoffrey Armstrong dated as of April 1, 1995; and
(k) all other consents, authorizations, orders and approvals of (or
filings or registrations with) any third party or governmental commission,
board or other regulatory body required in connection with the execution,
delivery and performance of this Agreement shall have been obtained or made,
except for filings in connection with the Merger and any other documents
required to be filed after the Effective Time and except where the failure to
have obtained or made any such consent, authorization, order, approval, filing
or registration would not have a Material Adverse Effect on the business of
MMR or SFX (or their respective subsidiaries), taken as a whole, following the
Effective Time, and the agreement described in Section 8.01(l)(B) shall have
been reached and the transactions contemplated therein consummated prior to
the Effective Time.
SECTION 7.02. CONDITIONS TO THE OBLIGATIONS OF SFX AND
ACQUISITION SUB. The obligations of SFX and Acquisition Sub to consummate the
Merger are subject to the satisfaction of the following further conditions:
(a) MMR shall have performed or complied in all material respects
with all agreements and covenants required by this Agreement to be performed
or complied with by it at or prior to the Effective Time and each of the
representations and warranties of MMR contained in this Agreement shall be true
and correct in all material respects as of the Effective Time as though made on
and as of the Effective Time, except that those representations and warranties
7-34
<PAGE>
which address matters only as of a particular date shall remain true and correct
as of such date, and SFX shall have received a certificate of an executive
officer of MMR to that effect;
(b) SFX shall have received from each MMR Affiliate and any other
person who may be deemed to have become an affiliate of MMR (under Rule 145
under the Securities Act) after the date of this Agreement and at or prior to
the Effective Time a signed Affiliate Agreement;
(c) since the date of this Agreement, no material adverse change in
the financial condition, results of operations or business of MMR and the MMR
Subsidiaries, taken as a whole, shall have occurred, and neither MMR nor any
MMR Subsidiary shall have suffered any damage, destruction or loss materially
affecting the business or properties of MMR and the MMR Subsidiaries, taken as
a whole;
(d) SFX shall have received evidence reasonably satisfactory to it
that MMR has repaid or provided for the repayment at the Effective Time of the
Finova Loan; and
(e) SFX shall have received a written fairness opinion from the SFX
Banker dated as of the date of the Proxy Statement, provided, however, that
SFX will only be able to waive this condition with the approval of the
Independent Committee of SFX.
SECTION 7.03. CONDITIONS TO THE OBLIGATIONS OF MMR. The obligations
of MMR to consummate the Merger are subject are subject to the satisfaction of
the following further conditions:
(a) SFX and Acquisition Sub shall have performed or complied in all
material respects with all agreements and covenants required by this Agreement
to be performed or complied with by them at or prior to the Effective Time and
each of the representations and warranties of SFX and Acquisition Sub
contained in this Agreement shall be true and correct in all material respects
as of the Effective Time, as though made on and as of the Effective Time,
except that those representations and warranties which address matters only as
of a particular date shall remain true and correct as of such date and MMR
shall have received a certificate of an executive officer of SFX to that
effect;
(b) since the date of this Agreement, no material adverse change in
the financial condition, results of operations or business of SFX and the SFX
Subsidiaries, taken as a whole, shall have occurred, and SFX and the SFX
Subsidiaries shall not have suffered any damage, destruction or loss
materially affecting the business or properties of SFX and the SFX
Subsidiaries, taken as a whole; and
(c) MMR shall have received a written fairness opinion from the MMR
Banker dated as of the date of the Proxy Statement, provided, however, that
MMR will only be able to waive this condition with the approval of the
Independent Committee of MMR.
ARTICLE VIII -- TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. TERMINATION. This Agreement may be terminated and the
Merger and the other Transactions may be abandoned at any time prior to the
Effective Time, notwithstanding any requisite approval and adoption of this
Agreement and the Transactions, as follows:
(a) by mutual written consent duly authorized by the Boards of
Directors (including the Independent Committees) of each of SFX and MMR;
(b) by either SFX or MMR, if either (i) the Effective Time shall not
have occurred on or before December 31, 1997; provided, however, that the
right to terminate this Agreement under this Section 8.01(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Effective
Time to occur on or before such date; provided further, however, that such
December 31, 1997 deadline shall be extended to and including June 30, 1998 in
the event that all other conditions to the consummation of the Merger shall
have been satisfied but (x) the FCC has granted its consent to the Merger and
(y) a third party petition seeking reconsideration or review of such consent
is permitted to be filed, or FCC review of such consent is permitted to be
taken
7-35
<PAGE>
pursuant to 47 C.F.R. ss. 1.117, or (ii) there shall be any Order which is
final and nonappealable preventing the consummation of the Merger, except if
the party relying on such Order has not complied with its obligations under
Section 6.03(a);
(c) by SFX, if (i) the Independent Committee or the Board of
Directors of MMR fails to recommend, withdraws, or materially modifies or
materially changes, their recommendations of this Agreement or the Merger in a
manner adverse to SFX or shall have resolved to do any of the foregoing, (ii)
the Independent Committee or the Board of Directors of MMR shall have
recommended to the stockholders of MMR a Competing Transaction or shall have
failed to recommend against accepting a Competing Transaction or take no
position with respect thereto or shall have resolved to do any of the
foregoing, or (iii) any person (other than SFX, Acquisition Sub or any
affiliate thereof) shall have acquired "beneficial ownership" or the right to
acquire beneficial ownership of, or any "group" (as such terms are defined
under Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder), shall have been formed which beneficially owns, or
has the right to acquire beneficial ownership of, more than 30% of the then
outstanding shares of any class of capital stock of MMR;
(d) by SFX, if the stockholders of MMR shall have failed to approve
and adopt this Agreement, the Merger and other Transactions at a meeting duly
convened therefor;
(e) by SFX, upon a breach of any representation, warranty, covenant
or agreement on the part of MMR set forth in this Agreement, or if any
representation or warranty of MMR shall have become untrue, in either case
such that the conditions set forth in Section 7.02 would not be satisfied (a
"Terminating MMR Breach"); provided, however, that, if such Terminating MMR
Breach is curable by MMR through the exercise of its best efforts and for so
long as MMR continues to exercise such best efforts, SFX may not terminate
this Agreement under this Section 8.01(e);
(f) by MMR, if the stockholders of SFX shall have failed to approve
and adopt this Agreement, the Merger and other Transactions at a meeting duly
convened therefor;
(g) by MMR, upon breach of any representation, warranty, covenant or
agreement on the part of SFX set forth in this Agreement, or if any
representation or warranty of SFX shall have become untrue, in either case
such that the conditions set forth in Section 7.03 would not be satisfied
("Terminating SFX Breach"); provided, however, that, if such Terminating SFX
Breach is curable by SFX through best efforts and for so long as SFX continues
to exercise such best efforts, MMR may not terminate this Agreement under this
Section 8.01(g);
(h) by MMR or the Independent Committee of MMR, upon (1) the
revocation by the MMR Banker of its written fairness opinion if such
revocation was (A) (i) directly related to the material misstatement or
omission contained in the information provided to the MMR Banker by SFX, and
(ii) MMR does not directly or indirectly solicit such a revocation or (B) a
direct result of a Material Adverse Effect with respect to SFX or (2) failure
of the MMR Banker to confirm its written fairness opinion at the time the
Proxy Statement is first mailed to MMR stockholders;
(i) by SFX or the Independent Committee of SFX, upon (1) the
revocation by the SFX Banker of its written fairness opinion if such
revocation was (A)(i) directly related to the material misstatement or
omission contained in the information provided to the SFX Banker by MMR, and
(ii) SFX does not directly or indirectly solicit such a revocation or (B) a
direct result of a Material Adverse Effect with respect to MMR or (2) failure
of the SFX Banker to confirm its written fairness opinion at the time of the
Proxy Statement is first mailed to SFX stockholders;
(j) by MMR or the Independent Committee of MMR within ten (10)
business days of the delivery of the SFX Disclosure Schedules, if such
schedules contain information inconsistent with information contained in the
SFX SEC Reports or if such schedules contain information which was omitted
from the SFX SEC Reports filed prior to the date hereof and such inconsistent
or omitted information would, in the reasonable good faith determination of
the Independent Committee of MMR after consultation with its advisors
supported (if practicable) by a written evaluation by the MMR Banker,
reasonably be expected to have a Material Adverse Effect on SFX;
(k) by SFX or the Independent Committee of SFX within ten (10)
business days of the delivery of the MMR Disclosure Schedules, if such
schedules contain information inconsistent with information contained in the
MMR SEC Reports or if such schedules contain information which was omitted
from the MMR SEC Reports filed prior to the date hereof and such inconsistent
or omitted information would, in the reasonable good faith determination of
the Independent
7-36
<PAGE>
Committee of SFX after consultation with its advisors supported (if
practicable) by a written evaluation by the SFX Banker reasonably be expected
to have a Material Adverse Effect on MMR;
(l) (A) by MMR or the Independent Committee of MMR, in the event that
(i) the Reported Price for the SFX Class A Common Stock for any seven (7)
consecutive trading days (the "Average Price") during any period commencing
with the first trading day following June 15, 1996 and ending on the
Determination Date shall be less than $27.33 and (ii) MMR has delivered
written notice to SFX of its intention to terminate this Agreement (the "Price
Termination Notice") within forty-eight (48) hours following the date on which
the Average Price is less than $27.33; provided, that SFX, upon the
recommendation of the Independent Committee of SFX, shall have the right, but
not the obligation, to deliver, within forty-eight (48) hours after the
receipt of the Price Termination Notice, a written notice pursuant to which
SFX agrees that MMR stockholders shall receive no less than the Minimum Per
Share Amount (the "Make Whole Notice"); and provided, further, that SFX, upon
the recommendation of the Independent Committee of SFX, shall, subject to the
next succeeding sentence, have the right to rescind such Make Whole Notice by
delivery of an additional notice (the "Make Whole Rescission Notice") in the
event that the Average Price at any time following the delivery of the Make
Whole Notice is at least $0.25 less than the Average Price as set forth in,
and which triggered, the Price Termination Notice (such Average Price at the
time of the first Make Whole Rescission Notice being referred to as the
"Reduced Average Price," which term, after any subsequent decline of the
Average Price of at least an additional $0.25, shall thereafter be deemed the
"Reduced Average Price"). The Make Whole Rescission Notice shall be effected
by delivery of written notice to MMR within forty-eight (48) hours following
the date on which a particular Reduced Average Price occurred, it being
understood that in the event SFX elects not to deliver a Make Whole Rescission
Notice within such 48-hour period with respect to any particular Reduced
Average Price, then SFX shall retain the right to deliver a Make Whole
Rescission Notice with respect to any subsequent Reduced Average Price. In the
event SFX either fails to deliver the Make Whole Notice within the forty-eight
(48) hour period following the receipt of a Price Termination Notice or
delivers a Make Whole Rescission Notice, this Agreement shall terminate
forthwith. (B) by MMR or the Independent Committee of MMR during the period
commencing on the end of the fifteenth (15th) business day following the
delivery of the SFX Disclosure Schedules (the "Huff Termination Date") and
ending on the twentieth (20th) business day following the delivery of the SFX
Disclosure Schedules if a binding, definitive agreement is not reached, by the
close of business on the Huff Termination Date, with respect to the repayment
and redemption in full at or prior to the Effective Time of the Subordinated
Debentures and the MMR Senior Preferred Stock;
(m) by MMR, if MMR accepts a Competing Transaction; or
(n) by MMR, if the Independent Committee or the Board of Directors of
SFX fails to recommend, withdraws or materially changes their recommendation
of this Agreement or the Merger in a manner adverse to MMR or shall have
resolved to do any of the foregoing.
SECTION 8.02. FEES AND EXPENSES. (a) MMR shall pay SFX a fee (an
"Alternative Proposal Fee") of $3,500,000, which amount is inclusive of all of
Specified Expenses (as hereinafter defined) and all other costs and expenses,
if:
(i) this Agreement is terminated pursuant to Section 8.01(m) or (c)
(except in the event a termination occurs pursuant to Section 8.01(c)(i) due
to the occurrence of an event described in Section 8.01(g), (h)(1), (j), (l)
or (n)); or
(ii) (A) this Agreement is terminated pursuant to Section 8.01(d) as
a result of the failure of the stockholders of MMR to approve the Merger, (B)
a proposal for Competing Transaction shall have been made prior to such
termination, and (C) any Competing Transaction is thereafter consummated
within 12 months of such termination.
(b) SFX shall pay MMR a fee (the "MMR Termination Fee") of
$1,000,000, which amount is inclusive of all of the Specified Expenses, if the
majority of the combined voting power of SFX votes with respect to, but does
not vote in favor of, the Merger.
(c) Except in connection with a termination pursuant to which the
Alternative Proposal Fee would otherwise be due and owing, MMR shall pay SFX a
fee (the "SFX Termination Fee") of $1,000,000, which amount is
7-37
<PAGE>
inclusive of all of the Specified Expenses, if the majority of the combined
voting power of MMR votes with respect to, but does not vote in favor of, the
Merger.
