SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): October 3, 1996
(August 20, 1996)
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SFX BROADCASTING, INC.
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(Exact name of registrant as specified in charter)
Delaware 0-22486 13-3649750
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(State or Other (Commission File No.) (IRS Employer Identification No.)
Jurisdiction
of Incorporation)
150 East 58th Street, 19th Floor, New York, New York 10155
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 407-9191
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N/A
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
Amendment of Merger Agreement with Multi-Market Radio, Inc.; Settlement of
Related Lawsuit
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On September 30, 1996, SFX Broadcasting, Inc. (the "Company") entered
into Amendment No. 3 to the Amended and Restated Agreement and Plan of Merger,
as amended (the "Merger Agreement"), among the Company, SFX Merger Company, a
wholly-owned subsidiary of the Company ("Acquisition Sub"), and Multi-Market
Radio, Inc. ("MMR"). The Merger Agreement provides for the merger (the
"Merger") of Acquisition Sub with and into MMR, as a result of which MMR will
become a wholly-owned subsidiary of the Company. Amendment No. 3 increased the
value of the shares of the Company to be issued in the Merger in respect of
each share of stock of MMR from $12.00 to $12.50, which value is subject to
adjustment downward in the event that the shares of Class A Common Stock of
the Company trade below $32.00 during a specified period prior to the
consummation of the Merger and adjustment upward in the event that the shares
of Class A Common Stock of the Company trade above $44.00 during a specified
period prior to the consummation of the Merger. No such adjustment will be
made in the event that the shares of Class A Common Stock of the Company trade
above $42.00 but at or below $44.00, as was previously the case. In the event
that the shares of Class A Common Stock of the Company trade above $44.00
during the twenty trading days ending on the fifth trading day prior to the
consummation of the Merger, the stockholders of MMR will be issued additional
stock of the Company equal to 30% of the amount by which the shares of Class A
Common Stock of the Company trade above $44.00. In the event that the shares
of Class A Common Stock of the Company trade below $32.00 during such period,
the stockholders of MMR will receive 0.3750 of a share of Class A Common Stock
of the Company, implying a value of less than $12.00 per share of MMR, subject
to further adjustment.
In addition, Amendment No. 3 relieves the Company and MMR of any
obligation to enter into a local marketing agreement ("LMA") with respect to
certain radio stations acquired by the Company from Liberty Broadcasting
Incorporated.
In a complaint (Index No. 602056/96) dated April 18, 1996, Paul Pops,
who purports to be a stockholder of MMR, brought suit in the Supreme Court of
the State of New York against MMR, each of the directors of MMR and the
Company, and Robert F.X. Sillerman, the Chief Executive Officer and
controlling stockholder of the Company, seeking to enjoin the Merger, or, in
the alternative, seeking monetary damages. On September 25, 1996, the parties
entered into a Memorandum of Understanding, pursuant to which the parties
reached an agreement in principle providing for the settlement of the action
(the "Settlement"). Pursuant to the Settlement, the plaintiff has agreed that
the ratio of shares of the Company to be received by the stockholders of MMR
in the Merger, as set forth in Amendment No. 3, is fair to the public
stockholders of MMR. The Settlement provides for the Company to pay
plaintiff's counsel's fees as approved by the court. The Settlement is
conditioned upon the (i) consummation of the Merger, (ii) completion of
certain confirmatory discovery, and (iii) approval of the court. Pursuant to
the Settlement, the defendants have denied, and continue to deny, that they
committed any violations of law or have acted in bad faith. There can be no
assurance that the court will approve the Settlement on the terms and
conditions provided for therein, or at all.
The foregoing description of Amendment No. 3 does not purport to be
complete and is qualified in its entirety by reference to the copy thereof
attached hereto as an exhibit, which is incorporated herein by reference.
Loan to Multi-Market Radio, Inc.
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On September 4, 1996, the Company entered into a loan agreement with MMR
pursuant to which the Company agreed to lend MMR $18.0 million to fund the
acquisition of WKSS-FM, Hartford, Connecticut, by MMR and an additional $5.0
million for working capital. The loan bears interest at 12% per annum and the
principal of the loan will be payable as follows: (i) if the Merger is
consummated, the loan plus accrued interest shall be due within 30 days
thereafter; (ii) if the Merger is terminated pursuant to certain sections of
the Merger Agreement and MMR exercises its right pursuant to the Merger
Agreement to acquire certain radio stations from SFX for an aggregate purchase
price of $100 million, then (a) $750,000 of the outstanding principal of the
loan, plus accrued interest thereon, shall be due on the date MMR exercises
such option, (b) $17,250,000 of the outstanding principal of the loan, plus
accrued interest thereon, shall be due upon the closing of such acquisitions,
and (c) the balance of the loan, plus accrued interest thereon, shall be due
on the date the Merger Agreement is terminated; (iii) if the Merger is
terminated pursuant to certain sections of the Merger Agreement and the
Company exercises its right pursuant to the Merger Agreement to exchange
certain
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of its radio stations for certain of MMR's radio stations, then (a) $18.0
million of the outstanding principal of the loan, plus accrued interest
thereon, shall be due on the date of the closing of such exchange and (b) the
balance of the outstanding principal of the loan shall be due on the date the
Merger Agreement is terminated; and (iv) if the Merger Agreement is terminated
pursuant to certain sections of the Merger Agreement, the entire outstanding
principal of the loan, plus accrued interest thereon, shall be due within 45
days of the date of such termination and $18.0 million of the outstanding
principal shall be repaid in full by means of a transfer to the Company of
MMR's ownership interest in WKSS-FM.
To secure the loan, MMR pledged the shares of its wholly-owned
subsidiary which acquired the assets of WKSS-FM to the Company. In addition,
MMR granted the Company a security interest in all of the assets of such
subsidiary to the extent permitted by law.
Acquisition of Radio Stations in Jackson, Mississippi
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On August 29, 1996, the Company acquired radio stations WSTZ-FM and
WZRX-AM, both of which serve the Jackson, Mississippi market, for
approximately $3.5 million from Lewis Broadcasting Corp. On January 26, 1996
MMR entered into an agreement to acquire these stations. The purchase price
was determined by arms-length negotiations between the parties. In connection
with entering into the Merger Agreement, the Company and MMR agreed that the
Company would finance the purchase of such stations and that MMR would
transfer the stations to the Company simultaneously with their purchase by
MMR. The purchase price was financed from the proceeds of debt and equity
offerings which the Company consummated in May 1996.
Acquisition and Disposition of Radio Stations in Louisville, Kentucky
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On September 16, 1996, the Company acquired three radio stations serving
the Louisville, Kentucky market from Prism Radio Partners L.P. for
approximately $22.5 million. The purchase price was determined by arms-length
negotiations between the parties. The purchase price was financed from the
proceeds of debt and equity offerings which the Company consummated in May
1996. The Company sold these three radio stations to third parties in October
1996 for aggregate consideration of approximately $18.5 million.
Agreement to Acquire Radio Station in Albany, New York
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On August 23, 1996, the Company announced that it had agreed to acquire
WYSR-FM, which serves the Albany, New York market, for approximately $1.0
million from Jarad Broadcasting Co. of New York Inc. The Company currently
sells advertising a WYSR-FM pursuant to a joint sales agreement. The
acquisition is subject to the prior approval of the Federal Communications
Commission (the "FCC").
Agreement to Acquire Radio Stations in Charlotte, North Carolina
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On September 4, 1996, the Company announced that it had entered into a
letter of intent with EZ Communications, Inc. ("EZ") pursuant to which the
Company will acquire WSSS-FM, WRFX-FM and WNKS-FM, each of which serves the
Charlotte, North Carolina market, from EZ in exchange for WTDR-FM, Charlotte,
North Carolina, and $64.8 million (the "Charlotte Exchange"). The Charlotte
Exchange is subject to the prior approval of the FCC and the receipt of all
applicable approvals and authorizations under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"). EZ is in the process of
acquiring WRFX-FM and WNKS-FM. The Company has received a civil investigative
demand from the Department of Justice's Antitrust Division relating to its
investigation of a proposed acquisition of EZ by a third party, and there can
be no assurance as to the impact of this investigation or the proposed
acquisition on the Charlotte Exchange.
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Agreement to Acquire Radio Stations in Richmond, Virginia
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On August 20, 1996, the Company announced that it had agreed to acquire
a 96% interest in ABS Communications L.L.C. ("ABS"). Simultaneously with the
consummation of this acquisition, ABS will acquire WKHK-FM and WBZU-FM, both
of which operate in the Richmond, Virginia market. Upon the consummation of
this acquisition, the Company will also assume ABS's LMAs with respect to
WVGO-FM and WLEE-FM, both of which also operate in the Richmond, Virginia
market, and will enter into LMAs with respect to WVGO-FM and WLEE-FM pending
the consummation of the acquisition of these stations. The aggregate purchase
price for the four stations is approximately $38.8 million, inclusive of
certain transaction costs. The acquisition of ABS is subject to the prior
approval of the FCC and the receipt of all applicable approvals and
authorizations under the HSR Act.
Agreement to Acquire Radio Stations in Dallas, Texas
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On September 25, 1996, the Company entered into an agreement with CBS
Inc., pursuant to which the Company agreed to exchange WHFS-FM, which serves
the Baltimore/Washington, D.C. market, for KTXQ-FM and KRRW-FM, both of which
serve the Dallas, Texas market. The agreement provides that, commencing on
September 30, 1996, the Company may conduct due diligence activities in
relation to the contemplated exchange of stations. The agreement further
provides that a condition to the Company's obligation to consummate the
exchange is that the Company shall have been satisfied that its due diligence
review of the stations, assets and liabilities to be acquired and assumed by
the Company shall not have revealed any fact or circumstance which shall have
caused the Company to believe in good faith that proceeding with the exchange
would adversely affect the Company; provided , however, that this condition is
irrevocably deemed satisfied if the Company does not describe any such facts
and circumstances in reasonable detail in writing to CBS Inc. on or prior to
October 10, 1996. The failure of the above condition to be satisfied would
allow the Company to terminate its agreement with CBS Inc. The exchange is
subject to the prior approval of the FCC and the receipt of all applicable
approvals and authorizations under the a HSR Act.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
2.1 Amendment No. 3, dated as of September 30, 1996, to the Amended and
Restated Agreement and Plan of Merger, dated as of April 15, 1996,
as amended on May 6, 1996 and July 30, 1996, among SFX Broadcasting,
Inc., SFX Merger Company and Multi-Market Radio, Inc.
2.2 Asset Purchase Agreement between Lewis Broadcasting Corporation and
Multi-Market Radio Acquisition Corp. (incorporated by reference to
Exhibit 10.49 of the Form SB-2 of Multi-Market Radio, Inc.
(Commission File No. 333-1712) filed on February 27, 1996).
2.3 Form of letter of intent, dated August 28, 1996, between SFX
Broadcasting, Inc. and EZ Communications, Inc.
2.4 Form of letter of intent, dated August 9, 1996, between SFX
Broadcasting, Inc., Kenneth A. Brown, ABS Communications, Inc., ABS
Communications, L.L.C., ABS Richmond Partners, L.P., ABS Richmond
Partners II, L.P., EBF, Inc. and EBF Partners.
2.5 Asset Exchange Agreement, dated as of September 24, 1996, among
WHFS, Inc., Liberty Broadcasting of Maryland Incorporated, SFX
Broadcasting, Inc. and CBS Inc.
2.6 Form of Asset Purchase Agreement between Jarad Broadcasting Company
of Albany Inc. and Liberty Broadcasting of Albany, Incorporated.
10.1 Loan Agreement, dated September 4, 1996, by and between Multi-Market
Radio, Inc. and SFX Broadcasting, Inc. (incorporated by reference to
Exhibit 10.1 of the Form 8-K of Multi-Market Radio, Inc. (Commission
File No. 0-22080) filed on September 10, 1996).
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10.2 Consent Agreement, dated May 17, 1996, by and among The Huff
Alternative Income Fund, L.P., Multi-Market Radio, Inc. and SFX
Broadcasting, Inc. (incorporated by reference to Exhibit 10.2 of the
Form 8-K of Multi-Market Radio, Inc. (Commission File No. 0-22080)
filed on September 10, 1996).
10.3 Warrant to purchase 300,000 shares of Class A Common Stock of SFX
Broadcasting, Inc., issued to Sillerman Communications Management
Corporation.
10.4 Warrant to purchase, subject to stockholder approval, 300,000 shares
of Class A Common Stock of SFX Broadcasting, Inc. issued to
Sillerman Communications Management Corporation.
99.1 Press release, dated August 29, 1996, of SFX Broadcasting, Inc.
announcing the acquisition of radio stations WSTZ-FM and WZRX-AM.
99.2 Press release, dated August 23, 1996, of SFX Broadcasting, Inc.
announcing its agreement to acquire WYSR-FM, Albany, New York.
99.3 Press release, dated September 4, 1996, of SFX Broadcasting, Inc.
announcing its agreement to acquire WSSS-FM, WRFX-FM and WNKS-FM,
Charlotte, North Carolina.
99.4 Press release, dated August 20, 1996, of SFX Broadcasting, Inc.
announcing its agreement to acquire ABS Communications, L.L.C.
99.5 Press release, dated September 26, 1996, of SFX Broadcasting, Inc.
announcing the exchange of WHFS-FM, Baltimore/Washington, D.C., for
KTXQ-FM and KRRW-FM, Dallas, Texas.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
SFX BROADCASTING, INC.
By: /s/ Robert F.X. Sillerman
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Name: Robert F.X. Sillerman
Title: Executive Chairman
Date: October 3, 1996
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EXHIBIT INDEX
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EXHIBITS DESCRIPTION
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2.1 Amendment No. 3, dated as of September 30, 1996, to the Amended and
Restated Agreement and Plan of Merger, dated as of April 15, 1996,
as amended on May 6, 1996 and July 30, 1996, among SFX Broadcasting,
Inc., SFX Merger Company and Multi-Market Radio, Inc.
2.2 Asset Purchase Agreement between Lewis Broadcasting Corporation and
Multi-Market Radio Acquisition Corp. (incorporated by reference to
Exhibit 10.49 of the Form SB-2 of Multi-Market Radio, Inc.
(Commission File No. 333-1712) filed on February 27, 1996).
2.3 Form of letter of intent, dated August 28, 1996, between SFX
Broadcasting, Inc. and EZ Communications, Inc.
2.4 Form of letter of intent, dated August 9, 1996, between SFX
Broadcasting, Inc., Kenneth A. Brown, ABS Communications, Inc., ABS
Communications, L.L.C., ABS Richmond Partners, L.P., ABS Richmond
Partners II, L.P., EBF, Inc. and EBF Partners.
2.5 Asset Exchange Agreement, dated as of September 24, 1996, among
WHFS, Inc., Liberty Broadcasting of Maryland Incorporated, SFX
Broadcasting, Inc. and CBS Inc.
2.6 Form of Asset Purchase Agreement between Jarad Broadcasting Company
of New York Inc. and Liberty Broadcasting of Albany, Incorporated.
10.1 Loan Agreement, dated September 4, 1996, by and between Multi-Market
Radio, Inc. and SFX Broadcasting, Inc. (incorporated by reference to
Exhibit 10.1 of the Form 8-K of Multi-Market Radio, Inc. (Commission
File No. 0-22080) filed on September 10, 1996).
10.2 Consent Agreement, dated May 17, 1996, by and among The Huff
Alternative Income Fund, L.P., Multi-Market Radio, Inc. and SFX
Broadcasting, Inc. (incorporated by reference to Exhibit 10.2 of the
Form 8-K of Multi-Market Radio, Inc. (Commission File No. 0-22080)
filed on September 10, 1996).
10.3 Warrant to purchase 300,000 shares of Class A Common Stock of SFX
Broadcasting, Inc., issued to Sillerman Communications Management
Corporation.
10.4 Warrant to purchase, subject to stockholder approval, 300,000 shares
of Class A Common Stock of SFX Broadcasting, Inc. issued to
Sillerman Communications Management Corporation.
99.1 Press release, dated August 29, 1996, of SFX Broadcasting, Inc.
announcing the acquisition of radio stations WSTZ-FM and WZRX-AM.
99.2 Press release, dated August 23, 1996, of SFX Broadcasting, Inc.
announcing its agreement to acquire WYSR-FM, Albany, New York.
99.3 Press release, dated September 4, 1996, of SFX Broadcasting, Inc.
announcing its agreement to acquire WSSS-FM, WRFX-FM and WNKS-FM,
Charlotte, North Carolina.
99.4 Press release, dated August 20, 1996, of SFX Broadcasting, Inc.
announcing its agreement to acquire ABS Communications, L.L.C.
99.5 Press release, dated September 26, 1996, of SFX Broadcasting, Inc.
announcing the exchange of WHFS-FM, Baltimore/Washington, D.C., for
KTXQ-FM and KRRW-FM, Dallas, Texas.
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EXHIBIT 2.1
AMENDMENT NO. 3
TO THE
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
AMENDMENT NO. 3, dated as of September 30, 1996 ("Amendment No.
3"), to the Amended and Restated Agreement and Plan of Merger, dated as of
April 15, 1996 (the "Agreement" and, as amended by Amendment No. 1 dated as of
May 6, 1996, Amendment No. 2 dated as of July 30, 1996 and Amendment No. 3,
the "Amended Agreement"), by and among SFX BROADCASTING, INC., a Delaware
corporation ("SFX"), SFX MERGER COMPANY, a Delaware corporation and a direct
wholly-owned subsidiary of SFX ("Acquisition Sub"), and MULTI-MARKET RADIO,
INC., a Delaware corporation ("MMR").
W I T N E S S E T H:
WHEREAS, Acquisition Sub, upon the terms and subject to the
conditions of this Agreement and in accordance with the General Corporation
Law of the State of Delaware ("Delaware Law"), intends to merge with and into
MMR (the "Merger");
WHEREAS, the Board of Directors and Independent Committees of MMR
(a) has determined that it is in the best interests of MMR and its
stockholders to amend the Agreement and has approved and adopted this
Amendment No. 3 and (b) has recommended the approval and adoption of the
Amended Agreement and the approval of the Merger by, and the Board of
Directors of MMR has directed that the Amended Agreement and the Merger be
submitted to a vote of, the stockholders of MMR;
WHEREAS, the Board of Directors and Independent Committees of SFX
(a) has determined that it is in the best interests of SFX and its
stockholders to amend the Agreement and has approved and adopted this
Amendment No. 3 and (b) has recommended the approval and adoption of the
Amended Agreement and the approval of the Merger by, and the Board of
Directors of SFX has directed that the Amended Agreement and the Merger be
submitted to a vote of, the stockholders of SFX;
WHEREAS, the Board of Directors of Acquisition Sub has determined
that it is in the best interests of Acquisition Sub and its stockholder, to
amend the Agreement and has approved and adopted this Amendment No. 3 and the
Amended Agreement; and
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, SFX, Acquisition Sub and MMR hereby agree as follows:
ARTICLE I -- AMENDMENTS
SECTION 1.01. Section 2.01(b) of the Agreement is hereby amended to
read, in its entirety, as follows:
"(b) For purposes of this Agreement, subject to adjustments
required by Section 6.16, "Exchange Ratio" shall mean the number of
shares of SFX Class A Common Stock or SFX Class B Common Stock, as the
case may be, equal to the quotient obtained by dividing $12.50 by the
average of the Reported Price (as defined hereafter) for the twenty (20)
consecutive trading days ending on the fifth trading day prior to the
Effective Time (such average Reported Price being the "SFX Class A
Common Stock Price") (the fifth trading day prior to the Effective Time
being referred to as the "Determination Date"), on the primary exchange
on which the SFX Class A Common Stock is traded, including the Nasdaq
National Market; provided, however, that (1) in the event that the SFX
Class A Common Stock Price exceeds $44.00, then the Exchange Ratio shall
be the quotient obtained by dividing (i) the sum of (A) $12.50, plus (B)
the product of (I) thirty percent (30%), multiplied by (II) the
difference between the SFX Class A Common Stock Price and $44.00 by (ii)
the SFX Class A Common Stock Price; or (2) in the event that the SFX
Class A Common Stock Price is less than
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$32.00 then the Exchange Ratio shall be .3750. All arithmetic
calculations pursuant to this paragraph shall be made through the fourth
decimal place (i.e., to the closest ten-thousandth). For purposes of
this Agreement, "Reported Price" shall mean, with respect to each
trading day, the average of the last reported bid and asked prices of
the SFX Class A Common Stock on such trading day."
SECTION 1.02. Section 6.17(b) of the Agreement is hereby amended to
read, in its entirety, as follows:
"(b) In the ev0ent that this Agreement is terminated pursuant to
Section 8.01(a), (b), (c)(ii), (c)(iii), (f), (g), (h), (j), (l), (m) or
(n), MMR will have the right but not the obligation to acquire, subject
to FCC approval, radio stations WHCN(FM), Hartford, Connecticut;
WMRQ(FM), Waterbury, Connecticut; WPOP-AM, Hartford, Connecticut;
WSNE(FM), Taunton, Massachusetts; WHJY(FM), Providence, Rhode Island;
WHJJ-AM, Providence, Rhode Island; WGNA(FM), Albany, New York; WPYX(FM),
Albany, New York; WTRY-AM, Troy, New York; WGNA-AM, Albany, New York;
WYSR(FM), Rotterdam, New York and WMXB(FM), Richmond, Virginia
(collectively, the "Liberty Stations") for $100 million in cash payable
in full at the closing. To exercise its right to purchase the Liberty
Stations, MMR shall give written notice of such exercise to SFX within
forty-five (45) days following the termination of this Agreement. Such
notice shall be accompanied by a $1.0 million cash deposit to secure its
obligation to purchase the Liberty Stations. MMR shall further deposit
$2.0 million cash within twenty (20) business days thereafter. In the
event that MMR exercises its right to acquire the Liberty Stations, the
parties shall use their best efforts to cause such acquisition to be
consummated as soon as practicable and in any event within nine months
following the termination of this Agreement. In the event that this
Agreement is terminated pursuant to Section 8.01(a), (b), (f), (h), (j)
or (l), SFX shall have the right to structure an exchange of stations
(the "Exchange") for the Liberty Stations, intended to qualify as a
like-kind exchange under Section 1031 of the Code and MMR and SFX shall
use their best efforts to consummate the Exchange as soon as practicable
and in any event within nine months following the termination of this
Agreement. Notwithstanding the foregoing, the parties acknowledge that,
in the event MMR acquires radio station WYSR(FM) under this Section 6.17,
such acquisition will be of an interest in a joint sales agreement with
respect to WYSR(FM) rather than that station itself, so long as SFX's
interest in such station is limited to a joint sales agreement."
ARTICLE II -- GENERAL PROVISIONS
SECTION 2.01 EFFECTIVENESS. This Amendment No. 3 shall be effective upon
the execution and delivery by the parties thereto of that certain Memorandum
of Understanding with respect to the settlement of the legal action brought by
Paul Pops, plaintiff, against Multi-Market Radio, Inc., SFX Broadcasting, Inc.
et. al., defendants, substantially in the form submitted to and approved by
the board of directors of SFX and MMR.
SECTION 2.02. CERTAIN DEFINITIONS. Capitalized terms used in this
Amendment No. 3 but not defined herein shall have the meanings set forth in
the Agreement.
SECTION 2.03. SEVERABILITY. If any term or other provision of this
Amendment No. 3 is invalid, illegal or incapable of being enforced by any rule
of Law, or public policy, all other conditions and provisions of this
Amendment No. 3 and the Amended Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the
Transactions is not affected in any manner materially adverse to any party.
Upon such determination that any term or other provision is invalid, illegal
or incapable of being enforced, the parties hereto shall negotiate in good
faith to modify the Amended Agreement so as to effect the original intent of
the parties as closely as possible in a mutually acceptable manner in order
that the Transactions be consummated as originally contemplated to the fullest
extent possible.
SECTION 2.04. GOVERNING LAW. EXCEPT TO THE EXTENT THAT DELAWARE LAW IS
MANDATORILY APPLICABLE TO THE MERGER AND THE RIGHTS OF THE STOCKHOLDERS OF MMR
AND ACQUISITION SUB, THIS AMENDMENT NO. 3 SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
RULES OF CONFLICTS OF LAW THEREOF. ALL ACTIONS AND PROCEEDINGS ARISING OUT OF
OR RELATING TO
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THIS AMENDMENT NO. 3 SHALL BE HEARD AND DETERMINED IN ANY COURT SITTING IN THE
CITY OF NEW YORK, STATE OF NEW YORK.
SECTION 2.05. NO OTHER CHANGE/HEADINGS. All other terms and
conditions of the Agreement shall remain unchanged. The descriptive headings
contained in this Amendment No. 3 are included for convenience of reference
only and shall not affect in any way the meaning or interpretation of this
Amendment No. 3.
SECTION 2.06. COUNTERPARTS. This Amendment No. 3 may be executed
and delivered (including by facsimile transmission) in one or more
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed and delivered shall be deemed to be an original
but all of which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, SFX, Acquisition Sub and MMR have caused this
Amendment No. 3 to be executed as of the date first written above by their
respective officers thereunto duly authorized.
SFX BROADCASTING, INC.
By /s/ Robert F.X. Sillerman
---------------------------------------------
Robert F.X. Sillerman, Chief Executive Officer
SFX MERGER COMPANY
By /s/ Robert F.X. Sillerman
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Robert F.X. Sillerman, President
MULTI-MARKET RADIO, INC.
By /s/ Michael G. Ferrel
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Michael G. Ferrel, Chief Executive Officer
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EZ COMMUNICATIONS, INC.
10800 MAIN STREET, P.O. BOX 10103
FAIRFAX, VA 22030-8003 703/591-1000 FAX 703/934-1200
August 28, 1996
Mr. Geoffrey Armstrong
SFX Broadcasting, Inc.
600 Congress Avenue
Suite 1270
Austin, Texas 78701
Re: Asset Exchange of WSSS(FM), Charlotte, North Carolina for WTDR(FM),
Stateville, North Carolina and Asset Purchase of WNKS(FM), Charlotte,
North Carolina and WRFX(FM), Kannapolis, North Carolina
Dear Jeff:
This letter is intended to set forth the basic terms of a possible like-kind
exchange within the meaning of Section 1031 of the Internal Revenue Code and
the regulations thereunder and asset purchase (the "Subject Transaction")
between EZ Communications, Inc., a Virginia corporation ("EZ"), present or
future licensee and owner of substantially all of the assets that are used or
useful in the operation of radio stations WSSS(FM) and WNKS(FM), Charlotte,
North Carolina and WRFX(FM), Kannapolis, North Carolina (the "EZ Stations")
and SFX Broadcasting, Inc. ("SFX"), a Delaware corporation, licensee and owner
of substantially all of the assets that are used or useful in the operation of
radio station WTDR(FM), Charlotte, North Carolina (the "SFX Station," and,
with the EZ Stations the "Stations").
1. Nature of the Subject Transaction. The Subject Transaction shall
involve the transfer and delivery by EZ and SFX at Closing of all the tangible
and intangible assets, both real and personal, used or useful in the operation
of the EZ Stations and SFX Station, respectively, and related real property,
but excluding cash, cash equivalents, and accounts receivable. The transfer
and delivery of the assets comprising WNKS(FM) and WRFX(FM), Charlotte, North
Carolina shall be excluded from the like-kind exchange described above, but
shall be the subject of a separate asset purchase agreement pursuant to which
SFX shall convey to EZ at Closing for such assets Sixty-Four Million Eight
Hundred Thousand Dollars ($64,800,000) in immediately available funds (the
"Asset Purchase Agreement"). As of this date, EZ has not been granted licenses
by the Federal Communications Commission to operate radio stations WNKS(FM)
and WRFX(FM) (the "Future EZ Stations"). In addition, EZ has not closed the
transactions to purchase the Future EZ Stations.
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Mr. Geoffrey Armstrong
August 28, 1996
Page 2
Therefore, EZ agrees to transfer all the tangible and intangible assets, both
real and personal, used or useful in the operation of the Future EZ Stations,
and related property, but excluding cash, cash equivalents, and accounts
receivable subject to an Asset Purchase Agreement and Asset Exchange Agreement
between EZ and Evergreen Media Corporation with respect to WNKS(FM) and
WRFX(FM) (collectively referred to as "Purchase & Exchange Agreements"). The
assets of the Stations to be exchanged will be transferred free and clear of
all liabilities, liens and encumbrances, including liabilities under financing
agreements, except those specifically provided for under the Purchase &
Exchange Agreements referred to above, if any.
2. Working Capital Adjustments. Within sixty (60) days following the
Closing Date, the parties shall establish a net working capital adjustment
based on customary accounting principles, including, without limitation, the
amount of the Stations' respective aggregate net trade balance at closing, if
and to the extent such balance is negative and exceeds mutually agreed levels
as to the EZ Stations and the SFX Station, respectively, and otherwise by the
amount of any prorations for rent, utility payments, employee benefits
(including vacation and sick leave), and other normal income and expense items
related to the operation of the Stations. Income and expense of the Stations
will be prorated as of 12:01 a.m., Eastern time, on the day of Closing.
3. Accounts Receivable. The parties will use their best efforts to
collect the accounts receivable of the Stations existing as of the Closing for
a period of 90 days after the Closing. Prior to the fifteenth day after the
end of the 90-day collection period, the parties will remit to the other all
amounts collected with respect to those account receivable, and all records,
or copies thereof, with respect to any accounts receivable.
4. Definitive Agreements. The parties will undertake to negotiate a
definitive Asset Exchange Agreement and Asset Purchase Agreement (together,
the "Agreements"), setting forth the terms and conditions of the exchange,
which will supersede all prior agreements, if any, between EZ and SFX. The
parties may assign their rights and obligations under this letter of intent
and the definitive Agreements to a wholly owned subsidiary, or to American
Radio Systems Corporation in the case of EZ, provided however that each party
shall remain liable to the other party for the satisfactory performance of
such assignee's obligations under this letter of intent or the Agreements, as
the case may be.
a. Terms of the Agreements. The Agreements will contain provisions
appropriate for a radio station asset exchange and purchase transaction,
including appropriate representations, warranties, covenants (which, as to
stations WNKS(FM) and WRFX(FM), shall be no greater than those granted by EZ's
predecessor), and indemnification agreement, such as the following:
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Mr. Geoffrey Armstrong
August 28, 1996
Page 3
i. FCC Approval. The exchange and sale of the Stations will be
conditioned on the prior consent of the FCC as to EZ's acquisition of the SFX
Station and SFX's acquisition of the EZ Stations, with the consent having
become a Final Order (as that term is commonly understood) and the parties
having complied with any statutory or regulatory requirements imposed or
administered by the FCC, provided, however, that the Closing shall not occur
prior to the close of the Purchase & Exchange Agreements between EZ and
Evergreen Media Corporation.
ii. Governmental Approvals. The exchange and sale of the
Stations will also be conditioned on the prior consent and approval of any
other Federal, state or local governmental agencies, the compliance by the
parties with any statutory or regulatory requirements imposed or administered
by any of those agencies and authorities, and the expiration of any applicable
waiting periods. The Agreements shall provide that it shall be the primary
responsibility of EZ, in the case of the EZ Stations, and SFX, in the case of
the SFX Station, to obtain necessary regulatory consents, including, without
limitation, making arrangements with third parties to insure regulatory
compliance of the Subject Transaction within the respective markets.
iii. Other Approvals. The exchange of the Stations will also
be conditioned on the receipt of all material third-party consents without the
imposition of any conditions that would be adverse to EZ or SFX. SFX and EZ
will warrant in the Agreements that it will use its best efforts to obtain all
material consents required under this paragraph prior to the Closing.
iv. Assumption of Liabilities. At Closing EZ in the case of
the SFX Station and SFX in the case of the EZ Stations will assume the
obligations of ongoing agreements of the Stations to the extent that the
obligations relate to the period after the Closing, and to the extent such
obligations are disclosed in the Agreements or are entered into thereafter in
the ordinary course of business. However, the parties will not assume any
obligations arising under financing arrangements or under agreements entered
into other than in the ordinary course of business.
v. Conditional Nature of the WNKS/WRFX Agreement. The Asset
Purchase Agreement shall provide that the closing under the Asset Exchange
Agreement is a condition precedent to closing the Asset Purchase Agreement,
but the closing of the Asset Purchase Agreement shall not be a condition to
closing the Asset Exchange Agreement; provided, however, SFX shall have the
option to terminate both the Asset Purchase Agreement and Asset Exchange
Agreement if EZ is unable to close under either agreement.
vi. Specific Performance. Agreements shall provide that either
party shall be entitled to obtain specific performance of the other's
obligation in the event such other party
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Mr. Geoffrey Armstrong
August 28, 1996
Page 4
wrongfully breaches its obligations to close the transaction pursuant to the
terms of the Agreements.
vii. Upset Date. The Asset Exchange Agreement will provide
that either party, if not then in default, could terminate the agreement at
any time after December 31, 1997.
b. Delivery of Draft Agreements; Due Diligence. EZ is prepared to
deliver a first draft of the Agreements to SFX within ten (10) days of the
date that this letter is countersigned on behalf of SFX. The parties shall
immediately have the opportunity to begin a thorough investigation and review
of (i) the conditions of the technical facilities of the Stations, and (ii)
the cash flow, assets and liabilities of the Stations as reflected in its
books, financial records and material contracts. The satisfactory completion
of such investigation and review and the approval of the Board of EZ
Communications, Inc. and SFX shall be condition precedents to the execution
and delivery of the Agreements.
c. Execution of Asset Exchange Agreement; Filing of FCC
Application. Unless otherwise mutually agreed, the parties shall use their
best efforts to execute and deliver the Agreements within thirty days after
the full execution and delivery of this letter, and to prepare and file an FCC
Assignment Application with respect to the Stations' licenses within ten (10)
days following such execution and delivery of the Agreements.
5. Time Brokerage Agreement. EZ and SFX agree to mutually negotiate in
good faith and enter into a Time Brokerage Agreement, which shall become
effective as of September 15, 1996, pursuant to which EZ (or its assignee), in
the case of the SFX Stations, and SFX, in the case of the EZ Stations, shall
be entitled to program, promote and sell advertising time on such respective
Stations to the fullest extent allowable by law. The parties agree that their
respective fees provided for under the Time Brokerage Agreements, shall be
equal and offsetting, subject to adjustment to reflect the projected 1996
monthly cash flow of the EZ Stations and SFX Station, respectively.
