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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] Quarterly report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 1997
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Transition period from to
Commission file number 0-24516
HEFTEL BROADCASTING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 99-0113417
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Crescent Court, Suite 1777 75201
Dallas, Texas (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (214) 855-8882
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [x] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Class Outstanding at May 14, 1997
- ----- ---------------------------
Class A Common Stock, $.001 Par Value 14,989,374
Class B Non-Voting Common Stock, $.001 Par Value 7,078,235
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HEFTEL BROADCASTING CORPORATION
March 31, 1997
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets (Unaudited) as of
March 31, 1997 and December 31, 1996. . . . . . . . . 2
Condensed Consolidated Statements of Operations (Unaudited) for the
Three Months Ended March 31, 1997 and 1996. . . . . . . 3
Condensed Consolidated Statements of Cash Flows (Unaudited)
for the Three Months Ended March 31, 1997 and 1996. . . . . 4
Notes to Condensed Consolidated Financial Statements (Unaudited) . 5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations . . . . . . . . . . . . 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . 9
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . 10
1
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HEFTEL BROADCASTING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
March 31, December 31,
1997 1996
------------- --------------
ASSETS
Current assets:
Cash and cash equivalents $ 15,475,735 $ 4,787,652
Accounts receivable, net 23,352,457 16,995,571
Other current assets 2,690,125 631,791
------------ ------------
Total current assets 41,518,317 22,415,014
Property and equipment, at cost, net 28,796,864 19,666,285
Intangible assets, net 409,526,862 120,592,334
Other non-current assets 13,969,523 1,051,462
------------ ------------
Total assets $493,811,566 $163,725,095
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 1,881,409 $ 1,860,237
Accounts payable and accrued expenses 18,406,057 12,125,922
------------ ------------
Total current liabilities 20,287,466 13,986,159
Long-term debt and other obligations, less
current portion 48,466,212 135,504,232
Deferred income taxes 53,296,324 69,000
Stockholders' equity:
Series A Preferred Stock, cumulative,
$.001 par value.
Authorized 5,000,000 shares; no shares
issued and outstanding -- --
Undesignated series Preferred Stock,
$.001 par value.
Authorized 2,400,000 shares; no shares
issued and outstanding -- --
Class A Common Stock, $.001 par value
Authorized 50,000,000 and 30,000,000 shares
at March 31, 1997 and December 31, 1996,
respectively; issued and outstanding
14,989,374 and 11,547,731 14,990 11,548
Class B Common Stock, $.001 par value.
Authorized 50,000,000 and 7,000,000 shares
at March 31, 1997 and December 31, 1996,
respectively; issued and outstanding
7,078,235 in 1997 7,078 --
Additional paid-in capital 459,597,506 102,578,149
Accumulated deficit (87,858,010) (88,423,993)
------------ ------------
Total stockholders' equity 371,761,564 14,165,704
------------ ------------
Total liabilities and stockholders'
equity $493,811,566 $163,725,095
------------ ------------
------------ ------------
See notes to condensed consolidated financial statements.
2
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HEFTEL BROADCASTING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended March 31,
----------------------------
1997 1996
----------- -----------
Net broadcasting revenue $23,029,373 $15,695,750
Station operating expenses 16,443,806 10,948,101
----------- -----------
Station operating income before depreciation,
amortization and corporate expenses 6,585,567 4,747,649
Depreciation and amortization 2,918,308 1,143,486
Corporate expenses 994,856 1,445,096
----------- -----------
Operating income 2,672,403 2,159,067
Other expense:
Interest expense, net 1,607,793 2,392,274
Other expense, net 121,305 74,652
----------- -----------
1,729,098 2,466,926
----------- -----------
Income (loss) before provision for
income taxes 943,305 (307,859)
Provision for income taxes 377,322 --
----------- -----------
Income (loss) from continuing operations 565,983 (307,859)
Loss on discontinued operations - CRC -- (663,798)
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Net income (loss) $ 565,983 $ (971,657)
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----------- -----------
Income (loss) per common and common equivalent
share:
Continuing operations $ 0.03 $ (0.03)
Discontinued operations (0.07)
----------- -----------
Net income (loss) $ 0.03 $ (0.10)
----------- -----------
----------- -----------
Weighted average common
shares outstanding 17,142,266 10,103,324
----------- -----------
----------- -----------
See notes to condensed consolidated financial statements.
3
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HEFTEL BROADCASTING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended March 31,
----------------------------
1997 1996
----------- -----------
Cash flows from operating activities:
Net income (loss) $ 565,983 $ (971,657)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Provision for bad debts 794,396 139,517
Depreciation and amortization 2,918,308 1,143,486
Other 239,031 169,662
Changes in operating assets and liabilities 1,713,317 (427,431)
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Net cash provided by operating activities 6,231,035 53,577
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Cash flows from investing activities:
Purchases of property and equipment (803,442) (5,910,888)
Increase in intangible assets (903,594) --
Increase in non-current assets (9,322,937) --
Payments relating to business acquisitions (1,402,737) (15,965,782)
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Net cash used in investing activities (12,432,710) (21,876,670)
------------- ------------
Cash flows from financing activities:
Borrowings on long-term obligations 56,038,990 28,459,267
Payment of debt issue cost (1,200,000) (5,157,833)
Payment of amounts owed to officers and
stockholders -- (376,319)
Repayment of long-term debt (215,079,889) (199,089)
Net proceeds from issuance of common stock 177,085,075 --
Other 45,582 (26,850)
------------- ------------
Net cash provided by financing activities 16,889,758 22,699,176
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Net increase in cash and cash equivalents 10,688,083 876,083
Cash and cash equivalents at beginning of period 4,787,652 3,416,396
------------- ------------
Cash and cash equivalents at end of period $ 15,475,735 $ 4,292,479
------------- ------------
------------- ------------
See notes to condensed consolidated financial statements.
4
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HEFTEL BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1997
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
of Heftel Broadcasting Corporation and subsidiaries (the "Company") have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
disclosures required by generally accepted accounting principles. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three-month period ended March 31, 1997 are not
necessarily indicative of the results that may be expected for the year
ending December 31, 1997. For further information, refer to the consolidated
financial statements and notes thereto included in Heftel Broadcasting
Corporation's Annual Report on Form 10-K/A for the fiscal year ended
September 30, 1996.
On February 19, 1997, the Board of Directors of the Company voted to
change the Company's fiscal year from September 30 to December 31. The Form
10-Q for the quarterly period ended December 31, 1996 covers the three-month
transition period.
Net income (loss) per common share is computed by dividing net income
(loss) by the weighted average number of common and common equivalent shares
(if dilutive) outstanding during each period. For purposes of this
computation, cumulative preferred stock dividends, if any, are deducted from
net income during each period in which preferred stock is outstanding,
whether or not preferred stock dividends have been actually declared or paid
during these periods.
Statement of Financial Accounting Standards No. 128 ("SFAS 128"),
"Earnings per Share," which supersedes APB Opinion No. 15, "Earnings per
Share," was issued in February, 1997. SFAS 128 requires dual presentation of
basic and diluted earnings per share ("EPS") for complex capital structures.
Basic EPS is computed by dividing income (loss) by the weighted-average
number of common shares outstanding for the period. Diluted EPS reflects the
potential dilution from the exercise or conversion of securities into common
stock, such as stock options. SFAS 128 is required to be adopted for
year-end 1997; earlier application is not permitted. After adoption, all
prior period EPS data presented shall be restated to conform with SFAS 128.
The Company does not expect that the basic and diluted EPS measured under
SFAS 128 will be materially different from the current presentation of
primary and fully-diluted EPS measured under APB No. 15.
Statement of Financial Accounting Standards No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities," was issued in June 1996. The Company does not expect the
statement to result in any substantive change in its financial statements.
2. ACQUISITIONS
In exchange for an initial payment of $10 million made on February 4,
1997, the Company has acquired from Golden West Broadcasters, a California
corporation ("Golden West") an option to purchase all of the assets used or
held for use in connection with the operation of radio station KSCA-FM, which
serves the Los Angeles market. The option is exercisable upon the death of
Gene Autry. The option has an initial term which expires on December 30,
1997, however, the term may
5
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be renewed for additional one-year terms provided the Company pays Golden
West an additional $3 million on or before the expiration date for the
one-year option period then in effect. If the sale of the KSCA-FM assets is
not consummated, Golden West is only obligated to refund to the Company a
portion of the option payments under certain circumstances. If the purchase
of the assets is completed, the option payments will be credited against the
purchase price. If the option is exercised, the purchase price for the
KSCA-FM assets will be the greater of (a) $112.5 million, or (b) the sum of
(i) $105 million, plus (ii) an amount equal to $13,699 per day during the
term of the time brokerage agreement for KSCA-FM to which the Company is a
party, which daily amount is subject to reduction if the Company is unable to
broadcast its programming on KSCA-FM under the agreement. The Company
commenced programming KSCA-FM under a time brokerage agreement on February 5,
1997.