(d) SFX shall be entitled to receive its Specified Expenses (but not
the Alternative Proposal Fee) in immediately available funds in the event that
this Agreement is terminated pursuant to Section 8.01(e), (i) or (k). MMR
shall be entitled to receive its Specified Expenses in immediately available
funds in the event that this Agreement is terminated pursuant to Section
8.01(g), (h) or (j). In addition, MMR shall also be entitled to receive in
immediately available funds one-half (1/2) of its out-of-pocket expenses
incurred in connection with the transactions contemplated by Section 6.16 in
the event that this Agreement is terminated pursuant to Section 8.01(f), (g),
(h), (j) or (l).
(e) In the event of termination of this Agreement and the abandonment
of the Merger pursuant to Section 8.01, all obligations of the parties hereto
shall terminate except the obligations of the parties pursuant to this Section
8.02 and Sections 6.17, 8.03, 8.04, 9.02, 9.05, 9.08, 9.11 and 9.13.
No termination of this Agreement pursuant to Section
8.01(e), (g), (h) or (i) shall prejudice the ability of a non-breaching party
from seeking damages from any other party for any breach of this Agreement,
including, without limitation, attorneys' fees and the right to pursue any
remedy at law or in equity. Notwithstanding the foregoing, if SFX is required
to file suit to seek the Alternative Proposal Fee or either SFX or MMR is
required to file suit to seek its Specified Expenses or to recover its
Termination Fee, and it ultimately succeeds on the merits, it shall be
entitled to all expenses, including attorneys' fees, which it has incurred in
enforcing its rights under this Section 8.02.
(f) As used herein, "Specified Expenses" means all reasonable
out-of-pocket expenses and fees actually incurred or accrued by a party or on
its behalf in connection with the Transactions prior to the termination of
this Agreement (including, without limitation, all fees and expenses of
counsel, financial advisors, banks or other entities providing financing to
such party (including financing, commitment and other fees payable thereto),
accountants and other experts and consultants to such party and its
affiliates, and all printing and advertising expenses) and in connection with
the negotiation, preparation, execution, performance and termination of this
Agreement, the structuring of the Transactions, any agreements relating
thereto and any filings to be made in connection therewith; provided however
in no event shall Specified Expenses include the expenses incurred under
Section 6.16 hereof.
(g) Except as set forth in this Section and in Sections
6.01, 6.13(a) and the last sentence of Section 6.17(a), all costs and expenses
incurred in connection with this Agreement and the Transactions shall be paid
by the party incurring such expenses, whether or not any Transaction is
consummated.
SECTION 8.03. AMENDMENT. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Independent
Committees and Boards of Directors at any time prior to the Effective Time;
provided, however, that, after the approval and adoption of this Agreement and
the Transactions by the stockholders of MMR, no amendment may be made which
would violate Delaware Law. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
SECTION 8.04. WAIVER. At any time prior to the Effective Time, any
party hereto with the consent of its Independent Committee and Board of
Directors may (a) extend the time for the performance of any obligation or
other act of any other party hereto, (b) waive any inaccuracy in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any agreement or condition
contained herein. Any such extension or waiver shall be valid only if set
forth in an instrument in writing signed by the party or parties to be bound
thereby.
ARTICLE IX -- GENERAL PROVISIONS
SECTION 9.01. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. The representations, warranties and agreements in this Agreement
and any certificate delivered pursuant hereto by any person shall terminate at
the Effective Time, except that the agreements set forth in Articles I and II
and Sections 6.06, 6.18 and 6.19 and the agreements delivered pursuant to this
Agreement shall survive the Effective Time indefinitely.
7-38
<PAGE>
SECTION 9.02. NOTICES. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person,
by cable, facsimile, telegram or telex or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be
specified in a notice given in accordance with this Section 9.02):
if to SFX or Acquisition Sub:
SFX Broadcasting, Inc.
150 East 58th Street, 19th Floor
New York, New York 10155
Attention: Robert F.X. Sillerman
Facsimile: (212) 753-3188
with copies to:
Baker & McKenzie
805 Third Avenue
New York, New York 10022
Attention: Howard M. Berkower
Facsimile: (212) 759-9133
Dewey Ballantine
1301 Avenue of the Americas
New York, New York 10019
Attention: Morton A. Pierce
Facsimile: (212) 259-6333
if to MMR:
Multi-Market Radio, Inc.
One Monarch Place
Suite 220
Springfield, Massachusetts 01144
Attention: Michael G. Ferrel
Facsimile: (413) 732-7851
with a copy to:
Paul, Hastings, Janofsky & Walker
399 Park Avenue, 31st Floor
New York, New York 10022
Attention: William F. Schwitter
Facsimile: (212) 319-4090
SECTION 9.03. CERTAIN DEFINITIONS. Unless the context requires
otherwise, for purposes of this Agreement, the term:
(a) "affiliate" of a specified person means a person who, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such specified person;
(b) "beneficial owner" with respect to any shares means a person who
shall be deemed to be the beneficial owner of such shares (i) which such
person or any of its affiliates or associates (as such term is defined in Rule
12b-2 promulgated under the Exchange Act) beneficially owns, directly or
indirectly, (ii) which such person or any of its affiliates or associates has,
directly or indirectly, (A) the right to acquire (whether such right is
exercisable immediately or
7-39
<PAGE>
subject only to the passage of time), pursuant to any agreement, arrangement
or understanding or upon the exercise of consideration rights, exchange
rights, warrants or options, or otherwise, or (B) the right to vote pursuant
to any agreement, arrangement or understanding, (iii) which are beneficially
owned, directly or indirectly, by any other persons with whom such person or
any of its affiliates or associates or any person with whom such person or any
of its affiliates or associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of
any such shares, or (iv) pursuant to Section 13(d) of the Exchange Act and any
rules or regulations promulgated thereunder;
(c) "business day" means any day on which the principal offices of
the SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized to close in New York, New York;
(d) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting securities, as
trustee or executor, by contract or credit arrangement or otherwise;
(e) "person" means an individual, corporation, partnership, limited
partnership, syndicate, person (including, without limitation, a "person" as
defined in Section 13(d)(3) of the Exchange Act), trust, association or entity
or government, political subdivision, agency or instrumentality of a
government; and
(f) "subsidiary" or "subsidiaries" of any person means any
corporation, partnership, joint venture or other legal entity of which such
person (either alone or through or together with any other subsidiary), owns
or has rights to acquire, directly or indirectly, more than 50% of the stock
or other equity interests the holders of which are generally entitled to vote
for the election of the board of directors or other governing body of such
corporation or other legal entity.
SECTION 9.04. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
Law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the Transactions is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner
in order that the Transactions be consummated as originally contemplated to
the fullest extent possible.
SECTION 9.05. ASSIGNMENT; BINDING EFFECT; BENEFIT. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties. Subject to
the preceding sentence, this Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
assigns. Notwithstanding anything contained in this Agreement to the contrary,
except for the provisions of Article II (including, without limitation,
provisions relating to the holders of any Warrants) and Section 6.06
(collectively, the "Third Party Provisions"), nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the
parties hereto or their respective successors and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
SECTION 9.06. INCORPORATION OF SCHEDULES. The MMR Disclosure Schedule
and the SFX Disclosure Schedule referred to herein and signed for
identification by the parties hereto and all exhibits attached hereto and
referred to herein are hereby incorporated herein and made a part hereof for
all purposes as if fully set forth herein. For purposes of this Agreement, any
disclosure made (i) on any Schedule to this Agreement shall be deemed included
in any other Schedule to which such disclosure is relevant and (ii) in any MMR
or SFX SEC Reports filed prior to the date hereto shall be deemed to have been
disclosed for all purposes relevant, and shall be deemed included in all
Schedules annexed, to this Agreement.
SECTION 9.07. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms hereof, in addition to
any other remedy at law or equity.
7-40
<PAGE>
SECTION 9.08. GOVERNING LAW. EXCEPT TO THE EXTENT THAT DELAWARE LAW
IS MANDATORILY APPLICABLE TO THE MERGER AND THE RIGHTS OF THE STOCKHOLDERS OF
MMR AND ACQUISITION SUB, THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE RULES
OF CONFLICTS OF LAW THEREOF. ALL ACTIONS AND PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS AGREEMENT SHALL BE HEARD AND DETERMINED IN ANY COURT SITTING
IN THE CITY OF NEW YORK, STATE OF NEW YORK.
SECTION 9.09. HEADINGS. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect
in any way the meaning or interpretation of this Agreement.
SECTION 9.10. COUNTERPARTS. This Agreement may be executed
and delivered (including by facsimile transmission) in one or more
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed and delivered shall be deemed to be an original
but all of which taken together shall constitute one and the same agreement.
SECTION 9.11. WAIVER OF JURY TRIAL. Each of SFX, MMR and Acquisition
Sub hereby irrevocably waives all right to trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise)
arising out of or relating to this Agreement or the actions of SFX, MMR or
Acquisition Sub in the negotiation, administration, performance and
enforcement thereof.
SECTION 9.12. ENTIRE AGREEMENT. This Agreement, the MMR Disclosure
Schedule, the SFX Disclosure Schedule, the Exhibits attached hereto, and all
documents delivered by the parties in connection herewith constitute the
entire agreement among the parties with respect to the subject matter hereof
and supersede all prior agreements and understandings among the parties with
respect thereto. No addition to or modification of any provision of this
Agreement shall be binding upon any party hereto unless made in writing and
signed by all parties hereto.
SECTION 9.13. WAIVER OF CERTAIN RIGHTS. (a) SFX hereby waives any
right to terminate this Agreement, during the period prior to the delivery of
the MMR Disclosure Schedule to SFX, to the extent that such right is based
upon any purported breach of any representation or warranty of MMR, except if
any such purported breach relates to a representation or warranty which is not
qualified by reference to the MMR Disclosure Schedule.
(b) MMR hereby waives any right to terminate this Agreement, during
the period prior to the delivery of the SFX Disclosure Schedule to MMR, to the
extent that such right is based upon any purported breach of any
representation or warranty of SFX, except if any such purported breach relates
to a representation or warranty which is not qualified by reference to the SFX
Disclosure Schedule.
(c) The information contained in the disclosure schedules will be
deemed to have been disclosed for all relevant purposes as of the date of this
Agreement.
7-41
<PAGE>
IN WITNESS WHEREOF, SFX, Acquisition Sub and MMR have caused this
Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
SFX BROADCASTING, INC.
By /s/ Robert F.X. Sillerman
------------------------------------------
Robert F.X. Sillerman, Executive Chairman
SFX MERGER COMPANY
By /s/ Robert F.X. Sillerman
------------------------------------------
Robert F.X. Sillerman, President
MULTI-MARKET RADIO, INC.
By /s/ Michael G. Ferrel
------------------------------------------
Michael G. Ferrel, Chief Executive Officer
7-42
EXHIBIT 8
The undersigned hereby agree, pursuant to Rule 13d-1(f)(1)
promulgated under the Securities Exchange Act of 1934, as amended, to file a
joint statement on Schedule 13D and amendments thereto pertaining to their
shares of Common Stock of Multi-Market Radio, Inc.
This agreement may be terminated for any reason by any party hereto
immediately upon the personal delivery or facsimile transmission of notice to
that effect to the other parties hereto.
This agreement may be executed in counterparts and all counterparts
so executed shall constitute one agreement.
Date: August 6, 1996
/s/ Robert F.X. Sillerman
------------------------------------
Robert F.X. Sillerman
/s/ Michael G. Ferrel
------------------------------------
Michael G. Ferrel
/s/ Bruce Morrow
------------------------------------
Bruce Morrow
8-1
EXHIBIT 9
ESCROW AGREEMENT
AGREEMENT, dated as of the 31st day of July, 1996, by and among Kraig
G. Fox (hereinafter referred to as the "Escrow Agent"), Multi-Market Radio,
Inc., a Delaware corporation (the "Company"), and the individuals and entities
listed on Exhibit A who have executed this agreement (hereinafter collectively
called the "Stockholders").
WHEREAS, the Stockholders own of record the Company's Preferred
Stock, par value $.01 per share (the "Original Preferred Stock") in the
amounts set forth on Exhibit A hereto; and
WHEREAS, each share of Original Preferred Stock is convertible into a
share of Class B Common Stock, par value $.01 per share (the "Class B Common
Stock") or a share of Class A Common Stock, par value (the "Class A Common
Stock") under certain circumstances; and
WHEREAS, the Stockholders and the Company have agreed to deposit in
escrow the shares of Original Preferred Stock and shares of Class B Common
Stock issued upon the conversion of such Original Preferred Stock, if any, as
well as and any other securities or property that such securities are or
otherwise become convertible into or otherwise receive or are entitled to
receive (the "Escrow Shares").