6. Broker, Expenses of Transaction. EZ and SFX will share equally any
transfer taxes, sales taxes, document stamps, or other charges levied by any
governmental entity including FCC, FTC and other filing fees on account of the
exchange and sale of the Stations. SFX and EZ hereby represent and warrant to
the other that neither has retained any broker or agent in connection with the
purchase or sale or exchange of the Stations other than Ed Dougan &
Associates, whose fee shall be borne equally between SFX and EZ, provided that
EZ's share of such fees shall not exceed Three Hundred Twenty Four Thousand
Dollars ($324,000).
7. Exclusive Negotiations. During the period of negotiation of the
Agreements, the parties hereby agree, in consideration of expenses to be
incurred in pursuing exchange of the Stations, that they will not discuss or
negotiate with any other possible party, or entertain or consider
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Mr. Geoffrey Armstrong
August 28, 1996
Page 5
any inquiries or proposals relating to, the possible disposition of the Stations
or of any material portion thereof.
8. Operations in Ordinary Course. Except to the extent provided for
otherwise in the respective Time Brokerage Agreement, the parties hereby agree
that they will operate their respective Stations only in the ordinary course
of business, including, without limitation, using its reasonable best efforts
to maintain all existing individual employment agreements and arrangements,
and to maintain levels of marketing and promotion efforts and expenditures in
the period prior to Closing at levels no less than those currently budgeted in
1996 business plans.
9. Confidentiality. During the course of negotiation of the Agreements,
the parties will continue to discuss and obtain information regarding the
Stations. The parties and their affiliates and agents agree to maintain in
confidence all such information and any other information obtained from the
other, whether written or oral. Subject to the requirements of law, EZ and SFX
shall keep confidential their negotiations regarding, and any definitive
agreement reached for, the exchange of the Stations. Upon request, the parties
will return all written information obtained from the other, any written
record of all oral information obtained from the other and all copies thereof,
including any corporate data files with respect thereto. Subject to applicable
FCC and other legal requirements, no public announcement regarding this letter
of intent or the underlying transaction shall be made without the express
written approval of both EZ and SFX, which shall not be unreasonably withheld
and with the understanding that the parties desire to issue public
announcements of the contemplated transactions on Thursday, August 29, 1996.
If the foregoing is acceptable, please countersign below to confirm your
intent to proceed with negotiations consistent with the terms of this letter
no later than three (3) business days following its receipt. By so doing, the
parties (i) agree to be bound by the terms set forth herein, which represent
the essential terms of the Subject Transaction, and agree to negotiate in good
faith such supplemental terms as are customary in similar transactions, and
(ii) represent and warrant to each
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Mr. Geoffrey Armstrong
August 28, 1996
Page 6
other that said negotiation, execution, delivery and performance of the
Agreements substantially as described above would not violate, conflict with,
or result in the breach of terms of any agreement, written or oral, or by
which the parties or any of their property is bound.
Very truly yours,
EZ COMMUNICATIONS, INC.
By:____________________________
Alan Box, President
ACCEPTED:
SFX BROADCASTING, INC.
By:_________________________________
Its: _________________________
Date:_________________________
In acknowledgment that EZ and American Radio Systems Corporation ("ARS")
have entered into an Agreement and Plan of Merger dated August 5, 1996, ARS
hereby acknowledges receipt of notice of the Subject Transaction and consents
to the terms herein.
AMERICAN RADIO SYSTEMS
CORPORATION
By:________________________________
August 9, 1996
PERSONAL AND CONFIDENTIAL
Mr. Kenneth A. Brown
ABS Communications, Inc.
ABS Communications, L.L.C.
ABS Richmond Partners, L.P.
ABS Richmond Partners II, L.P.
EBF, Inc.
EBF Partners
Acquisition of WKHK-FM, WBZU-FM,
WLEE-FM & WVGO-FM of Richmond, Virginia
Gentlemen:
This letter is intended to set forth basic substantive terms under which
SFX Broadcasting, Inc., or one of its subsidiaries, provided the subsidiary is
guaranteed by SFX Broadcasting, Inc., (together, "SFX") has agreed to acquire
interests in the partnerships owning WKHK-FM and WBZU-FM, and to finance the
acquisition of WLEE-FM and WVGO-FM of Richmond, Virginia (together with
WKHK-FM and WBZU-FM, the "Stations"). This letter represents a binding letter
of intent with no financing contingency (the "Letter") and the parties to this
Letter agree to expeditiously proceed with the good faith negotiation and
execution of the agreements necessary to complete the transaction contemplated
hereby (the "Definitive Agreements").
We understand that Kenneth A. Brown ("Ken") and ABS Communications,
Inc., a Virginia corporation (the "Corporation"), formed ABS Communications,
L.L.C., a Virginia limited liability company (the "L.C.") on April 29, 1996.
These Members initially own 99% and 1%, respectively, in the L.C. On June 1,
1996, Ken and the Corporation assigned to the L.C. their rights and
obligations under an Escrow Agreement and a Time Brokerage Agreement. and on
July 15, 1996, Ken and the Corporation assigned to the L.C. their rights and
obligations under an Asset Purchase Agreement, with Benchmark Communications
Radio Limited Partnership (the Escrow Agreement, the Time Brokerage Agreement
and the Asset Purchase Agreement hereinafter referred to as the "Benchmark
Contracts") with respect to the acquisition of WLEE-FM and WVGO-FM (the
"Benchmark Stations"). SFX acknowledges that it has received copies of the
Benchmark Contracts.
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ABS Communications, Inc.
August 9, 1996
Page 2
Ken and the Corporation also currently own partnership interests in two
Virginia limited partnerships: ABS Richmond Part Partners, L.P. ("RICH-I") and
ABS Richmond Partners II, L.P. ("RICH-II"). The other partners in these
partnerships are EBF, Inc. and EBF Partners (together with Ken and the
Corporation collectively referred to as the "Current Partners").
The acquisition of the Stations (the "Acquisition") will be effected by
(i) SFX financing the L.C.'s acquisition of the Benchmark Stations under the
Benchmark Contracts and (ii) Ken and the Corporation contributing all or part
of their interests in RICH-I and RICH-II to the L.C., while SFX will
contribute WMXB-FM and cash necessary to capitalize the L.C. as described
below. Thus, RICH-I and RICH-II will dissolve, terminate, and liquidate into
the L.C.
First, SFX will make a loan to the L.C. in an amount sufficient to allow
the L.C. to complete the acquisition of the Benchmark Stations under the terms
of the Benchmark Contracts. Upon completion of the acquisition of the
Benchmark Stations, SFX will file an application with the Federal
Communications Commission ("FCC") seeking permission to (i) convert its loan
to the L.C. into equity in the L.C. and (ii) acquire the partnership interests
in RICH-I and RICH-II through the L.C. Once this application has been granted,
then SFX will: (i) convert its loan to the L.C. into equity in the L.C., (ii)
cause the L.C. to acquire the partnership interests in RICH-I and RICH-II, and
(iii) contribute WMXB-FM to the L.C.
Following are the substantive terms of SFX's proposed acquisitions:
1. Agreement. Unless extended by mutual agreement, within 30 days of the
date hereof the parties will negotiate in good faith the execution and
delivery of the Definitive Agreements, drafts of which shall be prepared by
SFX's counsel. Failure to execute within this time will not effect the binding
nature of this Letter. Without limiting the foregoing, SFX agrees that the
Definitive Agreements shall include:
A. Acquisitions and Form of Payment
SFX agrees to finance the L.C.'s acquisition of the Benchmark
Stations for $14,500,000, as specified in the Benchmark Contracts. While
this financing is outstanding, SFX will have a first priority security
interest in all of the assets of the L.C. The successful acquisition of
the Benchmark Stations is a condition precedent to SFX's acquisition of
partnership interests in RICH-I and RICH-II.
SFX also agrees that, upon signing of the Definitive
Agreements, it will finance the L.C.'s assumption or completion, as the
case may be, of all of Ken's and the Corporation's rights and
obligations with respect to the acquisition of the Benchmark Stations.
These obligations will include, but not be limited to:
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ABS Communications, Inc.
August 9, 1996
Page 3
o repaying Ken's good faith deposit, not to exceed $1,000,000, which
is being held in escrow (which is in addition to the $2,000,000
escrow for the RICH-I and RICH-II transaction);
o repaying the outstanding borrowings, net of the $1,000,000 good
faith deposit referred to above, under Ken's bridge facility with
Signet Bank;
o reimbursing Ken for all additional expenses directly related to
acquiring and operating the Benchmark Stations under the Time
Brokerage Agreement; and
o indemnifying Ken with respect to his personal performance guarantees.
As of August 6, 1996, the outstanding balance under the Signet
bridge facility was $1,526,051. The bridge facility has been used to
fund the Benchmark escrow deposit ($1,000,000) and the differential
between cash receipts and working capital, payments to Benchmark under
the Time Brokerage Agreement ($48,732 per month) and transaction-related
expenses. Ken will agree to represent that all borrowings under the
bridge facility are directly related to the Benchmark acquisition and
Time Brokerage Agreement and over-all Richmond transaction expenses.
Upon the successful acquisition of the Benchmark Stations by
the L.C., as described above, Ken and the Corporation will contribute to
the L.C. the proportion of their interests in RICH-I and RICH-II that
have an equity value of $1,700,000. The cash that SFX will contribute to
the L.C. along with the available loan proceeds referred to below in
this paragraph will be sufficient to, and will be used for: (i) as
described in more detail in the next paragraph, the acquisition of the
remaining partnership interests in RICH-I and RICH-II for $21,300,000
plus the Net Working Capital (the acquisition price of $23,000,000 plus
the Net Working Capital, less Ken and the Corporation's contribution of
their equity interest valued at $1,700,000); and (ii) any projected cash
needs for operation of the Stations. Net Working Capital shall be the
excess, if any, of the sum of cash and cash equivalents, accounts
receivable, and any liquid assets of RICH-I and RICH-II over the current
accounts payable of RICH-I and RICH-II. In addition, the L.C. shall only
be responsible for the recorded liabilities of RICH-I and RICH-II, not
to exceed $21,300,000.
The amount paid to the remaining partners in RICH-I and RICH
II (EBF, Inc., EBF Partners, and perhaps, Ken) shall equal the excess of
(A) $21,300,000 plus Net Working Capital over (B) the recorded
liabilities, excluding current accounts payable, of RICH-I and RICH-II
(which the L.C. is assuming and extinguishing at closing). Whether Ken
has interests remaining to be purchased after his and the Corporation's
contribution
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ABS Communications, Inc.
August 9, 1996
Page 4
to the L.C. will depend upon whether the Current Partners agree that the
equity interest of Ken and the Corporation exceeds $1,700,000. In either
event, the amount that the L.C. pays (and, thus, the required
contribution of SFX) to purchase the remaining interests will remain the
same. Therefore, the L.C. will acquire 100% of the partnership interests
in RICH-I and RICH-II for $23,000,000 plus Net Working Capital, which is
the sum of Ken's and the Corporation's $1,700,000 contributed interest
plus SFX's cash contribution of $21,300,000 plus Net Working Capital.
The resulting Membership Interests in profits, losses, and
distributions of the L.C. will be 96.00% for SFX and 4.00% aggregate for
Ken and the Corporation. Ken and the Corporation will have an aggregate
capital account of $1,700,000 while SFX's capital account will be equal
to its cash contribution and the value of WMXB-FM ($15,000,000). Ken and
the Corporation will retain ultimate liability for an amount of debt
equal to their negative capital accounts in RICH-I and RICH-II;
currently estimated at an aggregate of $2,900,000. The debt will be of a
sufficient amount and type to defer these negative capital accounts.
Other than amounts reasonably necessary for working capital, all Members
must agree for the L.C. to incur debt in excess of the estimated
$2,900,000 and any debt that the L.C. incurs must be on commercially
reasonable terms regarding interest rates, amortization schedule, and
otherwise. The L.C. will account for the disparity between the book
capital accounts of Ken and the Corporation ($1,700,000 (credit)) and
their tax capital accounts (est. $2,900,000 (debit)) using the
traditional method provided in the income tax regulations unless all the
Members agree otherwise. The new Operating Agreement will require
minimum quarterly distributions to fund the Members' tax liability based
on their allocations from the L.C.
The L.C. will acquire 100% of the partnership interests in
RICH-I and RICH-II, the entities that own 100% of WKHK-FM and WBZU-FM.
These acquisitions will cause these partnerships to dissolve, terminate,
and liquidate into be L.C. for state law and federal and state income
tax purposes. Thus, the L.C. will succeed to all of the assets,
including Working Capital, and recorded liabilities of these
partnerships. In the Definitive Agreements, the partners will give
standard representations and warranties to a transaction of this nature
in the radio industry, and the cash investment of SFX will be the same
as an asset sale on the same basis.
Upon successful completion of the Acquisition and receipt of
FCC approval, the L.C. will have the right to require SFX to convert the
$14,500,000 financing for the acquisition of the Benchmark Stations into
equity in the L.C., however, such conversion will not cause SFX's
Membership Interest in the L.C. to be greater than 96.00%.
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ABS Communications, Inc.
August 9, 1996
Page 5
B. Management's Carried Interest
Five years from closing of the Acquisition, SFX agrees to cause the L.C.
to pay Ken, and at his election, other members of his management team
("Management"), a dollar amount equal to the greater of:
o the appreciation in value of 100,000 shares of SFX common stock
(adjusted for stock splits, stock dividends and any future issuance
of common stock), currently traded on the NASDAQ under the ticker
SFXBA, over the five-year period, or
o 20% of the value of the Stations plus the value of WMXB-FM
(collectively the "Richmond Station Group"), less an amount equal
to $78,189,501 reduced for disposition of any material assets
before such valuation (the "Hurdle"). The 20% carried interest will
in no way interfere with the L.C.'s right to acquire and dispose of
assets, so long as the Hurdle is adjusted to account for these
acquisitions and/or dispositions (the methodology for calculating
adjustments in the Hurdle will be agreed upon in the Definitive
Agreements).
SFX and Ken agree that the Richmond Station Group will be valued by a
mutually acceptable third party, with said valuation based on comparable
valuations for other similar station groups. Balance sheet adjustments
will not be taken into account in determining the valuation.
SFX agrees that Management will be entitled to the full carried interest
under all circumstances, provided, however, that should Ken terminate
his employment by his own choice:
o before the second anniversary of closing, Management would forfeit
the carried interest;
o on or after the second and before the third anniversary of closing,
Management would be entitled to 2/5 of the carried interest;
o on or after the third and before the fourth anniversary of closing,
Management would be entitled to 3/5 of the carried interest; or
o on or after the fourth and before the fifth anniversary of closing,
Management would be entitled to 4/5 of the carried interest.
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ABS Communications, Inc.
August 9, 1996
Page 6
If SFX terminates Ken's employment for any reason, other than his being
convicted of a felony or gross misconduct/fraud, SFX agrees that
Management will be paid the carried interest. Under all circumstances,
payment will be made in cash within ninety days following the fifth
anniversary of closing, with interest accruing at a market rate after
ninety days, unless otherwise agreed upon on the fifth anniversary of
closing.
C. Ken Brown's Ownership Interest
Ken, the Corporation and SFX agree that, beginning on the fifth
anniversary of closing, Ken and the Corporation will have the right to
put, and the L.C. will have the right to call, for cash, Ken's and the
Corporation's 4.00% Membership Interest in the L.C. SFX, Ken and the
Corporation agree that, upon exercise of either the put or call option,
the value of Ken's or the Corporation's respective Membership Interest
will equal the market value of the Richmond Station Group multiplied by
Ken's or the Corporation's respective ownership percentage.
Ken, the Corporation and SFX agree that, upon exercise of either the put
or call option, the Richmond Station Group will be valued by a mutually
acceptable third party, with said valuation based on comparable
valuations for other similar station groups. For purposes of valuing
Ken's or the Corporation's respective Membership Interest, the valuation
of the Richmond Station Group will include Net Working Capital and will
be net of recorded liabilities, excluding current accounts payable.
Payment for Ken's or the Corporation's respective Membership Interest
will be made in cash within ninety days, with interest accruing at a
market rate after ninety days, following the exercise of the put or call
option. For purposes of this Section C, Ken and the Corporation will
put, or SFX will call, Ken's and the Corporation's entire respective
Membership Interest if the put or call option is exercised.
D. Ken Brown's Employment Contract
SFX agrees that the L.C. will enter into a five-year employment contract
with Ken to serve as the General Manager of the Richmond Station Group.
SFX agrees that the L.C. will pay Ken a base annual salary of $200,000
and guaranteed minimum incentive compensation, linked to the performance
of the Richmond Station Group, of $50,000 per year. Ken would
participate in SFX's option plan and receive standard benefits which
would include, but not be limited to, paid vacation, expense
reimbursement, use of company automobile, and health insurance.
SFX agrees, that if the L.C. terminates Ken's employment before the end
of the fifth year for any reason, other than a felony conviction or
gross misconduct/fraud on his part, SFX
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ABS Communications, Inc.
August 9, 1996
Page 7
would immediately pay Ken a lump sum of $500,000 and continue his
benefits for 18 months. Ken agrees, that if he terminates his employment
on his own accord, SFX would be released from its obligation to pay this
severance package.
As a condition of his employment contract, Ken will enter into a
non-compete and non-solicitation agreement with SFX (the "Non-compete
Agreement") governing his activities within the Richmond, Virginia radio
market. This agreement will contain terms customary in transactions
similar to the transaction contemplated under the Letter. The
Non-compete Agreement shall expire at the earliest of (i) one year after
the termination of Ken's employment with SFX by either party; (ii) six
years from Ken's employment date; or (iii) termination of Ken's
employment contract due to SFX's breach.
E. Ed Conrad's Employment Contract
SFX agrees to enter into a five-year employment contract with Ed Conrad
("Ed") to serve as the Chief Financial Officer of the Richmond Station
Group. SFX agrees that the L.C. will pay Ed a base annual salary of
$130,000 and guaranteed minimum incentive compensation of $10,000 for
1996, with a target of $20,000 per year for incentive compensation,
linked to the performance of the Richmond Station Group, thereafter. Ed
would participate in SFX's option plan and receive standard benefits
which would include, but not be limited to, paid vacation, expense
reimbursement, use of company automobile, and health insurance.
SFX agrees that if the L.C. terminates Ed's employment before the end of
the fifth year for any reason, other than a felony conviction or gross
misconduct/fraud on his part, SFX would immediately pay Ed a lump sum
payment in cash equal to the lesser of $300,000 or the remaining salary
and guaranteed minimum incentive compensation due him under his
employment contract, and would continue his benefits for 18 months. Ken
agrees, that if he terminates his employment on his own accord, SFX
would be released from its obligation to pay this severance package.
As a condition of his employment contract, Ed will enter into a
non-compete and non-solicitation agreement with SFX (the "Non-compete
Agreement") governing his activities within the Richmond, Virginia radio
market This agreement will contain terms customary in transactions
similar to the transaction contemplated under the Letter. The
Non-compete Agreement shall expire at the earliest of (i) One year after
the termination of Ed's employment with SFX by either party; (ii) six
years from Ed's employment date; or (iii) termination of Ed's employment
contract due to SFX's breach.
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ABS Communications, Inc.
August 9, 1996
Page 8
F. Fees and Expenses
The parties agree that Interstate/Johnson Lane Corporation has been
retained as exclusive placement agent with respect to the transaction
and SFX agrees to pay Interstate/Johnson Lane's transaction fees and
expenses. Payment of these fees and expenses will be governed by the
Placement Agency Agreement between ABS Communications, Inc. and
Interstate/Johnson Lane Corporation dated April 17, 1996. A calculation
of the estimated fees due to Interstate/Johnson Lane is attached as
Annex A.
In addition to the amounts due to Interstate/Johnson Lane and expenses
related solely to the Benchmark transaction, all reasonable fees due or
expenses incurred in connection with the over-all Richmond transaction
(e.g., out-of-pocket and legal expenses) are for the account of SFX.
G. Tower Lease
Ken agrees to cause Token Towers, L.C. to enter into a lease with the
L.C. for WKHK-FM to transmit from the tower owned by Token Towers, L.C.
as part of the Definitive Agreements. The lease will have an initial
term of five years, with five subsequent five year renewal options. In
addition, upon successful negotiation of a new land lease by Token
Towers, L.C., the L.C. will receive two additional five year renewal
options. Lease payments will be made monthly, or annually in advance, at
a base rate of $30,000 per year for the first five years, with a rate
adjustment upon subsequent renewals based on the annual compounded
change in the Consumer Price Index since the date of the last rate
adjustment.
H. Representation, Warranties, Covenants and Good Faith Deposit
The Definitive Agreements shall contain (i) customary representations
and warranties for a transaction of the proposed nature of the
Acquisition; (ii) covenants as to the operation of the Stations before
closing in the normal course in accordance with good commercial practice
and the prior established practices of the Current Partners; (iii) the
required maintenance of the Stations' physical assets prior to closing
in accordance with governmental regulations, sound commercial practices
and the Current Partners' prior operating procedures; (iv) maintenance
of insurance before closing as appropriate and in accordance with past
practices; and (v) a requirement that SFX make a good faith deposit of
$2,000,000 (two million dollars) upon execution of the Definitive
Agreements that will be held in escrow for the benefit of the Current
Partners, first to pay any losses, costs or
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ABS Communications, Inc.
August 9, 1996
Page 9
expenses incurred by such Current Partners related to this transaction
and then equally to RICH-I and RICH-II.
3. No Shop: To induce SFX to proceed, the Current Partners agree that
from the date hereof, neither the Current Partners, nor any principal,
employee, agent or other representative of the Current Partners shall solicit
any offer to purchase, directly or indirectly, the Stations, nor shall any
such persons negotiate or discuss (except to advise any party making an
unsolicited offer that no discussions or negotiations will be pursued) the
purchase directly or indirectly, of the Stations.
4. Investigation; Confidentiality of Information; Non-solicitation of the
Current Partners' Employees: The Current Partners shall, at SFX's request,
provide SFX with copies of contracts and other business records relating to
the operation of the Stations. The Current Partners shall also permit SFX,
subject to terms and limitations satisfactory to the Current Partners, to
inspect the Stations and conduct investigations and surveys of the Stations'
facilities. Until the transactions contemplated hereunder are consummated, SFX
shall not disclose any information received pursuant to this provision except
as required by law or except to the extent the same is reasonably required to
be disclosed to SFX's lenders, partners, principals, employees, or
professional advisors to proceed with this transaction, provided that SFX
shall take reasonable steps to ensure that such lenders, partners, principals,
employees or professional advisors maintain the confidentiality of such
information. If, for any reason, the Agreement is not executed and delivered,
SFX will return to the Current Partners all materials received by SFX pursuant
to this provision.
For the period commencing on the date of this Letter and ending on the
date on which SFX and the Current Partners execute and deliver the Definitive
Agreements, SFX shall not, directly or indirectly, (i) hire, attempt to hire,
or otherwise solicit, for or on behalf of any entity or person, any employee
of RICH-I and RICH-II or the Benchmark stations or (ii) encourage, for or on
behalf of any entity or person, any employee of the Current Partners to
terminate his or her relationship or employment with the Current Partners.
In addition, for the period commencing on the date of this Letter and
ending on the late on which SFX and the Current Partners execute and deliver
the Definitive Agreements, the Current Partners shall not, directly or
indirectly, (i) hire, attempt to hire, or otherwise solicit, for or on behalf
of any entity or person, any employee of WMXB-FM or (ii) encourage, for or on
behalf of any entity or person, any employee of SFX to terminate his or her
relationship or employment with SFX.
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ABS Communications, Inc.
August 9, 1996
Page 10
5. Time Brokerage Agreement for Certain Stations: The Definitive
Agreements will include an appropriate time brokerage agreement or agreements
for the operation of WKHK-FM, WBZU-FM, WLEE-FM & WVGO-FM during pendency of
required FCC and FTC approvals.
6. Confidentiality: Except to the extent required by law or advice of
counsel and until the parties execute Definitive Agreements, no party shall
make any public disclosure of the existence or terms of this Letter and shall
keep such matters confidential except to the extent disclosure to lenders,
partners, principals, employees or professional advisors is reasonably
necessary to proceed with this transaction, provided that each such party will
take reasonable steps to ensure that such lenders, partners, principals,
employees, or professional advisors maintain the confidentiality of such
information. However, a press release or similar announcement may be issued
regarding the transaction if agreed to in writing by SFX and Ken Brown, such
agreement not to be unreasonably withheld.
7. Contingencies of Closing: The closing of the Acquisition shall be
conditioned upon (i) approvals of the Federal Communication Commission ( the
"FCC") and the Federal Trade Commission (the "FTC"); (ii) the continued truth
and accuracy of the representations and warranties in the Definitive
Agreements; and (iii) the maintenance of the physical assets of the Stations.
If this Letter is accepted, all parties agree to cooperate promptly and
negotiate in good faith in the preparation of the Definitive Agreements and
all other documents and applications required for filing with the FCC to
effect this transaction. If the parties fail to agree on the terms and
conditions of the Definitive Agreements or there is any other dispute or
controversy between the parties with respect to or arising under the Letter or
any amendment or modification hereof, such dispute shall be resolved by
arbitration in Washington D.C. in accordance with the Rules for Commercial
Arbitration of the American Arbitration's Association before a panel of three
(3) arbitrators, one appointed by SFX, one appointed by Ken and the
Corporation, and the third appointed by said Association. In such event, the
parties shall have the right to submit examples of ordinary and customary
agreements of the nature of the agreements under dispute to the arbitration
panel for review together with this Letter. The decision and judgment or order
may be entered thereon by any court of competent jurisdiction and that
decision and judgment or order may include termination of negotiations and
this Letter. The service of any notice, process, motion or other document in
connection any arbitration under this Letter or the enforcement of any
arbitration award hereunder may be effectuated either by personal service upon
a party or by certified mail duly addressed to him or to his executors,
administrators, personal representatives, next of kin, successors or assigns,
at the last known address or addresses of such party or parties.
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ABS Communications, Inc.
August 9, 1996
Page 11
If the foregoing meets with your approval, please evidence your
acceptance by executing a copy of this letter in the space below provided for
your signature and returning the same to SFX by telecopy.
Sincerely,
SFX BROADCASTING, INC.
By:_____________________________
Title:__________________________
AGREED AND ACKNOWLEDGED
AS OF AUGUST _____ ,1996
- ---------------------------
Kenneth A. Brown
ABS COMMUNICATIONS, INC.
By:________________________
Kenneth A. Brown
President & CEO
ABS COMMUNICATIONS, L.L.C.
By:________________________
Kenneth A. Brown
Manager
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<PAGE>
ABS Communications, Inc.
August 9, 1996
Page 12
ABS RICHMOND PARTNERS, L.P.
By:_____________________________
Title:__________________________
ABS RICHMOND PARTNERS II, L.P.
By:_____________________________
Title:__________________________
EBF, INC.
By:_____________________________
Title:__________________________
EBF PARTNERS
By:_____________________________
Title:__________________________
<PAGE>
<PAGE>
ABS Communications, Inc.
August 9, 1996
Page 13
Addendum
The following will be incorporated as an addendum to the letter of
intent for the acquisition of WKHK-FM, WBZU-FM, WLEE-FM and WVGO-FM by SFX
Broadcasting, Inc., dated August , 1996:
Ken and the Corporation agree that none of the Stations will be sold
prior to the completion of the Acquisition without the consent of SFX.
In addition, if any of the Stations are sold prior to the completion of
the Acquisition, then the proceeds from the sale will be contributed to
the L.C. in lieu of the station which is sold, and will remain in the
L.C. until the completion of the Acquisition.
If the foregoing meets with your approval, please evidence your acceptance by
executing a copy of this letter in the space below provided for your signature
and returning the same to SFX by telecopy.
Sincerely,
SFX BROADCASTING, INC.
By: ___________________________
Robert F.X. Sillerman
Chairman & CEO
AGREED AND ACKNOWLEDGED
AS OF AUGUST____, 1996
- ----------------------------
Kenneth A. Brown
ABS COMMUNICATIONS, INC.
By__________________________
Kenneth A. Brown
President & CEO
Exhibit 2.5
- -------------------------------------------------------------------------------
ASSET EXCHANGE AGREEMENT
dated as of September 24, 1996
among
WHFS, INC.,
LIBERTY BROADCASTING OF MARYLAND INCORPORATED,
SFX BROADCASTING, INC.
and
CBS INC.
- -------------------------------------------------------------------------------
<PAGE>
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE 1
EXCHANGE OF ASSETS
1.1 Transfer of SFX Station Assets.................. 1
1.2 SFX Excluded Assets............................. 3
1.3 Transfer of CBS Stations Assets................. 4
1.4 CBS Excluded Assets............................. 6
ARTICLE 2
ASSUMPTION OF OBLIGATIONS
2.1 Assumption of Obligations by CBS................ 6
2.2 SFX Retained Liabilities........................ 7
2.3 Assumption of Obligations by SFX................ 7
2.4 CBS Retained Liabilities........................ 7
ARTICLE 3
PRORATION AND VALUATION
3.1 Proration of Income and Expenses................ 8
3.2 Value of Exchanged Assets....................... 8
ARTICLE 4
CLOSING
4.1 Closing......................................... 9
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Page
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ARTICLE 5
GOVERNMENTAL CONSENTS
5.1 FCC Consent..................................... 10
5.2 FCC Applications................................ 10
5.3 Compliance with HSRA............................ 11
<PAGE>
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Page
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF SFX AND SFX
BROADCASTING
6.1 Organization and Standing....................... 11
6.2 Authorization and Binding Obligation............ 11
6.3 Absence of Conflicting Agreements or Required
Consents...................................... 12
6.4 Government Authorizations....................... 12
6.5 Compliance with Regulations..................... 13
6.6 Taxes........................................... 14
6.7 Personal Property............................... 14
6.8 Real Property................................... 15
6.9 Contracts....................................... 16
6.10 Sufficiency of Assets........................... 16
6.11 Environmental; Industrial Hygiene and Safety.... 16
6.12 SFX Intellectual Property....................... 17
6.13 Financial Statements............................ 17
6.14 Personnel....................................... 18
6.15 SFX Employee Benefit Plans...................... 18
6.16 Litigation...................................... 19
6.17 Compliance with Laws............................ 19
6.18 Commissions or Finder's Fees.................... 20
6.19 Insurance....................................... 20
6.20 Undisclosed Obligations......................... 20
6.21 No Material Adverse Change...................... 20
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF CBS
7.1 Organization and Standing....................... 21
7.2 Authorization and Binding Obligations........... 21
7.3 Absence of Conflicting Agreements or Required
Consents...................................... 21
7.4 Government Authorizations....................... 22
7.5 Compliance with Regulations..................... 23
7.6 Taxes........................................... 23
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7.7 Personal Property............................... 24
7.8 Real Property................................... 24
7.9 Contracts....................................... 25
7.10 Sufficiency of Assets........................... 26
7.11 Environmental; Industrial Hygiene and
Safety........................................ 26
7.12 CBS Intellectual Property....................... 26
7.13 Financial Statements............................ 27
7.14 Personnel....................................... 27
7.15 Employee Benefit Plans.......................... 28
7.16 Litigation...................................... 28
7.17 Compliance with Laws............................ 29
7.18 Commissions or Finder's Fees.................... 29
7.19 Insurance....................................... 29
7.20 Undisclosed Obligations......................... 29
7.21 No Material Adverse Change...................... 29
ARTICLE 8
COVENANTS OF SFX
8.1 Records......................................... 30
8.2 Employee Matters................................ 30
8.3 Sales Representation Agreement.................. 31
ARTICLE 9
COVENANTS OF CBS
9.1 Records......................................... 31
9.2 Employee Matters................................ 32
9.3 Sales Representative Agreement.................. 33
ARTICLE 10
MUTUAL COVENANTS
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10.1 Pre-Closing Covenants........................... 33
10.2 Notification.................................... 37
10.3 No Inconsistent Action.......................... 37
10.4 Closing Covenant................................ 37
10.5 Other Items..................................... 37
10.6 Conditions...................................... 37
10.7 Confidentiality................................. 38
10.8 Cooperation..................................... 38
10.9 Control of Stations............................. 38
10.10 Consents to Assignment.......................... 38
10.11 Waiver of Compliance with Bulk Sales Law........ 39
10.12 Accounts Receivable............................. 39
10.13 Completion of Schedules......................... 39
ARTICLE 11
CONDITIONS OF CLOSING BY CBS
11.1 Representations, Warranties and Covenants....... 40
11.2 Governmental Consents........................... 41
11.3 Governmental Authorizations..................... 41
11.4 Adverse Proceedings............................. 41
11.5 Legal Opinion................................... 41
11.6 Board Approval.................................. 41
11.7 Third-Party Consents............................ 42
11.8 Closing Documents............................... 42
11.9 Financing Statements............................ 42
11.10 Environmental Condition......................... 42
11.11 Due Diligence................................... 42
ARTICLE 12
CONDITIONS OF CLOSING BY SFX AND SFX
BROADCASTING
12.1 Representations, Warranties and Covenants....... 43
12.2 Governmental Consents........................... 43
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12.3 Government Authorization........................ 43
12.4 Adverse Proceedings............................. 43
12.5 Legal Opinion................................... 44
12.6 Third-Party Consents............................ 44
12.7 Closing Documents............................... 44
12.8 Financing Statements............................ 44
12.9 Environmental Condition......................... 44
12.10 Due Diligence................................... 44
ARTICLE 13
EXPENSES; TRANSFER TAXES; AND FEES
13.1 Expenses; Transfer Taxes........................ 44
13.2 Appraisal Fee................................... 45
ARTICLE 14
DOCUMENTS TO BE DELIVERED AT CLOSING
14.1 SFX's Documents................................. 45
14.2 CBS's Documents................................. 46
ARTICLE 15
INDEMNIFICATION
15.1 SFX's Indemnities............................... 47
15.2 CBS's Indemnities............................... 48
15.3 Survival of Representations and Warranties...... 48
15.4 Procedures...................................... 49
15.5 Limits on and Conditions of Indemnification..... 50
ARTICLE 16
TERMINATION RIGHTS
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Page
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16.1 Termination..................................... 51
16.2 Liability....................................... 52
16.3 Unwind.......................................... 52
ARTICLE 17
MISCELLANEOUS PROVISIONS
17.1 Specific Performance............................ 52
17.2 Risk of Loss.................................... 52
17.3 Further Assurances.............................. 53
17.4 Benefit and Assignment.......................... 53
17.5 Headings........................................ 53
17.6 Governing Law................................... 53
17.7 Notices......................................... 53
17.8 Counterparts.................................... 54
17.9 No Third Party Beneficiaries.................... 54
17.10 Public Announcements............................ 54
17.11 Exclusive Jurisdiction and Consent to Service
to Process.................................... 54
17.12 Severability.................................... 55
17.13 Amendments and Waivers.......................... 55
17.14 Certain Definitions and Usage................... 55
17.15 Entire Agreement................................ 56
Schedule 1.2.5 SFX Excluded Assets
Schedule 1.4.5 CBS Excluded Assets
Schedule 3.2 Value of Exchanged Assets
Schedule 6.3 No Conflicts, etc.