On February 14, 1997, the Company completed its acquisition of
Tichenor Media System, Inc. ("Tichenor"), a national radio broadcasting
company engaged in the business of acquiring, developing and programming
Spanish language radio stations. The acquisition was effected through the
merger of a wholly owned subsidiary of the Company with and into Tichenor
(the "Merger"). Under the terms of the Amended and Restated Agreement and
Plan of Merger by and among Clear Channel Communications, Inc. ("Clear
Channel") and Tichenor dated October 10, 1996 (the "Merger Agreement") (which
agreement was assigned to the Company by Clear Channel), Tichenor
shareholders received (a) 7.8261 shares of Heftel Class A Common Stock, par
value $.001 per share ("Heftel Common Stock"), in exchange for each share of
Tichenor Common Stock and (b) 4.3478 shares of Heftel Common Stock in
exchange for each share of Tichenor Junior Preferred Stock. In addition, the
holders of Tichenor 14% Senior Redeemable Cumulative Preferred Stock
("Tichenor Senior Preferred") received $1,000 per share plus accrued and
unpaid dividends through December 31, 1995 for each share of Tichenor Senior
Preferred.
The transaction value of the Merger of approximately $256.5 million
is calculated as the sum of (a) the fair value of the Tichenor stock ($181.1
million), (b) the outstanding Tichenor Senior Preferred ($3.4 million), and
(c) Tichenor's long-term debt ($72.0 million). The fair value of the
Tichenor stock is calculated as the sum of (a) the issuance of 5,689,878
shares of Heftel Common Stock issued in the Merger with an aggregate value of
$180.6 million based on a closing price of $31.75 per share on July 9, 1996
(the day the Merger was announced), and (b) the direct costs related to the
Merger. The direct costs related to the Merger were funded from the working
capital of the Company. The Tichenor Senior Preferred and long-term debt
were retired at the date of the Merger using a portion of the proceeds from
the Company's recently completed secondary public stock offering (the
"Offering") plus borrowings under a new credit agreement.
The Merger was accounted for using the purchase method of
accounting. The purchase price allocation is preliminary and is subject to
change upon final determination of the value of the assets acquired and
liabilities assumed. The preliminary purchase price allocation is as follows:
Current assets $ 15,798,808
Property and equipment 9,078,960
Intangible assets 290,197,419
Other non-current assets 2,977,099
Current liabilities (8,411,330)
Long-term debt and other non-current liabilities (128,540,956)
-------------
$ 181,100,000
-------------
-------------
Intangible assets are comprised primarily of broadcast licenses and
goodwill, which are being amortized over 40 years.
6
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Pro forma financial information for the three months ended March 31,
1997 and 1996, as though the Merger had occurred at the beginning of 1997 and
1996, is as follows:
Three Months Ended March 31,
----------------------------
1997 1996
----------- -----------
Net revenues $27,647,841 $25,360,956
Operating income $ 1,315,833 $ 766,736
Net loss $(2,051,777) $(2,268,006)
Net loss per common share $ (0.10) $ (0.14)
The pro forma financial information does not purport to represent what
the Company's results of operations actually would have been had the Merger
occurred at the dates specified, or to project the Company's results of
operations for any future period.
The Company exercised its option to purchase the assets of KLTO-FM
(formerly KMPQ-FM) in Rosenberg - Richmond (Houston), Texas on March 28,
1997. The Company has operated KLTO-FM under a time brokerage agreement
since 1994. The purchase price of $3,080,000 is subject to increase upon
certain conditions. Consummation of the acquisition is subject to approval
from the Federal Communications Commission ("FCC").
3. RECLASSIFICATIONS/DISCONTINUED OPERATIONS
On September 9, 1996, the Company's Board of Directors approved a plan
to discontinue the operations of the radio network owned by the Company's
wholly owned subsidiary Spanish Coast-to-Coast Ltd., d.b.a. Cadena Radio
Centro ("CRC") effective August 5, 1996. Consequently, the accompanying
condensed consolidated statement of operations for the three-month period
ended March 31, 1996 reflects the results of CRC as a discontinued operation.
4. LONG-TERM DEBT
On February 10, 1997, the Company repaid $142.5 million outstanding
under an existing $155 million credit facility with a portion of the proceeds
from the Offering.
On February 14, 1997, the Company entered into a new $300 million credit
facility (the "Credit Facility"), replacing the existing credit facility.
The Company used advances under the Credit Facility and a portion of the
proceeds from the Offering to retire the outstanding debt and senior
preferred stock of Tichenor assumed on the date of the Merger. At March 31,
1997, the Company had drawn $46 million under the Credit Facility. The
Company's ability to make additional borrowings under the Credit Facility is
subject to compliance with certain financial ratios and other conditions set
forth in the Credit Facility. The Credit Facility is secured by the stock of
the Company's material subsidiaries.
Borrowings under the Credit Facility bear interest at a rate based, at
the option of the Company, on the prime rate or Eurodollar rate, plus an
incremental rate. The interest rate on the borrowings outstanding under the
Credit Facility at March 31, 1997 was approximately 6.00%. Availability
under the Credit Facility reduces quarterly commencing September 30, 1999 and
ending March 31, 2004. The facility matures on March 14, 2004.
5. STOCKHOLDERS' EQUITY
On February 10, 1997, the Company completed the Offering selling
4,830,000 shares of its Class A Common Stock for $36.80 per share, after
underwriters' discount. The net proceeds of the Offering were approximately
$177.1 million.
7
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
COMPARISON OF THREE MONTHS ENDED MARCH 31, 1997 TO THREE MONTHS ENDED MARCH
31, 1996.
As discussed below, the financial condition and results of operations
for these two periods are not comparable. During the quarter ended March 31,
1997, the Company completed the Merger and undertook the start-up of KSCA-FM,
a radio station serving the Los Angeles market. A start-up station involves
converting an English language formatted station to a Spanish language
format, resulting in a substantial turnover in audience listening and
advertisers. In addition to KSCA-FM, the Company operated three start-up
stations during the first quarter of 1997 (WPAT-AM serving the New York
market, KRTX-FM serving the Houston market and KSOL/KZOL-FM serving the San
Francisco market). The operations of the radio network, CRC, were
discontinued effective August 5, 1996. Accordingly, the accompanying
condensed statement of operations reflects CRC as a discontinued operation
for the three months ended March 31, 1996. During the first quarter of 1997,
the Company completed the Offering and the Credit Facility. As a result, the
Company's financial position was substantially improved during the quarter
ended March 31, 1997, resulting in lower outstanding debt and interest
expense over the comparable period of 1996.
Net broadcast revenues increased by $7.3 million or 47% to $23.0 million
in the three months ended March 31, 1997 from $15.7 million in the same
quarter of 1996. Station operating expenses increased by $5.5 million or 50%
to $16.4 million in the three months ended March 31, 1997 from $10.9 million
in the same period of 1996. As a result, station operating income before
corporate expenses, depreciation, and amortization increased by $1.8 million
or 39% to $6.6 million in the first quarter of 1997 compared to $4.8 million
in the same period of 1996. Net revenues increased due to the Merger, the
Company's start-up stations, and positive same-station revenue growth.
Station operating expenses increased due to the Merger, operating losses
associated with the previously mentioned start-up stations, and higher bad
debt expense primarily associated with a specific customer situation.
Corporate expenses decreased 31% to $994,856 due primarily to lower staffing
costs of the newly-merged company compared to corporate expenses incurred in
the first quarter of 1996. Depreciation and amortization increased due to
completed station acquisitions, capital expenditures in prior periods, and
the additional amortization of intangible assets associated with the Merger.
Interest expense, net of interest income, decreased by $784,000 or 32%
to $1.6 million in the three months ended March 31, 1997 from $2.4 million in
the same period of 1996. The reduction in interest expense was primarily the
result of lower borrowing rates and a substantial repayment of debt in
February 1997, associated with the application of approximately $177 million
of proceeds from the Offering towards existing Company debt, Tichenor related
debt and the Tichenor Senior Preferred assumed in connection with the Merger.
For the three months ended March 31, 1997, the Company's net income
totaled $565,983 compared to a net loss of $971,657 in the same period of
1996.
8
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LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities for the quarter ended March
31, 1997 was $6.2 million as compared to $0.05 million for the same period of
1996. Capital expenditures are financed primarily from cash generated from
operations. Acquisitions are financed primarily with long-term borrowings.