9-1
<PAGE>
In consideration of the mutual covenants and promises herein
contained, the parties hereto agree as follows:
1. The Stockholders and the Company hereby appoint Kraig G. Fox, as
Escrow Agent, and Kraig G. Fox, by his execution of this Agreement hereby
acknowledges and accepts his appointment as Escrow Agent to hold the Escrow
Shares in escrow, upon the terms, provisions and conditions hereof. This
Agreement shall become effective on the date hereof (the "Effective Date") and
shall continue in effect until the close of business on July 29, 1998 (the
"Termination Date"). The period of time form the Effective Date until the
Termination Date is referred to herein as the "Escrow Period."
2. The Company shall cause stock certificates representing the
Original Preferred Stock for each of the Stockholders in the amount set forth
on Exhibit A hereto to be issued registered in the name of Kraig G. Fox, as
Escrow Agent, and shall cause such certificates to be delivered to the Escrow
Agent within five (5) business days of the Effective Date. Said certificates
shall contain the legend set forth in Paragraph 9(a) hereof. Within one (1)
business day of receipt of joint instructions from the Company and a
Stockholder to convert shares of Original Preferred Stock into shares of Class
B Common Stock in the form of Exhibit B hereto, the Escrow Agent shall deliver
such stock certificates to the Company or the Company's transfer agent with
irrevocable instructions to issue and deliver to the Escrow Agent stock
certificates representing shares of Class B Common Stock for such Stockholder
registered in the name of the Escrow Agent, in exchange for the Original
Preferred Stock. Said certificates shall have the legend set forth in
Paragraph 9(a) hereof.
9-2
<PAGE>
3. During the Escrow Period, any and all of the money, securities,
rights or property distributed in respect of the Escrow Shares then held in
escrow, including any such property distributed as dividends or pursuant to
any stock split, merger, recapitalization, dissolution, or total or partial
liquidation of the Company shall be delivered to the Escrow Agent, such
property to be held and distributed as herein provided and is hereinafter
referred to collectively as the "Escrow Property."
4. Except as otherwise provided in Paragraph 8 hereof, the Escrow
Shares shall not be sold, transferred, hypothecated, negotiated, pledged,
assigned, encumbered or otherwise disposed of (a "Transfer") during the Escrow
Period. Provided that each such Stockholder provides substantial services (as
defined in Treasury Regulation 1-83-8(c)) for the Company during the Escrow
Period the Escrow Shares and Escrow Property shall be released from escrow. If
the Company certifies to the Escrow Agent that such services have been
rendered, the Escrow Agent shall take such necessary action, within thirty
(30) days of receipt of said certificate, to cause the Company's transfer
agent to (i) reissue a stock certificate in the name of the Stockholder for
the total shares set forth on Exhibit A or such other Escrow Property ("Vested
Amount") which stock certificate shall not contain the legend set forth in
Paragraph 9(a) hereof. If the Company fails to deliver said certificate, the
Escrow Agent shall take such action to cause the Company's transfer agent to
cancel the Escrow Shares and remit to the Company any other Escrow Property.
After any such cancellation of stock, the Stockholders shall have no further
rights as a stockholder of the Company with respect to any of the canceled
Escrow Shares. Upon receipt of any unledgended stock certificates for shares
of Company Stock in the name of a Stockholder, the Escrow Agent shall cause
such certificate to be delivered to such Stockholder.
9-3
<PAGE>
5. (a) The Company shall present such documentation as is reasonably
required by the Escrow Agent to evidence the satisfaction of the condition set
forth in Paragraph 4 hereof and shall take such other action as the Escrow
Agent shall reasonably request. The Escrow Agent and the Company shall prepare
any documentation necessary to effectuate the terms of this Agreement.
(b) The Escrow Agent hereby agrees to be bound by the terms and
conditions of that certain Stockholders Agreement dated as of March 27, 1995
among the Company, The Huff Alternative Income Fund, L.P. and Robert F.X.
Sillerman, Michael G. Ferrel and Bruce Morrow (the "Stockholders Agreement")
to the extent applicable and shall if requested issue proxies in the form of
proxy contained therein, with respect to the Escrow Shares held on behalf of
such Stockholders.
6. It is understood and agreed by the parties to this Agreement as
follows:
(a) The Escrow Agent is not and shall not be deemed to be a
trustee for any party for any purpose and is merely acting as a depositary and
in a ministerial capacity hereunder with the limited duties herein prescribed.
(b) The Escrow Agent does not have and shall not be deemed to have
any responsibility in respect of any instruction, certificate or notice
delivered to it or of the Escrow Shares or any related Escrow Property other
than to (i) take all action necessary to effectuate the conversion of the
Original Preferred Stock into Class B Common Stock and (ii) faithfully carry
out the
9-4
<PAGE>
obligations undertaken in this Agreement and to follow the directions in
such instruction or notice provided in accordance with the terms hereof. The
Escrow Agent shall take any action necessary to convert shares of Company
Stock into shares of SFX stock pursuant to that certain Amended and Restated
Agreement and Plan of Merger among SFX Broadcasting, Inc., SFX Merger Company
and the Company. The Escrow Agent shall not be entitled to sell and shall not
sell the Escrow Shares or the Escrow Property.
(c) The Escrow Agent is not and shall not be deemed to be liable
for any action taken or omitted by it in good faith and may rely upon, and act
in accordance with, the advice of its counsel without liability on its part
for any action taken or omitted in accordance with such advice. In any event,
its liability hereunder shall be limited to liability for gross negligence or
willful misconduct on its part.
(d) The Escrow Agent may conclusively rely upon and act in
accordance with any certificate, instruction, notice, letter, telegram,
cablegram or other written instrument believed by it to be genuine and to have
been signed by the proper party or parties.
(e) The Company agrees (i) to pay the Escrow Agent, as
consideration for services rendered hereunder, the sum of Five Hundred Dollars
($500.00) per annum during the term of this Agreement, (ii) to pay the Escrow
Agent's reasonable fees and to reimburse it for its reasonable expenses
including attorney's fees incurred in connection with duties hereunder and
(iii) to save harmless, indemnify and defend the Escrow Agent for, from and
against any loss, damage, liability, judgment, cost and expense whatsoever,
including counsel fees, suffered or incurred by it
9-5
<PAGE>
by reason of, or on account of, any misrepresentation made to it or its status
or activities as Escrow Agent under this Agreement except for any loss,
damage, liability, judgment, cost or expense resulting from gross negligence
or willful misconduct on the part of the Escrow Agent. The obligation of the
Escrow Agent to deliver the Escrow Shares to either the Stockholders or the
Company shall be subject to the prior satisfaction upon demand from the Escrow
Agent, of the Company's obligations to so save harmless, indemnify and defend
the Escrow Agent and to reimburse the Escrow Agent or otherwise pay its fees
and expenses hereunder.
(f) The Escrow Agent shall not be required to defend any legal
proceeding which may be instituted against it in respect of the subject matter
of this Agreement unless requested to do so by the Stockholder and, to the
Escrow Agent's satisfaction, indemnified against, and provided advances with
respect to, the cost and expense of such defense by the party requesting such
defense. If any such legal proceeding is instituted against it, the Escrow
Agent agrees promptly to give notice of such proceeding to the Stockholders
and the Company. The Escrow Agent shall not be required to institute legal
proceedings of any kind.
(g) The Escrow Agent shall not, by act, delay, omission or
otherwise, be deemed to have waived any right or remedy it may have either
under this Agreement or generally, unless such waiver be in writing, and no
waiver shall be valid unless it is in writing signed by the Escrow Agent, and
only to the extent expressly therein set forth. A waiver by the Escrow Agent
under the terms of this Agreement shall not be construed as a bar to, or
waiver of, the same or any other such right or remedy which it would otherwise
have on any other occasion.
9-6
<PAGE>
(h) The Escrow Agent may resign as such hereunder by giving 30
days' written notice thereof to the Stockholders and the Company. Within 20
days after receipt of such notice, the Stockholders and the Company shall
furnish to the Escrow Agent written instructions for the release of the Escrow
Shares and any related Escrow Property (if such shares and property, if any,
have not yet been released pursuant to Paragraph 4 hereof) to a substitute
Escrow Agent which (whether designated by written instructions from the
Stockholders and the Company jointly or in the absence thereof by instructions
from a court of competent jurisdiction to the Escrow Agent) may be a bank or
trust company organized and doing business under the laws of the United States
or any state thereof; provided that, nothing contained in this Agreement shall
restrict the Escrow Agent's right to resign as provided in the first sentence
of this paragraph. Such substitute Escrow Agent shall thereafter hold any
Escrow Shares and any related Escrow Property received by it pursuant to the
terms of this Agreement and otherwise act hereunder as if it were the Escrow
Agent originally named herein. The Escrow Agent's duties and responsibilities
hereunder shall terminate upon the release of all shares then held in escrow
according to such written instruction or upon such delivery as herein
provided. This Agreement shall not otherwise be assignable by the Escrow Agent
without the prior written consent of the Company.
7. During the Escrow Period, each Stockholder shall have the sole
power to vote his Escrow Shares and any securities deposited in escrow under
this Agreement (including, without limitation, any shares issued in connection
with the Company's proposed merger with SFX Broadcasting, Inc. or any other
Escrow Property) while such shares are being held pursuant to this Agreement.
Upon receipt of instructions from any Stockholder, the Escrow Agent shall take
any and all necessary action to cause the Escrow Shares to be voted in
accordance with such instructions.
9-7
<PAGE>
8. (a) During the term of this Agreement no Stockholder shall sell,
transfer, hypothecate, negotiate, pledge, assign, encumber or otherwise
dispose of any or all of the Escrow Shares held in escrow pursuant to this
Agreement. This restriction shall not be applicable to transfers upon death,
upon which all remaining shares shall be released from escrow, or upon
transfers to members of the Stockholders' family or to any trust for the
benefit of the Stockholders, provided that such transferees agree to be bound
by the provisions of this Agreement, and subject to the Stockholder set forth
on Exhibit A providing the services necessary to vest such shares in
accordance with Paragraph 4 hereof.
(b) The Stockholders will take any action necessary or
appropriate, including the execution of any further documents or agreements,
in order to effectuate the terms of this Agreement.
9. (a) Each of the certificates representing the Series A Stock will
bear legends to the following effect, as well as any other legends required by
applicable law:
"The sale, transfer, hypothecation, negotiation, pledge,
assignment, encumbrance or other disposition of the shares
evidenced by this certificate are restricted by and are
subject to all of the terms, conditions and provisions of a
certain Escrow Agreement entered into among Multi-Market
Radio, Inc., Kraig G. Fox, as Escrow Agent and the
Stockholders, dated as of July 31, 1996, a copy of which may
be obtained from the Secretary of Multi-Market Radio, Inc.
No transfer, sale or other disposition of these shares may
be made unless specific conditions of such agreement are
satisfied."
(b) "The shares evidenced by this certificate have not been
registered under the Securities Act of 1933, as amended. No
transfer, sale or other disposition of these shares may be
made
9-8
<PAGE>
unless a registration statement with respect to these shares
has become effective under said act, or the Company is
furnished with an opinion of counsel satisfactory in form
and substance to it that such registration is not required."
The Company and the Escrow Agent shall direct the transfer agent for
the Company to place stop transfer orders with respect to the Escrow Shares
and to maintain such orders in effect until the transfer agent shall have
received written notice from the Company as contemplated in Paragraph 4
hereof.
10. Each notice, instruction or other certificate required or
permitted by the terms hereof shall be in writing and shall be communicated by
personal delivery, facsimile or registered or certified mail, return receipt
requested, to the parties hereto at the addresses set forth below, or at such
other address as any of them may designate by notice to each of the others:
(i) If to the Company, to:
Multi-Market Radio, Inc.
One Monarch Place
Suite 220
Springfield, MA 01144
Attn: Chief Executive Officer Fax:
412-732-7851
(ii) If to the Stockholders, to their respective addresses as set
forth on Exhibit A hereto.
(iii) If to the Escrow Agent, to:
Kraig G. Fox, Escrow Agent
150 East 58th Street, 19th Floor
New York, NY 10155
Fax: 212-743-3188
9-9
<PAGE>
All notices, instructions or certificates given hereunder to the Escrow Agent
shall be effective upon receipt by the Escrow Agent. All notices given
hereunder by the Escrow Agent shall be effective and deemed received upon
personal delivery or transmission by facsimile or, if mailed, five (5)
calendar days after mailing by the Escrow Agent.
A copy of all communications sent to the Company, the Stockholders or
the Escrow Agent shall be sent by ordinary mail to Baker & McKenzie, 805 Third
Avenue, New York, New York 10022, Attention: Howard Berkower, Esq.
11. This Agreement may not be modified, altered or amended in any
material respect or canceled or terminated except with the prior consent of
the parties hereto.
12. This Agreement shall be governed by and construed in accordance
with the laws of New York and shall be binding upon and inure to the benefits
of all parties hereto and their respective successors in interest and assigns.
13. This Agreement may be executed in several counterparts, which
taken together shall constitute a single instrument.
9-10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers on the day and year first above
written.
