FORM 10-QSB
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
X QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
--------- EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
______ TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT
For the transition period from __________________ to __________________
Commission File Number 0-22080
MULTI-MARKET RADIO, INC.
(Exact Name of Small Business Issuer as Specified in its Charter)
DELAWARE 13-3707697
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
150 EAST 58TH STREET - 19TH FLOOR
NEW YORK, NEW YORK 10155
(Address of principal executive offices) (Zip Code)
ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 407-9150
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No___
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares of the Company's common equity outstanding as of May 14,
1996 is: Class A Common Stock, par value $.01, 3,217,350 shares; Class B
Common Stock, par value $.01, 140,000 shares; Class C Common Stock, par value
$.01, 360,000 shares; and 1,838,650 Publicly Traded Redeemable Class A Warrants
1,840,000 Publicly Traded Redeemable Class B Warrants.
Transitional Small Business Disclosure Format. Yes ______ No X
1
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MULTI-MARKET RADIO, INC.
FORM 10-QSB
INDEX
Page
----
PART I - FINANCIAL STATEMENTS
Item 1. Financial Statements. Consolidated Balance Sheets
as of March 31, 1996 (unaudited) and December 31, 1995 3
Consolidated Statements of Operations for the Three
Months Ended March 31, 1996 and 1995 (unaudited) 4
Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 1996 and 1995 (unaudited) 5
Consolidated Statements of Stockholders' Equity as of
March 31, 1996 (unaudited) 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis or Plan of
Operation. 10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 6. Exhibits and Reports on Form 8-K. 13
SIGNATURES 14
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MULTI-MARKET RADIO, INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
March 31 December 31
1996 1995
---------------- ---------------
(unaudited)
<S> <C> <C>
ASSETS
Cash & cash equivalents $3,959,815 $1,258,212
Accounts receivable, net of allowance of
$270,436 in 1996 and $304,162 in 1995 3,437,335 4,232,995
Other current assets 470,495 429,060
---------------- ---------------
Total current assets 7,867,645 5,920,267
Property, plant and equipment, at cost:
Land 651,070 723,070
Buildings and improvements 766,253 762,822
Technical equipment 2,075,346 3,077,350
Furniture and equipment 438,979 524,718
Vehicles 119,216 123,066
---------------- ---------------
4,050,864 5,211,026
Less- accumulated depreciation (401,143) (450,174)
---------------- ---------------
3,649,721 4,760,852
Other assets:
Intangible assets, net 48,948,016 55,745,735
Deposits 1,871,000 0
Net assets to be sold 5,050,000 0
Other assets 54,954 37,884
---------------- ---------------
Total Assets $67,441,336 $66,464,738
================ ===============
LIABILITIES & STOCKHOLDERS' EQUITY
Liabilities to affiliate $302,019 $175,070
Accounts payable and accrued expenses 1,555,061 1,678,754
Accrued interest 1,298,298 910,596
Current portion of long term debt 1,826,000 1,804,000
---------------- ---------------
Total current liabilities 4,981,378 4,568,420
Deferred taxes 7,373,483 7,303,483
Long term debt 39,341,049 39,677,937
Other liabilities 57,694 100,045
Station sales deposits 3,562,903 0
---------------- ---------------
Total liabilities 55,316,507 51,649,885
Stockholder's equity:
Preferred Stock, par value $.01; 1,200,000 shares
authorized; 201,250 shares issued and outstanding 2,012 2,012
Class A Common Stock, par value $.01; 15,000,000 shares
authorized; 2,990,500 shares issued and outstanding in
1996, and 2,990,000 in 1995 29,905 29,900
Class B Common Stock, par value $.01; 1,200,000 shares
authorized; 140,000 shares issued and outstanding 1,400 1,400
Class C Common Stock, par value $.01; 700,000 shares
authorized; 360,000 shares issued and outstanding 3,600 3,600
Warrants and options 551,739 551,739
Paid in Capital 17,575,377 17,506,509
Accumulated Deficit (6,039,204) (3,280,307)
---------------- ---------------
Total Stockholders' Equity 12,124,829 14,814,853
---------------- ---------------
Total Liabilities and Stockholders' Equity $67,441,336 $66,464,738
================ ===============
</TABLE>
See notes to consolidated financial statements.
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MULTI-MARKET RADIO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
MARCH 31, 1996 & 1995
(unaudited)
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
REVENUES
Net Revenues $4,826,140 $1,796,427
EXPENSES
Station operating expenses 3,092,636 1,254,736
Depreciation and amortization 423,517 298,742
Corporate general and administrative expenses 622,337 220,807
Non-cash stock compensation 64,999 80,000
---------------- ---------------
Total operating expenses 4,203,489 1,854,285
Operating income (loss) 622,651 (57,858)
Interest expense, net (1,338,415) 1,402
Net loss related to radio station acquisition /
disposition transactions (2,040,572) 0
Other expenses, net (2,561) (312,314)
---------------- ---------------
Loss before income taxes and extraordinary item (2,758,897) (368,770)
Provision for ( benefit from ) income taxes 0 6,000
---------------- ---------------
Loss before extraordinary item ($2,758,897) ($374,770)
Extraordinary item - loss on early
extinguishment of debt 0 (328,571)
---------------- ---------------
Net loss (2,758,897) (703,341)
================ ===============
Per common share
- ----------------
Loss before extraordinary item (0.79) (0.11)
Extraordinary item (0.00) (0.09)
---------------- ---------------
Net loss ($0.79) ($0.20)
================ ===============
Weighted average shares outstanding 3,490,500 3,490,000
</TABLE>
See notes to consolidated financial statements.
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MULTI-MARKET RADIO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
MARCH 31, 1996 AND 1995
(unaudited)
<TABLE>
<CAPTION>
1996 1995
---------------- ---------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss ($2,758,897) ($703,341)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 423,517 298,742
Non cash stock compensation 64,999 80,000
Extraordinary item - debt extinguishment 0 328,571
Provision for loss on pending sale of WRXR 1,539,838 0
Write off of pending acquisition and financing costs 569,576 0
Gain on sale of WRSF (68,842) 0
Non cash interest expense 248,316 0
Changes in assets and liabilities-
Accounts receivable 795,660 95,265
Other current assets (41,435) 109,994
Other assets (17,070) (48,151)
Receivables / liabilities due from / to affiliate 126,949 (29,450)
Accounts payable and accrued expenses (123,693) 1,831,941
Accrued interest 387,702 (127,019)
Deferred taxes 70,000 0
Other (42,351) 843
---------------- ---------------
Total adjustments 3,933,166 2,540,736
---------------- ---------------
Net cash provided by operating activities 1,174,269 1,837,395
---------------- ---------------
Cash Flows from Investing Activities:
Proceeds from deposits on sale of stations 3,562,903 0
Proceeds from sale of WRSF 900,000 0
Disposition of net assets of radio station 0 48,649
Payments for deposits on radio stations (1,871,000) (31,932,137)
Capital expenditures (73,487) (47,745)
---------------- ---------------
Net cash provided by ( used for ) investing activities 2,518,416 (31,931,233)
Cash Flows from Financing Activities:
Repayments of long term debt (440,000) (6,478,309)
Proceeds from issuance of long term debt 0 41,328,750
Debt issuance costs 0 (3,702,951)
Acquisition / financing costs for radio station purchase (554,957) 0
Proceeds from sale of warrants 3,875 446,250
---------------- ---------------
Net cash ( used for ) provided by financing activities (991,082) 31,593,740
----------------
---------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 2,701,603 1,499,902
Cash and cash equivalents at beginning of period 1,258,212 712,502
---------------- ---------------
Cash and cash equivalents at end of period $3,959,815 $2,212,404
================ ===============
</TABLE>
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MULTI-MARKET RADIO, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(unaudited)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C TOTAL
COMMON COMMON COMMON PREFERRED WARRANTS PAID-IN ACCUMULATED STOCKHOLDERS'
STOCK STOCK STOCK STOCK & OPTIONS CAPITAL DEFICIT EQUITY
--------- ---------- ---------- ---------- ------------ -------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at
December 31, 1995 $29,900 $1,400 $3,600 $2,012 $551,739 $17,506,508 $(3,280,307) $14,814,852
Proceeds from
exercise of
warrants 5 3,870 3,875
Non cash
compensation 64,999 64,999
Net loss for the
three months ended
March 31, 1996 (3,768,897) (2,758,897)
------------------------------------------------------------------------------------------------------------------
Balances at
March 31, 1996 $29,905 $1,400 $3,600 $2,012 $551,739 $17,575,377 $(6,039,204) $12,124,829
==================================================================================================================
</TABLE>
See notes to financial statements.
-6-
<PAGE>
MULTI-MARKET RADIO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and in accordance with Item 310 (b) of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, the unaudited interim
consolidated financial statements contain all adjustments, consisting of
normal recurring accruals, necessary to present fairly the financial position
of the Company at March 31, 1996 and the results of operations and cash flows
for the periods presented. Results for the interim period are not necessarily
indicative of results to be expected for the full year. For further
information, refer to the consolidated financial statements and notes thereto
included in the Multi-Market Radio, Inc. Annual Report (Form 10-KSB) for the
year ended December 31, 1995.
2. Recent Developments
SFX Acquisition
The Company has entered into an amended and restated agreement and plan of
merger (the "SFX Acquisition") dated as of April 15, 1996 with SFX
Broadcasting, Inc. ("SFX") pursuant to which the Company agreed to merge with
and into a wholly - owned subsidiary of SFX. Following completion of the SFX
Acquisition, the Company will become a wholly-owned subsidiary of SFX.
Upon consummation of the SFX Acquisition, and subject to certain conditions,
the outstanding securities of the Company will be converted into shares of
common stock of SFX as follows: (i) each share of the Company's Class A Common
Stock and the Series B Convertible Preferred Stock will be converted into a
fractional share of Class A Common Stock of SFX determined on the basis of the
Exchange Ratio (as defined below) and (ii) each share of the Company's Class B
Common Stock, Class C Common Stock and Original Preferred Stock will be
converted into a fractional share of Class B Common Stock of SFX determined on
the basis of the Exchange Ratio.
The Exchange Ratio is the fractional share of Class A Common Stock or Class B
Common Stock of SFX as the case may be, to be issued to stockholders of the
Company equal to the quotient obtained by dividing $11.50 by the average of
the last reported bid and asked price of the Class A Common Stock of SFX for
the 20 trading days prior to the 5th trading day preceding the consummation of
the merger (the "SFX Stock Price"). The Exchange Ratio is subject to
adjustment in the event that the SFX Stock Price is less than $32.00 or more
than $42.00. No Fractional shares of SFX Common Stock will be issued in the
merger. Persons entitled to receive fractional shares of SFX will receive cash
in lieu thereof.
Upon the completion of the SFX Acquisition, each of the Company's outstanding
options and stock appreciation rights will be assumed by SFX. Each option will
be deemed to constitute an option to acquire, on the same terms and conditions
as were previously applicable, the number of shares (rounded up to the nearest
whole number) of SFX Class A Common Stock equal to the product of the number
of shares of Class A Common Stock of MMR covered by the option multiplied by
the Exchange Ratio at an exercise price equal to the quotient determined by
dividing the exercise price per share of the Company's Class A Common Stock
specified for such option by the Exchange Ratio (rounded down to the nearest
whole cent).
Upon the completion of the SFX Acquisition, each of the Company's outstanding
(i) Class A Warrants and Class B Warrants, (ii) options issued pursuant to the
unit purchase options issued to the underwriters of the Company's public
offering in March 1994, (iii) warrants issued to the underwriters of the
Company's initial public offering in July 1993, (iv) the warrants issued to
the Huff Alternative Income Fund, L.P.and (v) options issued to Robert F.X.
Sillerman outside the Company's stock option plans, shall be assumed by SFX.
Pursuant to the agreement, the Company has agreed to withdraw the registration
statements with respect to its proposed offerings of 5,750,000 shares of Class
A Common Stock and $110 million in aggregate principal amount of its senior
subordinated notes due 2006. For further information regarding the SFX
Acquisition, see Form 8-K dated April 15, 1996 and filed by the Company with the
Securities and Exchange Commission.
7
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MULTI-MARKET RADIO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
MARCH 31, 1996
Liberty Acquisition
On November 13, 1995, the Company and SFX entered into an exchange agreement
(the "Letter Agreement") pursuant to which the Company agreed to acquire seven
FM and four AM radio stations owned by Liberty Broadcasting, Inc. ("Liberty")
and to assume a JSA from Liberty with respect to one FM station following the
acquisition of Liberty by SFX (the "Liberty Acquisition"), in exchange for ten
radio stations to be acquired by the Company.
Pursuant to the SFX Acquisition, the Company and SFX canceled the Letter
Agreement and the Company agreed to use its commercially reasonable best
efforts to transfer to SFX its rights under the following purchase agreements
for the stations originally to be acquired by the Company and exchanged with
SFX. On January 26, 1996, the Company entered into an agreement to acquire
substantially all of the assets of WSTZ-FM and WZRX-AM, both operating in
Jackson, Mississippi, for a purchase price of $3.5 million. On January 22,
1996, the Company entered into as agreement to acquire substantially all the
assets of WROQ-FM, operating in Greenville, South Carolina, for a purchase
price of $14.0 million. On January 18, 1996 the Company entered into an
agreement to acquire substantially all of the assets of WTRG-FM and WRDU-FM
both operating in the Greensboro, North Carolina market and WMFR-AM, WMAG-FM
and WTCK-AM (formerly, WWWB-AM), each operating in the Greensboro, North
Carolina market, for a purchase price of approximately $40.5 million, subject
to adjustment based on the broadcast cash flow of WTRG-FM and WRDU-FM. On
December 27, 1995, the Company entered into an agreement to acquire
substantially all of the assets of KQUE-FM and KNUZ-AM, both operating in
Houston, Texas, for a purchase price of $38.0 million. Based upon an audit
conducted by an environmental consultant of one of the sites used in connection
with KQUE-FM's and KNUZ-AM's business, the Company may elect to terminate such
purchase agreement on or before June 15, 1996. Although the Company has not
elected to terminate the purchase agreement, it is unlikely that the purchase
agreement will be completed on the terms set forth therein, and the Company may
attempt to negotiate a purchase agreement with the seller that reflects the
environmental contamination at the site. There can be no assurance that the
Company and the seller will be able to enter into an agreement with respect to
the purchase of such stations. SFX and the Company have agreed that SFX will
lend to the Company the financing necessary to complete the purchase of such
stations and that the Company will immediately thereafter transfer the purchased
assets to SFX.
In addition, SFX and the Company have agreed that following the Liberty
Acquisition, SFX and the Company will enter into an LMA or JSA pursuant to
which the Company will provide programming to and/or sell advertising on
behalf of the following stations to be acquired by SFX from Liberty: WHCN-FM,
WMRQ-FM and WPOP-AM, each operating in Hartford, Connecticut, WSNE-FM, WHJY-FM
and WHJJ-AM, each operating in Providence, Rhode Island, WGNA-FM, WGNA-AM,
WPYX-FM, WTRY-AM and WYSR-FM, each operating in the Albany, New York, and
WMXB-FM, operating in Richmond, Virginia (collectively, the MMR Liberty
Stations"). In connection with such LMA or JSA, the Company has agreed to pay
to SFX a monthly fee in an amount equal to the broadcast cash flow of the MMR
Liberty Stations. The LMA or JSA will terminate upon the completion of the SFX
Acquisition or, in certain circumstances, the date of termination of the
agreement with respect to the SFX Acquisition. In the event that the agreement
with respect to the SFX Acquisition is terminated, except in certain
circumstances, the Company will have the right, subject to FCC approval, to
acquire the SFX interest in the MMR Liberty Stations for $100.0 million, or,
in certain circumstances, to acquire the SFX interest in the MMR Liberty
Stations pursuant to an exchange of stations intended to qualify as a
like-kind exchange under Section 1031 of the Code. In addition, in the event
that SFX fails to complete the Liberty Acquisition and the agreement with
respect to the SFX Acquisition is terminated, except in certain circumstances,
SFX will pay liquidated damages to the Company in the amount of $3.5 million.
Augusta Disposition
On March 25, 1996 the Company entered into an agreement to sell the assets of
WRXR-FM and WKBG-FM to Wilks Broadcast Acquisitions, Inc. (the "Buyer") for a
price of $5 million. A deposit of $300,000 was placed in an escrow account by
the Buyer upon signing of the purchase agreement. Additionally, a local
marketing agreement was entered into simultaneously with the signing of the
purchase agreement pursuant to which the Buyer will provide programming on
stations WRXR-FM and WKBG-FM from the date of the agreement until the closing
of the transaction. The Company has recorded a loss of $1,539,838 related to
this transaction.
8
<PAGE>
Hartford Acquisition
On April 1, 1996, the Company entered into an agreement to acquire
substantially all of the assets of WKSS-FM, Hartford, Connecticut, for an
aggregate purchase price of $18 million. The Company has deposited $1.8
million in escrow to secure its obligations under the agreement. The purchase
agreement contains customary covenants and conditions. The agreement may be
terminated by either party if the other party has not cured a breach of the
agreement within 30 days written notice or if the FCC consent is not obtained.
WRSF-FM Disposition
The Company completed the sale of WRSF-FM, Nags Head, North Carolina on March
28, 1996 and realized proceeds of $950,000. The Company recognized a gain of
$68,842 on the sale of WRSF-FM.
KOLL-FM Disposition
On March 15, 1996, the Company entered into an agreement to sell KOLL-FM,
Little Rock, Arkansas to Triathalon Broadcasting of Little Rock, for
approximately $4 million. The Company received a deposit of $3.5 million and
expects to complete the sale of KOLL-FM during the quarter ended June 30,
1996. The Company will not recognize a gain or loss on the sale of KOLL-FM
since it was acquired as part of the acquisition of Southern Starr
Broadcasting Corp., Inc. (the "Southern Starr Acquisition") on March 27, 1995.
MMR Myrtle Beach Acquisition
On April 29, 1996, the Company entered into an agreement to acquire WMYB-FM,
Myrtle Beach, South Carolina, for $1.1 million. The purchase agreement contains
customary covenants and conditions. The acquisition agreement may be terminated
by either party if the FCC has not approved the acquisition by April 29, 1997.
The Company is currently providing programming to the station pursuant to an
LMA which will terminate upon the acquisition of the station by the Company.
On May 6, 1996, the Company filed an application with the Federal
Communications Commission seeking the consent of the FCC to the conversion of
the Company's outstanding Class C Common Stock and Original Preferred Stock
held by Bruce Morrow and Robert F. X. Sillerman into shares of Class B Common
Stock upon the happening of certain conversion events as described in the
Company's Amended and Restated Certificate of Incorporation.
9
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MULTI-MARKET RADIO, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Financial Condition at March 31, 1996:
Working Capital $ 2,886,267
Total Assets 67,441,336
Long Term Portion of Debt 39,341,049
Stockholders' Equity 12,124,829
Results of Operations
The Company's financial results are dependent upon a number of factors,
including the general strength of the economy, population growth, ability to
provide programming, local market competition, relative efficiency of radio
broadcasting compared to other advertising media, signal strength and
government regulation and policies.
The industry benchmark, Broadcast Cash Flow ("BCF"), although not recognized
for generally accepted accounting principles ("GAAP"), is defined as operating
income (loss), before deduction for interest, taxes, depreciation,
amortization and corporate expenses. The Company's Loan Agreement and
Subordinated Debentures define BCF, as above, but exclude trade revenue and
expense.
The Company has changed its presentation of BCF, from that provided in
previous years, to include trade in its definition of BCF to conform to
industry practice.
Comparison of Three Months Ended March 31, 1996 and 1995
Net revenues (total revenues less agency commissions) for the three months
ended March 31, 1996 were $4,826,140 an increase of 168% over the three months
ended March 31, 1995 net revenues of $1,796,427. The increase in net revenues
is due primarily to revenues generated by the stations acquired on March 27,
1995 the Southern Starr Acquisition (the "Southern Starr Stations") including
improved revenues at these stations since their acquisition. The Southern
Starr stations accounted for $3,015,587 of total net revenues. The Company's
net revenues for the first quarter 1996 assuming all stations currently owned
and /or operated by the Company on March 31, 1996 would have increased 8.1%
reaching $4,237,111.
Total operating expenses for the three months ended March 31, 1996 were
$4,203,489 an increase of 126% over the three months ended March 31, 1995
operating expenses of $1,854,285. This increase is principally due to the
acquisition of Southern Starr which accounted for $1,666,366 of the increase
and higher corporate administrative expenses. Corporate expense increases are
due primarily to an increase in the accrual of the Sillerman Communications
Management Corporation ("SCMC") consulting fees, increased professional fees
and increased travel expenses.
Operating income (loss) for the three months ended March 31, 1996 was
$622,651, compared to an operating loss for the three months ended March 31,
1995 of $57,858 due to the factors discussed above.
Net interest expense for the three months ended March 31, 1996 of $1,338,415
increased 328% over the three months ended March 31, 1995 interest expense of
$312,314. This increase is principally associated with increased borrowings
associated with the Southern Starr Acquisition and higher interest rates on
the Company's floating rate senior debt.
Net loss for the three months ended March 31, 1996 was $2,758,897 compared to
a net loss of $703,341 for the three months ended March 31, 1995 due
principally to increased interest expenses a provision for loss impairment of
net assets on the sale of WRXR-FM / WKBG-FM in Augusta, Georgia and costs in
connection with the Liberty acquisition.
10
<PAGE>
MULTI-MARKET RADIO, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (cont)
BCF for the three months ended March 31, 1996 of $1,733,504 increased 220%
over the three months ended March 31, 1995 BCF of $541,691. This increase is
principally attributable to the Southern Starr acquisition and the improved
operations of the Southern Starr Stations. The Company's BCF for the first
quarter 1996 assuming all stations currently owned and / or operated by the
Company on March 31, 1996, would have increased 40.8% to $1,783,006 from first
quarter 1995.
Liquidity and Capital Resources
The Company's sources of funds have been cash flows from operations, and
borrowings. On March 27, 1995, the Company financed the Southern Starr
Acquisition with $19,422,000 in increased borrowings under the new $26,500,000
Loan Agreement with FINOVA and $15,428,750 in net proceeds from the Huff
Subordinated Debentures and Huff Warrant proceeds of $446,250.
Cash flow from operating activities for the three months ended March 31, 1996
was $1,174,269. Cash flow provided by investing activities for the three
months ended March 31, 1996 was $2,518,416. Cash flow used for financing
activities for the three months ended March 31, 1996 was $991,082.
At March 31, 1996, the Company's debt consists of:
FINOVA HUFF TOTAL
------------ ----------- -----------
Balance as of March 31, 1996 $25,342,921 $15,824,128 $41,167,049
Current portion of long term debt 1,826,000 -- 1,826,000
------------ ----------- -----------
Long term debt $23,516,921 $15,824,128 $39,341,049
============= =========== ===========
The Loan Agreement contains numerous covenants and customary events of
defaults, including material misrepresentations, payment defaults, limitations
on capital expenditures and SCMC fees and defaults which would result from a
shortfall in certain financial ratios.
At March, 1996, the Company is in compliance with all covenants under the Loan
Agreement and Subordinated Debentures.
The Company completed the sale WRSF-FM, Nags Head, North Carolina on March 28,
1996 and realized proceeds of $950,000. The Company recognized a gain of
$68,842 on the sale of WRSF-FM.
On March 15, 1996, the Company entered into an agreement to sell KOLL-FM,
Little Rock, Arkansas to Triathlon Broadcasting Company for approximately $4
million. The Company received a deposit of $3.5 million and expects to complete
the sale of KOLL-FM during the quarter ended June 30, 1996. The final price will
be subject to a fairness opinion and the Company will not recognize a gain or
loss on the sale of this station since it was acquired as part of the Southern
Starr Acquisition on March 27, 1995.
On March 25, 1996, the Company entered into an agreement to sell the assets of
WRXR-FM and WKBG-FM to Wilks Broadcast Acquisitions, Inc. for a price of $5.0
million. The Company has recorded a provision for loss on the sale of WRXR-FM
and WKBG-FM of $1,539,838. The Company expects to complete the sale of WRXR-FM
and WKBG-FM during the quarter ended June 30, 1996.
11
<PAGE>
MULTI-MARKET RADIO, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (cont.)
The Company has entered into a plan of merger (the "SFX Acquisition") dated as
of April 15, 1996 with SFX Broadcasting, Inc. ("SFX") pursuant to which the
Company agreed to merge with and into a wholly - owned subsidiary of SFX.
Following the completion of the SFX Acquisition, the Company will become a
wholly-owned subsidiary of SFX. In addition, the Company has entered into an
agreement to acquire radio station WKSS-FM, Hartford, Connecticut, for a
purchase price of $18.0 million of which $1.8 million was placed in escrow as
a deposit by the Company. SFX has agreed to repay approximately $64.4 million
of indebtedness of the Company, which includes indebtedness to be used to
acquire WKSS-FM, from the proceeds to its financing and the anticipated
exercise of the Company's Class A Warrants. The Company expects that its
outstanding Class A Warrants to purchase 1,838,650 shares of the Company's
Class A Common Stock will be exercised at an exercise price of $7.75 per share,
the Company is entitled to call such warrants for redemption at a nominal
redemption price in the event that the trading price of the Company's Class A
Common Stock exceeds $10.75 per share, on average, for twenty consecutive
trading days following notice and a thirty-day opportunity to exercise such
warrants. The Company anticipates that such notice will be issued and the
warrants will be exercised within ninety days. Such exercise would result in net
proceeds of approximately $13.6 million which would be used to fund a portion of
the acquisition of WKSS-FM, Hartford, Connecticut.
The Company has also entered into agreements to acquire WROQ-FM, Greenville,
South Carolina, WSTZ-FM and WZRX-AM, each operating in Jackson, Mississippi,
WTRG-FM and WRDU-FM, both operating in Raleigh, North Carolina and WMFR-AM and
WMAG-FM and WTCK-AM, each operating in Greensboro, North Carolina. The Company
and SFX have agreed that SFX will finance the purchase of such stations and
that the Company will immediately thereafter transfer the purchased assets to
SFX. See Note 2 to the Consolidated Financial Statements.
If the SFX merger does not occur, the Company expects that the cash flows from
operations will be sufficient to fund capital expenditures, quarterly
principal payments under the Loan Agreement, and operations through 1999. The
Company will require additional debt or equity financing to fund acquisitions
of other stations, and, to fund debt maturing after 1999. There can be no
assurance that the Company will be able to secure additional financing on
acceptable terms, if at all, and depending upon the terms of any such
financing, such financing may be restricted by the terms of the Indenture or
the Loan Agreement.
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MULTI-MARKET RADIO, INC.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
In a complaint dated April 18, 1996, Paul Pops, who purports to
be a stockholder of the Company, brought suit in the Supreme Court of the
State of New York against the Company, each of the directors of the Company
and Robert F.X. Sillerman seeking to enjoin the agreement with respect to the
SFX Acquisition or, in the alternative, seeking monetary damages. The suit
alleges that the consideration to be paid to the Company's stockholders in
the agreement with respect to the SFX Acquisition is unfair and grossly
inadequate. The suit also alleges that in connection with entering into the
Agreement with respect to the SFX Acquisition, the directors of the Company
violated their fiduciary duties to the Company and its stockholders and that
SFX aided and abetted such violation. The plaintiff is seeking to have his
suit certified as a class action representing the interests of the
stockholders of the Company. The Company believes the suit to be without
substantial merit and intends to vigorously defend the action.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Form of Asset Purchase Agreement by and between the Company and Puritan
Radiocasting Company dated April 29, 1996
10.2 Programming Agreement by and between the Company and Puritan Radiocasting
Company dated April 5, 1996
10.3 Asset Purchase Agreement by and between the Company and Wilks Broadcast
Acquisitions, Inc dated March 25, 1996
10.4 Local Marketing Agreement by and between the Company and Wilks
Broadcasting Acquisitions, Inc March 25, 1996
10.5 Letter Agreement by and between the Company and Jones Eastern Radio of
Augusta, Inc. dated March 4, 1996
10.6 Local Market Agreement by and between the Company and Jones Eastern Radio
of Augusta, Inc.
10.7 Amendment No. 1 to Amended and Restated Financial Consulting and
Marketing Agreement by and between the Company and Sillerman
Communications Management Corporation dated March 1, 1996
10.8 Amendment No. 1 to the Amended and Restated Agreement and Plan of Merger
dated as of May 6, 1996 by and among SFX Broadcasting, Inc., SFX Merger
Company and the Company
10.9 Local Market Agreement by and between Southern Starr of Arkansas, Inc.
and Triathlon Broadcasting of Little Rock, Inc. dated March 15, 1996.
10.10 Fifth Amendment to Asset Purchase Agreement by and between the Company
and Texas Coast Broadcasters, Inc. dated May 15, 1996
( b ) Reports on Form 8-K
A report on form 8-K was filed on April 18, 1996 under item 5 thereof ( other
events ) to disclose the execution of an Agreement and Plan of Merger, dated
April 15, 1996, among the Company, SFX and a wholly-owned subsidiary of SFX.
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MULTI-MARKET RADIO, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
MULTI-MARKET RADIO, INC.
/s/ Jerry D. Emlet
------------------------------------
Jerry D. Emlet
Treasurer & Chief Financial Officer
May 14, 1996
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ASSET PURCHASE AGREEMENT This ASSET PURCHASE AGREEMENT (the
"Agreement") is made and entered into as of the 29th day of April, 1996 by and
between PURITAN RADIOCASTING COMPANY, a Virginia partnership ("Seller"), and
MULTI-MARKET RADIO OF MYRTLE BEACH, INC., a Delaware corporation ("Buyer"),
under the following circumstances;
WHEREAS, Seller owns and operates radio station WMYB (FM) licensed to
Socastee, South Carolina (the "Station"), pursuant to licenses issued by the
Federal Communications Commission (the "FCC"); and
WHEREAS, Seller desires to sell and Buyer desires to purchase certain
assets associated with the ownership and operation of the Station, all on the
terms and subject to the conditions set forth herein; and
NOW, THEREFORE, the parties hereby agree as follows:
ARTICLE 1
PURCHASE OF ASSETS
1.1 Transfer of Assets. On the Closing Date, Seller shall sell,
assign, transfer and convey to Buyer, and Buyer shall purchase and assume from
Seller, all of the assets, properties, interests and rights of Seller of
whatsoever kind and nature, real and personal, tangible and intangible, owned
or leased by the Seller as the case may be, which are used or held for use by
or relate to the Station as the same shall exist on the Closing Date (the
"Station Assets"), including but not limited to the following (but excluding
the assets specified in SECTION 1.2 hereof):
1.1.1 all of Seller's rights in and to the licenses, permits and
other authorizations issued to Seller by any governmental authority and used
directly in, or relating directly to, the
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conduct of the business and operations of the Station, including those issued by
the FCC (the latter hereafter referred to as the "Station Licenses") and as
described more fully in SECTION 7.4, along with renewals or modifications of
such items between the date hereof and the Closing Date as well as all of
Seller's rights in and to the call letters "WMYB";
1.1.2 all equipment, office furniture and fixtures, office materials
and supplies, inventory, spare parts and other tangible personal property of
every kind and description, owned, leased or held by Seller and used in the
conduct of the business and operations of the Station, and which are described
more fully in SECTION 7.7, together with any replacements of equal quality
thereof and additions thereto, made between the date hereof and the Closing
Date;
1.1.3 all of Seller's rights in and under such contracts, agreements
or leases, written or oral, relating directly or exclusively to the conduct of
the Station ("Contracts"), and which are described more fully in SECTIONS 7.7,
and 7.9;
1.1.4 all of Seller's rights in any programs and programming material
of whatever form or nature owned by Seller and used directly and exclusively
in, or relating directly and exclusively to, the Station;
1.1.5 all of Seller's rights in and to the trademarks, trade names,
service marks, franchises, copyrights, including registrations and
applications for registration of any of them, jingles, logos and slogans or
licenses to use same owned or held by it and used directly and exclusively in,
or relating directly and exclusively to, the conduct of the business and
operations of the Station, as described more fully in SECTION 7.12, together
with any associated good will and any additions thereto between the date
hereof and the Closing Date;
1.1.6 all of Seller's rights in and to the files, records, and books
of account of the Station including, without limitation, programming
information and studies, technical information and engineering data, news and
advertising studies or consulting reports, marketing and demographic
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data, sales correspondence, lists of advertisers, promotional materials,
credit and sales reports and filings with the FCC, executed copies of all
written Contracts to be assigned hereunder, logs and commercially available
software programs to the extent the same are transferable by Seller; and
1.1.7 all of Seller's rights under manufacturers' and
vendors' warranties relating to items included in the Station Assets and all
similar rights against third parties relating to items included in the Station
Assets;
1.1.8 all of real property owned by Seller and used in the
conduct of the business and operations of the Station, which are described
more particularly in SECTION 7.8.
