SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): November 18, 1996
(September 27, 1996)
MULTI-MARKET RADIO, INC.
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(Exact name of registrant as specified in charter)
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Delaware 0-22080 13-3707697
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(State or Other Jurisdiction (Commission File No.) (IRS Employer Identification No.)
of Incorporation)
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150 East 58th Street, 19th Floor, New York, New York 10155
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 407-9150
N/A
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
In September 1996, Multi-Market Radio, Inc. agreed to sell WMYB-FM
and WYAK-FM, both of which operate in Myrtle Beach, South Carolina, to
Pinnacle Broadcasting Company for a price of $5.125 million, payable over a
period of four years.
The press releases attached hereto as Exhibits 99.1, 99.2 and 99.3
are incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits.
2.1 Radio Station Asset Purchase Agreement, dated as of September 27,
1996, by and between Pinnacle S.C., Inc. and Multi-Market Radio of
Myrtle Beach, Inc.
99.1 Press release, dated November 7, 1996, of Multi-Market Radio, Inc.
99.2 Press release, dated November 11, 1996, of Multi-Market Radio, Inc.
99.3 Press release, dated November 12, 1996, of Multi-Market Radio, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
MULTI-MARKET RADIO, INC.
By: /s/ Jerry D. Emlet
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Name: Jerry D. Emlet
Title: Chief Financial Officer
Date: November 18, 1996
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EXHIBIT INDEX
EXHIBIT DESCRIPTION
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2.1 Radio Station Asset Purchase Agreement, dated as of September 27,
1996, by and between Pinnacle S.C., Inc. and Multi-Market Radio of
Myrtle Beach, Inc.
99.1 Press release, dated November 7, 1996, of Multi-Market Radio, Inc.
99.2 Press release, dated November 11, 1996, of Multi-Market Radio, Inc.
99.3 Press release, dated November 12, 1996, of Multi-Market Radio, Inc.
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EXHIBIT 2.1
RADIO STATION ASSET PURCHASE AGREEMENT
This RADIO STATION ASSET PURCHASE AGREEMENT, dated as of September 27,
1996 (together with the Exhibits and Schedules hereto, the "Agreement") by and
between PINNACLE S.C., INC., a Delaware corporation ("Buyer") and MULTI-MARKET
RADIO OF MYRTLE BEACH, INC., a Delaware corporation ("Seller").
W I T N E S S E T H:
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WHEREAS, Seller is the owner, licensee and operator of
broadcast stations WMYB-FM, licensed to Socastee, South Carolina, and WYAK-FM,
licensed to Surfside Beach, South Carolina (each a "Station," and together,
the "Stations");
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to
purchase from Seller, the Purchased Assets (as hereinafter defined), including
but not limited to the Stations;
WHEREAS, in connection with such sale and purchase, Seller
desires to assign or to cause to be assigned to Buyer or for its benefit, and
Buyer desires to obtain such assignment from Seller of, the FCC Licenses (as
hereinafter defined), subject to the prior consent of the FCC; and
WHEREAS, Buyer and Seller will enter into a Time Brokerage
Agreement with respect to the Stations (the "TBA");
NOW, THEREFORE, in reliance upon the representations and
warranties made hereunder and in consideration of the mutual agreements herein
contained, Buyer and Seller hereby agree as follows (with certain terms used
in this Agreement being defined in Article VIII):
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ARTICLE I.
GENERAL
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Section 1.011. Sale and Transfer of Purchased Assets; Excluded
Assets.
(a) Sale and Transfer of Purchased Assets. Seller will sell,
transfer, convey, assign and deliver to Buyer, and Buyer will acquire from
Seller, at the Closing provided for in Article II, all of the businesses,
properties and assets owned or used by or held for use by Seller in the
operation of the Stations (other than "Excluded Assets" as hereinafter
defined), as a going concern, and any additions thereto and replacements
thereof (collectively, the "Purchased Assets"), including but not limited to
the following respective properties, assets and other rights:
(i) Licenses, Authorizations and Permits. All FCC Licenses and all
other permits issued with respect to the Stations, including, without
limitation, those described on Schedule 1.01(a)(i), and all applications
therefor, together with any renewals, extensions or modifications thereof
and additions thereto.
(ii) Tangible Personal Property. All equipment, vehicles, furniture,
fixtures, office materials and supplies, spare parts and other tangible
personal property owned by Seller or used or held for use in the business
and operations of the Stations ("Tangible Assets"), including, without
limitation, those described in Schedule 1.01(a)(ii), and any additions,
improvements, replacements and alterations thereto made between the date
hereof and the Closing Date in accordance with the provisions hereof.
(iii) Real Property. All interests in real property, including
leaseholds and other interests in real property, buildings, the
transmitter site, tower and antennae, and any improvements thereon owned
by Seller or used or held for use in the business and operations of the
Stations and described on Schedule 1.01(a)(iii).
(iv) Contracts. All contracts entered into by Seller in the business
and operations of the Stations set forth on Schedule 1.01(a)(iv) to the
extent relating to the
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Stations, but excluding all Contracts that are terminated or expire or
are no longer in effect on or before the Closing (the foregoing contracts
to be included in the Purchased Assets being referred to herein as the
"Assumed Contracts"). "Contracts" means all agreements, written or oral
(including any amendments and other modifications thereto), to which
Seller is a party or which are binding upon Seller or will affect the
Purchased Assets or the business or operations of the Stations following
the Closing, as defined herein.
(v) Trademarks. All call letters, copyrights, trademarks, service
marks, patents, trade names, jingles, slogans, programming licenses and
logotypes owned by Seller or used or held for use in the business and
operations of the Stations, including, without limitation, those shown on
Schedule 1.01(a)(v) ("Business Property Rights").
(vi) Programming and Copyrights. All programs and programming
materials and elements of whatever form or nature owned by Seller or used
or held for use in the business and operations of the Stations as of the
date hereof, whether recorded on tape or any other substance or intended
for live performance, and whether completed or in production, and all
related common law and statutory copyrights owned by or, to the extent of
Seller's interest therein, licensed to Seller or used or held for use in
the business and operations of the Stations.
(vii) FCC Records. All FCC logs, public files, engineering records
and other records, or copies of the foregoing, that relate to the
operation of the Stations.
(viii) Files and Records. All files and other records of Seller
relating to the business and operations of the Stations and maintained at
the Stations.
(ix) Goodwill. All of Seller's goodwill in and going concern value
of the Stations.
(b) Excluded Assets. The following assets shall be excluded from the
Purchased Assets and shall be retained by Seller:
(i) Cash. Bank accounts, cash on hand and cash equivalents of Seller
in existence on the Closing Date.
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(ii) Accounts Receivable. All cash accounts receivable (excluding
trade and barter) to the extent relating to or arising out of the
operation of the Stations through 11:59 P.M. local time on the date of
commencement by Buyer of broadcasting on the Stations pursuant to the TBA
(the "TBA Effective Time") (all of the foregoing accounts receivable, the
"Receivables").
(iii) Personal Property Disposed Of. All tangible personal property
disposed of or consumed in the ordinary course of the business of the
Stations as permitted under Section 5.01 or with the written consent of
Buyer between the date hereof and the Closing Date.
(iv) Insurance. All right, title and interest under all insurance
policies or contracts of insurance and all claims or other rights to
payment thereunder.
(v) Certain Contracts. Any contracts entered into by Seller or to
which Seller is bound, except for Assumed Contracts.
(vi) Investment Securities. All investment securities of Seller.
(vii) Corporate Name, Books and Records. Seller's corporate name,
Multi-Market Radio of Myrtle Beach, Inc., corporate books and records.
(viii) Deposits. All deposits paid by Seller in connection with any
lease or agreement affecting the Stations and listed on Schedule
1.01(b)(viii).
Section 1.012. Purchase Price.
(a) Purchase Price; Assumption of Liabilities. Subject to the terms
and conditions of this Agreement, and in reliance on the representations,
warranties, undertakings and agreements of Seller made hereunder, and in
consideration of such sale, conveyance, transfer, assignment and delivery,
Buyer agrees:
(i) to pay to Seller the amounts set forth in Sections 1.02(b)(ii)
and 1.02(b)(iii), which payment amounts
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total $5,125,000 (assuming each of the Deferred Payments (as defined
below) is made) (the "Purchase Price"); and
(ii) to undertake, assume and agree to perform and otherwise pay,
satisfy and discharge in accordance with their respective terms, and to
indemnify and hold Seller harmless with respect to, each of the debts,
liabilities and obligations of Seller specified in the Undertaking.
Except as and to the extent expressly provided in this Agreement, nothing
herein shall be interpreted as constituting an assumption by Buyer, or as
requiring Buyer to pay or otherwise be responsible for, and Buyer expressly
disclaims any liability or obligation of Seller other than the liabilities and
obligations of Seller specified in the Undertaking. Seller shall retain and be
solely responsible for paying or otherwise discharging or satisfying any and
all other liabilities and obligations of Seller, including but not limited to:
(i) liabilities under contracts which are not assumed by Buyer and (ii)
employment or personnel-related liabilities or obligations of Seller,
including obligations or liabilities arising from or in connection with any
employee benefit plan, program or arrangement sponsored or maintained by
Seller.
(b) Payment of Purchase Price.
(i) Deposit.
(A) Buyer shall, upon execution and delivery of this Agreement,
deposit an amount of $350,000 (the "Deposit") with an escrow agent
(the "Escrow Agent") pursuant to an escrow agreement (the "Escrow
Agreement") in the form attached hereto as Exhibit A.
(B) If this Agreement is subsequently terminated prior to the
Closing as a result of an uncured breach or default in any material
respect by Buyer of its representations, warranties and agreements
hereunder or under the TBA, and neither Seller nor the Stockholder
is in breach or default in any material respect of its
representations, warranties and agreements hereunder, the Deposit,
together with all earnings thereon, shall be paid
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to Seller as liquidated damages for such breach or default (the
"Liquidated Damages");
(C) If this Agreement is terminated prior to the Closing for
any reason other than a reason specified in the immediately
preceding paragraph, upon Buyer's request, the Deposit and all
earnings thereon (such aggregate amount being referred to as the
"Repayment Amount") shall be paid to Buyer, and, upon receipt by
Seller and the Escrow Agent of a request made by Buyer therefor,
Buyer and Seller shall instruct the Escrow Agent to pay to Buyer the
Repayment Amount.
(ii) Payment of Closing Purchase Price.
Upon consummation of the Closing, the Deposit shall be paid to
the Sellers and applied in partial satisfaction of the Purchase
Price payable to Seller. All earnings on the Deposit shall be paid
to Buyer.
(iii) Payment of Deferred Purchase Price.
(A) After the Closing, Buyer agrees to pay to Seller the
balance of the Purchase Price in installments (each such payment, a
"Deferred Payment") in accordance with the following schedule. Each
Deferred Payment shall be made on the date that falls in the month
specified below for such Deferred Payment and which corresponds to
the Closing Date. If such date falls on a day which is not a
business day, the payment shall be made on the next business day
thereafter.
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Month After
Closing In
Which Payment
Amount Shall Be Made
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$75,000 Third month
$75,000 Sixth month
$75,000 Ninth month
$875,000 Twelfth month
$150,000 Fifteenth month
$750,000 Eighteenth month
$150,000 Twenty-first month
$825,000 Twenty-fourth month
$600,000 Thirtieth month
$400,000 Thirty-sixth month
$400,000 Forty-second month
$400,000 Forty-eighth month
(B) Buyer may, without any cost or penalty, prepay any one or
more of the Deferred Payments set forth in this Section 1.02(b)(iii)
by paying to Seller on any business day on or after the Closing Date
the present value (as of the date of prepayment) of such Deferred
Payment, such present value to be calculated using a discount rate
equal to 10% per annum. For illustrative purposes and without
limiting the foregoing, Schedule 1.02(b)(iii)(B) hereto sets forth
for each of the dates indicated thereon the amount that would be
required to be paid if all of the remaining Deferred Payments were
prepaid on such date, assuming that all Deferred Payments due and
payable prior to such date have been paid in full.