On February 12, 1997, the entire balance outstanding under the Company's then
existing credit agreement of $142.5 million was repaid with the proceeds from
the Offering. On February 14, 1997, the Company entered into the Credit
Facility. Also on February 14, 1997, the Company borrowed $46 million under
the Credit Facility and used a substantial portion of the remaining proceeds
from the Offering to repay approximately $72 million of Tichenor related debt
and the Tichenor Senior Preferred assumed in connection with the Merger.
Available cash on hand plus cash flow provided by operations was
sufficient to fund the Company's operations, meet its debt obligations, and
to fund capital expenditures. The Company believes it will have sufficient
cash on hand, cash provided by operations and borrowing capacity to finance
its operations and satisfy its debt service requirements. The Company
regularly reviews potential acquisitions. The Company intends to finance
acquisitions primarily through additional borrowings under the Credit
Facility and/or from cash provided by operations.
FORWARD LOOKING STATEMENTS
When used in the preceding and following discussion, the words
"believes," "intends," "expects," "anticipates" and similar expressions are
intended to identify forward looking statements. Such statements are subject
to certain risks and uncertainties that could cause actual results to differ
materially from those expressed in any of the forward looking statements.
Such risks and uncertainties include, but are not limited to, industrywide
market factors and regulatory developments affecting the Company's
operations, acquisitions and dispositions of broadcast properties described
elsewhere herein, the financial performance of start-up stations, and efforts
by the new management to integrate its operating philosophies and practices
at the station level.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in various claims and lawsuits which are
generally incidental to its business. The Company is vigorously contesting
all such matters and believes that their ultimate resolution will not have a
material adverse effect on its consolidated financial position or results of
operations.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
No. Description of Exhibit
--- ----------------------
10.1 Time Brokerage Agreement, dated as of February 3, 1997, by
and between Tichenor Media System, Inc. and Heart Unlimited
Company.
10.2 Option Agreement, dated February 3, 1997, by and between
Tichenor Media System, Inc. and Heart Unlimited Company.
10.3 Asset Purchase Agreement, dated March 28, 1997, by and among
Roy E. Henderson and Fort Bend Broadcasting Company, Inc. and
Tichenor Media System, Inc.
27 Financial Data Schedule
(b) Reports on Form 8-K
A report on Form 8-K dated February 19, 1997, was filed by the Company
with the Securities and Exchange Commission on February 25, 1997 regarding
the Company's change in independent auditors and the change in the Company's
fiscal year end.
A report on Form 8-K dated February 14, 1997, was filed by the Company
with the Securities and Exchange Commission on March 3, 1997 regarding the
consummation of the Merger.
A report on Form 8-K/A dated February 14, 1997, was filed by the Company
with the Securities and Exchange Commission on March 25, 1997. It reported
under Item 2 amended information regarding the Company's acquisition of
Tichenor on February 14, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Heftel Broadcasting Corporation
-------------------------------
(Registrant)
/s/ Jeffrey T. Hinson
-------------------------------
Jeffrey T. Hinson
Senior Vice President/
Chief Financial Officer
Dated: May 14, 1997
10
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INDEX
Exhibit
No. Description of Exhibit
--- ----------------------
10.1 Time Brokerage Agreement, dated as of February 3, 1997, by
and between Tichenor Media System, Inc. and Heart Unlimited
Company.
10.2 Option Agreement, dated February 3, 1997, by and between
Tichenor Media System, Inc. and Heart Unlimited Company.
10.3 Asset Purchase Agreement, dated March 28, 1997, by and among
Roy E. Henderson and Fort Bend Broadcasting Company, Inc. and
Tichenor Media System, Inc.
27 Financial Data Schedule
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made as of the 28th day of March, 1997,
by and among Roy E. Henderson ("Henderson"), a resident of Harris County,
Texas, and Fort Bend Broadcasting Company, Inc. ("FBBC"), a Texas corporation
wholly owned by Roy E. Henderson (Henderson and FBBC hereinafter referred to
jointly as "Seller"), and Tichenor Media System, Inc., a Texas corporation
("Purchaser").
W I T N E S S E T H:
WHEREAS, Henderson is the individual licensee of FM Radio Station KLTO-FM
f/k/a KMPQ-FM (the "Station") authorized by the Federal Communications
Commission (the "Commission" or "FCC"); and
WHEREAS, FBBC is a Texas corporation in good standing wholly owned and
controlled by Henderson that holds title to various assets which are used in
the operation of the Station; and
WHEREAS, the Purchaser and the Seller have previously entered into that
certain Option Agreement (the "Option Agreement") pursuant to which the
Seller granted to Purchaser an option to purchase (the "Purchase Option")
from Seller all of the radio station properties and assets used or useful in
the ownership and operation of the Station; and
WHEREAS, the FCC licenses used in the operation of the Station may not be
assigned to Purchaser without the prior written consent of the Commission; and
WHEREAS, the Seller desires to sell to Purchaser, and Purchaser desires
to purchase from the Seller, all of the radio station properties and assets
used or useful in the ownership and operation of the Station under the terms
and conditions herein set forth; and
WHEREAS, the Seller and the Purchaser have previously entered into a Time
Brokerage Agreement (as amended to date, the "Time Brokerage Agreement")
pursuant to which the Purchaser broadcasts or broadcasted certain programs on
the Station as of the effective date of the Time Brokerage Agreement (the
"Time Brokerage Date");
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, the parties hereto agree as follows:
1. PURCHASE AND SALE OF ASSETS.
1.1 PURCHASE AND SALE OF STATION ASSETS. Subject to the conditions
set forth in this Agreement, at the Closing (as defined hereinafter), the
Seller shall assign, transfer, convey and deliver to Purchaser, and Purchaser
shall purchase from the Seller, all right, title and interest in and to the
following assets that are owned or held by Seller, whether or not on the
books and records of Seller (the "Station Assets"),
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free and clear of all liens, security interests, charges, encumbrances and
rights of others, except those assets specifically listed on Exhibit "A"
attached hereto or which may be added to Exhibit "A" by mutual consent prior
to the Closing (the "Excluded Assets"):
(a) All licenses issued by or pending before the FCC together with all
other construction permits or authorizations issued by or pending before the
FCC to Seller for use at the Station or any other governmental authority for
the operation of the Station, together with any and all renewals, extensions
and modifications thereof ("Governmental Licenses");
(b) All real and personal property, tangible or intangible, owned by
Seller which is used or useful in the operation of the Station, including,
but not limited to, the real property described on Exhibit "B" hereto (the
"Real Property"), broadcast towers and antennas, transmitters and transmitter
equipment, studio equipment, tapes and record libraries, office equipment and
furniture (all as more particularly set forth on Exhibit "B" hereto),
together with replacements thereof and additions thereto made between the
date hereof and the Closing;
(c) All tradenames, trademarks, patents, service marks, call letters,
copyrights, logos and similar intangibles owned by Seller and used in Station
operations;
(d) All programming materials, programs, jingles and promotional
materials owned or held by Seller and used in the operation of the Station,
whether recorded on tape or any other substance or intended for live
performance, and whether completed or in production; and
(e) Unless as may be otherwise required by law, all books and records
related to the Station Assets or the operation of the Station, including all
financial, accounting and property tax records, computer data and programs,
market data, FCC logs, all materials maintained in the Seller's FCC public
file, technical data and records and all correspondence with and documents
pertaining to suppliers, governmental authorities and other third parties
(provided, however, that copies of the same may be retained by the Seller).
1.2 NO ASSUMED LIABILITIES. At the Closing, the Purchaser shall
assume (i) those specified contractual obligations of the Station listed on
Exhibit "C" hereto, as the same may be amended through the Closing Date with
the mutual consent of Seller and Purchaser, and (ii) those obligations and
liabilities incurred by Purchaser after the Time Brokerage Date
(collectively, the "Assumed Liabilities"), and the Purchaser agrees to pay
and perform the Assumed Liabilities after the Closing Date. Except as
specifically set forth on such Exhibit "C", Purchaser does not assume and
shall in no event be liable for any debt, obligation, responsibility or
liability of the Station, Seller,
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any subsidiary or any affiliate or successor of Seller, or any claim against
any of the foregoing, whether known or unknown, contingent or absolute, or
otherwise.
2. CONSIDERATION; CLOSING.
2.1 PURCHASE PRICE. The consideration to be received by the Seller in
exchange for the Station Assets (the "Purchase Price") shall be $3.08 million
in cash, of which $330,000 shall be paid on the date hereof as a prepayment
of the Purchase Price, and the balance shall be paid on the Closing Date.