The Station Assets shall be transferred to Buyer free and clear of
all debts, security interests, mortgages, trusts, claims, pledges, conditional
sales agreements or other liens, liabilities and encumbrances whatsoever,
other than informational filings made by equipment lessors under the Uniform
Commercial Code.
1.2 Excluded Assets. Notwithstanding anything to the contrary
contained herein, it is expressly understood and agreed that the Station
Assets shall not include the following assets along with all rights, title and
interest therein which shall be referred to as the "Excluded Assets":
1.2.1 all cash, cash equivalents or similar type investments of
Seller, such as certificates of deposit, Treasury bills and other marketable
securities on hand and/or in banks;
1.2.2 all accounts receivable or notes receivable of Seller for
services performed or provided by Seller prior to the Closing Date;
1.2.3 all Contracts that have terminated or expired prior to
the Closing Date in the ordinary course of business or as permitted hereunder;
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1.2.4 Seller's partnership documents, minute books, charter
documents and such other books and records as pertain to the organization or
existence of Seller and duplicate copies of such records as are necessary to
enable Seller to file its tax returns and reports as well as any other records
or materials relating to Seller generally and not involving specific aspects
of the Station's operation;
1.2.5 Contracts of insurance and all insurance proceeds or
claims made by Seller relating to property or equipment repaired, replaced or
restored by Seller prior to the Closing Date;
1.2.6 any and all other claims made by Seller with respect
to transactions prior to the Closing Date and the proceeds thereof to the
extent Seller has expended funds or incurred a loss relating to same;
1.2.7 all pension, profit sharing or cash or deferred
(Section 401(k)) plans and trusts and the assets thereof and any other
employee benefit plan or arrangement and the assets thereof, if any,
maintained by Seller or its parent organization; and
1.2.8 any books and records relating to any of the foregoing.
ARTICLE 2
ASSUMPTION OF OBLIGATIONS
2.1 Assumption of Obligations. Subject to the provisions of this
SECTION 2.1 and SECTION 2.2, on the Closing Date, Buyer shall only assume and
undertake to pay, satisfy or discharge the liabilities, obligations and
commitments of Seller arising under the Contracts described more fully in
SECTIONS 7.7, and 7.9. All of the foregoing liabilities and obligations shall
be referred to herein collectively as the "Assumed Liabilities".
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2.2 Limitation. Except as set forth in SECTION 2.1 hereof,
Buyer expressly does not, and shall not, assume or be deemed to assume, under
this Agreement or otherwise by reason of the transactions contemplated hereby,
any liabilities, obligations or commitments of Seller of any nature
whatsoever. Without limiting the generality of the foregoing, except as set
forth in SECTION 2.1, Buyer shall not assume or be liable for any liability or
obligation of Seller arising out of any contract of employment, collective
bargaining agreement, insurance, pension, retirement, deferred compensation,
incentive bonus or profit sharing or employee benefit plan or trust, or any
judgment, litigation, proceeding or claim by any person or entity relating to
the business or operation of the Station prior to the Closing Date, whether or
not such judgment, litigation, proceeding or claim is pending, threatened or
asserted before, on or after the Closing Date.
ARTICLE 3
CONSIDERATION
3.1 Purchase Price. The aggregate consideration (the "Purchase
Price") for the transfer of the Station Assets from the Seller to the Buyer
shall be One Million One Hundred Thousand Dollars ($1,100,000), plus the
assumption at Closing of the Assumed Liabilities.
3.2 Payment. Buyer shall pay to Seller the Purchase Price at
Closing: (i) by wire transfer in immediately available funds of the sum of One
Million One Hundred Thousand Dollars ($1,100,000) to a bank designated in
writing by Seller.
3.3 Escrow Account. Buyer shall deposit an irrevocable stand-by
letter of credit in the sum of Fifty Thousand Dollars ($50,000) into an escrow
account (the "Escrow Account") with Media Services Group, Inc., to be held in
escrow in accordance with the terms of an escrow agreement (the "Escrow
Agreement") between the parties substantially in the form of EXHIBIT A hereto.
After payment of the purchase price by Buyer at the Closing, the Escrow
Deposit shall be returned to Buyer.
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3.4 Proration of Revenue and Expenses.
3.4.1 Except as otherwise provided herein, all expenses
incurred and all revenue earned arising from the conduct of the business and
operations of the Station shall be prorated between Buyer and Seller in
accordance with generally accepted accounting principles as of 11:59 p.m.,
local time, on the date immediately preceding the Closing Date. Such
prorations shall include, without limitation, all ad valorem, real estate and
other property taxes (but excluding taxes arising by reason of the transfer of
the Station Assets as contemplated hereby, which shall be paid as set forth in
ARTICLE 13 of this Agreement), business and license fees, music and other
license fees (including any retroactive adjustments thereof), wages and
salaries of employees, including accruals up to the Closing Date for bonuses,
commissions, vacations and sick pay, and related payroll taxes, utility
expenses, rents and similar prepaid and deferred items attributable to the
ownership and operation of the Station. Real estate taxes shall be apportioned
on the basis of taxes assessed for the preceding year, with a reapportionment
as soon as the new tax rate and valuation can be ascertained.
3.4.2 The prorations and adjustments contemplated by this
Section, to the extent practicable, shall be made on the Closing Date. As to
those prorations and adjustments not capable of being ascertained on the
Closing Date, an adjustment and proration shall be made within ninety (90)
calendar days of the Closing Date.
3.4.3 In the event of any disputes between the parties as to
such adjustments, the amounts not in dispute shall nonetheless be paid at the
time provided in SECTION 3.4.2 and such disputes shall be determined by an
independent certified public accountant mutually acceptable to the parties,
and the fees and expenses of such accountant shall be paid one-half by Seller
and one-half by Buyer.
3.5 Allocation of Purchase Price. The Purchase Price shall be
allocated among the Station Assets, Station Licenses and Contracts as provided
in schedule 3.5. Buyer and Sellers accept and
6
<PAGE>
shall abide by the foregoing allocation of the Purchase Price and shall not
include in any tax return filed by any of the parties hereto any item of gain,
income or deduction that reflects a different allocation of any portion of the
Purchase Price.
ARTICLE 4
CLOSING
4.1 Closing. Except as otherwise mutually agreed upon by Seller and
Buyer, the consummation of the transactions contemplated herein (the
"Closing") shall occur within ten (10) business days following the date on
which the last of the FCC Consents (as defined in SECTION 5.1) shall have
become a Final Order (as defined below), unless Buyer, subject to the
provisions of SECTION 8.4 below, in its sole discretion shall have waived the
condition that such consent shall have become final (the "Closing Date"). For
purposes of this Agreement, the FCC Consents shall be deemed to be a Final
Order when (i) they have not been vacated, reversed, stayed, set aside,
annulled or suspended; (ii) they are not the subject of any pending timely
appeal, request for stay or petition for rehearing, reconsideration or review
by any party or by the FCC on its own motion; and (iii) they are actions by
the FCC as to which the time for filing any such appeal, request, petition or
similar document or for the reconsideration or review by the FCC on its own
motion under the Communications Act of 1934 and the rules and regulations of
the FCC has expired. The Closing shall be held at the office of Edward B.
Bowers, Jr., in Myrtle Beach, South Carolina.
ARTICLE 5
GOVERNMENTAL CONSENTS
5.1 FCC Consents. It is specifically understood and agreed by Buyer
and Seller that the Closing and the assignment of the Station Licenses and the
transfer of the Station Assets is expressly conditioned on and is subject to
the prior consent and approval of the FCC and any reasonably acceptable
conditions imposed in such approval, which conditions are not deemed, in
Buyer's reasonable judgement, material or adverse to Buyer's interest in the
Station Assets (the "FCC Consents").
7
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5.2 FCC Application. Seller and Buyer shall hereafter file with
the FCC the requisite applications for assignment of the Station Licenses
("FCC Applications") from Seller to Buyer within ten (10) business days
following the date of this Agreement. Buyer shall have the right to make such
amendments to the FCC Applications and waiver requests as shall be necessary
to reflect changes that may occur in the structure of Buyer. Subject to the
terms and conditions of this Agreement, thereafter, Seller and Buyer shall
prosecute the FCC Applications with all reasonable diligence and otherwise use
their best efforts to obtain the grant of the FCC Applications as
expeditiously as practicable (but neither Seller nor Buyer shall have any
obligation to satisfy complainants or the FCC by taking any steps which would
have a material adverse effect upon Seller or Buyer or upon any affiliated
entity). If the FCC Consents impose any condition on either party hereto, such
party shall use its best efforts to comply with such condition; provided,
however, that neither party shall be required hereunder to comply with any
condition that would have a material adverse effect upon it or any affiliated
entity. If reconsideration or judicial review is sought with respect to the
FCC Consents, the party affected shall vigorously oppose such efforts for
reconsideration or judicial review; provided, however, that nothing herein
shall be construed to limit either party's right to terminate this Agreement
pursuant to ARTICLE 17 hereof.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby makes the following representations and warranties to
Seller, each of which is true and correct on the date hereof, shall remain
true and correct through and including the Closing Date, shall be unaffected
by any notice to Seller and shall survive the Closing to the extent provided
in SECTION 16.4.
6.1 Organization and Standing. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and is duly qualified to do business and is in good standing in the State of
South Carolina.
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6.2 Authorization and Binding Obligation. Buyer has all necessary power
and authority to enter into and perform this Agreement and the transactions
contemplated hereby, and to own or lease the Broadcast Assets and to carry on
the business of the Station as it is now being conducted,and Buyer's
execution, delivery and performance of this Agreement and the transactions
contemplated hereby have been duly and validly authorized by all necessary
action on its part. This Agreement has been duly executed and delivered by
Buyer and this Agreement constitutes, and the other agreements to be executed
in connection herewith will constitute, the valid and binding obligation of
Buyer, enforceable in accordance with their terms, except as limited by laws
affecting creditors' rights or equitable principles generally.
6.3 Absence of Conflicting Agreements or Required Consents. Except as
set forth in ARTICLE 5 hereof with respect to governmental consents, the
execution, delivery and performance of this Agreement by Buyer: (a) does not
require the consent of any third party; (b) will not violate any applicable
law, judgment, order, injunction, decree, rule, regulation or ruling of any
governmental authority to which Buyer is a party; and (c) will not, either
alone or with the giving of notice or the passage of time, or both, conflict
with, constitute grounds for termination of or result in a breach of the
terms, conditions or provisions of, or constitute a default under, any
agreement, instrument, license or permit to which Buyer is now subject.
6.4 Litigation and Compliance with Law. There is no litigation,
administrative, arbitration or other proceeding, or petition, complaint or
investigation before any court or governmental body, pending against Buyer or
any of its principals that would adversely affect Buyer's ability to perform
its obligations pursuant to this Agreement or the agreements to be executed in
connection herewith. There is no violation of any law, regulation or ordinance
or any other requirement of any governmental body or court which would have a
material adverse effect on Buyer or its ability to perform its obligations
pursuant to this Agreement or the agreements to be executed in connection
herewith.
9
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ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby makes the following representations and warranties to
Buyer, each of which is true and correct on the date hereof, shall remain true
and correct to and including the Closing Date, shall be unaffected by any
notice to Buyer other than in the Disclosure Schedule (as defined herein) and
shall survive the Closing to the extent provided in SECTION 16.4. Such
representations and warranties are subject to, and qualified by, any fact or
facts disclosed in the appropriate section of the separate Disclosure Schedule
which is hereby made a part of this Agreement (the "Disclosure Schedule").
7.1 Organization and Standing. Seller is a partnership duly
organized, validly existing and in good standing under the laws of the State
of Virginia, is duly qualified to do business in the State of South Carolina,
and has the requisite power and authority to own, lease and operate the
Station Assets and to carry on the business of the Station as now being
conducted and as proposed to be conducted by Seller between the date hereof
and the Closing Date.
7.2 Authorization and Binding Obligation. Seller has the power and
authority to enter into and perform this Agreement and the transactions
contemplated hereby, and Seller's execution, delivery and performance of this
Agreement, and the transactions contemplated hereby have been duly and validly
authorized by all necessary action on its part. This Agreement has been duly
executed and delivered by Seller and this Agreement and the agreements to be
executed in connection herewith will constitute the valid and binding
obligation of Seller enforceable in accordance with their terms, except as
limited by laws affecting the enforcement of creditor's rights or equitable
principles generally.
7.3 Absence of Conflicting Agreements or Required Consents. Except as
set forth in ARTICLE 5 hereof with respect to governmental consents and as set
forth in SECTIONS 7.7, 7.8 or 7.9 of the Disclosure Schedule with respect to
consents required in connection with the assignment of
10
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certain Contracts, the execution, delivery and performance of this Agreement
by Seller: (a) does not require the consent of any third party; (b) will not
violate any applicable law, judgment, order, injunction, decree, rule,
regulation or ruling of any governmental authority to which Seller is a party
or by which it or the Station Assets are bound; (c) will not, either alone or
with the giving of notice or the passage of time, or both, conflict with,
constitute grounds for termination of or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any Contract,
agreement, instrument, license or permit to which Seller or the Station Assets
is now subject; and (d) will not result in the creation of any lien, charge or
encumbrance on any of the Station Assets.
7.4 Government Authorizations. SECTION 7.4 of the Disclosure Schedule
contains a true and complete list of the Station Licenses and other material
licenses, permits or other authorizations from governmental and regulatory
authorities which are required for the lawful conduct of the business and
operations of the Station in the manner and to the full extent it is presently
conducted. Seller is the authorized legal holder of the Station Licenses and
other licenses, permits and authorizations listed in said SECTION 7.4, none of
which is subject to any restrictions or condition which would limit in any
respect the full operation of the Station as now operated.
Except as set forth in said SECTION 7.4 of the Disclosure Schedule, there are
no applications, complaints or proceedings pending or, to the best of Seller's
knowledge, threatened as of the date hereof before the FCC relating to the
business or operations of the Station other than applications, complaints or
proceedings which generally affect the broadcasting industry. Seller has
delivered to Buyer true and complete copies of the Station Licenses, including
any and all amendments and other modifications thereto. The Station Licenses
listed in said SECTION 7.4 are in good standing, are in full force and effect
and are unimpaired by any act or omission of Seller or its partners, general
partners, officers, directors or employees; and the operation of the Station
is in accordance with the Station Licenses and the underlying construction
permits. No proceedings are pending or, to the knowledge of Seller, are
threatened with respect to the Station Licenses which may result in the
revocation, modification, non-renewal or suspension of any of the Station
Licenses, the denial of any pending applications, the issuance of any cease
and desist order, the imposition of any administrative
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actions by the FCC with respect to the Station Licenses or which may affect
Buyer's ability to continue to operate the Station as it is currently
operated. Seller has no reason to believe that the Station Licenses will not
be renewed in their ordinary course. All material reports, forms and
statements required to be filed by Seller with the FCC with respect to the
Station since the grant of the last renewal of the Station Licenses have been
filed and are substantially complete and accurate. To the best knowledge of
Seller, there are no facts which, under the Communications Act of 1934, as
amended, or the existing Rules and Regulations of the FCC, would disqualify
Seller as an assignor of the Station Licenses.
7.5 Compliance with FCC Regulations. To the best of Seller's
knowledge, the operation of the Station and all of the Station Assets are in
compliance in all material respects with (i) all material applicable
engineering standards required to be met under applicable FCC rules, and (ii)
all other applicable rules, regulations, requirements and policies of the FCC,
including, but not limited to, ANSI Radiation Standards C95.1 - 1982 to the
extent required to be met under applicable FCC rules and regulations; and
there are no existing claims known to Seller to the contrary.
7.6 Taxes. Except as set forth on SECTION 7.6 of the Disclosure
Schedule, Seller has filed all federal, state, local and foreign income,
franchise, sales, use, property, excise, payroll and other tax returns
required by law and has paid in full all taxes, estimated taxes, interest,
assessments, and penalties due and payable. All returns and forms which have
been filed have been true and correct in all material respects and no tax or
other payment in a material amount other than as shown on such returns and
forms are required to be paid and have been paid by Seller. There are no
present disputes as to taxes of any nature payable by Seller which in any
event could materially adversely affect any of the Station Assets or the
operation of the Station.
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7.7 Personal Property.
7.7.1 SECTION 7.7 of the Disclosure Schedule contains a list
of all material tangible personal property and assets owned and leased by the
Seller and used primarily or exclusively in the conduct of the business and
operations of the Station. Except as may be subject to lease agreements of the
Seller (the "Personal Property Contracts"), Seller owns and has, and will have
on the Closing Date, good and marketable title to all such property (and to all
other tangible personal property and assets to be transferred to Buyer
hereunder), and none of such property is, or at the Closing will be, subject to
any security interest, mortgage, pledge, conditional sales agreement or other
lien or encumbrance. All of the items of the tangible personal property and
assets included in the Station Assets are in all material respects in good
operating condition (ordinary wear and tear excepted) and are available for
immediate use in the conduct of the business and operations of the Station. The
technical equipment, constituting a part of the tangible personal property
transferred hereunder, has been maintained in accordance with industry
practice and is in good operating condition and complies in all material
respects with all applicable rules and regulations of the FCC and the terms of
the Station Licenses. The properties listed in said SECTION 7.7 include all
such properties necessary to conduct in all material respects the business and
operations of the Station as now conducted.
7.8 Real Property.
7.8. SECTION 7.8 to the Disclosure Schedule contains a
complete and accurate list of all real property owned by the Seller and used
primarily or exclusively by the Station. There are no agreements, leases and
contracts of Seller relating to the tower, transmitter, studio site and
offices of the Station. Seller has good and marketable title to all such real
estate, free and clear of all liens and encumbrances.
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7.9 Contracts. SECTION 7.9 of the Disclosure Schedule lists all
Contracts as of the date of this Agreement which shall be assumed by the Buyer
as of the Closing Date. Those Contracts requiring the consent of a third party
to assignment which Seller and Buyer agree are critical to the consummation of
the transactions contemplated hereby are identified as "Material Contracts".
Notwithstanding the foregoing, if it is discovered before Closing that Seller
failed to list a contract in said SECTION 7.9 which was required to be listed,
then the Buyer may elect in its sole discretion to accept or reject such
contract.
7.10 Status of Contracts. Except as noted in SECTION 7.9 of the
Disclosure Schedule, Seller has delivered to Buyer true and complete copies of
all written Material Contracts, including any and all amendments and other
modifications to such Material Contracts. All Material Contracts are valid,
binding and enforceable by Seller in accordance with their respective terms,
except as limited by laws affecting creditors' rights or equitable principles
generally. To the best of Seller's knowledge, Seller has complied in all
material respects with all Material Contracts and is not in default beyond any
applicable grace periods under any of the Material Contracts, and no other
contracting party is in default under any of the Material Contracts. Except as
set forth in SECTION 7.9 of the Disclosure Schedule, Seller has full legal
power and authority to assign its respective rights under the Material
Contracts to Buyer in accordance with this Agreement on terms and conditions
no less favorable than those in effect on the date hereof, and such assignment
will not affect the validity, enforceability and continuity of any of the
Material Contracts.
7.11 Environmental Matters. Seller has not unlawfully disposed of any
hazardous waste or hazardous substance including Polychlorinated Byphenyls
("PCBs") in a manner which has caused, or could cause, Buyer to incur a
material liability under applicable law in connection therewith; and Seller
warrants that the technical equipment included in the Station Assets does not
contain any PCBs which are required by law to be removed and if any equipment
does contain PCBs, that such equipment is stored and maintained in compliance
with applicable law. To the best of Seller's knowledge, Seller has complied in
all material respects with all federal, state and local environmental laws,
rules and regulations applicable to the Station and its operations, including
but
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not limited to the FCC's guidelines regarding RF radiation. No hazardous waste
has been disposed of by Seller, and to the best of Seller's knowledge, no
hazardous waste has been disposed of by any other person, on the real estate
occupied by the Station or its transmitter. As used herein, the term
"hazardous waste" shall mean as defined in the Resource Conservation and
Recovery Act (RCRA) as amended and in the equivalent state statute under the
law of the state in which such real estate is located. Buyer, at its own
expense, shall have the right to have a Phase I environmental study of the
real property and transmitting equipment used by Seller in connection with the
operation of the Station performed. In the event that such Phase I
environmental study discloses a potential material environmental liability,
whether fixed or contingent, and such liability costs less than Fifty Thousand
Dollars ($50,000) to cure, Seller shall promptly begin remedial action to cure
the condition giving rise to such liability and shall either cure such
condition prior to Closing or reduce the Purchase Price by the amount agreed
to by the parties as being adequate to cure such condition. However, in the
event such remedial action is likely to cost Seller in excess of Fifty
Thousand Dollars ($50,000), Buyer or Seller may terminate this Agreement prior
to Closing and neither party shall have any liability to the other as a result
of such termination, other than the release of the Escrow Account to the
Buyer, unless: (a) Seller shall at its sole expense cure the condition giving
rise to such liability prior to Closing; (b) Seller shall reduce the Purchase
Price by the amount agreed to by the parties as being adequate to cure such
condition; (c) as to contingent liabilities disclosed in the Phase I
environmental study, Seller shall provide (i) collateral acceptable to the
Buyer or a security bond in such reasonably adequate amount as shall be
sufficient to cover such liability, which collateral or security bond shall
remain in place for a period of twenty (20) years from and after the Closing,
or (ii) such other resolution mutually agreed to by the Buyer and the Seller
and reasonably acceptable to Buyer's financing sources; or (d) Buyer shall
waive compliance with the provisions of this Section. In the event that this
Agreement is terminated for any reason other than Buyer's breach, Seller shall
reimburse Buyer for 100% of the cost associated with the obtaining of the
Phase I environmental study contemplated hereby.
7.12 Copyrights, Trademarks and Similar Rights. SECTION 7.12 of the
Disclosure Schedule is a true and complete list, in all material respects, of
all copyrights, trademarks, trade names,
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licenses, patents, permits, jingles and other similar intangible property
rights and interests applied for, issued to or owned by the Seller or under
which Seller is a licensee or franchisee and used exclusively or primarily in
the conduct of the business and operations of the Station referred to in
SECTION 1.1.5 hereof.
All of such rights and interests are issued to or owned by
Seller, or if licensed or franchised to Seller, to the best of Seller's
knowledge, are valid and in good standing and uncontested. Seller has
delivered or made available to Buyer copies of all material documents, if any,
establishing such rights, licenses or other authority. Seller has received no
written notice and has no knowledge of any infringements or unlawful use of
such property. The properties listed in SECTION 7.12 of the Disclosure
Schedule include all such properties necessary to conduct in all material
respects the business and operations of the Station as now conducted.
7.13 Personnel Information.
7.13.1 SECTION 7.13 of the Disclosure Schedule contains a
true and complete list of all persons employed at the Station, including a
description of material compensation arrangements (other than employee benefit
plans set forth in SECTION 7.16 of the Disclosure Schedule) and a list of
other terms of any and all agreements affecting such persons. Seller has not
received notification that any of the current key employees of Seller at the
Station presently plan to terminate their employment, whether by reason of the
transactions contemplated hereby or otherwise and Seller shall immediately
notify Buyer upon receipt of any such notice.
7.13.2 Seller is not a party to any Contract with any labor
organization, nor has Seller agreed to recognize any union or other collective
bargaining unit, nor has any union or other collective bargaining unit been
certified as representing any of Seller's employees. Seller has no knowledge
of any organizational effort currently being made or threatened by or on
behalf of any labor union with respect to employees of Seller. During the past
six (6) years, Seller has not experienced any strikes, work stoppages,
grievance proceedings, claims of unfair labor practices filed or other
significant labor difficulties of any nature.
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7.13.3 Except as disclosed in SECTION 7.13 of the Disclosure
Schedule, Seller, to the best of its knowledge, has complied in all material
respects with all laws relating to the employment of labor, including, without
limitation, the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and those laws relating to wages, hours, collective bargaining,
unemployment insurance, workers' compensation, equal employment opportunity
and payment and withholding of taxes.
7.14 Litigation. Except as set forth in SECTION 7.14 of the
Disclosure Schedule, Seller is subject to no judgment, award, order, writ,
injunction, arbitration decision or decree materially adversely affecting the
conduct of the business of the Station or the Station Assets, and there is no
litigation or proceeding or, to the best of Seller's knowledge, investigation
pending or, to the best of Seller's knowledge, threatened against Seller or
the Station in any federal, state or local court, or before any administrative
agency or arbitrator (including, without limitation, any proceeding which
seeks the forfeiture of, or opposes the renewal of, any of the Station
Licenses), or before any other tribunal duly authorized to resolve disputes,
which would reasonably be expected to have any material adverse effect upon
the business, property, assets or condition (financial or otherwise) of the
Station or which seeks to enjoin or prohibit, or otherwise questions the
validity of, any action taken or to be taken pursuant to or in connection with
this Agreement. In particular, but without limiting the generality of the
foregoing, there are no applications, complaints or proceedings pending or, to
the best of Seller's knowledge, threatened before the FCC or any other
governmental organization with respect to the business or operations of the
Station other than applications, complaints or proceedings which affect the
broadcasting industry generally.
7.15 Compliance With Laws. Except as set forth in SECTION 7.15 of the
Disclosure Schedule, Seller has not received any notice asserting any
non-compliance by it in connection with the business or operation of the
Station with any applicable statute, rule or regulation, federal, state or
local. Seller is not in default with respect to any judgment, order,
injunction or decree of any court, administrative agency or other governmental
authority or any other tribunal duly authorized to resolve disputes in any
respect material to the transactions contemplated hereby. To the best of
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Seller's knowledge, Seller is in compliance in all material respects with all
laws, regulations and governmental orders applicable to the conduct of the
business and operations of the Station, the failure to comply with which would
have a material adverse effect on the business, operations or financial
condition of the Station, and its present use of the Station Assets does not
violate any of such laws, regulations or orders, violation of which would have
a material adverse effect on the Station Assets or Station's operation.
7.16 Accuracy of Information. No written statements made by
Seller herein and no information provided by Seller herein or in the
documents, instruments or other written communications made or delivered
directly by Seller to Buyer in connection with the negotiations covering the
purchase and sale of the Station Assets contains any untrue statement of a
material fact or omits a material fact necessary to make the statements
contained therein or herein not misleading and there is no fact known to
Seller which relates to any information contained in any such written
document, instrument or communications which Seller has not disclosed to Buyer
in writing which materially affects adversely the Station or the Station
Assets. To the extent that a representation or other information is made to
the Seller's knowledge or is otherwise qualified by its terms, this
representation shall not be interpreted to expand such limitations or
qualifications.
ARTICLE 8
COVENANTS OF BUYER
8.1 Closing. On the Closing Date, Buyer or its assignee shall
purchase the Station Assets from Seller as provided in ARTICLE 1 hereof and
shall assume the Assumed Liabilities of Seller as provided in ARTICLE 2
hereof.
8.2 Notification. Buyer shall notify Seller of any litigation,
arbitration or administrative proceeding pending or, to its knowledge,
threatened against Buyer which challenges the transactions contemplated
hereby.
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8.3 No Inconsistent Action. Buyer shall not take any other
action which is materially inconsistent with its obligations under this
Agreement.
8.4 Waiver of Final Order for FCC Consents. Buyer shall use its
commercially reasonable best efforts to obtain waivers from any of its lenders
of any requirement which such lenders might have that the FCC Consents become
a Final Order prior to the Closing. If the Buyer shall obtain all such
necessary waivers, Buyer hereby agrees to waive the requirement of a Final
Order as set forth in SECTION 4.1 below.
8.5 Buyer's Post-Closing Covenant. Buyer, for a period of two (2)
years following the Closing Date, shall make available for audit and
inspection by Seller and its representatives for any reasonable purpose all
records, files, documents and correspondence transferred to it hereunder.
Buyer shall at no time dispose of or destroy any such records, files,
documents and correspondence without giving sixty (60) days prior notice to
Seller to permit Seller, at its expense, to examine, duplicate or take
possession of and title to such records, files, documents and correspondence.
All personnel records shall be maintained as confidential if required by any
applicable state or federal law.
ARTICLE 9
COVENANTS OF SELLER
9.1 Seller's Pre-Closing Covenants. Seller covenants and agrees with
respect to the Station that between the date hereof and the Closing Date,
except as expressly permitted by this Agreement or with the prior written
consent of Buyer, it shall, except as effected by the conduct of Buyer
pursuant to that certain Local Marketing Agreement, by and between Buyer and
Seller dated as of April 5, 1996, (the "LMA"), act in accordance with the
following:
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9.1.1 Seller shall conduct the business and operations of
the Station in the ordinary and prudent course of business and with the intent
of preserving the ongoing operations and assets of the Station, including, but
not limited to, maintaining the independent identity of the Station.
9.1.2 Seller shall operate the Station in all material
respects in accordance with FCC Rules and Regulations and the Station Licenses
and with all other laws, regulations, rules and orders, and shall not cause or
permit by any act, or failure to act, any of the Station Licenses to expire,
be surrendered, adversely modified, or otherwise terminated, or the FCC to
institute any proceedings for the suspension, revocation or adverse
modification of any of the Station Licenses, or fail to prosecute with due
diligence any pending applications to the FCC.
9.1.3 Should any fact relating to Seller which would cause
the FCC to deny its consent to the transactions contemplated by this Agreement
come to Seller's attention, Seller shall promptly notify Buyer thereof and
shall use its reasonable efforts to take such steps as may be necessary to
remove any such impediment to the transactions contemplated by this Agreement.
9.1.4 Seller shall not (i) sell or dispose of or commit to
sell or dispose of any of the Station Assets; (ii) grant or agree to grant any
general increases in the rates of salaries or compensation payable to
employees of the Station; (iii) grant or agree to grant any specific bonus or
increase to any executive or management employee of the Station; or (iv)
provide for any new pension, retirement or other employment benefits for
employees of the Station or any increases in any existing benefits.
9.1.5 Seller shall provide Buyer prompt written notice of
any change in any of the information contained in the representations and
warranties made in ARTICLE 7 hereof or any Exhibits or Schedules herein or
attached hereto.
9.1.6 The Seller shall give the Buyer and the Buyer's
counsel, accountants, engineers and other representatives, full and reasonable
access during normal business hours to all of the
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Station's personnel, properties, books, contracts, reports and records
including financial information and tax returns with supporting work papers
relating to the Station, to all real estate buildings and equipment relating
to the Station, and to the Station's employees in order that the Buyer may
have full opportunity to make such investigation as it desires of the affairs
of the Station. Seller shall make available to Buyer at Seller's place of
business information and copies of all documents and agreements including but
not limited to financial and operating data and other information concerning
the financial condition, results of operations and business of the Seller and
the Station, that the Buyer may reasonably request in order to complete the
Buyer's due diligence examination of the Station and any audit required by
Buyer's financing sources. The rights of the Buyer under this Section shall
not be exercised in such a manner as to materially interfere with the business
of the Station.
9.1.7 Notwithstanding anything in this Agreement to the
contrary, Seller may enter into any contract without the consent of Buyer, but
if any such contract is outside the scope of the restrictions set forth in
this SECTION 9.1, Buyer shall not be obligated to accept and assume such
contract at Closing.
9.1.8 The Seller shall cooperate with the Buyer by providing
the Buyer with such financial and accounting records as Buyer may reasonably
request in connection with the preparation of financial statements of the
Station.
9.2 Notification. Seller shall notify Buyer of any material
litigation, arbitration or administrative proceeding pending or, to its
knowledge, threatened against Seller which challenges the transactions
contemplated hereby.
9.3 No Inconsistent Action. Seller shall not take any action
which is materially inconsistent with its obligations under this Agreement.
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9.4 Covenant Not to Compete. During the period of five (5) years from
and after the Closing Date (the "Covenant Period"), neither Buyer nor any of
its partners will directly or indirectly, in any manner and at any time, (a)
own, manage, operate, control, invest in, advise, consult, provide programming
to, or perform sales or any other services for, any radio station or other
broadcast media in the Myrtle Beach Metropolitan Statistical Area, (b) solicit
or cause any other person to solicit any employee of the Station, as of the
date hereof, to terminate his or her employment with the Buyer; or (c) solicit
or cause any other person to solicit any person or persons, firm, association,
syndicate, partnership, company, corporation or other entity that is a
contracting party with the Buyer, as of the date of this Agreement, to
terminate any written or oral agreement with the Buyer. Seller acknowledges
that the restrictions contained herein, including but not limited to the time
periods and geographical limitations, are reasonable and necessary to protect
the business which Buyer is acquiring and that any violation of these
restrictions will cause irreparable injury to the Buyer.
9.5 Closing Covenant. On the Closing Date, Seller shall transfer,
convey, assign and deliver to Buyer the Station Assets and the Assumed
Liabilities as provided in ARTICLES 1 AND 2 of this Agreement.