Schedule 6.4 SFX Station Licenses and FCC Matters
Schedule 6.7 SFX Tangible Personal Property
Schedule 6.8 SFX Real Estate and SFX Real Estate
Contracts
Schedule 6.9 SFX Contracts
Schedule 6.11 SFX Environmental Matters
Schedule 6.12 SFX Intellectual Property
Schedule 6.13 SFX Financial Statements
<PAGE>
<PAGE>
Schedule 6.14 SFX Station Personnel, etc.
Schedule 6.15 SFX Employee Benefit Plans
Schedule 6.16 SFX Litigation
Schedule 6.17 SFX Compliance with Laws
Schedule 6.19 SFX Insurance Policies
Schedule 6.20 SFX Other Liabilities
Schedule 6.21 SFX Material Adverse Change
Schedule 7.3 No Conflicts, etc.
Schedule 7.4 CBS Stations Licenses and FCC Matters
Schedule 7.7 CBS Tangible Personal Property
Schedule 7.8 CBS Real Estate Contracts
Schedule 7.9 CBS Contracts
Schedule 7.11 CBS Environmental Matters
Schedule 7.12 CBS Intellectual Property
Schedule 7.13 CBS Financial Statements
Schedule 7.14 CBS Stations Personnel, etc.
Schedule 7.15 CBS Employee Benefit Plans
Schedule 7.16 CBS Litigation
Schedule 7.17 CBS Compliance with Laws
Schedule 7.19 CBS Insurance Policies
Schedule 7.20 CBS Other Liabilities
Schedule 7.21 CBS Material Adverse Change
Schedule 11.5 SFX Legal Opinion
Schedule 12.5 CBS Legal Opinion
<PAGE>
<PAGE>
EXECUTION COPY
ASSET EXCHANGE AGREEMENT
THIS ASSET EXCHANGE AGREEMENT (the "Agreement") is made and entered into
as of this 25th day of September, 1996, by and among WHFS, INC. and LIBERTY
BROADCASTING OF MARYLAND INCORPORATED, both of which are Maryland corporations
(collectively, "SFX"), and SFX BROADCASTING, INC., a Delaware corporation
("SFX Broadcasting"), and all the foregoing corporations have their principal
place of business at 150 East 58th Street, New York, New York 10155, and CBS
INC. ("CBS"), a New York corporation with its principal place of business at
51 West 52nd Street, New York, New York 10019-6188.
W I T N E S S E T H:
WHEREAS, SFX owns and operates radio station WHFS-FM in Washington, D.C.
(the "SFX Station") pursuant to licenses issued by the Federal Communications
Commission ("FCC"); and
WHEREAS, CBS owns and operates radio station KTXQ-FM in Fort Worth,
Texas and KRRW(FM) in Dallas, Texas (collectively, the "CBS Stations")
pursuant to licenses issued by the FCC; and
WHEREAS, SFX and CBS desire to exchange certain assets of the SFX
Station for certain assets of the CBS Stations, on the terms and subject to
the conditions set forth herein; and
WHEREAS, the transaction contemplated by this Agreement is intended to
be a like-kind exchange of assets between SFX and CBS in accordance with the
provisions of Section 1031 of the Internal Revenue Code of 1986, as amended
(the "Code").
<PAGE>
<PAGE>
2
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements hereinafter set forth, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE 1
EXCHANGE OF ASSETS
1.1 Transfer of SFX Station Assets. On the Closing Date, SFX shall
exchange, assign, transfer and convey to CBS, and CBS shall acquire and assume
from SFX, substantially all of the assets, properties, interests and rights of
SFX of whatsoever kind and nature, real and personal, tangible and intangible,
owned or leased by SFX, which are used or held for use primarily in the
operation of the SFX Station, and which, in the case of physical or tangible
assets and properties, are located at the SFX Station's broadcasting studios,
offices and transmitter site in Washington, D.C., as the same shall exist on
the Closing Date, including the following (but excluding the assets specified
in Section 1.2) (the "SFX Station Assets"):
1.1.1 all of SFX's rights in and to the licenses, permits and other
authorizations issued to SFX by any governmental authority and included in the
SFX Station Assets, including those issued by the FCC (the latter hereafter
referred to as the "SFX Station Licenses") described in Schedule 6.4 along
with renewals or modifications of such items between the date hereof and the
Closing Date as well as all of SFX's rights in and to the call letters
"WHFS-FM";
1.1.2 all of SFX's owned real estate used or held for use primarily
in the operation of the SFX Station, including the land, building and
fixtures, more fully described in Section 6.8 and Schedule 6.8, together with
any additions thereto between the date hereof and the Closing Date (the "SFX
Real Estate");
<PAGE>
<PAGE>
3
1.1.3 all equipment, office furniture and fixtures, office
materials and supplies, inventory, spare parts and other tangible personal
property of every kind and description, and SFX's rights therein, owned,
leased or held by SFX for use primarily in the operation of the SFX Station,
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 SFX and in
accordance with this Agreement;
1.1.4 all of SFX's rights in and under certain contracts,
agreements or leases, written or oral, described in Schedules 6.8 and 6.9 (the
"SFX Contracts");
1.1.5 all of SFX'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 the same described in Schedule 6.12 (the "SFX Intellectual
Property") and any additions thereto between the date hereof and the Closing
Date;
1.1.6 all of SFX's rights in and to the files, records, and books
of account, which are located at the premises of the SFX Station or are used
or held for use primarily in the operation of the SFX Station, including
programming information and studies, technical information and engineering
data, news and advertising studies or consulting reports, marketing and
demographic data, sales correspondence, lists of advertisers, promotional
materials, credit and sales reports and filings with the FCC, copies of all
written SFX Contracts to be assigned hereunder, employee records, logs and all
software programs used primarily in connection with the operation of the SFX
Station; and
1.1.7 all of SFX's rights under manufacturers' and
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<PAGE>
4
vendors' warranties relating to items included in the SFX Station Assets and
all similar rights against third parties relating to items included in the SFX
Station Assets.
The SFX Station Assets shall be transferred to CBS free and clear of all
debts, security interests, mortgages, trusts, claims, pledges, conditional
sales agreements or other liens, liabilities and encumbrances whatsoever
("Liens").
1.2 SFX Excluded Assets. Notwithstanding anything to the contrary
contained herein, it is expressly understood and agreed that the SFX Station
Assets shall not include the following assets along with all rights, title and
interest therein (the "SFX Excluded Assets"):
1.2.1 all cash, cash equivalents or similar type investments of
SFX, such as certificates of deposit, Treasury bills and other marketable
securities on hand and/or in banks;
1.2.2 all of SFX's accounts receivable for services performed by
SFX in connection with its operation of the SFX Station prior to the Closing
Date;
1.2.3 SFX'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 SFX and duplicate
copies of such records as are necessary to enable SFX to file its tax returns
and reports as well as any other records or materials relating to SFX
generally and not involving specific aspects of the SFX Station's operations;
1.2.4 the use of the name and mark SFX Broadcasting
and any derivation therefrom;
1.2.5 all other rights, interests or intangible assets
of SFX which are not used in or held for use primarily in the
<PAGE>
<PAGE>
5
operation of the SFX Station or which are listed in
Schedule 1.2.5; and
1.2.6 all 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 SFX for the SFX
Station.
1.3 Transfer of CBS Stations Assets. On the Closing Date, CBS shall
exchange, transfer, assign and convey to SFX, and SFX shall acquire and assume
from CBS, substantially all of the assets, properties, interests and rights of
CBS of whatsoever kind and nature, real and personal, tangible and intangible,
owned or leased by CBS, which are used or held for use primarily in the
operation of the CBS Stations, and which, in the case of physical or tangible
assets and properties, are located at the CBS Stations' broadcasting studios,
offices and transmitter sites in Fort Worth and Dallas, Texas, as the same
shall exist on the Closing Date, including the following (but excluding the
assets specified in Section 1.4) (the "CBS Stations Assets"):
1.3.1 all of CBS's rights in and to the licenses, permits and other
authorizations issued to CBS by any governmental authority and included in the
CBS Stations Assets, including those issued by the FCC (the latter hereafter
referred to as the "CBS Stations Licenses") described in Schedule 7.4 along
with renewals or modifications of such items between the date hereof and the
Closing Date as well as all of CBS's rights in and to the call letters
"KKRW-FM";
1.3.2 all of CBS's rights to lease and use the real estate used or
held for use primarily in the operation of the CBS Stations, including the
land, building and fixtures, more fully described in Section 7.8 and Schedule
7.8, together with any additions thereto between the date hereof and the
Closing Date (the "CBS Real Estate");
1.3.3 all equipment, office furniture and fixtures, office
materials and supplies, inventory, spare parts and other tangible personal
property of every kind and description, and CBS's rights therein, owned,
leased or held by CBS for use primarily in the operation of the CBS Stations,
together with any replacements of equal quality thereof and additions thereto,
made
<PAGE>
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6
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 CBS and in
accordance with this Agreement;
1.3.4 all of CBS's rights in and under certain contracts,
agreements or leases, written or oral, described in Schedules 7.8 and 7.9 (the
"CBS Contracts");
1.3.5 all of CBS'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 the same described in Schedule 7.12 (the "CBS Intellectual
Property") and any additions thereto between the date hereof and the Closing
Date;
1.3.6 all of CBS's rights in and to the files, records, and books
of account, which are located at the premises of the CBS Stations or are used
or held for use primarily in the operation of the CBS Stations, including
programming information and studies, technical information and engineering
data, news and advertising studies or consulting reports, marketing and
demographic data, sales correspondence, lists of advertisers, promotional
materials, credit and sales reports and filings with the FCC, copies of all
written CBS Contracts to be assigned hereunder, employee records, logs and all
software programs used primarily in connection with the operation of the CBS
Stations; and
1.3.7 all of CBS's rights under manufacturers' and vendors'
warranties relating to items included in the CBS Stations Assets and all
similar rights against third parties relating to items included in the CBS
Stations Assets.
The CBS Stations Assets shall be transferred to SFX free and clear of
all Liens.
1.4 CBS Excluded Assets. Notwithstanding anything to the
contrary contained herein, it is expressly understood and agreed
that the CBS Stations Assets shall not include the following
<PAGE>
<PAGE>
7
assets along with all rights, title and interest therein (the "CBS Excluded
Assets"):
1.4.1 all cash, cash equivalents or similar type investments of
CBS, such as certificates of deposit, Treasury bills and other marketable
securities on hand and/or in banks;
1.4.2 all of CBS's accounts receivable for services performed by
CBS in connection with its operation of the CBS Stations prior to the Closing
Date;
1.4.3 CBS'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 CBS and duplicate
copies of such records as are necessary to enable CBS to file its tax returns
and reports as well as any other records or materials relating to CBS
generally and not involving specific aspects of the CBS Stations' operations;
1.4.4 the use of the name and mark CBS, CBS
Broadcasting and any derivation therefrom;
1.4.5 all other rights, interests or intangible assets of CBS which
are not used in or held for use primarily in the operation of the CBS Stations
or which are listed in Schedule 1.4.5; and
1.4.6 all 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 CBS for the CBS
Stations.
ARTICLE 2
ASSUMPTION OF OBLIGATIONS
2.1 Assumption of Obligations by CBS. Subject to the provisions of this
Section 2.1 and Section 2.2, on the Closing Date, CBS shall assume and
undertake to pay, satisfy or discharge the liabilities, obligations and
commitments of SFX arising or to be performed on or after the Closing Date
under (i) the SFX
<PAGE>
<PAGE>
8
Contracts listed in Schedules 6.8 and 6.9 and (ii) any other contracts entered
into between the date hereof and the Closing Date which CBS may in its sole
discretion expressly agree in writing to assume. All of the foregoing
liabilities and obligations shall be referred to herein collectively as the
"CBS Assumed Liabilities."
2.2 SFX Retained Liabilities. Except as expressly set forth in Section
2.1, CBS 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 SFX of any nature whatsoever. All of such
liabilities and obligations shall be referred to herein collectively as the
"SFX Retained Liabilities."
2.3 Assumption of Obligations by SFX. Subject to the provisions of this
Section 2.3 and Section 2.4, on the Closing Date, SFX shall assume and
undertake to pay, satisfy or discharge the liabilities, obligations and
commitments of CBS arising or to be performed on or after the Closing Date
under (i) the CBS Contracts listed in Schedules 7.8 and 7.9 and (ii) any other
contracts entered into between the date hereof and the Closing Date which SFX
may in its sole discretion expressly agree in writing to assume. All of the
foregoing liabilities and obligations shall be referred to herein collectively
as the "SFX Assumed Liabilities."
2.4 CBS Retained Liabilities. Except as expressly set forth in Section
2.3, SFX 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 CBS of any nature
whatsoever. All of such liabilities and obligations shall be referred to
herein collectively as the "CBS Retained Liabilities."
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ARTICLE 3
PRORATION AND VALUATION
3.1 Proration of Income and Expenses.
3.1.1 Except as otherwise provided herein, all income and expenses
arising from the conduct of the business and operations of the SFX Station and
the CBS Stations shall be prorated between CBS and SFX in accordance with
generally accepted accounting principles as of the Closing Date. Such
prorations shall include all real estate and other property taxes (but
excluding taxes arising by reason of the transfer of the SFX Station Assets
and CBS Stations Assets (collectively referred to as the "Station Assets") as
contemplated hereby, which, shall be paid as set forth in Article 13),
business and license fees, music and other license fees, wages and salaries of
employees, including accruals up to the Closing Date for bonuses, commissions,
sick pay and similar prepaid and deferred items (but excluding vacation which
shall be governed by Sections 8.2.3 and 9.2.3) attributable to the ownership
and operation of the SFX Station and the CBS Stations (collectively referred
to as the "Stations").
3.1.2 The prorations and adjustments contemplated by this Section,
to the extent practicable, shall be made on the Closing Date and the party
owing any net amount hereunder shall pay such amount to the other party on
such 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.
3.1.3 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 3.1.2 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 SFX and
one-half by CBS.
3.2 Value of Exchanged Assets. As set forth on
Schedule 3.2 which shall be agreed upon and delivered at the
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10
Closing, (a) the SFX Station Assets consisting of tangible personal property
are being exchanged for the CBS Stations Assets consisting of tangible
personal property; (b) the SFX Station Assets, if any, consisting of real
property are being exchanged for the CBS Stations Assets, if any, consisting
of real property; and (c) the SFX Station Assets consisting of intangible
property are being exchanged for the CBS Stations Assets consisting of
intangible property. The parties further agree that the values on the Closing
Date of the respective SFX Station Assets and the respective CBS Stations
Assets will be based on an appraisal of such assets by an independent
valuation firm selected by CBS and approved by SFX. The appraised values will
be reflected on Schedule 3.2 and the parties will not take any position
inconsistent with such values and will prepare and file all returns and
reports relating to the exchange contemplated by this Agreement, including all
federal, state and local income tax returns, in a manner which is consistent
with Schedule 3.2.
ARTICLE 4
CLOSING
4.1 Closing. Except as otherwise mutually agreed upon by SFX and CBS,
the consummation of the transactions contemplated herein (the "Closing") shall
occur within ten (10) business days after the FCC Consent (as defined in
Section 5.1) has been obtained (whether or not the order giving the FCC
Consent has become final) and the expiration of the applicable waiting period
under the HSRA (as defined in Section 5.3), or such other date as may be
mutually agreed to by the parties but in no event later than June 30, 1997
("Closing Date"). The Closing shall be deemed effective as of 11:59 p.m. on
the Closing Date. The Closing shall be held at the offices of SFX in New York
or at such other place as the parties hereto may agree.
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11
ARTICLE 5
GOVERNMENTAL CONSENTS
5.1 FCC Consent. It is specifically understood and agreed by CBS and SFX
that the Closing and the assignment of the SFX Station Licenses and the CBS
Stations Licenses (collectively referred to as 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 (whether or not the order giving the
FCC Consent has become final) ("FCC Consent") without the imposition of any
conditions on the transfer of the Station Licenses which are materially
adverse to either party.
5.2 FCC Applications. Promptly upon the execution of this Agreement, the
parties shall proceed to prepare for filing the necessary FCC applications for
assignment of the Station Licenses (the "FCC Applications"), which shall be
filed no later than ten (10) business days after the date hereof. SFX and CBS
shall thereafter 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 SFX nor CBS shall
have any obligation to satisfy complainants or the FCC by taking any steps
which would have a Material Adverse Effect (as defined in Section 17.14) on it
or any of its Affiliates (as defined in Section 17.14) or with respect to the
SFX Station Assets or the CBS Stations Assets, as applicable). 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 which would
have a Material Adverse Effect on it or any of its Affiliates or with respect
to the SFX Station Assets or the CBS Stations Assets, as applicable. If
reconsideration or judicial review is sought with respect to the FCC Consent,
the party affected shall vigorously oppose such efforts for reconsideration or
judicial review; provided, however, that nothing herein shall be construed to
limit either party's right to terminate this Agreement pursuant to Article 16.
5.3 Compliance with HSRA. SFX and CBS shall make or cause
to be made in a timely fashion, and in any event within fifteen
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12
(15) business days after the date hereof, all filings which are required in
connection with the transactions contemplated hereby under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended ("HSRA"), and
shall furnish to the other party all information that the other reasonably
requests in connection with such filings. The parties shall promptly comply
with all requests for further documents and information made by any
governmental department or agency in connection with such filings and shall
use their best efforts to obtain early termination of all waiting periods
under the HSRA. The transfer of the Station Assets hereunder is conditioned
upon the expiration of the applicable waiting period under the HSRA without
the institution of any action with respect to the consummation of the
transactions contemplated hereunder.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF SFX AND SFX BROADCASTING
SFX and SFX Broadcasting hereby make the following representations and
warranties to CBS, each of which is true and correct on the date hereof, shall
remain true and correct for the period specified in Section 15.3, shall be
unaffected by any investigation heretofore or hereafter made by CBS, or any
notice to CBS other than in the schedules to this Agreement and shall survive
the Closing.
6.1 Organization and Standing. Each of SFX and SFX Broadcasting is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and is duly qualified to do business in the
State of Texas. SFX has the corporate power and authority to own, lease and
operate the SFX Station Assets and to carry on the business of the SFX Station
as now being conducted and as proposed to be conducted by SFX between the date
hereof and the Closing Date.
6.2 Authorization and Binding Obligation. SFX and SFX Broadcasting have
the corporate power and authority to enter into and perform this Agreement and
the transactions contemplated hereby, and SFX's and SFX Broadcasting's
execution, delivery and performance of this Agreement, and the transactions
contemplated
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13
hereby have been duly and validly authorized by all necessary corporate action
on their part. This Agreement has been duly executed and delivered by SFX and
SFX Broadcasting and this Agreement constitutes, and the agreements to be
executed in connection herewith will constitute, the valid and binding
obligation of SFX and SFX Broadcasting enforceable against SFX and SFX
Broadcasting in accordance with their terms.
6.3 Absence of Conflicting Agreements or Required Consents. Except as
set forth in Article 5 with respect to governmental consents, Schedules 6.8
and 6.9 with respect to consents required in connection with the assignment of
certain SFX Contracts and as set forth in Schedule 6.3 with respect to any
other consents, the execution, delivery and performance of this Agreement by
SFX and SFX Broadcasting: (a) do not require the consent of any third party;
(b) will not conflict with, result in a breach of, or constitute a violation
of or default under, the provisions of SFX's or SFX Broadcasting's articles of
incorporation or By-laws or any applicable law, judgment, order, injunction,
decree, rule, regulation or ruling of any governmental authority to which any
of SFX or SFX Broadcasting is a party or by which they or the SFX 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 SFX Contract, agreement, instrument,
license or permit to which SFX, SFX Broadcasting or the SFX Station Assets are
now subject; and (d) will not result in the creation of any Lien on any of the
SFX Station Assets.
6.4 Government Authorizations. Schedule 6.4 contains a true and complete
list of the SFX 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 SFX Station in
the manner and to the full extent it is presently conducted. SFX is the
authorized legal holder of the SFX Station Licenses and other licenses,
permits and authorizations listed in Schedule 6.4, none of which is subject to
any restrictions or conditions which would limit in any respect the full
operation of the SFX Station as now operated. Except as set forth in Schedule
6.4, there are no applications, complaints or
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14
proceedings pending or, to the best of SFX's knowledge, threatened as of the
date hereof before the FCC relating to the business or operations of the SFX
Station other than applications, complaints or proceedings which affect the
broadcasting industry generally. SFX has delivered to CBS true and complete
copies of the SFX Station Licenses, including any and all amendments and other
modifications thereto. The SFX Station Licenses and the other licenses,
permits or other authorizations from governmental and regulatory authorities
listed in Schedule 6.4 are in good standing, are in full force and effect and
are unimpaired by any act or omission of SFX or its officers, directors or
employees; and the operation of the SFX Station is in accordance with the SFX
Station Licenses and the underlying construction permits. No proceedings are
pending or, to the knowledge of SFX, are threatened which may result in the
revocation, modification, non-renewal or suspension of the SFX 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 SFX Station Licenses or which may affect SFX's ability to
continue to operate the SFX Station as it is currently operated. The SFX
Station is licensed by the FCC to operate, and is operating, with maximum
facilities for its class. The SFX Station is not short-spaced, on a
grandfathered basis or otherwise, to any existing station, outstanding
construction permit or pending application therefor, or to any existing or
proposed broadcast radio allotment. SFX has not received any complaint that
the SFX Station is causing objectionable interference to the transmissions of
any other broadcast station or communications facility. To the best of SFX's
knowledge, no other broadcast station or communications facility is causing
objectionable interference to the Station's transmissions or the public's
reception of such transmissions. SFX has no reason to believe that the SFX
Station Licenses will not be renewed in the ordinary course. All material
reports, forms and statements required to be filed by SFX with the FCC with
respect to the SFX Station since the grant of the last renewal of the SFX
Station Licenses have been filed and are substantially complete and accurate.
To the best of SFX'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 SFX as an assignor of the SFX Station Licenses or
an assignee of the CBS Stations Licenses.
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15
6.5 Compliance with Regulations. The operation of the SFX Station and
all of the SFX Station Assets are in compliance with (i) all applicable
engineering standards required to be met under applicable FCC rules, and (ii)
all other applicable federal, state and local rules, regulations, requirements
and policies, including all applicable painting and lighting requirements of
the FCC and the Federal Aviation Administration and ANSI Radiation Standards
C95.1 - 1982 to the extent required to be met under applicable FCC rules and
regulations, and there are no existing claims known to SFX to the contrary.
6.6 Taxes. All federal, state and local income, franchise, sales, use,
property, excise, payroll and other tax returns and reports required to be
filed by law where the failure to file such returns on a duly and timely basis
could result in a Lien on the SFX Station Assets or the imposition on CBS of
any liability for taxes or assessments have been duly and timely filed in the
proper form with the appropriate governmental authority. All taxes, fees and
assessments of whatever nature due or payable pursuant to such returns or
otherwise have been paid, except for such amounts as are being contested
diligently, in the appropriate forum and in good faith, where the failure to
pay or contest such amounts could result in a Lien on the SFX Station Assets
or the imposition on CBS of any liability for any taxes or assessments. There
are no tax audits pending and no outstanding agreements or waivers extending
the statutory period of limitations applicable to any federal, state or local
income tax return for any period, the result of which could result in a Lien
on the SFX Station Assets or the imposition on CBS of any liability for any
taxes or assessments. There are no governmental investigations or other legal,
administrative or tax proceedings pursuant to which SFX is or could be made
liable for any taxes, penalties, interest or other charges, the liability for
which could extend to CBS as transferee of the SFX Station Assets, or which
could result in a Lien on the SFX Station Assets and, to the best of SFX's
knowledge, no event has occurred that could impose on CBS any liability for
any taxes, penalties or interest due or to become due from SFX.
6.7 Personal Property. Schedule 6.7 contains a list of all
tangible personal property and assets owned or held by SFX and
used primarily in the conduct of the business and operations of
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16
the SFX Station. Except as disclosed in Schedule 6.7, and except as may be
subject to lease agreements of SFX listed on Schedule 6.9, SFX 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 CBS hereunder), and none of such property is, or at the Closing
will be, subject to any Lien. All of the items of the tangible personal
property and assets included in the SFX Station Assets are 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 SFX 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 (ordinary wear and tear excepted)
and complies with all applicable rules and regulations of the FCC and the
terms of the SFX Station Licenses.
6.8 Real Property.
6.8.1 Schedule 6.8 contains a complete and accurate list of all
real property owned and leased by SFX which is used primarily by the SFX
Station and all agreements, leases and contracts of SFX relating to the
towers, transmitter, booster, studio site and offices of the SFX Station
(collectively the "SFX Real Estate Contracts") and a list of the applicable
leases.
6.8.2 The SFX Real Estate Contracts listed on Schedule 6.8
constitute valid and binding obligations of SFX and, to the best of SFX'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 on the Closing Date
constitute valid and binding obligations of SFX and, to the best of SFX's
knowledge, of all other persons purported to be parties thereto and shall be
in full force and effect. SFX is not in default under any of such SFX Real
Estate Contracts and has not received or given written notice of any default
thereunder from or to any of the other parties thereto and will not have
received any such notice at or prior to the Closing. To the best of SFX's
knowledge, there are no present disputes or claims with respect to offsets or
defenses by either landlord or tenant against the other under any such lease.
SFX has delivered to CBS true and complete
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17
copies of all SFX Real Estate Contracts.
6.8.3 SFX has and shall convey to CBS good and insurable fee simple
title to the owned SFX Real Estate free and clear of any Liens. Each parcel of
SFX Real Estate has all appropriate easements and access required to ensure
uninterrupted use thereof. All buildings, structures, improvements and
fixtures comprising part of the real properties owned or leased by SFX in the
operation of the SFX Station are in good operating condition (ordinary wear
and tear excepted).
6.9 Contracts. Schedule 6.9 lists the SFX Contracts as of the date of
this Agreement which are to be assumed by CBS as of the Closing Date. Those
SFX Contracts requiring the consent of a third party to assignment which SFX
and CBS agree are critical to the consummation of the transactions
contemplated hereby are identified as "SFX Material Contracts" and are so
marked on Schedule 6.9. Except as noted in Schedule 6.9, SFX has delivered to
CBS true and complete copies of all written SFX Contracts, including any and
all amendments and other modifications to such SFX Contracts, and written
summaries of all oral SFX Contracts. All such SFX Contracts are valid, binding
and enforceable by SFX in accordance with their respective terms. SFX has
complied with all such SFX Contracts and is not in default under any of such
SFX Contracts, and to the best of SFX's knowledge, no other contracting party
is in default under any of such SFX Contracts. No other party to any such SFX
Contract has made or asserted, or, to the best of SFX's knowledge has, any
defense, setoff or counterclaim under any such SFX Contract, no such other
party has exercised any option granted to it to cancel or terminate its
agreement, to shorten the term of its agreement, or to renew or extend the
term of its agreement and SFX has not received any notice to that effect.
Schedule 6.9 also contains a true and complete current trade barter summary
with respect to the SFX Station, including applicable asset and liability
balances with respect thereto (which trade barter summary shall be updated as
of the Closing).
6.10 Sufficiency of Assets. The SFX Station Assets and all other rights
to be conveyed to CBS hereunder are sufficient to carry on the conduct of the
operation of the SFX Station as presently conducted.
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18
6.11 Environmental; Industrial Hygiene and Safety. SFX has complied and
is in compliance with the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, 42 U.S.C. ss.ss. 9601 et seq.
("CERCLA"), Toxic Substances Control Act, 15 U.S.C. ss.ss. 2601 et seq.
("TSCA"), the Resource Conservation and Recovery Act of 1976, 42 U.S.C. ss.ss.
6901 et seq. as amended ("RCRA"), the Occupational Safety and Health Act of
1970, 19 U.S.C. ss.651 et seq. as amended ("OSHA"), and all other federal,
state and local environmental, industrial hygiene and safety laws, rules and
regulations applicable to the SFX Station and its operations, including the
FCC's guidelines regarding RF radiation. SFX has not unlawfully disposed of
any hazardous waste (as defined below) or hazardous substance including
Polychlorinated Byphenyls ("PCBs") in connection with the operation of the SFX
Station. Except as set forth on Schedule 6.11, the technical equipment
included in the SFX Station Assets does not contain any PCBs. No hazardous
waste has been disposed of by SFX, and to the best of SFX's knowledge, no
hazardous waste has been disposed of by any other person, on the SFX Real
Estate. As used in this Agreement, the term "hazardous waste" shall mean as
defined in RCRA and in the equivalent state statute under Texas law. Except as
set forth on Schedule 6.11, there are no underground tanks at the SFX Station.
Except as set forth on Schedule 6.11, there is no asbestos insulation or other
asbestos-containing materials at the SFX Station.
6.12 SFX Intellectual Property. Schedule 6.12 is a true and complete
list of all SFX Intellectual Property applied for, issued to or owned by SFX
or under which SFX is a licensee, and used or held for use primarily in the
conduct of the business and operations of the SFX Station referred to in
Section 1.1.5 (but excluding those included in the SFX Excluded Assets and
referred to in Section 1.2). Except as set forth on Schedule 6.12, there are
no agreements with third parties which limit or restrict the right of the SFX
Station to use or register any of the SFX Intellectual Property. The SFX
Station is not being operated in a manner that infringes any trademark,
copyright or other intellectual property right of any third party or otherwise
violates the rights of any third party, and no claim has been made or, to the
best of SFX's knowledge, threatened, alleging any such violation. To the best
of SFX's knowledge, there has been no violation by others of any right of SFX
in any of the SFX
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19
Intellectual Property. Except as set forth on Schedule 6.12, all registrations
for the SFX Intellectual Property are valid and in good standing. True and
complete copies of all documents relating to the SFX Intellectual Property
have been delivered or made available to CBS.
6.13 Financial Statements. Set forth in Schedule 6.13 are complete
copies of the unaudited statements of operating income for the SFX Station for
the periods from January 1, 1995 to December 31, 1995 and January 1, 1996
through June 30, 1996, and the unaudited balance sheets for the SFX Station
dated as of December 31, 1995 and June 30, 1996 (the "SFX Financial
Statements"). The SFX Financial Statements for the 1996 periods are subject to
certain normal year-end adjustments. The SFX Financial Statements are true and
correct in all material respects and have been prepared in accordance with the
books and records of SFX and in accordance with the policies and procedures of
SFX applicable thereto, consistently applied, which differ from generally
accepted accounting principles in the respects set forth in Schedule 6.13. The
SFX Financial Statements fairly present in all material respects the financial
condition and results of operations of the SFX Station for the periods
indicated.
6.14 Personnel.
6.14.1 Schedule 6.14 contains a true and complete list of all
persons employed at the SFX Station, including a description of material
compensation arrangements (other than employee benefit plans set forth in
Schedule 6.15) and a list of other terms of any and all agreements affecting
such persons. SFX has not received notification that any of the current key
employees of SFX at the SFX Station presently plan to terminate their
employment, whether by reason of the transactions contemplated hereby or
otherwise.
6.14.2 SFX is not a party to any contract with any labor
organization, nor has SFX 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 SFX's employees at the SFX Station. SFX has
no knowledge of any organizational effort currently being made or threatened
by or on
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behalf of any labor union with respect to any of SFX's employees
at the SFX Station.
6.14.3 Except as disclosed in Schedule 6.14, SFX has complied with
all laws relating to the employment of labor, including 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 in connection with the operation of the SFX Station.
6.15 SFX Employee Benefit Plans. Schedule 6.15 contains a true and
complete list of each written and unwritten pension, retirement,
profit-sharing, deferred compensation bonus, incentive, performance, stock
option, medical, hospitalization, vision, dental or other health, life,
disability, severance, termination or other employee benefit plan, program,
arrangement, agreement, policy or understanding applicable to the employees of
the SFX Station (each, a "SFX Employee Benefit Plan"). Each SFX Employee
Benefit Plan complies in all material respects, and has been operated and
administered in all material respects in accordance with, all applicable
requirements of all laws and regulations of any public body or authority,
including the Consolidated Omnibus Budget Reconciliation Act ("COBRA") and the
regulations thereunder, and no "reportable event", "prohibited transaction"
(as such terms are defined in ERISA and the Code, as applicable) or
termination has occurred with respect to any SFX Employee Benefit Plan. All
contributions required under applicable law or the terms of the SFX Employee
Benefit Plans have been made within the time prescribed. CBS shall have no
obligations or liabilities under such SFX Employee Benefit Plans on or after
the Closing Date and any benefits due to any employee of the SFX Station under
such SFX Employee Benefit Plans shall be the sole responsibility of SFX.
6.16 Litigation. Except as set forth in Schedule 6.16, as of the date
hereof, SFX is subject to no judgment, award, order, writ, injunction,
arbitration decision or decree affecting the conduct of the business of the
SFX Station or the SFX Station Assets, and there is no litigation,
investigation or proceeding pending or, to the best of SFX's knowledge,
threatened, against
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SFX with respect to the SFX Station in any federal, state or local court, or
before any administrative agency or arbitrator (including any proceeding which
seeks the forfeiture of, or opposes the renewal of, the SFX Station Licenses),
or before any other tribunal duly authorized to resolve disputes, 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 SFX's
knowledge, threatened before the FCC or any other governmental organization
with respect to the business or operations of the SFX Station other than
applications, complaints or proceedings which affect the broadcasting industry
generally.
6.17 Compliance With Laws. Except as set forth in Schedule 6.17, SFX has
not received any notice asserting any non-compliance by it in connection with
the business or operation of the SFX Station with any applicable statute, rule
or regulation, whether federal, state or local. SFX 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 connection with the business or
operation of the SFX Station. SFX is in compliance with all laws, regulations
and governmental orders applicable to the conduct of the business or operation
of the SFX Station, and its present use of the SFX Station Assets does not
violate any of such laws, regulations or orders.
6.18 Commissions or Finder's Fees. None of SFX, SFX Broadcasting, their
affiliates nor any person or entity acting on behalf of any of the foregoing
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.