(C) Each Deferred Payment shall be deemed to be comprised of a
principal component and an interest component. Such interest
component shall be calculated using an interest rate equal to 10%
per annum.
(D) At the Closing, Buyer shall, to the extent permitted under
applicable law or other
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restrictions applicable to such assets, grant to Seller, or cause to
be granted to Seller, a first priority security interest (the
"Security Interest") in the Purchased Assets pursuant to the
Security Agreement in the form attached hereto as Exhibit H (the
"Security Agreement") and in the equity interests of Buyer pursuant
to the Pledge Agreement in the form attached hereto as Exhibit I
(the "Pledge Agreement"), subject only to liens in existence as of
the Closing and other than permitted liens as provided in the
Security Agreement and the Pledge Agreement in each case. The
Security Interest shall secure the obligations of Buyer to pay the
Deferred Payments. In addition, Buyer's obligation to pay the
Deferred Payments shall be guaranteed by Pinnacle Broadcasting
Company, Inc., a Delaware corporation ("Pinnacle"), pursuant to a
Guaranty Agreement; provided, however, that (1) the obligations of
Pinnacle under such Guaranty shall be fully subordinate to the
obligations of Pinnacle to its lender and that (2) such Guaranty
Agreement shall be in form and substance satisfactory to Pinnacle's
lender.
(c) Allocation of Purchase Price. Seller and Buyer agree that
Buyer shall cause the Purchased Assets to be appraised promptly
after the Closing by a reputable appraiser, selected by Buyer,
experienced in broadcast properties and that such appraisal shall be
used by both parties in allocating the value of the Purchased Assets
to the Purchase Price for federal tax purposes. Buyer shall pay all
fees incurred in connection with such appraisal. Buyer shall furnish
a copy of such appraisal to Seller within thirty (30) days after it
is completed.
Section 1.013. Instruments of Conveyance, Transfer, Assumption, Etc. (a)
Seller shall properly execute and deliver to Buyer at the Closing:
(i) a Bill of Sale;
(ii) assignments and consents to assignments, in form satisfactory
to Buyer, with respect to each of the contracts and other agreements and
rights to be assigned to
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Buyer hereunder which require for such assignment the
consent or waiver of any third party;
(iii) general warranty deeds in proper form for recordation and
otherwise satisfactory in form and substance to Buyer's counsel
sufficient to vest in Buyer good, marketable and insurable title to the
real property described in Schedule 3.10;
(iv) the Non-Compete Agreement;
(v) Certificates of the respective Secretaries of State of the
States of Delaware and South Carolina as to the legal existence and the
good standing of Seller in Delaware and the qualification of Seller to
conduct business as a foreign corporation and the good standing of Seller
in South Carolina; and
(vi) a certificate of the Secretary of Seller, as to:
(A) The certificate of incorporation and By-laws of Seller
(copies of which shall be attached to such certificate);
(B) The resolutions of the Board of Directors of Seller (copies
of which shall be attached to such certificate) authorizing the
execution and delivery of the Acquisition Agreements to which it is
a party and the consummation of the transactions contemplated
thereby; and
(C) Incumbency and specimen signatures of the officers of
Seller and other representatives, if any, of Seller who negotiated
the transactions contemplated hereby and/or signed any agreements,
documents, instruments or certificates in connection herewith; and
(vi) the certificate required pursuant to Section 6.03(b).
(b) Buyer shall properly execute and deliver to Seller at the Closing:
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(i) The Undertaking;
(ii) Certificates of the respective Secretaries of State of the
States of Delaware and South Carolina as to the legal existence and the
good standing of Buyer in Delaware and the qualification of Buyer to
conduct business as a foreign corporation and the good standing of Buyer
in South Carolina;
(iii) A certificate of the Secretary of Buyer, certifying on behalf
of Buyer, as to:
(A) The certificate of incorporation and By-laws of Buyer
(copies of which shall be attached to such certificate);
(B) The resolutions of the Board of Directors of Buyer (copies
of which shall be attached to such certificate) authorizing the
execution and delivery of the Acquisition Agreements to which it is
a party and the consummation of the transactions contemplated
thereby; and
(C) Incumbency and specimen signatures of the officers of Buyer
and other representatives, if any of Buyer who negotiated the
transactions contemplated hereby and/or signed any agreements,
documents, instruments or certificates in connection herewith; and
(iv) the certificate required pursuant to Section 6.02(b).
Section 1.014. Proration.
(a) Apportionment of Income and Expense. Seller shall be entitled to all
cash income (excluding trade and barter) received from, and shall be
responsible for all expenses arising out of, the operations of the Stations
through the TBA Effective Time. Buyer shall be entitled to all income received
from the operations of the Stations after the TBA Effective Time. After the
TBA Effective Time and through the Closing Date, all expenses arising out of
the operations of the Stations shall be allocated between Buyer and Seller as
provided in the TBA. All items of
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expense that are, under the terms and conditions of the TBA, the
responsibility of Seller on or before the Closing Date and that overlap the
Closing Date, including without limitation the following, shall be prorated
between Seller and Buyer as of 12:00:01 A.M. local time (the "Determination
Time") on the Closing Date (the "Prorations"):
(i) Prepaid expenses arising from payments made for goods or
services prior to the Determination Time where all or part of the goods
or services have not been received or used by the Determination Time (for
example, rents paid in advance for a rental period extending beyond the
Determination Time);
(ii) Utility services, rent, accrued sales commissions and business
and professional services;
(iii) Personal and real property taxes and utilities charges related
to the Station or in respect of any of the Purchased Assets; and
(iv) Unearned prepayments received by Seller in connection with any
agreement assumed by Buyer.
(b) Determination and Payment. Prorations shall be completed, insofar
as reasonably possible, on the TBA Effective Time and on the Closing Date and
in the case of Prorations on the Closing Date shall be paid by way of
adjustment to the Purchase Price to the extent then determined. As to
Prorations that cannot be made on the TBA Effective Time or on the Closing
Date, as applicable, within ninety (90) days after the TBA Effective Time or
the Closing Date, as applicable, Buyer and Seller shall determine all such
Prorations. Within ten (10) days thereafter Buyer shall pay in cash to Seller
or Seller shall pay in cash to Buyer, as the case may be, the net amount due.
If Buyer and Seller do not agree upon the Prorations, the dispute shall be
referred to a firm of independent Certified Public Accountants, mutually
acceptable to Seller and Buyer, whose decision shall be final, and whose fees
and expenses shall be shared equally by Seller and Buyer.
Section 1.015. Receivables. As soon as available after the TBA Effective
Time (but in any event within ten (10) days thereafter), Seller shall deliver
to Buyer an itemized schedule of the Receivables, listing each debtor, the
amounts due
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and whether (and when) the debtor has been billed (the "Accounts Receivable
Schedule") and an itemized schedule of all accounts payable of Seller arising
out of the operation of the Stations before the TBA Effective Time (the
"Payables"). For ninety days following the TBA Effective Time (the "Collection
Period"), Buyer shall, subject to the other provisions contained in this
Section 1.05, use commercially reasonable efforts to act as Seller's agent in
collecting the Receivables and paying, out of collections on the Receivables,
the Payables. Seller shall deliver to Buyer on the TBA Effective Time any
power of attorney necessary for such collection. Buyer shall collect the
Accounts Receivable without commission or compensation, except for payment of
commissions and compensation payable to employees and other parties incurred
in the ordinary course of business of the Stations consistent with Seller's
past practice, and forty-five (45) days following the TBA Effective Time and
ninety (90) days after the TBA Effective Time (such 90 day period, the
"Collection Period"), Buyer shall remit to Seller all amounts collected by
Buyer on Receivables in excess of the amount of payments on Payables.
Thereafter, Buyer shall remit any other amounts collected by it for
Receivables, subject to any offset arising hereunder. Buyer shall have no
liability or obligation with respect to Payables except to act as Seller's
agent to make payments on Payables out of Receivables actually collected.
Without the express written consent of Seller, Buyer shall not compromise or
settle for less than the full value any Receivables. Buyer shall not incur any
liability as the result of failure to collect any Receivables and shall not be
required to incur any expense or institute suit (or engage in any dunning) to
collect any Receivables. Buyer and Seller shall cooperate to facilitate
Buyer's collection of Receivables hereunder (e.g., by execution and delivery
of necessary powers of attorney for the deposit of checks). At the end of the
Collection Period, Buyer shall have no further obligation with respect to any
Receivables uncollected within the Collection Period. All monies relating to
the Receivables during the Collection Period shall be first applied toward the
payment of the Receivables listed on the Accounts Receivable Schedule, except
that, if any debtor shall dispute in writing a Receivable, Buyer shall
promptly notify Seller thereof; Seller shall have ten (10) business days from
receipt of such notice to investigate and/or adjust such account without
communicating with the debtor, except with the prior consent of Buyer and if,
at the end of said ten business days, Buyer has not received a writing from
the debtor that the dispute has been adjusted to the debtor's satisfaction,
Buyer may return
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such account to Seller and thereafter deal with such debtor as if it were not
on the Accounts Receivable Schedule, i.e., without the obligation of applying
funds subsequently received from such debtor to the Receivables, and Buyer
shall return any uncollected Receivables to Seller. To the extent Buyer
receives any proceeds from any Receivables which are returned to Seller after
the Collection Period, Buyer will immediately remit the same to Seller.
Section 1.016. Risk of Loss. The risk of loss by force majeure or for
any other event or reason (including but not limited to loss, damage,
condemnation, requisition or destruction) to the Purchased Assets
(hereinafter, collectively, a "Loss") between the date of this Agreement and
the Closing Date shall be on Seller, except to the extent arising out of an
uncured breach by Buyer of its obligations under the TBA or the gross
negligence or willful misconduct of Buyer. Seller shall take all reasonable
steps to repair, replace and restore the Purchased Assets or the Stations as
soon as possible after any Loss, it being understood that all insurance
proceeds received before the Closing shall be applied to or reserved for such
replacement, restoration, or repair.
Section 1.017. Further Assurances. At the Closing and from time to
time after the Closing, (a) at the request of Buyer and without further
consideration, Seller shall promptly execute and deliver to Buyer such
certificates and other instruments of sale, conveyance, assignment and
transfer, and take such other action, as may reasonably be required by Buyer
to confirm more effectively any obligation assumed by Buyer pursuant to the
Undertaking, and to sell, convey, assign and transfer to and vest in Buyer or
to put Buyer in possession of the business and any property or asset to be
sold, conveyed, assigned, transferred and delivered hereunder or under a Bill
of Sale or the deeds referred to above, and (b) at the request of Seller and
without further consideration, Buyer shall promptly execute and deliver to
Seller such certificates and other instruments of assumption and take such
other action as may be reasonably required by Seller to confirm and carry out
more effectively the assumption by Buyer of the obligations of Seller assumed
by Buyer pursuant to the Undertaking.
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ARTICLE II.
CLOSING AND TERMINATION OF AGREEMENT
Section 1.021. Closing. The Closing of the transactions provided for
herein (the "Closing" or "Closing Date") will take place at the offices of
Winthrop, Stimson, Putnam & Roberts, One Battery Park Plaza, New York, NY
10004, at 10:00 A.M. (New York City time) within ten (10) days after
satisfaction of the Closing Conditions contained in Section 6.01 and 6.03(h),
or at such other place, time and date as may be agreed upon by Buyer and
Seller.