ARTICLE 10
JOINT COVENANTS
Buyer and Seller covenant and agree that between the date hereof and
the Closing Date, they shall act in accordance with the following:
10.1 Conditions. If any event should occur, either within or without
the control of any party hereto, which would prevent fulfillment of the
conditions upon the obligations of any party hereto to consummate the
transactions contemplated by this Agreement, the parties hereto shall use
their best efforts to cure the event as expeditiously as possible.
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10.2 Confidentiality. Buyer and Seller shall each keep confidential
all information obtained by it with respect to the other in connection with
this Agreement and the negotiations preceding this Agreement, and will use
such information solely in connection with the transactions contemplated by
this Agreement, and if the transactions contemplated hereby are not
consummated for any reason, each shall return to the other, without retaining
a copy thereof, any schedules, documents or other written information obtained
from the other in connection with this Agreement and the transactions
contemplated hereby. Notwithstanding the foregoing, neither party shall be
required to keep confidential or return any information which (i) is known or
available through other lawful sources, not bound by a confidentiality
agreement with the disclosing party; (ii) is or becomes publicly known through
no fault of the receiving party or its agents; (iii) is required to be
disclosed pursuant to an order or request of a judicial or governmental
authority (provided the disclosing party is given reasonable prior notice) or
pursuant to the requirements of the Securities Act of 1933 or the
Securities Exchange Act of 1934; or (iv) is independently acquired or
developed by such party without violating any of the provisions of this
SECTION 10.2.
10.3 Cooperation. Buyer and Seller shall cooperate fully with each
other in taking any actions, including actions to obtain the required consent
of any governmental instrumentality or any third party necessary or helpful to
accomplish the transactions contemplated by this Agreement; provided, however,
that no party shall be required to take any action which would have a material
adverse effect upon it or any affiliated entity.
10.4 Control of Station. Buyer shall not, directly or indirectly,
control, supervise or direct the operations of the Station. Such operations,
including complete control and supervision of all Station programs, employees
and policies, shall be the sole responsibility of Seller.
10.5 Consents to Assign. To the extent that any Contract is not
capable of being sold, assigned, transferred, delivered or subleased without
the waiver or consent of any third person (including a government or
governmental unit), or if such sale, assignment, transfer, delivery or
sublease or attempted sale, assignment, transfer, delivery or sublease would
constitute a breach
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thereof or a violation of any law or regulation, this Agreement and any
Assignment executed pursuant hereto shall not constitute a sale, assignment,
transfer, delivery or sublease or an attempted sale, assignment, transfer,
delivery or sublease thereof. In those cases where consents, assignments,
releases and/or waivers have not been obtained at or prior to the Closing Date
to the transfer and assignment to the Buyer of the Contracts, this Agreement
and any Assignment executed pursuant hereto, to the extent permitted by law,
shall constitute an equitable assignment by Seller to the Buyer of all of
Seller's rights, benefits, title and interest in and to the Contracts, and
where necessary or appropriate, the Buyer shall be deemed to be the Seller's
agent for the purpose of completing, fulfilling and discharging all of
Seller's rights and liabilities arising after the Closing Date under such
Seller Contracts. Seller shall use its reasonable efforts to provide the Buyer
with the benefits of such Contracts (including, without limitation, permitting
the Buyer to enforce any rights of Seller arising under such Contracts), and
the Buyer shall, to the extent the Buyer is provided with the benefits of
such Contracts, assume, perform and in due course pay and discharge all debts,
obligations and liabilities of Seller under such Contracts.
10.6 Bulk Sales Laws. The Buyer hereby waives compliance by Seller
with the provisions of the "bulk sales" or similar laws of any state. Seller
agrees to indemnify the Buyer and hold it harmless against any and all claims,
losses, damages, liabilities, costs and expenses incurred by the Buyer or any
affiliate as a result of any failure to comply with any "bulk sales" or
similar laws.
10.7 Employee Matters. Buyer shall have the right, but not the
obligation, to hire substantially all of the employees of the Station
immediately. Seller shall be responsible for all salary and benefits of the
Buyer's employees at the Station for the period prior to the Closing Date. All
employees of the Station shall cease active participation in all of Seller's
employee benefit plans on the Closing Date, in accordance with the terms of
such plans.
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ARTICLE 11
CONDITIONS OF CLOSING BY BUYER
The obligations of Buyer hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
11.1 Representations, Warranties and Covenants.
11.1.1 All representations and warranties of Seller made in
this Agreement shall be true and complete in all material respects as of the
date hereof and on and as of the Closing Date as if made on and as of that
date, except for changes expressly permitted or contemplated by the terms of
this Agreement
11.1.2 Subject to the requirements of SECTION 8.4 below, all of
the terms, covenants and conditions to be complied with and performed by
Seller on or prior to Closing Date shall havebeen complied with or performed
in all material respects.
11.1.3 Buyer shall have received a certificate, dated as of
the Closing Date, executed by the general partner of Seller, to the effect
that the representations and warranties of Seller contained in this Agreement
are true and complete in all material respects on and as of the Closing Date
as if made on and as of that date, and that Seller has complied with or
performed all terms, covenants and conditions to be complied with or performed
by it in all material respects on or prior to the Closing Date.
11.2 Governmental Consents. The FCC Consents shall have become a
Final Order, or such condition shall have been waived by Buyer.
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11.3 Governmental Authorizations. Seller shall be the holder of the
Station Licenses and all other material licenses, permits and other
authorizations listed in SECTION 7.4 of the Disclosure Schedule, and there
shall not have been any modification of any of such licenses, permits and
other authorizations which has a material adverse effect on the Station or the
conduct of its business and operations. No proceeding shall be pending which
seeks or the effect of which reasonably could be to revoke, cancel, fail to
renew, suspend or modify materially and adversely the Station Licenses or any
other material licenses, permits or other authorizations.
11.4 Adverse Proceedings. No suit, action, claim or governmental
proceeding shall be pending against, and no order, decree or judgment of any
court, agency or other governmental authority shall have been rendered
against, any party hereto which would render it unlawful, as of the Closing
Date, to effect the transactions contemplated by this Agreement in accordance
with its terms.
11.5 Legal Opinion. Seller shall have delivered to Buyer a written
opinion of its counsel, dated as of the Closing Date, addressed to Buyer in
the form attached hereto as EXHIBIT B.
11.6 FCC Legal Opinion. Seller shall have furnished Buyer a written
opinion of Seller's FCC counsel, dated the Closing Date, addressed to Buyer in
the form attached hereto as EXHIBIT C.
11.7 Third-Party Consents. Seller shall have obtained and shall have
delivered to Buyer all third-party consents to the Material Contracts and to
all other Contracts assigned or transferred hereunder, except those the
absence of which will not have a material adverse effect on the operation of
the Station.
11.8 Closing Documents. Seller shall have delivered or caused to be
delivered to Buyer, on the Closing Date, all deeds, bills of sale,
endorsements, assignments and other instruments of conveyance and transfer
reasonably satisfactory in form and substance to Buyer, effecting the sale,
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transfer, assignment and conveyance of the Station Assets to Buyer, including,
without limitation, each of the documents required to be delivered pursuant to
ARTICLE 15.
11.9 Financing Statements. Seller shall have delivered to Buyer
releases, if any, under the Uniform Commercial Code of any financing
statements filed against any Station Assets, except for informational filings
made by equipment lessors on lease obligations being specifically assumed by
Buyer as set forth in SECTIONS 7.7, or 7.9 of the Disclosure Schedule.
11.10 Corporate Resolutions. Seller shall have delivered to Buyer
certified copies of resolutions of Seller authorizing the execution of this
contract and all documents required at closing certified by an authorized
officer of Seller.
ARTICLE 12
CONDITIONS OF CLOSING BY SELLER
The obligations of Seller hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
12.1 Representations, Warranties and Covenants.
12.1.1 All representations and warranties of Buyer made in
this Agreement shall be true and complete in all material respects as of the
date hereof and on and as of the Closing Date as if made on and as of that
date, except for changes expressly permitted or contemplated by the terms of
this Agreement.
12.1.2 All the terms, covenants and conditions to be
complied with and performed by Buyer on or prior to the Closing Date shall
have been complied with or performed in all material respects.
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12.1.3 Seller shall have received a certificate, dated as of
the Closing Date, executed by an officer of Buyer, to the effect that the
representations and warranties of Buyer contained in this Agreement are true
and complete in all material respects on and as of the Closing Date as if made
on and as of that date, and that Buyer has complied with or performed all
terms, covenants and conditions to be complied with or performed by it in all
material respects on or prior to the Closing Date.
12.2 Governmental Consents. The FCC Consents shall have become a
Final Order, or such condition shall have been waived by Buyer.
12.3 Adverse Proceedings. No suit, action, claim or governmental
proceeding shall be pending against, and no other, decree or judgment of any
court, agency or other governmental authority shall have been rendered against
any party hereto which would render it unlawful, as of the Closing Date, to
effect the transactions contemplated by this Agreement in accordance with its
terms.
12.4 Legal Opinion. Buyer shall have delivered to Seller an opinion
of its counsel, dated as of the Closing Date, addressed to Seller in the form
attached hereto as EXHIBIT D.
ARTICLE 13
TRANSFER TAXES; FEES AND EXPENSES
13.1 Expenses. Except as set forth in SECTION 13.2 AND 13.3 hereof,
each party hereto shall be solely responsible for all costs and expenses
incurred by it in connection with the negotiation, preparation and performance
of and compliance with the terms of this Agreement.
13.2 Transfer Taxes and Similar Charges. All costs of transferring
the Station Assets in accordance with this Agreement, including recordation,
transfer and documentary taxes and fees, and any excise, sales or use taxes,
shall be borne equally by Buyer and Seller.
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13.3 Governmental Filing or Grant Fees. Any filing or grant fees
imposed by any governmental authority the consent of which is required to the
transactions contemplated hereby shall be borne equally by Buyer and Seller.
ARTICLE 14
COMMISSIONS OR FINDER'S FEE
14.1 Buyer's Representation and Agreement to Indemnify. Buyer
represents and warrants to Seller that neither it nor any person or entity
acting on its behalf has agreed to pay a commission, finder's fee or similar
payment in connection with this Agreement or any matter related hereto to any
person or entity except to Media Services Group, Inc. Buyer further agrees to
indemnify, defend and hold Seller harmless from and against any and all
claims, losses, liabilities and expenses (including reasonable attorney's
fees) arising out of a claim by Media Services Group, Inc. or any other person
or entity based on any such arrangement or agreement made or alleged to have
been made by Buyer. Buyer shall be solely responsible for any fees due to
Media Services Group, Inc.
14.2 Seller's Representation and Agreement to Indemnify. Seller
represents and warrants to Buyer that neither it nor any person or entity
acting on its behalf has agreed to pay a commission, finder's fee or similar
payment in connection with this Agreement or any matter related hereto to any
person or entity. Seller further agrees to indemnify, defend and hold Buyer
harmless from and against any and all claims, losses, liabilities and expenses
(including reasonable attorney's fees) arising out of a claim by any other
person or entity based on any such arrangement or agreement made or alleged to
have been made by Seller.
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ARTICLE 15
DOCUMENTS TO BE DELIVERED AT CLOSING
15.1 Seller's Documents. At the Closing, Seller shall deliver or
cause to be delivered to Buyer the following:
15.1.1 A certificate of Seller approving the execution and
delivery of this Agreement and each of the other documents and authorizing the
consummation of the transactions contemplated hereby and thereby;
15.1.2 A certificate, dated the Closing Date, by Seller in the
form described in SECTION 11.1.3 above,
15.1.3 If regularly issued by the States of Virginia and/or
South Carolina, Governmental Certificates showing that Seller is duly
constituted and in good standing in the State of Virginia and qualified and in
good standing in the State of South Carolina dated not more than forty-five
(45) days before the Closing Date;
15.1.4 Bill of Sale, assignments and other good and
sufficient instruments of conveyance, transfer and assignment, all in form and
substance reasonably satisfactory to counsel for Buyer, as shall be effective
to vest in Buyer or its permitted assignees, good and marketable title in and
to the Station Assets transferred pursuant to this Agreement in accordance
with the terms of this Agreement;
15.1.5 At the time and place of Closing, originals or copies
of all program, operations, transmissions, or maintenance logs and all other
records required to be maintained by the FCC with respect to the Station,
including the Station's public file, shall be left at the Station and thereby
delivered to Buyer;
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15.1.6 The Seller's opinion letters referenced in SECTIONS 11.5 and
11.6 above; and
15.1.7 Such additional information and materials as Buyer
shall have reasonably requested.
15.2 Buyer's Documents. At the Closing, Buyer shall deliver or cause
to be delivered to Seller the following:
15.2.1 The Purchase Price in accordance with SECTION 3.2
hereof;
15.2.2 A certificate, dated the Closing Date, by Buyer in
the form described in SECTION 12.1.3 above.
15.2.3 The opinion of Buyer's counsel, dated the Closing Date,
to the effect set forth in SECTION 12.4;
15.2.4 Governmental certificates showing that Buyer is duly
incorporated and in good standing in the State of Delaware and qualified and
in good standing in the State of South Carolina dated not more than forty-five
(45) days before the Closing Date;
15.2.5 An assignment and assumption agreement or agreements
reasonably satisfactory in form and substance to counsel to Seller effecting
the assumption of the Assumed Liabilities;
15.2.6 Certified resolutions of the Board of Directors of
Buyer approving the execution and delivery of this Agreement and each of the
other documents and agreements referred to herein and authorizing the
consummation of the transactions contemplated hereby and thereby;
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15.2.7 Articles of Incorporation and Bylaws of Buyer certified by
Buyer's secretary as of the Closing Date; and
15.2.8 Such additional information and materials as Seller
shall have reasonably requested.
ARTICLE 16
INDEMNIFICATION
16.1 Seller's Indemnities. Seller hereby agrees to indemnify, defend
and hold Buyer harmless with respect to any and all demands, claims, actions,
suits, proceedings, assessments, judgments, costs, losses, damages,
liabilities and expenses (including, without limitation, reasonable attorneys'
fees) asserted against, resulting from, imposed upon or incurred by Buyer
directly or indirectly relating to or arising out of:
16.1.1 Any and all liabilities, obligations, or commitments
of Seller of any nature, whether absolute, accrued, contingent, or otherwise,
including those relating to all periods prior to the Closing, whether the
claim is asserted prior to or after the Closing, by reason of or resulting
from liabilities or obligations of or claims against Seller in connection with
Seller's ownership or operation of the Station prior to the Closing, except
liabilities, obligations, or commitments of Seller included in the Assumed
Liabilities and except for the actions of Buyer pursuant to the LMA;
16.1.2 The breach of any of the representations or warranties or
failure by Seller to perform any covenants, conditions or agreements of Seller
set forth in this Agreement;
16.1.3 Any failure to comply with any "bulk sales" laws applicable
to the transactions contemplated hereby;
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16.1.4 The failure of Seller to pay, perform or discharge
when due any of Seller's obligations, liabilities or Contracts not assumed by
Buyer pursuant to this Agreement;
16.1.5 The litigation listed on SECTION 7.14 of the Disclosure \
Schedule; and
16.1.6 Any employee benefit plan maintained by Seller.
16.2 Buyer's Indemnities. Buyer hereby agrees to indemnify, defend
and hold Seller harmless with respect to any and all demands, claims, actions,
suits, proceedings, assessments, judgments, costs, losses, damages,
liabilities and expenses (including, without limitation, reasonable attorneys'
fees) asserted against, resulting from, imposed upon or incurred by Seller
directly or indirectly relating to or arising out of:
16.2.1 The use or operation of the Station Assets by Buyer pursuant
to the LMA and after the Closing Date;
16.2.2 The breach of any of the representations, warranties,
covenants, conditions or agreements of Buyer set forth in this Agreement; and
16.2.3 The Assumed Liabilities.
16.3 Rights. Buyer and Seller agree that the rights of
indemnification provided in this ARTICLE 16 are exclusive of and in addition
to any and all other such rights of Buyer or Seller hereunder.
16.4 Survival of Representations and Warranties. Either party shall
have the right to bring an action with respect to the representations and
warranties contained herein for a period of eighteen (18) months following the
Closing Date, and upon the expiration of such period such right shall lapse
and be of no further force or effect.
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16.5 Limitation on Indemnity. Notwithstanding anything to the
contrary contained in this Agreement, and subject to the proviso set forth
below, neither party shall have any liability or obligation to the other for
breach of any representation, warranty, covenant or agreement of the other in
this Agreement except to the extent that the aggregate of all claims for such
breaches exceeds Fifty Thousand Dollars ($50,000) (the "Threshold Amount"), in
which event the party so liable shall then be liable for all claims for any
such breaches, including the sums constituting the Threshold Amount.
16.6 Procedures.
16.6.1 Promptly after the receipt by either party (the
"Indemnified Party") of notice of (a) any claim or (b) the commencement of any
action or proceeding which may entitle such party to indemnification under
this Section, such party shall give the other party (the "Indemnifying Party")
written notice of such claim or the commencement of such action or proceeding
and shall permit the Indemnifying Party to assume the defense of any such
claim or any litigation resulting from such claim. The failure to give the
Indemnifying Party timely notice under this SECTION 16.6.1 shall not preclude
the Indemnified Party from seeking indemnification from the Indemnifying Party
unless such failure has materially prejudiced the Indemnifying Party's ability
to defend the claim or litigation.
16.6.2 If the Indemnifying Party assumes the defense of any such
claim or litigation resulting therefrom with counsel reasonably acceptable to
Indemnified Party, the obligations of the Indemnifying Party as to such claim
shall be limited to taking all steps necessary in the defense or settlement of
such claim or litigation resulting therefrom and to holding the Indemnified
Party harmless from and against any losses, damages and liabilities caused by
or arising out of any settlement approved by the Indemnifying Party or any
judgment in connection with such claim or litigation resulting therefrom;
provided, however, that the Indemnified Party may participate, at its expense,
in the defense of such claim or litigation provided that the Indemnifying
Party shall direct and control the defense of such claim or litigation. The
Indemnified Party shall cooperate and make
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available all books and records reasonably necessary and useful in connection
with the defense. The Indemnifying Party shall not, in the defense of such
claim or any litigation resulting therefrom, consent to entry of any judgment,
except with the written consent of the Indemnified Party, or enter into any
settlement, except with the written consent of the Indemnified Party, which
does not include as an unconditional term thereof the giving by the claimant
or the plaintiff to the Indemnified Party of a release from all liability in
respect of such claim or litigation.
16.6.3 If the Indemnifying Party shall not assume the
defense of any such claim or litigation resulting therefrom, the Indemnified
Party may, but shall have no obligation to, defend against such claim or
litigation in such manner as it may deem appropriate, and the Indemnified
Party may compromise or settle such claim or litigation without the
Indemnifying Party's consent. The Indemnifying Party shall promptly pay any
such settlement of such claim or litigation and shall also promptly reimburse
the Indemnified Party for the amount of all expenses, legal or otherwise,
incurred by the Indemnified Party in connection with the defense against or
settlement of such claim or litigation. If no settlement of the claim or
litigation is made, the Indemnifying Party shall promptly reimburse the
Indemnified Party for the amount of any judgment rendered with respect to such
claim or in such litigation and of all expenses, legal or otherwise, incurred
by the Indemnified Party in the defense against such claim or litigation.
ARTICLE 17
TERMINATION RIGHTS
17.1 Termination. This Agreement may be terminated by either Buyer or
Seller, if the party seeking to terminate is not in material default or breach
of this Agreement, upon written notice to the other upon the occurrence of any
of the following:
(a) if the other party defaults in any material respect in
the observance or in the due and timely performance of any of its covenants or
agreements herein contained and such material default shall not be cured
within thirty (30) days of the date of notice of default served by the party
claiming such material default; or
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(b) if the FCC denies the FCC Application, or if the FCC fails to
grant the FCC Consents within twelve (12) months following the filing of the
FCC Application, provided that the party seeking termination has diligently
prosecuted the FCC Application in good faith; or
(c) on the first anniversary of this Agreement, if there shall be
in effect any judgment, final decree or order that would prevent or make
unlawful the Closing of this Agreement; or
(d) by the Buyer only, if there is a cessation of broadcast
transmissions by the Station, for a period of five (5) full consecutive days
or for ten (10) or more days within any thirty (30) day period, or normal
broadcast transmissions are not resumed by the date immediately preceding the
Closing Date; or
(e) as provided in SECTIONS 7.11 AND 18.3 or any other section of
this Agreement which specifically provides for terminations.
17.2 Liability. The termination of this Agreement under SECTION 17.1
shall not relieve any party of any liability for breach of this Agreement
prior to the date of termination.
ARTICLE 18
OTHER PROVISIONS
18.1 Specific Performance. Seller recognizes that, in the event
Seller refuses to perform the provisions of this Agreement, monetary damages
alone will not be adequate. Buyer shall, therefore, be entitled in such event,
in addition to bringing suit at law or equity for money or other damages, to
obtain specific performance of the terms of this Agreement. In any action to
enforce the provisions of this Agreement, Seller shall waive the defense that
there is an adequate remedy at law or equity and agrees that Buyer shall have
the right to obtain specific performance of the terms of this Agreement
without being required to prove actual damages, post bond or furnish other
security.
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18.2 Liquidated Damages. If the Seller terminates this Agreement
pursuant to SECTION 17.1 above due to Buyer's breach of any material
representation, warranty, covenant or condition hereunder, and Seller is not
at that time in breach of any material representation, warranty, covenant or
condition hereunder, then Seller would suffer direct and substantial damages,
which damages cannot be determined within reasonable certainty. Therefore,
because of the expense and delay which would be incurred in such event by
Seller, Buyer shall pay to Seller the amount of Two Hundred Thousand Dollars
($200,000), which amount shall constitute liquidated damages. Twenty- five
percent (25%) of such amount shall be delivered to Seller by the Escrow Agent
from the Escrow Account and Seventy-five percent (25%) shall be delivered to
Seller from Buyer. It is understood and agreed that such liquidated damage
amount represents Buyer's and Seller's reasonable estimate of actual damages
and does not constitute a penalty. Recovery of liquidated damages from the
Escrow Account shall be the sole and exclusive remedy of Seller against Buyer
for failing to consummate this Agreement on the Closing Date and shall be
applicable regardless of the actual amount of damages sustained. In the event
that either of the parties hereto bring suit to enforce the provisions of this
SECTION 18.2 OR SECTION 18.1 above, the prevailing party in any such action
shall, in addition to any remedies set forth in this Agreement, be entitled to
recover reasonable attorney's fees from the other party.
18.3 Risk of Loss. The risk of loss or damage to any of the Station
Assets prior to the Closing Date shall be upon Seller. Seller shall repair,
replace and restore any such damaged or lost Station Asset to its prior
condition as soon as possible and in no event later than the Closing Date.
Except as provided below, if Seller fails to restore or replace a Station
Asset with a value exceeding Twenty Thousand Dollars ($20,000), Buyer may
elect either to terminate this Agreement pursuant to ARTICLE 17 hereof or to
consummate the Closing on the Closing Date. If Seller fails to restore or
replace such Station Asset and Buyer does not elect to terminate this
Agreement, Seller shall assign to Buyer at Closing Seller's rights under any
insurance policy or pay over to Buyer all proceeds of insurance covering such
Station Asset's damage, destruction or loss. If the restoration and
replacement of any damaged or destroyed property has not been completed at the
time the Closing would otherwise be held, then unless Seller and Buyer
otherwise agree, the Closing Date shall be
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delayed and shall take place within fifteen (15) days after Seller gives
written notice to Buyer of completion of the restoration or replacement of
such Station Asset. If the delay in the Closing Date under this SECTION 18.3
would cause the Closing to fall at anytime after the period permitted by the
FCC Consents, Seller and Buyer shall file an appropriate request with the FCC
for an extension of time within which to complete the Closing.
18.4 Further Assurances. After the Closing, Seller shall from time to
time, at the request of and without further cost or expense to Buyer, execute
and deliver such other instruments of conveyance and transfer and take such
other actions as may reasonably requested in order to more effectively
consummate the transactions contemplated hereby to vest in Buyer good and
marketable title to the assets being transferred hereunder, and Buyer shall
from time to time, at the request of and without further cost or expense to
Seller, execute and deliver such other instruments and take such other actions
as may reasonably be requested in order to more effectively relieve Seller of
any obligations being assumed by Buyer hereunder.
18.5 Waiver. No delay or failure by any party hereto in exercising
any right, power or privilege under this Agreement, or under any other
instrument or document given in connection with or pursuant to this Agreement,
shall impair any such right, power or privilege or be construed as a waiver of
any default or any acquiescence therein. No single or partial exercise of any
such right, power or privilege shall preclude the further exercise of any
right, power of privilege, or the exercise of any other right, power or
privilege.
18.6 Severability. If any part or any provision of this Agreement
shall be invalid or unenforceable under applicable law, said part or
provisions shall be ineffective to the extent of such invalidity or
unenforceability only, without in any way affecting the remaining provisions
of this Agreement which shall be construed as if such invalid parts or
provisions had not been inserted, and such invalid or unenforceable provisions
shall become and be immediately amended and reformed to include only the
portions thereof as are enforceable by the court or such other body having
jurisdiction of this Agreement; and the parties agree that such portions as so
amended and reformed shall
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be valid and binding as though any wholly invalid or unenforceable portion had
not been included herein.
18.7 Benefit and Assignment. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Either party may assign its interests under
this Agreement without the prior written consent of the other party.
18.8 Additional Agreement. Buyer and Seller hereby further agree that
if the Closing shall not have occurred prior to June 29, 1996, then Buyer
shall at Seller's request, on June 29, 1996, advance to Seller, or a designee
of Seller, $225,000 (the "Advance"), as a pre-payment against the Purchase
Price at such time as the Note, as defined below, is cancelled, fully
refundable to Buyer if this Agreement is terminated for any reason whatsoever.
Buyer's obligation to make the Advance shall be conditioned upon Buyer's prior
receipt from Seller of the following: (i) an interest free promissory note
(the "Note") executed by Seller, in form and substance satisfactory to Buyer;
(ii) a first priority security interest in all of Seller's assets (other than
the FCC Licenses) used or useful in the operation of the Station, in form and
substance satisfactory to Buyer, together with executed UCC-1 financing
statements sufficient to grant Buyer a first priority security interest in the
Station Assets; (iii) an Amended and Restated Local Marketing Agreement,
executed by Seller, in the form attached hereto as EXHIBIT E; and (iv) a
notice to the Escrow Agent instructing the Escrow Agent to release the Escrow
Deposit to the Buyer. Furthermore, until all principal under the Note is
repaid in full, Buyer shall have a right of first refusal to purchase the
Station from the Seller. If this Agreement is terminated and Seller shall
receive a bona fide third party offer to purchase the Station which it desires
to accept, Seller shall so notify Buyer, in writing, of the terms of the
offer, and Buyer shall have ten (10) business days from receipt of such
written notification to notify Seller of its intent to exercise this right of
first refusal and purchase the Station on the same economic terms as contained
in such bona fide third party offer.
18.9 Survival of Certain Provisions. The provisions of SECTIONS
3.4.2, 8.54, 9.4, 18.1 18.2, 18.9 and and ARTICLE 16 shall, to the extent
applicable, continue in full force and effect
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notwithstanding the expiration or earlier termination of this Agreement or of
the consummation of the transactions contemplated hereby in accordance with
the terms of this Agreement.
18.10 Entire Agreement. This Agreement, the Disclosure Schedule and
the Exhibits hereto embody the entire agreement and understanding of the
parties hereto and supersede any and all prior agreements, arrangements and
understandings relating to the matters provided for herein. No amendment,
waiver of compliance with any provision or condition hereof or consent
pursuant to this Agreement shall be effective unless evidenced by an
instrument in writing signed by the party against whom enforcement of any
waiver, amendment, change, extension or discharge is sought.
18.11 Headings. The headings set forth in this Agreement are for
convenience only and will not control or affect the meaning or construction of
the provisions of this Agreement.
18.12 Governing Law. The construction and performance of this
Agreement shall be governed by the laws of the STATE OF SOUTH CAROLINA without
giving effect to the choice of law provisions thereof.
18.13 Notices. Any notice, demand or request required or permitted to
be given under the provisions of this Agreement shall be in writing and shall
be deemed to have been duly delivered and received on the date of personal
delivery or on the date of receipt, if mailed by registered or certified mail,
postage prepaid and return receipt requested, or on the date of a stamped
receipt, if sent by an overnight delivery service, and shall be addressed to
the following addresses, or to such other address as any party may request, in
the case of Seller, by notifying Buyer, and in the case of Buyer, by notifying
Seller:
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To Seller: Puritan Radio Casting Company
240 North Washington Blvd., Suite 700
Sarasota, Florida 34236
Attn:
Fax: 941-366-5533
Copies to: Charles Morgan
120 East Market Street
York, Pennsylvania 17401
Fax: 717-771-1436
Edward B. Bowers, Jr.
1000 29th Avenue North
Myrtle Beach, South Carolina 29578
Fax: 803-448-3022
To Buyer: Multi-Market Radio of Myrtle Beach, Inc.
150 East 58th Street, 19th Floor
New York, New York 10155
Fax: 212-753-3188
Attn: Michael G. Ferrel
Copy to: Howard Berkower, Esq.
Baker & McKenzie
805 Third Avenue
New York, NY 10022
Fax: 212-751-5700
18.13 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date and year first above written.
SELLER:
PURITAN RADIOCASTING COMPANY
By: /s/ Ronald D. Rackley
_____________________________
Its General Partner
By: /s/ Ronald D. Rackley
_____________________________
Name: Ronald D. Rackley
Title: Partner
BUYER:
MULTI-MARKET RADIO OF MYRTLE BEACH, INC.
By: /s/ Michael G. Ferrel
______________________________
Name: Michael G. Ferrel
Title: President
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PROGRAMMING AGREEMENT
THIS PROGRAMMING AGREEMENT (this "Agreement") is made and entered
into as of this 5th day of April, 1996 by and between MULTI-MARKET RADIO OF
MYRTLE BEACH, INC., a Delaware corporation ("Broker"), and PURITAN
RADIOCASTING COMPANY, a Virginia partnership ("Licensee").
WHEREAS, Licensee is the owner and licensee of radio broadcast
station WMYB (FM), Socastee, South Carolina (the "Station"); and
WHEREAS, Broker desires to provide programming including commercial
announcements on the Station; and
WHEREAS, Licensee desires to broadcast the programming provided by
Broker;
NOW THEREFORE, in consideration of the mutual covenants contained in
this Agreement, and intending to be fully bound hereby, Broker and Licensee
hereby agree as follows:
1. Basic Agreement. Subject to the terms of this Agreement and the
exceptions set forth herein, and to applicable rules, regulations and policies
of the Federal Communications Commission (the "FCC"), Broker agrees to provide
and Licensee agrees to accept programming on the Station as set forth in this
Agreement. Licensee agrees to broadcast the programming including commercial
announcements supplied by Broker without interruption, deletion or addition of
any kind, except as provided in this Agreement and subject to Licensee 's
obligations under the statutes, rules, regulations and policies of the FCC.
2. Hours of Programming. Broker will supply, and Licensee will
transmit, subject to the exceptions set forth in SECTIONS 6 AND 8 below,
programming for all periods of broadcast operations as long as this Agreement
remains in full force and effect.
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3. Term of Agreement. The term of this Agreement (the "Term") shall
be for twelve (12) months commencing April 5, 1996 (the "Effective Date") and
terminating on April 4, 1997; provided, however, that this Agreement may be
terminated sooner pursuant to the provisions of SECTIONS 12 OR 21 of this
Agreement.
4. Sale of Advertising Time; Accounts Receivable.
(a) In consideration for the furnishing by Broker of the programming
to Licensee, Licensee agrees that from and after the Effective Date of this
Agreement Broker may sell (or engage a third party to sell) all of the
commercial time on the Station for Broker's account and may collect all
revenues generated by such sales. All contracts, advertising agreements,
purchase orders and other similar documents and instruments negotiated and
executed by Broker in connection with its programming of the Station and with
sales, advertising or promotions on or after the Effective Date shall be in
the name of Broker, and Broker shall not represent in any fashion that Broker
is the licensee or owner of the Station.
5. Compensation. In consideration for Broker's right to sell
commercial time and collect all of the revenues from such sales pursuant to
this Agreement, Broker agrees to pay to Licensee the compensation set out in
paragraph 1 of Schedule I hereto.
6. Reservation of Time. Licensee specifically reserves for its own
use up to two (2) hours per week of programming time (the "Reserved Time")
during which it may broadcast programming of its choice, including news,
public affairs and other programming responsive to the needs and interests of
its community of license and service area. The Reserved Time shall be at a
mutually agreed time on Sunday between the hours of 7:00 a.m. and 11:00 p.m.,
in segments of no less than one (1) hour. Licensee will not sell advertising
time during the Reserved Time. In addition, Broker shall broadcast, at
Licensee's request, up to two (2) 30-second public service announcements each
day at such times as are mutually agreeable to Licensee and Broker. Broker
shall also consider in good faith including in its programming such other
public service announcements as Licensee may from time to time suggest.