6.19 Insurance. SFX currently maintains in full force and effect the
property damage, liability and other insurance coverages with respect to the
SFX Station Assets which are listed on Schedule 6.19.
6.20 Undisclosed Obligations. Except as reflected in the
SFX Financial Statements or as disclosed on Schedule 6.20 or on
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any other Schedule to this Agreement, SFX does not have any liability or
obligation of any kind with respect to the SFX Station or the SFX Station
Assets, whether accrued, absolute, fixed or contingent, known or unknown,
other than liabilities and obligations not being assumed by CBS.
6.21 No Material Adverse Change. Except as set forth on Schedule 6.21,
since June 30, 1996, there has been no change in circumstances which has had a
Material Adverse Effect on the SFX Station, nor to the best knowledge of SFX
is any such change threatened, nor has there been any damage, destruction or
loss which could reasonably be expected to have a Material Adverse Effect on
the SFX Station, whether or not covered by insurance.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF CBS
CBS hereby makes the following representations and warranties to SFX and
SFX Broadcasting, each of which is true and correct on the date hereof, shall
remain true and correct for the period specified in Section 15.3, shall be
unaffected by any investigation heretofore or hereafter made by SFX or SFX
Broadcasting, or any notice to SFX or SFX Broadcasting other than in the
Schedules to this Agreement and shall survive the Closing.
7.1 Organization and Standing. CBS is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York,
is duly qualified to do business in the State of Texas, and has the corporate
power and authority to own, lease and operate the CBS Stations Assets and to
carry on the business of the CBS Stations as now being conducted and as
proposed to be conducted by CBS between the date hereof and the Closing Date.
7.2 Authorization and Binding Obligation. Subject to the approval of the
Westinghouse Electric Corporation ("WELCO") and CBS Boards, CBS has the
corporate power and authority to enter into and perform this Agreement and the
transactions contemplated hereby, and CBS's execution, delivery and
performance of this Agreement, and the transactions contemplated hereby have
been
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duly and validly authorized by all necessary corporate action on its part.
This Agreement has been duly executed and delivered by CBS and this Agreement
constitutes, and the agreements to be executed in connection herewith will
constitute, the valid and binding obligation of CBS enforceable against CBS in
accordance with their terms.
7.3 Absence of Conflicting Agreements or Required Consents. Except for
the approval of the WELCO and CBS Boards and as set forth in Article 5 with
respect to governmental consents, Schedules 7.8 and 7.9 with respect to
consents required in connection with the assignment of certain CBS Contracts
and as set forth in Schedule 7.3 with respect to any other consents, the
execution, delivery and performance of this Agreement by CBS: (a) do not
require the consent of any third party; (b) will not conflict with, result in
a breach of, or constitute a violation of or default under, the provisions of
CBS's articles of incorporation or By-laws or any applicable law, judgment,
order, injunction, decree, rule, regulation or ruling of any governmental
authority to which CBS is a party or by which it or the CBS Stations 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 CBS Contract, agreement, instrument, license or permit to
which CBS or the CBS Stations Assets are now subject; and (d) will not result
in the creation of any Lien on any of the CBS Stations Assets.
7.4 Government Authorizations. Schedule 7.4 contains a true and complete
list of the CBS Stations 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 CBS
Stations in the manner and to the full extent it is presently conducted. CBS
is the authorized legal holder of the CBS Stations Licenses and other
licenses, permits and authorizations listed in Schedule 7.4, none of which is
subject to any restrictions or conditions which would limit in any respect the
full operation of the Station as now operated. Except as set forth in Schedule
7.4, there are no applications, complaints or proceedings pending or, to the
best of CBS's knowledge,
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24
threatened as of the date hereof before the FCC relating to the business or
operations of the CBS Stations other than applications, complaints or
proceedings which affect the broadcasting industry generally. CBS has
delivered to SFX a true and complete copy of the CBS Stations Licenses,
including any and all amendments and other modifications thereto. The CBS
Stations Licenses and the other licenses, permits or other authorizations from
governmental and regulatory authorities listed in Schedule 7.4 are in good
standing, are in full force and effect and are unimpaired by any act or
omission of CBS or its officers, directors or employees; and the operation of
the CBS Stations is in accordance with the CBS Stations Licenses and the
underlying construction permits. No proceedings are pending or, to the
knowledge of CBS, are threatened which may result in the revocation,
modification, non-renewal or suspension of the CBS Stations 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 CBS Stations Licenses or which may affect CBS's ability to continue to
operate the CBS Stations as it is currently operated. The CBS Stations is
licensed by the FCC to operate, and is operating, with maximum facilities for
its class. The CBS Stations is not short-spaced, on a grandfathered basis or
otherwise, to any existing station, outstanding construction permit or pending
application therefor, or to any existing or proposed broadcast radio
allotment. CBS has not received any complaint that the CBS Stations is causing
objectionable interference to the transmissions of any other broadcast station
or communications facility. To the best of CBS's knowledge, no other broadcast
station or communications facility is causing objectionable interference to
the CBS Stations' transmissions or the public's reception of such
transmissions. CBS has no reason to believe that the CBS Stations Licenses
will not be renewed in the ordinary course. All material reports, forms and
statements required to be filed by CBS with the FCC with respect to the CBS
Stations since the grant of the last renewal of the CBS Stations Licenses have
been filed and are substantially complete and accurate. To the best of CBS'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
CBS as an assignor of the CBS Stations Licenses or an assignee of the SFX
Station Licenses.
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25
7.5 Compliance with Regulations. The operation of the CBS Stations and
all of the CBS Stations Assets are in compliance with (i) all applicable
engineering standards required to be met under applicable FCC rules, and (ii)
all other applicable federal, state and local rules, regulations, requirements
and policies, including all applicable painting and lighting requirements of
the FCC and the Federal Aviation Administration and ANSI Radiation Standards
C95.1 - 1982 to the extent required to be met under applicable FCC rules and
regulations, and there are no existing claims known to CBS to the contrary.
7.6 Taxes. All federal, state and local income, franchise, sales, use,
property, excise, payroll and other tax returns and reports required to be
filed by law where the failure to file such returns on a duly and timely basis
could result in a Lien on the CBS Stations Assets or the imposition on SFX of
any liability for taxes or assessments have been duly and timely filed in the
proper form with the appropriate governmental authority. All taxes, fees and
assessments of whatever nature due or payable pursuant to such returns or
otherwise have been paid, except for such amounts as are being contested
diligently, in the appropriate forum and in good faith, where the failure to
pay or contest such amounts could result in a Lien on the CBS Stations Assets
or the imposition on SFX of any liability for any taxes or assessments. There
are no tax audits pending and no outstanding agreements or waivers extending
the statutory period of limitations applicable to any federal, state or local
income tax return for any period, the result of which could result in a Lien
on the CBS Stations Assets or the imposition on SFX of any liability for any
taxes or assessments. There are no governmental investigations or other legal,
administrative or tax proceedings pursuant to which CBS is or could be made
liable for any taxes, penalties, interest or other charges, the liability for
which could extend to SFX as transferee of the CBS Stations Assets, or which
could result in a Lien on the CBS Stations Assets and, to the best of CBS's
knowledge, no event has occurred that could impose on SFX any liability for
any taxes, penalties or interest due or to become due from CBS.
7.7 Personal Property. Schedule 7.7 contains a list of all
tangible personal property and assets owned or held by CBS and
used primarily in the conduct of the business and operations of
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26
the CBS Stations. Except as disclosed in Schedule 7.7, and except as may be
subject to lease agreements of CBS listed on Schedule 7.9, CBS 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 CBS hereunder), and none of such property is, or at the Closing
will be, subject to any Lien. All of the items of the tangible personal
property and assets included in the CBS Stations Assets are 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 CBS Stations. 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 (ordinary wear and tear excepted)
and complies with all applicable rules and regulations of the FCC and the
terms of the CBS Stations Licenses.
7.8 Real Property.
7.8.1 Schedule 7.8 contains a complete and accurate list of all
real property leased by CBS which is used primarily by the CBS Stations and
all agreements, leases and contracts of CBS relating to the towers,
transmitter, booster, studio site and offices of the CBS Stations
(collectively the "CBS Real Estate Contracts") and a list of the applicable
leases.
7.8.2 The CBS Real Estate Contracts listed on Schedule 7.8
constitute valid and binding obligations of CBS and, to the best of CBS'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 on the Closing Date
constitute valid and binding obligations of CBS and, to the best of CBS's
knowledge, of all other persons purported to be parties thereto and shall be
in full force and effect. CBS is not in default under any of the CBS Real
Estate Contracts and has not received or given written notice of any default
thereunder from or to any of the other parties thereto and will not have
received any such notice at or prior to the Closing. To the best of CBS's
knowledge, there are no present disputes or claims with respect to offsets or
defenses by either landlord or tenant against the other under any such lease.
CBS has delivered to SFX true and complete copies of all
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27
CBS Real Estate Contracts.
7.8.3 Each parcel of CBS Real Estate has all appropriate easements
and access required to ensure uninterrupted use thereof. All buildings,
structures, improvements and fixtures comprising part of the real properties
owned or leased by CBS in the operation of the CBS Stations are in good
operating condition (ordinary wear and tear excepted).
7.9 Contracts. Schedule 7.9 lists the CBS Contracts as of the date of
this Agreement which are to be assumed by SFX as of the Closing Date. Those
CBS Contracts requiring the consent of a third party to assignment which CBS
and SFX agree are critical to the consummation of the transactions
contemplated hereby are identified as "CBS Material Contracts" and are so
marked on Schedule 7.9. Except as noted in Schedule 7.9, CBS has delivered to
SFX true and complete copies of all written CBS Contracts, including any and
all amendments and other modifications to such CBS Contracts, and written
summaries of all oral CBS Contracts. All such CBS Contracts are valid, binding
and enforceable by CBS in accordance with their respective terms. CBS has
complied with all such CBS Contracts and is not in default under any of such
CBS Contracts, and to the best of CBS's knowledge, no other contracting party
is in default under any of such CBS Contracts. No other party to any such CBS
Contract has made or asserted, or, to the best of CBS's knowledge has, any
defense, setoff or counterclaim under any such CBS Contract, no such other
party has exercised any option granted to it to cancel or terminate its
agreement, to shorten the term of its agreement, or to renew or extend the
term of its agreement and CBS has not received any notice to that effect.
Schedule 7.9 also contains a true and complete current trade barter summary
with respect to the CBS Stations, including applicable asset and liability
balances with respect thereto (which trade barter summary shall be updated as
of the Closing).
7.10 Sufficiency of Assets. The CBS Stations Assets and all other rights
to be conveyed to SFX hereunder are sufficient to carry on the conduct of the
operation of the CBS Stations as presently conducted.
7.11 Environmental; Industrial Hygiene and Safety. CBS has
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28
complied and is in compliance with CERCLA, TSCA, RCRA, OSHA and all other
federal, state and local environmental, industrial hygiene and safety laws,
rules and regulations applicable to the CBS Stations and their operation,
including the FCC's guidelines regarding RF radiation. CBS has not unlawfully
disposed of any hazardous waste or hazardous substance including PCBs in
connection with the operation of the CBS Stations. Except as set forth on
Schedule 7.11, the technical equipment included in the CBS Stations Assets
does not contain any PCBs. No hazardous waste has been disposed of by CBS, and
to the best of CBS's knowledge, no hazardous waste has been disposed of by any
other person, on the CBS Real Estate. Except as set forth on Schedule 7.11,
there are no underground tanks at the CBS Stations. Except as set forth on
Schedule 7.11, there is no asbestos insulation or other asbestos-containing
materials at the CBS Stations.
7.12 CBS Intellectual Property. Schedule 7.12 is a true and complete
list of all CBS Intellectual Property applied for, issued to or owned by CBS
or under which CBS is a licensee, and used or held for use primarily in the
conduct of the business and operations of the CBS Stations referred to in
Section 1.3.5 (but excluding those included in the Excluded Assets and
referred to in Section 1.4). Except as set forth on Schedule 7.12, there are
no agreements with third parties which limit or restrict the right of the CBS
Stations to use or register any of the CBS Intellectual Property. The CBS
Stations is not being operated in a manner that infringes any trademark,
copyright or other intellectual property right of any third party or otherwise
violates the rights of any third party, and no claim has been made or, to the
best of CBS's knowledge, threatened alleging any such violation. To the best
of CBS's knowledge, there has been no violation by others of any right of CBS
in any of the CBS Intellectual Property. Except as set forth on Schedule 7.12,
all registrations for the CBS Intellectual Property are valid and in good
standing. True and complete copies of all documents relating to the CBS
Intellectual Property have been delivered or made available to SFX.
7.13 Financial Statements. Set forth in Schedule 7.13 are
complete copies of the unaudited statements of operating income
for the CBS Stations for the periods from January 1, 1995 to
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29
December 31, 1995 and January 1, 1996 through June 30, 1996, and the unaudited
balance sheets for the CBS Stations dated as of December 31, 1995 and June 30,
1996 (the "CBS Financial Statements"). The CBS Financial Statements have been
prepared on a historic basis and do not include the effect of the
Westinghouse/CBS acquisition. The CBS Financial Statements for the 1996
periods are subject to certain normal year-end adjustments. The CBS Financial
Statements are true and correct in all material respects and have been
prepared in accordance with the books and records of CBS and in accordance
with the policies and procedures of CBS applicable thereto, which differ from
generally accepted accounting principles in the respects set forth in Schedule
7.13. The CBS Financial Statements fairly present in all material respects the
financial condition and results of operations of the CBS Stations for the
periods indicated.
7.14 Personnel.
7.14.1 Schedule 7.14 contains a true and complete list of all
persons employed at the CBS Stations, including a description of material
compensation arrangements (other than employee benefit plans set forth in
Schedule 7.15) and a list of other terms of any and all agreements affecting
such persons. CBS has not received notification that any of the current key
employees of CBS at the CBS Stations presently plan to terminate their
employment, whether by reason of the transactions contemplated hereby or
otherwise.
7.14.2 CBS is not a party to any contract with any labor
organization, nor has CBS 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 CBS's employees at the CBS Stations. CBS has
no knowledge of any organizational effort currently being made or threatened
by or on behalf of any labor union with respect to any of CBS's employees at
the CBS Stations.
7.14.3 Except as disclosed in Schedule 7.14.3, CBS has complied
with all laws relating to the employment of labor, including ERISA, and those
laws relating to wages, hours, collective bargaining, unemployment insurance,
workers'
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30
compensation, equal employment opportunity and payment and withholding of
taxes in connection with the operation of the CBS Stations.
7.15 Employee Benefit Plans. Schedule 7.15 contains a true and complete
list of each written and unwritten pension, retirement, profit-sharing,
deferred compensation bonus, incentive, performance, stock option, medical,
hospitalization, vision, dental or other health, life, disability, severance,
termination or other employee benefit plan, program, arrangement, agreement,
policy or understanding applicable to the employees of the CBS Stations (each,
a "CBS Employee Benefit Plan"). Each CBS Employee Benefit Plan complies in all
material respects, and has been operated and administered in all material
respects in accordance with, all applicable requirements of all laws and
regulations of any public body or authority, including COBRA and the
regulations thereunder, and no "reportable event", "prohibited transaction"
(as such terms are defined in ERISA and the Code, as applicable) or
termination has occurred with respect to any CBS Employee Benefit Plan. All
contributions required under applicable law or the terms of the CBS Employee
Benefit Plans have been made within the time prescribed. SFX shall have no
obligations or liabilities under such CBS Employee Benefit Plans on or after
the Closing Date and any benefits due to any employee of the CBS Stations
under such CBS Employee Benefit Plans shall be the sole responsibility of CBS.
7.16 Litigation. Except as set forth in Schedule 7.16, as of the date
hereof, CBS is subject to no judgment, award, order, writ, injunction,
arbitration decision or decree affecting the conduct of the business of the
CBS Stations or the CBS Stations Assets, and there is no litigation,
investigation or proceeding pending or, to the best of CBS's knowledge,
threatened, against CBS with respect to the CBS Stations in any federal, state
or local court, or before any administrative agency or arbitrator (including
any proceeding which seeks the forfeiture of, or opposes the renewal of, the
CBS Stations Licenses), or before any other tribunal duly authorized to
resolve disputes, 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,
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31
complaints or proceedings pending or, to the best of CBS's knowledge,
threatened before the FCC or any other governmental organization with respect
to the business or operations of the CBS Stations other than applications,
complaints or proceedings which affect the broadcasting industry generally.
7.17 Compliance With Laws. Except as set forth in Schedule 7.17, CBS has
not received any notice asserting any non-compliance by it in connection with
the business or operation of the CBS Stations with any applicable statute,
rule or regulation, whether federal, state or local. CBS 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 connection with the business or
operation of the CBS Stations. CBS is in compliance with all laws, regulations
and governmental orders applicable to the conduct of the business or operation
of the CBS Stations, and its present use of the CBS Stations Assets does not
violate any of such laws, regulations or orders.
7.18 Commissions or Finder's Fees. Neither CBS 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.
7.19 Insurance. CBS currently maintains in full force and effect the
property damage, liability and other insurance coverages with respect to the
CBS Stations Assets which are listed on Schedule 7.19.
7.20 Undisclosed Obligations. Except as reflected in the CBS Financial
Statements or as disclosed on Schedule 7.20 or on any other Schedule to this
Agreement, CBS does not have any liability or obligation of any kind with
respect to the CBS Stations or the CBS Stations Assets, whether accrued,
absolute, fixed or contingent, known or unknown, other than liabilities and
obligations not being assumed by SFX.
7.21 No Material Adverse Change. Except as set forth on
Schedule 7.21, since June 30, 1996, there has been no change in
circumstances which has had a Material Adverse Effect on the CBS
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32
Stations, nor to the best knowledge of CBS is any such change threatened, nor
has there been any damage, destruction or loss which could reasonably be
expected to have a Material Adverse Effect on the CBS Stations, whether or not
covered by insurance.
ARTICLE 8
COVENANTS OF SFX
8.1 Records. SFX, for a period of seven (7) years following the Closing
Date, shall make available during normal business hours for audit and
inspection by CBS and its representatives for any reasonable purpose all
records, files, documents and correspondence transferred to it hereunder in
connection with the CBS Stations with respect to taxes, regulation and
litigation; provided, however, that SFX may dispose of or destroy any such
records, files, documents and correspondence during such period after giving
CBS sixty (60) days' written notice to permit CBS, at its expense, to examine,
duplicate or take possession of such records, files, documents and
correspondence. During such period, SFX shall make available to CBS at CBS's
expense upon reasonable written request, and consistent with the business
requirements of SFX, personnel of SFX to assist CBS in locating and obtaining
records and files with respect to the CBS Stations for periods prior to the
Closing Date.
8.2 Employee Matters.
8.2.1 On the Closing Date, SFX shall offer employment at will to
all but up to five (5) of the employees of the CBS Stations employed on that
date by CBS, including each employee on an approved leave of absence ("CBS
Leave of Absence Employee") (collectively, "New Employees of SFX"). The
employment for employees of the CBS Stations actively employed on the Closing
Date who receive offers of employment will commence on the Closing Date and
the employment for CBS Leave of Absence Employees who receive offers of
employment will commence on the dates that such leaves terminate. SFX shall
notify CBS of those employees to whom it will so offer employment at least
thirty (30) days prior to the Closing Date. CBS shall be responsible
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33
for severance payments which may be applicable under its employee benefit
plans to any employees to whom SFX is not so required to offer employment.
8.2.2 CBS shall be responsible for all salary and benefits of the
employees of the CBS Stations for the period prior to the Closing Date and all
salary and benefits of each CBS Leave of Absence Employee until such CBS Leave
of Absence Employee returns to work after the Closing Date and is offered
employment pursuant to Section 8.2.1 with SFX. All employees of the CBS
Stations except CBS Leave of Absence Employees shall cease active
participation in all of CBS's employee benefit plans on the Closing Date, in
accordance with the terms of such plans.
8.2.3 All New Employees of SFX shall receive credit for eligibility
and vesting purposes (but not for the purpose of benefit accrual) for years of
service with CBS under all employee benefit plans and programs maintained for
employees of SFX (excluding severance). CBS shall cause its employee benefit
plans to grant each New Employee of SFX credit for service with SFX for the
purposes of eligibility and vesting (but not for the purpose of benefit
accrual). During the remainder of the calendar year in which the Closing
occurs, all New Employees of SFX shall be eligible to take whatever remaining
vacation they had with CBS as of the Closing Date. CBS shall pay the amount of
such vacation liability to SFX on the Closing Date.
8.3 Sales Representation Agreement. SFX agrees to terminate its national
sales representation agreement with McGavren Guild effective as of the Closing
Date.
ARTICLE 9
COVENANTS OF CBS
9.1 Records. CBS, for a period of seven (7) years following the Closing
Date, shall make available during normal business hours for audit and
inspection by SFX and its representatives for any reasonable purpose all
records, files, documents and correspondence transferred to it hereunder in
connection with the SFX Station with respect to taxes, regulation
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34
and litigation; provided, however, that CBS may dispose of or destroy any such
records, files, documents and correspondence during such period after giving
SFX sixty (60) days' written notice to permit SFX, at its expense, to examine,
duplicate or take possession of such records, files, documents and
correspondence. During such period, CBS shall make available to SFX at SFX's
expense upon reasonable written request, and consistent with the business
requirements of CBS, personnel of CBS to assist SFX in locating and obtaining
records and files with respect to the SFX Station for periods prior to the
Closing Date.
9.2 Employee Matters.
9.2.1 On the Closing Date, CBS shall offer employment at will to
all but up to five (5) of the employees of the SFX Station employed on that
date by SFX, including each employee on an approved leave of absence ("SFX
Leave of Absence Employee") (collectively, "New Employees of CBS"). The
employment for employees of the SFX Station actively employed on the Closing
Date who receive offers of employment will commence on the Closing Date and
the employment for SFX Leave of Absence Employees who receive offers of
employment will commence on the dates that such leaves terminate. CBS shall
notify SFX of those employees to whom it will so offer employment at least
thirty (30) days prior to the Closing Date. SFX shall be responsible for
severance payments which may be applicable under its employee benefit plans to
any employees to whom CBS is not so required to offer employment.
9.2.2 SFX shall be responsible for all salary and benefits of the
employees of the SFX Station for the period prior to the Closing Date and all
salary and benefits of each SFX Leave of Absence Employee until such SFX Leave
of Absence Employee returns to work after the Closing Date and is offered
employment pursuant to Section 9.2.1 with CBS. All employees of the SFX
Station except SFX Leave of Absence Employees shall cease active participation
in all of SFX's employee benefit plans on the Closing Date, in accordance with
the terms of such plans.
9.2.3 All New Employees of CBS shall receive credit for eligibility
and vesting purposes (but not for the purpose of
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35
benefit accrual) for years of service with SFX under all employee benefit
plans and programs maintained for employees of CBS (excluding severance). SFX
shall cause its employee benefit plans to grant each New Employee of CBS
credit for service with CBS for the purposes of eligibility and vesting (but
not for the purpose of benefit accrual). During the remainder of the calendar
year in which the Closing occurs, all New Employees of CBS shall be eligible
to take whatever remaining vacation they had with SFX as of the Closing Date.
SFX shall pay the amount of such vacation liability to CBS on the Closing
Date.
9.3 Sales Representative Agreement. CBS agrees to terminate its national
sales representation agreement with CBS Radio Representatives effective as of
the Closing Date.
ARTICLE 10
MUTUAL COVENANTS
10.1 Pre-Closing Covenants. SFX and CBS covenant and agree with respect
to the SFX Station and CBS Stations, respectively, that between the date
hereof and the Closing Date, except as expressly permitted by this Agreement
or with the prior written consent of the other party, they shall act in
accordance with the following:
10.1.1 Each party shall conduct the business and operations of its
Station(s) in the ordinary and prudent course of business, and shall use all
reasonable efforts, consistent with its past practices, (i) to preserve the
ongoing operations and assets of its Station(s), (ii) to preserve the goodwill
and business of the advertisers, suppliers and others having business
relations with its Station(s), (iii) to retain the services of the employees
of its Station(s), and (iv) to maintain the independent identity of its
Station(s).
Neither party shall:
(i) sell or dispose of or commit to sell or dispose of
any of its Station Assets;
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(ii) enter into any commitment for capital expenditures for which
the other party would be liable after the Closing Date;
(iii) sell broadcast time on a prepaid basis (other than in the
course of existing Station credit practices) or introduce any deeply
discounted promotions for the sale of advertising time at its Station(s);
(iv) enter into any collective bargaining or, negotiation (the
status of which will be regularly communicated to the other party) or
otherwise, make any commitment or incur any liability to any labor
organization relating to any Station employee (to the extent the foregoing
does not violate applicable law);
(v) grant or agree to grant any general increases in the rates of
salaries or compensation payable to employees of its Station(s) (except for
increases substantially in accordance with existing employment practice);
(vi) grant or agree to grant any specific bonus or increase to any
executive or management employee of its Station(s) (except for increases
substantially in accordance with existing employment practice);
(vii) provide for any new pension, retirement or other employment
benefits for employees of its Station(s) or any increases in any existing
benefits (except for increases substantially in accordance with existing
employment practice);
(viii) modify, change or terminate any of the SFX Contracts or the
SFX Real Estate Contracts, in the case of SFX, or any of the CBS Contracts or
the CBS Real Estate Contracts, in the case of CBS;
(ix) introduce any material changes in the broadcast hours or in
the format of its Station(s) or any other material change in the programming
policies of its Station(s); or
(x) enter into any transaction or make or enter into any contract
or commitment which by reason of its size or otherwise is not in the ordinary
course of business.
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37
10.1.2 Each party shall operate its Station(s) in accordance with
rules and regulations and its Station Licenses and with all other laws,
regulations, rules and orders, and shall not cause or permit by any act, or
failure to act, its 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 its Station Licenses, or
fail to prosecute with due diligence any pending applications to the FCC.
10.1.3 Should any fact relating to either party which would cause
the FCC to deny its consent to the transactions contemplated by this Agreement
come to either party's attention, such party will promptly notify the other
party thereof and will use all reasonable efforts to take such steps as may be
necessary to remove any such impediment to the transactions contemplated by
this Agreement; provided, however, that the transactions contemplated by the
Agreement and Plan of Merger dated as of June 20, 1996, among WELCO, Infinity
Broadcasting Corporation and R Acquisition Corp., pursuant to which Infinity
will become a wholly owned subsidiary of Westinghouse, including pending
filings seeking FCC and other regulatory approval or clearance thereof, shall
not be considered an impediment as contemplated in this Section 10.1.3.
10.1.4 Each party will provide the other party prompt written
notice of any change in any of the information contained in the
representations and warranties made in Article 6 or 7 or any Schedules
referred to herein or attached hereto.
10.1.5 Each party shall give or cause its Station(s) to give the
other party's counsel, accountants, engineers and other representatives, at
the other party's reasonable request, full and reasonable access during normal
business hours to all of such party's personnel, properties, books, Contracts,
reports and records including financial information and tax returns relating
to its Station(s), to all real estate, buildings and equipment relating to its
Station(s), and to the employees of its Station(s) in order that the other
party may have full opportunity to make such investigation as it desires of
the affairs of its Station(s) and to furnish the other party with information,
and copies of all documents and agreements including
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38
financial and operating data and other information concerning the financial
condition, results of operations and business of its Station(s), that the
other party may reasonably request in connection with the preparation of
audited and unaudited Station- level financial statements. Both parties agree
that any audits shall be at the sole expense and staffing of the party
requesting such audits. Each party shall have the right to perform a Phase 1
environmental audit with respect to the real estate and operations of the
other party's Station(s), and the industrial hygiene and safety condition
thereof. In the event that the party performing the audit believes that any
further environmental investigation is required as a result of the conclusions
of any Phase 1 environmental audit report, the parties will consult with each
other and mutually agree on the scope of any additional environmental
investigation. The rights of each party under this Section 10.1.5 shall not be
exercised in such a manner as to interfere unreasonably with the business of
the other party's Station(s).
10.1.6 Within fifteen (15) days of the end of each month, each
party shall deliver to the other party an unaudited statement of revenue and
expenses of its Station(s) and a balance sheet for the month then ended
(collectively, the "Interim Financial Statements"). The Interim Financial
Statements shall be prepared in accordance with practices consistent with
those followed in the preparation of the SFX Financial Statements and the CBS
Financial Statements, as applicable, delivered pursuant to Sections 6.13 and
7.13, respectively. Such Interim Financial Statements shall be true and
complete in all material respects and fairly present in all material respects
the financial condition and results of operation of each party's Station(s)
for the periods covered by such statements. Each party shall furnish to the
other party any and all information customarily prepared by such party
concerning the financial condition of its Station(s) that the other party may
reasonably request.
10.1.7 Each party shall use all reasonable efforts (but shall not
be required to make any payment) to obtain any third party consents necessary
for the assignment of its Contracts to the other party, provided that no
payment shall be made by the Station(s) of the party seeking such consent, and
no Contract shall be modified to increase the amount payable
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thereunder or to otherwise modify the terms thereof in a manner adverse to
such Station(s), in order to obtain any such consent without first obtaining
the written consent of the other party.
10.1.8 Each party shall also use its best efforts to cause
advertisers on its Station(s) to use the air time available under trade and
barter contracts and agreements prior to the Closing Date and will not enter
into any new barter agreements at its Station(s) unless it discharges or
satisfies over 90% of the liability contained in the existing agreements for
such advertisers prior to the Closing Date or receives the permission of the
other party. Each party will also confirm in writing with the existing clients
of its Station(s) prior to the Closing Date their trade balances contained on
the trade report for its Station(s) in order to verify the accuracy of the
balances. Trade agreements that have expired or will expire prior to the
Closing Date shall not be extended without the approval of the other party.
Each party will also use its best efforts to bring its Station's overall trade
position to zero prior to the Closing Date.
10.2 Notification.
10.2.1 Each party shall notify the other party of any material
litigation, arbitration or administrative proceeding pending or, to its
knowledge, threatened against the other party which challenges the
transactions contemplated hereby.
10.2.2 Each party shall promptly notify the other party if the
normal broadcast transmissions of its Station(s) are interrupted, interfered
with or in any way impaired, and shall provide the other party with prompt
written notice of the problem and the measures being taken to correct such
problem. If any such Station is not restored so that operation is resumed to
full licensed power and antenna height within five (5) days of such event, or
if more than three (3) such events occur within any thirty (30) day period, or
if the applicable Station shall be off the air for more than seventy-two (72)
consecutive hours, then the other party shall have the right to terminate this
Agreement.
10.3 No Inconsistent Action. Neither party shall take any
action which is materially inconsistent with its obligations
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under this Agreement.
10.4 Closing Covenant. On the Closing Date, each party shall transfer,
convey, assign and deliver to the other party its Station Assets and each
party shall assume its Assumed Liabilities as provided in Articles 1 and 2.
10.5 Other Items. Except as otherwise specifically contemplated by this
Agreement, until the Closing Date, each party shall (i) maintain in full force
and effect such property damages, liability and other insurance coverage with
respect to its Station Assets as it currently has in effect, and (ii) maintain
its inventory levels (including office supplies, spare parts, tubes, equipment
and the like) at levels consistent with the normal and ordinary course of
operation of its Station(s).
10.6 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.
10.7 Confidentiality. CBS and SFX shall each keep confidential all
information obtained by it with respect to the other party in connection with
this Agreement and the transactions contemplated hereby and will use such
information solely in connection with the transactions contemplated hereby,
pursuant to the terms and conditions of the Confidentiality Agreement between
them dated September 20, 1996 (the "Confidentiality Agreement"). If the
transactions contemplated hereby are not consummated for any reason, the
parties shall continue to be bound by such Confidentiality Agreement, and each
party shall return to the other party, without retaining a copy thereof, any
schedules, documents or other written information obtained from the other
party in connection with this Agreement and the transactions contemplated
hereby.
10.8 Cooperation. CBS and SFX shall cooperate fully with each other in
taking any actions, including actions to obtain the required consent of any
governmental instrumentality or any third
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41
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 of its
Affiliates or with respect to the SFX Station or the CBS Stations, as
applicable. Each party shall also make available to the other party after the
Closing Date, upon reasonable request, such of its personnel who were
employees of the other party's Station(s) prior to the Closing Date whose
assistance or participation is reasonably requested by the other party in
anticipation of, preparation for or the prosecution or defense of existing or
future litigation, tax returns or other matters relating to the period prior
to the Closing Date.
10.9 Control of Stations. Neither party shall, directly or indirectly,
control, supervise or direct the operations of the other party's Station(s).
Such operations, including complete control and supervision of all station
programs, employees and policies, shall be the sole responsibility of the
party owning such Station(s).
10.10 Consents to Assignment. To the extent that any Contract (other
than a Material Contract) identified in the Schedules 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 other party of the Contracts, this Agreement and any
assignment executed pursuant hereto, to the extent permitted by law, shall
constitute an equitable assignment by the assigning party to the other party
of all of the assigning party's rights, benefits, title and interest in and to
the Contracts, and where necessary or appropriate, the other party shall be
deemed to be the assigning party's agent for the purpose of completing,
fulfilling and discharging all of the
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42
assigning party's rights and liabilities arising after the Closing Date under
such Contracts. The assigning party shall use all reasonable efforts to
provide the other party with the benefits of such Contracts (including
permitting the other party to enforce any rights of the assigning party
arising under such Contracts), and the other party shall, to the extent the
assigning party is provided with the benefits of such Contracts, assume,
perform and in due course pay and discharge all debts, obligations and
liabilities of the assigning party under such Contracts.
10.11 Waiver of Compliance with Bulk Sales Law. Each party waives
compliance by the other party with the provisions of any "bulk sales" law
applicable to the transactions contemplated hereby; provided, that each party
agrees to indemnify the other party pursuant to Section 15 for such
noncompliance.
10.12 Accounts Receivable.
10.12.1 Both parties acknowledge that all accounts receivable of
the other party for services performed by such other party in connection with
the operation of its Station(s) prior to the Closing Date ("Closing Accounts
Receivable"), shall remain the property of the other party.