2.2 STATION UPGRADE; UPGRADE PAYMENT.
(a) Purchaser intends to pursue an upgrade of the Station's broadcast
authorization to Class C1 status permitting Purchaser to relocate the
Station's transmitter site to a location at or near the Senior Road/McHard
Road transmitter "farm" location (such upgrade of the Station's broadcast
authorization is referred to herein as the "Full Upgrade"), and Seller will
cooperate with and assist Purchaser as described below and as reasonably
necessary in obtaining the same. The Seller shall withdraw or revise any
other present or future applications or rule making petitions filed by the
Seller, FBBC, or their affiliates, with the Commission, including but not
limited to those for changes in the broadcast authorizations of other radio
stations owned by the Seller, FBBC or their affiliates, to the extent such
applications or petitions might unfavorably impact the prospects of the
Commission's granting of the full upgrade or, in the circumstances described
below, the "Partial Upgrade". If the Full Upgrade and Construction Permit is
not economically or technically feasible (as determined in good faith by
Purchaser), then the Purchaser intends to pursue alternatives to improve the
Station's broadcast signal and to relocate the transmitter site to maximize
the number of persons living in the Houston metro area (as that term is
defined by Arbitron) covered by the Station's 70 dbu contour (such
improvement and relocation, if obtained, being referred to herein as a
"Partial Upgrade"). Purchaser's documented legal, engineering and similar
expenses incurred in obtaining the Full Upgrade or Partial Upgrade shall be
referred to herein as the "Upgrade Expenses."
(b) In the event that the Full Upgrade or Partial Upgrade is obtained
prior to April 1, 2004, the Purchaser shall pay to Seller, within 10 days
after such date (the "Determination Date") as the FCC has approved the
Upgrade Petition (provided, however, that the payment date may be extended as
necessary to determine the "Fair Market Value" as described herein), an
amount in cash equal to the following:
(i) In the case of the Full Upgrade, the amount of (W) $14 million
less (X) $3.08 million, less (Y) the Unearned Portion of prepayments (as
that term is defined in the Time Brokerage Agreement) made by Purchaser to
Seller pursuant to the Time Brokerage Agreement (which payments shall be
defined
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collectively herein the "TBA Prepayment") less (Z) Purchaser's Upgrade
Expenses.
(ii) In the case of the Partial Upgrade, the amount of (W) the
"Formula Price" less (X) $3.08 million less (Y) the TBA Prepayment less (Z)
Purchaser's Upgrade Expenses.
For the purposes of this Section 2.2 (b), the "Formula Price" shall be equal to
the following:
(i) If the "Fair Market Value" of the Station Assets is more than $14
million, then the Formula Price will be equal to the average of (X) $10
million and (Y) the Fair Market Value; and
(ii) If the Fair Market Value is less than $14 million, the Formula
Price will be equal to the greater of (X) 85% of the Fair Market Value and
(Y) $10 million.
In order to determine the "Fair Market Value" of the Station Assets, the
Seller and Purchaser shall each select an appraiser with at least five years
of experience in appraising companies engaged in the ownership and operation
of radio broadcast stations (collectively the "Two Appraisers"). Each of the
Two Appraisers shall determine the Fair Market Value as of the Determination
Date within 60 days of their selection and shall deliver to each of the
Seller and the Purchaser a copy of its appraisal within such 60 day period.
If the determination of each of the Two Appraisers is 90% or more but less
than 110% of the average of the two determinations, the Fair Market Value
shall be such average. If the determination of either of the Two Appraisers
is less than 90% or more than 110% of such average, then the Two Appraisers
shall, within five days thereafter, select a third appraiser with at least
five years' experience in appraising companies engaged in the ownership and
operation of radio broadcast stations. The determination of such third
appraiser (which shall be completed within 60 days of its selection and shall
not be higher than the higher of, nor lower than the lower of, the
determinations of the Two Appraisers), shall govern and shall be final and
binding on all parties. In determining the Fair Market Value, the appraisers
shall value the Station Assets on a "stick" or "base" value as if there were
no business or commercial operations of the Station and shall value the
Station's broadcast signal as of the Determination Date without any value
given to any potential improvement. Each of Seller and the Purchaser shall
cooperate with the appraisers to the extent required to complete the
appraisals on a timely basis, and the Seller and the Purchaser shall each pay
50% of the costs of all appraisals contemplated by this Agreement.
2.3 TBA PREPAYMENT. The earlier of (a) the payment of the Upgrade
Payment pursuant to Section 2.2 or (b) the seven year anniversary of the date
hereof shall be
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referred to herein as the "Maturity Date." If the Maturity Date is the date
on which the Upgrade Payment is paid, the TBA Prepayment shall reduce the
Upgrade Payment. If the Maturity Date is the seven year anniversary of the
date hereof, Seller shall pay to the Purchaser the TBA Prepayment on such
date.
2.4 TIME OF CLOSING.
(a) A closing (the "Closing") for the sale and purchase of the Station
Assets shall be held at the offices of Purchaser in Dallas, Texas (or such
other place as may be agreed upon by the parties in writing) on the date
which is the later of (i) the tenth business day after the Final Order (as
defined hereinafter) or (ii) the satisfaction of all of the conditions
precedent to the obligations of Purchaser and Seller hereunder, or on such
other date as may be agreed upon by the parties in writing (the "Closing
Date"). The Closing shall be deemed to be effective as of 12:01 a.m. on the
Closing Date.
(b) In order to consummate the transfer of the Station Assets, Seller
and Purchaser agree to use their best efforts to file, within five business
days after the date hereof, an assignment of license application (the
"Application") requesting FCC consent to the assignment from the Seller to
Purchaser of all Governmental Licenses relating to the operation of the
Station. The parties agree that the Application will be prosecuted in good
faith and with due diligence. The parties agree to use their reasonable best
efforts to file additional information or amendments requested by the FCC
orally or in writing within five business days after such request and, in any
event, to commence preparation of such additional information or amendments
immediately upon request and to complete and file the same with the FCC as
rapidly as practical. Each party will be solely responsible for the expenses
incurred by it in the preparation, filing and prosecution of the Application
(it being understood that the parties will bear equally the FCC filing fee).
As used herein, the term "Final Order" shall mean that the FCC has granted or
given its consent, without any condition materially adverse to Purchaser or
Seller, to the assignment of the Governmental Licenses and the time period
for filing any protests, requests for stay, reconsideration by the FCC,
petitions for rehearing or appeal of such order shall have expired, and that
no protest, request for stay, reconsideration by the FCC, petition for
rehearing or appeal of such order shall be pending.
2.5 CLOSING PROCEDURE. At the Closing, the Seller shall deliver to
Purchaser such bills of sale, instruments of assignment, transfer and
conveyance and similar documents as Purchaser shall reasonably request.
Against such delivery, Purchaser shall (i) issue and deliver to Seller the
purchase price in accordance with Section 2.1 above and (ii) execute and
deliver the assumption agreements with respect to the Assumed Liabilities as
are contemplated by Section 1.3 hereof. Each party will cause to be
prepared, executed and delivered all other documents required to be delivered
by such party pursuant to this Agreement and all other appropriate and
customary documents as another party or its counsel may reasonably request
for the purpose of
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consummating the transactions contemplated by this Agreement. All actions
taken at the Closing shall be deemed to have been taken simultaneously at the
time the last of any such actions is taken or completed.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
The Seller hereby represents and warrants to the Purchaser, except as
qualified by the Seller's Disclosure Schedule attached hereto as Exhibit "D"
(the "Disclosure Schedule"), as follows:
3.1 ORGANIZATION; GOOD STANDING. FBBC is a corporation, duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all requisite corporate power and
authority to own and lease its properties and assets and to carry on its
business as currently conducted.
3.2 DUE AUTHORIZATION; EXECUTION AND DELIVERY. Subject to the
issuance of the Final Order, the Seller has full power and authority to enter
into and perform this Agreement and to carry out the transactions
contemplated hereby. Prior to the Closing, the Seller will have taken all
requisite action to approve the execution and delivery of this Agreement and
the transactions contemplated hereby. This Agreement constitutes the legal,
valid and binding obligation of the Seller, enforceable against it in
accordance with its terms, except as may be limited by the availability of
equitable remedies or by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally. Neither the
execution and delivery by the Seller of this Agreement nor the consummation
by it of the transactions contemplated hereby will: (i) conflict with or
result in a breach of the articles of incorporation or bylaws of FBBC; (ii)
subject to the issuance of the Final Order, violate any statute, law, rule or
regulation or any order, writ, injunction or decree of any court or
governmental authority, which violation, either individually or in the
aggregate, might reasonably be expected to have a material adverse effect on
the business or operations of the Seller or Purchaser's ownership of the
Station Assets; or (iii) violate or conflict with or constitute a default
under (or give rise to any right of termination, cancellation or acceleration
under), or result in the creation of any lien on any of the Station Assets
pursuant to, any material agreement, indenture, mortgage or other instrument
to which the Seller is a party or by which it or its assets may be bound or
affected.