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7. Licensee's Programming Discretion.
(a) In order to enable Licensee to fulfill its obligations under
Section 317 of the Communications Act of 1934, as amended (the "Act"), Broker
in compliance with Section 507 of the Act will, in advance of any scheduled
broadcast by the Station, disclose to Licensee any information of which Broker
has knowledge, or which has been disclosed to it, as to any money, service or
other valuable consideration which any person has paid or accepted, or has
agreed to pay or to accept, for the inclusion of any matter as a part of the
programming or commercial matter to be supplied to Licensee pursuant to this
Agreement. Broker will cooperate with Licensee as necessary to ensure
compliance with this provision. Commercial matter with obvious sponsorship
identifications shall not require disclosure in addition to that contained in
the commercial copy. Broker further agrees that it will at all times proceed
in good faith to conduct sales of commercial matter hereunder in compliance
with all applicable statutes and regulations.
(b) Licensee shall be responsible for insuring that the Station's
overall programming is responsive to the needs and interests of the community.
In furtherance thereof, Licensee shall retain ultimate authority and control
over the policies, programming and operations of the Station, including,
without limitation, the right to decide whether to accept or reject any
programming or advertisements, the right to refuse to broadcast any
programming or part of programming deemed by Licensee to not be in the public
interest or to not meet Licensee's programming standards, the right to
interrupt or preempt any programming at any time in order to broadcast
programming deemed by Licensee to be of significant national, regional, local
or public interest or to broadcast emergency information, and the right to
take any other actions necessary for compliance with federal or state laws or
governmental regulations. At Licensee's request, Broker's on-site management
and staff will meet with Licensee at the Station on a monthly basis or other
agreed to intervals to discuss the Station's policies, programming and
operations. Licensee shall be entitled to review programming material relating
to the Station's broadcasts, including Broker's play-list, commercial
schedule, schedule of public service announcements and other programming
in advance of Broker's broadcast of such programs. Broker agrees that all such
programming as presented by Broker will be in compliance with all applicable
rules and regulations. Licensee shall continue to be responsible for
maintenance of the Station's public inspection file in good
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order as required by the FCC, to have prepared and timely filed in such file
the quarterly issues/programs list as required by FCC rules and to timely file
with the FCC all required reports and records.
(c) Broker shall immediately forward to Licensee all written
questions, comments or complaints received from third parties regarding
Broker's programming. Licensee may, but shall not be required to, cooperate
with Broker in responding to any such question, comment or complaint from any
third party (other than a governmental authority or agent thereof) with
respect to any of Broker's programming broadcast by the Station. At the
request of Licensee, Broker shall cooperate fully with respect to all
responses to such questions, comments or complaints, and all responses to
questions, comments or complaints with respect to programming shall be subject
to the approval of Licensee.
8. Maintenance, Installation and Removal of Equipment; Responsibility
for Costs.
(a) Licensee shall be responsible for maintenance and repair of the
Station's transmitter and antenna, and will keep those facilities operating in
compliance with the rules and regulations of the FCC.
(b) Broker shall be responsible for the salaries, commissions, taxes,
insurance and all other related costs for all personnel employed by Broker and
involved in the production, broadcast and sale of its programming and
commercial messages including, but not limited to, on-air personalities, sales
persons and traffic personnel. Broker shall also be responsible for all of its
promotional expenses in connection with the programming it is to furnish for
broadcast on the Station. Broker shall assume and undertake to pay, satisfy or
discharge the liabilities, obligations and commitments of Licensee which arise
and/or accrue after the Effective Date only under the contracts listed on
SCHEDULE II hereof. Broker shall maintain broadcaster's errors and omissions
insurance with respect to all programming to be broadcast by Broker over the
Station, with such insurance carriers and such policy limits as are reasonably
acceptable to Licensee, and shall name Licensee as an additional insured on
all such insurance policies. Broker shall provide evidence of such insurance
coverage to Licensee, upon Licensee's request. Licensee shall be responsible
for its own corporate expenses and obligations for borrowed money and for the
following direct
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operating costs of the Station: all lease payments for use of the Station's
main studio and offices; salaries, payroll taxes, insurance and related costs
of all personnel employed by Licensee for the Station after the Effective
Date; insurance costs relating to Licensee's assets and operations; power and
other utility bills (not including telephone service) for the Station's main
studio facilities, its transmitter site and any other facilities it may have;
maintenance of all transmitting equipment including costs of repairs and
supplies; Licensee's own telephone delivery and postal expenses; and income,
gross receipts, sales, personal property, real property and any other taxes of
whatever nature related to Licensee's ownership of the Station assets or
Licensee's own programming efforts on the Station.
9. Broker's Representations and Indemnification. Broker represents
and warrants that it has the right to enter into this Agreement and to provide
programming to the Station as provided for by this Agreement. Broker further
represents and warrants that the performing rights to all music contained in
such programming are or will be licensed by BMI, ASCAP or SESAC, are in the
public domain or are controlled by Broker. Broker agrees to indemnify and hold
Licensee, its directors, shareholders, officers, agents, employees, successors
and assigns free and harmless from any and all claims, damages, liabilities,
FCC fines or forfeitures, losses, costs and expenses, including reasonable
attorneys' fees, incurred by Licensee or such other persons arising from (a)
the breach by Broker of any representation or warranty contained in this
Agreement, (b) the breach by Broker of any covenant or obligation contained in
this Agreement, and (c) the broadcast of any programming or other matter by
Broker pursuant to this Agreement, including but not limited to, those arising
as a result of copyright infringement, libel, slander, defamation, invasion of
privacy or violation of applicable federal or state laws or government
regulations. The indemnity and hold harmless obligation of Broker specified in
this SECTION 9 shall in no way be limited by the exercise of authority or
control over the programming of the Station by Licensee in accordance with
SECTION 7 above, or its failure to exercise such authority or control.
10. Facilities. Broker shall provide programming to the Station
pursuant to this Agreement from facilities owned, leased or maintained by
Licensee, and during the Term of this
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Agreement Broker shall have the right to use Licensee's furniture, equipment
and other items of personal property in providing such programming. Licensee
shall, at its sole expense, retain a management level employee and the
necessary staff as may be required by FCC rules and regulations, which manager
and staff shall be responsible for maintaining the transmitting facilities of
the Station and insuring compliance with the technical operating and reporting
requirements established by the FCC. The transmitting facilities of the
Station shall be maintained by Licensee in accordance with all applicable FCC
rules and regulations and all FCC licenses and authorizations for the Station.
Throughout the Term of this Agreement, all transmitting equipment shall be in
good operating condition consistent with standards of good engineering
practice in the broadcast industry. Nothing herein shall be construed to grant
to Broker the power or authority to control or direct the operation of the
Station. Whenever on the premises of the Station, Broker's employees and
agents shall at all times be subject to the direction and control of Licensee,
its designated employees and agents.
11. Monthly Reports. At Licensee's request, Broker shall submit to
Licensee in writing monthly reports in form reasonably satisfactory to
Licensee and Broker, which reports will cover programs and commercials
delivered by Broker and broadcast by the Station. Broker shall deliver to
Licensee, on a timely basis, such records, documents, and information as are
required under the FCC rules to be placed in the Station's public inspection
files. Broker shall also provide to Licensee on a quarterly basis a list of
programs aired on the Station by Broker that may be helpful to Licensee in
preparing its list of issue-responsive programming for the preceding quarter,
as well as copies of the minutes of any station management meetings once they
are available for distribution.
12. Failure of Facilities. Any substantial failure or impairment of
facilities (i.e. failure to broadcast at least 80% of the Station's licensed
ERP), or any delay or interruption in broadcast programs, or failure at any
time to furnish facilities, in whole or in part, for broadcasting, due to acts
of God, strikes or threats thereof or force majeure or due to causes beyond
the control of Licensee shall not constitute a breach of this Agreement and
Licensee will not be liable to Broker,
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except to the extent of allowing in each such case an appropriate payment
credit for time or broadcasts not provided based upon a pro-rata adjustment to
the Monthly Payment based upon the length of time during which the failure or
impairment exists.
Notwithstanding the foregoing or any other provision hereof, if
during the Term of this Agreement any event occurs which prevents the Station
from broadcasting at the ERP described in the preceding sentence, Licensee
shall give prompt written notice thereof to Broker. If such facilities (a) are
not restored so that operation is resumed with such power within five (5)
calendar days of such event; or (b) in the case of more than one event, the
aggregate number of days preceding such restoration from all such events
during any quarterly Arbitron ratings period would be more than ten (10)
calendar days; or (c) if the Station is off the air more than four (4) times,
in each case exceeding five (5) hours, during any quarterly Arbitron ratings
period, Broker shall have the exclusive right, by giving written notice to
Licensee of its election to do so, to terminate this Agreement effective as of
a date stated in such notice not less than thirty (30) nor more than sixty
(60) days following such delivery. Alternatively, should Licensee fail or
refuse to repair or restore such facilities at the request of Broker, Broker
shall have the right to pay for such repairs or restorations and to offset the
sums so expended by Broker against any future Monthly Payment due under this
Agreement and/or the Purchase Price payable under any agreement between the
parties hereto with respect to the sale of the Station by Licensee to Broker.
13. Restriction on Other Programming. During the Term of this
Agreement, Broker shall not be restricted from offering to any other radio
station the programming and services provided by Broker to Licensee pursuant
to this Agreement.
14. Maintenance of Licenses. Broker agrees to maintain at Broker's
expense such licenses, including performing rights licenses and including
specifically performing rights licenses issued by ASCAP, SESAC and BMI, as now
are or hereafter may be in general use by a radio broadcasting station and as
may be necessary for Broker to broadcast the programming which Broker
furnishes to the Station hereunder.
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15. Assignability. Neither party hereto may assign or transfer any of
its obligations or the rights or privileges granted to it under this Agreement
without the other's prior written consent, which consent shall not be
unreasonably withheld. Broker and Licensee shall be entitled to institute
proceedings at law or in equity to enforce the specific performance of the
provisions of this SECTION 15.
16. Modifications and Waivers. No inducements, representations or
warranties except as specifically set forth in this Agreement have been made
by any of the parties to this Agreement with respect to the subject matter
hereof. No provision of this Agreement shall be changed or modified, nor shall
this Agreement be discharged in whole or in part, except by an agreement in
writing, signed by the party against whom the change, modification or
discharge is claimed or sought to be enforced, nor shall any waiver of any of
the conditions or provisions of this Agreement be effective and binding unless
such waiver shall be in writing and signed by the party against whom the
waiver is asserted; and no waiver of any provision of this Agreement shall be
deemed to be a waiver of any preceding or succeeding breach of the same or of
any other provision. Nothing in this Agreement shall be construed to make
Licensee and Broker partners or joint venturers or to afford any rights to any
third party other than as expressly provided herein.
17. No Conflict. Both Licensee and Broker represent that they are
empowered and able to enter into this Agreement, and that the execution,
delivery and performance hereof shall not constitute a breach or violation of
any agreement, contract or other obligation to which either party is subject
or by which it is bound.
18. Licensee's Representations. Licensee makes the following further
representations, warranties and covenants:
(a) Licensee owns and holds all licenses and other permits and
authorizations necessary for the operation of the Station as presently
conducted (including licenses, permits and authorizations issued by the FCC),
and such licenses, permits and authorizations will be in full
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force and effect for the entire Term hereof unimpaired by any acts or
omissions of Licensee, its principals, employees or agents. There is not
pending or, to Licensee's best knowledge, threatened, any action by the FCC or
other party to revoke, cancel, suspend, refuse to renew or modify adversely
any of such licenses, permits or authorizations and, to Licensee's best
knowledge, no event has occurred which allows or, after notice or lapse of
time or both, would allow, the revocation or termination of such licenses,
permits or authorizations or the imposition of any restrictions thereon of
such a nature that may limit the operation of the Station as presently
conducted. Licensee has no reason to believe that any such license, permit or
authorization will not be renewed during the Term of the Agreement in its
ordinary course.
(b) All reports and applications required to be filed with the FCC
(including ownership reports and renewal applications) or any other government
entity, department or body in respect of the Station have been, and in the
future will be, filed in a timely manner and are and will be true and complete
and accurately present the information contained and required thereby. All
such reports and documents, to the extent required to be kept in the public
inspection files of the Station, are and will be kept in such files.
(c) Licensee has, and will throughout the Term hereof maintain, good
and indefeasible title to all assets and properties that are owned by Licensee
and used in the operation of the Station.
(d) Licensee will maintain in full force and effect throughout the
Term of this Agreement insurance with responsible and reputable insurance
companies or associations covering such risks (including fire and other risks
insured against by extended coverage, public liability insurance, insurance
for claims against personal injury or death or property damage and such other
insurance as may be required by law) and in such amounts and on such terms as
is conventionally carried by broadcasters operating a radio station with
facilities comparable to those of the Station. Any insurance proceeds received
by Licensee in respect of damaged property will be used to repair or replace
such property so that the operation of the Station conforms with this
Agreement.
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(e) There are no commercial or trade accounts that will extend beyond
the Effective Date of this Agreement.
19. Notices. All notices, demands and requests permitted or required
under this Agreement shall be in writing and shall be deemed given on the date
of personal delivery or on the date of receipt if mailed by certified mail,
postage prepaid and return receipt requested, or on the date of a stamped
receipt if sent by an overnight delivery service, or on the date of written
confirmation of delivery by facsimile or telecopy transmission to the
following addresses:
If to Licensee: Puritan Radiocasting Company
240 North Washington Boulevard, Suite 700
Sarasota, Florida 34236
Attention: Ron Rackley
Telecopy No.: 941-366-5533
Copy to: Charles Morgan
140 East Market Street
York, Pennsylvania 17401
Telecopy No.:717-771-1436
If to Broker: Mr. Michael G. Ferrel
President
Multi-Market Radio, Inc.
One Monarch Place
Suite 220
Springfield, MA 0114
Telecopy No. (413) 734-3865
Copy to: Martin R. Leader, Esq.
Fisher Wayland Cooper Leader & Zaragoza, L.L.P.
2001 Pennsylvania Avenue, N.W.
Suite 400
Washington, D.C. 20006
Telecopy No. (202) 296-6518
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20. Law Governing. This Agreement shall be governed by and construed
in accordance with the laws of the State of South Carolina without giving
effect to the choice of law provisions thereof and is intended to be fully
consistent with the Act and all rules and regulations of the FCC, as
applicable. The obligations of the parties hereto are subject to all federal,
state and local laws and regulations now or hereafter in force and to the
rules, regulations and policies of the FCC and all other government entities
or authorities presently or hereafter to be constituted.
21. Termination. This Agreement may be terminated by either party,
(a) in the event of a material breach of any of the terms of this Agreement by
the other party, which breach is not cured within ten (10) days following
delivery of written notice of such breach together with a demand that it be
cured, (b) if the other party shall make a general assignment for the benefit
of creditors, or files or has filed against it a petition for bankruptcy,
reorganization or an arrangement for the benefit of creditors, or for the
appointment of a receiver, trustee or similar creditors' representative for
the property or assets of such party under any federal or state insolvency
law, which, if filed against such party, has not been dismissed or discharged
within sixty (60) days thereof, (c) in the event of a material breach by the
other party of any representation or warranty herein, or in any certificate,
affidavit or document furnished pursuant to the provisions hereof, which shall
prove to have been false or misleading in any material respect as of the time
made or furnished, or (d) in the event either party is specifically required
by the FCC to terminate this Agreement in order to comply with FCC rules or
policies, or if there is a material change to Licensee's FCC authorizations
which materially and adversely affects the
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Station's signal, quality or coverage. Additionally, this Agreement shall
terminate upon the acquisition of the Station by Broker.
22. Counterparts. This Agreement may be executed in any one or more
counterparts, each of which shall be binding upon the party so executing it
and when taken together shall constitute one and the same Agreement.
23. Construction. In the event any provision contained in this
Agreement is held to be invalid, illegal or unenforceable, such holding shall
not affect any other provision hereof and this Agreement shall be construed as
if such invalid, illegal or unenforceable provision had not been contained
herein. In the event of the issuance of any order or decree of any
administrative agency or court of competent jurisdiction, including without
limitation any material change or clarification of FCC rules, policies or
precedents, which would cause this Agreement to be in violation of any
applicable law, the parties will use their respective best efforts to
negotiate in good faith any modifications of this Agreement that may be
necessary to comply fully with such order or decree.
24. Binding and Enforceable. Subject to the provisions of SECTION 17
hereof, this Agreement shall be binding upon, inure to the benefit of, and be
enforceable by the parties hereto and their respective successors and
permitted assigns.
25. No Broker. Each party represents that there is no broker or
finder or other person who would have any valid claim against any of the
parties to this Agreement for a commission
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or brokerage fee or payment in connection with this Agreement or the
transactions contemplated hereby as a result of any agreement of, or action
taken by, either party hereto. Each party agrees to indemnify and hold
harmless the other with respect to any such claim.
26. No Limitation on Remedies. Except as otherwise expressly limited
by the provisions of this Agreement, any failure by either party to comply
with the provisions of this Agreement shall entitle the other party to assert
any remedies available to it at law or in equity.
27. Headings. The headings in this Agreement are for convenience only
and will not affect the meaning or construction of the provisions of this
Agreement.
28. Indulgences. Unless otherwise specifically agreed in writing to
the contrary: (i) the failure of either party at any time to require
performance by the other of any provision of this Agreement shall not affect
such party's right thereafter to enforce the same; (ii) no waiver by either
party of any default by the other shall be take or held to be a waiver by such
party of any other preceding or subsequent default; and (iii) no extension of
time granted by either party for the performance of any obligation or act by
the other party shall be deemed to be an extension of time for the performance
of any other obligation or act hereunder.
29. No Partnership or Joint Venture. This Agreement is not intended
to be and shall not be construed as a partnership or joint venture agreement
between the parties. Except as otherwise
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specifically provided herein, neither party to this Agreement shall be
authorized to act as agent of or otherwise represent or bind the other party
to this Agreement.
[END OF PAGE]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year written above.
Licensee:
PURITAN RADIOCASTING COMPANY
By: /s/ Ronald D. Rackley
_____________________________________
Name: Ronald D. Rackley
Title: General Partner
Broker:
MULTI-MARKET RADIO OF MYRTLE BEACH, INC.
By: /s/ Michael G. Ferrel
______________________________________
Name: Michael G. Ferrel
Title: President
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of the 25 day of March, 1996 by and between MULTI-MARKET RADIO OF
AUGUSTA, INC., a Delaware corporation ("Seller"), and WILKS BROADCAST
ACQUISITIONS, INC., a Georgia corporation ("Buyer"), under the following
circumstances;
WHEREAS, Seller owns and operates radio stations WRXR-FM and WKBG-FM
serving the Augusta, Georgia market (the "Stations"), pursuant to licenses
issued by the Federal Communications Commission (the "FCC"); and
WHEREAS, Seller desires to sell and Buyer desires to purchase certain
assets and assume certain liabilities associated with the ownership and
operation of the Stations, all on the terms and subject to the conditions set
forth herein; and
NOW, THEREFORE, the parties hereby agree as follows:
ARTICLE 1
PURCHASE OF ASSETS
1.1 Transfer of Assets. On the Closing Date, Seller shall sell,
assign, transfer and convey to Buyer, and Buyer shall purchase and assume from
Seller, all of the assets, properties, interests and rights of Seller of
whatsoever kind and nature, real and personal, tangible and intangible, owned
or leased by the Seller as the case may be, which are used or held for use
exclusively by or relate exclusively to the Stations, and which, in the case
of physical or tangible assets and properties are located at the Station's
broadcasting studios, offices and transmitter site as the same shall exist on
the date hereof (the "Stations Assets"), including but not limited to the
following (but excluding the assets specified in SECTION 1.2 hereof):
<PAGE>
1.1.1 all of Seller's rights in and to the licenses, permits
and other authorizations issued to Seller by any governmental authority and
used directly and exclusively in, or relating directly and exclusively to, the
conduct of the business and operations of the Stations, including those issued
by the FCC (the latter hereafter referred to as the "Station Licenses") and as
described more fully in SECTION 7.4, along with renewals or modifications of
such items between the date hereof and the Closing Date as well as all of
Seller's rights in and to the call letters "WRXR-FM" and "WKBG-FM";
1.1.2 all equipment, office furniture and fixtures, office
materials and supplies, inventory, spare parts and other tangible personal
property of every kind and description, owned, leased or held by Seller and
used exclusively or primarily in the conduct of the business and operations of
the Stations, and which are described more fully in SECTION 7.7, together with
any replacements of equal quality thereof and additions thereto, made between
the date hereof and the Closing Date, and less any retirements or dispositions
thereof made between the date hereof and the Closing Date in the ordinary
course of business and consistent with past practices of the Seller;
1.1.3 all of Seller's rights in and under such contracts,
agreements or leases, written or oral, relating directly or exclusively to the
conduct of the Stations ("Contracts"), and which are described more fully in
SECTIONS 7.7, 7.8 and 7.9, together with all Contracts entered into or
acquired by Seller between the date hereof and the Closing Date in the
ordinary course of business and consistent with the terms of this Agreement
and past practices of the Seller;
1.1.4 all of Seller's rights in any programs and programming
material of whatever form or nature owned by Seller and used directly and
exclusively in, or relating directly and exclusively to, the Stations;
1.1.5 all of Seller's rights in and to the trademarks, trade
names, service marks, franchises, copyrights, including registrations and
applications for registration of any of them, jingles, logos and slogans or
licenses to use same owned or held by it and used directly and
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exclusively in, or relating directly and exclusively to, the conduct of the
business and operations of the Stations, as described more fully in SECTION
7.12, together with any associated good will and any additions thereto between
the date hereof and the Closing Date;
1.1.6 all of Seller's rights in and to the files, records,
and books of account, which are located at the premises of the Stations or
used exclusively in the conduct of the business and operations of the
Stations, including, without limitation, programming information and studies,
technical information and engineering data, news and advertising studies or
consulting reports, marketing and demographic data, sales correspondence,
lists of advertisers, promotional materials, credit and sales reports and
filings with the FCC, executed copies of all written Contracts to be assigned
hereunder, logs and commercially available software programs to the extent the
same are transferable by Seller but excluding the financial records of the
Stations not located at the Stations and records relating to any Excluded
Asset; and
1.1.7 all of Seller's rights under manufacturers' and
vendors' warranties relating to items included in the Station Assets and all
similar rights against third parties relating to items included in the Station
Assets.
The Station Assets shall be transferred to Buyer free and clear of
all debts, security interests, mortgages, trusts, claims, pledges, conditional
sales agreements or other liens, liabilities and encumbrances whatsoever,
other than informational filings made by equipment lessors under the Uniform
Commercial Code.
1.2 Excluded Assets. Notwithstanding anything to the contrary
contained herein, it is expressly understood and agreed that the Station
Assets shall not include the following assets along with all rights, title and
interest therein which shall be referred to as the "Excluded Assets":
1.2.1 all cash, cash equivalents or similar type investments
of Seller, such as certificates of deposit, Treasury bills and other
marketable securities on hand and/or in banks;
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1.2.2 all accounts receivable or notes receivable of Seller
for services performed or provided by Seller prior to the Closing Date;
1.2.3 all tangible and intangible personal property disposed
of or consumed in the ordinary course of business between the date of this
Agreement and the Closing Date, or as permitted under the terms hereof;
1.2.4 all Contracts that have terminated or expired prior to
the Closing Date in the ordinary course of business or as permitted hereunder;
1.2.5 Seller's corporate seal, minute books, charter
documents, corporate stock record books and such other books and records as
pertain to the organization, existence or share capitalization of Seller and
duplicate copies of such records as are necessary to enable Seller to file its
tax returns and reports as well as any other records or materials relating to
Seller generally and not involving specific aspects of the Station's
operation;
1.2.6 Contracts of insurance and all insurance proceeds or
claims made by Seller relating to property or equipment repaired, replaced or
restored by Seller prior to the Closing Date;
1.2.7 any and all other claims made by Seller with respect
to transactions prior to the Closing Date and the proceeds thereof to the
extent Seller has expended funds or incurred a loss relating to same;
1.2.8 all pension, profit sharing or cash or deferred
(Section 401(k)) plans and trusts and the assets thereof and any other
employee benefit plan or arrangement and the assets thereof, if any,
maintained by Seller or its parent organization; and
1.2.9 any books and records relating to any of the
foregoing.
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ARTICLE 2
ASSUMPTION OF OBLIGATIONS
2.1 Assumption of Obligations. Subject to the provisions of this
SECTION 2.1, SECTION 2.2 and SECTION 3.4, on the Closing Date, Buyer shall
only assume and undertake to pay, satisfy or discharge the liabilities,
obligations and commitments of Seller arising under (i) the Contracts
described more fully in SECTIONS 7.7, 7.8 and 7.9; (ii) all contracts for the
sale of advertising on the Stations, whether payable in cash or services; and
(iii) any other Contracts entered into between the date hereof and the Closing
Date which Buyer expressly agrees in writing to assume. All of the foregoing
liabilities and obligations shall be referred to herein collectively as the
"Assumed Liabilities".
2.2 Limitation. Except as set forth in SECTION 2.1 hereof, Buyer
expressly does not, and shall not, assume or be deemed to assume, under this
Agreement or otherwise by reason of the transactions contemplated hereby, any
liabilities, obligations or commitments of Seller of any nature whatsoever.
ARTICLE 3
CONSIDERATION
3.1 Purchase Price. The aggregate consideration (the "Purchase
Price") for the transfer of the Station Assets from the Seller to the Buyer
shall be Five Million Dollars ($5,000,000), plus the assumption at Closing of
the Assumed Liabilities.
3.2 Payment. Buyer shall pay to Seller the Purchase Price at Closing
in cash or wire transfer of immediately available funds.
3.3 Escrow Account. Buyer shall deposit cash in the sum of Three
Hundred Thousand Dollars ($300,000) into an escrow account (the "Escrow
Account") with Media Services Group,
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Inc. (the "Escrow Agent") to be held in escrow in and disbursed in accordance
with the terms of an escrow agreement (the "Escrow Agreement") between the
parties substantially in the form of EXHIBIT A hereto. Upon the connsumation
of the transactions contemplated hereby, Buyer and Seller shall deliver joint
instructions to the Escrow Agent instructing the Escrow Agent to deliver the
Escrow Deposit to the Buyer.
3.4 Proration of Revenue and Expenses.
3.4.1 Except as otherwise provided herein and in the LMA (as
defined below), all expenses incurred and all revenue earned arising from the
conduct of the business and operations of the Stations shall be prorated
between Buyer and Seller in accordance with generally accepted accounting
principles as of 11:59 p.m., local time, on the date hereof. Such prorations
shall include, without limitation, all ad valorem, real estate and other
property taxes (but excluding taxes arising by reason of the transfer of the
Station Assets as contemplated hereby, which shall be paid as set forth in
ARTICLE 13 of this Agreement), business and license fees, music and other
license fees (including any retroactive adjustments thereof), wages and
salaries of employees, including accruals up to the Closing Date for bonuses,
commissions, vacations and sick pay, and related payroll taxes, utility
expenses, time sales agreements, rents and similar prepaid and deferred items
attributable to the ownership and operation of the Stations. Real estate taxes
shall be apportioned on the basis of taxes assessed for the preceding year,
with a reapportionment as soon as the new tax rate and valuation can be
ascertained.
3.4.2 The prorations and adjustments contemplated by this
Section, to the extent practicable, shall be made on the date hereof and paid
on the Closing Date.
3.4.3 In the event of any disputes between the parties as to
such adjustments, the amounts not in dispute shall nonetheless be paid at the
time provided in SECTION 3.4.2 and such disputes shall be determined by an
independent certified public accountant mutually acceptable to
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the parties, and the fees and expenses of such accountant shall be paid
one-half by Seller and one-half by Buyer.
ARTICLE 4
CLOSING
4.1 Closing. The consummation of the transactions contemplated herein
(the "Closing") shall occur within five (5) days following the date on which
the FCC Consent (as defined in SECTION 5.1) has become a Final Order (as
defined below). For purposes of this Agreement, the FCC Consent shall be
deemed to be a Final Order when (i) it has not been vacated, reversed, stayed,
set aside, annulled or suspended; (ii) it is not the subject of any pending
timely appeal, request for stay or petition for rehearing, reconsideration or
review by any party or by the FCC on its own motion; and (iii) it is an action
by the FCC as to which the time for filing any such appeal, request, petition
or similar document or for the reconsideration or review by the FCC on its own
motion under the Communications Act of 1934 and the rules and regulations of
the FCC has expired. The parties hereby agree and stipulate that finality
occurs for the purposes of SUBSECTION 4.1(I) hereof forty (40) days after the
date of the public notice from the FCC approving the assignment of the Station
Licenses to Buyer; provided, however, if such date is a Saturday, Sunday or
Federal Holiday, finality shall occur on the next business day.
The Closing shall be held at such offices as shall be specified by
Seller in New York City.
ARTICLE 5
GOVERNMENTAL CONSENTS
5.1 FCC Consent. It is specifically understood and agreed by Buyer
and Seller that the Closing and the assignment of the Stations Licenses and
the transfer of the Station Assets is expressly conditioned on and is subject
to the prior consent and approval of the FCC (the "FCC Consent").
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<PAGE>
5.2 FCC Application. Seller and Buyer shall hereafter file with the
FCC the requisite applications for assignment of the Stations Licenses ("FCC
Applications") from Seller to Buyer ten (10) business days following the date
of this Agreement. Thereafter, Seller and Buyer shall prosecute the FCC
Applications with all reasonable diligence and otherwise use their best
efforts to obtain the grant of the FCC Applications as expeditiously as
practicable (but neither Seller nor Buyer shall have any obligation to satisfy
complainants or the FCC by taking any steps which would have a material
adverse effect upon Seller or Buyer or upon any affiliated entity). If the FCC
Consent imposes any condition on either party hereto, such party shall use its
best efforts to comply with such condition; provided, however, that neither
party shall be required hereunder to comply with any condition that would have
a material adverse effect upon it or any affiliated entity. If reconsideration
or judicial review is sought with respect to the FCC Consent, the party
affected shall vigorously oppose such efforts for reconsideration or judicial
review; provided, however, that nothing herein shall be construed to limit
either party's right to terminate this Agreement pursuant to ARTICLE 17
hereof.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby makes the following representations and warranties to
Seller, each of which is true and correct on the date hereof, shall remain
true and correct to and including the Closing Date, shall be unaffected by any
investigation heretofore or hereafter made by Seller, or any notice to Seller
and shall survive the Closing to the extent provided in SECTION 16.4.
6.1 Organization and Standing. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Georgia
and is duly qualified to do business and is in good standing in the State of
South Carolina.
6.2 Authorization and Binding Obligation. Buyer has all necessary
power and authority to enter into and perform this Agreement and the
transactions contemplated hereby, and to own
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<PAGE>
or lease the Broadcast Assets and to carry on the business of the Stations as
it is now being conducted, and Buyer's execution, delivery and performance of
this Agreement and the transactions contemplated hereby have been duly and
validly authorized by all necessary action on its part. This Agreement has
been duly executed and delivered by Buyer and this Agreement constitutes, and
the other agreements to be executed in connection herewith will constitute,
the valid and binding obligation of Buyer, enforceable in accordance with
their terms, except as limited by laws affecting creditors' rights or
equitable principles generally.
6.3 Qualification. To the best of Buyer's knowledge, there are no
facts which, under the Communications Act of 1934, as amended, or the existing
Rules and Regulations of the FCC, would disqualify Buyer as an assignee of the
Stations Licenses.
6.4 Absence of Conflicting Agreements or Required Consents. Except as
set forth in ARTICLE 5 hereof with respect to governmental consents, the
execution, delivery and performance of this Agreement by Buyer: (a) does not
require the consent of any third party; (b) will not violate any applicable
law, judgment, order, injunction, decree, rule, regulation or ruling of any
governmental authority to which Buyer is a party; and (c) will not, either
alone or with the giving of notice or the passage of time, or both, conflict
with, constitute grounds for termination of or result in a breach of the
terms, conditions or provisions of, or constitute a default under, any
agreement, instrument, license or permit to which Buyer is now subject.
6.5 Litigation and Compliance with Law. There is no litigation,
administrative, arbitration or other proceeding, or petition, complaint or
investigation before any court or governmental body, pending against Buyer or
any of its principals that would adversely affect Buyer's ability to perform
its obligations pursuant to this Agreement or the agreements to be executed in
connection herewith. There is no violation of any law, regulation or ordinance
or any other requirement of any governmental body or court which would have a
material adverse effect on Buyer or its ability to perform its obligations
pursuant to this Agreement or the agreements to be executed in connection
herewith.
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ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby makes the following representations and warranties to
Buyer, each of which is true and correct on the date hereof, shall remain true
and correct to and including the Closing Date, shall be unaffected by any
investigation heretofore or hereafter made by Buyer, or any notice to Buyer
other than in the Disclosure Schedule and shall survive the Closing to the
extent provided in SECTION 16.4. Such representations and warranties are
subject to, and qualified by, any fact or facts disclosed in the appropriate
section of the separate Disclosure Schedule delivered simultaneously with the
execution hereof (the "Disclosure Schedule").