10.12.2 After the Closing Date and until such time as an account
receivable has aged for 120 days, SFX and CBS shall each use reasonable
efforts to collect, in the manner regularly pursued by SFX and CBS in the
ordinary course of their business, such of the other party's Closing Accounts
Receivable as are collectible. SFX and CBS will each furnish to the other
party a complete list of the other party's Closing Accounts Receivable within
twenty (20) days after the Closing Date. Any funds received after the Closing
Date by either party with respect to the other party's Closing Accounts
Receivables shall be forwarded directly to SFX or CBS as applicable, for
deposit and processing. If any Closing Accounts Receivable are received by SFX
or CBS in combination with accounts receivable arising after the Closing Date,
SFX or CBS will deposit such funds into its own account and remit such
portions of the funds received applicable to the other party's Closing
Accounts Receivable along with backup documentation by the 15th day of the
following month. Each party
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43
will supply the other party with a Closing Accounts Receivable aging report
for such other party's Closing Accounts Receivable on a monthly basis to track
the remaining outstanding Closing Accounts Receivable of such other party
until both parties mutually agree to discontinue such reports. Neither SFX nor
CBS shall be required or authorized to institute any litigation or employ
counsel or to utilize any means of collection outside of the ordinary course
of business with respect to any of the other party's Closing Accounts
Receivable, respectively, unless authorized in writing by the other party. All
payments received from account debtors on account of Closing Accounts
Receivable shall be applied to the account debtor's oldest accounts receivable
first, except to the extent that an account debtor shall specify that its
payments relate to a specific invoice. Both parties will make reasonable
efforts to handle ongoing customers in a manner that helps to insure the
continuity of such customer's business with the other party's Station(s).
10.13 Completion of Schedules. As soon as practicable after the date
hereof (and in any event by October 1, 1996), each party shall deliver to the
other party a complete set of the schedules contemplated by this Agreement.
ARTICLE 11
CONDITIONS OF CLOSING BY CBS
The obligations of CBS 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 SFX and SFX
Broadcasting made in this Agreement, or in any Schedule or document delivered
pursuant hereto, 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 (unless an earlier date is expressly provided for therein), except for
changes expressly permitted or contemplated by the terms of this Agreement.
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44
11.1.2 All of the terms, covenants and conditions to be complied
with and performed by SFX and SFX Broadcasting on or prior to Closing Date
shall have been complied with or performed in all material respects.
11.1.3 CBS shall have received a certificate, dated as of the
Closing Date, executed by an officer of SFX and SFX Broadcasting, to the
effect that the conditions set forth in Sections 11.1.1 and 11.1.2 have been
satisfied.
11.2 Governmental Consents. The conditions specified in
Sections 5.1, 5.2 and 5.3 shall have been satisfied.
11.3 Governmental Authorizations. SFX shall be the holder of the SFX
Station Licenses and all other material licenses, permits and other
authorizations listed in Schedule 6.4, 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 SFX 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 SFX Station Licenses or any other
material licenses, permits or other authorizations of the SFX Station.
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. SFX shall have delivered to CBS a written opinion of
its in-house corporate counsel, dated as of the Closing Date, with respect to
the matters set forth in Schedule 11.5, in a form satisfactory to CBS and SFX.
11.6 Board Approval. The WELCO and CBS Boards shall have
authorized the transactions to be consummated by CBS at the
Closing.
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11.7 Third-Party Consents. SFX shall have obtained and shall have
delivered to CBS all third-party consents to the SFX Material Contracts.
11.8 Closing Documents. SFX shall have delivered or caused to be
delivered to CBS, on the Closing Date, all deeds, bills of sale, endorsements,
assignment and other instruments of conveyance and transfer reasonably
satisfactory in form and substance to CBS, effecting the sale, transfer,
assignment and conveyance of the SFX Station Assets to CBS and the assumption
of the SFX Assumed Liabilities, including each of the documents required to be
delivered pursuant to Article 14.
11.9 Financing Statements. SFX shall have delivered to CBS releases
under the Uniform Commercial Code of any financing statements filed against
any of the SFX Station Assets in the jurisdictions in which the SFX Station
Assets are and have been located since such SFX Station Assets were acquired
by SFX.
11.10 Environmental Condition. CBS shall have been satisfied in its
reasonable discretion that any environmental conditions identified in the
Phase 1 environmental audit report with respect to the SFX Real Estate and
operations of the SFX Station, and the environmental and industrial hygiene
and safety condition of the SFX Real Estate and operations of the SFX Station,
shall have been or are scheduled to be satisfactorily remediated.
11.11 Due Diligence. (a) On or Prior to October 10, 1996. CBS shall have
been satisfied that its due diligence review of the SFX Station, the SFX
Station Assets and the CBS Assumed Liabilities shall not have revealed any
fact or circumstance which shall have caused CBS to believe in good faith that
proceeding with the transactions contemplated hereby would adversely affect
CBS; provided, however, that this condition shall irrevocably be deemed
satisfied for all purposes hereunder if CBS shall not have described any such
facts and circumstances in reasonable detail in writing to SFX on or prior to
October 10, 1996.
(b) Prior to October 16, 1996. CBS shall have been
satisfied that its due diligence review of the SFX Schedules (and
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46
the underlying agreements, documents and other information referred to or
directly supporting the information set forth in the SFX Schedules) shall not
have revealed facts and circumstances that are materially different, taken as
a whole, from the facts and circumstances as known to CBS on the date hereof
and that such differences could reasonably be expected to materially adversely
affect the SFX Station Assets, or that any such difference so identified shall
have been or shall be resolved to the reasonable satisfaction of CBS;
provided, however, that this condition shall irrevocably be deemed satisfied
for all purposes hereunder with respect to any such differences that CBS shall
not have described in reasonable detail in writing to SFX prior to October 16,
1996.
ARTICLE 12
CONDITIONS OF CLOSING BY SFX AND SFX BROADCASTING
The obligations of SFX and SFX Broadcasting 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 CBS made in this
Agreement, or in any Schedule or document delivered pursuant hereto, 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 (unless an earlier date
is expressly provided for therein), except for changes expressly permitted or
contemplated by the terms of this Agreement.
12.1.2 All of the terms, covenants and conditions to be complied
with and performed by CBS on or prior to the Closing Date shall have been
complied with or performed in all material respects.
12.1.3 SFX shall have received a certificate, dated as of the
Closing Date, executed by an officer of CBS, to the effect that the conditions
set forth in Sections 12.1.1 and 12.1.2 have been satisfied.
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47
12.2 Governmental Consents. The conditions specified in
Sections 5.1, 5.2 and 5.3 shall have been satisfied.
12.3 Government Authorizations. CBS shall be the holder of the CBS
Stations Licenses and all other material licenses, permits and other
authorizations listed in Schedule 7.4, 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 CBS 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 CBS Stations Licenses or any other
material licenses, permits or other authorizations of the CBS Stations.
12.4 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.
12.5 Legal Opinion. CBS shall have delivered to SFX an opinion of its
counsel, an employee of CBS, dated as of the Closing Date, with respect to the
matters set forth in Schedule 12.5 in a form satisfactory to CBS and SFX.
12.6 Third-Party Consents. CBS shall have obtained and shall have
delivered to SFX all third-party consents to the CBS Material Contracts.
12.7 Closing. CBS shall have delivered or caused to be delivered to SFX,
on the Closing Date, all deeds, bills of sale, endorsements, assignment and
other instruments of conveyance and transfer reasonably satisfactory in form
and substance to SFX, effecting the sale, transfer, assignment and conveyance
of the CBS Stations Assets to SFX and the assumption by CBS of the CBS Assumed
Liabilities, including each of the documents required to be delivered pursuant
to Article 14.
12.8 Financing Statements. CBS shall have delivered to SFX
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48
releases under the Uniform Commercial Code of any financing statements filed
against any of the CBS Stations Assets in the jurisdictions in which the CBS
Stations Assets are and have been located since such CBS Stations Assets were
acquired by CBS.
12.9 Environmental. SFX shall have been satisfied in its reasonable
discretion that any environmental conditions identified in the Phase 1
environmental audit report with respect to the CBS Real Estate and operations
of the CBS Stations, and the environmental and industrial hygiene and safety
condition of the CBS Real Estate and operations of the CBS Stations, shall
have been or are scheduled to be satisfactorily remediated.
12.10 Due Diligence. (a) On or Prior to October 10, 1996. SFX shall have
been satisfied that its due diligence review of the CBS Stations, the CBS
Stations Assets and the SFX Assumed Liabilities shall not have revealed any
fact or circumstance which shall have caused SFX to believe in good faith that
proceeding with the transactions contemplated hereby would adversely affect
SFX; provided, however, that this condition shall irrevocably be deemed
satisfied for all purposes hereunder if SFX shall not have described any such
facts and circumstances in reasonable detail in writing to CBS on or prior to
October 10, 1996.
(b) Prior to October 16, 1996. SFX shall have been satisfied that its
due diligence review of the CBS Schedules (and the underlying agreements,
documents and other information referred to or directly supporting the
information set forth in the CBS Schedules) shall not have revealed facts and
circumstances that are materially different, taken as a whole, from the facts
and circumstances as known to SFX on the date hereof and that such differences
could reasonably be expected to materially adversely affect the CBS Stations
Assets, or that any such difference so identified shall have been or shall be
resolved to the reasonable satisfaction of SFX; provided, however, that this
condition shall irrevocably be deemed satisfied for all purposes hereunder
with respect to any such differences that SFX shall not have described in
reasonable detail in writing to CBS prior to October 16, 1996.
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ARTICLE 13
EXPENSES; TRANSFER TAXES; AND FEES
13.1 Expenses; Transfer Taxes. Except as set forth in Section 13.2, each
party hereto shall be solely responsible for all costs and expense incurred by
it in connection with the negotiation, preparation and performance of and
compliance with the terms of this Agreement, including all recordation,
transfer and documentary taxes and fees, and any excise, sales or use taxes,
associated with transferring its Station Assets in accordance with this
Agreement, and any filing or grant fees imposed by any governmental authority,
the consent of which is required to the transactions contemplated hereby.
13.2 Appraisal Fee. The appraisal fee of the independent valuation firm
selected in accordance with Section 3.2 shall be borne equally by CBS and SFX.
ARTICLE 14
DOCUMENTS TO BE DELIVERED AT CLOSING
14.1 SFX's Documents. At the Closing, SFX and SFX
Broadcasting shall deliver or cause to be delivered to CBS the
following:
14.1.1 Bill of sale, general warranty deed, assignments and other
good and sufficient instruments of conveyance, transfer and assignment, all in
form and substance reasonably satisfactory to counsel for CBS, as shall be
effective to vest in CBS or its permitted assignees, good and marketable title
in and to the SFX Station Assets transferred pursuant to this Agreement in
accordance with the terms of this Agreement;
14.1.2 Certified resolutions of the Boards of Directors of SFX and
SFX Broadcasting 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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14.1.3 A certificate, dated the Closing Date, by SFX
and SFX Broadcasting in the form described in Section 11.1.3;
14.1.4 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 SFX Station,
including the SFX's Station's public file, shall be left at the SFX Station
and thereby delivered to CBS;
14.1.5 An assignment and assumption agreement or agreements
reasonably satisfactory in form and substance to counsel to CBS effecting the
assumption of the SFX Assumed Liabilities;
14.1.6 Certificates of Good Standing for SFX and SFX Broadcasting
from the States of Delaware and Texas certified as of a date not more than
thirty (30) days before the Closing Date;
14.1.7 The opinion of SFX's counsel referenced in Section ll.5; and
14.1.8 Such additional information and materials as CBS shall have
reasonably requested.
14.2 CBS's Documents. At the Closing, CBS shall deliver or cause to be
delivered to SFX and SFX Broadcasting the following:
14.2.1 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 SFX, as shall be effective to vest in
SFX or its permitted assignees, good and marketable title in and to the CBS
Stations Assets transferred pursuant to this Agreement in accordance with the
terms of this Agreement;
14.2.2 Certified resolutions of the Board of Directors of CBS and
WELCO 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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14.2.3 A certificate, dated the Closing Date, by CBS
in the form described in Section 12.1.3;
14.2.4 At the time and place of Closing, CBS's 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 CBS Stations,
including the CBS Stations' public file, shall be left at the CBS Stations and
thereby delivered to SFX;
14.2.5 An assignment and assumption agreement or agreements
reasonably satisfactory in form and substance to counsel to SFX effecting the
assumption of the CBS Assumed Liabilities;
14.2.6 Certificates of Good Standing for CBS from the States of New
York and Texas dated not more than thirty (30) days before the Closing Date;
14.2.7 The opinion of CBS's counsel referenced in
Section 12.5; and
14.2.8 Such additional information and materials as
SFX shall have reasonably requested.
ARTICLE 15
INDEMNIFICATION
15.1 SFX's Indemnities. SFX and SFX Broadcasting hereby agree to
indemnify, defend and hold harmless CBS, its Affiliates and their respective
officers and directors (the "CBS Indemnitees") with respect to any and all
demands, claims, actions, suits, proceedings, assessments, judgments, costs,
losses, damages, liabilities and expenses (including interest, penalties,
court costs and reasonable attorneys' fees)
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52
(collectively "Damages") asserted against, resulting from, imposed upon or
incurred by the CBS Indemnitees directly or indirectly relating to or arising
out of:
15.1.1 The breach by SFX or SFX Broadcasting of any of their
representations or warranties, or failure by SFX or SFX Broadcasting to
perform any covenants, conditions or agreements of SFX or SFX Broadcasting set
forth in this Agreement;
15.1.2 The SFX Assumed Liabilities;
15.1.3 The SFX Retained Liabilities;
15.1.4 Any employee benefit plan maintained by SFX;
15.1.5 Any failure by SFX to comply with any "bulk
sales" law applicable to the transactions contemplated hereby;
and
15.1.6 Any and all claims, liabilities or obligations of any
nature, absolute or contingent, relating to the business and operation of the
SFX Station prior to the Closing Date.
15.2 CBS's Indemnities. CBS hereby agrees to indemnify, defend and hold
harmless SFX, SFX Broadcasting, their Affiliates and their respective officers
and directors (the "SFX Indemnitees") with respect to any and all Damages
asserted against, resulting from, imposed upon or incurred by the SFX
Indemnitees directly or indirectly relating to or arising out of:
15.2.1 The breach by CBS of any of its representations, warranties,
or failure by CBS to perform any covenants, conditions or agreements of CBS
set forth in this Agreement;
15.2.2 The CBS Assumed Liabilities;
15.2.3 The CBS Retained Liabilities;
15.2.4 Any employee benefit plan maintained by CBS;
15.2.5 Any failure by CBS to comply with any "bulk
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sales" law applicable to the transactions contemplated hereby;
and
15.2.6 Any and all claims, liabilities or obligations of any
nature, absolute or contingent, relating to the business and operation of the
CBS Stations prior to the Closing Date.
15.3 Survival of Representations and Warranties. The representations and
warranties contained herein shall survive the Closing for a period of two (2)
years following the Closing Date, except for the representation and warranty
with respect to taxes set forth in Sections 6.6 and 7.6, which shall survive
until the expiration of any statutes of limitations applicable with respect to
such taxes, and the representations and warranties with respect to title set
forth in Sections 6.7, 6.8.3, 7.7 and 7.8.3 and the environmental
representations in Sections 6.11 and 7.11 which shall survive the Closing for
five years, and upon the expiration of such periods shall lapse and be of no
further effect unless a specific claim shall have been made or an action shall
have been commenced before such date.
15.4 Procedures.
15.4.1 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.
15.4.2 If the Indemnifying Party assumes the defense of any such
claim or litigation resulting therefrom, 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 Damages caused by
or arising out of any settlement approved by the Indemnifying Party or any
judgment in connection with such claim or litigation resulting therefrom;
however, the Indemnified Party may participate, at its expense, in the defense
of such
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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.
15.4.3 If the Indemnifying Party shall not assume the defense of
any such claim or litigation resulting therefrom within 45 days after notice
thereof from the Indemnified Party, the Indemnified Party may, but shall have
no obligation to, defend against such claim or litigation in such manner as it
may deem appropriate, and the Indemnified Party may compromise or settle such
claim or litigation without the Indemnifying Party's consent. The Indemnifying
Party shall promptly reimburse the Indemnified Party for the amount of all
expenses, legal or otherwise, incurred by the Indemnified Party in connection
with the defense against or settlement of such claim or litigation. If no
settlement of the claim or litigation is made, the Indemnifying Party shall
promptly reimburse the Indemnified Party for the amount of any judgment
rendered with respect to such claim or in such litigation and of all expenses,
legal or otherwise, incurred by the Indemnified Party in the defense against
such claim or litigation.
15.5 Limits on and Conditions of Indemnification.
15.5.1 Threshold Amount. Neither party shall be liable to the other
party for any Damages under this Agreement resulting from the falsity or
breach of any of the representations or warranties set forth in Articles 6 or
7, except to the extent that the aggregate amount of such Damages exceeds the
amount of $100,000 (the "Threshold Amount"); provided, however, that once such
aggregate has been exceeded, such party shall be liable for the amount of all
Damages, including the Threshold Amount.
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55
15.5.2 Consequential Damages. Neither party shall be liable to or
indemnify the other party for Damages arising out of any loss or interruption
of business, profits, business opportunities or goodwill, loss of use of
facilities, cost of capital, claims of customers, or any other indirect,
special or consequential damages or any cost or expense related to such
Damages. The limitation against liability contained herein shall apply whether
the action in which recovery of Damages is sought is based on contract, tort
(including sole, concurrent or other negligence and strict liability), statute
or otherwise. To the extent permitted by law, any statutory remedies which are
inconsistent with the provisions of these terms are waived.
15.5.3 Other Limitations. Neither party shall be liable to or
indemnify the other party for Damages to the extent that the same are: (a)
caused, contributed to or exacerbated by the other party; or (b) recovered
from any third party (including any insurance proceeds).
15.5.4 Exclusive Remedy. The remedies provided for under this
Article 15 and Section 17.1 shall be the exclusive remedies of the parties
with respect to the matters covered by this Agreement. Neither party shall be
entitled to a rescission of this Agreement.
15.5.5 Assignment of Claims. In the event that any of the Damages
for which an Indemnifying Party is responsible or allegedly responsible
hereunder are recoverable or potentially recoverable against any third party
at the time when payment is due under this Article 15, then, the Indemnified
Party shall assign any and all rights that it may have that are related in any
fashion to the Damages or the facts or circumstances giving rise thereto to
the Indemnifying Party as a condition to any payment due under this Article
15, or, if such rights are not assignable under applicable law or otherwise,
the Indemnified Party hereunder shall attempt in good faith to collect any and
all damages and losses on account thereof from such third party for the
benefit of, and at the expense and direction of, the Indemnifying Party.
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56
ARTICLE 16
TERMINATION RIGHTS
16.1 Termination.
16.1.1 This Agreement may be terminated by either CBS or SFX, 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 (so long as such party seeking termination is not itself at such
time in material breach of its representations, warranties, covenants or
agreements set forth herein):
(a) if any condition set forth herein to the obligations of
the party seeking to terminate has not been satisfied or waived on or prior to
the Closing Date; or
(b) if the FCC denies the FCC Application of such
party or designait for a trial-type hearing; or
(c) if the Closing shall not have occurred by
June 30, 1997; or
(d) if any of the conditions described in
Section 10.2.2 which permit termination shall occur; or
(e) if there shall be in effect any judgment, final decree or
order that would prevent or make unlawful the Closing of the transactions
contemplated by this Agreement.
16.1.2 This Agreement may be terminated by mutual
agreement of the parties hereto.
16.2 Liability. The termination of this Agreement under Section 16.1
shall not relieve any party of any liability for breach of this Agreement
prior to the date of termination.
16.3 Unwind. In the event that the FCC requires the parties to unwind
the transactions contemplated hereby after the Closing has occurred, the
parties will mutually agree on the arrangements necessary to put the parties
in the positions they
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57
were in prior to the Closing.
ARTICLE 17
MISCELLANEOUS PROVISIONS
17.1 Specific Performance. SFX and CBS each recognize and
acknowledge that, in the event that either party shall fail to perform its
obligations to consummate the transactions contemplated hereby, money damages
alone will not be adequate to compensate such party for its injury. SFX and
CBS, therefore, each agree and acknowledge that, in the event of their failure
to perform their obligation to consummate the transactions contemplated
hereby, the other party shall be entitled, in addition to any action for
monetary damages, and in addition to any other rights and remedies on account
of such failure, to specific performance of the terms of this Agreement and of
the other party's obligation to consummate the transactions contemplated
hereby. If any action is brought by either party to enforce this Agreement,
the other party shall waive the defense that there is an adequate remedy at
law.
17.2 Risk of Loss. The risk of loss or damage to any of the SFX Station
Assets prior to the Closing Date shall be upon SFX. In consultation with CBS,
SFX shall repair, replace and restore any such damaged or lost SFX Station
Asset to its prior condition as soon as possible and in no event later than
the Closing Date. The risk of loss or damage to any of the CBS Stations Assets
prior to the Closing Date shall be upon CBS. In consultation with SFX, CBS
shall repair, replace and restore any such damaged or lost CBS Stations Asset
to its prior condition as soon as possible and in no event later than the
Closing Date.
17.3 Further Assurances. After the Closing, each party shall, from time
to time, at the request of and without further cost or expense to the other
party, 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 such
party good and marketable title to the assets being transferred hereunder, and
each party shall from time to time, at
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58
the request of and without further cost or expense to the other party, execute
and deliver such other instruments and take such other actions as may
reasonably be requested in order to more effectively relieve such party of any
obligations being assumed by the other party hereunder.
17.4 Benefit and Assignment. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. No party may voluntarily or involuntarily
assign its interest under this Agreement without the prior written consent of
the other party, except for any assignment to an Affiliate of either party in
which case SFX or CBS, as the case may be, shall remain fully obligated under
this Agreement as an assignor.
17.5 Headings. The table of contents and headings set forth in this
Agreement are for convenience only and will not control or affect the meaning
or construction of the provisions of this Agreement.
17.6 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.
17.7 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 third day after deposit in the U.S. mail, if mailed by
registered or certified mail, postage prepaid and return receipt requested, or
on the day after delivery to a nationally recognized overnight courier service
for next morning delivery, or by fax transmission with confirmed receipt by
the other party, and shall be addressed
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59
to the following addresses, or to such other address as any party may request,
pursuant to this Section 17.7:
To SFX or SFX
Broadcasting: SFX Broadcasting, Inc.
150 East 58th Street - 19th Floor
New York, New York 10155
Attention: Robert F. X. Sillerman
Copy to: SFX Broadcasting, Inc.
150 East 58th Street - 19th Floor
New York, New York 10155
Attention: Richard A. Liese, Esq.
To CBS: CBS Inc.
10220 River Road
Potomac, Maryland 20854
Attention: Dan Mason
Copy to: CBS Inc.
51 West 52nd Street
New York, New York 10019-6188
Attention: Law Department,
M. P. Messinger
17.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which
together will constitute one and the same instrument.
17.9 No Third Party Beneficiaries. Nothing herein expressed or implied
is intended or shall be construed to confer upon or give to any person or
entity other than the parties hereto and their successors or permitted
assigns, any rights or remedies under or by reason of this Agreement.
17.10 Public Announcements. SFX, SFX Broadcasting and CBS shall consult
with each other before issuing any press releases or otherwise making any
public statements with respect to this Agreement and the transactions
contemplated hereby and shall not issue any such press release or make any
public statement without the consent of the other, except as may be required
by law.
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60
17.11 Exclusive Jurisdiction and Consent to Service of Process. The
parties agree that any legal action, suit or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby, shall be
instituted in a Federal or state court sitting in New York, New York, which
shall be the exclusive jurisdiction and venue of said legal proceedings and
each party hereto waives any objection which such party may now or hereafter
have to the laying of venue of any such action, suit or proceeding, and
irrevocably submits to the jurisdiction of any such court in any such action,
suit or proceeding. Any and all service of process and any other notice in any
such action, suit or proceeding shall be effective against such party (or the
subsidiary of such party) when transmitted in accordance with Section 17.7.
Nothing contained herein shall be deemed to affect the right of any party
hereto to serve process in any manner permitted by law.
17.12 Severability. The parties agree that if one or more provisions
contained in this Agreement shall be deemed or held to be invalid, illegal or
unenforceable in any respect under any applicable law, this Agreement shall be
construed with the invalid, illegal or unenforceable provision deleted, and
the validity, legality and enforceability of the remaining provisions
contained herein shall not be affected or impaired thereby.
17.13 Amendments and Waivers. No amendment, waiver of compliance with
any provision or condition hereof or consent pursuant to this Agreement shall
be effective unless evidenced by an instrument in writing signed by the party
against whom enforcement of any waiver, amendment, change, extension or
discharge is sought.
17.14 Certain Definitions and Usage. For all purposes of this Agreement,
except as otherwise expressly provided, the following terms have the following
meanings:
"Affiliate" means an entity that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under
common control with, any party.
"Material Adverse Effect" means a material adverse
effect on, or material adverse change in, (i) the SFX
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61
Station Assets or CBS Stations Assets, taken as a whole, (ii) the
business, results of operations or financial or other condition of the
SFX Station or the CBS Stations, or (ii) the ability of SFX or CBS to
perform their respective obligations under this Agreement.
"person" means any individual, corporation, partnership, firm,
joint venture, association, unincorporated organization, or other
entity.
When a reference is made in this Agreement to an Article, Section or
Schedule, such reference shall be to an Article, Section or Schedule of this
Agreement unless otherwise indicated. Whenever the words "included",
"includes" or "including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation". All accounting terms not
defined in this Agreement shall have the meanings determined by generally
accepted accounting principles as in effect from time to time. The words
"hereof", "herein" and "hereunder" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. The definitions contained in this
Agreement are applicable to the singular as well as the plural forms of such
terms and to the masculine as well as to the feminine and neuter genders of
such term, and references to a person are also to its permitted successors and
assigns.
17.15 Entire Agreement. This Agreement and the Schedules hereto and the
ancillary documents provided for herein embody the entire agreement and
understanding of the parties hereto relating to the matters provided for
herein and supersede any and all prior agreements, arrangements and
understandings relating to the matters provided for herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
WHFS, INC.
By: /s/ Robert F.X. Sillerman
--------------------------
Name: Robert F.X. Sillerman
Title: Chairman and CEO
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62
LIBERTY BROADCASTING OF MARYLAND
INCORPORATED
By: /s/ Robert F.X. Sillerman
--------------------------
Name: Robert F.X. Sillerman
Title: Chairman and CEO
SFX BROADCASTING, INC.
By: /s/ Robert F.X. Sillerman
--------------------------
Name: Robert F.X. Sillerman
Title: Chairman and CEO
By:
Name:
Title:
CBS INC.
By: /s/ Dan Mason
--------------------------
Name: Dan Mason
Title: President
Exhibit 2.6
ASSET PURCHASE AGREEMENT
FOR STATION WYSR(FM)ROTTERDAM, NEW YORK
between
JARAD BROADCASTING COMPANY OF NEW YORK, INC.
and
LIBERTY BROADCASTING OF ALBANY, INCORPORATED
<PAGE>
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TABLE OF CONTENTS
Page
ARTICLE 1. Exchange of Consideration..............................1
1.1. Consideration Conveyed by Seller.......................1
1.2. Payment by Buyer to Seller.............................3
1.3. Adjustments............................................3
1.4. Allocation.............................................4
1.5. Closing................................................4
1.6. Timing.................................................4
ARTICLE 2. Representations and Warranties of Seller...............4
2.1. Incorporation..........................................4
2.2. FCC Licenses...........................................4
2.3. Condition of Assets....................................5
2.4. Title..................................................5
2.5. Employees..............................................5
2.6. Taxes..................................................5
2.7. Environmental..........................................6
2.8. Litigation.............................................6
2.9. Compliance with Laws...................................7
2.10. No Defaults............................................7
2.11. Brokers................................................7
2.12. Corporate Action.......................................7
2.13. Station Assets.........................................7
2.14. Leases.................................................7
2.15. Insolvency.............................................7
2.16. Government Approvals...................................8
2.17. Contracts..............................................8
2.18. No Material Omission...................................8
ARTICLE 3. Representations and Warranties of Buyer................8
3.1. Status.................................................8
3.2. Corporate Action.......................................8
3.3. No Defaults............................................8
3.4. Brokers................................................8
3.5. Litigation.............................................9
3.6. Qualification as a Broadcast Licensee..................9
3.7. Financial Capabilities.................................9
3.8. No Material Omission...................................9
ARTICLE 4. Covenants of Seller Pending Closing....................9
4.1. Maintenance of Station.................................9
4.2 Organization, Good Will, Promotion....................10
4.3. Access to Facilities, Files, and Records..............10
4.4. Representations and Warranties........................10
4.5. Application for FCC Consent...........................10
4.6. Consents..............................................11
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4.7. Notice of Proceedings.................................11
4.8. Confidential Information..............................11
4.9. Consummation of Agreement.............................11
4.10. Compliance with Law...................................11
4.11. Performance under Leases..............................11
ARTICLE 5. Covenants of Buyer Pending the Closing................11
5.1. Representation and Warranties.........................12
5.2. Application for Commission Consent....................12
5.3. Confidential Information..............................12
5.4. Consummation of Agreement.............................12
5.5. Notice of Proceedings.................................12
5.6. Actions Inconsistent with Consummation................12
ARTICLE 6. Conditions Precedent to Obligations of Seller.........13
6.1. Representations, Warranties, Covenants................13
6.2 Proceedings...........................................13
6.3 FCC Approval..........................................13
ARTICLE 7. Conditions Precedent to Obligations of Buyer..........13
7.1 Representations, Warranties, Covenants................13
7.2 Proceedings...........................................14
7.3 FCC Approval..........................................14
ARTICLE 8 Indemnification.......................................14
8.1 Survival..............................................14
8.2 Indemnification of Buyer..............................14
8.3 Indemnification of Seller.............................14
8.4 Notice of Claim.......................................15
8.5 Defense of Third Party Claims.........................15
ARTICLE 9 Miscellaneous.........................................15
9.1 Termination of Agreement..............................15
9.2 Liabilities Upon Termination..........................16
9.3 Expenses..............................................16
9.4 Assignments...........................................17
9.5 Further Assurances....................................17
9.6 Damage to the Assets..................................17
9.7 Notices...............................................17
9.8 Captions..............................................18
9.9 Law Governing.........................................18
9.10 Waiver of Provisions..................................18
9.11 Counterparts..........................................18
9.12 Reimbursement of Legal Expenses.......................18
9.13 Entire Agreement......................................18
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SCHEDULE 1 FCC Licenses
SCHEDULE 2 Personal Property
SCHEDULE 3 Leases
SCHEDULE 4 Allocation
SCHEDULE 5 Employees
SCHEDULE 6 Contracts
EXHIBIT A Escrow Agreement
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT is dated as of August __, 1996, and is between Jarad
Broadcasting Company of New York, Inc. ("Seller"), a corporation organized
under laws of the State of New York, and Liberty Broadcasting of Albany,
Incorporated ("Buyer"), a corporation duly organized under the laws of the
State of New York.
W I T N E S S E T H:
1. Seller holds licenses from the Federal Communications Commission (the
"FCC") for broadcast station WYSR(FM) in Rotterdam, New York (the "Station")
and owns or holds other assets used and useful in connection with the
operation of the Station.
2. Seller desires to sell, assign, and transfer, to the fullest extent
permitted by law, the FCC licenses and other assets owned or held by Seller
and used and useful in the operation of the Station, and, to the fullest
extent permitted by law, Buyer desires to acquire the FCC licenses and other
assets owned or held by Seller and used and useful in the operation of the
Station under the terms described herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants contained herein, the parties hereby agree as follows:
ARTICLE 1. Exchange of Consideration
1.1. Consideration Conveyed by Seller. At the Closing, Seller shall
provide Buyer with the following consideration:
1. Subject to the terms and conditions of this Agreement, Seller
shall, to the fullest extent permitted by law, convey, transfer, and deliver
to Buyer, and Buyer shall, to the fullest extent permitted by law, acquire
from Seller free and clear of all liens, claims, security interests and
encumbrances of any kind whatsoever, all of Seller's right, title and interest
in and to Seller's assets, as set forth hereafter, real and personal, tangible
and intangible, of every kind and description owned by Seller and used and
useful in connection with the business and operation of the Station as a going
concern (collectively the "Station Assets") except the assets described in
Section 1.1.2. of this Agreement. The Station Assets consist of the following
items:
1. FCC Licenses. All licenses issued by the FCC to Seller (the
"FCC Licenses") with respect to the Station, as shown on Schedule l to
this Agreement, and all applications therefore, together with any and
all applications pending before and orders issued by the FCC with
respect to renewals, extensions, or modifications thereof.
2. Tangible Personal Property. All equipment, furniture,
fixtures, office materials and supplies, spare parts, and other tangible
personal property of every kind and description owned as of the date of
this Agreement by Seller and used and useful in connection with the
business and operation of the Station, all of which are set
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forth on Schedule 2 to this Agreement, and any additions, improvements,
replacements, and alterations made thereto in the ordinary course of
business between the date of this Agreement and the Closing Date, as
defined herein.
3. Leases. Seller's leases for the main studio and the
Station's transmitter site, both of which are annexed hereto in
Schedule 3.
4. Marketing Items. All trademarks, call signs, service marks,
franchises, patents, trade names, jingles, slogans, and logotypes owned
and used by Seller as of the date hereof as well as those acquired
between the date hereof and the Closing Date in connection with the
business and operation of the Station.
5. Programming and Copyrights. All programs and programming
materials and elements of whatever form or nature owned by Seller and
used and useful in connection with the business and operation of the
Station as of the date hereof, together with all such programs,
materials, elements and copyrights acquired between the date hereof and
the Closing Date, whether recorded on tape or any other substance or
intended for live performance, and whether completed or in production,
and all related common law and statutory copyrights owned by or licensed
to Seller and used in connection with the business and operation of the
Station.
6. Records. Any and all files, program logs, public inspection
files, and other records that relate to the operation of the Station.
7. Warranties. Any and all warranties and guarantees supplied
by vendors, suppliers, and other third parties which cover or provide
any benefit with respect to any of the Personal Property being assigned.
8. Goodwill. All of Seller's goodwill in and going concern
value of the Station.
2. There shall be excluded from the Station Assets and retained by
Seller, to the extent in existence on the Closing Date, the following assets
(the "Excluded Assets"):
1. Receivables. All notes and accounts receivable and other
receivables of Seller relating to or arising out of the business and
operation of the Station.
2. Cash and Investments. All cash on hand or in bank accounts.
3. Prepaid Items. All deposits, reserves, and prepaid expenses
and taxes (which shall be prorated as provided in Section 1.3. below).
4. Personal Property. All tangible personal property disposed
of or consumed in the ordinary course of business of the Station.
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5. Insurance. All contracts of insurance.
6. Securities. Any and all securities owned or held by
Seller.
7. Claims. Any and all claims of Seller with respect to
transactions which transpire prior to the Closing Date, including,
without limitation, claims for tax refunds.