3.3 GOVERNMENTAL CONSENTS. No approval, authorization, consent, order
or other action of, or filing with, any governmental authority or
administrative agency is required in connection with the execution and
delivery by the Seller of this Agreement or the consummation of the
transactions contemplated hereby or thereby, other than those of the FCC.
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3.4 TITLE TO ASSETS. The Seller is the sole and exclusive legal owner
of all right, title and interest in, and has good and marketable title to,
all of the Station Assets, free and clear of liens, claims and encumbrances
except (i) liens, claims and encumbrances to be released at Closing and (ii)
liens for taxes not yet payable.
3.5 REAL ESTATE.
(a) With respect to the Real Property, Seller has good, indefeasible
and record title to the Real Property in fee simple absolute, and there is no
outstanding liens or encumbrances with respect to the Real Property or any
part thereof. Policies of liability insurance exist and will be effective as
of the Closing Date with respect to the Real Property, affording such
coverage and with limits as are reasonable and customary with respect to the
operation of property similar to the Real Property. There is no existing,
pending, or notice of threatened litigation, condemnation or sale in lieu
thereof, with respect to any portion of the Real Property relating to or
arising out of the ownership of the Real Property by any federal, state,
county, or municipal department, commission, board, bureau or agency or other
governmental instrumentality. There is no proceeding pending or presently
being prosecuted for the reduction or increase of the assessed valuation or
taxes or other impositions payable in respect of any portion of the Real
Property. Seller has not received any notice of a proposed increase in the
assessed valuation of the Real Property. Seller has no information or
knowledge of any change contemplated in any applicable law, ordinances, or
restrictions, or any judicial or administrative action, or any action by
adjacent landowners, or natural or artificial conditions upon the Real
Property, which would have a material adverse affect upon the Real Property
or its value. There is no significant adverse fact or condition relating to
the Real Property and Seller knows of no fact or condition of any kind or
character whatsoever which adversely affects Purchaser's intended use of the
Real Property. Seller has no knowledge of any fact or condition existing
which would result or could result in the termination or reduction of the
current access from the Real Property to existing highways and roads, or to
sewer or other utility services presently serving the Real Property. The
Real Property is not within any area determined by the Department of Housing
and Urban Development and other applicable governmental authorities to be
flood prone under the Federal Flood Disaster Protection Act of 1973, as
amended.
(b) Seller has not received any notice of, and has no knowledge of,
any material violation of any zoning, building, health, fire, water use or
similar statute, ordinance, law, regulation or code in connection with any
real property leased by the Seller and used in connection with the operation
of the Station and the Real Property (collectively, the "Real Estate"). To
the knowledge of Seller, no fact or condition exists which would result in
the termination or impairment of access of the Station to the Real Estate or
discontinuation of necessary sewer, water, electrical, gas, telephone or
other utilities or services.
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(c) No hazardous or toxic material (as hereinafter defined) exists in
any structure located on, or exists on or under the surface of, any of the
Real Estate which is, in any case, in material violation by Seller of
applicable environmental law. For purposes of this Section, "hazardous or
toxic material" shall mean waste, substance, materials, smoke, gas or
particulate matter designated as hazardous, toxic or dangerous under any
environmental law. For purposes of this Section, "environmental law" shall
include the Comprehensive Environmental Response Compensation and Liability
Act, the Clean Air Act, the Clean Water Act and any other applicable federal,
state or local environmental, health or safety law, rule or regulation
relating to or imposing liability or standards concerning or in connection
with hazardous, toxic or dangerous waste, substance, materials, smoke, gas or
particulate matter.
3.6 CONDITION OF ASSETS. All of the Station Assets viewed as a whole
and not on an asset by asset basis are in good condition and working order,
ordinary wear and tear excepted, and are suitable for the uses for which
intended, free from any known defects except such minor defects as do not
substantially interfere with the continued use thereof.
3.7 GOVERNMENTAL LICENSES. The Disclosure Schedule lists and
accurately describes all Governmental Licenses owned or held by the Seller
and necessary for the lawful ownership and operation of the Station and the
conduct of the Station's business, except where the failure to hold such
Governmental License would not have a material adverse effect on the Station.
The Seller has furnished to Purchaser true and accurate copies of all such
Governmental Licenses. Each Governmental License is in full force and effect
and is valid under applicable federal, state and local laws; the Station is
being operated in compliance in all material respects with all rules,
regulations and policies of the FCC; and, to the knowledge of Seller, no
event has occurred which (whether with or without notice, lapse of time or
the happening or occurrence of any other event) is reasonably likely to
result in the revocation or termination of any Governmental License or the
imposition of any restriction of such a nature as might adversely affect the
ownership or operation of the Station as now conducted, except for
proceedings of a legislative or rule-making nature intended to affect the
broadcasting industry generally. The Station, its physical facilities,
electrical and mechanical systems and transmitting and studio equipment are
being operated in all material respects in accordance with the specifications
of the Governmental Licenses.
3.8 TAXES. All tax reports and returns required to be filed by or
relating to the Station Assets or operations (including sales, use, property
and employment taxes) have been filed with the appropriate federal, state and
local governmental agencies, and there have been paid all taxes, penalties,
interest, deficiencies, assessments or other charges due as reflected on the
filed returns or claimed to be due by such federal, state or local taxing
authorities (other than taxes, deficiencies, assessments or claims which are
being contested in good faith and which in the aggregate are not
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material). There are no examinations or audits pending or unresolved
examinations or audit issues with respect to the Seller's federal, state or
local tax returns. All additional taxes, if any, assessed as a result of
such examinations or audits have been paid. There are no pending claims or
proceedings relating to, or asserted for, taxes, penalties, interest,
deficiencies or assessments against the Station Assets.
3.9 LITIGATION. There is no order of any court, governmental agency
or authority and no action, suit, proceeding or investigation, judicial,
administrative or otherwise that is pending or, to Seller's knowledge,
threatened against or affecting the Station which, if adversely determined,
might materially and adversely affect the business, operations, properties,
assets or conditions (financial or otherwise) of the Station or which
challenges the validity or propriety of any of the transactions contemplated
by this Agreement.
3.10 REPORTS. The Seller has duly filed all reports required to be
filed by law or applicable rule, regulation, order, writ or decree of any
court, governmental commission, body or instrumentality and has made payment
of all charges and other payments, if any, shown by such reports to be due
and payable, except where the failure to so file or make payment would not
have a material adverse effect upon the operations of the Station. All
reports required to be filed by the Seller with the FCC with respect to the
Station have been filed.
3.11 EMPLOYEE MATTERS.
(a) The Disclosure Schedule sets forth all liabilities of the Seller
under ERISA or similar laws with respect to employee benefit plans.
(b) There are no labor disputes of a material nature pending between
the Seller, on the one hand, and any of its employees, on the other hand, and
there are no known organizational efforts presently being made involving any
of such employees. The Seller has complied in all material respects with all
laws relating to the employment of labor, including any provisions thereof
relating to wages, hours, collective bargaining and the payment of social
security and other taxes, and is not liable for any material arrearages of
wages or any taxes or penalties for failure to comply with any of the
foregoing.
(c) The Seller has paid when due all salaries, bonuses, commissions
and deferred compensation expenses in connection with the employees of the
Station for all periods prior to such dates and has paid over to the proper
tax collecting agencies all taxes required to be withheld from or paid with
respect to such payments for all periods through the payroll date ended most
recently prior to the Time Brokerage Date.
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(d) Other than scheduled anniversary raises consistent with prior
practice (or as otherwise set forth on the Disclosure Schedule), no increases
in compensation to employees will occur or become due at any time prior to
the Time Brokerage Date.
3.12 CONTRACTS AND AGREEMENTS. The Disclosure Schedule contains a
list, complete and accurate in all material respects, of all of the following
categories of contracts and agreements to which the Station is bound at the
date hereof: (i) employee benefit plans, employment, consulting or similar
contracts; (ii) contracts that may not be canceled without penalty upon 30
days or less notice; (iii) insurance policies; and (iv) other contracts not
made in the ordinary course of business (collectively the "Material
Contracts"). The Station is not in default with respect to any of the
Material Contracts contained on Exhibit "B" hereto; and, as of the Time
Brokerage Date, the Station will have paid all sums and performed all
obligations under the Material Contracts included on Exhibit "B" which are
required to be paid or performed prior to such date.