7.1 Organization and Standing. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware, is duly qualified to do business in the States of Georgia and
South Carolina, and has the corporate power and authority to own, lease and
operate the Station Assets and to carry on the business of the Stations as now
being conducted and as proposed to be conducted by Seller between the date
hereof and the Closing Date.
7.2 Authorization and Binding Obligation. Seller has the corporate
power and authority to enter into and perform this Agreement and the
transactions contemplated hereby, and Seller's execution, delivery and
performance of this Agreement, and the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action on its
part. This Agreement has been duly executed and delivered by Seller and this
Agreement and the agreements to be executed in connection herewith will
constitute the valid and binding obligation of Seller enforceable in
accordance with their terms, except as limited by laws affecting the
enforcement of creditor's rights or equitable principles generally.
7.3 Absence of Conflicting Agreements or Required Consents. Except as
set forth in ARTICLE 5 hereof with respect to governmental consents, as set
forth in SECTIONS 7.7, 7.8 or 7.9 of the Disclosure Schedule with respect to
consents required in connection with the assignment of
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certain Contracts and as set forth in SECTION 7.3 of the Disclosure Schedule,
the execution, delivery and performance of this Agreement by Seller: (a) does
not require the consent of any third party; (b) will not violate any
applicable law, judgment, order, injunction, decree, rule, regulation or
ruling of any governmental authority to which Seller is a party or by which it
or the Station Assets are bound; (c) will not, either alone or with the giving
of notice or the passage of time, or both, conflict with, constitute grounds
for termination of or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any Contract, agreement,
instrument, license or permit to which Seller or the Station Assets is now
subject; and (d) will not result in the creation of any lien, charge or
encumbrance on any of the Station Assets, except to the extent that any such
matter or matters referred to in sub parts (a) through (d) would not in the
aggregate have a material adverse effect on the Buyer.
7.4 Government Authorizations. SECTION 7.4 of the Disclosure Schedule
contains a true and complete list of the Station Licenses and other material
licenses, permits or other authorizations from governmental and regulatory
authorities which are required for the lawful conduct of the business and
operations of the Stations in the manner and to the full extent they are
presently conducted. Seller is the authorized legal holder of the Station
Licenses and other licenses, permits and authorizations listed in said SECTION
7.4, none of which is subject to any restrictions or condition which would
limit in any respect the full operation of the Stations as now operated.
No proceedings are pending or, to the knowledge of Seller, are
threatened with respect to the Station Licenses which may result in the
revocation, modification, non-renewal or suspension of any of the Station
Licenses, the denial of any pending applications, the issuance of any cease
and desist order, the imposition of any administrative actions by the FCC with
respect to the Stations Licenses or which may affect Buyer's ability to
continue to operate the Stations as they are currently operated. All material
reports, forms and statements required to be filed by Seller with the FCC with
respect to the Stations since the grant of the last renewal of the Station
Licenses have been filed and are substantially complete and accurate. To the
best knowledge of
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Seller, there are no facts which, under the Communications Act of 1934, as
amended, or the existing Rules and Regulations of the FCC, would disqualify
Seller as an assignor of the Station Licenses.
7.5 Compliance with FCC Regulations. The operation of the Stations
and all of the Station Assets are in compliance in all material respects with
(i) all material applicable engineering standards required to be met under
applicable FCC rules, and (ii) all other applicable rules, regulations,
requirements and policies of the FCC.
7.6 Taxes. Except as set forth on SECTION 7.6 of the Disclosure
Schedule, Seller has filed all federal, state, local and foreign income,
franchise, sales, use, property, excise, payroll and other tax returns
required by law and has paid in full all taxes, estimated taxes, interest,
assessments, and penalties due and payable. All returns and forms which have
been filed have been true and correct in all material respects and no tax or
other payment in a material amount other than as shown on such returns and
forms are required to be paid and have been paid by Seller. There are no
present disputes as to taxes of any nature payable by Seller which in any
event could materially adversely affect any of the Station Assets or the
operation of the Stations.
7.7 Personal Property.
7.7.1 SECTION 7.7 of the Disclosure Schedule contains a list
of all material tangible personal property and assets owned and leased by the
Seller and used primarily or exclusively in the conduct of the business and
operations of the Stations. Except as disclosed in such SECTION 7.7, and
except as may be subject to lease agreements of the Seller (the "Personal
Property Contracts"), Seller owns and has, and will have on the Closing Date,
good and marketable title to all such property (and to all other tangible
personal property and assets to be transferred to Buyer hereunder), and none
of such property is, or at the Closing will be, subject to any security
interest, mortgage, pledge, conditional sales agreement or other lien or
encumbrance other than as set forth on said SECTION 7.7. All of the items of
the tangible personal property and assets
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included in the Station Assets are in all material respects in good operating
condition (ordinary wear and tear excepted) and are available for immediate
use in the conduct of the business and operations of the Stations.
7.7.2 The Personal Property Contracts listed on such SECTION
7.7 constitute valid and binding obligations of Seller and, to the best of
Seller's knowledge, of all other persons purported to be parties thereto and
are in full force and effect as of the date hereof. Seller is not in default
under any of the Personal Property Contracts and has not received or given
written notice of any default thereunder from or to any of the other parties
thereto. Seller will use reasonable efforts to obtain valid and binding
third-party consents from all required third parties to the Personal Property
Contracts to be conveyed and assigned to Buyer as part of the Station Assets,
so as to insure the Buyer will enjoy all of the privileges of Seller
thereunder. Except as set forth in SECTION 7.7 of the Disclosure Schedule,
Seller has full legal power and authority to assign its rights under the
Personal Property Contracts to Buyer in accordance with this Agreement on
terms and conditions no less favorable than those in effect on the date
hereof, and such assignment will not affect the validity, enforceability and
continuity of any of the Personal Property Contracts.
7.8 Real Property.
7.8.1 SECTION 7.8 to the Disclosure Schedule contains a
complete and accurate list of all real property owned and leased by the Seller
and used primarily or exclusively by the Stations and all agreements, leases
and contracts of Seller relating to the towers, transmitters, studio site and
offices of the Stations (collectively the "Real Estate Contracts").
7.8.2 The Real Estate Contracts listed on such SECTION 7.8
constitute valid and binding obligations of Seller and, to the best of
Seller's knowledge, of all other persons purported to be parties thereto and
are in full force and effect as of the date hereof and will be on the Closind
Date. Seller is not in default under any of such Real Estate Contracts and has
not
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received or given written notice of any default thereunder from or to any of
the other parties thereto. Seller will use reasonable efforts to obtain valid
and binding third-party consents from all required third parties to the Real
Estate Contracts to be conveyed and assigned to Buyer as part of the Station
Assets, so as to insure that Buyer will enjoy all of the privileges of Seller
thereunder. Except as set forth in SECTION 7.8 of the Disclosure Schedule,
Seller has full legal power and authority to assign its rights under the Real
Estate Contracts to Buyer in accordance with this Agreement on terms and
conditions no less favorable than those in effect on the date hereof, and such
assignment will not affect the validity, enforceability and continuity of any
of the Real Estate Contracts.
7.9 Contracts. SECTION 7.9 of the Disclosure Schedule lists all
Contracts as of the date of this Agreement which shall be assumed by the Buyer
as of the Closing Date, except Contracts to be assumed that were entered into
in the ordinary course of business (i) for the sale or sponsorship of
broadcast time on the Stations; or (ii) Contracts which are currently
scheduled to expire prior to Closing Date and for which Buyer will assume no
obligations. Those Contracts requiring the consent of a third party to
assignment which Seller and Buyer agree are critical to the consummation of
the transactions contemplated hereby are identified as "Material Contracts"
and shall be so noted in SECTION 7.9 of the Disclosure Schedule.
Notwithstanding the foregoing, if it is discovered before Closing that Seller
failed to list a contract in said SECTION 7.9 which was required to be listed,
then the Buyer may elect in its sole discretion to accept or reject such
Contract.
7.10 Status of Contracts. Except as noted in Section 7.9 of the
Disclosure Schedule, Seller has delivered to Buyer true and complete copies of
all written Material Contracts, including any and all amendments and other
modifications to such Material Contracts. All Material Contracts are valid,
binding and enforceable by Seller in accordance with their respective terms,
except as limited by laws affecting creditors' rights or equitable principles
generally. To the best of Seller's knowledge, Seller has complied in all
material respects with all Material Contracts and is not in default beyond any
applicable grace periods under any of the Material Contracts, and no
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other contracting party is in default under any of the Material Contracts.
Except as set forth in SECTION 7.9 of the Disclosure Schedule, Seller has full
legal power and authority to assign its respective rights under the Material
Contracts to Buyer in accordance with this Agreement on terms and conditions
no less favorable than those in effect on the date hereof, and such assignment
will not affect the validity, enforceability and continuity of any of the
Material Contracts.
7.11 Environmental Matters. Seller has not and to best of its
knowledge, no other person has unlawfully disposed of any hazardous waste or
hazardous substance including Polychlorinated Byphenyls ("PCBs") in a manner
which has caused, or could cause, Buyer to incur a material liability under
applicable law in connection therewith. To the best of Seller's knowledge,
Seller has complied in all material respects with all federal, state and local
environmental laws, rules and regulations applicable to the Stations and its
operations, including but not limited to the FCC's guidelines regarding RF
radiation. No hazardous waste has been disposed of by Seller. As used herein,
the term "hazardous waste" shall mean as defined in the Resource Conservation
and Recovery Act (RCRA) as amended and in the equivalent state statute under
the law of the state in which such real estate is located.
Seller shall, at its expense, provide Buyer with a Phase I
environmental study of the antenna site for WKBG-FM. Such study shall have
been prepared within two (2) years prior to this Agreement. Buyer shall have
the right, at is own expense, to cause an engineering firm conduct a Phase I
environmental study of the real property and transmitting equipment used in
connection with the operation of WRXR-FM. In the event that (i) either Phase I
environmental study discloses a potential material environmental liability,
either fixed or contingent, (ii) such study concludes that such liability
occurred during the ownership of the property by Seller and (iii) such
liability is reasonably estimated to cost less than Twenty-Five ($25,000) to
cure, Seller shall promptly begin remedial action to cure the condition giving
rise to such liability and shall either cure such condition prior to Closing
or reduce the Purchase Price by the amount agreed to by the parties as being
adequate to cure such condition. However, in the event such remedial action is
reasonably estimated to cost Seller in excess of Twenty-Five Thousand Dollars
($25,000), Buyer or Seller may terminate
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this Agreement prior to Closing and neither party shall have any liability to
the other as a result of such termination, other than the release of the
Escrow Account to the Buyer, unless: (a) Seller shall at its sole expense cure
the condition giving rise to such liability prior to Closing; (b) Seller shall
reduce the Purchase Price by the amount agreed to by the parties as being
adequate to cure such condition; or (c) as to contingent liabilities, Seller
shall provide (i) collateral acceptable to the Buyer or a security bond in
such reasonably adequate amount as shall be sufficient to cover such
liability, which collateral or security bond shall remain in place for a
period of twenty (20) years from and after the Closing, or (ii) such other
resolution mutually agreed to by the Buyer and the Sellers and reasonably
acceptable to Buyer's financing sources.
7.12 Copyrights, Trademarks and Similar Rights. SECTION 7.12 of the
Disclosure Schedule is a true and complete list, in all material respects, of
all copyrights, trademarks, trade names, licenses, patents, permits, jingles
and other similar intangible property rights and interests applied for, issued
to or owned by the Seller or under which Seller is a licensee or franchisee
and used exclusively or primarily in the conduct of the business and
operations of the Stations referred to in SECTION 1.1.5 hereof.
All of such rights and interests are issued to or owned by Seller, or
if licensed or franchised to Seller, to the best of Seller's knowledge, are
valid and in good standing and uncontested. Seller has delivered or made
available to Buyer copies of all material documents, if any, establishing such
rights, licenses or other authority. Seller has received no written notice and
has no knowledge of any infringements or unlawful use of such property. The
properties listed in SECTION 7.12 of the Disclosure Schedule include all such
properties necessary to conduct in all material respects the business and
operations of the Stations as now conducted.
7.13 Personnel Information.
7.13.1 SECTION 7.13 of the Disclosure Schedule contains a
true and complete list of all persons employed at the Stations, including a
description of material compensation
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arrangements (other than employee benefit plans set forth in SECTION 7.17 of
the Disclosure Schedule) and a list of other terms of any and all agreements
affecting such persons. Seller has not received notification that any of the
current key employees of Seller at the Stations presently plan to terminate
their employment, whether by reason of the transactions contemplated hereby or
otherwise.
7.13.2 Seller is not a party to any Contract with any labor
organization, nor has Seller agreed to recognize any union or other collective
bargaining unit, nor has any union or other collective bargaining unit been
certified as representing any of Seller's employees. Seller has no knowledge
of any organizational effort currently being made or threatened by or on
behalf of any labor union with respect to employees of Seller. During the past
two (2) years, Seller has not experienced any strikes, work stoppages,
grievance proceedings, claims of unfair labor practices filed or other
significant labor difficulties of any nature.
7.13.3 Seller, to the best of its knowledge, has complied in
all material respects with all laws relating to the employment of labor,
including, without limitation, the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and those laws relating to wages, hours,
collective bargaining, unemployment insurance, workers' compensation, equal
employment opportunity and payment and withholding of taxes. To the best of
Seller's knowledge, it is not a party to any ERISA defined employee benefit
plans but does have in place a 401k retirement plan.
7.14 Litigation. Seller is not subject to any judgment,
award, order, writ, injunction, arbitration decision or decree materially
adversely affecting the conduct of the business of the Stations or the Station
Assets, and there is no litigation or proceeding or, to the best of Seller's
knowledge, investigation pending or, to the best of Seller's knowledge,
threatened against Seller or the Stations in any federal, state or local
court, or before any administrative agency or arbitrator (including, without
limitation, any proceeding which seeks the forfeiture of, or opposes the
renewal of, any of the Stations Licenses), or before any other tribunal duly
authorized to
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resolve disputes, which would reasonably be expected to have any material
adverse effect upon the business, property, assets or condition (financial or
otherwise) of the Stations or which seeks to enjoin or prohibit, or otherwise
questions the validity of, any action taken or to be taken pursuant to or in
connection with this Agreement.
7.15 Compliance With Laws. Seller has not received any notice
asserting any non-compliance by it in connection with the business or
operation of the Stations with any applicable statute, rule or regulation,
federal, state or local. Seller is not in default with respect to any
judgment, order, injunction or decree of any court, administrative agency or
other governmental authority or any other tribunal duly authorized to resolve
disputes in any respect material to the transactions contemplated hereby.
Seller is in compliance in all material respects with all laws, regulations
and governmental orders applicable to the conduct of the business and
operations of the Stations, the failure to comply with which would have a
material adverse effect on the business, operations or financial condition of
the Stations, and its present use of the Station Assets does not violate any
of such laws, regulations or orders, violation of which would have a material
adverse effect on the Station Assets or Stations' operations.
7.16 Accuracy of Information. No written statements made by Seller
herein and no information provided by Seller herein or in the documents,
instruments or other written communications made or delivered directly by
Seller to Buyer in connection with the negotiations covering the purchase and
sale of the Station Assets contains any untrue statement of a material fact or
omits a material fact necessary to make the statements contained therein or
herein not misleading and there is no fact known to Seller which relates to
any information contained in any such written document, instrument or
communications which Seller has not disclosed to Buyer in writing which
materially affects adversely the Stations or the Station Assets. To the extent
that a representation or other information is made to the Seller's knowledge
or is otherwise qualified by its terms, this representation shall not be
interpreted to expand such limitations or qualifications.
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ARTICLE 8
COVENANTS OF BUYER
8.1 Closing. On the Closing Date, Buyer or its assignee shall
purchase the Station Assets from Seller as provided in ARTICLE 1 hereof and
shall assume the Assumed Liabilities of Seller as provided in ARTICLE 2
hereof.
8.2 Notification. Buyer shall notify Seller of any litigation,
arbitration or administrative proceeding pending or, to its knowledge,
threatened against Buyer which challenges the transactions contemplated
hereby.
8.3 No Inconsistent Action. Buyer shall not take any other action
which is materially inconsistent with its obligations under this Agreement.
8.4 Buyer's Post-Closing Covenant. Buyer, for a period of four (4)
years following the Closing Date, shall make available for audit and
inspection by Seller and its representatives for any reasonable purpose all
records, files, documents and correspondence transferred to it hereunder.
Buyer shall at no time dispose of or destroy any such records, files,
documents and correspondence without giving sixty (60) days prior notice to
Seller to permit Seller, at its expense, to examine, duplicate or take
possession of and title to such records, files, documents and correspondence.
All personnel records shall be maintained as confidential if required by any
applicable state or federal law.
8.5 Accounts Receivable. Subject to the provisions of the LMA, Buyer
acknowledges that all accounts receivable in connection with the operation of
the Station, including but not limited to accounts receivable for advertising
revenues for programs and announcements performed prior to the Closing Date
and other broadcast revenues for services performed prior to the Closing Date,
shall remain the property of Seller and that Buyer shall not acquire any
beneficial right of interest herein or responsibility therefor.
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ARTICLE 9
COVENANTS OF SELLER
9.1 Seller's Pre-Closing Covenants. Seller covenants and agrees with
respect to the Stations that between the date hereof and the Closing Date,
except as expressly permitted by this Agreement or with the prior written
consent of Buyer, it shall act in accordance with the following:
9.1.1 Seller shall operate the Stations in all material
respects in accordance with FCC Rules and Regulations and the Station Licenses
and with all other laws, regulations, rules and orders, and shall not cause or
permit by any act, or failure to act, any of the Station Licenses to expire,
be surrendered, adversely modified, or otherwise terminated, or the FCC to
institute any proceedings for the suspension, revocation or adverse
modification of any of the Station Licenses, or fail to prosecute with due
diligence any pending applications to the FCC.
9.1.2 Should any fact relating to Seller which would cause
the FCC to deny its consent to the transactions contemplated by this Agreement
come to Seller's attention, Seller shall promptly notify Buyer thereof and
shall use its reasonable efforts to take such steps as may be necessary to
remove any such impediment to the transactions contemplated by this Agreement.
9.1.3 Seller shall not other than in the ordinary course of
business or in accordance with a pre-existing plan or arrangement sell or
dispose of or commit to sell or dispose of any of the Station Assets.
9.1.4 Notwithstanding anything in this Agreement to the
contrary, Seller may enter into any contract without the consent of Buyer, but
if any such contract is outside the scope of the restrictions set forth in
this Agreement, Buyer shall not be obligated to accept and assume such
contract at Closing.
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9.2 Notification. Seller shall notify Buyer of any material
litigation, arbitration or administrative proceeding pending or, to its
knowledge, threatened against Seller which challenges the transactions
contemplated hereby.
9.3 No Inconsistent Action. Seller shall not take any action which is
materially inconsistent with its obligations under this Agreement.
9.4 Covenant Not to Compete. During the period of five (5) years from
and after the date hereof (the "Covenant Period"), Buyer will not, directly or
indirectly, in any manner and at any time (a) solicit or cause any other
person to solicit any employee of the Stations, as of the Closing Date, to
terminate his or her employment with the Buyer, provided that Seller shall
have the right to offer employment to Anthony Walker, the Stations' business
manager; or (b) solicit or cause any other person to solicit any person or
persons, firm, association, syndicate, partnership, company, corporation or
other entity that is a contracting party with the Buyer, as of the date of
this Agreement, to terminate any written or oral agreement with the Buyer.
Seller acknowledges that the restrictions contained herein, including but not
limited to the time periods and geographical limitations, are reasonable and
necessary to protect the business which Buyer is acquiring and that any
violation of these restrictions will cause irreparable injury to Buyer.
9.5 Closing Covenant. On the Closing Date, Seller shall transfer,
convey, assign and deliver to Buyer the Station Assets and the Assumed
Liabilities as provided in ARTICLES 1 AND 2 of this Agreement.
ARTICLE 10
JOINT COVENANTS
Buyer and Seller covenant and agree that between the date hereof and
the Closing Date, they shall act in accordance with the following:
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10.1 Conditions. If any event should occur, either within or without
the control of any party hereto, which would prevent fulfillment of the
conditions upon the obligations of any party hereto to consummate the
transactions contemplated by this Agreement, the parties hereto shall use
their best efforts to cure the event as expeditiously as possible.
10.2 Confidentiality. Buyer and Seller shall each keep confidential
all information obtained by it with respect to the other in connection with
this Agreement and the negotiations preceding this Agreement, and will use
such information solely in connection with the transactions contemplated by
this Agreement, and if the transactions contemplated hereby are not
consummated for any reason, each shall return to the other, without retaining
a copy thereof, any schedules, documents or other written information obtained
from the other in connection with this Agreement and the transactions
contemplated hereby. Notwithstanding the foregoing, neither party shall be
required to keep confidential or return any information which (i) is known or
available through other lawful sources, not bound by a confidentiality
agreement with the disclosing party; (ii) is or becomes publicly known through
no fault of the receiving party or its agents; (iii) is required to be
disclosed pursuant to an order or request of a judicial or governmental
authority (provided the disclosing party is given reasonable prior notice) or
pursuant to the requirements of the Securities Act of 1933 or the Securities
Exchange Act of 1934; or (iv) is independently acquired or developed by such
party without violating any of the provision of this SECTION 10.2.
10.3 Cooperation. Buyer and Seller shall cooperate fully with each
other in taking any actions, including actions to obtain the required consent
of any governmental instrumentality or any third party necessary or helpful to
accomplish the transactions contemplated by this Agreement; provided, however,
that no party shall be required to take any action which would have a material
adverse effect upon it or any affiliated entity.
10.4 Control of Station. Buyer shall not, directly or indirectly,
control, supervise or direct the operations of the Stations. Such operations,
including complete control and supervision of all of the Stations' programs,
employees and policies, shall be the sole responsibility of Seller.
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10.5 Consents to Assign. To the extent that any Contract is not
capable of being sold, assigned, transferred, delivered or subleased without
the waiver or consent of any third person (including a government or
governmental unit), or if such sale, assignment, transfer, delivery or
sublease or attempted sale, assignment, transfer, delivery or sublease would
constitute a breach thereof or a violation of any law or regulation, this
Agreement and any Assignment executed pursuant hereto shall not constitute a
sale, assignment, transfer, delivery or sublease or an attempted sale,
assignment, transfer, delivery or sublease thereof. In those cases where
consents, assignments, releases and/or waivers have not been obtained at or
prior to the Closing Date to the transfer and assignment to the Buyer of the
Contracts, this Agreement and any Assignment executed pursuant hereto, to the
extent permitted by law, shall constitute an equitable assignment by Seller to
the Buyer of all of Seller's rights, benefits, title and interest in and to
the Contracts, and where necessary or appropriate, the Buyer shall be deemed
to be the Seller's agent for the purpose of completing, fulfilling and
discharging all of Seller's rights and liabilities arising after the Closing
Date under such Seller Contracts. Seller shall use its reasonable efforts to
provide the Buyer with the benefits of such Contracts (including, without
limitation, permitting the Buyer to enforce any rights of Seller arising under
such Contracts), and the Buyer shall, to the extent the Buyer is provided with
the benefits of such Contracts, assume, perform and in due course pay and
discharge all debts, obligations and liabilities of Seller under such
Contracts.
10.6 Bulk Sales Laws. The Buyer hereby waives compliance by Seller
with the provisions of the "bulk sales" or similar laws of any state. Seller
agrees to indemnify the Buyer and hold it harmless against any and all claims,
losses, damages, liabilities, costs and expenses incurred by the Buyer or any
affiliate as a result of any failure to comply with any "bulk sales" or
similar laws.
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ARTICLE 11
CONDITIONS OF CLOSING BY BUYER
The obligations of Buyer hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
11.1 Representations, Warranties and Covenants.
11.1.1 All representations and warranties of Seller made in
this Agreement shall be true and complete in all material respects as of the
date hereof and on and as of the Closing Date as if made on and as of that
date, except for changes expressly permitted or contemplated by the terms of
this Agreement.
11.1.2 All of the terms, covenants and conditions to be
complied with and performed by Seller on or prior to Closing Date shall have
been complied with or performed in all material respects.
11.1.3 Buyer shall have received a certificate, dated as of
the Closing Date, executed by officers of Seller, to the effect that the
representations and warranties of Seller contained in this Agreement are true
and complete in all material respects on and as of the Closing Date as if made
on and as of that date, and that Seller has complied with or performed all
terms, covenants and conditions to be complied with or performed by it in all
material respects on or prior to the Closing Date
11.2 Governmental Consents. The FCC Consent shall have become a
Final Order.
11.3 Governmental Authorizations. Seller shall be the holder of the
Stations Licenses and all other material licenses, permits and other
authorizations listed in SECTION 7.4 of the Disclosure
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Schedule, and there shall not have been any modification of any of such
licenses, permits and other authorizations which has a material adverse effect
on the Stations or the conduct of its business and operations. No proceeding
shall be pending which seeks or the effect of which reasonably could be to
revoke, cancel, fail to renew, suspend or modify materially and adversely the
Station Licenses or any other material licenses, permits or other
authorizations.
11.4 Adverse Proceedings. No suit, action, claim or governmental
proceeding shall be pending against, and no order, decree or judgment of any
court, agency or other governmental authority shall have been rendered
against, any party hereto which would render it unlawful, as of the Closing
Date, to effect the transactions contemplated by this Agreement in accordance
with its terms.
11.5 Legal Opinion. Seller shall have delivered to Buyer a written
opinion of its counsel, dated as of the Closing Date, addressed to Buyer in
the form attached hereto as EXHIBIT B.
11.6 Third-Party Consents. Seller shall have obtained and shall have
delivered to Buyer all third-party consents to the Material Contracts and to
all other Contracts assigned or transferred hereunder, except those the
absence of which will not have a material adverse effect on the operation of
the Stations.
11.7 Closing Documents. Seller shall have delivered or caused to be
delivered to Buyer, on the Closing Date, all deeds, bills of sale,
endorsements, assignments and other instruments of conveyance and transfer
reasonably satisfactory in form and substance to Buyer, effecting the sale,
transfer, assignment and conveyance of the Station Assets to Buyer, including,
without limitation, each of the documents required to be delivered pursuant to
ARTICLE 15.
11.8 Financing Statements. Seller shall have delivered to Buyer
releases, if any, under the Uniform Commercial Code of any financing
statements filed against any Station Assets, except
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for informational filings made by equipment lessors on lease obligations being
specifically assumed by Buyer as set forth in SECTION 7.9 of the Disclosure
Schedule.
11.9 Legal Opinion. Seller shall have delivered to Buyer a written
opinion of its FCC counsel, dated as of the Closing Date, addressed to Buyer
in the form attached hereto as EXHIBIT C.
ARTICLE 12
CONDITIONS OF CLOSING BY SELLER
The obligations of Seller hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
12.1 Representations, Warranties and Covenants.
12.1.1 All representations and warranties of Buyer made in
this Agreement shall be true and complete in all material respects as of the
date hereof and on and as of the Closing Date as if made on and as of that
date, except for changes expressly permitted or contemplated by the terms of
this Agreement.
12.1.2 All the terms, covenants and conditions to be
complied with and performed by Buyer on or prior to the Closing Date shall
have been complied with or performed in all material respects.
12.1.3 Seller shall have received a certificate, dated as of
the Closing Date, executed by officers of Buyer, to the effect that the
representations and warranties of Buyer contained in this Agreement are true
and complete in all material respects on and as of the Closing Date as if made
on and as of that date, and that Buyer has complied with or performed all
terms,
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covenants and conditions to be complied with or performed by it in all
material respects on or prior to the Closing Date.
12.2 Governmental Consents. The FCC Consent shall have become a
Final Order.
12.3 Adverse Proceedings. No suit, action, claim or governmental
proceeding shall be pending against, and no other, decree or judgment of any
court, agency or other governmental authority shall have been rendered against
any party hereto which would render it unlawful, as of the Closing Date, to
effect the transactions contemplated by this Agreement in accordance with its
terms.
12.4 Legal Opinion. Buyer shall have delivered to Seller an opinion
of its counsel, dated as of the Closing Date, addressed to Seller in the form
attached hereto as EXHIBIT D.
ARTICLE 13
TRANSFER TAXES; FEES AND EXPENSES
13.1 Expenses. Except as set forth in SECTION 13.2 and 13.3 hereof,
each party hereto shall be solely responsible for all costs and expenses
incurred by it in connection with the negotiation, preparation and performance
of and compliance with the terms of this Agreement.
13.2 Transfer Taxes and Similar Charges. All costs of transferring
the Station Assets in accordance with this Agreement, including recordation,
transfer and documentary taxes and fees, and any excise, sales or use taxes,
shall be borne by equally by Seller and Buyer.
13.3 Governmental Filing or Grant Fees. Any filing or grant fees
imposed by any governmental authority the consent of which is required to the
transactions contemplated hereby shall be borne equally by Seller and Buyer.
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ARTICLE 14
COMMISSIONS OR FINDER'S FEE
14.1 Buyer's Representation and Agreement to Indemnify. Buyer
represents and warrants to Seller that neither it nor any person or entity
acting on its behalf has agreed to pay a commission, finder's fee or similar
payment in connection with this Agreement or any matter related hereto to any
person or entity. Buyer further agrees to indemnify, defend and hold Seller
harmless from and against any and all claims, losses, liabilities and expenses
(including reasonable attorney's fees) arising out of a claim by any person or
entity based on any such arrangement or agreement made or alleged to have been
made by Buyer.
14.2 Seller's Representation and Agreement to Indemnify. Seller
represents and warrants to Buyer that neither it nor any person or entity acting
on its behalf has agreed to pay a commission, finder's fee or similar payment in
connection with this Agreement or any matter related hereto to any person or
entity other than Media Services Group, Inc., which fee Buyer agrees to pay in
full at the Closing. Seller further agrees to indemnify, defend and hold Buyer
harmless from and against any and all claims, losses, liabilities and expenses
(including reasonable attorney's fees) arising out of a claim by any person or
entity based on any such arrangement or agreement made or alleged to have been
made by Seller.
ARTICLE 15
DOCUMENTS TO BE DELIVERED AT CLOSING
15.1 Seller's Documents. At the Closing, Seller shall
deliver or cause to be delivered to Buyer the following:
15.1.1 Certified resolutions of the Board of Directors of
Seller approving the execution and delivery of this Agreement and each of the
other documents and authorizing the consummation of the transactions
contemplated hereby and thereby;
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15.1.2 A certificate, dated the Closing Date, by Seller in
the form described in SECTION 11.1 above,
15.1.3 Governmental Certificates showing that Seller is duly
incorporated and in good standing in the State of Delaware and qualified and
in good standing in the States of Georgia and South Carolina dated not more
than forty-five (45) days before the Closing Date;
15.1.4 Articles of Incorporation and Bylaws of Seller
Certified by Seller's secretary as of the Closing Date;
15.1.5 Bill of Sale, assignments and other good and
sufficient instruments of conveyance, transfer and assignment, all in form and
substance reasonably satisfactory to counsel for Buyer, as shall be effective
to vest in Buyer or its permitted assignees, good and marketable title in and
to the Station Assets transferred pursuant to this Agreement in accordance
with the terms of this Agreement;
15.1.6 At the time and place of Closing, originals or copies
of all program, operations, transmissions, or maintenance logs and all other
records required to be maintained by the FCC with respect to the Stations,
including the Stations' public files, shall be left at the Stations and
thereby delivered to Buyer;
15.1.7 The Seller's opinion letter referenced in SECTIONS
11.5 and 11.9 above; and
15.1.8 Such additional information and materials as Buyer
shall have reasonably requested.
15.2 Buyer's Documents. At the Closing, Buyer shall deliver
or cause to be delivered to Seller the following:
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15.2.1 The Purchase Price in accordance with ARTICLE 3
hereof;
15.2.2 A certificate, dated the Closing Date, by Buyer in
the form described in SECTION 12.1.3 above.
15.2.3 The opinion of Buyer's counsel, dated the Closing
Date, to the effect set forth in SECTION 12.4;
15.2.4 Governmental certificates showing that Buyer is duly
incorporated and in good standing in the State of Georgia and qualified and in
good standing in the State of South Carolina dated not more than forty-five
(45) days before the Closing Date;
15.2.5 An assignment and assumption agreement or agreements
reasonably satisfactory in form and substance to counsel to Seller effecting
the assumption of the Assumed Liabilities;
15.2.6 Certified resolutions of the Board of Directors of
Buyer approving the execution and delivery of this Agreement and each of the
other documents and agreements referred to herein and authorizing the
consummation of the transactions contemplated hereby and thereby;
15.2.7 Articles of Incorporation and Bylaws of Buyer
certified by Buyer's secretary as of the Closing Date; and
15.2.8 Such additional information and materials as Seller
shall have reasonably requested.