MULTI-MARKET RADIO, INC.
By:________________________________
ESCROW AGENT
/s/ Kraig G. Fox
-----------------------------------
Kraig G. Fox
STOCKHOLDERS:
/s/ Robert F.X. Sillerman
------------------------------------
Robert F.X. Sillerman
/s/ Michael G. Ferrel
-------------------------------------
Michael G. Ferrel
9-11
<PAGE>
EXHIBIT A
STOCKHOLDERS' LIST
NAME AND ADDRESS
OF STOCKHOLDER NUMBER OF ESCROW SHARES
Robert F.X. Sillerman 133,334
150 East 58th Street
New York, New York 10155
Fax: (212) 753-3188
Michael Ferrel 66,666
One Monarch Place, Suite 220
Springfield, Massachusetts 01144
Fax: (413) 732-7851
9-12
EXHIBIT 10
ESCROW AGREEMENT
AGREEMENT, dated as of the 31st day of July, 1996, by and among Kraig
G. Fox (hereinafter referred to as the "Escrow Agent"), Multi-Market Radio,
Inc., a Delaware corporation (the "Company"), and the individuals and entities
listed on Exhibit A who have executed this agreement (hereinafter collectively
called the "Stockholders").
WHEREAS, the Board of Directors of the Company has approved the
issuance of shares of Series A Convertible Preferred Stock, par value $.01 per
share (the "Series A Stock") to the Stockholders pursuant to a compensation
plan approved by the stockholders of the Company at the 1995 Annual
Stockholders Meeting;
WHEREAS, pursuant to the terms of the Certificate of Designations in
respect of the Series A Stock, each share of Series A Stock is convertible
into one share of the Company's Class A Common Stock, par value $.01 per share
("Class A Common Stock") in the event that the Company generates broadcast
cash flow (as defined in the certificate of designations) of at least $5
million for the fiscal year ending December 31, 1995 and the closing sales
price of Class A Common Stock for the thirty (30) trading days immediately
preceding the conversion exceeds $7.50 per share;
WHEREAS, the Board of Directors of the Company has determined that
the conditions to the conversion of Series A Stock into Class A Common Stock
have been satisfied; and
10-1
<PAGE>
WHEREAS, the Stockholders and the Company have agreed to deposit in
escrow the shares of Series A Stock and shares of Class A Common Stock
issuable upon the conversion of such Series A Stock and any other securities
or property that such securities are or otherwise become convertible into or
otherwise receive or are entitled to receive (the "Escrow Shares").
In consideration of the mutual covenants and promises herein
contained, the parties hereto agree as follows:
1. The Stockholders and the Company hereby appoint Kraig G. Fox, as
Escrow Agent, and Kraig G. Fox, by his execution of this Agreement hereby
acknowledges and accepts his appointment as Escrow Agent to hold the Escrow
Shares in escrow, upon the terms, provisions and conditions hereof. This
Agreement shall become effective on the date hereof (the "Effective Date") and
shall continue in effect until the distribution by the Escrow Agent of all of
the Escrow Shares in accordance with the terms hereof (the "Termination
Date"). The period of time form the Effective Date until the Termination Date
is referred to herein as the "Escrow Period."
2. The Company shall cause stock certificates representing the Series
A Stock for each of the Stockholders in the amount set forth on Exhibit A
hereto to be issued registered in the name of Kraig G. Fox, as Escrow Agent,
and shall cause such certificates to be delivered to the Escrow Agent within
five (5) business days of the Effective Date. Said certificates shall contain
the legend set forth in Paragraph 9(a) hereof. Within five (5) business days
of receipt of the stock certificates representing the Series A Stock, the
Escrow Agent shall deliver such stock certificates to the Company's transfer
agent with irrevocable instructions to issue and deliver to the Escrow
10-2
<PAGE>
Agent stock certificates representing shares of Class A Common Stock for each
of the Stockholders registered in the name of the Escrow Agent, in exchange
for the Series A Stock. Said certificates shall have the legend set forth in
Paragraph 9(a) hereof.
3. During the Escrow Period, any and all of the money, securities,
rights or property distributed in respect of the Escrow Shares then held in
escrow, including any such property distributed as dividends or pursuant to
any stock split, merger, recapitalization, dissolution, or total or partial
liquidation of the Company shall be delivered to the Escrow Agent, such
property to be held and distributed as herein provided and is hereinafter
referred to collectively as the "Escrow Property."
4. The Escrow Shares of each Stockholder shall vest in five equal
annual installments beginning on April 30, 1997 (the "Initial Disbursement
Date") provided that each such Stockholder provides substantial services for
the Company during each fiscal year ended December 31 immediately preceding
such April 30. After each fiscal year the Company shall deliver to the Escrow
Agent a certificate stating whether such Stockholder has performed substantial
services (as defined in Treasury Regulation 1-83-3(c)) during the most recent
fiscal year-end. If the Company certifies to the Escrow Agent that such
services have been rendered, the Escrow Agent shall take such necessary
action, within thirty (30) days of receipt of said certificate, to cause the
Company's transfer agent to (i) reissue a stock certificate in the name of the
Stockholder for 20% of the total shares set forth on Exhibit A or such other
Escrow Property ("Vested Amount") which stock certificate shall not contain
the legend set forth in Paragraph 9(a) hereof and, (ii) issue and deliver to
the Escrow Agent a stock certificate in the name of the Escrow Agent for the
remaining shares of Class A Common Stock which certificate shall contain the
legend set forth in Paragraph 9(a) hereof.
10-3
<PAGE>
If the Company fails to deliver said certificate, the Escrow Agent shall take
such action to cause the Company's transfer agent to cancel shares of Class A
Common Stock equal to the Vested Amount and reissue a certificate in the name
of the Escrow Agent for the remaining shares of Class A Common Stock which
certificate shall contain the legend set forth in Paragraph 9(a) hereof. After
any such cancellation of stock, the Stockholders shall have no further rights
as a stockholder of the Company with respect to any of the canceled Escrow
Shares. Upon receipt of any unlegended stock certificates for shares of Class
A Common Stock in the name of a Stockholder, the Escrow Agent shall cause such
certificate to be delivered to such Stockholder.
5. (a) The Company shall present such documentation as is reasonably
required by the Escrow Agent to evidence the satisfaction of the condition set
forth in Paragraph 4 hereof and shall take such other action as the Escrow
Agent shall reasonably request. The Escrow Agent and the Company shall prepare
any documentation necessary to effectuate the terms of this Agreement.
(b) The Escrow Agent hereby agrees to be bound by the terms and
conditions of that certain Stockholders Agreement dated as of March 27, 1995
among the Company, The Huff Alternative Income Fund, L.P. and Robert F.X.
Sillerman, Michael G. Ferrel and Bruce Morrow (the "Stockholders Agreement")
to the extent applicable and shall if requested issue proxies in the form of
proxy contained therein, with respect to the Escrow Shares held on behalf of
such Stockholders.
6. It is understood and agreed by the parties to this Agreement as
follows:
10-4
<PAGE>
(a) The Escrow Agent is not and shall not be deemed to be a
trustee for any party for any purpose and is merely acting as a depositary and
in a ministerial capacity hereunder with the limited duties herein prescribed.
(b) The Escrow Agent does not have and shall not be deemed to have
any responsibility in respect of any instruction, certificate or notice
delivered to it or of the Escrow Shares or any related Escrow Property other
than to (i) take all action necessary to effectuate the conversion of the
Series A Stock into Class A Common Stock and (ii) faithfully carry out the
obligations undertaken in this Agreement and to follow the directions in such
instruction or notice provided in accordance with the terms hereof. The Escrow
Agent shall take any action necessary to convert shares of Class A Common
Stock into shares of SFX stock pursuant to that certain Amended and Restated
Agreement and Plan of Merger among SFX Broadcasting, Inc., SFX Merger Company
and the Company. The Escrow Agent shall not be entitled to sell the Escrow
Shares or the Escrow Property.
(c) The Escrow Agent is not and shall not be deemed to be liable
for any action taken or omitted by it in good faith and may rely upon, and act
in accordance with, the advice of its counsel without liability on its part
for any action taken or omitted in accordance with such advice. In any event,
its liability hereunder shall be limited to liability for gross negligence or
willful misconduct on its part.
10-5
<PAGE>
(d) The Escrow Agent may conclusively rely upon and act in
accordance with any certificate, instruction, notice, letter, telegram,
cablegram or other written instrument believed by it to be genuine and to have
been signed by the proper party or parties.
(e) The Company agrees (i) to pay the Escrow Agent, as
consideration for services rendered hereunder, the sum of Five Hundred Dollars
($500.00) per annum during the term of this Agreement, (ii) to pay the Escrow
Agent's reasonable fees and to reimburse it for its reasonable expenses
including attorney's fees incurred in connection with duties hereunder and
(iii) to save harmless, indemnify and defend the Escrow Agent for, from and
against any loss, damage, liability, judgment, cost and expense whatsoever,
including counsel fees, suffered or incurred by it by reason of, or on account
of, any misrepresentation made to it or its status or activities as Escrow
Agent under this Agreement except for any loss, damage, liability, judgment,
cost or expense resulting from gross negligence or willful misconduct on the
part of the Escrow Agent. The obligation of the Escrow Agent to deliver the
Escrow Shares to either the Stockholders or the Company shall be subject to
the prior satisfaction upon demand from the Escrow Agent, of the Company's
obligations to so save harmless, indemnify and defend the Escrow Agent and to
reimburse the Escrow Agent or otherwise pay its fees and expenses hereunder.
(f) The Escrow Agent shall not be required to defend any legal
proceeding which may be instituted against it in respect of the subject matter
of this Agreement unless requested to do so by the Stockholders and, to the
Escrow Agent's satisfaction, indemnified against, and provided advances with
respect to, the cost and expense of such defense by the party requesting such
defense. If any such legal proceeding is instituted against it, the Escrow
Agent agrees promptly to
10-6
<PAGE>
give notice of such proceeding to the Stockholders and the Company. The Escrow
Agent shall not be required to institute legal proceedings of any kind.
(g) The Escrow Agent shall not, by act, delay, omission or
otherwise, be deemed to have waived any right or remedy it may have either
under this Agreement or generally, unless such waiver be in writing, and no
waiver shall be valid unless it is in writing signed by the Escrow Agent, and
only to the extent expressly therein set forth. A waiver by the Escrow Agent
under the terms of this Agreement shall not be construed as a bar to, or
waiver of, the same or any other such right or remedy which it would otherwise
have on any other occasion.
(h) The Escrow Agent may resign as such hereunder by giving 30
days' written notice thereof to the Stockholders and the Company. Within 20
days after receipt of such notice, the Stockholders and the Company shall
furnish to the Escrow Agent written instructions for the release of the Escrow
Shares and any related Escrow Property (if such shares and property, if any,
have not yet been released pursuant to Paragraph 4 hereof) to a substitute
Escrow Agent which (whether designated by written instructions from the
Stockholders and the Company jointly or in the absence thereof by instructions
from a court of competent jurisdiction to the Escrow Agent) may be a bank or
trust company organized and doing business under the laws of the United States
or any state thereof; provided that, nothing contained in this Agreement shall
restrict the Escrow Agent's right to resign as provided in the first sentence
of this paragraph. Such substitute Escrow Agent shall thereafter hold any
Escrow Shares and any related Escrow Property received by it pursuant to the
terms of this Agreement and otherwise act hereunder as if it were the Escrow
Agent originally named herein. The Escrow Agent's duties and responsibilities
hereunder shall terminate upon the release of
10-7
<PAGE>
all shares then held in escrow according to such written instruction or
upon such delivery as herein provided. This Agreement shall not otherwise be
assignable by the Escrow Agent without the prior written consent of the
Company.
7. During the Escrow Period, the Stockholders shall have the sole
power to vote the Class A Common Stock issued or issuable upon the conversion
of the Series A Stock and any securities deposited in escrow under this
Agreement (including, without limitation, any shares issued in connection with
the Company's proposed merger with SFX Broadcasting, Inc. or any other Escrow
Property) while such shares are being held pursuant to this Agreement. Upon
receipt of instructions from any Stockholder, the Escrow Agent shall take any
and all necessary action to cause the Escrow Shares to be voted in accordance
with such instructions.
8. (a) During the term of this Agreement no Stockholder shall
sell, transfer, hypothecate, negotiate, pledge, assign, encumber or otherwise
dispose of any or all of the shares of Class A Common Stock held in escrow
pursuant to this Agreement. This restriction shall not be applicable to
transfers upon death, upon which all remaining shares shall be released from
escrow, or upon transfers to members of the Stockholders' family or to any
trust for the benefit of the Stockholders, provided that such transferees
agree to be bound by the provisions of this Agreement, and subject to the
Stockholder set forth on Exhibit A providing the services necessary to vest
such shares in accordance with Paragraph 4 hereof.
10-8
<PAGE>
(b) The Stockholders will take any action necessary or
appropriate, including the execution of any further documents or agreements,
in order to effectuate the terms of this Agreement.