8. Name. Any right to use the name "Jarad Broadcasting
Company of New York, Inc." or any logo or variation of such name.
9. Contracts. All agreements and contracts except for those
which Buyer will assume in accordance with Section 1.1.1.(c) of this
Agreement.
10. Miscellaneous Assets. Pension, profit-sharing, and savings
plans and trusts and any assets thereof.
3. The Station Assets shall be sold and conveyed to Buyer free and
clear of all liens, claims, security interests and encumbrances except for (a)
liens for taxes not yet due and payable, and (b) the obligations of Seller
which Buyer shall assume under leases described in Subsection 1.1.1.(c)
hereof. Buyer shall not assume or be liable for any liability or obligation of
Seller arising out of any contract of insurance, any pension, retirement or
profit-sharing plan, trust or other benefit plan, or any 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
litigation, proceeding, or claim is pending, threatened, or asserted before,
on, or after the Closing Date.
1.2. Payment by Buyer to Seller.
1. Buyer shall pay Seller One Million Dollars ($1,000,000) (the
"Purchase Price") in cash at the Closing, as defined herein.
2. Simultaneous with the execution of this Agreement, Buyer will
deposit One Hundred Thousand Dollars ($100,000) in an interest-bearing account
in North Fork Bank pursuant to the terms of an Escrow Agreement in the form
annexed hereto as Exhibit A. Such deposit shall be referred to herein as the
"Escrow Funds." The Escrow Funds shall be paid to Seller at the Closing,
subject to any adjustments made under Section 1.3. of this Agreement. All
interest accrued prior to Closing shall be paid to Buyer. In the event this
Agreement is terminated prior to any Closing, the Escrow Funds will be
distributed in accordance with Section 9.2. of this Agreement.
1.3. Adjustments. At the Closing, all tangible and intangible personal
property taxes and assessments, rent, water, sewer and other utility charges,
if any, and any other lienable municipal services, if any, and any other
pre-paid items with respect to the Station Assets to be acquired by Buyer
shall be apportioned and allocated between Buyer and Seller as of the Closing
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Date on the basis of the period of time to which such items or liabilities
apply. To the extent such items cannot be determined at Closing, a final
settlement on such prorations shall be held within thirty (30) days after the
Closing Date. If the Closing occurs before the tax rate is fixed for the then
current term, the apportionment of taxes at Closing shall be upon the basis of
the tax rate for the preceding tax year applied to the latest assessed
valuation. All transfer, sales, use or other taxes or assessments or
documentary stamps imposed by any governmental body or others on the sale
and/or transfer of the Station Assets herein, if any, shall be paid by Buyer.
1.4. Allocation. The Purchase Price shall be allocated in accordance with
Schedule 4 annexed hereto.
1.5. Closing. The closing of the transactions provided for in this
Agreement (the "Closing") shall be accomplished by overnight delivery services
and such other communications, including the wire transfer of funds, mutually
agreed to by the parties commencing at 10:00 a.m. on a date (the "Closing
Date") mutually agreed to or, in the absence of a mutual agreement, selected
by Seller, which shall be within ten (10) days after the date on which the FCC
order approving the assignment of the FCC Licenses becomes a Final Order
(which, for purposes of this Agreement, means an order issued by the FCC
consenting to the assignment of the FCC Licenses which is no longer subject to
reconsideration or review by the FCC or a court of competent jurisdiction and
does not include conditions materially adverse to Seller or Buyer). At the
Closing, each party shall execute and deliver to the other party the documents
and other items (including but not limited to the Purchase Price) specified
herein as well as any other document(s) and item(s) reasonably necessary for
the consummation of the transactions contemplated herein. Such additional
documents shall be reasonably satisfactory to the other party as to both form
and substance and shall include, without limitation, a bill of sale and
assignments of licenses and leases.
1.6. Timing. Time is of the essence to implementation of this Agreement.
It is the intention of the parties that the Closing of the transactions
contemplated herein occur not later than April 1, 1997.
ARTICLE 2. Representations and Warranties of Seller.
Seller represents and warrants to Buyer as to the following matters from
now until the date one (1) year after the Closing Date hereunder:
2.1. Incorporation. Seller is a corporation duly organized, validly
existing, and in good standing in the State of New York and has the corporate
power to carry on the business of the Station as it is now being conducted, to
own and operate the Station Assets, and to enter into and consummate the
transactions contemplated by this Agreement.
2.2. FCC Licenses. Seller is the holder of the FCC Licenses listed in
Schedule 1 to this Agreement. The FCC Licenses constitute all of the licenses
required under the Communications Act of 1934, as amended (the "Communications
Act"), and the current rules,
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<PAGE>
regulations, and policies of the FCC for the operation of the Station as
currently conducted. The FCC Licenses are in full force and effect and are in
good standing in every respect for the purpose of operating the Station for
its full term expiring on June 1, 1998. All material applications, reports and
other disclosures required by the FCC with respect to the Station have been
and will be, as of the Closing, timely filed. There is not, as of the date of
this Agreement, pending or, to the best of Seller's knowledge, threatened, any
action by or before the FCC or any court to revoke, cancel, rescind, modify,
or refuse to renew any of the FCC Licenses, or which would otherwise have a
material adverse impact on the operation of the Station. There is not now
pending or, to the best of Seller's knowledge, threatened, any petition,
informal objection, investigation, order to show cause, notice of violation,
notice of apparent liability, or notice of forfeiture or complaint before the
FCC or any court against Seller with respect to the Station. The Station is
operating in material compliance with the FCC Licenses, the Communications
Act, and the rules, regulations and policies of the FCC. There is not now
pending or, to the best of Seller's knowledge, threatened any petition,
application, or proposal (except those of general applicability) which, if
favorably acted upon, would have a material adverse impact on the Station's
signal coverage.
2.3. Condition of Assets. The Station Assets are in good working order
(ordinary wear and tear excepted), meet any and all government-requirements,
are being maintained in accordance with generally accepted engineering
practices, and constitute all the assets needed to operate the Station as
currently conducted.
2.4. Title. On the Closing Date, the Station Assets will be in each case
free and clear of all security interests, mortgages, pledges, liens,
conditional sales agreements, leases, encumbrances, or charges of any nature
whatsoever except for those referenced in Section 1.1.3. of this Agreement.
2.5. Employees. Annexed hereto as Schedule 5 is a list of Station
employees and their respective compensation. Seller is not a party to any
pending or, to its knowledge, threatened labor dispute affecting the Station.
Except for taxes due to be paid to the Internal Revenue Service and
instrumentalities of the State of New York with respect to Seller's employees,
Seller (a) has complied in all material respects with all applicable federal,
state, and local laws, ordinances, rules and regulations and requirements
relating to employment or labor, including but not limited to the provisions
thereof relative to wages, hours, collective bargaining, and payment of Social
Security, unemployment and withholding taxes and (b) is not liable for any
arrears of wages or any taxes or penalties for failure to comply with any of
the foregoing. There are no collective bargaining agreements, or negotiations
for the same, in existence which affect any of the Station employees, and
Seller is not aware of any efforts to have the Station recognize any union as
the bargaining agent for Station employees.
2.6. Taxes. To the best of Seller's knowledge, it has duly and timely
filed all required federal, state and local tax returns and paid all taxes,
interest and penalties due with respect to Seller's interest in the Station
Assets or its operation of the Station, has sought and obtained extensions of
time to file such and pay same within the time provided therefor, or is
challenging such taxes in good faith in accordance with applicable procedures.
Between the date hereof and
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the Closing Date Seller shall exercise its best efforts to duly and timely
file all such required returns and pay all such taxes, interest and penalties
or to obtain such extensions within the time provided therefor, unless such
taxes are being challenged in good faith in accordance with applicable
procedures. Seller shall indemnify, defend, save and hold Buyer harmless from
and against all claims, obligations and liabilities for all taxes, interest
and penalties attributable to Seller's ownership or operation of the Station
and the Station Assets prior to the Closing Date.
2.7. Environmental. (a) To the best of Seller's knowledge, none of the
real property or buildings and improvements erected thereon and leased by
Seller and assigned to Buyer hereunder has ever been used by Seller or, to the
best of Seller's knowledge, by any prior owner or occupant to refine, produce,
store, handle, transfer, process, dispose of or transport "Hazardous or Toxic
Waste or Substances" or "Pollutants" (including and without limitation
hydrocarbons, polychlorinated biphenyls, petroleum and the like) as such terms
or similar terms are defined under the laws, rules, regulations or ordinances
of the United States, the State of the State of New York or any other
governmental authority with jurisdiction over the Station Assets. Seller has
not received any notice, summons, citation, directive, letter or other
communication, written or oral, from the United States or New York
Environmental Protection Agencies or anyone else concerning any intentional or
unintentional action or omission on Seller's or any prior owner or prior
occupant's part which resulted in the releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leeching,
dumping or disposing or the like of such "Hazardous or Toxic Waste or
Substances" or "Pollutants" into the waters, into the air or onto the land
which may or may not have resulted in damage to the land, waters, fish,
shellfish, wildlife, air or other resources owned, managed, held in trust or
otherwise controlled by the United States, the State of New York, Seller, or
others.
(b) Buyer shall have the right to conduct a Phase I
environmental audit of the Station Assets at Buyer's expense. If the audit
reveals any material discrepancy with the representations contained in this
section, Seller shall, within 30 days after receipt of notice of such
discrepancy and at Seller's expense, eliminate the discrepancy or, at Seller's
option, provide an appropriate reduction in the Purchase Price based on the
monies to be expended by Buyer to eliminate the discrepancies. Notwithstanding
anything herein to the contrary, the Closing contemplated herein shall not
occur until after expiration of the aforesaid 30-day notice period provided to
Seller by this subsection.
2.8. Litigation. Seller has not been operating under or subject to, or
in default with respect to, any order, writ, injunction, or decree of any
court or federal, state, municipal, or other governmental department,
commission, board, agency, or instrumentality, foreign or domestic, which has
had or could reasonably be expected to have a material adverse effect on the
operation of the Station. There is no litigation, arbitration, dispute,
proceeding or investigation ("Litigation") pending by or against, or, to the
best of Seller's knowledge, threatened against Seller relating to or affecting
the Station Assets or the business of the Station which materially interferes
or could reasonably be expected materially to interfere with (a) the Seller's
right, title to, interest in, and operation of the Station or (b) Seller's
ability to transfer the Station Assets to Buyer free of such Litigation.
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2.9. Compliance with Laws. Seller is in material compliance with all
applicable laws, rules, regulations, and orders of the federal, state, and
local governments with respect to the Station. The present uses by Seller of
the Station Assets do not violate any such laws, regulations, or orders in any
material respect.
2.10.No Defaults. Neither the execution and delivery by Seller of this
Agreement nor the consummation by Seller of the transactions contemplated
herein are events that, by themselves or with the giving of notice or the
passage of time or both, constitute a material violation of or will conflict
with or result in any material breach of or any default under (a) the terms,
conditions, or provisions of any arbitration award, judgment, law, judicial
order, or regulation to which Seller is subject, (b) its articles of
incorporation or by-laws, or (c) any agreement or instrument to which Seller
is a party or by which Seller is bound, or result in the creation of
imposition of any lien, charge, or encumbrance on any of the Station Assets.
2.11.Brokers. There is no broker or finder or other person who would, as
a result of any agreement of or action taken by Seller, have any valid claim
against any of the parties to this Agreement for a commission or brokerage fee
in connection with this Agreement or the transactions contemplated herein.
2.12.Corporate Action. All corporate actions and proceedings necessary
to be taken by or on the part of Seller in connection with the transactions
contemplated by this Agreement and necessary to make them effective have been
duly and validly taken. This Agreement has been duly and validly authorized,
executed, and delivered by Seller and constitutes a valid and binding
agreement of Seller, enforceable in accordance with and subject to its terms,
except as limited by laws affecting the enforcement of creditor rights or
contractual obligations generally. Seller shall deliver to Buyer at Closing
copies of the resolutions adopted by the Board of Directors and shareholders
of Seller authorizing the delivery, execution and consummation of the
transactions contemplated by this Agreement.
2.13.Station Assets. All of the statements made and Schedules referred
to in this Agreement with respect to the Station Assets are true, accurate,
and complete in all material respects.
2.14.Leases. All of the leases listed on Schedule 3 have been complied
with in all material respects by Seller and will have been complied with in
all material respects by Seller as of the Closing Date hereunder, and no
material default of Seller in respect to any duties or obligations required to
be performed by Seller has or will have occurred. All such leases are valid,
binding, and enforceable in accordance with their respective terms and are
sufficient to enable the Station to operate as currently conducted. The leases
listed in the schedule are all of the leases currently used in the operation
of the station.
2.15.Insolvency. No insolvency proceedings of any character, including,
without limitation, bankruptcy, receivership, reorganization, composition or
arrangement with creditors, voluntary or involuntary, affecting the Seller or
any of the Station Assets is pending or, to the best of Seller's knowledge,
threatened, and Seller has made no assignment for the benefit of
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creditors, nor taken any actions with a view to, or which would constitute the
basis for, the institution of any such insolvency proceedings.
2.16.Government Approvals. No approval of any third party, governmental
agency or of any court is required to be obtained by Seller with regard to the
assignment of the FCC Licenses and the other Station Assets except the lessors
of the leases cited in Schedule 3 and approval by the FCC as provided herein.
2.17.Contracts. Annexed hereto in Schedule 6 is a list of all the
material contracts utilized in the current operation of the Station.
2.18.No Material Omission. Seller has not failed to disclose any
material fact within its knowledge which would make any statement or
representation in this Agreement inaccurate or misleading.
ARTICLE 3. Representations and Warranties of Buyer.
Buyer represents and warrants to Seller as to the following matters now
and on the Closing Date hereunder:
3.1. Status. Buyer is a corporation duly organized, validly existing,
and in good standing in the State of New York and has the corporate power to
enter into and consummate the transactions contemplated by this Agreement.
3.2. Corporate Action. All corporate actions and proceedings necessary
to be taken by or on the part of Buyer in connection with the transactions
contemplated by this Agreement and necessary to make them effective have been
duly and validly taken. This Agreement has been duly and validly authorized,
executed, and delivered by Buyer and constitutes a valid and binding agreement
of Buyer, enforceable in accordance with and subject to its terms, except as
limited by laws affecting the enforcement of creditor rights or contractual
obligations generally. Buyer shall deliver to Seller at Closing copies of the
resolutions adopted by the Board of Directors and shareholders of Buyer
authorizing the delivery, execution and consummation of the transactions
contemplated by this Agreement.
3.3. No Defaults. Neither the execution and delivery by Buyer of this
Agreement nor the consummation by Buyer of the transactions contemplated
herein are events that, by themselves or with the giving of notice or the
passage of time or both, constitute a material violation of or will conflict
with or result in any material breach of or any default under (a) the terms,
conditions, or provisions of any arbitration award, judgment, law, judicial
order, or regulation to which Buyer is subject, (b) its articles of
incorporation or by-laws, or (c) any agreement or instrument to which Buyer is
a party or by which Buyer is bound, or result in the creation of imposition of
any lien, charge, or encumbrance on any of the Station Assets.
3.4. Brokers. There is no broker or finder or other person who would, as
a result of any agreement of or action taken by Buyer, have any valid claim
against any of the parties to this
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Agreement for a commission or brokerage in connection with this Agreement or
the transactions contemplated herein.
3.5. Litigation. There is no litigation, proceeding, or investigation of
any nature pending or, to the best of Buyer's knowledge, threatened against or
affecting Buyer that would affect Buyer's ability to carry out the
transactions contemplated herein.
3.6. Qualification as a Broadcast Licensee. Buyer is legally and
financially qualified under the Communications Act and all other applicable
federal, state and local laws, rules and regulations, to acquire the Station
Assets from Seller. Buyer knows of no fact that would, under the
Communications Act and the rules, policies and practices of the FCC,
disqualify Buyer as an assignee of the FCC Licenses or as owner and holder of
the Station Assets.
3.7. Financial Capabilities. Buyer has sufficient liquid resources on
hand or from committed sources to fulfill its financial obligations under this
Agreement.
3.8. No Material Omission. Buyer has not failed to disclose any material
fact within its knowledge which would make any statement or representation in
this Agreement inaccurate or misleading.
ARTICLE 4. Covenants of Seller Pending Closing.
Seller covenants and agrees that, from the date of this Agreement to and
including the Closing Date, it will take, or refrain from taking, the
following actions:
4.1. Maintenance of Station. Seller shall continue to carry on the
Station's business and keep its books of account, records, and files in the
ordinary course of business. Seller also shall continue to operate the Station
in all material respects in accordance with the terms of the FCC Licenses and
in material compliance with all applicable rules, regulations, policies and
laws. Seller will maintain in full force and effect through and including the
Closing Date existing property damage, liability, and other insurance with
respect to the Station Assets and to cover contingencies that can be
reasonably anticipated. Prior to the Closing, Seller will not, without the
prior written consent of Buyer:
1. sell, lease, transfer, or agree to sell, lease, or transfer
any Station Assets without replacement thereof with a substantially
equivalent asset of substantially equivalent kind, condition, and value;
2. enter into any collective bargaining agreement;
3. renew, renegotiate, modify, amend, or terminate any
existing time sales contracts with respect to the Station except in the
ordinary course of business;
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4. enter into or amend any contract or commitment with respect
to the Station or the Station Assets in excess of $25,000 unless such
contract or amended contract is cancellable upon 30 days notice without
liability;
5. make any material change in the Station's buildings,
leasehold improvements, or fixtures except in the ordinary course of
business; or
6. except in the ordinary course of business consistent with
prior practices, (i) grant or agree to grant any general increases in
the rates of salaries or compensation payable to employees of the
Station; (ii) grant or agree to grant any specific bonus or increase to
any executive or management employee of the Station; or (iii) provide
for any new pension, retirement or other employment benefits for
employees of the Station or any increases in any existing benefits.
4.2. Organization, Good Will, Promotion. Seller shall use its best
efforts to preserve the business organization of the Station intact as well as
the goodwill of the Station's suppliers, customers, and others having business
relations with the Station and, to that end, will continue to expend whatever
monies Seller has previously budgeted for marketing purposes: provided, that
Buyer expressly acknowledges that the announcement of a sale of the Station
from Seller to Buyer may affect the business of the Station and the goodwill
of the Station's suppliers, customers, employees, and others having business
relations with the Station.
4.3. Access to Facilities, Files, and Records. At the reasonable request
of Buyer, Seller shall give Buyer and/or its representatives (a) reasonable
access during normal business hours to all facilities, property, accounts,
title papers, insurance policies, licenses, agreements, commitments, records,
machinery, fixtures, furniture, and inventories related to the Station, and
(b) all such other information concerning the affairs of the Station as Buyer
may reasonably request. The rights of Buyer under this Section shall not be
exercised in such a manner as to interfere unreasonably with the business of
the Station.
4.4. Representations and Warranties. Seller shall give notice to Buyer
promptly upon the occurrence of, or upon becoming aware of the impending or
threatened occurrence of, any event that would cause or constitute a material
breach of any of Seller's representations or warranties contained in this
Agreement.
4.5. Application for FCC Consent. Within ten (10) business days after
execution of this Agreement, Seller shall prepare and file an appropriate
application (the "Application") with the FCC requesting its written consent to
the assignment of the FCC Licenses for the Station to Buyer. Seller shall
diligently take, or cooperate in the taking of, all steps necessary and
appropriate to expedite the preparation of the Application and its prosecution
to a favorable conclusion. Seller will promptly provide Buyer with a copy of
any pleading, order, or other document served on it relating to the
Application. Seller will use its best efforts and otherwise cooperate with
Buyer in responding to any information requested by the FCC related to the
Application or this Agreement and in defending against any petition, informal
complaint, and
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other objection which may be filed against the Application. The FCC filing
fees shall be divided equally between Seller and Buyer.
4.6. Consents. Seller shall obtain or cause to be obtained prior to the
Closing consents to the assignment to or assumption by Buyer of all leases of
Seller included in the Station Assets that require the consent of any third
party by reason of the transactions provided for in this Agreement. If any
necessary consent to any lease deemed material to Buyer's operation of the
Station is not obtained prior to the Closing, then Buyer has the option of
terminating this Agreement or of requiring Seller to cooperate with Buyer in
any reasonable arrangement necessary to provide to Buyer after the Closing the
benefits under such lease, including enforcement for the benefit of Buyer of
any and all rights of Seller against third parties.
4.7. Notice of Proceedings. Seller will promptly notify Buyer upon
becoming aware of any claim, dispute, arbitration, litigation, complaint,
order or decree relating to Seller, the Station, the operation of the Station,
or the consummation of this Agreement or any transaction contemplated herein.
4.8. Confidential Information. If the transactions contemplated in this
Agreement are not consummated for any reason, Seller shall not disclose to
third parties any information designated as confidential and received from
Buyer or its agents in the course of investigating, negotiating, and
consummating the transactions contemplated by this Agreement: provided, that
nothing shall be deemed to be confidential information that (a) is known to
Seller at the time of disclosure to it; (b) becomes publicly known or
available other than through disclosure by Seller; (c) is rightfully received
by Seller from a third party; or (d) is independently developed by Seller.
4.9. Consummation of Agreement. Seller shall fulfill and perform all
conditions and obligations to be fulfilled and performed by Seller under this
Agreement and make every reasonable effort to cause the transactions
contemplated by this Agreement to be fully carried out.
4.10.Compliance with Law. Seller will comply materially with all
applicable federal, state and local laws, ordinances and regulations,
including but not limited to the Communications Act and the rules, regulations
and policies of the FCC.
4.11.Performance under Leases. Seller will perform its obligations
under, and keep in good standing, all leases to which Seller is a party and
which will be assigned to Buyer at the Closing pursuant to this Agreement.
ARTICLE 5. Covenants of Buyer Pending the Closing.
Buyer covenants and agrees that, from the date of this Agreement to and
including the Closing, it will take, or refrain from taking, the following
actions:
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5.1. Representation and Warranties. Buyer shall give notice to Seller
promptly upon the occurrence of, or upon becoming aware of the impending or
threatened occurrence of, any event that would cause or constitute a material
breach of any of the representations and warranties of Buyer contained in this
Agreement.
5.2. Application for Commission Consent. Within ten (10) business days
after execution of this Agreement, Buyer will prepare and provide Seller's
counsel with the assignee's portion of the Application. Buyer will diligently
take, or cooperate in the taking of, all steps necessary and appropriate to
expedite the preparation of the Application and its prosecution to a favorable
conclusion. Buyer will promptly provide Seller with a copy of any pleading,
order, or other document served on it relating to the Application. Buyer will
use its best efforts and otherwise cooperate with Seller in responding to any
information requested by the FCC related to the Application or this Agreement
and in defending against any petition, informal complaint, and other objection
which may be filed against the Application.
5.3. Confidential Information. If the transactions contemplated in this
Agreement are not consummated for any reason, Buyer shall not disclose to
third parties any information designated as confidential and received from
Seller or its agents in the course of investigating, negotiating, and
performing the transactions contemplated by this Agreement: provided, however,
that nothing shall be deemed to be confidential information that (a) is known
to Buyer at the time of disclosure to it; (b) becomes publicly known or
available other than through disclosure by Buyer; (c) is rightfully received
by Buyer from a third party; or (d) is independently developed by Buyer.
5.4. Consummation of Agreement. Buyer shall fulfill and perform all
conditions and obligations to be fulfilled and performed by Buyer under this
Agreement and make every reasonable effort to cause the transactions
contemplated by this Agreement to be fully carried out.
5.5. Notice of Proceedings. Buyer will promptly notify Seller upon
becoming aware of any order or decree or any complaint requesting an order or
decree restraining or enjoining the consummation of this Agreement or the
transactions contemplated herein, or upon receiving any notice from any
governmental department, court, agency, or commission of its intention to
institute an investigation into, or institute a suit or proceeding to restrain
or enjoin, the consummation of this Agreement or such transactions, or to
nullify or render ineffective this Agreement or such transactions if
consummated.
5.6. Actions Inconsistent with Consummation. Prior to the Closing, Buyer
shall not (a) acquire (or, to the extent within Buyer's control, permit any
other person or entity affiliated with Buyer to acquire) any interest in any
radio or television station, newspaper, or other communications facility, or
take any other action, or omit to take any action, if such acquisition, action
or omission, together with the other interests of Buyer, would make the
consummation of this Agreement contrary to the Communications Act or the
rules, regulations, or policies of the FCC or would otherwise prevent the
consummation of this Agreement, or (b) have any right to
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exercise or attempt to exercise any control over programming, personnel,
finances, or any other matter relating to the Station.
ARTICLE 6. Conditions Precedent to Obligations of Seller.
The obligations of Seller under this Agreement are subject to the
fulfillment of the following conditions prior to or at the Closing.
6.1. Representations, Warranties, Covenants.
1. Each of the representations and warranties of Buyer contained in
this Agreement shall have been true and accurate in all material respects as
of the date when made and as of the Closing Date;
2. Buyer shall have performed and complied in all material respects
with each and every covenant and agreement required by this Agreement to be
performed or complied with by Buyer prior to or at the Closing, other than the
delivery by Buyer of the Purchase Price; and
3. Buyer shall have delivered to Seller (a) a certificate executed
by an officer of Buyer, dated the Closing Date, certifying to the fulfillment
of the conditions set forth in Sections 6.1.1. and 6.1.2., and (b) certified
copies of the resolutions of Buyer's referred to in Section 3.2. of this
Agreement.
6.2 Proceedings. No action or proceeding shall have been instituted
before any court or governmental body to restrain or prohibit, or to obtain
substantial damages with respect to, the consummation of this Agreement that
may reasonably be expected to result in the issuance of a preliminary or
permanent injunction against such consummation or otherwise result in a
decision materially adverse to Seller.
6.3 FCC Approval. The FCC approval contemplated by this Agreement shall
have become a Final Order.
ARTICLE 7. Conditions Precedent to Obligations of Buyer.
The obligations of Buyer under this Agreement are subject to
the fulfillment of the following conditions prior to or at the Closing:
7.1. Representations, Warranties, Covenants.
1. Each of the representations and warranties of Seller contained
in this Agreement shall have been true and accurate in all material respects
as of the date when made and as of the Closing Date;
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2. Seller shall have performed and complied in all material
respects with each and every covenant and agreement required by this Agreement
to be performed or complied with by it prior to or at the Closing, other than
the delivery to Buyer of the instruments conveying the Station Assets to
Buyer; and
3. Seller shall have delivered to Buyer (a) a certificate executed
by an officer of Seller, dated the Closing Date, certifying to the fulfillment
of the conditions set forth in Sections 7.1.1. and 7.1.2., (b) certified
copies of the resolutions referred to in Section 2.12. hereof, and (c) the
required consents of the lessors for all leases being assigned hereunder.
7.2 Proceedings. No action or proceeding shall be pending or have been
instituted before any court or governmental body to restrain or prohibit, or
to obtain substantial damages with respect to, the consummation of this
Agreement that, in the reasonable opinion of Buyer, may reasonably be expected
to result in the issuance of a preliminary or permanent injunction against
such consummation or otherwise result in a decision materially adverse to
Buyer.
7.3. FCC Approval. The FCC approval contemplated by this Agreement shall
have become a Final Order: provided, that Buyer may waive the requirement that
the FCC approval become final, and, in that event, the parties may Close upon
the execution of an appropriate rescission agreement.
ARTICLE 8 Indemnification.
8.1 Survival. All statements of any party contained in this Agreement or
in any exhibit, schedule or certificate delivered pursuant to this Agreement
shall be deemed to be representations and warranties made pursuant to this
Agreement. The several representations, warranties, covenants, and agreements
of Seller and Buyer contained in or made pursuant to this Agreement shall be
deemed to have been made on the Closing, shall survive the Closing, and shall
remain operative and in full force and effect for a period of one (l) year
after the Closing, except that Buyer's obligation to pay or discharge any
liabilities assumed pursuant to this Agreement shall remain in effect until
such liabilities have been paid or discharged in full.
8.2 Indemnification of Buyer. Seller shall indemnify, defend, and hold
Buyer harmless from and against any and all damages, claims, losses, expenses,
costs, obligations, and liabilities including, without limiting the generality
of the foregoing, liabilities for reasonable attorneys' fees ("Loss and
Expense"), suffered, directly or indirectly, by Buyer after the Closing Date
by reason of, or arising out of, (a) any material breach of a representation
or warranty made by Seller pursuant to this Agreement, (b) any material
failure by Seller to perform or fulfill any of its covenants or agreements set
forth in this Agreement, (c) any material failure by Seller to pay or
discharge any liabilities which remain the responsibility of Seller under this
Agreement, or (d) any litigation, proceeding, or claim by any third party
relating to the business or operation of the Station prior to the Closing.
8.3 Indemnification of Seller. Buyer agrees that it shall indemnify,
defend and hold Seller harmless from and against any and all Loss and Expense
suffered, directly or
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indirectly, by Seller after the Closing Date by reason of, or arising out of,
(a) any material breach of a representation or warranty made by Buyer pursuant
to this Agreement, (b) any material failure by Buyer to perform or fulfill any
of its covenants or agreements set forth in this Agreement, (c) any material
failure by Buyer to pay or discharge any liabilities assumed pursuant to this
Agreement, (d) Buyer's termination of employment after the Closing of any
employee of the Station whom Buyer employs on or after the Closing Date, other
than any pre-closing claims of any such employee, or (e) any litigation,
proceeding, or claim by any third party relating to the business or operation
of the Station after the Closing.
8.4 Notice of Claim. If either Seller or Buyer believes that any
Loss and Expense has been suffered or incurred, such party shall notify the
other promptly in writing describing such Loss and Expense, the amount
thereof, if known, and the method of computation of such Loss and Expense, all
with reasonable particularity and containing a reference to the provisions of
this Agreement in respect of which such Loss and Expense shall have occurred.
If any action at law or suit in equity is instituted by a third party with
respect to which any of the parties intends to claim any liability or expense
as Loss and Expense under this Article 8, such party shall promptly notify the
indemnifying party of such action or suit.
8.5 Defense of Third Party Claims. The indemnifying party under this
Article 8 shall have the right to conduct and control, through counsel of that
party's own choosing, any third party claim, action, or suit at the
indemnifying party's sole cost and expense, but the indemnified party may, at
that latter party's election, participate in the defense of any such claim,
action, or suit at that party's sole cost and expense: provided, that if the
indemnifying party shall fail to defend any such claim, action, or suit, then
the indemnified party may defend, through counsel of that party's own
choosing, such claim, action, or suit and settle such claim, action, or suit,
and to recover from the indemnifying party the amount of such settlement or of
any judgment and the costs and expenses of such defense: provided further,
that the indemnifying party shall be given at least fifteen (15) days' prior
notice of the terms of any proposed settlement thereof so that the
indemnifying party may then undertake and/or resume the defense against the
claim. The indemnifying party shall not compromise or settle any third party
claim, action, or suit without the prior written consent of the indemnified
party, which consent will not be unreasonably withheld or delayed: provided,
that any such compromise or settlement shall include a release for the
Indemnified Party of all liability with respect to the matter being
compromised or settled.
ARTICLE 9 Miscellaneous.
9.1 Termination of Agreement. This Agreement may be terminated on or
prior to the Closing under one or more of the following circumstances upon 10
days prior notice (except for actions taken by mutual consent or for Buyer's
failure to timely pay the Purchase Price):
1. by the mutual consent of the parties hereto;
2. by Seller, if any of the conditions provided in Article 6 hereof
have not been met by the time required and have not been waived;
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3. by Buyer, if any of the conditions provided in Section 4.6 or
Article 7 hereof have not been met by the time required and have not
been waived;
4. by Seller or Buyer, if the FCC has failed by April 1, 1997 to
grant the Application in a decision which has become a Final Order
5. by any party hereto, if the FCC (a) denies the Application or
(b) designates a hearing on the Application or on any issue related to
the assignment contemplated herein.
9.2 Liabilities Upon Termination.
1. Except as provided in Section 9.2.2 of this Agreement, no party
shall have any liability to any other party for costs, expenses, or damages in
the event this Agreement is terminated pursuant to Section 9.1. and, in the
event of such termination, the Escrow Funds shall immediately be returned to
Buyer.
2. If the parties hereto shall fail to consummate this Agreement on
the Closing Date due to Buyer's material breach of any material
representation, warranty, covenant or condition hereunder, and Seller is not
at that time in material breach of any material representation, warranty,
covenant or condition hereunder, then Seller would suffer direct and
substantial damages that cannot be determined within reasonable certainty.
Seller shall thereupon be entitled to retain the Escrow Funds, which shall
constitute liquidated damages. Such liquidated damages represent Buyer's and
Seller's reasonable estimate of actual damages and do not constitute a
penalty. Recovery of liquidated damages shall be the exclusive remedy of
Seller against Buyer for termination of this Agreement under this Subsection
and shall be applicable regardless of the actual amount of damages sustained.
3. If the parties hereto shall fail to consummate this Agreement on
the Closing Date due to Seller's material breach of any material
representation, warranty, covenant or condition hereunder (after the
preparation of any applicable notice period), and Buyer is not at that time in
material breach of any material representation, warranty, covenant or
condition hereunder, then Buyer shall be entitled to specific performance of
the terms of this Agreement and of Seller's obligation to consummate the
transaction contemplated hereby. If any action is brought by Buyer to enforce
this Agreement, Seller shall waive the defense that there is an adequate
remedy at law or that Buyer has not incurred or will not incur irreparable
injury.
4. Notwithstanding any other provision of this Agreement, the
confidentiality provisions in Sections 4.8 and 5.3 shall survive any
termination of this Agreement.
9.3 Expenses. Each party hereto shall be solely responsible for all fees
and expenses each party incurs in connection with the transactions
contemplated by this Agreement, including, without limitation, legal fees
incurred in connection herewith: provided, that any and all FCC filing fees
shall be divided equally by Seller and Buyer.
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9.4 Assignments. This Agreement shall not be assigned by any party
hereto without the prior written consent of the other party: provided, that
Buyer may assign its rights under this Agreement to any other party controlled
by the Buyer or the same parties who control Buyer if such assignee agrees in
writing to be bound to the terms of this Agreement; and provided further, that
Buyer shall promptly notify Seller of any such assignment in writing.
9.5 Further Assurances. From time to time prior to, at and after the
Closing, each party hereto will execute all such instruments and take all such
actions any other party shall reasonably request in connection with
effectuating the intent and purpose of this Agreement and all transactions
contemplated by this Agreement, including, without limitation, the execution
and delivery of any and all confirmatory and other instruments in addition to
those to be delivered at the Closing.