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ARTICLE 16
INDEMNIFICATION
16.1 Seller's Indemnities. Seller hereby agrees to indemnify, defend
and hold Buyer harmless with respect to any and all demands, claims, actions,
suits, proceedings, assessments, judgments, costs, losses, damages,
liabilities and expenses (including, without limitation, reasonable attorneys'
fees) asserted against, resulting from, imposed upon or incurred by Buyer
directly or indirectly relating to or arising out of:
16.1.1 Any and all liabilities, obligations, or commitments
of Seller of any nature, whether absolute, accrued, contingent, or otherwise,
including those relating to all periods prior to the date hereof, whether the
claim is asserted prior to or after the Closing, by reason of or resulting
from liabilities or obligations of or claims against Seller in connection with
Seller's ownership or operation of the Stations prior to the date hereof,
except liabilities, obligations, or commitments of Seller included in the
Assumed Liabilities;
16.1.2 The breach of any of the representations or
warranties or failure by Seller to perform any covenants, conditions or
agreements of Seller set forth in this Agreement;
16.1.3 Any failure to comply with any "bulk sales" laws
applicable to the transactions contemplated hereby; and
16.1.4 The failure of Seller to pay, perform or discharge
when due any of Seller's obligations, liabilities or Contracts not assumed by
Buyer pursuant to this Agreement.
16.2 Buyer's Indemnities. Buyer hereby agrees to indemnify, defend
and hold Seller harmless with respect to any and all demands, claims, actions,
suits, proceedings, assessments, judgments, costs, losses, damages,
liabilities and expenses (including, without limitation,
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reasonable attorneys' fees) asserted against, resulting from, imposed upon or
incurred by Seller directly or indirectly relating to or arising out of:
16.2.1 The breach of any of the representations, warranties,
covenants, conditions or agreements of Buyer set forth in this Agreement; and
16.2.2 The Assumed Liabilities.
16.3 Rights. Buyer and Seller agree that the rights of
indemnification provided in this ARTICLE 16 are exclusive of and in addition
to any and all other such rights of Buyer or Seller hereunder.
16.4 Survival of Representations and Warranties. Either party shall
have the right to bring an action with respect to the representations and
warranties contained herein for a period of twelve (12) months following the
Closing Date, and upon the expiration of such period such right shall lapse
and be of no further force or effect.
16.5 Limitation on Indemnity. Notwithstanding anything to the
contrary contained in this Agreement, and subject to the proviso set forth
below, neither party shall have any liability or obligation to the other for
breach of any representation, warranty, covenant or agreement of the other in
this Agreement except to the extent that the aggregate of all claims for such
breaches exceeds Twenty-Five Thousand Dollars ($25,000) (the "Threshold
Amount"), in which event the party so liable shall then be liable for all
claims for any such breaches, including the sums constituting the Threshold
Amount.
16.6 Procedures.
16.6.1 Promptly after the receipt by either party (the
"Indemnified Party") of notice of (A) any claim or (B) the commencement of any
action or proceeding which may entitle
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such party to indemnification under this Section, such party shall give the
other party (the "Indemnifying Party") written notice of such claim or the
commencement of such action or proceeding and shall permit the Indemnifying
Party to assume the defense of any such claim or any litigation resulting from
such claim. The failure to give the Indemnifying Party timely notice under
this SECTION 16.6.1 shall not preclude the Indemnified Party from seeking
indemnification from the Indemnifying Party unless such failure has materially
prejudiced the Indemnifying Party's ability to defend the claim or litigation.
16.6.2 If the Indemnifying Party assumes the defense of any
such claim or litigation resulting therefrom with counsel reasonably
acceptable to Indemnified Party, the obligations of the Indemnifying Party as
to such claim shall be limited to taking all steps necessary in the defense or
settlement of such claim or litigation resulting therefrom and to holding the
Indemnified Party harmless from and against any losses, damages and
liabilities caused by or arising out of any settlement approved by the
Indemnifying Party or any judgment in connection with such claim or litigation
resulting therefrom; provided, however, that the Indemnified Party may
participate, at its expense, in the defense of such claim or litigation
provided that the Indemnifying Party shall direct and control the defense of
such claim or litigation. The Indemnified Party shall cooperate and make
available all books and records reasonably necessary and useful in connection
with the defense. The Indemnifying Party shall not, in the defense of such
claim or any litigation resulting therefrom, consent to entry of any judgment,
except with the written consent of the Indemnified Party, or enter into any
settlement, except with the written consent of the Indemnified Party, which
does not include as an unconditional term thereof the giving by the claimant
or the plaintiff to the Indemnified Party of a release from all liability in
respect of such claim or litigation.
16.6.3 If the Indemnifying Party shall not assume the
defense of any such claim or litigation resulting therefrom, the Indemnified
Party may, but shall have no obligation to, defend against such claim or
litigation in such manner as it may deem appropriate, and the Indemnified
Party may compromise or settle such claim or litigation without the
Indemnifying
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Party's consent. The Indemnifying Party shall promptly pay any
such settlement of such claim or litigation and shall also promptly reimburse
the Indemnified Party for the amount of all expenses, legal or otherwise,
incurred by the Indemnified Party in connection with the defense against or
settlement of such claim or litigation. If no settlement of the claim or
litigation is made, the Indemnifying Party shall promptly reimburse the
Indemnified Party for the amount of any judgment rendered with respect to such
claim or in such litigation and of all expenses, legal or otherwise, incurred
by the Indemnified Party in the defense against such claim or litigation.
ARTICLE 17
TERMINATION RIGHTS
17.1 Termination. This Agreement may be terminated by either Buyer or
Seller, if the party seeking to terminate is not in material default or breach
of this Agreement, upon written notice to the other upon the occurrence of any
of the following:
(a) if, prior to the Closing Date, the other party defaults
in any material respect in the observance or in the due and timely performance
of any of its covenants or agreements herein contained and such material
default shall not be cured within five (5) days of the date of notice of
default served by the party claiming such material default, provided, however,
Buyer's obligation to pay the Purchase Price at Closing shall not be subject
to the cure period set forth in this SECTION 17.1; or
(b) if the FCC denies the FCC Application, or if the FCC
Consent is not given on or before the second anniversary of the date hereof;
or
(c) if there shall be in effect any judgment, final decree
or order that would prevent or make unlawful the Closing of this Agreement; or
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(d) as provided in any section of this Agreement which
specifically provides for terminations.
17.2 Liability. The termination of this Agreement under SECTION 17.1
shall not relieve any party of any liability for breach of this Agreement
prior to the date of termination.
ARTICLE 18
OTHER PROVISIONS
18.1 Specific Performance. Seller recognizes that, in the event
Seller refuses to perform the provisions of this Agreement, monetary damages
alone will not be adequate. Buyer shall, therefore, be entitled in such event,
in addition to bringing suit at law or equity for money or other damages, to
obtain specific performance of the terms of this Agreement. In any action to
enforce the provisions of this Agreement, Seller shall waive the defense that
there is an adequate remedy at law or equity and agrees that Buyer shall have
the right to obtain specific performance of the terms of this Agreement
without being required to prove actual damages, post bond or furnish other
security.
18.2 Liquidated Damages. If the parties hereto shall fail to
consummate this Agreement on the Closing Date due to Buyer's breach of any
material representation, warranty, covenant or condition hereunder, and Seller
is not at that time in breach of any material representation, warranty,
covenant or condition hereunder, then Seller would suffer direct and
substantial damages, which damages cannot be determined within reasonable
certainty. Therefore, because of the expense and delay which would be incurred
in such event by Seller, Buyer shall pay to Seller the amount of Three Hundred
Thousand Hundred Dollars ($300,000), which amount shall constitute liquidated
damages. Such amount shall be delivered to Seller by the Escrow Agent from the
Escrow Account. It is understood and agreed that such liquidated damage amount
represents Buyer's and Seller's reasonable estimate of actual damages and does
not constitute a penalty. Recovery of liquidated damages from the Escrow
Account shall be the sole and exclusive
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remedy of Seller against Buyer for failing to consummate this Agreement on the
Closing Date and shall be applicable regardless of the actual amount of
damages sustained; provided, however, that Seller shall be entitled to recover
all expenses, including attorney's fees, reasonably incurred by Seller in
enforcing this SECTION 18.2.
18.3 Risk of Loss. The risk of loss or damage to any of the Station
Assets prior to the Closing Date shall be upon Buyer. Seller shall assign to
Buyer at Closing Seller's rights under any insurance policy or pay over to
Buyer all proceeds of insurance covering any Station Assets' damage,
destruction or loss.
18.4 Further Assurances. After the Closing, Seller shall from time to
time, at the request of and without further cost or expense to Buyer, execute
and deliver such other instruments of conveyance and transfer and take such
other actions as may reasonably be requested in order to more effectively
consummate the transactions contemplated hereby to vest in Buyer good and
marketable title to the assets being transferred hereunder, and Buyer shall
from time to time, at the request of and without further cost or expense to
Seller, execute and deliver such other instruments and take such other actions
as may reasonably be requested in order to more effectively relieve Seller of
any obligations being assumed by Buyer hereunder.
18.5 Waiver. No delay or failure by any party hereto in exercising
any right, power or privilege under this Agreement, or under any other
instrument or document given in connection with or pursuant to this Agreement,
shall impair any such right, power or privilege or be construed as a waiver of
any default or any acquiescence therein. No single or partial exercise of any
such right, power or privilege shall preclude the further exercise of any
right, power of privilege, or the exercise of any other right, power or
privilege.
18.6 Severability. If any part or any provision of this Agreement
shall be invalid or unenforceable under applicable law, said part or
provisions shall be ineffective to the extent of such invalidity or
unenforceability only, without in any way affecting the remaining provisions
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of this Agreement which shall be construed as if such invalid parts or
provisions had not been inserted, and such invalid or unenforceable provisions
shall become and be immediately amended and reformed to include only the
portions thereof as are enforceable by the court or such other body having
jurisdiction of this Agreement; and the parties agree that such portions as so
amended and reformed shall be valid and binding as though any wholly invalid
or unenforceable portion had not been included herein.
18.7 Benefit and Assignment. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. No party may voluntarily or involuntarily
assign its interest under this Agreement without the prior written consent of
the other party.
18.8 Upon the execution of this Agreement, the parties will enter
into a Local Marketing Agreement (the "LMA") in the form attached hereto as
EXHIBIT E.
1.8.9 Entire Agreement. This Agreement and the Exhibits hereto embody
the entire agreement and understanding of the parties hereto and supersede any
and all prior agreements, arrangements and understandings relating to the
matters provided for herein. No amendment, waiver of compliance with any
provision or condition hereof or consent pursuant to this Agreement shall be
effective unless evidenced by an instrument in writing signed by the party
against whom enforcement of any waiver, amendment, change, extension or
discharge is sought.
18.10 Headings. The headings set forth in this Agreement are for
convenience only and will not control or affect the meaning or construction of
the provisions of this Agreement.
18.11 Governing Law. The construction and performance of this
Agreement shall be governed by the laws of the State of New York without
giving effect to the choice of law provisions thereof.
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18.12 Notices. Any notice, demand or request required or permitted to
be given under the provisions of this Agreement shall be in writing and shall
be deemed to have been duly delivered and received on the date of personal
delivery or on the date of receipt, if mailed by registered or certified mail,
postage prepaid and return receipt requested, or on the date of a stamped
receipt, if sent by an overnight delivery service, and shall be addressed to
the following addresses, or to such other address as any party may request, in
the case of Seller, by notifying Buyer, and in the case of Buyer, by notifying
Seller:
To Buyer: Wilks Broadcast Acquisitions, Inc.
6811 Southeast Harbor Circle
Stuart, Florida 34996
Attn: Don Wilks
Copies to: John Pelkey, Esq.
Haley, Bader & Potts
4350 North Fairfax Drive
Suite 900
Arlington, VA 22203-1633
Jeff Wilks
62 Conifer Circle
Augusta, Georgia 30909
To Seller: Multi-Market Radio, Inc.
One Monarch Place, Suite 220
Springfield, MA 01144
Attention: Mr. Michael G. Ferrel
Copy to: Howard Berkower, Esq.
Baker and McKenzie
805 Third Avenue
New York, NY 10022
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18.13 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which
together shall constitute one and the same instrument.
18.14 Survival of Certain Provisions. The provisions of SECTIONS 8.4,
9.4, 18.1 18.2 and and ARTICLE 16 shall, to the extent applicable, continue in
full force and effect notwithstanding the expiration or earlier termination of
this Agreement or of the consummation of the transactions contemplated hereby
in accordance with the terms of this Agreement.
[END OF PAGE]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date and year first above written.
SELLER:
MULTI-MARKET RADIO OF AUGUSTA, INC.
By: /s/ Michael G. Ferrel
-------------------------------
Name: Michael G. Ferrel
Title: President
BUYER:
WILKS BROADCAST ACQUISITIONS, INC.
By: /s/ Don Wilks
-------------------
Name: Don Wilks
Title: President
40
LOCAL MARKETING AGREEMENT
THIS LOCAL MARKETING AGREEMENT (this "Agreement") is made and entered
into as of this 25 day of March, 1996 by and between MULTI-MARKET RADIO OF
AUGUSTA, INC., a Delaware corporation ("MMR"), and WILKS BROADCAST
ACQUISITIONS, INC., a Georgia corporation ("Broker").
WHEREAS, MMR is the owner and licensee of radio broadcast stations
WRXR-FM and WKBG-FM, serving the Augusta, Georgia market (the "Stations"); and
WHEREAS, MMR and Broker have entered into an agreement for the
purchase of the Stations by the Broker from MMR as of the date hereof (the
"Purchase Agreement"); and
WHEREAS, Broker desires to provide programming to the Stations from
the date hereof until the closing of the acquisition of the Stations by the
Broker or the termination of the Purchase Agreement; and
WHEREAS, MMR desires to broadcast the programming provided by Broker;
NOW THEREFORE, in consideration of the mutual covenants contained in
this Agreement, and intending to be fully bound hereby, Broker and MMR hereby
agree as follows:
<PAGE>
1. Basic Agreement. Subject to the terms of this Agreement and the
exceptions set forth herein, and to applicable rules, regulations and policies
of the Federal Communications Commission (the "FCC"), Broker agrees to provide
and MMR agrees to accept programming on the Stations as set forth in this
Agreement. MMR agrees to broadcast the programming including commercial
announcements supplied by Broker without interruption, deletion or addition of
any kind, except as provided in this Agreement and subject to MMR 's
obligations under the statutes, rules, regulations and policies of the FCC.
2. Hours of Programming. Broker will supply, and MMR will transmit,
subject to the exceptions set forth in SECTIONS 6 and 8 below, programming for
all periods of broadcast operations as long as this Agreement remains in full
force and effect.
3. Term of Agreement. The term of this Agreement (the "Term") shall
be for a maximum period of twenty-four (24) months commencing on the date
hereof (the "Effective Date") and terminating on March __, 1998; provided,
however, that this Agreement may be terminated sooner pursuant to the
provisions of SECTIONS 13 or 22 of this Agreement.
4. Sale of Advertising Time; Accounts Receivable.
(a) In consideration for the furnishing by Broker of the
programming to MMR, MMR agrees that from and after the Effective Date of this
Agreement Broker may sell all of the commercial time on the Stations for
Broker's account and may collect all revenues generated by such sales. All
contracts, advertising agreements, purchase orders and other similar documents
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and instruments negotiated and executed by Broker in connection with its
programming of the Stations and with sales, advertising or promotions on or
after the Effective Date shall be in the name of Broker, and Broker shall not
represent in any fashion that Broker is the licensee or owner of the Stations.
Broker agrees to run the trade and commercial spots sold by MMR prior to the
Effective Date, in the normal and ordinary course of business, at the times
contracted for by MMR. A list of all trade and commercial spots sold by MMR to
be broadcast during programming provided by Broker shall be provided to Broker
within five (5) days of the Effective Date. Notwithstanding the foregoing,
Seller shall pay to Buyer an amount equal to one-third (1/3) of the amount of
the currently existing trade balance used by ____________, up to a maximum
payment to Broker of $6,9000.00 and only upon presentation to Seller of
invoices, certified to be true and accurate by Broker's President, for such
advertising time. MMR shall pay one-third (1/3) of the invoices amounts, up to
$6,900.00, within twenty (20) days of such presentation.
(b) All accounts receivable arising out of the sale of
advertising time by MMR to be broadcast prior to the Effective Date remain the
property of MMR.
(c) All accounts receivable arising out of the sale of
advertising time by MMR to be broadcast after the Effective Date shall be
assigned to Broker as of the Effective Date; provided, however, if this
agreement is terminated, other than because of the purchase of the Stations by
Broker, those accounts receivable shall be assigned back to MMR as of the date
of termination.
(d) Broker agrees to complete MMR's "Cash Classic" on-air
promotion on its current terms. MMR agrees to pay Broker one-half (1/2) of
each week's winnings and one-half
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(1/2) of the final grand prize upon presentment to MMR of a certification by
an authorized officer of Broker as to (i) the winner of the contest; (ii) to
the fact that such winner has no affiliation with the Stations, the Broker,
MMR or any of the Stations' employees and (iii) that fact that such winner has
produced legally valid identification upon receipt of his or her prize.
5. Compensation. In consideration for Broker's right to sell
commercial time and collect all of the revenues from such sales pursuant to
this Agreement, Broker agrees to pay to MMR the compensation set out in
paragraph 1 of Schedule I hereto.
6. Reservation of Time. MMR specifically reserves for its own use up
to two (2) hours per week of programming time (the "Reserved Time") during
which it may broadcast programming of its choice, including news, public
affairs and other programming responsive to the needs and interests of its
community of license and service area. The Reserved Time shall be at a
mutually agreed time on Sunday between the hours of 7:00 a.m. and 11:00 a.m.,
in segments of no less than one (1) hour. MMR will not sell advertising time
during the Reserved Time. In addition, Broker shall broadcast, at MMR's
request, up to two (2) 30-second public service announcements each day at such
times as are mutually agreeable to MMR and Broker. Broker shall also consider
in good faith including in its programming such other public service
announcements as MMR may from time to time suggest.
7. Employees. Both parties agree that if this Agreement is terminated
for any reason, other than the purchase of the Stations by Broker, MMR shall
be entitled to reassume an
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employment relationship with any employee currently employed by the Stations.
Further, if this Agreement terminates for any reason (other than Brokers
purchase of the Stations), Broker agrees to not employ, solicit or negotiate
with for employment, either directly or indirectly, any employee of MMR listed
on Schedule II hereto for a period of five (5) years after the effective date
of termination. Broker shall only be responsible for the payment of the
compensation of those MMR employees hired by it commencing with the date of
this Agreement and shall not be responsible for the payment of any sums owed
to any such employees for any period prior to the date of this Agreement.
8. MMR's Programming Discretion.
a) In order to enable MMR to fulfill its obligations under
Section 317 of the Communications Act of 1934, as amended (the "Act"), Broker
in compliance with Section 507 of the Act will, in advance of any scheduled
broadcast by the Stations, disclose to MMR any information of which Broker has
knowledge, or which has been disclosed to it, as to any money, service or
other valuable consideration which any person has paid or accepted, or has
agreed to pay or to accept, for the inclusion of any matter as a part of the
programming or commercial matter to be supplied to MMR pursuant to this
Agreement. Broker will cooperate with MMR as necessary to ensure compliance
with this provision. Commercial matter with obvious sponsorship
identifications shall not require disclosure in addition to that contained in
the commercial copy. Broker further agrees that it will at all times proceed
in good faith to conduct sales of commercial matter hereunder in compliance
with all applicable statutes and regulations.
(b) MMR shall be responsible for insuring that the Stations'
overall programming is responsive to the needs and interests of the community.
In furtherance thereof, MMR shall
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retain ultimate authority and control over the policies, programming and
operations of the Stations, including, without limitation, the right to decide
whether to accept or reject any programming or advertisements, the right to
refuse to broadcast any programming or part of programming deemed by MMR to
not be in the public interest or to not meet MMR's programming standards, the
right to interrupt or preempt any programming at any time in order to
broadcast programming deemed by MMR to be of significant national, regional,
local or public interest or to broadcast emergency information, and the right
to take any other actions necessary for compliance with federal or state laws
or governmental regulations. At MMR's request, Broker's on-site management and
staff will meet with MMR at the Stations on a monthly basis or other agreed to
intervals to discuss the Stations' policies, programming and operations. MMR
shall be entitled to review programming material relating to the Stations'
broadcasts, including Broker's play-list, commercial schedule, schedule of
public service announcements and other programming in advance of Broker's
broadcast of such programs. Broker agrees that all such programming as
presented by Broker will be in compliance with all applicable rules and
regulations. MMR shall continue to be responsible for maintenance of the
Stations' public inspection file in good order as required by the FCC, to have
prepared and timely filed in such file the quarterly issues/programs list as
required by FCC rules and to timely file with the FCC all required reports and
records.
(c) MMR has adopted and will enforce certain programming
guidelines (the "Guidelines"), a copy of which is attached hereto as
ATTACHMENT A. Broker agrees and covenants to comply with the Guidelines and
with all rules, regulations and policies of the FCC that pertain to Broker's
programming.
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(d) Broker shall immediately forward to MMR all written
questions, comments or complaints received from third parties regarding
Broker's programming. MMR may, but shall not be required to unless required by
the FCC, cooperate with Broker in responding to any such question, comment or
complaint from any third party (other than a governmental authority or agent
thereof) with respect to any of Broker's programming broadcast by the
Stations. At the request of MMR, Broker shall cooperate fully with respect to
all responses to such questions, comments or complaints, and all responses to
questions, comments or complaints with respect to programming shall be subject
to the approval of MMR.
9. Maintenance, Installation and Removal of Equipment; Responsibility
for Costs.
(a) MMR shall be responsible for maintenance and repair of the
Stations' transmitter and antenna, and will keep those facilities operating in
compliance with the rules and regulations of the FCC.
(b) Broker shall be responsible for the salaries, commissions, taxes,
insurance and all other related costs for all personnel employed by Broker and
involved in the production, broadcast and sale of its programming and
commercial messages including, but not limited to, on-air personalities, sales
persons and traffic personnel. Broker shall also be responsible for all of its
promotional expenses in connection with the programming it is to furnish for
broadcast on the Stations. Broker shall assume and undertake to pay, satisfy
or discharge the liabilities, obligations and commitments of MMR which arise
and/or accrue after the Effective Date only under the contracts listed on the
Disclosure Schedules attached and made part of the Purchase Agreement. Broker
shall maintain broadcaster's errors and omissions insurance with respect to
all programming to be broadcast by Broker over the Stations, with such
insurance carriers and such
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policy limits as are reasonably acceptable to MMR, and shall name MMR as an
additional insured on all such insurance policies. Broker shall provide
evidence of such insurance coverage to MMR, upon MMR's request. MMR shall be
responsible for its own corporate expenses and obligations for borrowed money
and for the following direct operating costs of the Stations: all lease
payments for use of the Stations' main studio and offices; salaries, payroll
taxes, insurance and related costs of all personnel employed by MMR for the
Stations after the Effective Date; insurance costs relating to MMR's assets
and operations; power and other utility bills (not including telephone
service) for the Stations' main studio facilities, its transmitter site and
any other facilities it may have; maintenance of all transmitting equipment
including costs of repairs and supplies; MMR's own telephone delivery and
postal expenses; and income, gross receipts, sales, personal property, real
property and any other taxes of whatever nature related to MMR's ownership of
the Stations' assets or MMR's own programming efforts on the Stations.
10. Broker's Representations and Indemnification. Broker represents
and warrants that it has the right to enter into this Agreement and to provide
programming to the Stations as provided for by this Agreement. Broker further
represents and warrants that the performing rights to all music contained in
such programming are or will be licensed by BMI, ASCAP or SESAC, are in the
public domain or are controlled by Broker. Broker agrees to indemnify and hold
MMR, its directors, shareholders, officers, agents, employees, successors and
assigns free and harmless from any and all claims, damages, liabilities, FCC
fines or forfeitures, losses, costs and expenses, including reasonable
attorneys' fees, incurred by MMR or such other persons arising from (a) the
breach by Broker of any representation or warranty contained in this
Agreement, (b) the breach by Broker of any covenant or obligation contained in
this Agreement, and (c) the broadcast of any
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programming or other matter by Broker pursuant to this Agreement,
including but not limited to, those arising as a result of copyright
infringement, libel, slander, defamation, invasion of privacy or violation of
applicable federal or state laws or government regulations. The indemnity and
hold harmless obligation of Broker specified in this SECTION 10 shall in no
way be limited by the exercise of authority or control over the programming of
the Stations by MMR in accordance with SECTION 8 above, or its failure to
exercise such authority or control.
11. Facilities. Broker shall provide programming to the Stations
pursuant to this Agreement from facilities owned, leased or maintained by MMR,
and during the Term of this Agreement Broker shall have the right to use MMR's
furniture, equipment and other items of personal property in providing such
programming. MMR shall, at its sole expense, retain a management level
employee and the necessary staff as may be required by FCC rules and
regulations, which manager and staff shall be responsible for maintaining the
transmitting facilities of the Stations and insuring compliance with the
technical operating and reporting requirements established by the FCC. The
transmitting facilities of the Stations shall be maintained by MMR in
accordance with all applicable FCC rules and regulations and all FCC licenses
and authorizations for the Stations. Throughout the Term of this Agreement,
all transmitting equipment shall be in good operating condition consistent
with standards of good engineering practice in the broadcast industry. Nothing
herein shall be construed to grant to Broker the power or authority to control
or direct the operation of the Stations. Whenever on the premises of the
Stations, Broker's employees and agents shall at all times be subject to the
direction and control of MMR, its designated employees and agents.
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12. Monthly Reports. At MMR's request, Broker shall submit to MMR in
writing monthly reports in form reasonably satisfactory to MMR and Broker,
which reports will cover programs and commercials delivered by Broker and
broadcast by the Stations. Broker shall deliver to MMR, on a timely basis,
such records, documents, and information as are required under the FCC rules
to be placed in the Stations' public inspection files. Broker shall also
provide to MMR on a quarterly basis a list of programs aired on the Stations
by Broker that may be helpful to MMR in preparing its list of issue-responsive
programming for the preceding quarter, as well as copies of the minutes of any
Stations management meetings once they are available for distribution.
13. Failure of Facilities. Any substantial failure or impairment of
facilities (i.e. failure to broadcast at least 80% of the Stations' licensed
ERP), or any delay or interruption in broadcast programs, or failure at any
time to furnish facilities, in whole or in part, for broadcasting, due to acts
of God, strikes or threats thereof or force majeure or due to causes beyond
the control of MMR shall not constitute a breach of this Agreement and MMR
will not be liable to Broker, except to the extent of allowing in each such
case an appropriate payment credit for time or broadcasts not provided based
upon a pro-rata adjustment to the Monthly Payment based upon the length of
time during which the failure or impairment exists.
Notwithstanding the foregoing or any other provision hereof, if
during the Term of this Agreement any event occurs which prevents the Stations
from broadcasting at the ERP described in the preceding sentence, MMR shall
give prompt written notice thereof to Broker. If such facilities (a) are not
restored so that operation is resumed with such power within five (5) calendar
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<PAGE>
days of such event; or (b) in the case of more than one event, the
aggregate number of days preceding such restoration from all such events
during any quarterly Arbitron ratings period would be more than ten (10)
calendar days; or (c) if the Stations is off the air more than four (4) times,
in each case exceeding five (5) hours, during any quarterly Arbitron ratings
period, Broker shall have the exclusive right, by giving written notice to MMR
of its election to do so, to terminate this Agreement effective as of a date
stated in such notice not less than thirty (30) nor more than sixty (60) days
following such delivery. Alternatively, should MMR fail or refuse to repair or
restore such facilities at the request of Broker, Broker shall have the right
to pay for such repairs or restorations and to offset the sums so expended by
Broker against any future Monthly Payment due under this Agreement and/or the
Purchase Price payable under the Asset Purchase Agreement.
14. Restriction on Other Programming. During the Term of this
Agreement, Broker shall not be restricted from offering to any other radio
station the programming and services provided by Broker to MMR pursuant to
this Agreement.
15. Maintenance of Licenses. Broker agrees to maintain at Broker's
expense such licenses, including performing rights licenses and including
specifically performing rights licenses issued by ASCAP, SESAC and BMI, as now
are or hereafter may be in general use by a radio broadcasting stations and as
may be necessary for Broker to broadcast the programming which Broker
furnishes to the Stations hereunder.
11
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16. Assignability. Neither party hereto may assign or transfer any of
its obligations or the rights or privileges granted to it under this Agreement
without the other's prior written consent. Broker and MMR shall be entitled to
institute proceedings at law or in equity to enforce the specific performance
of the provisions of this SECTION 16.
17. Modifications and Waivers. No inducements, representations or
warranties except as specifically set forth in this Agreement have been made
by any of the parties to this Agreement with respect to the subject matter
hereof. No provision of this Agreement shall be changed or modified, nor shall
this Agreement be discharged in whole or in part, except by an agreement in
writing, signed by the party against whom the change, modification or
discharge is claimed or sought to be enforced, nor shall any waiver of any of
the conditions or provisions of this Agreement be effective and binding unless
such waiver shall be in writing and signed by the party against whom the
waiver is asserted; and no waiver of any provision of this Agreement shall be
deemed to be a waiver of any preceding or succeeding breach of the same or of
any other provision. Nothing in this Agreement shall be construed to make MMR
and Broker partners or joint venturers or to afford any rights to any third
party other than as expressly provided herein.
18. No Conflict. Both MMR and Broker represent that they are
empowered and able to enter into this Agreement, and that the execution,
delivery and performance hereof shall not constitute a breach or violation of
any agreement, contract or other obligation to which either party is subject or
by which it is bound.
12
<PAGE>
19. MMR's Representations. MMR makes the following further
representations, warranties and covenants:
(a) MMR owns and holds all licenses and other permits and
authorizations necessary for the operation of the Stations as presently
conducted (including licenses, permits and authorizations issued by the FCC),
and MMR will use its commercially reasonable best efforts to ensure that such
licenses, permits and authorizations will be in full force and effect for the
entire Term hereof unimpaired by any acts or omissions of MMR, its principals,
employees or agents. There is not pending or, to MMR's best knowledge,
threatened, any action by the FCC or other party to revoke, cancel, suspend,
refuse to renew or modify adversely any of such licenses, permits or
authorizations and, to MMR's best knowledge, no event has occurred which
allows or, after notice or lapse of time or both, would allow, the revocation
or termination of such licenses, permits or authorizations or the imposition
of any restrictions thereon of such a nature that may limit the operation of
the Stations as presently conducted. MMR has no reason to believe that any
such license, permit or authorization will not be renewed during the Term of
the Agreement in its ordinary course.
(b) All reports and applications required to be filed with
the FCC by MMR (including ownership reports and renewal applications) or any
other government entity, department or body in respect of the Stations have
been, and in the future will be, filed in a timely manner and are and will be
true and complete and accurately present the information contained and
required thereby. All such reports and documents, to the extent required to be
kept in the public inspection files of the Stations, are and will be kept in
such files.
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(c) MMR has, and will throughout the Term hereof maintain,
good and indefeasible title to all assets and properties that are owned by MMR
and used in the operation of the Stations.
(d) MMR will maintain in full force and effect throughout
the Term of this Agreement insurance with responsible and reputable insurance
companies or associations covering such risks (including fire and other risks
insured against by extended coverage, public liability insurance, insurance
for claims against personal injury or death or property damage and such other
insurance as may be required by law) and in such amounts and on such terms as
is conventionally carried by broadcasters operating radio stations with
facilities comparable to those of the Stations.
20. Notices. All notices, demands and requests permitted or required
under this Agreement shall be in writing and shall be deemed given on the date
of personal delivery or on the date of receipt if mailed by certified mail,
postage prepaid and return receipt requested, or on the date of a stamped
receipt if sent by an overnight delivery service, or on the date of written
confirmation of delivery by facsimile or telecopy transmission to the
following addresses:
If to MMR: Multi-Market Radio, Inc.
One Monarch Place, Suite 220
Springfield, MA 01144
Attention: Mr. Michael G. Ferrel
Copy to: Howard Berkower, Esq.
Baker & McKenzie
805 Third Avenue
New York, New York 10022
14
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If to Broker: Wilks Broadcast Acquisitions, Inc.
6811 Southeast Harbour Circle
Stuart, Florida 34996
Attn: Don Wilks
Copies to: John Pelkey, Esq.
Haley, Bader & Potts
4350 North Fairfax Drive
Suite 900
Arlington, VA 22203-1633
Jeff Wilks
62 Conifer Circle
Augusta, Georgia 30909
21. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without giving effect to
the choice of law provisions thereof and is intended to be fully consistent
with the Act and all rules and regulations of the FCC, as applicable. The
obligations of the parties hereto are subject to all federal, state and local
laws and regulations now or hereafter in force and to the rules, regulations
and policies of the FCC and all other government entities or authorities
presently or hereafter to be constituted.