3.13 INTELLECTUAL PROPERTY. The Seller has no knowledge of any claim
of infringement or other complaint that the operation of the Station violates
or infringes the rights or the trade names, copyrights or trademarks or
similar intangible rights of others.
3.14 THIRD PARTY CONSENTS. By the Closing Date, the Seller will have
obtained all consents from any person or entity which are required in
connection with the execution and delivery by Purchaser of this Agreement and
the consummation of the transactions contemplated hereby, which such consents
are described on the Disclosure Schedule.
3.15 FINDERS AND BROKERS. All negotiations relating to this Agreement
and the transactions contemplated herein have been carried on by the Seller
directly with the Purchaser. No person has as a result of any agreement or
action of the Seller any valid claim against any of the parties hereto for a
brokerage commission, finder's fee or other like payment except Mireya
Guerrero, whose fee will be paid by Seller.
3.16 TRANSACTIONS WITH AFFILIATES. Upon the transfer of the Station
Assets as contemplated by this Agreement, neither FBBC, Henderson nor any of
their affiliates will have any interest in or will own any property used in
the conduct of the Station. Purchaser will acquire at the Closing all of the
real and personal property used in the operation of the Station, except as
otherwise agreed by the Purchaser.
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4. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser hereby represents and warrants to the Seller as follows:
4.1 ORGANIZATION AND GOOD STANDING. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the state
of its incorporation and has all requisite corporate power and authority to
own and lease its properties and carry on its business as currently conducted.
4.2 DUE AUTHORIZATION. Subject to the issuance of the Final Order,
Purchaser has full power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of
Purchaser. This Agreement has been duly executed and delivered by Purchaser
and constitutes the legal, valid and binding obligation of Purchaser,
enforceable against it in accordance with its respective terms, except as may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors' rights generally or general equitable
principles.
4.3 EXECUTION AND DELIVERY. Neither the execution and delivery by
Purchaser of this Agreement nor the consummation of the transactions
contemplated hereby will: (i) conflict with or result in a breach of the
Articles of Incorporation or Bylaws of Purchaser; (ii) subject to the
issuance of the Final Order, violate any law, statute, rule or regulation or
any order, writ, injunction or decree of any court or governmental authority;
or (iii) violate or conflict with or constitute a default under (or give rise
to any right of termination, cancellation or acceleration under) any
indenture, mortgage, lease, contract or other instrument to which Purchaser
is a party or by which it is bound or affected.
4.4 CONSENTS. No consent, approval, authorization, license, exemption
of, filing or registration with any court, governmental authority,
commission, board, bureau, agency or instrumentality, domestic or foreign, is
required by Purchaser in connection with the execution and delivery of this
Agreement or the consummation by it of any transaction contemplated hereby,
other than the consent of the FCC. No approval, authorization or consent of
any other third party is required in connection with the execution and
delivery by Purchaser of this Agreement and the consummation of the
transactions contemplated hereby, except as may have been previously obtained
by Purchaser. Purchaser warrants that it is legally qualified to become a
licensee of the Station (except as to matters previously disclosed to Seller
in writing) and is aware of no material impediment to the approval by the FCC
of the assignment of the Governmental Licenses.
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4.5 FINDERS AND BROKERS. All negotiations relating to this Agreement
and the transactions contemplated herein have been carried on by the
Purchaser directly with the Seller. No person has as a result of any
agreement or action of the Purchaser any valid claim against any of the
parties hereto for a brokerage commission, finder's fee or other like payment.
5. CERTAIN COVENANTS AND AGREEMENTS.
5.1 BEST EFFORTS. Each of the Seller and Purchaser shall take all
reasonable action necessary to consummate the transactions contemplated by
this Agreement and will use all necessary and reasonable means at its
disposal to obtain all necessary consents and approvals of other persons and
governmental authorities required to enable it to consummate the transactions
contemplated by this Agreement; provided, that the parties agree that such
reasonable efforts shall not include participating in hearings before the
FCC. Except as otherwise provided herein, each of the Seller and Purchaser
acknowledges and agrees that it shall pay all costs, fees and expenses
incurred by it in obtaining such necessary consents and approvals, including
those certain consents set forth on the Disclosure Schedule. Each party shall
make all filings, applications, statements and reports to all governmental
agencies or entities which are required to be made prior to the Closing Date
by or on its behalf pursuant to any statute, rule or regulation in connection
with the transactions contemplated by this Agreement, and copies of all such
filings, applications, statements and reports shall be provided to the other.
If the FCC determines that the transactions contemplated hereby or a portion
thereof are inconsistent or violative of FCC rules or regulations, the
parties agree that they will negotiate in good faith to amend, modify or
restructure the transactions contemplated hereby so as to be consistent with
FCC rules and regulations.
5.2 PUBLIC ANNOUNCEMENTS. Prior to the Closing Date, all notices to
third parties and other publicity relating to the transaction contemplated by
this Agreement shall be jointly planned and agreed to by the Seller and
Purchaser.
5.3 NON-COMPETITION AGREEMENT.
(a) The Seller covenants and agrees that during the Non-Competition
Period (as defined herein) it will not directly or indirectly, either as an
individual, a partner or a joint venturer, or in any other capacity, (i)
invest (other than investments in publicly owned companies which constitute
not more than 1% of the voting securities of any such company) or engage in
any business that is competitive with the Purchaser's Business (as defined
herein), (ii) accept employment with or render services to a competitor of
the Business as a director, officer, agent, employee or consultant, (iii)
contact, solicit or attempt to solicit or accept or direct business that is
competitive with the Business, or (iv) otherwise compete with the Business.
As used herein, the
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term "Non-Competition Period" shall mean the period commencing on the date
hereof and terminating on the Maturity Date. As used herein, "Business"
shall mean the Spanish language radio business conducted by Purchaser in the
Houston metropolitan market (as defined by Arbitron) other than the business
conducted by the Seller in KFRD(AM) in Bellville, Texas.
(b) Each of Henderson and FBBC agree that during the Non-Competition
Period they will not (A) enter into any local area marketing agreement, time
brokerage agreement, purchase or sale agreement or similar agreement with
respect to the Station or (B) transfer or assign any of the Governmental
Licenses, unless in each instance such broker, purchaser, transferee,
assignee or other person or entity agrees to execute a document (the form and
substance of which shall be approved in advance by Purchaser) stating that it
will be bound by the covenants contained in this Section 5.3.
5.4 REAL PROPERTY ASSETS. If Purchaser elects, Purchaser shall not be
required to purchase the Real Property and may at its option lease the Real
Property from Seller for a 20-year term with the lease payments equal to
$1.00 per year. If Purchaser does not make such election, the Seller will
transfer the Real Property to Purchaser at the Closing and will provide a
title policy and survey of the Real Property on substantially the same terms
as provided for that certain Asset Purchase Agreement regarding AM Radio
Station KMPQ(AM).
6. CONDITIONS TO PURCHASER'S CLOSING.
All obligations of Purchaser under this Agreement shall be subject to the
fulfillment at or prior to the Closing of the following conditions, it being
understood that Purchaser may, in its sole discretion, waive any or all of
such conditions in whole or in part:
6.1 REPRESENTATIONS, ETC. The Seller shall have performed in all
material respects the covenants and agreements contained in this Agreement
that are to be performed by it at or prior to the Closing, and the
representations and warranties of the Seller contained in this Agreement
shall be true and correct in all material respects as of the Closing Date
with the same effect as though made at such time (except as contemplated or
permitted by this Agreement).
6.2 CONSENTS. All consents and approvals from the FCC and
governmental agencies and (unless the failure to obtain consent would not
have a material adverse effect on the Station) from other third parties
required to consummate the transactions
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contemplated by this Agreement shall have been obtained without material cost
or other materially adverse consequence to Purchaser and shall be in full
force and effect, and the Final Order shall, at the Closing, be in full force
and effect.
6.3 NO ADVERSE LITIGATION. No order or temporary, preliminary or
permanent injunction or restraining order shall have been entered and no
action, suit or other legal or administrative proceeding by any court or
governmental authority, agency or other person shall be pending or threatened
on the Closing Date which may have the effect of (i) making any of the
transactions contemplated hereby illegal, (ii) materially adversely affecting
the value of the Station Assets or (iii) making Purchaser liable for the
payment of damages to any person.
6.4 CLOSING DELIVERIES. Purchaser shall have received each of the
documents or items required to be delivered to it pursuant to Section 8.1
hereof.
6.5 ENVIRONMENTAL AUDIT. The Phase I environmental audit of the real
estate on which the Station Assets are located shall not have revealed the
existence of any hazardous or toxic material at the real estate which is in
material violation of any applicable environmental law or which would require
remedial action involving a material cost to the Purchaser. The results of
such audit will be kept confidential and will not be disclosed to any third
party except (i) to Purchaser's lenders, (ii) as required by law or (iii) in
connection with any remediation agreed to by the parties.