Section 1.022. Termination. Anything contained in this Agreement other
than in this Article II to the contrary notwithstanding, this Agreement may be
terminated prior to the Closing:
(a) by mutual consent of Buyer and Seller;
(b) by either Buyer or Seller if, due to a condition that is not
caused by a breach or default in any material respect by it of its
representations, warranties and agreements hereunder, or under the TBA, as the
case may be, including the failure to obtain any Final Order from the FCC
required as a condition to Closing hereunder, the sale hereunder is not
consummated on or before September 30, 1997 (or such later date as may be
agreed upon in writing by the parties hereto);
(c) by either Buyer or Seller, if the other party to this Agreement
breaches or defaults upon in any material respect its representations,
warranties and agreements hereunder, or under the TBA (and the TBA is
terminated), as the case may be, and the terminating party is not in breach or
default in any material respect of its representations, warranties and
agreements hereunder, or under the TBA, provided that this clause (c) shall
not apply if such breach or default has been, or the party in breach or
default provides adequate assurance that, on or before the scheduled Closing,
such breach or default will be, fully cured; and
(d) by Buyer (i) in the event of any material loss, damage,
condemnation, or destruction of the Stations or the Purchased Assets or any
part thereof as described in
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Section 1.06, except to the extent arising out of an uncured breach by Buyer
of its obligations under the TBA or the gross negligence or willful misconduct
of Buyer; and (ii) if the FCC has denied any of the consents to assignment of
the license(s) required as a condition to Closing under this Agreement, or has
granted any such consents with any condition materially adverse to Buyer.
(e) by Seller, (i) in the event that a Phase I environmental survey
(the "Phase I") procured by Buyer with respect to the Purchased Assets
indicates that an environmental condition exists that would result in a breach
of a representation or warranty or would entitle Buyer to indemnification by
Seller, and the cost of remediating such condition or satisfying such
indemnification obligation would exceed $50,000; or (ii) the cost of
installation by Seller of any pollution control equipment or other equipment
to bring the facility into compliance with any Environmental law would exceed
$50,000.
The foregoing notwithstanding, Seller shall not be entitled to terminate this
Agreement under Sections 2.02(a) and 2.02(b) hereof unless and until Seller
shall have first authorized the release to Buyer of all amounts held by the
Escrow Agent pursuant to the Escrow Agreement, and Seller shall promptly
authorize the release to Buyer of such escrow amounts upon the exercise by
Buyer of its rights under this Section 2.02 to terminate this Agreement. In
the event that Buyer breaches or defaults upon in any material respect its
representations, warranties and agreements hereunder and Seller terminates
this Agreement under clause (c) above, Seller (or its permitted assignees)
shall be entitled to the benefits of Section 1.02(b)(i) hereof as its sole and
exclusive remedy. In the event that Seller breaches or defaults upon in any
material respect its representations, warranties and agreements hereunder,
Buyer may pursue and obtain whatever remedies may be available to it at law or
in equity, provided that, in the case of a breach by Seller prior to Closing,
Buyer may either (i) terminate the Agreement and recover all of its
out-of-pocket costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby and the enforcement of its rights
hereunder and any Losses arising out of third-party litigation, claims,
actions, suits, proceedings or demands, or (ii) bring an action for specific
performance and recover all of its out-of-pocket costs and expenses incurred
in connection with this Agreement and the
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transactions contemplated hereby and the enforcement of its rights hereunder
and any Losses arising out of third-party litigation, claims, actions, suits,
proceedings or demands.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer that:
Section 1.031. Organization. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all corporate power and authority to conduct its business as such
business is now being conducted.
Section 1.032. Licenses and Permits. (a) Schedule 3.02 hereto contains a
true and complete list of all material Federal, state, local and foreign
governmental licenses and permits necessary, used or useful in the operation
of either of the Stations or the ownership of the Purchased Assets (including
but not limited to all of the FCC Licenses, together with the call letters for
the Stations, and all other licenses, authorizations and permits with respect
to the Stations for which Seller has made application to the FCC); all
Federal, state, local and foreign governmental or judicial consents, orders,
decrees and other compliance agreements under which any of the Stations is
being operated or by which Seller is bound; and all available reports of
inspection, if any, relating to the Purchased Assets from the date of
acquisition of the Stations by Seller of the Stations to the date hereof under
all applicable, Federal, state and local environmental, health and safety laws
and regulations. The FCC Licenses expire on the respective dates indicated on
Schedule 3.02. Seller has, and is operating in compliance with, all material
permits, licenses, approvals, and authorizations of all Federal, state and
local authorities necessary for it to carry on its business as presently
conducted and all such permits, licenses, approvals and authorizations have
been validly obtained, are in full force and effect and, to the best of
Seller's knowledge, no suspension or cancellation of any of them is
threatened.
(b) Except as set forth in Schedule 3.02, the FCC Licenses are free
and clear of any conditions or restrictions
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which would limit the full operation of the Stations or which would have a
material adverse effect on the assets, liabilities, condition (financial or
otherwise), results of operations, business or business prospects of the
Stations ("Material Adverse Effect"), and, except as set forth in Schedule
3.02, there is not pending, or to the best of Seller's knowledge, threatened
before the FCC, (i) any application, proceeding or complaint relating to the
FCC Licenses that might result in the modification, suspension, revocation,
termination, short-term renewal or non-renewal of, or imposition of any
condition with respect to, any of the FCC Licenses or which would have a
Material Adverse Effect on the operation of the Stations, or (ii) any FCC
inquiry, investigation, order to show cause, notice of violation, notice of
apparent liability, notice of forfeiture, complaint, or request for
information against the Seller with respect to either of the Stations or
Seller's qualification to serve as a broadcast licensee. The Stations are
properly identified by their current respective call letters and each
transmitter operated by Seller is transmitting at the frequency and power for
which Federal, state and local government authorization has been obtained and
in accordance with all applicable FCC standards and procedures with respect to
exposure to RF radiation, including compliance, prior to Closing, with the
standards set forth in the new RF guidelines (Report and Order, FCC 96-326
(released Aug. 1, 1996); 61 Fed. Reg. 41006). Seller, the Purchased Assets and
the Stations are in compliance in all material respects with the FCC Act and
the rules, regulations and policies promulgated thereunder and all FCC
Licenses. All reports and other information relating to the Stations and the
Purchased Assets required to be filed with the FCC have been duly and timely
filed; and all of such reports and information are complete and correct in all
material respects and comply in all material respects with the requirements of
the FCC Act and the rules, regulations and policies promulgated thereunder.
Section 1.033. No Violation. Neither Seller nor any of the Purchased
Assets is subject to or bound by any provision of:
(a) any law, statute, rule, regulation or judicial or administrative
decision (provided that the transactions contemplated hereby are subject to
the FCC Act and the rules, regulations and policies thereunder);
(b) articles or certificate of incorporation or By- laws;
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(c) mortgage, deed of trust, lease, note, bond, indenture, other
instrument or agreement, license (other than the FCC Licenses) permit, trust,
custodianship, other restriction; or
(d) any decision, judgment, order, writ, injunction or decree of any
court, governmental body, administrative agency or arbitrator;
that could prevent or be violated by or under which there would be a default
as a result of, nor is the consent of any Person which has not been obtained
and which has not been specified in Schedule 3.03 required for, the execution,
delivery and performance by Seller of any of the Acquisition Agreements to
which it is or will be a party.
Section 1.034. Authority. Seller has full corporate power and authority
to enter into each of the Acquisition Agreements to which it is or will be a
party and to consummate the transactions contemplated hereby. Each of the
Acquisition Agreements has been (or will be at the Closing) duly executed and
delivered by Seller to the extent it is a party thereto and (assuming valid
execution and delivery by Buyer) is a valid and binding obligation of Seller
to the extent it is a party thereto, enforceable in accordance with its terms,
subject to bankruptcy, insolvency and other laws affecting the rights of
creditors and to equitable principles which may affect the availability of the
remedy of specific performance. The execution and delivery of, and performance
by Seller of its obligations under, each of the Acquisition Agreements to
which it is or will be a party have been duly authorized by all necessary
corporate action of Seller.
Section 1.035. Financial Statements. (a) Seller has heretofore furnished
Buyer with complete and correct copies of (i) unaudited financial statements
of Seller for each of the three fiscal years ended December 31, 1995, December
31, 1994 and December 31, 1993, including balance sheets, statements of income
and statements of cash flows; and (ii) unaudited financial statements of
Seller for the seven months ended July 31, 1996, including a balance sheet,
statement of income and statement of changes in financial position for such
period, and the report of the chief financial officer of Seller with respect
to such unaudited financial statements.
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(b) All such unaudited financial statements are complete and correct
in all material respects, were prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods indicated,
reflect all liabilities of Seller, including contingent liabilities, and
present fairly the financial condition of Seller at such dates and results of
operations and cash flows for the periods then ended. The information
contained in all such unaudited financial statements is the same as that used
in the audited financial statements of Multi-Market Radio, Inc., a Delaware
corporation, the owner of 100% of the outstanding capital stock of Seller,
without any material changes in the account information or accounting
principles utilized therein.
(c) There are no liabilities, debts, obligations, or claims against,
Seller, the Purchased Assets or the Stations, of any nature, whether absolute
or contingent, except (i) as and to the extent reflected or reserved against
on the balance sheet of Seller as of July 31, 1996; or (ii) specifically
described and identified as an exception to this paragraph in any of the
Schedules delivered to Buyer pursuant to this Agreement; and (iii) incurred
since December 31, 1995 in the ordinary course of business consistent with
prior practice.
(d) Since December 31, 1995, Seller has maintained, and until the TBA
Effective Time, Seller shall maintain, the level of promotional expenditures
provided for in Seller's budget for calendar year 1996 through the date hereof
and through the TBA Effective Time, respectively.
Section 1.036. Records. Seller has made available for inspection by
representatives of Buyer and Buyer's Lenders and stockholders all the books of
account of Seller with respect to the assets, liabilities, condition
(financial and otherwise) and business conducted by Seller. Such books of
account of Seller reflect substantially all the transactions and other matters
required under generally accepted accounting principles to be reflected
therein.
Section 1.037. Disclosure Schedules. Seller has delivered to Buyer
complete and correct Schedules and complete and correct copies of documents
underlying a disclosure on a Schedule.
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Section 1.038. Taxes. All material Federal, state and local taxes or
assessments due and payable in respect of Seller for all periods, including
interest and penalties, have been paid, and there is no tax levy against any
of the Purchased Assets. No unsettled claim for any tax or assessment or levy
for which Seller may become liable has been asserted. Seller has not failed to
file timely any tax returns, tax reports or other related tax information
required by law to be filed.
Section 1.039. Title to and Condition of Certain Purchased Assets and
Description of Purchased Assets. Schedule 3.09 is a complete and correct list
of all machinery, inventory, equipment (including but not limited to all
towers and broadcasting and transmitting equipment), furniture, furnishings,
leasehold improvements, vehicles, buildings and other tangible physical assets
(other than office supplies used in the ordinary course of business) and
fixtures (as of the date hereof) of Seller or used or held for use in the
business and operations of the Stations. Seller has (and will have at the
Closing) good, valid and marketable title (and Buyer shall receive such title
of Seller by delivery of the Bill of Sale), to all of the Purchased Assets
which do not constitute real property, free and clear of all Encumbrances
except for Permitted Encumbrances. Schedule 3.09 sets forth all Encumbrances
with respect to the Purchased Assets (other than Purchased Assets constituting
an interest in real property). All of the material machinery, equipment and
other tangible physical assets of Seller to be transferred hereunder
(including, without limitation, those reflected in Schedule 3.09 or acquired
since the date of Schedule 3.09) are in a good state of maintenance, repair
and operating condition in order to conduct the business of Seller as now
conducted, ordinary wear and tear excepted. The Purchased Assets are used by
or are useful to Seller in the ordinary course of business as presently
conducted and constitute all of the assets and properties used in or necessary
to conduct and operate the Stations consistent with past practice.