22. Termination. Except as provided in Section 13 hereof, which
termination provisions shall effect such Section only, this Agreement may be
terminated by either party, (a) in the event of a material breach of any of
the terms of this Agreement by the other party, which breach is not cured
within five (5) days following delivery of written notice of such breach
together with a demand that it be cured, (b) if the other party shall make a
general assignment for the benefit of creditors, or files or has filed against
it a petition for bankruptcy, reorganization or an arrangement for the benefit
of creditors, or for the appointment of a receiver, trustee or similar
15
<PAGE>
creditors' representative for the property or assets of such party
under any federal or state insolvency law, which, if filed against such party,
has not been dismissed or discharged within sixty (60) days thereof, (c) in
the event of a material breach by the other party of any representation or
warranty herein, or in any certificate, affidavit or document furnished
pursuant to the provisions hereof, which shall prove to have been false or
misleading in any material respect as of the time made or furnished, (d) in
the event either party is specifically required by the FCC to terminate this
Agreement in order to comply with FCC rules or policies, or if there is a
material change to MMR's FCC authorizations which materially and adversely
affects the Stations' signal, quality or coverage, or (e) in the event of a
breach of the Purchase Agreement by the other party which breach is not cured
within the time period set forth in the Purchase Agreement. Additionally, this
Agreement shall terminate upon the acquisition of the Stations by Broker
pursuant to that certain Asset Purchase Agreement bearing even date herewith
(the "Asset Purchase Agreement") between MMR and Broker.
23. Counterparts. This Agreement may be executed in any one or more
counterparts, each of which shall be binding upon the party so executing it
and when taken together shall constitute one and the same Agreement.
24. Construction. In the event any provision contained in this
Agreement is held to be invalid, illegal or unenforceable, such holding shall
not affect any other provision hereof and this Agreement shall be construed as
if such invalid, illegal or unenforceable provision had not been contained
herein. In the event of the issuance of any order or decree of any
administrative agency or court of competent jurisdiction, including without
limitation any material change or clarification
16
<PAGE>
of FCC rules, policies or precedents, which would cause this Agreement to be
in violation of any applicable law, the parties will use their respective best
efforts to negotiate in good faith any modifications of this Agreement that
may be necessary to comply fully with such order or decree.
25. Binding and Enforceable. Subject to the provisions of SECTION 16
hereof, this Agreement shall be binding upon, inure to the benefit of, and be
enforceable by the parties hereto and their respective successors and
permitted assigns.
26. Broker. Each party represents that there is no broker or finder
or other person who would have any valid claim against any of the parties to
this Agreement for a commission or brokerage fee or payment in connection with
this Agreement or the transactions contemplated hereby as a result of any
agreement of, or action taken by, either party hereto. Each party agrees to
indemnify and hold harmless the other with respect to any such claim.
27. No Limitation on Remedies. Except as otherwise expressly limited
by the provisions of this Agreement, any failure by either party to comply
with the provisions of this Agreement shall entitle the other party to assert
any remedies available to it at law or in equity.
28. Headings. The headings in this Agreement are for convenience
only and will not affect the meaning or construction of the provisions of this
Agreement.
29. Indulgences. Unless otherwise specifically agreed in writing to
the contrary: (i) the failure of either party at any time to require
performance by the other of any provision of this
17
<PAGE>
Agreement shall not affect such party's right thereafter to enforce the same;
(ii) no waiver by either party of any default by the other shall be take or
held to be a waiver by such party of any other preceding or subsequent
default; and (iii) no extension of time granted by either party for the
performance of any obligation or act by the other party shall be deemed to be
an extension of time for the performance of any other obligation or act
hereunder.
30. No Partnership or Joint Venture. This Agreement is not intended
to be and shall not be construed as a partnership or joint venture agreement
between the parties. Except as otherwise specifically provided herein, neither
party to this Agreement shall be authorized to act as agent of or otherwise
represent or bind the other party to this Agreement.
31. Certification. Pursuant to Section 73.3555(a)(2)(ii) of the FCC's
rules, MMR certifies that it will maintain ultimate control over the Station's
facilities, including control over Station finances, personnel and
programming, and Broker certifies that the arrangement contemplated by this
Agreement complies with the provisions of Sections 73.3555(a)(1) and
73.3555(e)(1) of the FCC's rules.
32. Exemption from Non-Solicitation Prohibition. MMR hereby agrees
that, upon the Effective Date, Broker may offer employment on the Stations to
the current employees of the Stations and any such offer shall not be a breach
of the terms of the non-solicitation provisions contained in Section 9.1.12 of
that certain Asset Purchase Agreement by and between J&L Broadcasting, Inc.
and Multi-Market Radio of Augusta, Inc. dated as of December 3, 1993 (the
"1993 Agreement"). Nothing contained herein shall in any way be construed to
limit any other
18
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rights of MMR under the 1993 Agreement and the exemption from Section 9.12 of
the 1993 Agreement shall be strictly limited to the current employees of the
Stations and shall terminate upon the termination of this Agreement.
[END OF PAGE]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year written above.
MULTI-MARKET RADIO OF AUGUSTA, INC.
By: /s/ Michael G. Ferrel
---------------------------
Name: Michael G. Ferrel
Title: President
WILKS BROADCAST ACQUISITIONS, INC.
By: /s/ Don Wilks
---------------------------
Name: Don Wilks
Title:
20
March 4, 1996
Scott J. Klosinski, Esq.
3525-B Walton Way
Augusta, Georgia 30909
Re: Radio Stations WAEG(FM) and WAEJ(FM)
------------------------------------
Dear Mr. Klosinski:
This letter, when countersigned by the Bankruptcy Trustee (the "Trustee") for
Jones Eastern Radio of Augusta, Inc., Debtor-in-Possession (the "Seller"), shall
constitute the mutual binding agreement (the "Agreement") of the parties hereto
with respect to the acquisition (the "Acquisition") by a wholly-owned subsidiary
of Multi-Market Radio, Inc. (the "Purchaser"), of substantially all of the
assets used in the operation of radio stations WAEG(FM), Waynesboro, Georgia and
WAEJ(FM), Evans, Georgia (together, the "Stations"), including but not limited
to the FCC licenses of the Stations, on the terms described below.
Multi-Market Radio, Inc. ("Multi-Market Radio") is a publicly traded, NASDAQ-
listed company which, through wholly-owned subsidiaries, currently owns and
operates 15 radio stations in 8 markets in the eastern United States, including
the Augusta, Georgia market, and is under contract to acquire 11 additional
radio stations in 4 separate markets. The obligations of the Purchaser to
acquire the Stations in accordance with the terms of this Agreement and to pay
the consideration set forth herein are and shall be fully and unconditionally
guaranteed by Multi-Market Radio.
1. Acquisition of Assets. The Seller shall sell and the Purchaser shall
acquire substantially all of the assets of the Seller of whatsoever kind and
nature, real and personal, tangible and intangible, which are used or held for
use by or relate to the ownership and operation of the Stations (collectively,
the "Station Assets"), including but not limited to all of the Seller's rights
in and to (i) the Stations' FCC Licenses and the call letters "WAEG(FM)" and
"WAEJ(FM)"; (ii) all equipment, office furniture and fixtures, supplies,
inventory, spare parts and other tangible personal property of every kind and
description; (iii) all leases of real and personal property; (iv) all programs
and programming material of whatever form or nature owned by the Seller; (v) all
trademarks, trade names, service marks, jingles, logos and slogans or licenses
to use the same, together with any associated goodwill; (vi) all of the Seller's
rights in and to the
Scott J. Klosinski, Esq.
March 4 1996
Page 2 of 6
files, records and books of account of the Stations; and (vii) all of the
Seller's rights under manufacturers' and vendors' warranties relating to items
included in the Station Assets.
2. Liens and Encumbrances. The Station Assets shall be transferred to the
Purchaser free and clear of all debts, security interests, mortgages, trusts,
claims, pledges, conditional sales agreements or other liens, liabilities and
encumbrances whatsoever, other than the first lien and security interest of
Bible Broadcast Network, Inc. ("Bible Broadcast Network") which shall continue
to secure that certain note dated January 27, 1994 in the stated principal sum
of $475,000 (the "Senior Note"), executed by Jones Eastern Radio of Augusta,
Inc. ("Jones Eastern"), in favor of Bible Broadcast Network, which shall be
assumed by the Purchaser as part of the Purchase Price for the Stations.
3. Purchase Price. The aggregate consideration (the "Purchase Price") for
the transfer of the Station Assets from the Seller to the Purchaser shall be as
follows:
(i) The Purchaser shall pay to Bible Broadcast Network in cash at Closing
an amount equal to the then outstanding accrued and unpaid interest and
principal due under the Senior Note and the reasonable attorney's fees incurred
by Bible Broadcast Network in protecting its rights and interests under the
Senior Note. It is the Purchaser's understanding that this amount will
aggregate approximately $50,000 at Closing. Additionally, the Purchaser shall
assume and pay in full the remaining amounts due under the Secured Note in
accordance with the amortization schedule set forth therein.
(ii) The Purchaser shall pay to the Internal Revenue Service (the "IRS")
in cash at Closing the outstanding unremitted FICA and FUTA taxes, including
interest (but excluding penalties), owed by Jones Eastern to the IRS. It is the
Purchaser's understanding that the outstanding FICA and FUTA liability of Jones
Eastern will aggregate approximately $200,000 at Closing.
(iii) The Purchaser shall pay to the bankruptcy estate in cash at
Closing the sum of $165,000 for the benefit of administrative expenses, trustee
fees, state taxes, etc., with the remaining amounts to go to the unsecured
creditors of Jones Eastern.
4. Studio and Tower Leases. At Closing, the Seller shall assign to the
Purchaser all
Scott J. Klosinski, Esq.
March 4, 1996
Page 3 of 6
of the Seller's right, title and interest in and to the Seller's studio lease
with ARA Development, Ltd., and the Seller's tower lease with Bible Broadcast
Network (together, the "Leases"). The Purchaser shall assume all of the Seller's
liabilities and obligations which arise under the Leases from and after the
Closing.
5. Closing. Except as otherwise mutually agreed upon by the Seller and the
Purchaser, the closing (the "Closing") of the Acquisition shall occur within
five (5) business days following the date on which the consent of the Federal
Communications Commission (the "FCC") to the assignment of the Stations' FCC
Licenses from the Seller to the Purchaser shall have become a Final Order (the
"Closing Date"). For the purposes of this Agreement, the FCC's consent to the
assignment of the Stations' FCC Licenses shall be deemed to be a Final Order
when (i) it has not been vacated, reversed, stayed, set aside, annulled or
suspended; (ii) it is not the subject of any pending timely appeal, request for
stay or petition for rehearing, reconsideration or review by any party or by
the FCC on its own motion; and (iii) it is an action by the FCC as to which the
time for filing any such appeal, request, petition or similar document or for
the reconsideration or review by the FCC on its own motion under the
Communications Act of 1934, as amended, and the rules and regulations of the
FCC has expired.
6. FCC Applications. The Seller and the Buyer shall hereafter file with the
FCC the requisite applications (the "FCC Applications") for the assignment of
the Stations' FCC Licenses within ten (10) business days following the approval
of the terms of this Agreement by the United States Bankruptcy Court for the
Southern District of Georgia (the "Bankruptcy Court") and the execution and
delivery of this Agreement by the Trustee on behalf of the Seller. Thereafter,
the Seller and the Purchaser shall prosecute the FCC Applications with all
reasonable diligence and otherwise use their best efforts to obtain the grant of
the FCC Applications as expeditiously as practicable.
7. Sales and Programming Agreements. Simultaneously with the execution and
delivery of this Agreement, the Seller and the Purchaser have entered into a
Joint Sales Agreement (the "JSA") in the form of Exhibit A hereto pursuant to
which the Purchaser has acquired the Stations' commercial advertising time
inventory in bulk for resale on a retail basis pending the Closing of the
Acquisition. Under the existing rules and regulations of the FCC, a licensee is
precluded from owning more than two (2) FM radio stations in a market the size
of Augusta, and that limit also applies to Local Market
Scott J. Klosinski, Esq.
March 4, 1996
Page 4 of 6
Agreements, or "LMA's". However, pursuant to the terms of the recently enacted
Telecommunications Bill of 1996 (the "Telecommunications Bill"), the FCC has
been instructed to revise its existing rules and regulations to permit, among
other things, a licensee to own up to four (4) FM radio stations in a market the
size of Augusta. The increase also applies to LMA's. The FCC has stated that it
will issue its revised rules and regulations on ownership limits during the
month of March 1996. Upon the issuance of the revised rules and regulations by
the FCC, the JSA will convert into an LMA in the form of Exhibit B hereto.
8. Closing Conditions. The obligations of the Purchaser under this Agreement
are subject to the satisfaction of each of the following at or prior to the
Closing Date:
(i) The Seller shall be the holder of the Stations' FCC Licenses, and
there shall not have been any modification of the Stations' FCC Licenses which
has a material adverse effect on the Stations or the conduct of their business
and operations. No proceeding shall be pending which seeks or the effect of
which reasonably could be to revoke, cancel, fail to renew, suspend or modify
materially and adversely the Stations' FCC Licenses or any other material
licenses, permits or other authorizations.
(ii) The FCC's consent to the assignment of the Stations' Licenses
from the Seller to the Purchaser shall have been published and become a Final
Order.
(iii) No suit, action, claim or governmental proceeding shall be
pending against, and no order, decree or judgment of any court, agency or other
governmental authority shall have been rendered against, any party hereto which
would render it unlawful, as of the Closing Date, to effect the transactions
contemplated by this Agreement.
(iv) The Bankruptcy Court shall have entered an order approving the
Acquisition of the Stations by the Purchaser on the terms set forth in this
Agreement, and the time within to appeal such order shall have expired and no
appeals from such order shall be pending.
(vi) The Seller shall have delivered or caused to be delivered to the
Purchaser on the Closing Date an assignment of the leases to the Purchaser, all
necessary third
Scott J. Klosinski, Esq.
March 4, 1 996
Page 5 of 6
party consents to the assignment of the Leases to the Purchaser, a bill of sale
for the Station Assets, an assignment of the Stations' FCC Licenses, and such
other instruments of conveyance and transfer reasonably satisfactory to the
Purchaser effecting the sale, transfer, assignment and conveyance of the Station
Assets to the Purchaser in accordance with the terms of this Agreement.
9. Termination. This Agreement may be terminated by either the Seller or the
Purchaser, if the party seeking termination is not then in default or breach of
this Agreement, by written notice to the other upon the occurrence of any of the
following:
(i) If, on or prior to the Closing Date, the other party defaults in
any material respect in the observance or in the due and timely performance of
any of its covenants or agreements contained herein or in the JSA or the LMA,
and such material default shall not be cured within thirty (30) days of the date
of notice of default served by the party claiming such material default; or
(ii) If the FCC denies the FCC Applications, or if the FCC's consent
to the assignment of the Stations' FCC Licenses imposes conditions which in
either the Seller's or the Purchaser's reasonable judgment are deemed material
or adverse to their respective interests in the Station Assets; or
(iii) If there is a material loss or damage to any of the Station
Assets prior to Closing through no fault of the Purchaser, which loss or damage
is not covered by insurance or which in the aggregate would cost more than
$20,000 to repair or replace, it being understood that the risk of loss or
damage to any of the Station Assets prior to the Closing Date shall be on the
Seller.
10. Miscellaneous. This Agreement, together with the JSA and the LMA, embody
the entire agreement and understanding of the parties hereto and supersede any
and all prior agreements, arrangements and understandings relating to the
matters provided for herein. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. The headings set forth in this Agreement are for convenience
only and will not control or affect the meaning or construction of the
provisions of this Agreement. The construction and performance of this
Agreement shall be governed by the laws of the State of Georgia without giving
Scott J. Klosinski, Esq.
March 4, 1996
Page 6 of 6
effect to the choice of law provisions thereof. This Agreement may be executed
in counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument. Kindly indicate your
acceptance and agreement with the terms of this Agreement by signing in the
space provided below.
Very truly yours,
MULTI-MARKET RADIO, INC.
By: /s/ Kraig Fox
____________________
Kraig Fox
Secretary
AGREED TO AND ACCEPTED:
JONES EASTERN RADIO OF AUGUSTA, INC.,
Debtor-In-Possession
By: /s/ C.J. Jones
_____________________
Name: C.J. Jones
Title: President/CEO
<PAGE>
LOCAL MARKET AGREEMENT
THIS LOCAL MARKET AGREEMENT (this "Agreement") is made and entered into as
of this___ day of ________, 1996 by and between JONES EASTERN RADIO OF AUGUSTA,
INC., Debtor-In-Possession ("Jones Eastern"), and MULTI-MARKET RADIO, INC., a
Delaware corporation ("Multi-Market").
WHEREAS, Jones Eastern owns and operates radio broadcast stations
WAEG(FM), Waynesboro, Georgia, and WAEJ(FM), Evans, Georgia (the "Stations");
and
WHEREAS, Multi-Market desires to provide programming to the Stations, and
Jones Eastern desires to broadcast the programming provided by Multi-Market;
NOW THEREFORE, in consideration of the mutual representations, warranties
and covenants contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be fully bound hereby, Multi-Market and Jones Eastern hereby agree
as follows:
1. Basic Agreement. Subject to the terms of this Agreement and the
exceptions set forth herein, and to the applicable rules, regulations and
policies of the Federal Communications
<PAGE>
Commission (the "FCC"), Multi-Market agrees to provide and Jones Eastern agrees
to accept programming on the Stations as set forth in this Agreement. Jones
Eastern agrees to broadcast the programming including commercial announcements
supplied by Multi-Market without interruption, deletion or addition of any kind,
except as provided in this Agreement and subject to Jones Eastern's obligations
under the statutes, rules, regulations and policies of the FCC.
2. Hours of Programming. Multi-Market will supply, and Jones Eastern will
transmit, subject to the exceptions set forth in Sections 6 and 8 below,
programming for all periods of broadcast operations as long as this Agreement
remains in full force and effect.
3. Term of Agreement. The term of this Agreement (the "Term") shall
commence on the date hereof and shall terminate upon the earlier to occur of (i)
the Closing under (and as defined in) that certain Purchase Agreement dated
March 4, 1996 (the "Purchase Agreement") by and between Multi-Market and Jones
Eastern, or (ii) the termination of the Purchase Agreement in accordance with
its terms, unless sooner terminated pursuant to the provisions of Section 21 of
this Agreement or unless extended by the mutual written agreement of the
parties. Multi-Market represents and warrants to Jones Eastern that during the
Term of this Agreement, Multi-Market will neither take any action nor fail to
take any action, the direct result of which will cause Jones Eastern to be in
breach of its covenants, representations and warranties under the Purchase
Agreement.
4. Sale of Advertising Time; Accounts Receivable. In consideration for
the furnishing by
2
<PAGE>
Multi-Market of the programming to Jones Eastern, Jones Eastern agrees that from
and after the date of this Agreement, Multi-Market may sell (or engage a third
party to sell) all of the commercial time on the Stations for Multi-Market's
account and may collect all revenues generated by such sales. All accounts
receivable owing to Jones Eastern arising out of the business and operations of
the Stations prior to the date of this Agreement shall be assigned to Multi-
Market for collection only, which collection shall be for the account of Jones
Eastern. Within ten (10) days of the date of this Agreement, Jones Eastern shall
provide Multi-Market with a complete list of all such accounts receivable,
showing the name, amount and age of each such account. Multi-Market shall make
reasonable efforts to collect such accounts receivable on Jones Eastern's behalf
consistent with the manner it collects its own accounts receivable; provided,
however, that Multi-Market shall not be obligated to refer any of the accounts
receivable to a collection agency or attorney for collection, and shall not make
any compromise or settlement of such account without the express prior approval
of Jones Eastern. For a period of ninety (90) days following the date of this
Agreement (the "Collection Period"), Multi-Market shall on the 15th and 30th
days of each month remit to Jones Eastern the amounts collected on such accounts
receivable, net of commissions approved by Jones Eastern which Multi-Market
shall deduct and pay out of collections, together with an accounting thereof.
Any payment received by Multi-Market from any customer owing such account
receivable shall first be applied in reduction of such account receivable, and
not to any amounts owed to Multi-Market by such customer; provided, however,
that in the case of any account receivable for which there exists a bona fide
dispute between Jones Eastern and such account debtor which pre-existed the date
of this Agreement, Multi-Market shall not be obligated to first apply any such
payment to the account receivable of Jones Eastern but
3
<PAGE>
only to the extent of the amount in dispute. At the expiration of the Collection
Period, Multi-Market shall deliver to Jones Eastern any remaining accounts
receivable of Jones Eastern and all records pertaining to same. Multi-Market
agrees to run the trade and commercial spots sold by Jones Eastern prior to the
date of this Agreement, but to be broadcast after the date hereof, at the
times contracted for by Jones Eastern. A list of all trade and commercial spots
sold by Jones Eastern to be broadcast during programming provided by Multi-
Market shall be provided to Multi-Market within ten (10) days of the date of
this Agreement.
5. Compensation. In consideration for Multi-Market's right to sell
commercial time and collect all of the revenues from such sales pursuant to this
Agreement, Multi-Market agrees to pay to Jones Eastern the compensation set out
on Schedule A hereto.
6. Reservation of Time. Jones Eastern specifically reserves for its own
use up to two (2) hours per week of programming time (the "Reserved Time")
during which it may broadcast programming of its choice. The Reserved Time shall
be at a mutually agreed time on Sunday between the hours of 6:00 a.m. and 12:00
midnight, in segments of no less than one (1) hour. Jones Eastern will not sell
advertising time during the Reserved Time.
7. Jones Eastern's Programming Discretion. In order to enable Jones
Eastern to fulfill its obligations under Section 317 of the Communications Act
of 1934, as amended (the "Act"), Multi-Market in compliance with Section 507 of
the Act will, in advance of any scheduled broadcast by the Stations, disclose to
Jones Eastern any information of which Multi-Market has
4
<PAGE>
knowledge, or which has been disclosed to it, as to any money, service or other
valuable consideration which any person has paid or accepted, or has agreed to
pay or to accept, for the inclusion of any matter as a part of the programming
or commercial matter to be supplied to Jones Eastern pursuant to this Agreement.
Multi-Market will cooperate with Jones Eastern as necessary to ensure compliance
with this provision. Commercial matter with obvious sponsorship identifications
shall not require disclosure in addition to that contained in the commercial
copy. Multi-Market further agrees that it will at all times conduct sales of,
and broadcast, commercial matter hereunder in compliance with all applicable
statutes and regulations, including, without limitation, the rules and
regulations of the FCC and the Act.
It is further understood and agreed that Jones Eastern will retain
ultimate authority and control over programming decisions for the Stations
during the course of this Agreement and will be responsible for insuring that
the Stations' overall programming is responsive to the needs and interests of
the community. Multi-Market agrees that all such programming as presented by
Multi-Market will be in compliance with all applicable FCC rules and regulations
and the Act. Jones Eastern shall continue to be responsible for maintenance of
the Stations' public inspection file in good order as required by the FCC, to
have prepared and timely filed in such file the quarterly issues/programs list
as required by FCC rules and to timely file with the FCC all required reports
and records. Multi-Market shall provide Jones Eastern with any information
concerning programming or commercial matter broadcast or to be broadcast on the
Stations as Jones Eastern shall reasonable request.
5
<PAGE>
8. Maintenance. Installation and Removal of Equipment; Responsibility for
Costs.
(a) Jones Eastern shall be responsible for maintenance and repair of the
Stations transmitter and antenna, and will keep those facilities operating in
compliance with the rules and regulations of the FCC.
(b) Multi-Market shall be responsible for the salaries, commissions,
taxes, insurance and all other related costs for all personnel employed by
Multi-Market and involved in the production, broadcast and sale of its
programming and commercial messages including, but not limited to, on-air
personalities, sales persons and traffic personnel. Multi-Market shall also be
responsible for all of its promotional expenses in connection with the
programming it is to furnish for broadcast on the Stations. Jones Eastern shall
be responsible for its own corporate expenses and obligations for borrowed money
and for all direct operating costs of the Stations, including, but not limited
to the following: all lease payments for use of the Stations' main studio and
offices; salaries, payroll taxes, insurance and related costs of all personnel
employed by Jones Eastern for the Stations; insurance costs relating to Jones
Eastern's assets and operations; power and other utility bills for the Stations'
main studio facilities, its transmitter sites and any other facilities it may
have; maintenance of all transmitting equipment including costs of repairs and
supplies; Jones Eastern's own telephone delivery and postal expenses; and
income, gross receipts, sales, personal property, real property and any other
taxes of whatever nature related to Jones Eastern's ownership of the Stations
assets or Jones Eastern's own programming efforts on the Stations.
Notwithstanding the foregoing, Multi-Market shall reimburse Jones Eastern for
the operational expenses of the Stations which are incurred in the normal course
of the Stations' business and are consistent with the past practices of the
Stations, including those which are specified in Schedule
6
A hereto.
9. Multi-Market's Representations. Multi-Market represents and warrants
that it has the right to enter into this Agreement and to provide programming to
the Stations as provided for by this Agreement. Multi-Market further represents
and warrants that the performing rights to all music contained in such
programming are or will be licensed by BMI, ASCAP or SESAC, are in the public
domain or are controlled by Multi-Market. Multi-Market agrees to indemnify and
hold Jones Eastern, its directors, shareholders, officers, agents, employees,
successors and assigns free and harmless from any and all claims, losses,
damages, liabilities, costs or expenses, including reasonable attorneys' fees,
of every kind and nature incurred by Jones Eastern or such persons by reason of
the breach of this representation and warranty by Multi-Market and for all
claims, losses, damages, liabilities, costs or expenses, including reasonable
attorneys' fees, of every kind and nature arising from the broadcast of any
programming or other matter by Multi-Market pursuant to this Agreement with
respect to copyright infringement, libel, slander, defamation, infringement of
trademarks, trade names or program titles, appropriation of name or likeness,
invasion of privacy or violation of the rules and regulations of the FCC. Multi-
Market agrees to defend at its own expense any action or proceeding arising out
of its indemnification obligations hereunder.
10. Facilities. Multi-Market shall provide programming to the Stations
pursuant to this Agreement from facilities owned, leased or maintained by Jones
Eastern, and during the Term of this Agreement Multi-Market shall have the right
to use Jones Eastern's Station Assets (as defined
7
in the Purchase Agreement) in providing such programming. Jones Eastern shall,
at its sole expense, retain a general manager and the necessary staff as may be
required by FCC rules and regulations, which manager and staff shall be
responsible for maintaining the transmitting facilities of the Stations and
insuring compliance with the technical operating and reporting requirements
established by the FCC. The transmitting facilities of the Stations shall be
maintained by Jones Eastern in accordance with all applicable FCC rules and
regulations and all FCC licenses and authorizations for the Stations.
Throughout the Term of this Agreement, all transmitting equipment shall be in
good operating condition consistent with standards of good engineering practice
in the broadcast industry.
11. Monthly Reports. At Jones Eastern's request, Multi-Market shall
submit to Jones Eastern in writing monthly reports in form reasonably
satisfactory to Jones Eastern, which reports will cover programs and commercials
delivered by Multi-Market and broadcast by the Stations.
12. Failure of Facilities. Any failure or impairment (i.e. failure to
broadcast at the Stations' full authorized height and power) of facilities or
any delay or interruption in broadcast programming, or failure at any time to
furnish facilities, in whole or in part, for broadcasting, due to acts of God,
strikes or threats thereof or force majeure or due to causes beyond the control
of Jones Eastern shall not constitute a breach of this Agreement and Jones
Eastern will not be liable to Multi-Market.
13. No Restriction on Other Programming. Nothing in this Agreement shall
restrict
8
Multi-Market from offering the programming and services provided by Multi-Market
to Jones Eastern pursuant to this Agreement to any other radio Stations in the
Stations' market.
14. Maintenance of Licenses. Multi-Market agrees to maintain at Multi-
Market's expense such licenses, including performing rights licenses and
including specifically performing rights licenses issued by ASCAP, SESAC and
BMI, as now are or hereafter may be in general use by radio broadcasting
stations and as may be necessary for Multi-Market to broadcast the programming
which Multi-Market furnishes to the Stations hereunder.
15. Assignability. Neither party hereto may assign or transfer any of its
obligations or the rights or privileges granted to it under this Agreement
without the other' s prior written consent, except that Multi-Market may assign
its obligations, rights and privileges hereunder to an affiliate or wholly-owned
subsidiary of Multi-Market in which case Multi-Market shall remain fully
obligated under this Agreement as an assignor. Multi-Market or Jones Eastern
shall be entitled to institute proceedings at law or in equity to enforce the
specific performance of the provisions of this Section 15.
16. Modifications and Waivers. No inducements, representations or
warranties except as specifically set forth in this Agreement and in the
Purchase Agreement have been made by any of the parties to this Agreement with
respect to the subject matter hereof. No provision of this Agreement shall be
changed or modified, nor shall this Agreement be discharged in whole or in
part, except by an agreement in writing, signed by the party against whom the
change,
9
modification or discharge is claimed or sought to be enforced, nor shall any
waiver of any of the conditions or provisions of this Agreement be effective and
binding unless such waiver shall be in writing and signed by the party against
whom the waiver is asserted; and no waiver of any provision of this Agreement
shall be deemed to be a waiver of any preceding or succeeding breach of the same
or of any other provision. Nothing in this Agreement shall be construed to make
Jones Eastern and Multi-Market partners or joint venturers or to afford any
rights to any third party other than as expressly provided herein.
17. No Conflict. Both Jones Eastern and Multi-Market represent that they
are empowered and able to enter into this Agreement, and that the execution,
delivery and performance hereof shall not constitute a breach or violation of
any agreement, contract or other obligation to which either party is subject or
by which it is bound.
18. Jones Eastern's Representations. Jones Eastern makes the following
further representations, warranties and covenants:
(a) Jones Eastern owns and holds all licenses and other permits and
authorizations necessary for the operation of the Stations as presently
conducted (including licenses, permits and authorizations issued by the FCC),
and such licenses, permits and authorizations will be in full force and effect
for the entire Term hereof unimpaired by any acts or omissions of Jones Eastern,
its principals, employees or agents. There is not pending or, to Jones Eastern's
best knowledge, threatened, any action by the FCC or other party to revoke,
cancel, suspend, refuse to renew or modify adversely any of such licenses,
permits or authorizations and, to Jones Eastern's best
10
knowledge, no event has occurred which allows or, after notice or lapse of time
or both, would allow, the revocation or termination of such licenses, permits or
authorizations or the imposition of any restrictions thereon of such a nature
that may limit the operation of the Stations as presently conducted. Jones
Eastern has no reason to believe that any such license, permit or authorization
will not be renewed during the Term of the Agreement in its ordinary course.
(b) All reports and applications required to be filed with the FCC
(including ownership reports and renewal applications) or any other government
entity, department or body in respect of the Stations have been, and in the
future will be, filed in a timely manner and are and will be true and complete
and accurately present the information contained and required thereby. All such
reports and documents, to the extent required to be kept in the public
inspection files of the Stations, are and will be kept in such files.
(c) Jones Eastern has, and will throughout the Term hereof maintain,
good and marketable title to all of its assets and properties used in the
operation of the Stations.
(d) Jones Eastern will maintain in full force and effect throughout the
Term of this Agreement insurance with responsible and reputable insurance
companies or associations covering such risks (including fire and other risks
insured against by extended coverage, public liability insurance, insurance for
claims against personal injury or death or property damage and such other
insurance as may be required by law) and in such amounts and on such terms as is
conventionally carried by broadcasters operating radio stations with facilities
comparable to those of the Stations. Any insurance proceeds received by Jones
Eastern in respect of damaged property will be used to repair or replace such
property so that the operation of the Stations conforms with this Agreement.
11
19. Notices. All notices, demands and requests permitted or required
under this Agreement shall be in writing and shall be deemed given on the date
of personal delivery or on the date of receipt if mailed by certified mail,
postage prepaid and return receipt requested, or on the date of a stamped
receipt if sent by an overnight delivery service, or on the date of written
confirmation of delivery by facsimile or telecopy transmission to the following
addresses:
If to Jones Eastern: C.J. Jones
P.O. Box 8636
Alexandria, LA 37103
Copy to: Greg Skau, Esq.
Pepper & Corazinni, L.L.P.
1776 K Street Northwest, Suite 200
Washington, DC 20006
If to Multi-Market: Mr. Michael G. Ferrel
President and Chief Executive Officer
Multi-Market Radio, Inc.
One Monarch Place
Suite 220
Springfield, Massachusetts 01144
Telecopy No. (413) 732-7851
Copy to: Howard M. Berkower, Esq.