7. CONDITIONS TO SELLER'S CLOSING.
All obligations of the Seller under this Agreement shall be subject to
the fulfillment at or prior to the Closing of the following conditions, it
being understood that the Seller may, in its sole discretion, waive any or
all of such conditions in whole or in part:
7.1 REPRESENTATIONS, ETC. Purchaser shall have performed in all
material respects the covenants and agreements contained in this Agreement
that are to be performed by Purchaser as of the Closing, and the
representations and warranties of Purchaser contained in this Agreement shall
be true and correct in all material respects as of the Closing Date with the
same effect as though made at such time (except as contemplated or permitted
by this Agreement).
7.2 NO ADVERSE LITIGATION. No order or temporary, preliminary or
permanent injunction or restraining order shall have been entered and no
action, suit or other legal or administrative proceeding by any court or
governmental authority, agency or other person shall be pending or threatened
on the Closing Date which may have the effect of making any of the
transactions contemplated hereby illegal.
14
<PAGE>
7.3 CLOSING DELIVERIES. The Seller shall have received each of the
documents or items required to be delivered to it pursuant to Section 8.2.
8. DOCUMENTS TO BE DELIVERED AT CLOSING.
8.1 TO PURCHASER. At the Closing, there shall be delivered to
Purchaser:
(a) The bills of sale, agreements of assignment and similar instruments
of transfer to the Station Assets contemplated by Section 2.3 hereof.
(b) A certificate, signed by Henderson both individually and as an
executive officer of FBBC, as to the fulfillment of the conditions set forth in
Sections 6.1 through 6.3 hereof.
(c) A copy of all consents and approvals referred to in Section 6.2
hereof.
(d) All other items reasonably requested by Purchaser.
8.2 TO SELLER. At the Closing, there shall be delivered to the Seller:
(a) The purchase price contemplated by Section 2.1 hereof, in the form
of wire transfer or cashier's or certified check as the Seller may direct.
(b) A certificate, signed by an executive officer of Purchaser, as to
the fulfillment of the conditions set forth in Sections 7.1 and 7.2 hereof.
(c) An assumption agreement pursuant to which Purchaser shall assume the
Assumed Liabilities.
(d) All other items reasonably requested by the Seller.
9. SURVIVAL.
All representations, warranties, covenants and agreements made by any party
to this Agreement or pursuant hereto shall be deemed to be material and to have
been relied upon by the parties hereto and shall survive the Closing. The
representations and warranties hereunder shall not be affected or diminished by
any investigation at any time by or on behalf of the party for whose benefit
such representations and warranties were made. All statements contained herein
or in any certificate, exhibit, list or other document delivered pursuant hereto
or in connection with the transactions contemplated hereby shall be deemed to be
representations and warranties. No representation or warranty contained herein
shall be deemed to be made at any time
15
<PAGE>
after the date of this Agreement or, if made in a certificate, the date of
such certificate.
10. INDEMNIFICATION OF PURCHASER.
Subject to the limitations set forth in Sections 9 and 12, the Seller shall
indemnify and hold Purchaser harmless from, against, for and in respect of:
(a) any and all damages, losses, settlement payments, obligations,
liabilities, claims, actions or causes of action and encumbrances suffered,
sustained, incurred or required to be paid by Purchaser because of the breach of
any written representation, warranty, agreement or covenant of the Seller
contained in this Agreement or any document, certificate or agreement executed
in connection with this Agreement;
(b) any and all liabilities, obligations, claims and demands arising out
of the ownership and operation of the Station at all times prior to the Closing
Date (other than the liabilities specifically assumed as set forth in Section
1.2 hereto and such liabilities incurred by the Purchaser between the Time
Brokerage Date and the Closing Date pursuant to its operation of the Station
under the Time Brokerage Agreement); and
(c) all reasonable costs and expenses (including, without limitation,
attorneys' fees, interest and penalties) incurred by Purchaser in connection
with any action, suit, proceeding, demand, assessment or judgment incident to
any of the matters indemnified against in this Section 10.
11. INDEMNIFICATION OF SELLER.
Subject to the limitations set forth in Sections 9 and 12, Purchaser shall
indemnify and hold the Seller harmless from, against, for and in respect of:
(a) any and all damages, losses, settlement payments, obligations,
liabilities, claims, actions or causes of action and encumbrances suffered,
sustained, incurred or required to be paid by the Seller because of the breach
of any written representation, warranty, agreement or covenant of Purchaser
contained in this Agreement or any document, certificate or agreement executed
in connection with this Agreement;
(b) any and all liabilities, obligations, claims and demands arising out
of the ownership and operation of the Station on and after the Closing Date or
incurred by the Purchaser between the Time Brokerage Date and the Closing Date
pursuant to its operation of the Station under the Time Brokerage Agreement,
except to the extent the same arises from a breach of any written
representation, warranty, agreement or
16
<PAGE>
covenant of the Seller contained in this Agreement or any document,
certificate or agreement executed in connection with this Agreement;
(c) any of the liabilities specifically assumed as set forth in Section
1.2; and
(d) all reasonable costs and expenses (including, without limitation,
attorneys' fees, interest and penalties) incurred by the Seller in connection
with any action, suit, proceeding, demand, assessment or judgment incident to
any of the matters indemnified against in this Section 11.
12. GENERAL RULES REGARDING INDEMNIFICATION.
The obligations and liabilities of each indemnifying party hereunder with
respect to claims resulting from the assertion of liability by the other party
or indemnified third parties shall be subject to the following terms and
conditions:
(a) The indemnified party shall give prompt written notice (which in no
event shall exceed 30 days from the date on which the indemnified party first
became aware of such claim or assertion) to the indemnifying party of any claim
which might give rise to a claim by the indemnified party against the
indemnifying party based on the indemnity agreements contained in Section 10 or
11 hereof, stating the nature and basis of said claims and the amounts thereof,
to the extent known;
(b) If any action, suit or proceeding is brought against the indemnified
party with respect to which the indemnifying party may have liability under the
indemnity agreements contained in Section 10 or 11 hereof, the action, suit or
proceeding shall, upon the written acknowledgment by the indemnifying party that
it is obligated to indemnify under such indemnity agreement, be defended
(including all proceedings on appeal or for review which counsel for the
indemnified party shall deem appropriate) by the indemnifying party. The
indemnified party shall have the right to employ its own counsel in any such
case, but the fees and expenses of such counsel shall be at the indemnified
party's own expense unless (A) the employment of such counsel and the payment of
such fees and expenses both shall have been specifically authorized in writing
by the indemnifying party in connection with the defense of such action, suit or
proceeding, or (B) counsel to such indemnified party shall have reasonably
concluded and specifically notified the indemnifying party that there may be
specific defenses available to it which are different from or additional to
those available to the indemnifying party or that such action, suit or
proceeding involves or could have an effect upon matters beyond the scope of the
indemnity agreements contained in Sections 10 and 11 hereof, in any of which
events the indemnifying party, to the extent made necessary by such defenses,
shall not have the right to direct the defense of such action, suit or
proceeding on behalf of the indemnified party. In the latter such case only
that portion of such fees and expenses of the indemnified party's separate
17
<PAGE>
counsel reasonably related to matters covered by the indemnity agreements
contained in Section 10 or 11 hereof shall be borne by the indemnifying
party. The indemnified party shall be kept fully informed of such action,
suit or proceeding at all stages thereof whether or not it is represented by
separate counsel.
(c) The indemnified party shall make available to the indemnifying party
and its attorneys and accountants all books and records of the indemnified party
relating to such proceedings or litigation and the parties hereto agree to
render to each other such assistance as they may reasonably require of each
other in order to ensure the proper and adequate defense of any such action,
suit or proceeding.
(d) The indemnified party shall not make any settlement of any claims
without the written consent of the indemnifying party, which consent shall not
be unreasonably withheld or delayed.
(e) If any claims are made by third parties against an indemnified party
for which an indemnifying party would be liable, and it appears likely that such
claims might also be covered by the indemnified party's insurance policies, the
indemnified party shall make a timely claim under such policies and to the
extent that such party obtains any recovery from such insurance, such recovery
shall be offset against any sums due from an indemnifying party (or shall be
repaid by the indemnified party to the extent that an indemnifying party has
already paid any such amounts). The parties acknowledge, however, that if an
indemnified party is self-insured as to any matters, either directly or through
an insurer which assesses retroactive premiums based on loss experience, then to
the extent that the indemnified party bears the economic burden of any claims
through self-insurance or retroactive premiums or insurance ratings, the
indemnifying party's obligation shall only be reduced by any insurance recovery
in excess of the amount paid or to be paid by the indemnified party in insurance
premiums.