Section 3.10. Real Property. (a) Schedule 3.10 sets forth a complete and
correct legal description and street address (including lot and block number,
if any) of each and every parcel of real property or interest therein owned in
whole or in part by Seller or held for the benefit of Seller under a
title-holding agreement or held under a lease or otherwise used by Seller, in
each case indicating the nature of such ownership, holding, or use; and
complete and correct copies of each and every of the
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following in the possession of Seller: (i) title report, title binder, survey
document and datum affording information or opinions with respect to,
certifying to, or evidencing the extent, current title, title history, title
marketability, use, possession, restriction or regulation, if any
(governmental or otherwise), and compliance with applicable laws of (A) the
real property or (B) any estate or interest in (or in the nature of) real
property or in a land or building lease or chattel real; (ii) deed or
title-holding or trust agreement, if any, under which any of the parcels may
have been conveyed to Seller under which the same may be held for the benefit
of Seller; (iii) leases; and (iv) certificates of occupancy. Schedule 3.10
sets forth all Encumbrances with respect to the Purchased Assets constituting
an interest in real property. None of the exceptions to title listed in the
title report procured by Buyer after the date hereof in connection with the
real property transferred by Seller as described in Schedule 3.10 materially
detracts from or interferes with the present use of any such property subject
thereto or affected thereby and each and every such exception to title taken
with each and every other exception to title affecting real property of Seller
does not materially adversely impair the business operations of Seller.
(b) Seller has complete and good and valid rights of ingress and
egress to and from all the real property owned or leased by it from and to the
public street systems for all usual street, road and utility purposes. Seller
has not received and does not know of any notice or any appropriation,
condemnation or like proceeding, or of any violation of any applicable zoning
law, regulation or other law, order, regulation or requirement relating to or
affecting any of its operations, properties or assets; and no such proceeding
has been threatened or commenced and, to the best of Seller's knowledge, no
such violation exists. All of the buildings, structures, transmitter sites,
towers, antennae and other improvements which constitute a Purchased Asset (i)
to the best of Seller's knowledge, are located within the boundary lines and
applicable set back lines of real property interests constituting Purchased
Assets, (ii) to the best of Seller's knowledge, do not encroach on any
easements or on any real property interest, other than a Purchased Asset, and
(iii) comply in all material respects with all local zoning requirements and
conform with the uses permitted thereunder and do not constitute
"non-conforming uses."
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(c) Seller has on the date hereof, and, upon delivery by Seller to
Buyer at the Closing of (i) the Bill of Sale; (ii) the Deeds; and (iii) the
assignments with full covenant and warranty in proper form for recordation of
Seller's entire interest in all leases specified in Schedule 3.10, and Buyer
at such time shall thereby receive, good and marketable title to all of the
real property (including all improvements thereon) owned by Seller or held for
the benefit of Seller under any title holding agreement as specified in
Schedule 3.10, in the condition specified in this Section 3.10, free and clear
of all Encumbrances except Permitted Encumbrances.
(d) All of the buildings, improvements and fixtures owned or leased
by Seller are in a good state of repair, maintenance and operating condition,
ordinary wear and tear excepted, in order to conduct the business of Seller as
now conducted.
(e) All of the radio transmitter sites, towers and antennae used or
held for use in the business and operations of the Stations are located on
real property constituting a Purchased Asset.
Section 3.11. Contracts and Bids. Schedule 3.11 sets forth a complete and
correct list of all material contracts, agreements and commitments (including
all trade and barter arrangements); written and oral leases and occupancy or
use agreements (other than those included in Schedule 3.11); security deposits
under leases; licenses (other than those listed in Schedule 3.02); franchises;
and, with respect to each item in each category referred to above, a
specification as to whether the consent of any third person or agency is
required for the assignment thereof. All of the contracts and agreements of
Seller required to be listed in Schedules 3.10 and 3.11 are in full force and
effect in accordance with their respective terms, covenants and conditions.
Copies of the documents listed in such Schedules have been made available for
inspection by Buyer. Seller, and, to the best of its knowledge, the other
party thereto, is not in default under any of such contracts and agreements.
Section 3.12. Absence of Litigation. Schedule 3.12 sets forth all
demands, claims, actions, suits, litigation, governmental or arbitral
proceedings, investigations or labor disputes pending or, to Seller's
knowledge, threatened against
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Seller (to the extent relating to the Stations or Seller) or any of the
Purchased Assets or to which Seller or any of Seller's employees (to the
extent relating to the Stations or Seller) is a party. Except as described in
Schedule 3.12, there is no demand, claim, action, suit, litigation or
governmental or arbitral proceeding, investigation or labor dispute pending
or, to the best of Seller's knowledge, threatened against Seller (to the
extent relating to the Seller or the Stations) or any of the Purchased Assets
or to which Seller or any of Seller's employees (to the extent relating to the
Stations or Seller) is a party or any basis for any of the foregoing and all
files of Seller and its counsel with respect to such litigation and other
matters described in Schedule 3.12 have been made available to counsel for
Buyer by Seller.
Section 3.13. Non-infringement of Certain Rights. Schedule 3.13 sets
forth all trademark registrations, service mark registrations, patents,
copyrights (whether common law or statutory) and applications for all of the
foregoing (including information as to expiration dates of all the foregoing
where applicable) presently owned or used by or held for use by Seller, or to
which Seller is equitably entitled. Seller possesses all trademarks, trade
names, labels or other marks, patents, call letters, copyrights, trade secrets
and other proprietary intellectual property necessary to conduct its business
as now being conducted. None of the trademarks, trade names, labels or other
marks or copyrights used by Seller, infringe the trademark, trade name, label,
other mark, right or copyright of any other person or entity, and Seller has
not received any notice of adverse claim by any third party with respect
thereto.
Section 3.14. Absence of Material Change, Etc. As of the date hereof,
there has been no material adverse change (or changes which in the aggregate
are materially adverse) since December 31, 1995 in the assets, liabilities,
condition (financial or otherwise), results of operations, business or
prospects of Seller, the Purchased Assets or the Stations, including without
limitation, any material damage, destruction or loss (whether or not covered
by insurance); any material adverse change in managerial, supervisory, sales,
technical or other key employees or agents; any material adverse change in
customers or ratings of the Stations, or any discontinuance, cancellation or
material interruption of any business, broadcast transmission or project.
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Section 3.15. Absence of Changes or Events. Except as disclosed in
Schedule 3.15, since December 31, 1995 Seller has not:
(a) entered into any material transaction other than in the ordinary
course of business;
(b) leased, licensed, mortgaged, pledged or subjected to any lien or
encumbrance any of its assets, tangible or intangible;
(c) exercised any option or other right; canceled any debt or claim
or waived any right of substantial value; sold, conveyed or transferred any of
its properties or assets; or contracted or otherwise agreed to do any of the
foregoing;
(d) granted any general or uniform increase in the compensation
(including any bonus, pension or other commitment) of employees; or granted
any substantial increase in any compensation payable or to become payable by
it to any employee or agent whose annual rate of compensation is or would then
be in excess of $10,000;
(e) made any capital expenditures or commitments for additions to
property or equipment, other than ordinary repairs and maintenance;
(f) made any changes in any of its methods of accounting or in any of
its accounting principles;
(g) sold or otherwise transferred assets of the type referred to in
Section 3.09 or 3.10;
(h) disposed of or permitted to lapse any trademark, trademark
registration, service mark, service mark registration, copyright, copyright
registration, or any trademark, service mark, or copyright application, or
failed to make timely application therefor.
Section 3.16. Governmental Consents. No consent by, approval or
authorization of or filing, registration or qualification with any Federal or
state authority is required for the negotiation, execution, delivery or
performance by Seller of this Agreement other than the consent of the FCC.
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Section 3.17. Insurance. Schedule 3.17 sets forth all policies of
insurance presently in force with respect to Seller and, without restricting
the generality of the foregoing, those covering their personnel, properties,
buildings, machinery, equipment, furniture, fixtures and operations. All of
such policies are in full force and effect, and Seller has not received any
notice of termination or cancellation.
Section 3.18. Compliance With Law. (a) Except as disclosed in Schedule
3.18(a), the operations and activities of the Stations and the Purchased
Assets have complied and are in compliance in all material respects with all
applicable Federal, state and local laws, including, without limitation,
health and safety statutes and regulations ("Laws") and all Environmental
Laws, including, without limitation, all restrictions, conditions, standards,
limitations, prohibitions, requirements, obligations, schedules and timetables
contained in the Environmental Laws or contained in any regulation, code,
plan, order, decree, judgment, injunction, notice or demand letter issued,
entered, promulgated or approved thereunder.
(b) Schedule 3.18(b) sets forth: (i) all Federal, state, local and
foreign governmental licenses, permits and other authorizations ("Permits") of
the Purchased Assets; and (ii) all reports of inspection of the Purchased
Assets to the date hereof under all applicable Federal, state and local health
and safety laws and regulations. Seller has heretofore delivered to Buyer
complete and correct copies of all of the foregoing and applications relating
thereto.
(c) Except as disclosed in Schedule 3.18(c), Seller has obtained all
Permits that are (i) required under all Federal, state and local laws,
including the Environmental Laws, for the ownership, use and operation of each
location owned, operated or leased by Seller in connection with the Purchased
Assets (the "Property") or (ii) otherwise necessary in the conduct of the
business of the Purchased Assets. Except as disclosed in Schedule 3.18(c), all
such Permits are in effect, no appeal nor any other action is pending to
revoke any such Permit, and each of Seller is in full compliance with all
terms and conditions of all such Permits.
(d) Seller has heretofore delivered to Buyer true and complete copies
of all environmental studies in Seller's possession, made in the last ten
years relating to the Property
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or any other property or facility previously owned, operated or leased by
Seller.
(e) Except as disclosed in Schedule 3.18(e), there is no civil,
criminal or administrative action, suit, demand, claim, hearing, notice of
violation, investigation, proceeding, notice or demand letter existing or
pending relating to Seller or the Property or any other property or facility
now or formerly owned, operated or leased by Seller or, to the best of
Seller's knowledge, threatened relating to Seller or the Property (or any such
property or facility) and relating in any way to the Environmental Laws or any
regulation, code, plan, order, decree, judgment, injunction, notice or demand
letter issued, entered, promulgated or approved thereunder. Except as
disclosed in Schedule 3.18(e), Seller has not received any notice or order
from any governmental agency or private or public entity advising it that
Seller is responsible for or potentially responsible for Cleanup or paying for
the cost of Cleanup of any Hazardous Substances, Oils, Pollutants or
Contaminants or any other waste or substance, and Seller has not entered into
any agreements concerning such Cleanup, nor is Seller aware of any facts which
might reasonably give rise to such notice, order or agreement.
(f) Except as disclosed in Schedule 3.18(f), Seller has not, and to
the best of Seller's knowledge, no other Person has, Released, placed, stored,
buried or dumped any Hazardous Substances, Oils, Pollutants or Contaminants or
any other wastes produced by, or resulting from, any business, commercial, or
industrial activities, operations, or processes, on, beneath, or adjacent to
the Property (or any other property or facility formerly owned, operated or
leased by Seller) except for inventories of such substances to be used, and
wastes generated therefrom, in the ordinary course of business of Seller or
any Subsidiary (which inventories and wastes, if any, were and are stored or
disposed of in accordance with applicable laws and regulations and in a manner
such that there has been no Release of any such substances into the
environment).
(g) Except as disclosed in Schedule 3.18(g), to the best of Seller's
knowledge, no Release or Cleanup occurred at the Property (or any other
property or facility formerly owned, operated or leased by Seller) which could
result in the assertion or creation of a lien on the Property by any
governmental body or agency with respect thereto, nor has any such assertion
of a lien
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been made by any governmental body or agency with respect thereto.
(h) Except as disclosed in Schedule 3.18(h), to the best of Seller's
knowledge, no employee of Seller in the course of his or her employment with
Seller has been exposed to any Hazardous Substances, Oils, Pollutants,
Contaminants or other substance, generated, produced or used by Seller which
could give rise to any claim against the Purchased Assets.
(i) Except as disclosed in Schedule 3.18(i), to the best of Seller's
knowledge, the Property does not contain any: (a) underground storage tanks;
(b) asbestos; (c) equipment using PCBs; (d) underground injection wells; or
(e) septic tanks in which process wastewater or any Hazardous Substances,
Oils, Pollutants or Contaminants have been disposed.