9. (a) Each of the certificates representing the Series A Stock will
bear legends to the following effect, as well as any other legends required by
applicable law:
"The sale, transfer, hypothecation, negotiation, pledge,
assignment, encumbrance or other disposition of the shares
evidenced by this certificate are restricted by and are
subject to all of the terms, conditions and provisions of a
certain Escrow Agreement entered into among Multi-Market
Radio, Inc., Kraig G. Fox, as Escrow Agent and the
Stockholders, dated as of July 31, 1996, a copy of which may
be obtained from the Secretary of Multi-Market Radio, Inc. No
transfer, sale or other disposition of these shares may be
made unless specific conditions of such agreement are
satisfied."
(b) "The shares evidenced by this certificate have not been
registered under the Securities Act of 1933, as amended. No
transfer, sale or other disposition of these shares may be
made unless a registration statement with respect to these
shares has become effective under said act, or the Company is
furnished with an opinion of counsel satisfactory in form and
substance to it that such registration is not required."
The Company and the Escrow Agent shall direct the transfer agent
for the Company to place stop transfer orders with respect to the Escrow
Shares and to maintain such orders in effect until the transfer agent shall
have received written notice from the Company as contemplated in Paragraph 4
hereof.
10. Each notice, instruction or other certificate required or
permitted by the terms hereof shall be in writing and shall be communicated by
personal delivery, facsimile or registered or
10-9
<PAGE>
certified mail, return receipt requested, to the parties hereto at the
addresses set forth below, or at such other address as any of them may
designate by notice to each of the others:
(i) If to the Company, to:
Multi-Market Radio, Inc.
One Monarch Place
Suite 220
Springfield, MA 01144
Attn: Michael G. Ferrel
Fax: 412-732-7851
(ii) If to the Stockholders, to their respective addresses as
set forth on Exhibit A hereto.
(iii)If to the Escrow Agent, to:
Kraig G. Fox, Escrow Agent
150 East 58th Street, 19th Floor
New York, NY 10155
Fax: 212-743-3188
All notices, instructions or certificates given hereunder to the Escrow Agent
shall be effective upon receipt by the Escrow Agent. All notices given
hereunder by the Escrow Agent shall be effective and deemed received upon
personal delivery or transmission by facsimile or, if mailed, five (5)
calendar days after mailing by the Escrow Agent.
A copy of all communications sent to the Company, the Stockholders or
the Escrow Agent shall be sent by ordinary mail to Baker & McKenzie, 805 Third
Avenue, New York, New York 10022, Attention: Howard Berkower, Esq.
11. This Agreement may not be modified, altered or amended in any
material respect or canceled or terminated except with the prior consent of
the parties hereto.
10-10
<PAGE>
15. This Agreement shall be governed by and construed in accordance
with the laws of New York and shall be binding upon and inure to the benefits
of all parties hereto and their respective successors in interest and assigns.
16. This Agreement may be executed in several counterparts, which
taken together shall constitute a single instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers on the day and year first above
written.
MULTI-MARKET RADIO, INC.
By:________________________________
ESCROW AGENT
/s/ Kraig G. Fox
-------------------------------
Kraig G. Fox
STOCKHOLDERS:
/s/ Robert F.X. Sillerman
------------------------------------
Robert F.X. Sillerman
SILLERMAN COMMUNICATIONS
MANAGEMENT CORPORATION
------------------------------------
/s/ Michael G. Ferrel
------------------------------------
Michael G. Ferrel
10-11
<PAGE>
/s/ Howard Tytel
-----------------------------------
Howard Tytel
10-12
<PAGE>
EXHIBIT A
STOCKHOLDERS' LIST
NAME AND ADDRESS
OF STOCKHOLDER NUMBER OF ESCROW SHARES
Robert F.X. Sillerman 80,000
150 East 58th Street
New York, New York 10155
Fax: (212) 753-3188
Sillerman Communications Management Corporation 40,000
150 East 58th Street
New York, New York 10155
Fax: (212) 753-3188
Michael Ferrel 40,000
One Monarch Place, Suite 220
Springfield, Massachusetts 01144
Fax: (413) 732-7851
Howard Tytel 20,000
150 East 58th Street
New York, New York 10155
Fax: (212) 753-3188
10-13
EXHIBIT 11
ESCROW AGREEMENT
AGREEMENT, dated as of the 31st day of July, 1996, by and
among Kraig G. Fox (hereinafter referred to as the "Escrow Agent"),
Multi-Market Radio, Inc., a Delaware corporation (the "Company"), and the
individuals and entities listed on Exhibit A who have executed this agreement
(hereinafter collectively called the "Stockholders").
WHEREAS, the Board of Directors of the Company has approved
the issuance of shares of Series A Convertible Preferred Stock, par value $.01
per share (the "Series A Stock") to the Stockholders pursuant to a
compensation plan approved by the stockholders of the Company at the 1995
Annual Stockholders Meeting;
WHEREAS, pursuant to the terms of the Certificate of
Designations in respect of the Series A Stock, each share of Series A Stock is
convertible into one share of the Company's Class A Common Stock, par value
$.01 per share ("Class A Common Stock") in the event that the Company
generates broadcast cash flow (as defined in the certificate of designations)
of at least $5 million for the fiscal year ending December 31, 1995 and the
closing sales price of Class A Common Stock for the thirty (30) trading days
immediately preceding the conversion exceeds $7.50 per share;
WHEREAS, the Board of Directors of the Company has
determined that the conditions to the conversion of Series A Stock into Class
A Common Stock have been satisfied; and
11-1
<PAGE>
WHEREAS, the Stockholders and the Company have agreed to
deposit in escrow the shares of Series A Stock and shares of Class A Common
Stock issuable upon the conversion of such Series A Stock and any other
securities or property that such securities are or otherwise become
convertible into or otherwise receive or are entitled to receive (the "Escrow
Shares").
In consideration of the mutual covenants and promises herein
contained, the parties hereto agree as follows:
1. The Stockholders and the Company hereby appoint Kraig G.
Fox, as Escrow Agent, and Kraig G. Fox, by his execution of this Agreement
hereby acknowledges and accepts his appointment as Escrow Agent to hold the
Escrow Shares in escrow, upon the terms, provisions and conditions hereof.
This Agreement shall become effective on the date hereof (the "Effective
Date") and shall continue in effect until the distribution by the Escrow Agent
of all of the Escrow Shares in accordance with the terms hereof (the
"Termination Date"). The period of time form the Effective Date until the
Termination Date is referred to herein as the "Escrow Period."
2. The Company shall cause stock certificates representing
the Series A Stock for each of the Stockholders in the amount set forth on
Exhibit A hereto to be issued registered in the name of Kraig G. Fox, as
Escrow Agent, and shall cause such certificates to be delivered to the Escrow
Agent within five (5) business days of the Effective Date. Said certificates
shall contain the legend set forth in Paragraph 9(a) hereof. Within five (5)
business days of receipt of the stock certificates representing the Series A
Stock, the Escrow Agent shall deliver such stock certificates to the Company's
transfer agent with irrevocable instructions to issue and deliver to the
Escrow
11-2
<PAGE>
Agent stock certificates representing shares of Class A Common Stock for each
of the Stockholders registered in the name of the Escrow Agent, in exchange
for the Series A Stock. Said certificates shall have the legend set forth in
Paragraph 9(a) hereof.
3. During the Escrow Period, any and all of the money,
securities, rights or property distributed in respect of the Escrow Shares
then held in escrow, including any such property distributed as dividends or
pursuant to any stock split, merger, recapitalization, dissolution, or total
or partial liquidation of the Company shall be delivered to the Escrow Agent,
such property to be held and distributed as herein provided and is hereinafter
referred to collectively as the "Escrow Property."
4. The Escrow Shares of each Stockholder shall vest in five
equal annual installments beginning on April 30, 1997 (the "Initial
Disbursement Date") provided that each such Stockholder is available to
provide substantial services for and serve as a director of the Company during
each fiscal year ended December 31 immediately preceding such April 30. After
each fiscal year, the Company shall deliver to the Escrow Agent a certificate
stating whether such Stockholder was available to perform substantial services
for (as defined in Treasury Regulation 1-83-3(c)) and to serve as a director
of the Company during the most recent fiscal year-end. If the Company
certifies to the Escrow Agent, the Escrow Agent shall take such necessary
action, within thirty (30) days of receipt of said certificate, to cause the
Company's transfer agent to (i) reissue a stock certificate in the name of the
Stockholder for 20% of the total shares set forth on Exhibit A or such other
Escrow Property ("Vested Amount") which stock certificate shall not contain
the legend set forth in Paragraph 9(a) hereof and, (ii) issue and deliver to
the Escrow Agent a stock certificate in the name of the Escrow Agent for the
remaining shares of Class A Common Stock which certificate shall
11-3
<PAGE>
contain the legend set forth in Paragraph 9(a) hereof. If the Company fails to
deliver said certificate, the Escrow Agent shall take such action to cause the
Company's transfer agent to cancel shares of Class A Common Stock equal to the
Vested Amount and reissue a certificate in the name of the Escrow Agent for
the remaining shares of Class A Common Stock which certificate shall contain
the legend set forth in Paragraph 9(a) hereof. After any such cancellation of
stock, the Stockholders shall have no further rights as a stockholder of the
Company with respect to any of the canceled Escrow Shares. Upon receipt of any
unlegended stock certificates for shares of Class A Common Stock in the name
of a Stockholder, the Escrow Agent shall cause such certificate to be
delivered to such Stockholder.
5. The Company shall present such documentation as is
reasonably required by the Escrow Agent to evidence the satisfaction of the
condition set forth in Paragraph 4 hereof and shall take such other action as
the Escrow Agent shall reasonably request. The Escrow Agent and the Company
shall prepare any documentation necessary to effectuate the terms of this
Agreement.
6. It is understood and agreed by the parties to this
Agreement as follows:
(a) The Escrow Agent is not and shall not be deemed
to be a trustee for any party for any purpose and is merely acting as a
depositary and in a ministerial capacity hereunder with the limited duties
herein prescribed.
(b) The Escrow Agent does not have and shall not be
deemed to have any responsibility in respect of any instruction, certificate
or notice delivered to it or of the Escrow Shares
11-4
<PAGE>
or any related Escrow Property other than to (i) take all action necessary to
effectuate the conversion of the Series A Stock into Class A Common and (ii)
faithfully carry out the obligations undertaken in this Agreement and to
follow the directions in such instruction or notice provided in accordance
with the terms hereof. The Escrow Agent shall take any action necessary to
convert shares of Class A Common Stock into shares of SFX stock pursuant to
that certain Amended and Restated Agreement and Plan of Merger among SFX
Broadcasting, Inc., SFX Merger Company and the Company. The Escrow Agent shall
not be entitled to sell and shall not sell the Escrow Shares or the Escrow
Property.
(c) The Escrow Agent is not and shall not be deemed
to be liable for any action taken or omitted by it in good faith and may rely
upon, and act in accordance with, the advice of its counsel without liability
on its part for any action taken or omitted in accordance with such advice. In
any event, its liability hereunder shall be limited to liability for gross
negligence or willful misconduct on its part.
(d) The Escrow Agent may conclusively rely upon and
act in accordance with any certificate, instruction, notice, letter, telegram,
cablegram or other written instrument believed by it to be genuine and to have
been signed by the proper party or parties.
(e) The Company agrees (i) to pay the Escrow Agent,
as consideration for services rendered hereunder, the sum of Five Hundred
Dollars ($500.00) per annum during the term of this Agreement, (ii) to pay the
Escrow Agent's reasonable fees and to reimburse it for its reasonable expenses
including attorney's fees incurred in connection with duties hereunder and
(iii)
11-5
<PAGE>
to save harmless, indemnify and defend the Escrow Agent for, from and against
any loss, damage, liability, judgment, cost and expense whatsoever, including
counsel fees, suffered or incurred by it by reason of, or on account of, any
misrepresentation made to it or its status or activities as Escrow Agent under
this Agreement except for any loss, damage, liability, judgment, cost or
expense resulting from gross negligence or willful misconduct on the part of
the Escrow Agent. The obligation of the Escrow Agent to deliver the Escrow
Shares to either the Stockholders or the Company shall be subject to the prior
satisfaction upon demand from the Escrow Agent, of the Company's obligations
to so save harmless, indemnify and defend the Escrow Agent and to reimburse
the Escrow Agent or otherwise pay its fees and expenses hereunder.
(f) The Escrow Agent shall not be required to
defend any legal proceeding which may be instituted against it in respect of
the subject matter of this Agreement unless requested to do so by the
Stockholders and, to the Escrow Agent's satisfaction, indemnified against, and
provided advances with respect to, the cost and expense of such defense by the
party requesting such defense. If any such legal proceeding is instituted
against it, the Escrow Agent agrees promptly to give notice of such proceeding
to the Stockholders and the Company. The Escrow Agent shall not be required to
institute legal proceedings of any kind.