9.6 Damage to the Assets. The risk of loss or damage to any of the
Station Assets prior to the Closing shall be upon Seller. In consultation with
Buyer, 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.
9.7 Notices. All notices, demands and other communications which may be
or are required to be given hereunder shall be in writing, shall be delivered
either by personal delivery, by United States certified mail-return receipt
requested (postage prepaid), or by overnight delivery service (charges
prepaid), and shall be deemed to have been given or made when personally
delivered, within five (5) days after being deposited in the mail, postage
prepaid, or within one (1) day after being delivered to an overnight delivery
service, charges prepaid. Notices shall be delivered to each party at the
following addresses (or at such other address as any party may designate in
writing to the other parties):
1. If to Seller --
Ronald J. Morey, President
Jarad Broadcasting Co. of New York Inc.
1103 Stewart Ave.
Garden City, New York 11530
with a copy to (but which shall not constitute notice to
Seller):
Lewis J. Paper, Esq.
Dickstein, Shapiro, Morin & Oshinsky, L.L.P.
2101 L Street, N.W.
Washington, DC 20037
1. If to Buyer --
Robert F.X. Sillerman, Chief Executive Officer
Liberty Broadcasting of Albany, Incorporated
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150 East 58th Street
New York, New York 10155
with a copy to (but which shall not constitute notice to Buyer):
Kraig Fox, Esq.
Liberty Broadcasting of Albany, Incorporated
150 East 58th Street
New York, New York 10155
9.8 Captions. The captions of articles and sections of this Agreement
are for convenience only and shall not control or affect the meaning or
construction of any of the provisions of this Agreement.
9.9 Law Governing. This Agreement shall be governed by, construed, and
enforced in accordance with the laws of the State of New York without regard
to conflicts of laws provisions.
9.10 Waiver of Provisions. The terms, covenants, representations,
warranties, and conditions of this Agreement may be waived only by a written
instrument executed by the party waiving compliance. The failure of any party
at any time or times to require performance of any provision of this Agreement
shall not affect the exercise of a party's rights at a later date. No waiver
by any party of any condition or the breach of any provision, term, covenant,
representation, or warranty contained in this Agreement, in any one or more
instances shall be deemed to be or construed as a further or continuing waiver
of any such condition or of the breach of any other provision, term, covenant,
representation, or warranty of this Agreement.
9.11 Counterparts. This Agreement may be executed in counterparts, and
all counterparts so executed shall collectively constitute one agreement,
binding on all of the parties hereto, notwithstanding that all the parties are
not signatory to the same counterpart.
9.12 Reimbursement of Legal Expenses. If a formal legal proceeding is
instituted by a party to enforce that party's rights under this Agreement, the
party prevailing in the proceeding shall reimburse the other party for all
reasonable costs, including but not limited to reasonable attorneys, fees,
incurred in conjunction with the proceeding.
9.13 Entire Agreement. This Agreement constitutes the entire Agreement
among the parties and supersedes any and all prior or contemporaneous
agreements between them relating to the subject matter hereof and may not be
amended except in a writing signed by the parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year written above.
JARAD BROADCASTING COMPANY OF NEW YORK, INC.
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By: __________________________________________
Ronald J. Morey
President
LIBERTY BROADCASTING OF ALBANY, INCORPORATED
By: __________________________________________
Robert F.X. Sillerman
Chief Executive Officer
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Exhibit 10.3
THE WARRANT REPRESENTED HEREBY AND THE SHARES OF CLASS A COMMON STOCK ISSUABLE
UPON EXERCISE OF THE WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, ASSIGNED OR
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS, UNLESS THE COMPANY HAS
RECEIVED THE WRITTEN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
COUNSEL IS OF THE OPINION THAT SUCH SALE, ASSIGNMENT OR TRANSFER DOES NOT
INVOLVE A TRANSACTION REQUIRING THE REGISTRATION OF SUCH SECURITY UNDER THE
SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS.
Right to Purchase 300,000 Shares of Class A Common Stock of SFX
Broadcasting, Inc.
SFX BROADCASTING, INC.
Common Stock Purchase Warrant
SFX BROADCASTING, INC., a Delaware corporation (the "Company") having
its principal executive offices at 150 East 58th Street, 19th Floor, New York,
New York 10155, hereby certifies that, for value received, Sillerman
Communications Management Corporation, having an address at 150 East 58th
Street, 19th Floor, New York, New York 10155, or assigns (the "Holder" or
"Holders"), is entitled, subject to the terms set forth below, to purchase
from the Company at any time or from time to time before 5:00 P.M., New York
time, on April 15, 2002, Three Hundred Thousand (300,000) fully paid and
nonassessable shares of Class A Common Stock of the Company at an exercise
price, subject to adjustment, of $33.75 per share (the "Purchase Price").
As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:
(a) The term "Average Closing Price" means, as of any specified
date, (i) if shares of the Common Stock are listed on a national
securities exchange, the average of the closing prices therefor on the
largest securities exchange on which such shares are traded on the last
five (5) trading days immediately prior to, but not including, such
date; (ii) if such shares are listed on the NASDAQ National Market
System but not on any national securities exchange, the average of the
closing sales prices therefor on the NASDAQ National Market System on
the last five (5) trading days immediately prior to, but not including,
such date; or (iii) if such shares are not listed on either a national
securities exchange or the NASDAQ National Market System, the average of
the mean of
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the high and low bid and asked quotations therefor on the last five (5)
trading days immediately prior to, but not including, such date; or (iv)
if the Common Stock is not listed or admitted to trading on any national
exchange or quoted in the over-the-counter market, the fair market value
thereof as determined in good faith by the board of directors of the
Company.
(b) The term "Common Stock" includes (a) the Class A Common Stock,
$.01 par value per share (the "Class A Common Stock"), the Class B
Common Stock, $.01 par value per share, the Class C Common Stock, $.01
par value per share, of the Company as authorized on the date hereof,
(b) any other capital stock of any class or classes (however designated)
of the Company, authorized on or after such date, the holders of which
shall have the right, without limitation as to amount, either to all or
to a share of the balance of current dividends and liquidating dividends
after the payment of dividends and distributions on any shares entitled
to preference, (c) any other securities into which or for which any of
the securities described in (a) or (b) may be converted or exchanged
pursuant to a plan of recapitalization, reorganization, merger, sale of
assets or otherwise, and (d) shares of stock or other securities
directly or indirectly convertible into or exchangeable for shares of
Class A Common Stock.
(c) The term "Company" shall include SFX Broadcasting, Inc. and any
corporation which shall succeed or assume the obligations of the Company
hereunder.
1. EXERCISE OF WARRANT.
1.1. EXERCISE; CASHLESS EXERCISE. (a) Commencing on the date of this
Warrant, or from time to time thereafter prior to the expiration hereof, this
Warrant may be exercised in whole or in part by the holder hereof by surrender
of this Warrant, with the form of subscription at the end hereof duly executed
by such holder, to the Company at its principal office, accompanied by
payment, in cash or by certified or official bank check payable to the order
of the Company, in the amount obtained by multiplying the number of shares of
Class A Common Stock for which this Warrant is then exercisable by the
Purchase Price then in effect.
(b) The Holder shall have the right, at its election, in lieu of
delivering the Purchase Price in cash, to instruct the Company in the form of
subscription to retain, in payment of the Purchase Price, a number of shares
of Class A Common Stock (the "Payment Shares") equal to the quotient of (i)
the aggregate Purchase Price of the shares as to which the Warrant is then
being exercised divided by (ii) the Average Closing Price as of the date of
exercise and to deduct the number of Payment Shares from the shares to be
delivered to the Holder.
1.2. TRUSTEE FOR WARRANT HOLDERS. In the event that a bank or trust
company shall have been appointed as trustee for the holder of this Warrant
pursuant to Section 3.2, such bank or trust company shall have all the powers
and duties of a warrant agent appointed pursuant
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to Section 11 and shall accept, in its own name for the account of the Company
or such successor person as may be entitled thereto, all amounts otherwise
payable to the Company or such successor, as the case may be, on exercise of
this Warrant pursuant to this Section 1.
2. DELIVERY OF STOCK CERTIFICATES ON EXERCISE. As soon as practicable
after the exercise of this Warrant in full or in part, and in any event within
10 days thereafter, the Company at its expense (including the payment by it of
any applicable issue taxes) will cause to be issued in the name of and
delivered to the holder hereof, or as such holder (upon payment by the Company
of any applicable transfer taxes) may direct, a certificate or certificates
for the number of fully paid and nonassessable shares of Class A Common Stock
to which such holder shall be entitled on such exercise.
3. ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION OR MERGER.
3.1. REORGANIZATION, CONSOLIDATION OR MERGER. In case at any time
or from time to time, the Company shall (a) effect a reorganization, (b)
consolidate with or merge into any other person, or (c) transfer all or
substantially all of its properties or assets to any other person under any
plan or arrangement contemplating the dissolution of the Company, then, in
each such case, the holder of this Warrant, on the exercise hereof as provided
in Section 1 at any time after the consummation of such reorganization,
consolidation or merger or the effective date of such dissolution, as the case
may be, shall receive, in lieu of the Class A Common Stock issuable on such
exercise prior to such consummation or such effective date, the stock and
other securities and property (including cash) to which such holder would have
been entitled upon such consummation or in connection with such dissolution,
as the case may be, if such holder had so exercised this Warrant, immediately
prior thereto, all subject to further adjustment thereafter as provided in
Section 4.
3.2. DISSOLUTION. In the event of any dissolution of the Company
following the transfer of all or substantially all of its properties or
assets, the Company, prior to such dissolu tion, shall at its expense deliver
or cause to be delivered the stock and other securities and property
(including cash, where applicable) receivable by the holder of the Warrant
after the effective date of such dissolution pursuant to this Section 3 to a
bank or trust company, as trustee for the holder of the Warrant and shall
promptly notify each holder of the Warrants of the occurrence of any of the
events specified in this Section 3.
3.3. CONTINUATION OF TERMS. Upon any reorganization, consolidation,
merger or transfer (and any dissolution following any transfer) referred to in
this Section 3, this Warrant shall continue in full force and effect and the
terms hereof shall be applicable to all securities and other property
receivable on the exercise of this Warrant after the consummation of such
reorgani zation, consolidation or merger or the effective date of dissolution
following any such transfer, as the case may be, and shall be binding upon the
issuer of any such stock or other securities, including, in the case of any
such transfer, the person acquiring all or substantially all of the properties
or assets of the Company, whether or not such person shall have expressly
assumed the terms of this Warrant.
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4. ADJUSTMENTS FOR STOCK DIVIDENDS AND STOCK SPLITS. In the event that
the Company shall (i) issue additional shares of the Class A Common Stock as a
dividend or other distribution on outstanding Common Stock, (ii) subdivide its
outstanding shares of Class A Common Stock, or (iii) combine its outstanding
shares of the Class A Common Stock into a smaller number of shares of the
Class A Common Stock, then, in each such event, the Purchase Price shall,
simultaneously with the happening of such event, be adjusted by multiplying
the then prevailing Purchase Price by a fraction, the numerator of which shall
be the number of shares of Class A Common Stock outstanding immediately prior
to such event and the denominator of which shall be the number of shares of
Class A Common Stock outstanding immediately after such event, and the product
so obtained shall thereafter be the Purchase Price then in effect. The
Purchase Price, as so adjusted, shall be readjusted in the same manner upon
the happening of any successive event or events described herein in this
Section 4. The holder of this Warrant shall thereafter, on the exercise hereof
as provided in Section 1, be entitled to receive that number of shares of
Class A Common Stock determined by multiplying the number of shares of Class A
Common Stock which would otherwise (but for the provisions of this Section 4)
be issuable on such exercise, by a fraction of which (i) the numerator is the
Purchase Price which would otherwise (but for the provisions of this Section
4) be in effect, and (ii) the denominator is the Purchase Price in effect on
the date of such exercise.
5. REGISTRATION RIGHTS.
5.1. "PIGGYBACK" REGISTRATION. At any time during the period when
this Warrant shall be exercisable, if the Company shall determine to proceed
with the actual preparation and filing of a registration statement under the
Securities Act in connection with the proposed offer and sale of any of its
securities by it or any of its security holders (other than a registration
statement on Form S-4, S-8 or other limited purpose form), the Company will
give written notice of its determination to the Holder. Upon the written
request from the Holder within twenty (20) days after receipt of any such
notice from the Company, the Company will, except as herein provided, cause
all shares of Class A Common Stock issuable upon exercise of this Warrant (the
"Registrable Securities") to be included in such registration statement, all
to the extent requisite to permit the sale or other disposition of the
Securities to be so registered; provided, however, that nothing herein shall
prevent the Company from, at any time, abandoning or delaying any registration
under this Section 5. If any registration pursuant to this Section 5 shall be
underwritten in whole or in part, the Company shall require that the
Registrable Securities requested for inclusion pursuant to this Section 5 be
included in the underwriting on the same terms and conditions as the
securities otherwise being sold through the underwriters.
Notwithstanding the foregoing, if the managing underwriter determines
and advises in writing that the inclusion of all Registrable Securities
proposed to be included in the underwritten public offering, together with any
other issued and outstanding securities proposed to be included therein by
holders of securities other than the Holder, would interfere with the
successful marketing of such securities, then the number of such Registrable
Securities that the managing underwriter believes may be sold in such
underwritten public offering shall be allocated for inclusion in the
registration statement in the following order of priority: (i) the securities
being
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offered by the Company, and (ii) the number of Registrable Securities then
owned by the Holder and the number of securities held by holders other than
the Holder, on a pro rata basis, based upon the number of Registrable
Securities sought to be registered by the Holder and the other holders. The
Registrable Securities that are excluded from the underwritten public offering
shall be withheld from the market by the Holder for a period that the managing
underwriter determines as necessary in order to effect the underwritten public
offering, but in no event shall such period exceed 180 days. To the extent
that Securities requested for inclusion pursuant to this Section 5 are
excluded from a registration statement pursuant to this provision, the Company
shall file a new registration statement covering such excluded Registrable
Securities and shall use its best efforts to cause such registration statement
to become effective upon the expiration of the period, not to exceed 180 days,
that the excluded Registrable Securities are to be withheld from the market
pursuant to this paragraph.
5.2. REGISTRATION PROCEDURES. If and whenever the Company is required by
the provisions of Section 5 to effect the registration of Registrable
Securities under the Securities Act, the Company will:
(a) prepare and file with the Securities and Exchange Commission
(the "Commission") a registration statement with respect to such securities,
and use its best efforts to cause such registration statement to become, and
with respect to Section 5, remain effective for such period as may be
reasonably necessary to effect the sale of such securities, not to exceed nine
months (the "Effective Period");
(b) prepare and file with the Commission such amendments to such
registration statement and supplements to the prospectus contained therein as
may be necessary to keep such registration statement effective for the
Effective Period as may be reasonably necessary to effect the sale of such
securities;
(c) furnish to the Holder participating in such registration and to
the underwriters of the securities being registered, such reasonable number of
copies of the registration statement, preliminary prospectus, final prospectus
and such other documents as the Holder and such underwriters may reasonably
request in order to facilitate the public offering of such securities;
(d) use its best efforts to register or qualify the Registrable
Securities covered by such registration statement under such state securities
or blue sky laws of such jurisdictions as the Holder may reasonably request in
writing within twenty (20) days following the original filing of such
registration statement, except that the Company shall not for any purpose be
required to execute a general consent to service of process or to qualify to
do business as a foreign corporation in any jurisdiction wherein it is not so
qualified;
(e) notify the Holder participating in such registration, promptly
after it shall receive notice thereof, of the time when such registration
statement has become effective or a supplement to any prospectus forming a
part of such registration statement has been filed;
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(f) notify the Holder promptly of any request by the Commission for
the amending or supplementing of such registration statement or prospectus or
for additional information;
(g) prepare and file with the Commission, promptly upon the request
of the Holder, any amendments or supplements to such registration statement or
prospectus which, in the opinion of counsel for the Holder (and concurred in
by counsel for the Company), is required under the Securities Act or the rules
and regulations thereunder in connection with the distribution of Securities
by the Holder;
(h) prepare and promptly file with the Commission and promptly
notify the Holder of the filing of such amendment or supplement to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at any time when a prospectus relating to such
securities is required to be delivered under the Securities Act, any event
shall have occurred as the result of which any such prospectus or any other
prospectus as then in effect would include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances in which they were made, not
misleading; and
(i) advise the Holder, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the Commission
suspending the effectiveness of such registration statement or the initiation
or threatening of any proceeding for that purpose and promptly use its best
efforts to prevent the issuance of any stop order or to obtain its withdrawal
if such stop order should be issued.
5.3. EXPENSES.
(a) With respect to an inclusion of Securities in a registration
statement pursuant to Section 5 hereof, all fees, costs and expenses of and
incidental to such registration, inclusion and public offering (as specified
in paragraph (b) below) in connection therewith shall be borne by the Company;
provided, however, that the Holder shall bear his pro rata share of the
underwriting discount and commissions and transfer taxes, and such Holder
shall be responsible for the payment of such Holder's legal fees.
(b) The fees, costs and expenses of registration to be borne by the
Company as provided in Section 5.3.(a) above shall include, without
limitation, all registration, filing, and NASD fees, printing expenses, fees
and disbursements of counsel and accountants for the Company, and all legal
fees and disbursements and other expenses of complying with state securities
or blue sky laws of any jurisdictions in which the securities to be offered
are to be registered and qualified (except as provided in Section 5(a) above).
Fees and disbursements of counsel and accountants for the selling Holder not
expressly included above shall be borne by such Holder.
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5.4. INDEMNIFICATION.
(a) The Company will indemnify and hold harmless Holder if he is
included in a registration statement pursuant to the provisions of Section 5
hereof, and any underwriter (as defined in the Securities Act) for such Holder
and each person, if any, who controls such Holder or such underwriter within
the meaning of the Securities Act, from and against and will reimburse the
Holder and each such underwriter and controlling person with respect to, any
and all loss, damage, liability, cost and expense to which such Holder or any
such underwriter or controlling person may become subject under the Securities
Act or otherwise, insofar as such losses, damages, liabilities, costs or
expenses are caused by any untrue statement or alleged untrue statement of any
material fact contained in such registration statement, any prospectus
contained therein or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, damage, liability, cost or expenses
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission so made in conformity with information
furnished by such Holder, such underwriter or such controlling person in
writing specifically for use in the preparation thereof.
(b) Such Holder of Securities included in a registration pursuant
to the provisions of Section 5 hereof will indemnify and hold harmless the
Company, its directors and officers, any controlling person and any
underwriter thereof from and against, and will reimburse the Company, its
directors and officers, any controlling person and any underwriter thereof
with respect to, any and all loss, damage, liability, cost or expense to which
the Company or any controlling person and/or any underwriter thereof may
become subject under the Securities Act or otherwise, insofar as such losses,
damages, liabilities, costs or expenses are caused by any untrue statement or
alleged untrue statement of any material fact contained in such registration
statement, any prospectus contained therein or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statement therein, in light of the circumstances in which they were
made, not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was so made in reliance upon and in conformity with written
information furnished by or on behalf of such Holder specifically for use in
the preparation thereof.
(c) Promptly after receipt by an indemnified party pursuant to the
provisions of paragraph (a) or (b) of this Section 5.4. of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions such indemnified party will, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of said
paragraph (a) or (b), promptly notify the indemnifying party of the
commencement thereof; but the omission to so notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party otherwise than hereunder. In case such action is brought against any
indemnified party and it notifies the indemnifying party of the commencement
thereof, the
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indemnifying party shall have the right to participate in, and, to the extent
that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party; provided, however, that if the defendants in any action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or in addition to those available to the indemnifying party, or if there
is a conflict of interest which would prevent counsel for the indemnifying
party from also representing the indemnified party, the indemnified party or
parties shall have the right to select separate counsel to participate in the
defense of such action on behalf of such indemnified party or parties. After
notice from the indemnifying party to an indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to
such indemnified party pursuant to the provisions of said paragraph (a) or (b)
for any legal or other expense subsequently incurred by such indemnified party
in connection with the defense thereof other than reasonable costs of
investigation, unless (i) the indemnified party shall have employed counsel in
accordance with the provisions of the preceding sentence, (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after the notice of the commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party.
6. NOTICES OF RECORD DATE, ETC. In case:
(a) the Company shall take a record of the holders of its Common
Stock (or other securities at the time receivable upon the exercise of
the Warrant) for the purpose of entitling them to receive any dividend
(other than a cash dividend payable out of earned surplus) or other
distribution, or any right to subscribe for, purchase or otherwise
acquire any shares of stock of any class or any other securities, or to
receive any other right; or
(b) of any capital reorganization of the Company (other than a
stock split or reverse stock split), any reclassification of the capital
stock of the Company, any consoli dation or merger of the Company with
or into another corporation (other than a merger for purposes of change
of domicile) or any conveyance of all or substantially all of the assets
of the Company to another corporation; or
(c) of any voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
then, and in each such case, the Company shall mail or cause to be mailed to
the Holder a notice specifying, as the case may be, (i) the date on which a
record is to be taken for the purpose of such dividend, distribution or right,
and stating the amount and character of such dividend, distribution or right,
or (ii) the date on which such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or winding-up is
to take place, and the time, if any, is to be fixed, as to which the holders
of record of Class A Common Stock (or such other securities at the time
receivable upon the exercise of the Warrant) shall be entitled to exchange
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their shares of Class A Common Stock (or such other securities) for securities
or other property deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or winding-up.
Such notice shall be mailed at least twenty (20) days prior to the date
therein specified and this Warrant may be exercised prior to said date during
the term of the Warrant no later than five days prior to said date.
7. NO IMPAIRMENT. The Company will not, by amendment of its Certificate
of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms of this Warrant, but will at all times in good faith assist in
the carrying assist in the carrying out of all such terms and in the taking of
all such action as may be necessary or appropriate in order to protect the
rights of the holder of this Warrant. Without limiting the generality of the
foregoing, the Company (a) will not increase the par value of any shares of
stock receivable on the exercise of the Warrant above the amount payable
therefor on such exercise, and (b) will take all such action as may be
necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of stock on the exercise of this
Warrant from time to time outstanding.
8. RESERVATION OF STOCK ISSUABLE ON EXERCISE OF WARRANT. The Company
will at all times reserve and keep available, solely for issuance and delivery
on the exercise of the Warrant, all shares of Class A Common Stock from time
to time issuable on the exercise of the Warrant.
9. EXCHANGE OF WARRANT. On surrender for exchange of this Warrant,
properly endorsed, to the Company, the Company at its expense will issue and
deliver to or on the order of the holder thereof a new Warrant or Warrants of
like tenor, in the name of such holder or as such holder (on payment by such
holder of any applicable transfer taxes) may direct, calling in the aggregate
on the face or faces thereof for the number of shares of Class A Common Stock
for which the Warrant or Warrants may still be exercised.
10. REPLACEMENT OF WARRANT. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of such Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant of like
tenor.
11. WARRANT AGENT. The Company may, by written notice to each holder of
a Warrant, appoint an agent for the purpose of issuing the Class A Common
Stock on the exercise of the Warrant pursuant to Section 1, exchanging this
Warrant pursuant to Section 9, and replacing this Warrant pursuant to Section
10, or any of the foregoing, and thereafter any such issuance, exchange or
replacement, as the case may be, shall be made at such office by such agent.
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12. NEGOTIABILITY; RESTRICTIONS ON TRANSFER; WARRANT HOLDER NOT DEEMED
STOCKHOLDER. This Warrant is issued upon the following terms, to all of which
each holder or owner hereof by the taking hereof consents and agrees:
(a) No holder of this Warrant shall, as such, be entitled to vote
or to receive dividends or to be deemed the holder of any class of
security that may at any time be issuable upon exercise of the Warrant
for any purpose whatsoever, nor shall anything contained herein be
construed to confer upon such holder, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action (whether
upon any recapitalization, issue or reclassification of stock, change of
par value or change of stock to no par value, consolidation, merger or
conveyance or otherwise), or to receive notice of meetings, or to
receive dividends or subscription rights, until such holder shall have
exercised the Warrant and been issued shares of Class A Common Stock in
accordance with the provisions hereof; and
(b) Neither this Warrant nor any shares of Class A Common Stock
purchased pursuant to this Warrant have been registered under the
Securities Act of 1933. Therefore, the Company may require, as a
condition of allowing the transfer or exchange of this Warrant or such
shares, that the holder or transferee of this Warrant or such shares, as
the case may be, furnish to the Company an opinion of counsel reasonably
acceptable to the Company to the effect that such transfer or exchange
may be made without registration under the Securities Act of 1933. The
certificates evidencing the Class A Common Stock issued on the exercise
of the Warrant shall bear a legend to the effect that the certificates
have not been registered under the Securities Act of 1933.
13. FURTHER ASSURANCES. The Company undertakes generally to execute all
such agree ments and other instruments and to do all such other acts as are
necessary or appropriate (including, but not limited to, authorizing and
issuing additional shares of stock of the Company) to give full effect to the
terms, conditions and provisions of this Warrant and make it binding on the
Company.
14. NOTICES. All notices and other communications between the Company
and the holder of this Warrant shall be mailed by first class mail, postage
prepaid, at such addresses listed above, or as may have been subsequently
furnished to the other party in writing.
15. MISCELLANEOUS. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by
the party against which enforcement of such change, waiver, discharge or
termination is sought. This Warrant shall be construed and enforced in
accordance with and governed by the laws of the State of New York. The
headings in this Warrant are for purposes of reference only, and shall not
limit or otherwise affect any of the terms hereof. This Warrant is being
executed as an instrument under seal. The invalidity or unenforceability of
any provision thereof shall in no way affect the validity or enforceability of
any other provision.
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16. EXPIRATION. The right to exercise this Warrant shall expire at
5:00 P.M., New York time, April 15, 2002.
Dated as of: April 15, 1996 SFX BROADCASTING, INC.
By: /s/ Rick Liese
--------------------------
Name: Rick Liese
Title: Vice President
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FORM OF SUBSCRIPTION
(TO BE SIGNED ONLY ON EXERCISE OF WARRANT)
TO SFX BROADCASTING, INC.
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise this Warrant for, and to purchase thereunder shares
of Class A Common Stock of SFX BROADCASTING, INC. and herewith makes payment
of $ therefor, and requests that the certificates for such shares be issued
in the name of, and delivered to , whose address is .
Dated:
------------------------------------
(Signature must conform to name of
holder as specified on the face of the
Warrant)
------------------------------------
(Address)
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FORM OF ASSIGNMENT
(TO BE SIGNED ONLY ON TRANSFER OF WARRANT)
For value received, the undersigned hereby sells, assigns, and transfers
unto the right represented by the within Warrant to purchase
shares of Class A Common Stock of SFX BROADCASTING, INC. to which the within
Warrant relates, and appoints Attorney to transfer SFX BROADCASTING,
INC. such right on the books of SFX BROADCASTING, INC. with full power of
substitution in the premises.
Dated:
_____________________________________
(Signature must conform to name of
holder as specified on the face of
the Warrant)
_____________________________________
(Address)
Signed in the presence of:
________________________________
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Exhibit 10.4
THE WARRANT REPRESENTED HEREBY AND THE SHARES OF CLASS A COMMON STOCK ISSUABLE
UPON EXERCISE OF THE WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, ASSIGNED OR
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS, UNLESS THE COMPANY HAS
RECEIVED THE WRITTEN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
COUNSEL IS OF THE OPINION THAT SUCH SALE, ASSIGNMENT OR TRANSFER DOES NOT
INVOLVE A TRANSACTION REQUIRING THE REGISTRATION OF SUCH SECURITY UNDER THE
SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS.
Right to Purchase 300,000 Shares of Class A Common Stock of
SFX Broadcasting, Inc.
SFX BROADCASTING, INC.
Common Stock Purchase Warrant
SFX BROADCASTING, INC., a Delaware corporation (the "Company") having
its principal executive offices at 150 East 58th Street, 19th Floor, New York,
New York 10155, hereby certifies that, for value received, Sillerman
Communications Management Corporation, having an address at 150 East 58th
Street, 19th Floor, New York, New York 10155, or assigns (the "Holder" or
"Holders"), is entitled, subject to the terms set forth below and the receipt
of approval by the Company's stockholders, to purchase from the Company at any
time or from time to time before 5:00 P.M., New York time, on April 15, 2002,
Three Hundred Thousand (300,000) fully paid and nonassessable shares of Class
A Common Stock of the Company at an exercise price, subject to adjustment, of
$33.75 per share (the "Purchase Price").
As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:
(a) The term "Average Closing Price" means, as of any specified
date, (i) if shares of the Common Stock are listed on a national
securities exchange, the average of the closing prices therefor on the
largest securities exchange on which such shares are traded on the last
five (5) trading days immediately prior to, but not including, such
date; (ii) if such shares are listed on the NASDAQ National Market
System but not on any national securities exchange, the average of the
closing sales prices therefor on the NASDAQ National Market System on
the last five (5) trading days immediately prior to, but not including,
such date; or (iii) if such shares are not listed on either a national
securities exchange or the NASDAQ National Market System, the average of
the mean of
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the high and low bid and asked quotations therefor on the last five (5)
trading days immediately prior to, but not including, such date; or (iv)
if the Common Stock is not listed or admitted to trading on any national
exchange or quoted in the over-the-counter market, the fair market value
thereof as determined in good faith by the board of directors of the
Company.
(b) The term "Common Stock" includes (a) the Class A Common Stock,
$.01 par value per share (the "Class A Common Stock"), the Class B
Common Stock, $.01 par value per share, the Class C Common Stock, $.01
par value per share, of the Company as authorized on the date hereof,
(b) any other capital stock of any class or classes (however designated)
of the Company, authorized on or after such date, the holders of which
shall have the right, without limitation as to amount, either to all or
to a share of the balance of current dividends and liquidating dividends
after the payment of dividends and distributions on any shares entitled
to preference, (c) any other securities into which or for which any of
the securities described in (a) or (b) may be converted or exchanged
pursuant to a plan of recapitalization, reorganization, merger, sale of
assets or otherwise, and (d) shares of stock or other securities
directly or indirectly convertible into or exchangeable for shares of
Class A Common Stock.
(c) The term "Company" shall include SFX Broadcasting, Inc. and any
corporation which shall succeed or assume the obligations of the Company
hereunder.
1. EXERCISE OF WARRANT.
1.1. EXERCISE; CASHLESS EXERCISE. (a) Commencing on the date of this
Warrant, or from time to time thereafter prior to the expiration hereof, this
Warrant may be exercised in whole or in part by the holder hereof by surrender
of this Warrant, with the form of subscription at the end hereof duly executed
by such holder, to the Company at its principal office, accompanied by
payment, in cash or by certified or official bank check payable to the order
of the Company, in the amount obtained by multiplying the number of shares of
Class A Common Stock for which this Warrant is then exercisable by the
Purchase Price then in effect.
(b) The Holder shall have the right, at its election, in lieu of
delivering the Purchase Price in cash, to instruct the Company in the form of
subscription to retain, in payment of the Purchase Price, a number of shares
of Class A Common Stock (the "Payment Shares") equal to the quotient of (i)
the aggregate Purchase Price of the shares as to which the Warrant is then
being exercised divided by (ii) the Average Closing Price as of the date of
exercise and to deduct the number of Payment Shares from the shares to be
delivered to the Holder.
1.2. TRUSTEE FOR WARRANT HOLDERS. In the event that a bank or trust
company shall have been appointed as trustee for the holder of this Warrant
pursuant to Section 3.2, such bank or trust company shall have all the powers
and duties of a warrant agent appointed pursuant
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to Section 11 and shall accept, in its own name for the account of the Company
or such successor person as may be entitled thereto, all amounts otherwise
payable to the Company or such successor, as the case may be, on exercise of
this Warrant pursuant to this Section 1.
2. DELIVERY OF STOCK CERTIFICATES ON EXERCISE. As soon as practicable
after the exercise of this Warrant in full or in part, and in any event within
10 days thereafter, the Company at its expense (including the payment by it of
any applicable issue taxes) will cause to be issued in the name of and
delivered to the holder hereof, or as such holder (upon payment by the Company
of any applicable transfer taxes) may direct, a certificate or certificates
for the number of fully paid and nonassessable shares of Class A Common Stock
to which such holder shall be entitled on such exercise.
3. ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION OR MERGER.
3.1. REORGANIZATION, CONSOLIDATION OR MERGER. In case at any time
or from time to time, the Company shall (a) effect a reorganization, (b)
consolidate with or merge into any other person, or (c) transfer all or
substantially all of its properties or assets to any other person under any
plan or arrangement contemplating the dissolution of the Company, then, in
each such case, the holder of this Warrant, on the exercise hereof as provided
in Section 1 at any time after the consummation of such reorganization,
consolidation or merger or the effective date of such dissolution, as the case
may be, shall receive, in lieu of the Class A Common Stock issuable on such
exercise prior to such consummation or such effective date, the stock and
other securities and property (including cash) to which such holder would have
been entitled upon such consummation or in connection with such dissolution,
as the case may be, if such holder had so exercised this Warrant, immediately
prior thereto, all subject to further adjustment thereafter as provided in
Section 4.
3.2. DISSOLUTION. In the event of any dissolution of the Company
following the transfer of all or substantially all of its properties or
assets, the Company, prior to such dissolu tion, shall at its expense deliver
or cause to be delivered the stock and other securities and property
(including cash, where applicable) receivable by the holder of the Warrant
after the effective date of such dissolution pursuant to this Section 3 to a
bank or trust company, as trustee for the holder of the Warrant and shall
promptly notify each holder of the Warrants of the occurrence of any of the
events specified in this Section 3.
3.3. CONTINUATION OF TERMS. Upon any reorganization, consolidation,
merger or transfer (and any dissolution following any transfer) referred to in
this Section 3, this Warrant shall continue in full force and effect and the
terms hereof shall be applicable to all securities and other property
receivable on the exercise of this Warrant after the consummation of such
reorgani zation, consolidation or merger or the effective date of dissolution
following any such transfer, as the case may be, and shall be binding upon the
issuer of any such stock or other securities, including, in the case of any
such transfer, the person acquiring all or substantially all of the properties
or assets of the Company, whether or not such person shall have expressly
assumed the terms of this Warrant.