Section 3.19. Benefit Plans and Agreements; ERISA. (a) Schedule 3.19(a)
attached hereto sets forth the name, current annual compensation rate
(including bonus and commissions), title, vacation policy, severance policy
and sick leave policy, current base salary rate; collective bargaining, union
or other employee association agreements; employment, managerial, advisory and
consulting agreements; employee confidentiality or other agreements protecting
proprietary processes, formulae or information to the extent relating to the
Stations (other than employee handbooks); any reports and/or plans prepared or
adopted pursuant to the Equal Employment Opportunity Act of 1972, as amended;
each employee benefit plan (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974 ("ERISA")), stock purchase plan, stock
option plan, fringe benefit plan, bonus plan and any other deferred
compensation agreement or plan or funding arrangement sponsored, maintained or
to which contributions are made (or are required to be made) by Seller with
respect to the employees of Seller (collectively, the "Benefit Plans"); and
the amount of any unfunded liabilities, including medical coverage, arising
under any Benefit Plan, and the identity of the plan, fund, or arrangement
giving rise thereto.
(b) Except as set forth on Schedule 3.19(b), Seller (1) is not a
party to any collective bargaining agreement, employment or consulting
agreement covering any employee of Seller; and (2) has not announced or
otherwise made a commitment to create any bonus, option, deferred
compensation, pension,
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profit-sharing or retirement plan or arrangement, severance arrangement or
other fringe benefit plan covering any employee of Seller.
(c) The execution and delivery of this Agreement by Seller and the
consummation of the transactions contemplated hereunder will not result in any
obligation or liability (with respect to accrued benefits or otherwise) of
Buyer to any employee or former employee of Seller.
(d) Except as set forth on Schedule 3.19(d), with respect to any
employee of Seller, Seller has not at any time contributed to (or been
obligated to contribute to) any multiemployer plan within the meaning of
Section 4001(a) of ERISA.
(e) Except as set forth on Schedule 3.19(e), none of the Benefit
Plans are subject to Title IV of ERISA or Section 412 of the Code.
(f) To the best of Seller's knowledge, Seller has complied in all
material respects with ERISA, the Code and the regulations thereunder and all
other applicable federal or state statutes or regulations. Each Benefit Plan
that is an employee pension benefit plan, within the meaning of Section 3(2)
of ERISA, intended to qualify under the Code ("Retirement Plan") has received
a favorable determination letter from the Internal Revenue Service as to such
qualification, or application for such determination letter has been made
prior to the expiration of the applicable remedial amendment period (and
Seller agrees to make such plan amendments as the IRS may require in order to
issue a favorable determination letter), and nothing has occurred, whether by
action or failure to act, which would cause the loss of such qualification.
(g) All contributions and insurance premiums required to be paid or
accrued with respect to the Benefit Plans as of the Closing Date have been
paid or have been accrued on the financial statements of the Seller.
Section 3.20. Labor Relations. To the best of Seller's knowledge, Seller
has complied in all material respects with applicable laws, rules and
regulations relating to the employment of labor in connection with the
Stations and their operations, including without limitation those relating to
wages,
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hours, unfair labor practices, discrimination, payment of social security and
similar taxes, and Seller is not liable for any penalties for failure to
comply with any of the foregoing, and no claims have been made against Seller
with regard to any of the foregoing.
Section 3.21. Disclosure, Etc. To the best of Seller's knowledge, no
representation, warranty or other statement of Seller made under this
Agreement, or contained in any certificate, list or other document furnished
to Buyer or made available for inspection by it (or to be so furnished or made
available for inspection) in connection with this Agreement, contains any
untrue statement of a material fact, or omits to state any material fact
necessary in order to make the statements contained therein not materially
misleading from the point of view of a prospective purchaser of the Purchased
Assets.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that:
Section 1.041. Organization. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all corporate power and authority to conduct its business as such
business is now being conducted and on or before the Closing Date shall be
qualified to do business as a foreign corporation in the State of South
Carolina.
Section 1.042. Authority. Buyer has full corporate power and authority to
execute, deliver and perform each of this Agreement, the Escrow Agreement and
the Undertaking and to consummate the transactions contemplated hereby and
thereby. Each of this Agreement and the Escrow Agreement has been duly
executed and delivered by Buyer and (assuming valid execution and delivery by
Seller) is a valid and binding obligation of Buyer, enforceable in accordance
with its terms, subject to bankruptcy, insolvency and other laws affecting the
rights of creditors and to equitable principles which may affect the
availability of the remedy of specific performance. The execution and delivery
by Buyer of, and the performance by Buyer of its obligations under,
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this Agreement, the Escrow Agreement and the Undertaking have been duly
authorized by all necessary corporate action of Buyer.
Section 1.043. No Violation. Buyer is not subject to or bound by any
provisions of:
(a) any law, statute, rule, regulation or judicial or administrative
decision (provided that the transactions contemplated hereby are subject to
the FCC Act and the rules and regulations thereunder),
(b) articles or certificate of incorporation or by- laws,
(c) any mortgage, deed of trust, lease, note, bond, indenture, other
instrument or agreement, license, permit, trust, custodianship, other
restriction, or
(d) any decision, judgment, order, writ, injunction or decree of any
court, governmental body, administrative agency or arbitrator, that could
prevent or be violated by or under which there would be a breach or default as
a result of, nor is the consent of any person (other than the consent of the
FCC which shall be obtained before the Closing) which has not been obtained
required for, the execution, delivery and performance by Buyer of this
Agreement, the Escrow Agreement and the Undertaking and the consummation of
the transactions contemplated hereby and thereby.
ARTICLE V.
CONDUCT OF BUSINESS PRIOR TO CLOSING DATE
Section 1.051. Conduct of Business Prior to Closing Date. Except as
permitted by prior written consent of Buyer, between the date hereof and the
Closing:
(a) Subject to subsections (b), (c), (d) and (e) below, Seller will
not:
(i) take any action, fail to take any action or suffer any
event to occur which would have the effect of making any
representation or warranty set forth in Article
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III hereof untrue in any material respect if made immediately after
each such action or event; or
(ii) take any action, fail to take any action or suffer any
event to occur which would have the effect of making any of the
Schedules delivered pursuant hereto inaccurate in any material
respect if delivered as of a date immediately after each such action
or event.
(b) Seller shall operate the Stations in accordance with the TBA,
retain control of the Stations until the Closing and use its best efforts to
preserve the Purchased Assets intact, to keep available to Buyer the services
of Seller's present employees and agents and to preserve for Buyer, Seller's
business relations with suppliers, customers and others.
(c) Seller will maintain in force the insurance coverage provided by
the policies reflected in Schedule 3.17.
(d) Seller will continue to perform normal maintenance and repairs on
the Purchased Assets.
(e) On or before the TBA Effective Time, Seller shall not enter into
any contracts (i) for broadcast of advertising for any client covering a
period of more than ninety (90) days; (ii) that are not in the ordinary course
of business consistent with past practice; or (iii) that are barter agreements
with a value exceeding $1,000 per contract or $5,000 in the aggregate, in each
case, without the prior consent of Buyer.
(f) Without limiting the generality of Section 5.02, and promptly
after the date hereof, Seller will (i) use its best efforts to obtain all
renewals, consents, waivers, approvals and authorizations which may be
necessary to effectuate this Agreement and to consummate the transactions
contemplated hereby in accordance with the terms hereof; and (ii) give all
notices to third parties required to be given by Seller in contemplation of
and as a result of the transactions contemplated by this Agreement. Seller
shall promptly advise of any difficulties encountered by Seller in obtaining
any such renewals, consents, waivers, approvals and authorizations.
(g) Seller agrees that, with respect to its respective
representations and warranties made in this Agreement, it shall promptly
supplement or amend the Schedules with respect to any
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material matter hereafter arising or discovered which, if existing or known at
the date of this Agreement, would have been required to be set forth or
described in any of the Schedules. For purposes of the rights and obligations
of the parties hereunder, any such supplemental or amended Schedule, and any
matters discovered by Buyer after the date hereof, shall not be deemed to cure
any breach of, or to amend or qualify in any respect, any representation or
warranty made in this Agreement on the date hereof or on the Closing or to
have been disclosed on the date hereof or on the Closing.
Section 1.052. Confidentiality. Seller and Buyer shall treat in
confidence all documents, materials and other information that they shall have
obtained regarding the other during the course of the negotiations leading to
the transactions contemplated hereby, the investigation of Seller or Buyer and
the preparation of this Agreement, and, in the event the sale and purchase of
the Purchased Assets hereunder shall not be consummated, Seller and Buyer
shall return all copies of nonpublic documents and materials which have been
furnished in connection therewith. However, nothing contained herein shall
prohibit Seller or Buyer from:
(a) supplying or filing such documents, materials or other information
to or with the FCC or any other federal, state or local government,
agency or authority that Seller or Buyer deems necessary or
desirable in connection with the obtaining of any consent, waiver,
amendment, modification, approval, authorization, permit or license
which may be necessary to effectuate this Agreement and to
consummate the transactions contemplated hereby; or
(b) subject to the foregoing confidentiality restrictions, providing
such documents, materials or other information to Buyer's lenders,
officers, directors, agents or advisors for the purpose of
consummating the transactions contemplated by this Agreement.
Section 1.053. Application For FCC Consents. Each of Seller and Buyer
shall file within ten (10) days after execution of this Agreement,
substantially complete applications with the FCC seeking its consents to the
assignment to Buyer of the FCC
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Licenses, and they will diligently take all steps necessary or desirable and
proper to prosecute expeditiously such applications and to obtain such FCC
consents. The failure by either party to timely file or diligently prosecute
its portion of such applications shall be deemed a material breach of this
Agreement. Seller shall publish and broadcast the notices required by the
rules and regulations of the FCC relative to the filing of such applications.
Buyer and Seller shall cooperate with each other in the preparation of such
applications and shall take all steps necessary for the expeditious grant of
such consents. Each party shall provide the other with copies of any and all
petitions or pleadings filed by third parties or correspondence or orders from
the FCC with respect to the FCC applications. Each party shall, to the extent
reasonably possible, provide the other with a reasonable opportunity to submit
comments to said party in connection with the preparation of responses to such
petitions, pleadings, correspondence or orders, provided, however, that all
final decisions regarding the nature, content, format, and other matters
concerning such responses shall, at all times, remain with the party
responsible for filing such response(s). Copies of all applications, documents
and papers filed after the date hereof and prior to the Closing with respect
to the transactions under this Agreement, by Buyer or Seller with the FCC
shall be mailed to the other simultaneously with the filing of the same with
the FCC. All application fees payable to the FCC with respect to the
aforementioned consents to transfer shall be paid one-half by Buyer and
one-half by Seller. Additional costs associated with amendments to such
applications shall be borne by the party required to make any such amendments.
All FCC regulatory fees shall be prorated between Buyer and Seller at Closing
as of the date of the Closing.
Section 1.054. Access to Information and Documents. Between the date
hereof and the Closing, Seller will give to Buyer and to Buyer's counsel,
accountants, engineers, lender and other representatives full access during
normal business hours to all the properties, documents, contracts,
commitments, financial information and records of Seller relating to the
business, assets and properties to be sold hereunder or the employees of
Seller and will furnish Buyer with copies of such documents (certified if so
requested) and with such other information with respect to the affairs of
Seller relating to the business, assets and properties to be sold hereunder or
to such employees as Buyer may from time to time reasonably request.
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Section 1.055. Exclusivity. (a) In recognition and consideration of the
fact that Buyer's management will invest substantial time and effort in its
investigation of the Stations and its respective businesses and in the
preparation and negotiation of this Agreement and the TBA and in other matters
relating to the proposed transactions, and as a result forego or delay the
conduct of other management activities, Seller agrees not to, directly or
indirectly, solicit offers, negotiate or enter into discussions, or permit
their representatives to, directly or indirectly, solicit offers, negotiate or
enter into discussions, from or with any other person or entity for the sale
of all or any portion of the equity in or assets and businesses of the
Stations (other than with respect to sales in the ordinary course of business
and dispositions of nonmaterial assets) until the termination of this
Agreement.