Baker & McKenzie
805 Third Avenue
New York, New York 10155
Telecopy No. (212) 759-9133
12
20. Law Governing. This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia without giving effect to the
choice of law provisions thereof and is intended to be fully consistent with the
Act and all rules and regulations of the FCC, as applicable. The obligations of
the parties hereto are subject to all federal, state and local laws and
regulations now or hereafter in force and to the rules, regulations and policies
of the FCC and all other government entities or authorities presently or
hereafter to be constituted.
21. Termination. This Agreement may be terminated by either party, (a) in
the event of a material breach of any of the terms of this Agreement or the
Purchase Agreement by the other party, which breach is not cured within thirty
(30) days following delivery of written notice of such breach together with a
demand that it be cured, or (b) in the event of a material breach by the other
party of any representation or warranty herein, or in any certificate, affidavit
or document furnished pursuant to the provisions hereof, which shall prove to
have been false or misleading in any material respect as of the time made or
furnished, or (c) in the event either party is specifically required by the FCC
to terminate this Agreement in order to comply with FCC rules or policies, or if
there is a material change to Jones Eastern' s FCC authorizations which
materially and adversely affects Jones Eastern's signal, quality or coverage.
22. Counterparts. This Agreement may be executed in any one or more
counterparts, each of which shall be binding upon the party so executing it and
when taken together shall constitute
13
one and the same Agreement.
23. Construction. In the event any provision contained in this Agreement
is held to be invalid, illegal or unenforceable, such holding shall not affect
any other provision hereof and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had not been contained herein.
24. Binding and Enforceable. Subject to the provisions of Section 15
hereof, this Agreement shall be binding upon, inure to the benefit of, and be
enforceable by the parties hereto and their respective successors and permitted
assigns.
25. No Broker. Each party represents that there is no broker or finder or
other person who would have any valid claim against any of the parties to this
Agreement for a commission or brokerage fee or payment in connection with this
Agreement or the transactions contemplated hereby as a result of any agreement
of, or action taken by, either party hereto. Each party agrees to indemnify and
hold harmless the other with respect to any such claim.
26. No Limitation on Remedies. Except as otherwise expressly limited by
the provisions of this Agreement, any failure by either party to comply with the
provisions of this Agreement shall entitle the other party to assert any
remedies available to it at law or in equity.
14
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year written above.
MULTI-MARKET RADIO, INC.
By: /s/ Krais Fox
----------------------------------
Title: Krais Fox
Secretary
JONES EASTERN RADIO OF AUGUSTA, INC.,
Debtor-In-Possession
By: /s/ C.J. Jones
----------------------------------
Title: C.J. Jones
President/CEO
15
<PAGE>
SCHEDULE A
REIMBURSEMENT OF EXPENSES. Multi-Market shall pay to Jones Eastern each
month on the first day of each month an amount sufficient to reimburse Jones
Eastern for the following direct and indirect operating costs of the Stations:
lease payments for the use of its main studio facilities and transmitter sites;
power and other utility bills for its main studio facilities and transmitter
sites; insurance costs relating to Jones Eastern's own assets and operations;
maintenance of the transmitting facility, main studio and all equipment
necessary for the operation of the Stations in compliance with the rules,
regulations and policies of the FCC; the salary, payroll taxes, insurance and
related costs of the engineer and general manager employed by Jones Eastern for
the Stations; income, gross receipts, sales, real property, personal property
and any other taxes of any nature whatsoever related to the operation of the
Stations or Jones Eastern's own programming efforts on the Stations but
expressly not including any corporate or franchise tax payments due from Jones
Eastern to the State of Georgia; and such other direct and indirect operating
costs of the Stations incurred at the request of Multi-Market.
16
AMENDMENT NO.1
TO AMENDED AND RESTATED
FINANCIAL CONSULTING AND MARKETING AGREEMENT
AMENDMENT NO. 1 made this 1st day of March, 1996 and effective as of
January 1, 1996 by and between Multi-Market Radio, Inc. (the "Company") and
Sillerman Communications Management Corporation ("SCMC").
WHEREAS, the Company and SCMC have heretofore entered into an Amended and
Restated Financial Consulting and Marketing Agreement dated March ___ 1995 (the
"Agreement"); and
WHEREAS, the Company and SCMC wish to further amend the Agreement on the
terms and conditions set forth; and
WHEREAS, all capitalized terms used but not defined herein shall have the
respective meanings ascribed to them in the Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
Article 1. Amendments to Financial Consulting and Marketing Agreement
The Agreement is hereby further amended as follows:
1.1 Article 4 is amended to read in its entirety as follows:
"4. Compensation. As compensation for the services to be rendered
by SCMC pursuant to this Agreement as well as SCMC's agreement to
perform such services, the Company shall pay to SCMC during the Term
hereof the sum of $500,000 per year (the "Consulting Fees"). The
Consulting Fees shall be payable in advance in monthly installments
on the first day of each and every month of the Term hereof.
The Consulting Fees shall be increased annually by a percentage
amount equal to the percentage increase in the Consumer Price Index
for New York City."
Article 2. Miscellaneous.
2.1 Without limiting any of the other provisions of this
Amendment, the Agreement shall be deemed to be amended to the full extent
necessary to give effect to the provisions of this Amendment.
2.2 Except as amended hereby, the Agreement remains in full force
and effect in accordance with its terms.
2.3 All references in the Agreement and in any other agreement,
instrument or document executed or delivered in connection therewith to the
"Agreement" shall be deemed to refer to the Agreement as amended hereby and as
it may hereafter be amended.
2.4 If any provision of this Amendment shall be determined to be
contrary to law and unenforceable by any court of law, the remaining provisions
shall be severable and enforceable in accordance with their terms.
2.5 This Amendment may be executed in one or more counterparts,
each of which shall be deemed an original but all of which together will
constitute one and the same instrument.
2.6 The article and section headings contained in this Amendment
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of the Amendment. Each party has participated substantially in
the negotiation and drafting of this Amendment and each party hereby disclaims
any defense or assertion in any litigation or arbitration that any ambiguity
herein should be construed against the draftsman.
2.7 THIS AMENDMENT SHALL BE CONSTRUED AND INTERPRETED
ACCORDING TO THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICTS OF LAWS PRINCIPLES THEREOF.
IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment
as of the day and year first above written.
SILLERMAN COMMUNICATIONS
MANAGEMENT CORPORATION
By: /s/ Robert F.X Sillerman
___________________________________
Name: Robert F.X Sillerman
Title: Executive Chairman
MULTI-MARKET RADIO, INC.
By: /s/ Michael G. Ferrel
___________________________________
Name: Michael G. Ferrel
Title:Chief Executive Officer
AMENDMENT NO.1 TO THE AMENDED AND
RESTATED AGREEMENT AND PLAN OF MERGER
This AMENDMENT TO THE AMENDED AND RESTATED AGREEMENT AND
PLAN OF MERGER (the "Amendment") is entered into as of the 6th day of May, 1996,
by and among SFX BROADCASTING, INC., a Delaware corporation ("SFX"), SFX MERGER
COMPANY, a Delaware corporation and a direct wholly-owned subsidiary of SFX
("Acquisition Sub"), and MULTI-MARKET RADIO, INC., a Delaware corporation
("MMR") (SFX, Acquisition Sub and MMR collectively the "Parties").
WITNESSETH
WHEREAS, the Parties have entered into that certain Amended and
Restated Agreement and Plan of Merger as of the 15th day of April, 1996 (the
"Agreement");
WHEREAS, the Parties wish to amend the Agreement, by this Amendment,
and as more specifically described herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties hereby agree as
follows:
1. Section 8.01(1)(B) of the Agreement shall be deleted in its
entirety, and replaced by the following new Section 8.01(1)(B):
"(B) by MMR or the Independent Committee of MMR during
the period commencing on the end of the fifteenth (15th) business
day following the delivery of the SFX Disclosure Schedules (the
"Huff Termination Date") and ending on the twentieth (20th) business
day following the delivery of the SFX Disclosure Schedules if a
binding, definitive agreement is not reached, by the close of
business on the Huff Termination Date, with respect to the repayment
and redemption in full at or prior to the Effective Time of the
Subordinated Debentures and the MMR Senior Preferred Stock;"
2. All other terms and conditions of the Agreement shall remain
unchanged.
IN WITNESS WHEREOF, the Parties have set their hands to this
Amendment as of the year and day first above written.
SFX Broadcasting, Inc.
By: /s/ Robert F. X. Sillerman
---------------------------
Name: Robert F. X. Sillerman
Title: Executive Chairman
SFX Merger Company
By: /s/ Robert F. X. Sillerman
---------------------------
Name: Robert F. X. Sillerman
Title: President
Multi-Market Radio, Inc.
By: /s/ Michael G. Ferrel
--------------------------
Name: Michael G. Ferrel
Title: Chief Executive Officer
- 2 -
<PAGE>
LOCAL MARKET AGREEMENT
THIS LOCAL MARKET AGREEMENT (this "Agreement") is made and entered into as
of this 15th day of March, 1996 by and between SOUTHERN STARR OF ARKANSAS, INC.1
an Arkansas corporation ("Southern Starr"), and TRIATHLON BROADCASTING OF LITTLE
ROCK, INC., a Delaware corporation ("Triathlon")
WHEREAS, Southern Starr owns and operates radio broadcast station KOLL(FM),
Little Rock, Arkansas (the "Station"); and
WHEREAS, Triathlon desires to provide programming to the Station, and
Southern Starr desires to broadcast the programming provided by Triathlon;
NOW THEREFORE, in consideration of the mutual representations, warranties
and covenants contained in this Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be fully bound hereby, Triathlon and Southern Starr hereby agree as
follows:
1. BASIC AGREEMENT. Subject to the terms of this Agreement and the
exceptions set forth herein, and to the applicable rules, regulations and
policies of the Federal Communications
1
<PAGE>
Commission (the "FCC"), Triathlon agrees to provide and Southern Starr agrees to
accept programming on the Station as set forth in this Agreement. Southern Starr
agrees to broadcast the programming including commercial announcements supplied
by Triathlon without interruption, deletion or addition of any kind, except as
provided in this Agreement and subject to Southern Starr's obligations under the
statutes, rules, regulations and policies of the FCC.
2. Hours of Programming. Triathlon will supply, and Southern Starr
will transmit, subject to the exceptions set forth in Sections 6 and 8 below,
programming for all periods of broadcast operations as long as this Agreement
remains in full force and effect.
3. Term of Agreement. The term of this Agreement (the "Term") shall
commence on the date hereof and shall terminate upon the earlier to occur of (1)
the closing of Triathlon's acquisition of the Station pursuant to the terms of
the definitive agreement (the "Purchase Agreement") to be entered into by and
between Triathlon and Southern Starr, or (ii) the termination of the Purchase
Agreement in accordance with its terms, unless sooner terminated pursuant to the
provisions of Section 22 of this Agreement or unless extended by the mutual
written agreement of the parties.
4. Sale of Advertising Time: Accounts Receivable. In consideration for
the furnishing by Triathlon of the programming to Southern Starr, Southern Starr
agrees that from and after the date of this Agreement, Triathlon may sell (or
engage a third party to sell) all of the commercial time on tile Station for
Triathlon's account and may collect all revenues generated by such sates.
All accounts receivable owing to Southern Starr arising out of the business
and operations of the
2
<PAGE>
Station prior to the date of this Agreement shall be assigned to Triathlon for
collection only, which collection shall be for the account of Southern Starr.
Within ten (10) days of the date of this Agreement, Southern Starr shall provide
Triathlon with a complete list of all such accounts receivable, showing the
name, amount and age of each such account. Triathlon shall make reasonable
efforts to collect such accounts receivable on Southern Starr's behalf
consistent with the manner it collects its own accounts receivable; provided,
however, that Triathlon shall not be obligated to refer any of the accounts
receivable to a collection agency or attorney for collection, and shall not make
any compromise or settlement of such account without the express prior approval
of Southern Starr. For a period of ninety (90) days following the date of this
Agreement (the "Collection Period"), Triathlon shall on the 15th and 30th days
of each month remit to Southern Starr the amounts collected on such accounts
receivable, net of commissions approved by Southern Starr which Triathlon shall
deduct and pay out of collections, together with an accounting thereof. Any
payment received by Triathlon from any customer owing such account receivable
shall first be applied in reduction of such account receivable, and not to any
amounts owed to Triathlon by such customer; provided, however, that in the case
of any account receivable for which there exists a bona fide dispute between
Southern Starr and such account debtor which pre-existed the date of this
Agreement, Triathlon shall not be obligated to first apply any such payment to
the account receivable of Southern Starr but only to the extent of the amount in
dispute. At the expiration of the Collection Period, Triathlon shall deliver to
Southern Starr any remaining accounts receivable of Southern Starr and all
records pertaining to same. Triathlon agrees to run the trade and commercial
spots sold by Southern Starr prior to the date of this Agreement, but to be
broadcast after the date hereof, at the times contracted for by Southern Starr.
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A list of all trade and commercial spots sold by Southern Starr to be broadcast
during programming provided by Triathlon shall be provided to Triathlon within
ten (10) days of the date of this Agreement.
5. Compensation. In consideration for Triathlon's right to sell
commercial time and collect all of the revenues from such sales pursuant to this
Agreement, Triathlon agrees to pay to Southern Starr the compensation set out on
Schedule A hereto.
6. Reservation of Time. Southern Starr specifically reserves for its
own use up to two (2) hours per week of programming time (the "Reserved Time")
during which it may broadcast programming of its choice. The Reserved Time shall
be at a mutually agreed time on Sunday between the hours of 6:00 a.m. and 12:00
midnight, in segments of no less than one (1) hour. Southern Starr will not sell
advertising time during the Reserved Time.
7. Employees. Triathlon agrees to hire all employees of Southern Starr
who presently perform services which will be performed by Triathlon under this
Agreement at their current wages, commission structure and group benefits. Both
parties agree that if this Agreement is terminated for any reason other than
pursuant to Section 3(i) hereof, Southern Starr shall be entitled to reassume an
employment relationship with these employees; and in furtherance thereof,
Triathlon agrees that it will not terminate the employment of any of such
employees nor change their wages or compensation structure during the Term of
this Agreement without Southern Starr's prior consent, which consent will not be
unreasonably withheld, and will in no way object or seek
4
<PAGE>
in any way to interfere with Southern Starr's exercise of such reassumption
rights following the expiration of the Term hereof. Except as provided in
paragraph 2 of Schedule A hereto, Triathlon shall only be responsible for the
payment of the compensation of those Southern Starr employees hired by it
commencing with the date of this Agreement and shall not be responsible for the
payment of any sums owed to any such employees for any period prior to the date
of this Agreement. Additionally Southern Starr shall be solely responsible for
the payment of any extraordinary compensation (such as retention bonuses and the
like) which are or may be due and payable to any Southern Starr employees hired
by Triathlon in connection with or relating to Triathlon's acquisition of the
Station pursuant to the Purchase Agreement.
8. Southern Starr's Programming Discretion. In order to enable Southern
Starr to fulfill its obligations under Section 311 of the Communications Act of
1934, as amended (the "Act"), Triathlon in compliance with Section 507 of the
Act will in advance of any scheduled broadcast by the Station, disclose to
Southern Starr any information of which Triathlon has knowledge, or which has
been disclosed to it, as to any money, service or other valuable consideration
which any person has paid or accepted, or has agreed to pay or to accept, for
the inclusion of any matter as a part of the programming or commercial matter to
be supplied to Southern Starr pursuant to this Agreement. Triathlon will
cooperate with Southern Starr as necessary to ensure compliance with this
provision. Commercial matter with obvious sponsorship identifications shall not
require disclosure in addition to that contained in the commercial copy.
Triathlon further agrees that it will at all times conduct sales of, and
broadcast, commercial matter hereunder in compliance with all applicable
statutes and regulations, including, without limitation, the rules and
regulations of
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the FCC and the Act.
It is further understood and agreed that Southern Starr will retain
ultimate authority and control over programming decisions for the Station during
the course of this Agreement and will be responsible for insuring that the
Station' overall programming is responsive to the needs and interests of the
community. Triathlon agrees that all such programming as presented by Triathlon
will be in compliance with all applicable FCC rules and regulations and the Act.
Southern Starr agrees that during the Term of this Agreement Triathlon shall
have the right to change the format of the Station, provided that Triathlon
notifies Southern Starr of any format change prior to making any such change.
Southern Starr shall continue to be responsible for maintenance of the
Station's public inspection file in good order as required by the FCC, to have
prepared and timely filed in such file the quarterly issues/programs list as
required by FCC rules and to timely file with the FCC all required reports and
records. Triathlon shall provide Southern Starr with any information concerning
programming or commercial matter broadcast or to be broadcast on the Station as
Southern Starr shall reasonably request.
9. Maintenance, Installation and Removal of Equipment; Responsibility for
Costs.
(a) Southern Starr shall be responsible for maintenance and repair of the
Station's transmitter and antenna, and will keep those facilities operating in
compliance with the rules and regulations of the FCC.
(b) Triathlon shall be responsible for the salaries, commissions, taxes,
insurance and all other related costs for all personnel employed by Triathlon
and involved in the production,
6
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broadcast and sale of its programming and commercial messages including, but not
limited to, on-air personalities, sales persons and traffic personnel. Triathlon
shall also be responsible for all of its promotional expenses in connection with
the programming it is to furnish for broadcast on the Station. Southern Starr
shall be responsible for its own corporate expenses and obligations for borrowed
money and for all direct operating costs of the Station, including, but not
limited to the following: all lease payments for use of the Station's main
studio and offices; salaries, payroll taxes, insurance and related costs of all
personnel employed by Southern Starr for the Station; insurance costs relating
to Southern Starr's assets and operations; power and other utility bills for
the Station's main studio facilities, its transmitter sites and any other
facilities it may have; maintenance of all transmitting equipment including
costs of repairs and supplies; Southern Starr's own telephone delivery and
postal expenses; and income, gross receipts, sales, personal property,
real property and any other taxes of whatever nature related to Southern Starr's
ownership of the Station assets or Southern Starr's own programming efforts on
the Station. Notwithstanding the foregoing, Triathlon shall reimburse Southern
Starr for the operational expenses of the Station which are incurred in the
normal course of the Station' business and are consistent with the past
practices of the Station, including those which are specified in Schedule A
hereto.
10. Triathlon's Representations. Triathlon represents and warrants that it
has the right to enter into this Agreement and to provide programming to the
Station as provided for by this Agreement. Triathlon further represents and
warrants that the performing rights to all music contained in such programming
are or will be licensed by BMI, ASCAP or SESAC, are in the public domain or are
controlled by Triathlon. Triathlon agrees to indemnify and hold Southern
7
<PAGE>
Starr, its directors, shareholders, officers, agents, employees, successors and
assigns free and harmless from any and all claims, losses, damages, liabilities,
costs or expenses, including reasonable attorneys' fees, of every kind and
nature incurred by Southern Starr or such persons by reason of the breach of
this representation and warranty by Triathlon and for all claims, losses,
damages, liabilities, costs or expenses, including reasonable attorneys' fees,
of every kind and nature arising from the broadcast of any programming or other
matter by Triathlon pursuant to this Agreement with respect to copyright
infringement, libel, slander, defamation, infringement of trademarks, trade
names or program titles, appropriation of name or likeness, invasion of privacy
or violation of the rules and regulations of the FCC. Triathlon agrees to defend
at its own expense any action or proceeding arising out of its indemnification
obligations hereunder.
11. Facilities. Triathlon shall provide programming to the
Station pursuant to this Agreement from facilities owned, leased or maintained
by Southern Starr, and during the Term of this Agreement Triathlon shall have
the right to use the assets of the Station in providing such programming.
Southern Starr shall, at its sole expense, retain a general manager and the
necessary staff as may be required by FCC rules and regulations, which manager
and staff shall be responsible for maintaining the transmitting facilities of
the Station and insuring compliance with the technical operating and reporting
requirements established by the FCC. The transmitting facilities of the Station
shall be maintained by Southern Starr in accordance with all applicable
FCC rules and regulations and all FCC licenses and authorizations for the
Station. Throughout the Term of this Agreement, all transmitting equipment shall
be in good operating condition consistent with standards of good engineering
practice in the broadcast industry.
8
<PAGE>
12. Monthly Reports. At Southern Starr's request, Triathlon shall
submit to Southern Starr in writing monthly reports in form reasonably
satisfactory to Southern Starr, which reports will cover programs and
commercials delivered by Triathlon and broadcast by the Station.
13. Failure of Facilities. Any failure or impairment (i.e. failure to
broadcast at the Station' full authorized height and power) of facilities or any
delay or interruption in broadcast programming, or failure at any time to
furnish facilities, in whole or in part, for broadcasting, due to acts of God,
strikes or threats thereof or force majeure or due to causes beyond the control
of Southern Starr shall not constitute a breach of this Agreement and Southern
Starr will not be liable to Triathlon, except to the extent of allowing in each
case an appropriate payment credit for time or broadcasts not provided based
upon a pro-rata adjustment to the compensation payable to Southern Starr based
upon the length of time during which the failure or impairment exists.
14. No Restriction on Other Programming. Nothing in this Agreement
shall restrict Triathlon from offering the programming and services provided by
Triathlon to Southern Starr pursuant to this Agreement to any other radio
Station in the Station' market.
15. Maintenance of Licenses. Triathlon agrees to maintain at
Triathlon's expense such licenses, including performing rights licenses and
including specifically performing rights licenses issued by ASCAP, SESAC and
BMI, as now are or hereafter may be in general use by radio broadcasting Station
and as may be necessary for Triathlon to broadcast the programming which
Triathlon furnishes to the Station hereunder.
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<PAGE>
16. Assignability. Neither party hereto may assign or transfer any of
its obligations or the rights or privileges granted to it under this Agreement
without the other's prior written consent, except that Triathlon may assign its
obligations, rights and privileges hereunder to an affiliate or wholly-owned
subsidiary of Triathlon in which case Triathlon shall remain fully obligated
under this Agreement as an assignor. Triathlon or Southern Starr shall be
entitled to institute proceedings at law or in equity to enforce the specific
performance of the provisions of this Section 16.
17. Modifications and Waivers. No inducements, representations or
warranties except as specifically set forth in this Agreement have been made by
any of the parties to this Agreement with respect to the subject matter hereof.
No provision of this Agreement shall be changed or modified, nor shall this
Agreement be discharged in whole or in part, except by an agreement in writing,
signed by the party against whom the change, modification or discharge is
claimed or sought to be enforced, nor shall any waiver of any of the conditions
or provisions of this Agreement be effective and binding unless such waiver
shall be in writing and signed by the party against whom the waiver is asserted;
and no waiver of any provision of this Agreement shall be deemed to be a waiver
of any preceding or succeeding breach of the same or of any other provision.
Nothing in this Agreement shall be construed to make Southern Starr and
Triathlon partners or joint venturers or to afford any rights to any third party
other than as expressly provided herein.
18. No Conflict. Both Southern Starr and Triathlon represent that they
are empowered
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<PAGE>
and able to enter into this Agreement, and that the execution, delivery and
performance hereof shall not constitute a breach or violation of any agreement,
contract or other obligation to which either party is subject or by which it is
bound.
19. Southern Starr's Representations. Southern Starr makes the
following further representations, warranties and covenants:
(a) Southern Starr owns and holds all licenses and other permits and
authorizations necessary for the operation of the Station as presently conducted
(including licenses, permits and authorizations issued by the FCC), and such
licenses, permits and authorizations will be in full force and effect for the
entire Term hereof unimpaired by any acts or omissions of Southern Starr,
its principals, employees or agents. There is not pending or, to Southern
Starr's best knowledge, threatened, any action by the FCC or other party to
revoke, cancel, suspend, refuse to renew or modify adversely any of such
licenses, permits or authorizations and, to Southern Starr's best knowledge, no
event has occurred which allows or, after notice or lapse of time or both, would
allow, the revocation or termination of such licenses, permits or authorizations
or the imposition of any restrictions thereon of such a nature that may limit
the operation of the Station as presently conducted. Southern Starr has no
reason to believe that any such license, permit or authorization will not be
renewed during the Term of the Agreement in its ordinary course.
(b) All reports and applications required to be filed with the FCC
(including ownership reports and renewal applications) or any other government
entity, department or body in respect of the Station have been, and in the
future will be, filed in a timely manner and are and will be true and complete
and accurately present the information contained and required thereby. All such
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<PAGE>
reports and documents, to the extent required to be kept in the public
inspection files of the Station, are and will be kept in such files.
(c) Southern Starr has, and will throughout the Term hereof maintain,
good and marketable title to all of its assets and properties used in the
operation of the Station.
(d) Southern Starr will maintain in full force and effect throughout
the Term of this Agreement insurance with responsible and reputable insurance
companies or associations covering such risks (including fire and other risks
insured against by extended coverage, public liability insurance, insurance for
claims against personal injury or death or property damage and such other
insurance as may be required by law) and in such amounts and on such tens as is
conventionally carried by broadcasters operating radio Station with facilities
comparable to those of the Station. Any insurance proceeds received by Southern
Starr in respect of damaged property will be used to repair or replace such
property so that the operation of the Station conforms with this Agreement.
20. Notices. All notices, demands and requests permitted or required
under this Agreement shall be in writing and shall be deemed given on the date
of personal delivery or on the date of receipt if mailed by certified mail,
postage prepaid and return receipt requested, or on the date of a stamped
receipt if sent by an overnight delivery service, or on the date of written
confirmation of delivery by facsimile or telecopy transmission to the following
addresses:
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If to Southern Starr: Mr. Michael G. Ferrel
President and Chief Executive Officer
Southern Starr of Arkansas, Inc.
One Monarch Place
Suite 220
Springfield, Massachusetts 01144
Telecopy No. (413) 732-7851
Copy to: Howard M. Berkower, Esq.
Baker & McKenzie
805 Third Avenue
New York, New York 10155
Telecopy No. (212) 759-9133
If to Triathlon: Mr. Norman Feuer
President and Chief Executive Officer
Triathlon Broadcasting of Little Rock, Inc.
750 B Street
Suite 1910
San Diego, California
Telecopy No. (619) 239-4270
Copy to: Howard J. Tytel, Esq.
The Sillerman Companies
150 East 58th Street
19th Floor
New York, New York 10155
Telecopy No. (212) 753-3188
21. Law Governing. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to the
choice of law provisions thereof and is intended to be fully consistent with the
Act and all rules and regulations of the FCC, as applicable. The obligations of
the parties hereto are subject to all federal, state and local laws and
regulations now or hereafter in force and to the rules, regulations and
policies of the FCC and all other government entities or authorities presently
or hereafter to be constituted.
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<PAGE>
22. Termination. This Agreement may be terminated by either party, (a)
in the event of a material breach of any of the terms of this Agreement by the
other party, which breach is not cured within thirty (30) days following
delivery of written notice of such breach together with a demand that it be
cured, (b) if the other party shall make a general assignment for the benefit of
creditors, or files or has filed against it a petition for bankruptcy,
reorganization or an arrangement for the benefit of creditors, or for the
appointment of a receiver, trustee or similar creditors' representative for the
property or assets of such party under any federal or state insolvency law,
which, if filed against such party, has not been dismissed or discharged within
sixty (60) days thereof, (c) in the event of a material breach by the other
party of any representation or warranty herein, or in any certificate, affidavit
or document furnished pursuant to the provisions hereof, which shall prove to
have been false or misleading in any material respect as of the time made or
furnished, or (d) in the event either party is specifically required by the FCC
to terminate this Agreement in order to comply with FCC rules or policies, or if
there is a material change to Southern Starr's FCC authorizations which
materially and adversely affects Southern Starr's signal, quality or coverage.
23. Counterparts. This Agreement may be executed in any one or more
counterparts, each of which shall be binding upon the party so executing it and
when taken together shall constitute one and the same Agreement.
24. Construction In the event any provision contained in this
Agreement is held to be invalid, illegal or unenforceable, such holding shall
not affect any other provision hereof and this
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Agreement shall be construed as if such invalid, illegal or unenforceable
provision had not been contained herein.
25. Binding and Enforceable. Subject to the provisions of Section 16
hereof, this Agreement shall be binding upon, inure to the benefit of, and be
enforceable by the parties hereto and their respective successors and permitted
assigns.
26. No Broker. Each party represents that there is no broker or finder
or other person who would have any valid claim against any of the parties to
this Agreement for a commission or brokerage fee or payment in connection with
this Agreement or the transactions contemplated hereby as a result of any
agreement of, or action taken by, either party hereto. Each party agrees
to indemnify and hold harmless the other with respect to any such claim.
27. No Limitation on Remedies. Except as otherwise expressly limited by
the provisions of this Agreement, any failure by either party to comply with the
provisions of this Agreement shall entitle the other party to assert any
remedies available to it at law or in equity.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year written above.
TRIATHLON BROADCASTING OF LITTLE
ROCK, INC.
By: /s/ Norman Ferrer
-----------------------
Title: President/CEO
SOUTHERN STARR OF ARKANSAS, INC.
By: /s/ Michael G. Ferrel
-----------------------
Title: President
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SCHEDULE A
1. Compensation. In consideration for Triathlon's right to sell
commercial time and collect all revenues from such sale pursuant to and during
the Term of this Agreement, Triathlon shall pay to Southern Starr simultaneously
with the execution of this Agreement the cash sum of Three Million Five Hundred
Thousand Dollars ($3,500,000), which amount shall be applied to and credited
against the purchase price which Triathlon has agreed to pay to Southern Starr
for the Station under the Purchase Agreement.
2. Reinbursement of Other Expenses. Triathlon shall pay to Southern
Starr each month on the first day of each month an amount sufficient to
reimburse Southern Starr for the following direct and indirect operating costs
of the Station: lease payments for the use of its main studio facilities and
transmitter sites; power and other utility bills for its main studio facilities
and transmitter sites; insurance costs relating to Southern Starr's own assets
and operations; maintenance of the transmitting facility, main studio and all
equipment necessary for the operation of the Station in compliance with the
rules, regulations and policies of the FCC; the salary, payroll taxes, insurance
and related costs of the engineer and general manager employed by Southern Starr
for the Station; income, gross receipts, sales, real property, personal property
and any other taxes of any nature whatsoever related to the operation of the
Station or Southern Starr's own programming efforts on the Station but expressly
not including any corporate or franchise tax payments due from Southern Starr to
the State of Arkansas; and such other direct and indirect operating costs of the
Station incurred at the request of Triathlon.
17
FIFTH AMENDMENT TO ASSET PURCHASE AGREEMENT
This Fifth Amendment to Asset Purchase Agreement is made and entered into
this 15th day of May, 1996, by and between Texas Coast Broadcasters, Inc.
("Seller"), a Texas corporation, and Multi-Market Radio, Inc. ("Purchaser"),
a Delaware corporation
WHEREAS, Seller and Purchaser executed that certain Asset Purchase
Agreement dated December 27, 1995 (the "Agreement"), pursuant to which Seller
agreed to sell to Purchaser the properties and assets described in the
Agreement; and
WHEREAS, the Seller and Purchaser wish to amend Section 5.9(c) of the
Agreement to extend the time by which Purchaser must terminate the Agreement
if it does not agree with the Remedy Report, as defined in the Agreement.
NOW, THEREFORE, in consideration of the promises and the mutual covenants
and agreements contained in this amendment and in the Agreement, the parties
agree as follows:
1. Section 5.9(c) of the Agreement is hereby amended to read as follows:
(c) Seller has engaged Weston to conduct such additional investigation
of the environmental conditions at the Ennis Site as may be necessary
in the opinion of such consultant to recommend the remediation
appropriate for such site and to prepare a report describing such
environmental conditions and recommending the remediation necessary
for the Ennis Site (the "Remedy Report"). Purchaser will be provided a
copy of the Remedy Report, and if it does not agree with the proposed
remedy, Purchaser may elect to terminate this Agreement
<PAGE>
by notifying Seller in writing on or before June 15, 1996, of its
election to terminate this Agreement. If Purchaser does not elect to
terminate this Agreement by notifying Seller, on or before June 15,
1996, of its election to terminate, Purchaser shall be deemed to have
approved the remedy specified in the Remedy Report. Seller will not
implement a remedy for the Ennis Site that is different from the
remedy described in the Remedy Report without the proper written
consent of Purchaser.
2. This amendment contains the entire understanding of the parties hereto
in respect of the amendment of Section 5.9(c) of the Agreement and supersedes
any prior agreements and understandings between the parties with respect to
the amendment of Section 5.9(c). All other provisions of the Agreement remain
unchanged.
3. This amendment may be executed in any number of counterparts, each of
which shall be deemed an original, buy all of which together shall constitute
one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Fifth Amendment
to Asset Purchase Agreement to be effective as of the date first above
written.
SELLER:
TEXAS COAST BROADCASTERS, INC.
By: /s/ Harry M. Green
-------------------------------
Harry M. Green
Chairman of the Board
PURCHASER:
MULTI-MARKET RADIO, INC.
By: /s/ Michael G. Ferrel
-------------------------------