(a) The Escrow Agent shall not, by act, delay,
omission or otherwise, be deemed to have waived any right or remedy it may
have either under this Agreement or generally, unless such waiver be in
writing, and no waiver shall be valid unless it is in writing signed by the
Escrow Agent, and only to the extent expressly therein set forth. A waiver by
the Escrow Agent
11-6
<PAGE>
under the terms of this Agreement shall not be construed as a bar to, or
waiver of, the same or any other such right or remedy which it would otherwise
have on any other occasion.
(b) The Escrow Agent may resign as such hereunder
by giving 30 days' written notice thereof to the Stockholders and the Company.
Within 20 days after receipt of such notice, the Stockholders and the Company
shall furnish to the Escrow Agent written instructions for the release of the
Escrow Shares and any related Escrow Property (if such shares and property, if
any, have not yet been released pursuant to Paragraph 4 hereof) to a
substitute Escrow Agent which (whether designated by written instructions from
the Stockholders and the Company jointly or in the absence thereof by
instructions from a court of competent jurisdiction to the Escrow Agent) may
be a bank or trust company organized and doing business under the laws of the
United States or any state thereof; provided that, nothing contained in this
Agreement shall restrict the Escrow Agent's right to resign as provided in the
first sentence of this paragraph. Such substitute Escrow Agent shall
thereafter hold any Escrow Shares and any related Escrow Property received by
it pursuant to the terms of this Agreement and otherwise act hereunder as if
it were the Escrow Agent originally named herein. The Escrow Agent's duties
and responsibilities hereunder shall terminate upon the release of all shares
then held in escrow according to such written instruction or upon such
delivery as herein provided. This Agreement shall not otherwise be assignable
by the Escrow Agent without the prior written consent of the Company.
7. During the Escrow Period, the Stockholders shall
have the sole power to vote the Class A Common Stock issued or issuable upon
the conversion of the Series A Stock and any securities deposited in escrow
under this Agreement (including, without limitation, any shares issued
11-7
<PAGE>
in connection with the Company's proposed merger with SFX Broadcasting, Inc.
or any other Escrow Property) while such shares are being held pursuant to
this Agreement. Upon receipt of instructions from any Stockholder, the Escrow
Agent shall take any and all necessary action to cause the Escrow Shares to be
voted in accordance with such instructions.
8. (a) During the term of this Agreement no Stockholder
shall sell, transfer, hypothecate, negotiate, pledge, assign, encumber or
otherwise dispose of any or all of the shares of Class A Common Stock held in
escrow pursuant to this Agreement. This restriction shall not be applicable to
transfers upon death, upon which all remaining shares shall be released from
escrow, or upon transfers to members of the Stockholders' family or to any
trust for the benefit of the Stockholders, provided that such transferees
agree to be bound by the provisions of this Agreement, and subject to the
Stockholder set forth on Exhibit A providing the services necessary to vest
such shares in accordance with Paragraph 4 hereof.
(b) The Stockholders will take any action necessary
or appropriate, including the execution of any further documents or
agreements, in order to effectuate the terms of this Agreement.
9. (a) Each of the certificates representing the Series A
Stock will bear legends to the following effect, as well as any other legends
required by applicable law:
"The sale, transfer, hypothecation,
negotiation, pledge, assignment,
encumbrance or other disposition of the
shares evidenced by this certificate are
restricted by and are subject to all of
the terms, conditions and provisions of a
certain
11-8
<PAGE>
Escrow Agreement entered into among
Multi-Market Radio, Inc., Kraig G. Fox, as
Escrow Agent and the Stockholders, dated
as of July 31, 1996, a copy of which may
be obtained from the Secretary of
Multi-Market Radio, Inc. No transfer, sale
or other disposition of these shares may
be made unless specific conditions of such
agreement are satisfied."
(b) "The shares evidenced by this certificate
have not been registered under the
Securities Act of 1933, as amended. No
transfer, sale or other disposition of
these shares may be made unless a
registration statement with respect to
these shares has become effective under
said act, or the Company is furnished with
an opinion of counsel satisfactory in form
and substance to it that such registration
is not required."
The Company and the Escrow Agent shall direct the transfer
agent for the Company to place stop transfer orders with respect to the Escrow
Shares and to maintain such orders in effect until the transfer agent shall
have received written notice from the Company as contemplated in Paragraph 4
hereof.
10. Each notice, instruction or other certificate required
or permitted by the terms hereof shall be in writing and shall be communicated
by personal delivery, facsimile or registered or certified mail, return
receipt requested, to the parties hereto at the addresses set forth below, or
at such other address as any of them may designate by notice to each of the
others:
(i) If to the Company, to:
Multi-Market Radio, Inc.
One Monarch Place
Suite 220
Springfield, MA 01144
Attn: Michael G. Ferrel
Fax: 412-732-7851
(ii) If to the Stockholders, to their respectiv
addresses as set forth on Exhibit A hereto.
11-9
<PAGE>
(iii) If to the Escrow Agent, to:
Kraig G. Fox, Escrow Agent
150 East 58th Street, 19th Floor
New York, NY 10155
Fax: 212-743-3188
All notices, instructions or certificates given hereunder to the Escrow Agent
shall be effective upon receipt by the Escrow Agent. All notices given
hereunder by the Escrow Agent shall be effective and deemed received upon
personal delivery or transmission by facsimile or, if mailed, five (5)
calendar days after mailing by the Escrow Agent.
A copy of all communications sent to the Company, the
Stockholders or the Escrow Agent shall be sent by ordinary mail to Baker &
McKenzie, 805 Third Avenue, New York, New York 10022, Attention: Howard
Berkower, Esq.
11. This Agreement may not be modified, altered or amended
in any material respect or canceled or terminated except with the prior
consent of the parties hereto.
12. This Agreement shall be governed by and construed in
accordance with the laws of New York and shall be binding upon and inure to
the benefits of all parties hereto and their respective successors in interest
and assigns.
13. This Agreement may be executed in several counterparts,
which taken together shall constitute a single instrument.
11-10
<PAGE>
11-11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers on the day and year
first above written.
MULTI-MARKET RADIO, INC.
By: /s/ Michael G. Ferrel
---------------------------------
ESCROW AGENT
/s/ Kraig G. Fox
------------------------------------
Kraig G. Fox
STOCKHOLDERS:
/s/ Bruce Morrow
------------------------------------
Bruce Morrow
/s/ Myles Schumer
------------------------------------
Myles Schumer
/s/ Edward Simon
-----------------------------------
Edward Simon
11-12
<PAGE>
EXHIBIT A
STOCKHOLDERS' LIST
NAME AND ADDRESS
OF STOCKHOLDER NUMBER OF ESCROW SHARES
- -------------------------------------- ------------------------
Bruce Morrow 10,000
200 Mercer Street
Apt. 1A
New York, New York 10012
Myles Schumer 5,000
Cornick, Garber & Sandler
630 Third Avenue
New York, New York 10017
Fax: (212) 557-3936
Edward Simon 5,000
55 Central Park West, #11E
New York, New York 10023
Fax: (212) 877-0987
11-13
EXHIBIT 12
ESCROW AGREEMENT
AGREEMENT, dated as of the 31st day of July, 1996, by and
among Kraig G. Fox (hereinafter referred to as the "Escrow Agent"),
Multi-Market Radio, Inc., a Delaware corporation (the "Company"), and the
individuals and entities listed on Exhibit A who have executed this agreement
(hereinafter collectively called the "Stockholders").
WHEREAS, the Board of Directors of the Company has approved
the issuance of shares of Series B Convertible Preferred Stock, par value $.01
per share (the "Series B Stock") to the Stockholders pursuant to a
compensation plan approved by the stockholders of the Company at the 1995
Annual Stockholders Meeting;
WHEREAS, pursuant to the terms of the Certificate of
Designations in respect of the Series B Stock, each share of Series B Stock is
convertible into one share of the Company's Class A Common Stock, par value
$.01 per share ("Class A Common Stock") in the event that the Company
generates broadcast cash flow (as defined in the certificate of designations)
of at least $10 million for the fiscal year ending December 31, 1997 and the
closing sales price of Class A Common Stock for the thirty (30) trading days
immediately preceding the conversion exceeds $7.50 per share (the "Conversion
Conditions");
WHEREAS, the Stockholders and the Company have agreed to
deposit in escrow the shares of Series B Stock and shares of Class A Common
Stock issuable upon the conversion of such
12-1
<PAGE>
Series B Stock and any other securities or property that such securities are
or otherwise become convertible into or otherwise receive or are entitled to
receive (the "Escrow Shares").
In consideration of the mutual covenants and promises herein
contained, the parties hereto agree as follows:
1. The Stockholders and the Company hereby appoint Kraig G.
Fox, as Escrow Agent, and Kraig G. Fox, by his execution of this Agreement
hereby acknowledges and accepts his appointment as Escrow Agent to hold the
Escrow Shares in escrow, upon the terms, provisions and conditions hereof.
This Agreement shall become effective on the date hereof (the "Effective
Date") and shall continue in effect until the distribution by the Escrow Agent
of all of the Escrow Shares in accordance with the terms hereof (the
"Termination Date"). The period of time form the Effective Date until the
Termination Date is referred to herein as the "Escrow Period."
2. The Company shall cause stock certificates representing
the Series B Stock for each of the Stockholders in the amount set forth on
Exhibit A hereto to be issued registered in the name of Kraig G. Fox, as
Escrow Agent, and shall cause such certificates to be delivered to the Escrow
Agent within five (5) business days of the Effective Date. Said certificates
shall contain the legend set forth in Paragraph 9(a) hereof. Within five (5)
business days of receipt of notice from the Company that the Conversion
Conditions have been satisfied, the Escrow Agent shall deliver the stock
certificates representing the Series B Stock to the Company's transfer agent
with irrevocable instructions to issue and deliver to the Escrow Agent stock
certificates representing shares of Class A Common Stock for each of the
Stockholders registered in the name of the Escrow Agent, in
12-2
<PAGE>
exchange for the Series B Stock. Said certificates shall have the legend set
forth in Paragraph 9(a) hereof.
3. During the Escrow Period, any and all of the money,
securities, rights or property distributed in respect of the Escrow Shares
then held in escrow, including any such property distributed as dividends or
pursuant to any stock split, merger, recapitalization, dissolution, or total
or partial liquidation of the Company shall be delivered to the Escrow Agent,
such property to be held and distributed as herein provided and is hereinafter
referred to collectively as the "Escrow Property."
4. The Escrow Shares of each Stockholder shall vest in five
equal annual installments beginning on April 30, 1997 (the "Initial
Disbursement Date") provided that each such Stockholder provides substantial
services for the Company during each fiscal year ended December 31 immediately
preceding such April 30. After each fiscal year, the Company shall deliver to
the Escrow Agent a certificate stating whether such Stockholder has performed
substantial services (as defined in Treasury Regulation 1-83-3(c)) during the
most recent fiscal year-end. If the Company certifies to the Escrow Agent, the
Escrow Agent shall take such necessary action, within thirty (30) days of
receipt of said certificate, to cause the Company's transfer agent to (i)
reissue a stock certificate in the name of the Stockholder for 20% of the
total shares set forth on Exhibit A or such other Escrow Property ("Vested
Amount") which stock certificate shall not contain the legend set forth in
Paragraph 9(a) hereof and, (ii) issue and deliver to the Escrow Agent a stock
certificate in the name of the Escrow Agent for the remaining shares of Class
A Common Stock which certificate shall contain the legend set forth in
Paragraph 9(a) hereof. If the Company fails to deliver saidcertificate, the
Escrow Agent shall take such action to cause the Company's transfer agent to
cancel
12-3
<PAGE>
shares of Class A Common Stock equal to the Vested Amount and reissue a
certificate in the name of the Escrow Agent for the remaining shares of Class
A Common Stock which certificate shall contain the legend set forth in
Paragraph 9(a) hereof. After any such cancellation of stock, the Stockholders
shall have no further rights as a stockholder of the Company with respect to
any of the canceled Escrow Shares. Upon receipt of any unlegended stock
certificates for shares of Class A Common Stock in the name of a Stockholder,
the Escrow Agent shall cause such certificate to be delivered to such
Stockholder.
5. The Company shall (i) promptly provide the Escrow Agent
with notice of the satisfaction of the Conversion Conditions, (ii) present
such documentation as is reasonably required by the Escrow Agent to evidence
the satisfaction of the condition set forth in Paragraph 4 hereof and (iii)
take such other action as the Escrow Agent shall reasonably request. The
Escrow Agent and the Company shall prepare any documentation necessary to
effectuate the terms of this Agreement.
6. It is understood and agreed by the parties to this
Agreement as follows:
(a) The Escrow Agent is not and shall not be deemed
to be a trustee for any party for any purpose and is merely acting as a
depositary and in a ministerial capacity hereunder with the limited duties
herein prescribed.