(b) Until the termination of this Agreement, Buyer shall not,
directly or indirectly, make or negotiate any offer, or enter into any
discussions, regarding an acquisition by Buyer or any affiliate of Buyer of
any interest in any radio station (other than the Stations) in the Myrtle
Beach, South Carolina, DMA ("Buyer Prohibited Activities"), except that Buyer
and its affiliates shall not be prohibited from engaging in any Buyer
Prohibited Activities if any acquisition resulting from the same, together
with the acquisition contemplated hereby, would be permitted under then
applicable FCC rules and regulations and would not adversely affect the
consummation of the transactions contemplated hereby.
Section 1.056. Employees. Seller shall, upon request, permit Buyer to
interview any of Seller's employees. Seller shall encourage each of its
employees to be interviewed and to accept any offer of employment by Buyer. If
Buyer extends an offer of employment to an employee of Seller, Seller will not
make a competing offer of employment to said employee and will waive any
non-competition or other employment contract obligation which might otherwise
restrict said employee's ability to be employed by Buyer.
Section 5.07. Real Property. Buyer shall, after the execution of this
Agreement, order a survey and title commitment with respect to the real
property which is part of the Purchased Assets.
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Section 5.08. Environmental Matters. (a) Buyer shall, after the execution
of this Agreement, procure a Phase I with respect to the Property. If the
Phase I reveals any condition for which Buyer wishes to seek indemnification
from Seller, Buyer shall make a written request to Seller and furnish to
Seller a copy of the Phase I.
(b) Seller shall, prior to the Closing, (i) remediate any condition
discovered or arising on or before the Closing that would result in a breach
of a representation or warranty on the part of Seller or would entitle Buyer
to indemnification hereunder, and (ii) install any pollution control equipment
or other equipment to bring the facility into compliance with any
Environmental Law if such equipment is installed because the facility was not
in compliance with such Environmental Law prior to Closing, provided, however,
that in the event the cost of such remediation or installation of such
pollution control equipment would exceed $50,000, then Seller will have the
option to terminate this Agreement in lieu of incurring such costs in
accordance with Section 2.02(e).
Section 5.09. Application to Relocate Transmitter. Seller shall file, as
expeditiously as possible after the date hereof, a substantially complete
application, with the FCC for approval, and diligently pursue such approval,
to relocate the transmitter site of WYAK-FM to the site covered by the Conway
Lease (as defined in Section 5.10), the Buyer having obtained an independent
engineering report with respect thereto, and to obtain all FCC authorizations
for auxiliary broadcast facilities necessary and appropriate for operations of
such site. Upon consummation of the Closing, Buyer shall reimburse Seller for
all of Seller's reasonable out-of-pocket costs and expenses relating to such
applications.
Section 5.10. Relocation of Transmitter. Seller has
entered into a lease with Myrtle Beach Communications, Inc. for space on the
transmitter site in Conway, South Carolina (the "Conway Transmitter Site") and
equipment space in lessor's building at 3274 International Drive, Conway,
South Carolina (the "Conway Lease") for operations relating to WYAK-FM; and
Seller shall, upon receipt of the necessary FCC approvals, promptly relocate
the transmitter site of WYAK-FM to the Conway Transmitter Site and file the
necessary application with the FCC for covering license. Seller shall use its
reasonable best efforts to ensure that operation at the new transmitter site
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begins as soon as practicable. Upon consummation of the Closing, Buyer shall
reimburse Seller for all of Seller's reasonable out-of-pocket costs and
expenses relating to such relocation. In addition, upon consummation of the
Closing, Seller shall assign and Buyer shall assume all of Seller's rights and
obligations under the Conway Lease and the FCC authorizations with respect
thereto to the extent relating to the period after the Closing and
specifically excluding all rentals and other charges under the Conway Lease,
and all liabilities or obligations arising out of a breach by Seller of
obligations under the Conway Lease, on or before the Closing.
Section 5.11. Reimbursement on Termination of Conway Lease. If the
Closing fails to occur on account of a breach by Buyer of any representation,
warranty, covenant or agreement herein, and Seller elects to terminate the
Conway Lease pursuant to its termination rights thereunder, then within 30
days after said termination of the Conway Lease, Buyer shall reimburse Seller
an amount up to $2,500, representing Seller's termination costs under the
Conway Lease.
ARTICLE VI.
CONDITIONS TO CLOSING
Section 1.061. Conditions Precedent to Each Party's Obligation to
Complete the Transaction. The obligation of Buyer and Seller to consummate the
transactions described in Article I hereof is subject to the fulfillment of
the following condition prior to or at the Closing: The FCC shall have entered
an order or orders approving or consenting to the assignment of all of the FCC
Licenses of the Stations to Buyer without any condition materially adverse to
Buyer or Seller (unless Buyer or Seller, as applicable, accepts such
condition) and such approvals or consents shall have become Final Orders. The
FCC orders, including the Final Orders, shall not have been modified, amended,
dissolved or rescinded and shall be in full force and effect on the date of
the Closing.
Section 1.062. Conditions Precedent to Seller's Obligation to Complete
the Transaction. The obligation of Seller to consummate the transactions
described in Article I hereof is subject to the fulfillment of each of the
following conditions prior to or at the Closing:
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(a) All proceedings taken in connection with the transactions
contemplated hereby and all instruments and documents required in connection
therewith or incident thereto shall be satisfactory to Seller's Counsel;
(b) The representations, warranties and agreements of Buyer made
hereunder, including without limitation those made in any certificate or
document delivered to Seller pursuant hereto, shall be deemed to have been
made again at and as of the Closing and shall then be true in all material
respects; Buyer shall have performed and complied in all material respects
with all of its agreements required by this Agreement to be performed or
complied with by Buyer prior to or at the Closing; and Seller shall have been
furnished with certificates of appropriate officers of Buyer, dated the
Closing Date, certifying to that effect;
(c) Buyer shall have executed and delivered to Seller acceptances by
Buyer reasonably required in connection with all assignments of contracts,
leases and other agreements required hereunder; and
(d) Seller shall have been furnished with an opinion dated the
Closing Date of Buyer's Counsel, in the form attached hereto as Exhibit F.
Section 1.063. Conditions Precedent to Buyer's Obligation to Complete the
Transaction. The obligation of Buyer to consummate the transactions described
in Article I hereof is subject to the fulfillment of each of the following
conditions prior to or at the Closing:
(a) All proceedings taken in connection with the transactions
contemplated hereby and all instruments and documents required in connection
therewith or incident thereto shall be satisfactory to Buyer's Counsel and
Buyer's FCC Counsel.
(b) The representations, warranties and agreements of Seller made
hereunder, including without limitation those made in any certificate or
document delivered to Buyer pursuant hereto, shall be deemed to have been made
again at and as of the Closing and shall then be true in all material
respects; Seller shall have performed and complied in all material respects
with all of their respective agreements
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required by this Agreement to be performed or complied with by Seller prior to
or at the Closing; and Buyer shall have been furnished with certificates of
appropriate officers of Seller, dated the Closing Date, certifying to that
effect.
(c) Buyer shall have been furnished with an opinion dated the Closing
Date of Seller's Counsel in the form attached hereto as Exhibit G.
(d) No action, suit, or proceeding before any court or governmental
or regulatory authority shall be pending, no investigation by any governmental
or regulatory authority shall have been commenced, and no action, suit or
proceeding by any governmental or regulatory authority shall have been
threatened, against Buyer, Seller, the Stations or the Purchased Assets or any
of their respective shareholders, officers or directors seeking to restrain,
prevent, or change the transactions contemplated hereby or questioning the
legality or validity of any such transactions or seeking material damages in
connection with any such transactions, and which action, suit, proceeding or
investigation has a reasonable possibility of success.
(e) All consents of third parties including, without limitation,
governmental authorities, self-regulatory agencies and parties to contracts
transferred hereunder, and all filings with and notifications of governmental
authorities, regulatory agencies (including non-governmental self-regulatory
agencies) or other entities which regulate the business of Seller or Buyer,
necessary on the part of Seller or Buyer, or their respective subsidiaries or
affiliates, to the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, other than routine
post-closing notifications or filings, shall have been obtained or effected.
(f) Buyer shall have received at its expense an "As Built" survey and
a binding commitment for an owner's and mortgagee's title insurance policy for
full replacement value with respect to all real property interests (including
leasehold interests) to be transferred pursuant hereto. The title insurance
policies shall (i) insure that title to the real property interests is good
and marketable, (ii) contain extended coverage and, if required by Buyer,
contain zoning, contiguity, access, encroachment, easement and comprehensive
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endorsements and such other affirmative insurance as Buyer shall reasonably
require ad insure appurtenant easements or servitudes, (iii) shall not contain
any exceptions not constituting a Permitted Encumbrance and (iv) otherwise be
in form, and be issued by a title company, acceptable to Buyer and Buyer's
senior lender. The surveys shall be certified to Buyer, Buyer's lender and the
title insurance company issuing the applicable property in a manner reasonably
acceptable to Buyer by a registered land surveyor.
(g) Seller shall have delivered to Buyer executed title
affidavits and such other evidence as may be required by Buyer or
its title insurer.
(j) There shall have occurred no material adverse change
(or changes which in the aggregate are materially adverse) since
December 31, 1995 in the Purchased Assets, including without
limitation, any material damage, destruction or loss, except to the
extent arising out of an uncured breach by Buyer of its obligations
under the TBA or the gross negligence or willful misconduct of
Buyer (whether or not covered by insurance); or any discontinuance,
cancellation or material interruption of any broadcast
transmission; and Buyer shall have received a certificate of the
president and chief financial officer of Seller certifying to the
effect of the foregoing.
ARTICLE VII.
INDEMNIFICATION AND SURVIVAL OF
REPRESENTATIONS AND WARRANTIES
Section 1.071. Indemnification.
(a) Seller. Seller (Seller being referred to herein as the "Seller
Indemnitor"), jointly and severally, shall indemnify, defend, and hold Buyer
and its officers, directors and affiliates (the "Buyer Indemnitees") harmless
from and against any and all loss, damage, claim, obligation, assessment,
cost, liability and expense (including, without limitation, reasonable
attorneys' fees and costs and expenses incurred in investigating, preparing,
defending against or prosecuting any litigation or claim, action, suit,
proceeding or demand, including in
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connection with the enforcement of this indemnity), of any kind or character
(a "Loss"), incurred, suffered, sustained or required to be paid by any one of
them to the extent caused by, arising out of or resulting from:
(i) a breach of the representations and warranties made by
Seller in or pursuant to this Agreement or the TBA;
(ii) the failure by Seller to perform or observe the covenants
and agreements to be performed or observed by them
pursuant to this Agreements, the TBA or the Non-Compete
Agreement;
(iii) any and all obligations of Seller except for obligations
expressly assumed by Buyer pursuant to the Undertaking;
(iv) the actual, alleged or threatened Release, storage,
transportation, treatment or generation of Hazardous
Substances, Oils, Pollutants or Contaminants generated,
stored, used, disposed of, treated, handled or shipped by
Seller or any prior owner of the Property on or before the
Closing Date;
(v) any Cleanup of Hazardous Substances, Oils, Pollutants or
Contaminants Released, disposed of or discharged: (A) on,
beneath or adjacent to the Property prior to or on the
Closing Date; (B) at any other location if such substances
were generated, used, stored, disposed of, treated,
transported or Released by Seller or any prior owner of
the Property prior to or on the Closing Date; and
(vi) the installation of any pollution control equipment or
other equipment to bring the facility into compliance with
any Environmental Law if such equipment is installed
because the facility was not in compliance with any
Environmental Laws as of the Closing Date.
(b) Buyer. Buyer ("Buyer Indemnitor") shall indemnify, defend and
hold Seller and the officers, directors and
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affiliates of Seller (the "Seller Indemnitees") harmless from and against any
Loss incurred, suffered, sustained or required to be paid by any of them to
the extent caused by, arising out of or resulting from:
(i) a breach of the representations and warranties made by
Buyer in or pursuant to this Agreement or the TBA;
(ii) the failure by Buyer to perform or observe the covenants
and agreements to be performed or observed by it pursuant
to this Agreement or the TBA; or
(iii) Buyer's operation or ownership of the Station Assets on
and after the Closing Date, including any and all
liabilities arising under the Assumed Contracts which
relate to obligations arising thereunder and to the extent
relating to the period after the Closing Date.