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4. ADJUSTMENTS FOR STOCK DIVIDENDS AND STOCK SPLITS. In the event that
the Company shall (i) issue additional shares of the Class A Common Stock as a
dividend or other distribution on outstanding Common Stock, (ii) subdivide its
outstanding shares of Class A Common Stock, or (iii) combine its outstanding
shares of the Class A Common Stock into a smaller number of shares of the
Class A Common Stock, then, in each such event, the Purchase Price shall,
simultaneously with the happening of such event, be adjusted by multiplying
the then prevailing Purchase Price by a fraction, the numerator of which shall
be the number of shares of Class A Common Stock outstanding immediately prior
to such event and the denominator of which shall be the number of shares of
Class A Common Stock outstanding immediately after such event, and the product
so obtained shall thereafter be the Purchase Price then in effect. The
Purchase Price, as so adjusted, shall be readjusted in the same manner upon
the happening of any successive event or events described herein in this
Section 4. The holder of this Warrant shall thereafter, on the exercise hereof
as provided in Section 1, be entitled to receive that number of shares of
Class A Common Stock determined by multiplying the number of shares of Class A
Common Stock which would otherwise (but for the provisions of this Section 4)
be issuable on such exercise, by a fraction of which (i) the numerator is the
Purchase Price which would otherwise (but for the provisions of this Section
4) be in effect, and (ii) the denominator is the Purchase Price in effect on
the date of such exercise.
5. REGISTRATION RIGHTS.
5.1. "PIGGYBACK" REGISTRATION. At any time during the period when
this Warrant shall be exercisable, if the Company shall determine to proceed
with the actual preparation and filing of a registration statement under the
Securities Act in connection with the proposed offer and sale of any of its
securities by it or any of its security holders (other than a registration
statement on Form S-4, S-8 or other limited purpose form), the Company will
give written notice of its determination to the Holder. Upon the written
request from the Holder within twenty (20) days after receipt of any such
notice from the Company, the Company will, except as herein provided, cause
all shares of Class A Common Stock issuable upon exercise of this Warrant (the
"Registrable Securities") to be included in such registration statement, all
to the extent requisite to permit the sale or other disposition of the
Securities to be so registered; provided, however, that nothing herein shall
prevent the Company from, at any time, abandoning or delaying any registration
under this Section 5. If any registration pursuant to this Section 5 shall be
underwritten in whole or in part, the Company shall require that the
Registrable Securities requested for inclusion pursuant to this Section 5 be
included in the underwriting on the same terms and conditions as the
securities otherwise being sold through the underwriters.
Notwithstanding the foregoing, if the managing underwriter determines
and advises in writing that the inclusion of all Registrable Securities
proposed to be included in the underwritten public offering, together with any
other issued and outstanding securities proposed to be included therein by
holders of securities other than the Holder, would interfere with the
successful marketing of such securities, then the number of such Registrable
Securities that the managing underwriter believes may be sold in such
underwritten public offering shall be allocated for inclusion in the
registration statement in the following order of priority: (i) the securities
being
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offered by the Company, and (ii) the number of Registrable Securities then
owned by the Holder and the number of securities held by holders other than
the Holder, on a pro rata basis, based upon the number of Registrable
Securities sought to be registered by the Holder and the other holders. The
Registrable Securities that are excluded from the underwritten public offering
shall be withheld from the market by the Holder for a period that the managing
underwriter determines as necessary in order to effect the underwritten public
offering, but in no event shall such period exceed 180 days. To the extent
that Securities requested for inclusion pursuant to this Section 5 are
excluded from a registration statement pursuant to this provision, the Company
shall file a new registration statement covering such excluded Registrable
Securities and shall use its best efforts to cause such registration statement
to become effective upon the expiration of the period, not to exceed 180 days,
that the excluded Registrable Securities are to be withheld from the market
pursuant to this paragraph.
5.2. REGISTRATION PROCEDURES. If and whenever the Company is required by
the provisions of Section 5 to effect the registration of Registrable
Securities under the Securities Act, the Company will:
(a) prepare and file with the Securities and Exchange Commission
(the "Commission") a registration statement with respect to such securities,
and use its best efforts to cause such registration statement to become, and
with respect to Section 5, remain effective for such period as may be
reasonably necessary to effect the sale of such securities, not to exceed nine
months (the "Effective Period");
(b) prepare and file with the Commission such amendments to such
registration statement and supplements to the prospectus contained therein as
may be necessary to keep such registration statement effective for the
Effective Period as may be reasonably necessary to effect the sale of such
securities;
(c) furnish to the Holder participating in such registration and to
the underwriters of the securities being registered, such reasonable number of
copies of the registration statement, preliminary prospectus, final prospectus
and such other documents as the Holder and such underwriters may reasonably
request in order to facilitate the public offering of such securities;
(d) use its best efforts to register or qualify the Registrable
Securities covered by such registration statement under such state securities
or blue sky laws of such jurisdictions as the Holder may reasonably request in
writing within twenty (20) days following the original filing of such
registration statement, except that the Company shall not for any purpose be
required to execute a general consent to service of process or to qualify to
do business as a foreign corporation in any jurisdiction wherein it is not so
qualified;
(e) notify the Holder participating in such registration, promptly
after it shall receive notice thereof, of the time when such registration
statement has become effective or a supplement to any prospectus forming a
part of such registration statement has been filed;
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(f) notify the Holder promptly of any request by the Commission for
the amending or supplementing of such registration statement or prospectus or
for additional information;
(g) prepare and file with the Commission, promptly upon the request
of the Holder, any amendments or supplements to such registration statement or
prospectus which, in the opinion of counsel for the Holder (and concurred in
by counsel for the Company), is required under the Securities Act or the rules
and regulations thereunder in connection with the distribution of Securities
by the Holder;
(h) prepare and promptly file with the Commission and promptly
notify the Holder of the filing of such amendment or supplement to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at any time when a prospectus relating to such
securities is required to be delivered under the Securities Act, any event
shall have occurred as the result of which any such prospectus or any other
prospectus as then in effect would include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances in which they were made, not
misleading; and
(i) advise the Holder, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the Commission
suspending the effectiveness of such registration statement or the initiation
or threatening of any proceeding for that purpose and promptly use its best
efforts to prevent the issuance of any stop order or to obtain its withdrawal
if such stop order should be issued.
5.3. EXPENSES.
(a) With respect to an inclusion of Securities in a registration
statement pursuant to Section 5 hereof, all fees, costs and expenses of and
incidental to such registration, inclusion and public offering (as specified
in paragraph (b) below) in connection therewith shall be borne by the Company;
provided, however, that the Holder shall bear his pro rata share of the
underwriting discount and commissions and transfer taxes, and such Holder
shall be responsible for the payment of such Holder's legal fees.
(b) The fees, costs and expenses of registration to be borne by the
Company as provided in Section 5.3.(a) above shall include, without
limitation, all registration, filing, and NASD fees, printing expenses, fees
and disbursements of counsel and accountants for the Company, and all legal
fees and disbursements and other expenses of complying with state securities
or blue sky laws of any jurisdictions in which the securities to be offered
are to be registered and qualified (except as provided in Section 5(a) above).
Fees and disbursements of counsel and accountants for the selling Holder not
expressly included above shall be borne by such Holder.
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5.4. INDEMNIFICATION.
(a) The Company will indemnify and hold harmless Holder if he is
included in a registration statement pursuant to the provisions of Section 5
hereof, and any underwriter (as defined in the Securities Act) for such Holder
and each person, if any, who controls such Holder or such underwriter within
the meaning of the Securities Act, from and against and will reimburse the
Holder and each such underwriter and controlling person with respect to, any
and all loss, damage, liability, cost and expense to which such Holder or any
such underwriter or controlling person may become subject under the Securities
Act or otherwise, insofar as such losses, damages, liabilities, costs or
expenses are caused by any untrue statement or alleged untrue statement of any
material fact contained in such registration statement, any prospectus
contained therein or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, damage, liability, cost or expenses
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission so made in conformity with information
furnished by such Holder, such underwriter or such controlling person in
writing specifically for use in the preparation thereof.
(b) Such Holder of Securities included in a registration pursuant
to the provisions of Section 5 hereof will indemnify and hold harmless the
Company, its directors and officers, any controlling person and any
underwriter thereof from and against, and will reimburse the Company, its
directors and officers, any controlling person and any underwriter thereof
with respect to, any and all loss, damage, liability, cost or expense to which
the Company or any controlling person and/or any underwriter thereof may
become subject under the Securities Act or otherwise, insofar as such losses,
damages, liabilities, costs or expenses are caused by any untrue statement or
alleged untrue statement of any material fact contained in such registration
statement, any prospectus contained therein or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statement therein, in light of the circumstances in which they were
made, not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was so made in reliance upon and in conformity with written
information furnished by or on behalf of such Holder specifically for use in
the preparation thereof.
(c) Promptly after receipt by an indemnified party pursuant to the
provisions of paragraph (a) or (b) of this Section 5.4. of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions such indemnified party will, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of said
paragraph (a) or (b), promptly notify the indemnifying party of the
commencement thereof; but the omission to so notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party otherwise than hereunder. In case such action is brought against any
indemnified party and it notifies the indemnifying party of the commencement
thereof, the
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indemnifying party shall have the right to participate in, and, to the extent
that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party; provided, however, that if the defendants in any action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or in addition to those available to the indemnifying party, or if there
is a conflict of interest which would prevent counsel for the indemnifying
party from also representing the indemnified party, the indemnified party or
parties shall have the right to select separate counsel to participate in the
defense of such action on behalf of such indemnified party or parties. After
notice from the indemnifying party to an indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to
such indemnified party pursuant to the provisions of said paragraph (a) or (b)
for any legal or other expense subsequently incurred by such indemnified party
in connection with the defense thereof other than reasonable costs of
investigation, unless (i) the indemnified party shall have employed counsel in
accordance with the provisions of the preceding sentence, (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after the notice of the commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party.
6. NOTICES OF RECORD DATE, ETC. In case:
(a) the Company shall take a record of the holders of its Common
Stock (or other securities at the time receivable upon the exercise of
the Warrant) for the purpose of entitling them to receive any dividend
(other than a cash dividend payable out of earned surplus) or other
distribution, or any right to subscribe for, purchase or otherwise
acquire any shares of stock of any class or any other securities, or to
receive any other right; or
(b) of any capital reorganization of the Company (other than a
stock split or reverse stock split), any reclassification of the capital
stock of the Company, any consoli dation or merger of the Company with
or into another corporation (other than a merger for purposes of change
of domicile) or any conveyance of all or substantially all of the assets
of the Company to another corporation; or
(c) of any voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
then, and in each such case, the Company shall mail or cause to be mailed to
the Holder a notice specifying, as the case may be, (i) the date on which a
record is to be taken for the purpose of such dividend, distribution or right,
and stating the amount and character of such dividend, distribution or right,
or (ii) the date on which such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or winding-up is
to take place, and the time, if any, is to be fixed, as to which the holders
of record of Class A Common Stock (or such other securities at the time
receivable upon the exercise of the Warrant) shall be entitled to exchange
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their shares of Class A Common Stock (or such other securities) for securities
or other property deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or winding-up.
Such notice shall be mailed at least twenty (20) days prior to the date
therein specified and this Warrant may be exercised prior to said date during
the term of the Warrant no later than five days prior to said date.
7. NO IMPAIRMENT. The Company will not, by amendment of its Certificate
of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms of this Warrant, but will at all times in good faith assist in
the carrying assist in the carrying out of all such terms and in the taking of
all such action as may be necessary or appropriate in order to protect the
rights of the holder of this Warrant. Without limiting the generality of the
foregoing, the Company (a) will not increase the par value of any shares of
stock receivable on the exercise of the Warrant above the amount payable
therefor on such exercise, and (b) will take all such action as may be
necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of stock on the exercise of this
Warrant from time to time outstanding.
8. RESERVATION OF STOCK ISSUABLE ON EXERCISE OF WARRANT. The Company
will at all times reserve and keep available, solely for issuance and delivery
on the exercise of the Warrant, all shares of Class A Common Stock from time
to time issuable on the exercise of the Warrant.
9. EXCHANGE OF WARRANT. On surrender for exchange of this Warrant,
properly endorsed, to the Company, the Company at its expense will issue and
deliver to or on the order of the holder thereof a new Warrant or Warrants of
like tenor, in the name of such holder or as such holder (on payment by such
holder of any applicable transfer taxes) may direct, calling in the aggregate
on the face or faces thereof for the number of shares of Class A Common Stock
for which the Warrant or Warrants may still be exercised.
10. REPLACEMENT OF WARRANT. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of such Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant of like
tenor.
11. WARRANT AGENT. The Company may, by written notice to each holder of
a Warrant, appoint an agent for the purpose of issuing the Class A Common
Stock on the exercise of the Warrant pursuant to Section 1, exchanging this
Warrant pursuant to Section 9, and replacing this Warrant pursuant to Section
10, or any of the foregoing, and thereafter any such issuance, exchange or
replacement, as the case may be, shall be made at such office by such agent.
9
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<PAGE>
12. NEGOTIABILITY; RESTRICTIONS ON TRANSFER; WARRANT HOLDER NOT DEEMED
STOCKHOLDER. This Warrant is issued upon the following terms, to all of which
each holder or owner hereof by the taking hereof consents and agrees:
(a) No holder of this Warrant shall, as such, be entitled to vote
or to receive dividends or to be deemed the holder of any class of
security that may at any time be issuable upon exercise of the Warrant
for any purpose whatsoever, nor shall anything contained herein be
construed to confer upon such holder, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action (whether
upon any recapitalization, issue or reclassification of stock, change of
par value or change of stock to no par value, consolidation, merger or
conveyance or otherwise), or to receive notice of meetings, or to
receive dividends or subscription rights, until such holder shall have
exercised the Warrant and been issued shares of Class A Common Stock in
accordance with the provisions hereof; and
(b) Neither this Warrant nor any shares of Class A Common Stock
purchased pursuant to this Warrant have been registered under the
Securities Act of 1933. Therefore, the Company may require, as a
condition of allowing the transfer or exchange of this Warrant or such
shares, that the holder or transferee of this Warrant or such shares, as
the case may be, furnish to the Company an opinion of counsel reasonably
acceptable to the Company to the effect that such transfer or exchange
may be made without registration under the Securities Act of 1933. The
certificates evidencing the Class A Common Stock issued on the exercise
of the Warrant shall bear a legend to the effect that the certificates
have not been registered under the Securities Act of 1933.
13. FURTHER ASSURANCES. The Company undertakes generally to execute all
such agree ments and other instruments and to do all such other acts as are
necessary or appropriate (including, but not limited to, authorizing and
issuing additional shares of stock of the Company) to give full effect to the
terms, conditions and provisions of this Warrant and make it binding on the
Company.
14. NOTICES. All notices and other communications between the Company
and the holder of this Warrant shall be mailed by first class mail, postage
prepaid, at such addresses listed above, or as may have been subsequently
furnished to the other party in writing.
15. MISCELLANEOUS. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by
the party against which enforcement of such change, waiver, discharge or
termination is sought. This Warrant shall be construed and enforced in
accordance with and governed by the laws of the State of New York. The
headings in this Warrant are for purposes of reference only, and shall not
limit or otherwise affect any of the terms hereof. This Warrant is being
executed as an instrument under seal. The invalidity or unenforceability of
any provision thereof shall in no way affect the validity or enforceability of
any other provision.
10
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<PAGE>
16. EXPIRATION. The right to exercise this Warrant shall expire at
5:00 P.M., New York time, April 15, 2002.
Dated as of: , 1996 SFX BROADCASTING, INC.
By: /s/ Rick Liese
--------------------------------
Name: Rick Liese
Title: Vice President
11
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<PAGE>
FORM OF SUBSCRIPTION
(TO BE SIGNED ONLY ON EXERCISE OF WARRANT)
TO SFX BROADCASTING, INC.
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise this Warrant for, and to purchase thereunder, shares of
Class A Common Stock of SFX BROADCASTING, INC. and herewith makes payment of
$ therefor, and requests that the certificates for such shares be issued in
the name of, and delivered to , whose address is .
Dated:
_____________________________________
(Signature must conform to name of
holder as specified on the face of the
Warrant)
_____________________________________
(Address)
12
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<PAGE>
FORM OF ASSIGNMENT
(TO BE SIGNED ONLY ON TRANSFER OF WARRANT)
For value received, the undersigned hereby sells, assigns, and transfers
unto the right represented by the within Warrant to purchase shares
of Class A Common Stock of SFX BROADCASTING, INC. to which the within Warrant
relates, and appoints Attorney to transfer SFX BROADCASTING, INC.
such right on the books of SFX BROADCASTING, INC. with full power of
substitution in the premises.
Dated:
_____________________________________
(Signature must conform to name of
holder as specified on the face of the
Warrant)
_____________________________________
(Address)
Signed in the presence of:
________________________________
13
Exhibit 99.1
(BW) (SFX-BROADCASTING) (SFXBA) SFX Broadcasting acquires fifth and sixth
stations in Jackson
Business Editors
NEW YORK--Aug. 29, 1996--SFX Broadcasting Inc. (NASDAQ: SFXBA) today announced
that it has closed on the acquisition of radio stations WSTZ (FM) and WZRX-AM
serving the Jackson, Miss. market.
The stations were acquired for $3.5 million from Lewis Broadcasting Corp.
based in Savannah, Ga.
In addition to these two new stations, SFX owns WMSI (FM), WKTF (FM),
WJDX (FM) and WJDS-AM, all serving the Jackson market.
Commenting on the transaction, Robert F.X. Sillerman, executive chairman
of SFX Broadcasting, said, "We are extremely pleased to be adding our fifth and
sixth stations in the Jackson market, where we have been the dominant operator
for many years. We are particularly excited to be gaining WSTZ, which is the
number three ranking station, joining WMSI, which ranks second in the market.
The combination of our six stations gives us the opportunity for enhanced cost
savings and sound inventory control. Jackson has always been a strong market
for us and the addition of these two stations solidifies our prominent and
powerful position.
"Additionally, we are extremely pleased to have received early
termination of the waiting period required by the Federal Trade Commission
under Hart-Scott-Rodino for the impending merger between SFX and Multi-Market
Radio. We are proceeding with the remaining steps and anticipate closing the
merger within the first two weeks of October."
WSTZ (FM) has an album oriented rock format and WZRX-AM has a gospel
format. Both WMSI (FM) and WKTF (FM) play country. WJDX (FM) and its simulcast,
WJDS-AM, have a hot adult contemporary format. Jackson is the one hundred and
seventeenth largest metro ranked market.
In April 1996 SFX announced that it would acquire Multi-Market Radio Inc.
(NASDAQ: RDIOA). MMR common stock shareholders will receive the stock
equivalent of $12.00 per common share, subject to adjustment. There can be no
assurance that the transaction will be consummated.
With the anticipated consummation of all previously announced
transactions, SFX will own and operate or provide services to the following
radio stations:
<PAGE>
<PAGE>
Houston, TX Charlotte, NC Tucson, AZ
KKRW (FM) WLYT (FM) KWFM (FM)
KODA (FM) WTDR (FM) KRQQ (FM)
KQUE (FM) KNST-AM
KNUZ-AM KCEE-AM
Wash., DC/Balt., MD Raleigh, NC Springfield/North, MA
WHFS (FM) WZZU (FM) WHMP (FM)
WTRG (FM) WPKX (FM)
WDCG (FM) WHMP-AM
WRDU (FM)
San Diego, CA Richmond, VA New Haven, CT
KPLN (FM) WMXB (FM) WPLR (FM)
KYXY (FM) WVGO (FM) WYBC (FM) (a)
WLEE (FM)
WKHK (FM) (b)
WBZU (FM) (b)
Providence, RI Albany, NY Daytona Beach, FL
WSNE (FM) WGNA (FM) WGNE (FM)
WHJY (FM) WPYX (FM)
WHJJ-AM WYSR (FM)
WGNA-AM
WTRY-AM
Hartford, CT Greenville-Spartanburg, SC Augusta, GA
WHCN (FM) WMYI (FM) WCHZ (FM) (a)
WMRQ (FM) WSSL (FM)
WKSS (FM) WROQ (FM)
WPOP-AM WGVL-AM
<PAGE>
<PAGE>
Greensboro, NC Wichita, KS Jackson, MS
WMAG (FM) KRZZ (FM) WKTF (FM)
WHSL (FM) (b) KKRD (FM) WMSI (FM)
WTCK-AM KNSS-AM WSTZ (FM)
WMFR-AM WJDX (FM)
WJDS-AM
WZRX-AM
Nashville, TN Myrtle Beach, SC Biloxi, MS
WSIX (FM) WVCO (FM) (b) WKNN (FM)
WRVW (FM) WYAK (FM) WMJY (FM)
WMYB (FM)
Jacksonville, FL
WFYV (FM) (b)
WAPE (FM) (b)
WKQL (FM)
WIVY (FM)
WOKV-AM
WPDQ-AM
(a) Joint Selling Agreement (JSA)
(b) Local Marketing Agreement (LMA)
*T
Under contract to be sold or swapped by SFX are the Texas State Networks, a
group of regional radio networks; KRLD-AM and KTCK-AM in Dallas; WHFM (FM),
WBAB (FM), WBLI (FM) and WGBB-AM in Long Island, NY; WVEZ (FM), WTFX (FM) and
WWKY-AM in Louisville, KY and KOLL (FM) in Little Rock, AR.
--30--
CONTACT: SFX Broadcasting Inc., New York
Cynthia A. Bond
Director, Investor Relations
212/407-9126
Exhibit 99.2
(BW)(SFX-BROADCASTING)(SFXBA) SFX Broadcasting to acquire third Albany FM
station
Business Editors
NEW YORK--Aug. 23, 1996--SFX Broadcasting Inc. (NASDAQ:SFXBA) announced
today that it has agreed to acquire radio station WYSR(FM) serving the Albany,
N.Y. market from Jarad Broadcasting Co. of New York Inc. for $1.0 million.
SFX had been selling advertising for the station pursuant to a joint
selling agreement.
In addition to this station, SFX owns WGNA (FM), WPYX(FM), WGNA-AM and
WTRY-AM, all of which serve the Albany market.
Commenting on the transaction, Robert F.X. Sillerman, executive chairman
of SFX Broadcasting, said, "While we've been selling advertising for WYSR, it's
great to now be acquiring the station. Our proven programming expertise will
allow us to fully exploit the potential of this station and bring its market
ratings up to the level of our other two stations. With three strong FMs and
two AMs we will be able to offer advertisers diverse formats for smart audience
targeting. We are extremely pleased with the performance of our two existing
FMs, number one ranking WGNA and number three WPYX. This is a dynamic group of
stations and we look forward to its contribution to the company."
Albany is the fifty-seventh largest metro market. WYSR(FM) has a 70s
oldies format. Number one ranking WGNA(FM) and its simulcast, WGNA-AM, have
country formats. WPYX(FM) is the third highest ranking station and plays
album-oriented rock. WTRY-AM plays 70s oldies.
This transaction is subject to the approval of the Federal Communications
Commission.
Exhibit 99.3
(BW) (SFX-BROADCASTING) (SFXBA) SFX Broadcasting creates super duopoly in
Charlotte
NEW YORK-- (BUSINESS WIRE) --Sept. 4, 1996
Also gains 33-station "John Boy and Billy"
Syndication Network
SFX Broadcasting Inc. (Nasdaq: SFXBA) announced today that it has agreed
to acquire radio stations WSSS(FM), WRFX(FM) and WNKS(FM) from EZ Communications
(Nasdaq: EZCIA) for radio station WTDR(FM) and $64.8 million in cash; all
stations serve the Charlotte, N.C., market.
EZ is currently in the process of acquiring WRFX(FM) and WNKS(FM) from
Evergreen Media Corp. (Nasdaq: EVGM). SFX will immediately enter into a local
marketing agreement pursuant to which it will program and sell advertising on
these stations prior to closing. Included in the acquisition is the "John Boy
and Billy" Syndication Network, whose morning show airs on 32 FM and one AM
radio stations across the country.
In addition to the above listed stations, SFX owns radio station
WLYT(FM) which serves the Charlotte market.
Commenting on the transaction, Robert F. X. Sillerman, executive
chairman of SFX Broadcasting, said, "The Carolinas have presented excellent
markets for us and we particularly want to take advantage of the growth and
economic strengths of the Charlotte market. This swap and acquisition give us
an incredibly strong four FM cluster, representing over 33 percent of the
market revenue share. As a combined entity we have the opportunity for
significant cost savings as well as presenting a cohesive and smart buy for
advertisers.
Charlotte is the 37th largest metro market. WLYT(FM), which ranks eighth
in the market has a soft adult contemporary format. WSSS(FM) has a 70s oldies
format. Number three ranking WRFX(FM) plays album oriented rock. WNKS(FM),
formerly known as WEDJ(FM), plays contemporary hit radio.
Ed Dugan of Dugan & Associates brokered the transaction.
In April 1996, SFX announced that it would acquire Multi-Market Radio
Inc. (Nasdaq: RDIOA). MMR common stock shareholders will receive the stock
equivalent of $12.00 per common share, subject to adjustment. SFX has received
early termination of the waiting period required by the Federal Trade
Commission under Hart-Scott-Rodino for this merger. There can be no assurance
that the transaction will be consummated.
This transaction is subject to the approval of the Federal Communications
Commission.
<PAGE>
<PAGE>
With the anticipated consummation of all previously announced
transactions' SFX will own and operate or provide services to the following
radio stations:
Houston, TX Charlotte, NC Tucson, AZ
KKRW(FM) WLYT(FM) KWFM(FM)
KODA(FM) WSSS(FM) KRQQ(FM)
KQUE(FM) WRFX(FM) KNST-AM
KNUZ-AM WNKS(FM) KCEE-AM
Wash., DC/Balt., MD Raleigh, NC Springfield/North, MA
WHFS(FM) WZZU(FM) WHMP(FM)
WTRG(FM) WPKX(FM)
WDCG(FM) WHMP-AM
WRDU(FM)
San Diego, CA Richmond, VA New Haven, CT
KPLN(FM) WMXB(FM) WPLR(FM)
KYXY(FM) WVGO(FM) WYBC(FM)(a)
WLEE(FM)
WKHK(FM)(b)
WBZU(FM)(b)
Providence, RI Daytona Beach, FL Augusta, GA
WSNE(FM) WGNE(FM) WCHZ(FM)(a)
WHJY(FM)
WHJJ-AM
Hartford, CT Albany, NY Jackson, MS
WHCN(FM) WGNA(FM) WKTF(FM)
WMRQ(FM) WPYX(FM) WMSI(FM)
WKSS(FM) WYSR(FM) WSTZ(FM)
WPOP-AM WGNA-AM WJDX(FM)
WTRY-AM WJDS-AM
WZRX-AM
<PAGE>
<PAGE>
Greensboro, NC Greenville-Spartanburg, Biloxi, MS
WMAG(FM) WMYI(FM) WKNN(FM)
WHSL(FM)(b) WSSL(FM) WMJY(FM)
WTCK-AM WROQ(FM)
WMFR-AM WGVL-AM
Nashville, TN Wichita, KS Myrtle Beach, SC
WSIX(FM) KRZZ(FM) WVCO(FM)(b)
WRVW(FM) KKRD(FM) WYAK(FM)
KNSS-AM WMYB(FM)
Jacksonville, FL
WFYV(FM)(b)
WAPE(FM)(b)
WKQL(FM)
WIVY(FM)
WOKV-AM
WPDQ-AM
(a) Joint Selling Agreement (JSA)
(b) Local Marketing Agreement (LMA)
Under contract to be sold or swapped by SFX are the Texas State Networks, a
group of regional radio networks; KRLD-AM and KTCK-AM in Dallas; WHFM(FM),
WBAB(FM), WBLI(FM) and WGBB-AM in Long Island, NY; WVEZ(FM), WTFX(FM) and
WWKY-AM in Louisville, KY; WTDR(FM) in Charlotte, NC and KOLL(FM) in Little
Rock, AR.
CONTACT: SFX Broadcasting Inc., New York
Cynthia A. Bond, Director, Investor Relations
2121407-9126
Exhibit 99.4
FOR IMMEDIATE RELEASE For further information:
Cynthia A. Bond
Director, Investor Relations
SFX Broadcasting, Inc.
(212) 407-9126
SFX BROADCASTING TO ACQUIRE ADDITIONAL FOUR RICHMOND FM STATIONS
FOR $37.5 MILLION
Includes #1 Ranked Country Station WKHK(FM)
NEW YORK, August 20, 1996 -- SFX Broadcasting, Inc. (NASDAQ: SFXBA)
announced today that it has signed a binding agreement to acquire ABS
Communications L.L.C. which will own four Richmond, Virginia FM radio
stations, for a total consideration of $37.5 million. Through its investment
in this L.L.C., SFX will acquire WVGO(FM) and WLEE(FM) for $14.5 million.
Simultaneously with this acquisition, the SFX-owned L.L.C. will acquire
WKHK(FM) and WBZU(FM) from Richmond-based ABS Communications for $23.0
million. SFX will enter into an LMA with these stations simultaneously with
the acquisition of WVGO(FM) and WLEE(FM).
Commenting on the transaction, Robert F.X. Sillerman, Executive
Chairman of SFX Broadcasting, said, "We are extremely excited to be adding
these four excellent FM stations to our number three revenue ranking station,
WMXB, and to continue our corporate strategy of building strong clusters of
stations within our markets. This new cluster of stations is a major leap
forward for SFX in the Richmond market and, in total, will provide us with
approximately a 41 percent revenue share. With five diverse but complementary
formats we will be able to present an extremely attractive 'buy' to
advertisers in this market. We are equally pleased that Ken Brown, the
president of ABS, who has had an outstanding career in radio broadcasting,
both as an entrepreneur and an operator, and Ed Conrad, ABS' chief financial
officer, will be joining SFX to manage the Richmond station group.
Additionally, they will continue to hold a small equity stake in this new
group of stations. Ken and Ed's experience and expertise will be an invaluable
addition."
Richmond is the fifty-sixth largest metro market. Country-formatted
WKHK(FM) is the number one ranking Richmond station, both in terms of revenue
and audience share. WMXB(FM), which has an adult contemporary format, ranks
fourth in terms of audience share, persons 25-54. In addition to the country
and AC formats, the group currently consists of a modern rock station, a 70s
rock station and an oldies station.
Interstate/Johnson Lane Corporation of Charlotte, North Carolina
acted as private placement agent and financial advisor to ABS for the
transaction.
<PAGE>
<PAGE>
This transaction is subject to the approval of the Federal
Communications Commission.
With the anticipated consummation of all previously announced
transactions, SFX will own and operate or provide services to the following
radio stations.
- list of stations follows -
- 2 -
<PAGE>
<PAGE>
Houston, TX Charlotte, NC Tucson, AZ
KKRW(FM) WLYT(FM) KWFM(FM)
KODA(FM) WTRD(FM) KRQQ(FM)
KQUE(FM) KNST-AM
KNUZ-AM Raleigh, NC KCEE-AM
WZZU(FM)
Wash., DC/Balt., MD WTRG(FM) Springfield/North, MA
WHFS(FM) WDCG(FM) WHMP(FM)
WRDU(FM) WPKX(FM)
San Diego, CA WHMP-AM
KPLN(FM) Richmond, VA
KYXY(FM) WMXB(FM) New Haven, CT
WVGO(FM) WPLR(FM)
Providence, RI WLEE(FM) WYBC(FM)*
WSNE(FM) WKHK(FM)***
WHJY(FM) WBZU(FM)*** Daytona Beach, FL
WHJJ(FM) WGNE(FM)
Albany, NY
Hartford, CT WGNA(FM) Augusta, GA
WHCN(FM) WPYX(FM) WCHZ(FM)*
WMRQ(FM) WYSR(FM)*
WKSS(FM) WGNA-AM Jackson, MS
WPOP-AM WTRY-AM WKTF(FM)
WMSI(FM)
Greensboro, NC Greenville-Spartanburg, SC WSTZ(FM)*
WMAG(FM) WMYI(FM) WJDX(FM)
WHSL(FM)*** WSSL(FM) WJDS-AM
WTCK-AM WROQ(FM) WZRX-AM
WMFR-AM WGVL-AM
Biloxi, MS
Nashville, TN Witchita, KS WKNN(FM)
WSIX(FM) KRZZ(FM) WMJY(FM)
WRVW(FM) KKRD(FM)
KNSS-AM Myrtle Beach, SC
Jacksonville, FL WVCO(FM)***
WFYV(FM)*** WYAK(FM)
WAPE(FM)*** WMYB(FM)***
WKQL(FM)
WIVY(FM)
WOKV-AM
WPDQ-AM
* Joint Selling Agreement (JSA)
** JSA with option to buy
*** Local Marketing Agreement (LMA)
Under contract to be sold or swapped by SFX are the Texas State Networks, a
group of regional radio networks; KRLD-AM and KTCK-AM in Dallas; WHFM(FM),
WBAB(FM), WBLI(FM) and WGBB-AM in Long Island, NY; WVEZ(FM), WTFX(FM) and
WWKY-AM in Louisville, KY; and KOLL(FM) in Little Rock, AR.
- 3 -
Exhibit 99.5
FOR IMMEDIATE RELEASE For further information:
Cynthia A. Bond
Director, Investor Relations
(212) 407-9126
SFX BROADCASTING TO SWAP DC-BASED WHFS(FM)
FOR TWO CBS DALLAS FM STATIONS
NEW YORK, September 26, 1996 -- SFX Broadcasting, Inc. (NASDAQ: SFXBA) and CBS
Radio, a division of CBS Inc., today jointly announced that they have agreed
to exchange SFX's WHFS(FM) serving the Baltimore, Maryland and District of
Columbia markets for CBS' KTXQ(FM) and KRRW(FM) serving the Dallas market. It
is anticipated that this transaction will be a tax-free, like-kind exchange.
SFX previously agreed to exchange radio station KRLD-AM and the Texas State
Networks in Dallas for CBS' sister station KKRW(FM) in Houston, which has the
same format as KRRW(FM).
Commenting on the transaction, Robert F. X. Sillerman, Executive Chairman of
SFX Broadcasting, said, "This swap is consistent with our strategy of exiting
markets where we operate only a single station, and building groups of strong
FM stations in markets. These two excellent Dallas FMs will complement our
number one revenue generating Houston group in the southwest region."
Radio station KRRW(FM) has been one of four CBS ARROW formatted stations,
playing a classic rock/oldies format since November 1993. KTXQ(FM) has an album
oriented rock format. Dallas is the seventh ranking market.
The transaction is subject to regulatory approval, satisfactory completion of
due diligence by both parties and other customary conditions.
Paul Leonard of Dallas-based Star Media Group, Inc. was a broker of this
transaction.