(b) The Escrow Agent does not have and shall not be
deemed to have any responsibility in respect of any instruction, certificate
or notice delivered to it or of the Escrow Shares or any related Escrow
Property other than to (i) take all action necessary to effectuate the
conversion
12-4
<PAGE>
of the Series B Stock into Class A Common upon the satisfaction of the
Conversion Conditions and (ii) faithfully carry out the obligations undertaken
in this Agreement and to follow the directions in such instruction or notice
provided in accordance with the terms hereof. The Escrow Agent shall take any
action necessary to convert shares of Class A Common Stock into shares of SFX
stock pursuant to that certain Amended and Restated Agreement and Plan of
Merger among SFX Broadcasting, Inc., SFX Merger Company and the Company. The
Escrow Agent shall not be entitled to sell and shall not sell the Escrow
Shares or the Escrow Property.
(c) The Escrow Agent is not and shall not be deemed
to be liable for any action taken or omitted by it in good faith and may rely
upon, and act in accordance with, the advice of its counsel without liability
on its part for any action taken or omitted in accordance with such advice. In
any event, its liability hereunder shall be limited to liability for gross
negligence or willful misconduct on its part.
(d) The Escrow Agent may conclusively rely upon and
act in accordance with any certificate, instruction, notice, letter, telegram,
cablegram or other written instrument believed by it to be genuine and to have
been signed by the proper party or parties.
(e) The Company agrees (i) to pay the Escrow Agent,
as consideration for services rendered hereunder, the sum of Five Hundred
Dollars ($500.00) per annum during the term of this Agreement, (ii) to pay the
Escrow Agent's reasonable fees and to reimburse it for its reasonable expenses
including attorney's fees incurred in connection with duties hereunder and
(iii) to save harmless, indemnify and defend the Escrow Agent for, from and
against any loss, damage,
12-5
<PAGE>
liability, judgment, cost and expense whatsoever, including counsel fees,
suffered or incurred by it by reason of, or on account of, any
misrepresentation made to it or its status or activities as Escrow Agent under
this Agreement except for any loss, damage, liability, judgment, cost or
expense resulting from gross negligence or willful misconduct on the part of
the Escrow Agent. The obligation of the Escrow Agent to deliver the Escrow
Shares to either the Stockholders or the Company shall be subject to the prior
satisfaction upon demand from the Escrow Agent, of the Company's obligations
to so save harmless, indemnify and defend the Escrow Agent and to reimburse
the Escrow Agent or otherwise pay its fees and expenses hereunder.
(f) The Escrow Agent shall not be required to
defend any legal proceeding which may be instituted against it in respect of
the subject matter of this Agreement unless requested to do so by the
Stockholders and, to the Escrow Agent's satisfaction, indemnified against, and
provided advances with respect to, the cost and expense of such defense by the
party requesting such defense. If any such legal proceeding is instituted
against it, the Escrow Agent agrees promptly to give notice of such proceeding
to the Stockholders and the Company. The Escrow Agent shall not be required to
institute legal proceedings of any kind.
(a) The Escrow Agent shall not, by act, delay,
omission or otherwise, be deemed to have waived any right or remedy it may
have either under this Agreement or generally, unless such waiver be in
writing, and no waiver shall be valid unless it is in writing signed by the
Escrow Agent, and only to the extent expressly therein set forth. A waiver by
the Escrow Agent under the terms of this Agreement shall not be construed as a
bar to, or waiver of, the same or any other such right or remedy which it
would otherwise have on any other occasion.
12-6
<PAGE>
(b) The Escrow Agent may resign as such hereunder
by giving 30 days' written notice thereof to the Stockholders and the Company.
Within 20 days after receipt of such notice, the Stockholders and the Company
shall furnish to the Escrow Agent written instructions for the release of the
Escrow Shares and any related Escrow Property (if such shares and property, if
any, have not yet been released pursuant to Paragraph 4 hereof) to a
substitute Escrow Agent which (whether designated by written instructions from
the Stockholders and the Company jointly or in the absence thereof by
instructions from a court of competent jurisdiction to the Escrow Agent) may
be a bank or trust company organized and doing business under the laws of the
United States or any state thereof; provided that, nothing contained in this
Agreement shall restrict the Escrow Agent's right to resign as provided in the
first sentence of this paragraph. Such substitute Escrow Agent shall
thereafter hold any Escrow Shares and any related Escrow Property received by
it pursuant to the terms of this Agreement and otherwise act hereunder as if
it were the Escrow Agent originally named herein. The Escrow Agent's duties
and responsibilities hereunder shall terminate upon the release of all shares
then held in escrow according to such written instruction or upon such
delivery as herein provided. This Agreement shall not otherwise be assignable
by the Escrow Agent without the prior written consent of the Company.
7. During the Escrow Period, the Stockholders shall have the
sole power to vote the Class A Common Stock issued or issuable upon the
conversion of the Series B Stock and any securities deposited in escrow under
this Agreement (including, without limitation, any shares issued in connection
with the Company's proposed merger with SFX Broadcasting, Inc. or any other
Escrow Property) while such shares are being held pursuant to this Agreement.
Upon receipt of instructions
12-7
<PAGE>
from any Stockholder, the Escrow Agent shall take any and all necessary action
to cause the Escrow Shares to be voted in accordance with such instructions.
8. (a) During the term of this Agreement no Stockholder
shall sell, transfer, hypothecate, negotiate, pledge, assign, encumber or
otherwise dispose of any or all of the shares of Class A Common Stock held in
escrow pursuant to this Agreement. This restriction shall not be applicable to
transfers upon death, upon which all remaining shares shall be released from
escrow, or upon transfers to members of the Stockholders' family or to any
trust for the benefit of the Stockholders, provided that such transferees
agree to be bound by the provisions of this Agreement, and subject to the
Stockholder set forth on Exhibit A providing the services necessary to vest
such shares in accordance with Paragraph 4 hereof.
(b) The Stockholders will take any action necessary
or appropriate, including the execution of any further documents or
agreements, in order to effectuate the terms of this Agreement.
9. (a) Each of the certificates representing the
Series B Stock will bear legends to the following effect, as well as any other
legends required by applicable law:
"The sale, transfer, hypothecation,
negotiation, pledge, assignment,
encumbrance or other disposition of the
shares evidenced by this certificate are
restricted by and are subject to all of
the terms, conditions and provisions of a
certain Escrow Agreement entered into
among Multi-Market Radio, Inc., Kraig G.
Fox, as Escrow Agent and the Stockholders,
dated as of July 31, 1996, a copy of which
may be obtained from the Secretary of
Multi-Market Radio, Inc. No transfer,
12-8
<PAGE>
sale or other disposition of these shares
may be made unless specific conditions of
such agreement are satisfied."
(b) "The shares evidenced by this certificate
have not been registered under the
Securities Act of 1933, as amended. No
transfer, sale or other disposition of
these shares may be made unless a
registration statement with respect to
these shares has become effective under
said act, or the Company is furnished with
an opinion of counsel satisfactory in form
and substance to it that such registration
is not required."
The Company and the Escrow Agent shall direct the transfer
agent for the Company to place stop transfer orders with respect to the Escrow
Shares and to maintain such orders in effect until the transfer agent shall
have received written notice from the Company as contemplated in Paragraph 4
hereof.
10. Each notice, instruction or other certificate required
or permitted by the terms hereof shall be in writing and shall be communicated
by personal delivery, facsimile or registered or certified mail, return
receipt requested, to the parties hereto at the addresses set forth below, or
at such other address as any of them may designate by notice to each of the
others:
(i) If to the Company, to:
Multi-Market Radio, Inc.
One Monarch Place
Suite 220
Springfield, MA 01144
Attn: Michael G. Ferrel
Fax: 412-732-7851
(ii) If to the Stockholders, to their respective
addresses as set forth on Exhibit A
hereto.
12-9
<PAGE>
(iii) If to the Escrow Agent, to:
Kraig G. Fox, Escrow Agent
150 East 58th Street, 19th Floor
New York, NY 10155
Fax: 212-743-3188
All notices, instructions or certificates given hereunder to the Escrow Agent
shall be effective upon receipt by the Escrow Agent. All notices given
hereunder by the Escrow Agent shall be effective and deemed received upon
personal delivery or transmission by facsimile or, if mailed, five (5)
calendar days after mailing by the Escrow Agent.
A copy of all communications sent to the Company, the
Stockholders or the Escrow Agent shall be sent by ordinary mail to Baker &
McKenzie, 805 Third Avenue, New York, New York 10022, Attention: Howard
Berkower, Esq.
11. This Agreement may not be modified, altered or amended
in any material respect or canceled or terminated except with the prior
consent of the parties hereto.
111. This Agreement shall be governed by and construed in
accordance with the laws of New York and shall be binding upon and inure to
the benefits of all parties hereto and their respective successors in interest
and assigns.
12-10
<PAGE>
112. This Agreement may be executed in several counterparts,
which taken together shall constitute a single instrument.
12-11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers on the day and year
first above written.
MULTI-MARKET RADIO, INC.
By:
--------------------------------
ESCROW AGENT
/s/ Kraig G. Fox
-----------------------------------
Kraig G. Fox
STOCKHOLDERS:
SILLERMAN COMMUNICATIONS MANAGEMENT
CORPORATION
By:
--------------------------------
/s/ Robert F.X. Sillerman
-----------------------------------
Robert F.X. Sillerman
/s/ Michael G. Ferrel
-----------------------------------
Michael G. Ferrel
/s/ Howard Tytel
-----------------------------------
Howard Tytel
12-12
<PAGE>
EXHIBIT A
STOCKHOLDERS' LIST
NAME AND ADDRESS
OF STOCKHOLDER NUMBER OF ESCROW SHARES
- ----------------------------------------------- -----------------------
Robert F.X. Sillerman 80,000
150 East 58th Street
New York, New York 10155
Fax: (212) 753-3188
Sillerman Communications Management Corporation 40,000
150 East 58th Street
New York, New York 10155
Fax: (212) 753-3188
Michael Ferrel 40,000
One Monarch Place, Suite 220
Springfield, Massachusetts 01144
Fax: (413) 732-7851
Howard Tytel 20,000
150 East 58th Street
New York, New York 10155
Fax: (212) 753-3188
12-13
EXHIBIT 13
ESCROW AGREEMENT
AGREEMENT, dated as of the 31st day of July, 1996, by and among Kraig
G. Fox (hereinafter referred to as the "Escrow Agent"), Multi-Market Radio,
Inc., a Delaware corporation (the "Company"), and the individuals and entities
listed on Exhibit A who have executed this agreement (hereinafter collectively
called the "Stockholders").
WHEREAS, the Board of Directors of the Company has approved the
issuance of shares of Series B Convertible Preferred Stock, par value $.01 per
share (the "Series B Stock") to the Stockholders pursuant to a compensation
plan approved by the stockholders of the Company at the 1995 Annual
Stockholders Meeting;
WHEREAS, pursuant to the terms of the Certificate of Designations in
respect of the Series B Stock, each share of Series B Stock is convertible
into one share of the Company's Class A Common Stock, par value $.01 per share
("Class A Common Stock") in the event that the Company generates broadcast
cash flow (as defined in the certificate of designations) of at least $10
million for the fiscal year ending December 31, 1997 and the closing sales
price of Class A Common Stock for the thirty (30) trading days immediately
preceding the conversion exceeds $7.50 per share (the "Conversion
Conditions");
WHEREAS, the Stockholders and the Company have agreed to deposit in
escrow the shares of Series B Stock and shares of Class A Common Stock
issuable upon the conversion of such
13-1
<PAGE>
Series B Stock and any other securities or property that such securities are
or otherwise become convertible into or otherwise receive or are entitled to
receive (the "Escrow Shares").
In consideration of the mutual covenants and promises herein
contained, the parties hereto agree as follows:
1. The Stockholders and the Company hereby appoint Kraig G. Fox, as
Escrow Agent, and Kraig G. Fox, by his execution of this Agreement hereby
acknowledges and accepts his appointment as Escrow Agent to hold the Escrow
Shares in escrow, upon the terms, provisions and conditions hereof. This
Agreement shall become effective on the date hereof (the "Effective Date") and
shall continue in effect until the distribution by the Escrow Agent of all of
the Escrow Shares in accordance with the terms hereof (the "Termination
Date"). The period of time form the Effective Date until the Termination Date
is referred to herein as the "Escrow Period."
2. The Company shall cause stock certificates representing the Series
B Stock for each of the Stockholders in the amount set forth on Exhibit A
hereto to be issued registered in the name of Kraig G. Fox, as Escrow Agent,
and shall cause such certificates to be delivered to the Escrow Agent within
five (5) business days of the Effective Date. Said certificates shall contain
the legend set forth in Paragraph 9(a) hereof. Within five (5) business days
of receipt of notice from the Company that the Conversion Conditions have been
satisfied, the Escrow Agent shall deliver the stock certificates representing
the Series B Stock to the Company's transfer agent with irrevocable
instructions to issue and deliver to the Escrow Agent stock certificates
representing shares of Class A Common Stock for each of the Stockholders
registered in the name of the Escrow Agent, in
13-2
<PAGE>
exchange for the Series B Stock. Said certificates shall have the legend set
forth in Paragraph 9(a) hereof.