(c) Notice and Procedure. If any claim or liability is asserted or
threatened, or any action, suit or proceeding is commenced by any third party
against any indemnitee which might result in any indemnification obligation
hereunder on behalf of any indemnitor, such indemnitee shall give written
notice thereof to each such indemnitor together with a copy of any complaint
or other documents asserting such claim, provided, however, that the failure
to provide such notice shall not affect an Indemnitor's obligations hereunder
or constitute a waiver of rights, except to the extent such Indemnitor is
materially prejudiced by such failure. Within ten (10) days from receipt of
such notice, the indemnitor shall give the indemnitee written notice as to
whether the indemnitor elects to contest any such claim or liability;
provided, however, that during the interim, the indemnitee shall be entitled
to take reasonable action (which shall not include settlement) with respect to
such claim which it deems necessary to protect against such further damage or
default with respect thereto. If an indemnitor elects to contest any such
claim or liability, it shall be at the cost and expense of the indemnitor and
using professionals reasonably chosen by the indemnitor. The indemnitee may
participate in the defense of any claim or liability that an indemnitor has
elected to contest, but such participation shall be at its own expense. If the
indemnitor does not elect to assume control or otherwise participate in the
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defense of any third party claim, it shall be bound by the results obtained by
the indemnitee with respect to such claim.
(d) Indemnity Payments. All payments under Section 7.01 shall be
treated as an adjustment of the Purchase Price, except as may be otherwise
required by any applicable taxing authority.
Section 1.072. Survival of Representations and Warranties. All the
respective representations, warranties, undertakings and agreements of Seller
and Buyer hereunder shall survive the Closing and any investigation made at
any time with respect thereto, provided, however, that the representations and
warranties of the parties hereunder shall survive until the second anniversary
of the Closing Date.
ARTICLE VIII.
DEFINITIONS
Section 1.081. Definitions.
Accounts Receivable Schedule: As defined in Section 1.05.
Acquisition Agreements: The Agreement, the TBA, the Bill of Sale, the
Escrow Agreement, the FCC License Assignment, the Non-Compete Agreement, the
Undertaking, the Deeds and other instruments required to be delivered pursuant
to Article I.
Agreement: This Purchase Agreement, together with the Exhibits and
Schedules attached hereto, as amended and supplemented from time to time.
Assumed Contracts: As defined in Section 1.01(a)(iv).
Bill of Sale: The bill of sale substantially in the form attached hereto
as Exhibit B.
Business Property Rights: As defined in Section 1.01(a)(v).
Buyer: As defined in the preamble to this Agreement.
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Buyer Indemnitees: As defined in Section 7.01(a).
Buyer Indemnitor: As defined in Section 7.01(b).
Buyer Prohibited Activities: As defined in Section 5.05(b).
Buyer's Counsel: The law firm of Winthrop, Stimson, Putnam & Roberts,
One Battery Park Plaza, New York, New York, 10004, who represents Buyer in the
transactions contemplated hereby.
Buyer's FCC Counsel: The law firm of Wilmer, Cutler & Pickering, 2445
M Street, N.W., Washington, D.C., 20037, who represents Buyer with respect to
FCC matters in the transactions contemplated hereby.
Cleanup: Means all actions required to: (1) clean up, remove, treat
or remediate Hazardous Substances, Oils, Pollutants or Contaminants in the
indoor or outdoor environment; (2) prevent the Release of Hazardous
Substances, Oils, Pollutants or Contaminants so that they do not migrate,
endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment; (3) perform pre-remedial studies and investigations and
post-remedial monitoring and care; or (4) respond to any government requests
for information or documents in any way relating to cleanup, removal,
treatment or remediation or potential cleanup, removal, treatment or
remediation of Hazardous Substances, Oils, Pollutants or Contaminants in the
indoor or outdoor environment.
Closing; Closing Date: As defined in Section 2.01.
Collection Period: As defined in Section 1.05.
Contracts: As defined in Section 1.01(a)(iv).
Deeds: The Deeds to be delivered by Seller pursuant to Section
2.01(e).
Deposit: As defined in Section 1.02(b)(i).
Determination Time: As defined in Section 1.04(a).
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Employee Benefit Plans: As defined in Section 3.19.
Encumbrances: Title defects, obligations, liabilities, liens,
encumbrances, easements, options, restrictions, encroachments, oil, gas and
mineral leases and any other encumbrances on the mineral estate, tenancies,
rights of way, licenses, reservations, prescriptive rights, charges, claims
and security interests, mortgages, deeds of trust, pledges and rights of third
persons of any kind.
Environmental Laws: Means all foreign, Federal, state and local laws,
regulations, rules and ordinances relating to pollution or protection of the
environment, including, without limitation, laws relating to Releases or
threatened Releases of Hazardous Substances, Oils, Pollutants or Contaminants
into the indoor or outdoor environment (including, without limitation, ambient
air, surface water, groundwater, land, surface and subsurface strata) or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, Release, transport or handling of Hazardous Substances,
Oils, Pollutants or Contaminants, and all laws and regulations with regard to
recordkeeping, notification, disclosure and reporting requirements respecting
Hazardous Substances, Oils, Pollutants or Contaminants.
Environmental Liabilities and Costs: Means all liabilities,
obligations, responsibilities, obligations to conduct Cleanup, losses,
damages, deficiencies, punitive damages, consequential damages, treble
damages, costs and expenses (including, without limitation, all reasonable
fees, disbursements and expenses of counsel, expert and consulting fees and
costs of investigations and feasibility studies and responding to government
requests for information or documents), fines, penalties, restitution and
monetary sanctions, interest, direct or indirect, known or unknown, absolute
or contingent, past, present or future, resulting from any claim or demand, by
any Person, whether based in contract, tort, implied or express warranty,
strict liability, joint and several liability, criminal or civil statute,
including any Environmental Law, or arising from environmental, health or
safety conditions, the Release or threatened Release of Hazardous Substances,
Oils, Pollutants or Contaminants into the environment, as a result of past or
present ownership, leasing or operation of any properties, owned, leased or
operated by Seller, including, without limitation, any of the foregoing
incurred in connection with the conduct of any Cleanup.
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ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
Escrow Agent: Star Media Group, Inc.
Escrow Agreement: The Escrow Agreement, dated as of the date hereof
among the Escrow Agent, Buyer and Seller in the form attached as Exhibit A.
Excluded Assets: All assets excluded from the Purchased Assets and
retained by Seller as set forth in Section 1.01(b).
FCC: The Federal Communications Commission, together with its staff
acting under delegated authority.
FCC Act: The Communications Act of 1934, as amended.
FCC Assignment: The assignment substantially in the form attached
hereto as Exhibit C.
FCC Licenses: All the licenses, permits, franchises, approvals or
authorizations, granted or issued to Seller by the FCC, all of which are set
forth on Schedule 1.01(a)(i) hereto.
Final Order: Action by the FCC granting its consent and approval to
the assignment of the FCC Licenses to Buyer, which has not been reversed,
stayed, enjoined, set aside, annulled or suspended, with respect to which no
administrative or judicial action or appeal is pending (including but not
limited to a request for stay, a petition for rehearing or reconsideration and
application for review and FCC reconsideration on its own motion), and as to
which the time for such FCC reconsideration or for filing any such request,
petition, or appeal has expired.
Hazardous Substances, Oils, Pollutants or Contaminants: Means all
substances defined as such in the National Oil and Hazardous Substances
Pollution Contingency Plan, 40 C.F.R. ss. 300.5, or defined as such by, or
regulated as such under, any Environmental Law.
IRS: The Internal Revenue Service.
Loss: As defined in Section 7.01(a).
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Material Adverse Effect: As defined in Section 3.02.
Non-Compete Agreement: The agreement substantially in the form
attached hereto as Exhibit E.
PBGC: The Pension Benefit Guaranty Corporation.
Permits: As defined in Section 3.18(b).
Permitted Encumbrances: As applied to any asset, (a) Encumbrances
which are specifically set forth and identified in Schedule 3.09 or Schedule
3.10 and designated as a "Permitted Encumbrance" and (b) Encumbrances on real
estate for real estate taxes, assessments, governmental charges or levies not
yet delinquent.
Person: An individual, corporation, partnership, trust or
unincorporated organization or a government or any agency or political
subdivision thereof.
Prorations: As defined in Section 1.04.
Purchase Price: The consideration described in Section 1.02(a).
Purchased Assets: As defined in Section 1.01(a).
Release: Means, when used as a noun, any release, spill, emission,
discharge, leaking, pumping, injection, deposit, disposal, discharge,
dispersal, leaching or migration into the indoor or outdoor environment
(including, without limitation, ambient air, surface water, groundwater, and
surface or subsurface strata) or into or out of any property, including the
movement of Hazardous Substances, Oils, Pollutants or Contaminants through or
in the air, soil, surface water, groundwater or property and when used as a
verb, the occurrence of any Release.
Seller: As defined in the Preamble to this Agreement.
Seller Indemnitees: As defined in Section 7.02(b).
Seller's Counsel: Kraig Fox, Esq., Assistant General Counsel of
Seller, who represents Seller in the transactions contemplated hereby.
- 49 -
<PAGE>
Stations: As defined in the Preamble to this Agreement.
TBA: As defined in the Preamble to this Agreement.
TBA Effective Time: As defined in Section 1.01(b)(ii).
Tangible Assets: As defined in Section 1.01(a)(ii).
Undertaking: The agreement substantially in the form attached hereto
as Exhibit F.
Section 1.082. Other Interpretational Provisions.
(a) Except as otherwise specified herein, all references herein (A)
to any Person shall be deemed to include such Person's successors and
permitted assigns and (B) to any law, statute, rule or regulation shall be
deemed references to such law, statute, rule or regulation as the same may be
amended or supplemented from time to time.
(b) When used in this Agreement, the words "herein", "hereof" and
"hereunder" and words of similar import shall refer to this Agreement as a
whole and not to any provision of this Agreement, and the words "Section",
"Exhibit" and "Schedule" shall refer to a Section of, and an Annex and
Schedule to, this Agreement unless otherwise specified.
(c) Whenever the context so requires, the neuter gender includes the
masculine or feminine, and the singular number includes the plural and visa
versa.
(d) The Section and other headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
ARTICLE IX.
MISCELLANEOUS
Section 1.091. Commissions, Fees and Expenses. Buyer and Seller represent
and warrant that the negotiations relative
- 50 -
<PAGE>
to this Agreement and the transactions contemplated hereby have been carried
on by each of them directly with the other in such manner as not to give rise
to any valid claim against the other for a brokerage commission, finder's fee
or other like payment except for the fee payable to Star Media Group, Inc.,
which shall be paid by Seller. Buyer and Seller shall each pay all of their
respective expenses in connection with the negotiation and preparation of the
Acquisition Agreements, provided that the following expenses shall be paid by
the parties indicated:
(a) title insurance policy premiums shall be paid by Buyer;
(b) costs of surveys of the real property to be conveyed to Buyer
hereunder shall be paid by Buyer;
(c) recording fees shall be paid by Buyer;
(d) real estate conveyance or transfer taxes shall be paid by Buyer;
and
(e) personal property sales taxes, if any, shall be paid by Seller.
Section 1.092. Applicable Law. THIS AGREEMENT SHALL BE CONSTRUED AND THE
RIGHTS AND DUTIES OF THE PARTIES DETERMINED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF SOUTH CAROLINA WITHOUT REGARD TO ITS CONFLICTS OF LAW RULES.
Section 1.093. Notices. All notices, requests, permissions, waivers and
other communications hereunder shall be in writing and shall be deemed to have
been duly given if signed by the respective persons giving them (in the case
of any corporation the signature shall be by an officer thereof) and delivered
by hand, or deposited in the United States mail (registered, return receipt
requested), properly addressed and postage prepaid:
(a) if to Seller, to:
Multi-Market Radio, Inc.
150 East 58th Street
19th Floor
New York, New York 10155
- 51 -
<PAGE>
Attention: Robert F.X. Sillerman
with a copy to:
Multi-Market Radio, Inc.
150 East 58th Street
19th Floor
New York, New York 10155
Attention: Kraig Fox, Esq.
(b) if to Buyer, to:
Pinnacle Broadcasting Company, Inc.
2505 N. Highway 360
Grand Prairie, Texas 75050-7801
Attention: Edward J. Ferreri
with a copy to:
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, New York 10004
Attention: David W. Ambrosia, Esq.
Such names and addresses may be changed by such a notice.
Section 1.094. Entire Agreement and Amendments. This Agreement, including
all Exhibits and the Schedules hereto, and the TBA, the FCC Assignment,
Undertakings, Bill of Sale, each Indemnification Agreement and deeds to be
delivered at the Closing hereunder contain the entire understanding of the
parties hereto with respect to the subject matter contained herein, supersede
and cancel all prior agreements with respect thereto and may be amended only
by a written instrument executed by all the parties thereto or their
respective successors or assigns. There are no restrictions, promises,
representations, warranties, agreements or undertakings of any of the parties
hereto with respect to the transaction under this Agreement other than those
set forth herein or therein or made hereunder or thereunder. The Section and
paragraph headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this
Agreement.
- 52 -
<PAGE>
Section 1.095. Counterparts. This Agreement may be executed by the
parties hereto individually or in any combination of the parties hereto in
several separate counterparts, each of which shall be deemed an original but
all of which shall constitute one and the same instrument.
Section 1.096. Assignment. This Agreement shall not be assignable by any
party hereto without the prior written consent of the other parties hereto,
and any purported assignment by either party without the prior written consent
of the other party shall be void, except that Buyer may assign this Agreement
to one or more of its affiliates or to the Buyer's lender for collateral
security purposes. This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Section 1.097. Benefits and Obligations; No Third Party Beneficiaries.
This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns. Except for Buyer
Indemnitees and Seller Indemnitees under Section 7.02, no person not a party
to this Agreement shall have or acquire any rights by reason of this Agreement
or any provision contained herein.
Section 1.098. Severability. Any paragraph, sentence, phrase or other
provision of this Agreement which is in conflict with any applicable statute,
rule or other law shall be deemed if possible, to be modified or altered to
conform therewith, or if not possible, to be omitted herefrom. The invalidity
of any portion hereof shall not affect the force and effect of the remaining
valid portions hereof.
Section 1.099. Use of Call Letters. Upon and after the Closing Date, any
and all rights of Seller to use the name and call letters of each of WMYB-FM
and WYAK-FM and any other trade names used in connection with operation of
either of the Stations shall belong to the Buyer. Within ten (10) business
days of the Closing Date, Seller shall cause the name of any corporation,
bearing the name WMYB-FM or WYAK-FM and that continues to operate a business,
to be changed to eliminate such term, as the case may be, from such name.
- 53 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the date first above written.
PINNACLE S.C., INC., as
Buyer
By: /s/Edward J. Ferreri
----------------------
Name: Edward J. Ferreri
Title: President/CEO
MULTI-MARKET RADIO OF MYRTLE BEACH,
INC., as Seller
By: /s/Michael G. Ferrel
----------------------
Name: Michael G. Ferrel
Title: President
- 54 -
EXHIBIT 99.1
MULTI-MARKET RADIO COMPLETES EXCHANGE OFFER
NEW YORK, November 7, 1996 -- Multi-Market Radio, Inc. (NASDAQ:RDIOA) today
announced that its offer to exchange an aggregate of 368,000 shares of its
Class A Common Stock for all of its 1,840,000 Class B Warrants was completed
at 5:00 PM on November 6, 1996. 1,090,540, or 59.3% of the total outstanding
Class B Warrants, were tendered in exchange for 218,108 shares of its Class A
Common Stock. Pursuant to the pending Merger Agreement between Multi-Market
Radio, Inc. and SFX Broadcasting, Inc. (NASDAQ:SFXBA), the consideration to be
received by Multi-Market Radio, Inc. shareholders was to be reduced in the
event that fewer than 50% of the Class B Warrants were tendered. As a result
of the outcome of the Exchange Offer, there will be no such adjustment. The
merger is expected to close immediately following Multi-Market Radio, Inc.'s
Special Meeting and SFX Broadcasting, Inc.'s Annual Meeting each of which will
be held on November 22, 1996.
On November 5, 1996, the last sale prices of the shares of Class A Common
Stock and the Class B Warrants on the Nasdaq National Market were $11.375 and
$2.25, respectively.
Multi-Market Radio, Inc., headquartered in New York City, currently owns or
sells advertising on behalf of nine radio stations in five markets.
EXHIBIT 99.2
MULTI-MARKET RADIO COMPLETES WARRANT REDEMPTION
NEW YORK, November 11, 1996 -- Multi-Market Radio, Inc. (NASDAQ: RDIOA) today
announced that it had redeemed all of its Class A Warrants that were
outstanding at 5:00 PM, New York time, on November 7, 1996. Approximately
4,000 warrants remained outstanding at the exercise deadline and were redeemed
at the redemption price of $.01 per warrant. The redemption was made in
accordance with the terms of the warrant agreement governing the Class A
Warrants. After notice of the redemption had been disseminated, an aggregate
of $14.2 million in new equity capital was raised by the exercise of the Class
A Warrants.
Multi-Market Radio, with all previously announced dispositions and
terminations, will own, provide programming for, or sell advertising on behalf
of nine radio stations in five markets. Multi-Market Radio has entered into a
merger agreement with SFX Broadcasting, Inc. (NASDAQ: SFXBA) pursuant to which
it will be acquired by SFX Broadcasting. The transaction is expected to close
immediately following Multi-Market's and SFX's stockholder meetings, which
will be held on November 22, 1996.
EXHIBIT 99.3
MULTI-MARKET RADIO REPORTS THIRD QUARTER RESULTS
Nine Months Broadcast Cash Flow up 23% from Previous Year
NEW YORK, November 12, 1996 -- Multi-Market Radio, Inc. (NASDAQ: RDIOA) today
announced results for the third quarter ended September 30, 1996.
Net revenues for the third quarter decreased 1% to $5,099,000 from $5,162,000
in the third quarter of 1995. Broadcast cash flow (defined as net revenues
less station operating expenses) increased 2% to $2,006,000 from $1,969,000.
On a pro forma basis, excluding the results of all stations which the Company
has agreed to sell and assuming all remaining stations were owned for the
entire period reported, the Company's net revenues for the third quarter 1996
would have increased 3% reaching $5,496,000, and broadcast cash flow would
have increased 9% to $2,422,000 from the third quarter 1995.
Net revenues for the first nine months of 1996 increased 23% reaching
$15,242,000 from $12,412,000 in the first nine months of 1995, and broadcast
cash flow increased 23% to $5,896,000 from $4,805,000. On a pro forma basis,
the Company's net revenues for the first nine months of 1996, would have
increased 5% reaching $16,464,000, and broadcast cash flow would have
increased 14% to $7,012,000 from the first nine months of 1995.
Commenting on the quarter's results, Michael G. Ferrel, President and Chief
Executive Officer said, "We are extremely happy with this quarter's
station-to-station results. We continue to see improved revenue and cash flow
generation, both in the aggregate and from our individual markets. The only
notable exception was a decrease in revenues at our recently acquired station
WKSS-FM in the Hartford, CT market, which we have only operated since
September 4th of this year. However, since our takeover of this station, we
have already dramatically improved its operating results and intend to further
improve its performance in the months ahead. This is an excellent and
well-managed group of stations which will be a great complement to SFX
Broadcasting, upon the completion of our pending merger."
In April 1996, SFX Broadcasting, Inc. (NASDAQ: SFXBA) announced that it would
acquire Multi-Market Radio. Common stock shareholders of Multi-Market Radio
will receive the stock equivalent of $12.50 per common share, subject to
adjustment. The transaction is expected to close immediately following
Multi-Market's and SFX's stockholder meetings which will be held on November
22, 1996.
Multi-Market Radio, with all previously announced dispositions and
terminations, will own, provide programming for, or sell advertising on behalf
of nine stations in five markets:
WKSS(FM) Hartford, CT
WHMP(FM) Springfield/Northampton, MA
WPKX(FM) Springfield/Northampton, MA
WHMP-AM Springfield/Northampton, MA
WPLR(FM) New Haven, CT
WYBC(FM) New Haven, CT*
WGNE(FM) Daytona Beach, FL
WKNN(FM) Biloxi, MS
WMJY(FM) Biloxi, MS
* Joint Selling Agreement
- table follows -
<PAGE>
MULTI-MARKETRADIO,INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
11/14/96
<TABLE>
<CAPTION>
THREE MONTHS ENDED
9/30/96 9/30/95 %Change
<S> <C> <C> <C>
Net revenues $ 5,099,014 $ 5,161,772 -1%
Station operating expenses 3,092,578 3,192,381 -3%
----------- -----------
Broadcast cash flow 2,006,436 1,969,391 2%
Depreciation & amortization expense 411,122 347,939 18%
Corporate general & administrative expenses 569,307 488,672 17%
Other corporate expenses-non cash charge 132,464 30,000 342%
----------- -----------
Operating income 893,543 1,102,780 -19%
Interest expense (1,575,498) (1,975,198) -20%
Loss on dispositions of radio stations, net (231,118) -
Write-off of acquisition and financing costs (10,736) -
Costs related to pending merger with SFX Broadcasting (83,850) -
Other expenses (2,078) (544) 282%
----------- -----------
Loss before income taxes and extraordinary item (1,009,737) $ (872,962) 16%
Benefit from (provision for) income taxes - 132,000 -100%
----------- -----------
Loss before extraordinary item (1,009,737) (740,962) 36%
Extraordinary loss-early extinguishment of debt - -
----------- -----------
Net loss $(1,009,737) $ (740,962) 36%
=========== =========== ====
Per Share:
Loss before extraordinary item $ (0.25) $ (0.21)
Extraordinary item - -
----------- -----------
Net loss $ (0.25) $ (0.21)
=========== ===========
Weighted average shares outstanding 4,011,966 3,490,000
</TABLE>
MULTI-MARKETRADIO,INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
11/14/96
<TABLE>
<CAPTION>
(CONTINUED)
NINE MONTHS ENDED
9/30/96 9/30/95 %Change
<S> <C> <C> <C>
Net revenues $15,242,480 $12,411,907 23%
Station operating expenses 9,346,294 7,606,687 23%
------------ -----------
Broadcast cash flow 5,896,186 4,805,220 23%
Depreciation & amortization expense 1,220,801 1,314,026 -7%
Corporate general & administrative expenses 1,844,310 1,111,927 66%
Other corporate expenses-non cash charge 262,464 383,400 -32%
------------ -----------
Operating income 2,568,611 1,995,867 29%
Interest expense (4,184,582) (3,825,704) 9%
Loss on dispositions of radio stations, net (1,827,114) -
Write-off of acquisition and financing costs (719,573) -
Costs related to pending merger with SFX Broadcast (3,432,528) -
Other expenses (5,644) 437 1192%
------------ -----------
Loss before income taxes and extraordinary item (7,600,830) (1,830,274) 315%
Benefit from (provision for) income taxes - 59,000 -100%
------------ -----------
Loss before extraordinary item (7,600,830) (1,771,274) 329%
Extraordinary loss-early extinguishment of debt (328,571) -100%
------------ -----------
Net loss $(7,600,830) $(2,099,845) 262%
============ =========== ====
Per Share:
Loss before extraordinary item $ (2.07) $ (0.51)
Extraordinary item - (0.09)
------------ -----------
Net loss (2.07) (0.60)
============ ===========
Weighted average shares outstanding 3,666,232 3,490,000
</TABLE>