3. During the Escrow Period, any and all of the money, securities,
rights or property distributed in respect of the Escrow Shares then held in
escrow, including any such property distributed as dividends or pursuant to
any stock split, merger, recapitalization, dissolution, or total or partial
liquidation of the Company shall be delivered to the Escrow Agent, such
property to be held and distributed as herein provided and is hereinafter
referred to collectively as the "Escrow Property."
4. The Escrow Shares of each Stockholder shall vest in five equal
annual installments beginning on April 30, 1997 (the "Initial Disbursement
Date") provided that each such Stockholder is available to provide substantial
services for and serve as a director of the Company during each fiscal year
ended December 31 immediately preceding such April 30. After each fiscal year,
the Company shall deliver to the Escrow Agent a certificate stating whether
such Stockholder was available to perform substantial services for (as defined
in Treasury Regulation 1-83-3(c)) and to serve as a director of the Company
during the most recent fiscal year-end. If the Company certifies to the Escrow
Agent, the Escrow Agent shall take such necessary action, within thirty (30)
days of receipt of said certificate, to cause the Company's transfer agent to
(i) reissue a stock certificate in the name of the Stockholder for 20% of the
total shares set forth on Exhibit A or such other Escrow Property ("Vested
Amount") which stock certificate shall not contain the legend set forth in
Paragraph 9(a) hereof and, (ii) issue and deliver to the Escrow Agent a stock
certificate in the name of the Escrow Agent for the remaining shares of Class
A Common Stock which certificate shall contain the legend set forth in
Paragraph 9(a) hereof. If the Company fails to deliver said certificate,
13-3
<PAGE>
the Escrow Agent shall take such action to cause the Company's transfer agent
to cancel shares of Class A Common Stock equal to the Vested Amount and
reissue a certificate in the name of the Escrow Agent for the remaining shares
of Class A Common Stock which certificate shall contain the legend set forth
in Paragraph 9(a) hereof. After any such cancellation of stock, the
Stockholders shall have no further rights as a stockholder of the Company with
respect to any of the canceled Escrow Shares. Upon receipt of any unlegended
stock certificates for shares of Class A Common Stock in the name of a
Stockholder, the Escrow Agent shall cause such certificate to be delivered to
such Stockholder.
5. The Company shall (i) promptly provide the Escrow Agent with
notice of the satisfaction of the Conversion Conditions, (ii) present such
documentation as is reasonably required by the Escrow Agent to evidence the
satisfaction of the condition set forth in Paragraph 4 hereof and (iii) take
such other action as the Escrow Agent shall reasonably request. The Escrow
Agent and the Company shall prepare any documentation necessary to effectuate
the terms of this Agreement.
6. It is understood and agreed by the parties to this Agreement as
follows:
(a) The Escrow Agent is not and shall not be deemed to be a
trustee for any party for any purpose and is merely acting as a depositary and
in a ministerial capacity hereunder with the limited duties herein prescribed.
(b) The Escrow Agent does not have and shall not be deemed to have
any responsibility in respect of any instruction, certificate or notice
delivered to it or of the Escrow Shares
13-4
<PAGE>
or any related Escrow Property other than to (i) take all action necessary to
effectuate the conversion of the Series B Stock into Class A Common upon the
satisfaction of the Conversion Conditions and (ii) faithfully carry out the
obligations undertaken in this Agreement and to follow the directions in such
instruction or notice provided in accordance with the terms hereof. The Escrow
Agent shall take any action necessary to convert shares of Class A Common
Stock into shares of SFX stock pursuant to that certain Amended and Restated
Agreement and Plan of Merger among SFX Broadcasting, Inc., SFX Merger Company
and the Company. The Escrow Agent shall not be entitled to sell and shall not
sell the Escrow Shares or the Escrow Property.
(c) The Escrow Agent is not and shall not be deemed to be liable
for any action taken or omitted by it in good faith and may rely upon, and act
in accordance with, the advice of its counsel without liability on its part
for any action taken or omitted in accordance with such advice. In any event,
its liability hereunder shall be limited to liability for gross negligence or
willful misconduct on its part.
(d) The Escrow Agent may conclusively rely upon and act in
accordance with any certificate, instruction, notice, letter, telegram,
cablegram or other written instrument believed by it to be genuine and to have
been signed by the proper party or parties.
(e) The Company agrees (i) to pay the Escrow Agent, as
consideration for services rendered hereunder, the sum of Five Hundred Dollars
($500.00) per annum during the term of this Agreement, (ii) to pay the Escrow
Agent's reasonable fees and to reimburse it for its reasonable expenses
including attorney's fees incurred in connection with duties hereunder and
(iii)
13-5
<PAGE>
to save harmless, indemnify and defend the Escrow Agent for, from and against
any loss, damage, liability, judgment, cost and expense whatsoever, including
counsel fees, suffered or incurred by it by reason of, or on account of, any
misrepresentation made to it or its status or activities as Escrow Agent under
this Agreement except for any loss, damage, liability, judgment, cost or
expense resulting from gross negligence or willful misconduct on the part of
the Escrow Agent. The obligation of the Escrow Agent to deliver the Escrow
Shares to either the Stockholders or the Company shall be subject to the prior
satisfaction upon demand from the Escrow Agent, of the Company's obligations
to so save harmless, indemnify and defend the Escrow Agent and to reimburse
the Escrow Agent or otherwise pay its fees and expenses hereunder.
(f) The Escrow Agent shall not be required to defend any legal
proceeding which may be instituted against it in respect of the subject matter
of this Agreement unless requested to do so by the Stockholders and, to the
Escrow Agent's satisfaction, indemnified against, and provided advances with
respect to, the cost and expense of such defense by the party requesting such
defense. If any such legal proceeding is instituted against it, the Escrow
Agent agrees promptly to give notice of such proceeding to the Stockholders
and the Company. The Escrow Agent shall not be required to institute legal
proceedings of any kind.
(a) The Escrow Agent shall not, by act, delay, omission or
otherwise, be deemed to have waived any right or remedy it may have either
under this Agreement or generally, unless such waiver be in writing, and no
waiver shall be valid unless it is in writing signed by the Escrow Agent, and
only to the extent expressly therein set forth. A waiver by the Escrow Agent
13-6
<PAGE>
under the terms of this Agreement shall not be construed as a bar to, or
waiver of, the same or any other such right or remedy which it would otherwise
have on any other occasion.
(b) The Escrow Agent may resign as such hereunder by giving 30
days' written notice thereof to the Stockholders and the Company. Within 20
days after receipt of such notice, the Stockholders and the Company shall
furnish to the Escrow Agent written instructions for the release of the Escrow
Shares and any related Escrow Property (if such shares and property, if any,
have not yet been released pursuant to Paragraph 4 hereof) to a substitute
Escrow Agent which (whether designated by written instructions from the
Stockholders and the Company jointly or in the absence thereof by instructions
from a court of competent jurisdiction to the Escrow Agent) may be a bank or
trust company organized and doing business under the laws of the United States
or any state thereof; provided that, nothing contained in this Agreement shall
restrict the Escrow Agent's right to resign as provided in the first sentence
of this paragraph. Such substitute Escrow Agent shall thereafter hold any
Escrow Shares and any related Escrow Property received by it pursuant to the
terms of this Agreement and otherwise act hereunder as if it were the Escrow
Agent originally named herein. The Escrow Agent's duties and responsibilities
hereunder shall terminate upon the release of all shares then held in escrow
according to such written instruction or upon such delivery as herein
provided. This Agreement shall not otherwise be assignable by the Escrow Agent
without the prior written consent of the Company.
7. During the Escrow Period, the Stockholders shall have the sole
power to vote the Class A Common Stock issued or issuable upon the conversion
of the Series B Stock and any securities deposited in escrow under this
Agreement (including, without limitation, any shares issued
13-7
<PAGE>
in connection with the Company's proposed merger with SFX Broadcasting, Inc.
or any other Escrow Property) while such shares are being held pursuant to
this Agreement. Upon receipt of instructions from any Stockholder, the Escrow
Agent shall take any and all necessary action to cause the Escrow Shares to be
voted in accordance with such instructions.
8. (a) During the term of this Agreement no Stockholder shall sell,
transfer, hypothecate, negotiate, pledge, assign, encumber or otherwise
dispose of any or all of the shares of Class A Common Stock held in escrow
pursuant to this Agreement. This restriction shall not be applicable to
transfers upon death, upon which all remaining shares shall be released from
escrow, or upon transfers to members of the Stockholders' family or to any
trust for the benefit of the Stockholders, provided that such transferees
agree to be bound by the provisions of this Agreement, and subject to the
Stockholder set forth on Exhibit A providing the services necessary to vest
such shares in accordance with Paragraph 4 hereof.
(b) The Stockholders will take any action necessary or appropriate,
including the execution of any further documents or agreements, in order to
effectuate the terms of this Agreement.
9. (a) Each of the certificates representing the Series B Stock will
bear legends to the following effect, as well as any other legends required by
applicable law:
"The sale, transfer, hypothecation,
negotiation, pledge, assignment,
encumbrance or other disposition of the
shares evidenced by this certificate are
restricted by and are subject to all of
the terms, conditions and provisions of a
certain
13-8
<PAGE>
Escrow Agreement entered into among
Multi-Market Radio, Inc., Kraig G. Fox, as
Escrow Agent and the Stockholders, dated
as of July 31, 1996, a copy of which may
be obtained from the Secretary of
Multi-Market Radio, Inc. No transfer, sale
or other disposition of these shares may
be made unless specific conditions of such
agreement are satisfied."
(b) "The shares evidenced by this certificate
have not been registered under the
Securities Act of 1933, as amended. No
transfer, sale or other disposition of
these shares may be made unless a
registration statement with respect to
these shares has become effective under
said act, or the Company is furnished with
an opinion of counsel satisfactory in form
and substance to it that such registration
is not required."
The Company and the Escrow Agent shall direct the transfer agent for
the Company to place stop transfer orders with respect to the Escrow Shares
and to maintain such orders in effect until the transfer agent shall have
received written notice from the Company as contemplated in Paragraph 4
hereof.
10. Each notice, instruction or other certificate required or
permitted by the terms hereof shall be in writing and shall be communicated by
personal delivery, facsimile or registered or certified mail, return receipt
requested, to the parties hereto at the addresses set forth below, or at such
other address as any of them may designate by notice to each of the others:
(i) If to the Company, to:
Multi-Market Radio, Inc.
One Monarch Place
Suite 220
Springfield, MA 01144
Attn: Michael G. Ferrel
Fax: 412-732-7851
(ii) If to the Stockholders, to their respective
addresses as set forth on Exhibit A hereto.
13-9
<PAGE>
(iii) If to the Escrow Agent, to:
Kraig G. Fox, Escrow Agent
150 East 58th Street, 19th Floor
New York, NY 10155
Fax: 212-743-3188
All notices, instructions or certificates given hereunder to the Escrow Agent
shall be effective upon receipt by the Escrow Agent. All notices given
hereunder by the Escrow Agent shall be effective and deemed received upon
personal delivery or transmission by facsimile or, if mailed, five (5)
calendar days after mailing by the Escrow Agent.
A copy of all communications sent to the Company, the Stockholders or
the Escrow Agent shall be sent by ordinary mail to Baker & McKenzie, 805 Third
Avenue, New York, New York 10022, Attention: Howard Berkower, Esq.
11. This Agreement may not be modified, altered or amended in any
material respect or canceled or terminated except with the prior consent of
the parties hereto.
114. This Agreement shall be governed by and construed in accordance
with the laws of New York and shall be binding upon and inure to the benefits
of all parties hereto and their respective successors in interest and assigns.
115. This Agreement may be executed in several counterparts, which
taken together shall constitute a single instrument.
13-10
<PAGE>
13-11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers on the day and year
first above written.
MULTI-MARKET RADIO, INC.
By: /s/ Michael G. Ferrel
-----------------------------
ESCROW AGENT
/s/ Kraig G. Fox
--------------------------------
Kraig G. Fox
STOCKHOLDERS:
/s/ Bruce Morrow
--------------------------------
Bruce Morrow
/s/ Myles Schumer
--------------------------------
Myles Schumer
/s/ Edward Simon
--------------------------------
Edward Simon
13-12
<PAGE>
EXHIBIT A
STOCKHOLDERS' LIST
NAME AND ADDRESS
OF STOCKHOLDER NUMBER OF ESCROW SHARES
- -------------------------- -----------------------
Bruce Morrow 10,000
200 Mercer Street
Apt. 1A
New York, New York 10012
Myles Schumer 5,000
Cornick, Garber & Sandler
630 Third Avenue
New York, New York 10017
Fax: (212) 557-3936
Edward Simon 5,000
55 Central Park West, #11E
New York, New York 10023
Fax: (212) 877-0987
13-13