(f) Except as herein expressly provided, the remedies provided in
Sections 10 through 12 hereof shall be cumulative and shall not preclude
assertion by any party of any other rights or the seeking of any other rights or
remedies against any other party hereto.
13. FAILURE TO CLOSE BECAUSE OF DEFAULT.
In the event that the Closing is not consummated by virtue of a material
default made by a party in the observance or in the due and timely performance
of any of its covenants or agreements herein contained ("Default"), the parties
shall have and retain all of the rights afforded them at law or in equity by
reason of that Default. In addition, the parties hereto acknowledge that the
Station Assets and the transactions contemplated hereby are unique, that a
failure by the Seller to complete such
18
<PAGE>
transactions will cause irreparable injury to the Purchaser and that actual
damages for any such failure may be difficult to ascertain and may be
inadequate. Consequently, the parties agree that the Purchaser shall be
entitled, in the event of a Default by the Seller, to specific performance of
any of the provisions of this Agreement in addition to any other legal or
equitable remedies to which the Purchaser may otherwise be entitled. In the
event any action is brought, the prevailing party shall be entitled to
recover court costs, arbitration expenses and reasonable attorneys' fees.
14. TERMINATION AND RESCISSION RIGHTS; RISK OF LOSS.
14.1 TERMINATION PRIOR TO CLOSING. This Agreement may be terminated by
either Purchaser or the Seller (as set forth below), if either such party is not
then in Default upon written notice to the other upon the occurrence of any of
the following:
(a) By the non-Defaulting party, if the other party Defaults and such
Default has not been cured within 30 days of written notice of such Default by
the other party;
(b) Subject to the provisions of Sections 6 and 7 hereof, by the Seller
or the Purchaser if on the Closing Date any of the conditions precedent to the
obligations of the Seller or the Purchaser, respectively, set forth in this
Agreement have not been satisfied or waived by such party; or
(c) By mutual consent of the Seller and the Purchaser; or
(d) If the Commission designates the Application contemplated by Section
2.2(b) hereof for hearing, either party shall have the option of terminating
this Agreement by notice to the other party prior to the commencement of the
hearing if the terminating party shall not be in default under the provisions of
this Agreement.
Notwithstanding the foregoing, the parties acknowledge that the covenants
contained in Sections 5.3 and 15.14 hereof shall continue after the termination
of this Agreement, except as otherwise provided in Section 5.3.
14.2 RISK OF LOSS. Except as set forth in the Time Brokerage Agreement,
the Seller shall bear the risk of all damage to, loss of or destruction of any
of the Station Assets between the date of this Agreement and the Closing Date.
If any material portion of the Station Assets shall suffer any material damage
or destruction prior to the Closing Date (other than any such damage or
destruction caused by the action or negligence of Purchaser after the Time
Brokerage Date), the Seller shall promptly notify the Purchaser in writing of
such damage or destruction, shall promptly take all necessary steps to restore,
repair or replace such assets at its sole expense, and shall advise the
Purchaser in writing of the estimated cost to complete such restoration,
19
<PAGE>
repair or replacement and all amounts actually paid as of the date of the
estimate. The Purchaser may extend the Closing Date for a period not
exceeding 45 days to accomplish such restoration, repair or replacement, but
is not required to do so. If such restoration, repair or replacement is not
accomplished prior to the Closing Date, whether or not extended as provided
herein, the Purchaser may, at its option:
(a) terminate this Agreement upon written notice to Seller; or
(b) receive all insurance proceeds paid or payable to Seller in excess
of amounts actually applied towards such restoration, repair or replacement,
close this Agreement and thereafter complete such restoration, repair or
replacement at its sole expense; provided, however, Seller shall have no further
liabilities with respect to such damage or destruction after payment to
Purchaser of such insurance proceeds.
15. MISCELLANEOUS PROVISIONS.
15.1 EXPENSES. Except as otherwise expressly provided herein, each
party shall pay the fees and expenses incurred by it in connection with the
transactions contemplated by this Agreement. If any action is brought for
breach of this Agreement or to enforce any provision of this Agreement, the
prevailing party shall be entitled to recover court costs, arbitration expenses
and reasonable attorneys' fees.
15.2 PRORATIONS. Except as otherwise provided in the Time Brokerage
Agreement, all items of income and expense arising from the operation of the
Station with respect to the Station Assets and the Assumed Liabilities on or
before the close of business on the Time Brokerage Date shall be for the account
of the Seller and thereafter shall be for the account of the Purchaser.
Proration of the items described below between the Seller and the Purchaser
shall be effective as of 11:59 p.m., local time, on such date and shall occur as
follows with respect to those rights, liabilities and obligations of the Seller
transferred to and assumed by the Purchaser hereunder and except as otherwise
provided in the Time Brokerage Agreement:
(a) Liability for state and local taxes assessed on the Station Assets
payable with respect to the tax year in which the Time Brokerage Date falls
shall be prorated as between the Seller and the Purchaser on the basis of the
number of days of the tax year elapsed to and including such date, appropriately
adjusted with respect to improvements to the Station Assets effected by
Purchaser after the Time Brokerage Date.
(b) Prepaid items and accruals such as fees under the Time Brokerage
Agreement, water, electricity, telephone, other utility and service charges,
lease expenses, license fees (if any) and payments under any contracts to be
assumed by
20
<PAGE>
the Purchaser shall be prorated between the Seller and the Purchaser on the
basis of the period of time to which such liabilities, prepaid items and
accruals apply.
All prorations shall be made and paid insofar as feasible on the Time Brokerage
Date with a final settlement to be made on the Closing Date. The Seller and the
Purchaser agree to assume, pay and perform all costs, liabilities and expenses
allocated to each of them pursuant to this Section 15.2.
15.3 AMENDMENT. This Agreement may be amended at any time but only by an
instrument in writing signed by the parties hereto.
15.4 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if mailed by certified mail, return receipt
requested, or by nationally recognized "next-day" delivery service, to the
parties at the addresses set forth below (or at such other address for a party
as shall be specified by like notice), or sent by facsimile to the number set
forth below (or such other number for a party as shall be specified by proper
notice hereunder):
If to the Purchaser:
c/o Heftel Broadcasting Corporation
100 Crescent Court, Suite 1777
Dallas, Texas 75201
ATT: McHenry T. Tichenor, Jr.
Fax: (214)855-8881
With a copy (which shall not constitute notice) to:
Crouch & Hallett, L.L.P.
717 North Harwood Street, Suite 1400
Dallas, Texas 75201
ATT: Bruce H. Hallett
Fax: (214)953-0576
If to the Seller:
Roy E. Henderson
14318 Spring Maple Lane
Houston, Texas 77062
21
<PAGE>
With a copy (which shall not constitute notice) to:
Henry E. Crawford, Esq.
Suite 900
1150 Connecticut Avenue, N.W.
Washington, D.C. 20036
15.5 ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, heirs and
permitted assigns. The parties hereto acknowledge and agree that Purchaser may
assign its rights and obligations hereunder to an affiliated corporation and
such affiliated corporation shall be deemed the "Purchaser" pursuant hereto;
provided, however, if such assignment occurs, Tichenor Media System, Inc. will
continue to have ultimate responsibility for all obligations, representations
and duties contained herein and shall guarantee the obligations of such assignee
hereunder.
15.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
15.7 HEADINGS. The headings of the Sections of this Agreement are
inserted for convenience only and shall not constitute a part hereof.
15.8 ENTIRE AGREEMENT. This Agreement and the documents referred to
herein contain the entire understanding of the parties hereto in respect of the
subject matter contained herein. There are no restrictions, promises,
warranties, conveyances or undertakings other than those expressly set forth
herein. This Agreement supersedes any prior agreements and understandings
between the parties with respect to the subject matter.
15.9 WAIVER. No attempted waiver of compliance with any provision or
condition hereof, or consent pursuant to this Agreement, will be effective
unless evidenced by an instrument in writing by the party against whom the
enforcement of any such waiver or consent is sought.
15.10 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
15.11 CERTAIN DEFINITIONS. As used in this Agreement, "affiliates" of a
party shall mean persons or entities that directly, or indirectly through one or
more intermediaries, control or are controlled by, or are under common control
with, such party.
22
<PAGE>
15.12 INTENDED BENEFICIARIES. The rights and obligations contained in
this Agreement are hereby declared by the parties hereto to have been provided
expressly for the exclusive benefit of such entities as set forth herein and
shall not benefit, and do not benefit, any unrelated third parties.
15.13 MUTUAL CONTRIBUTION. The parties to this Agreement and their
counsel have mutually contributed to its drafting. Consequently, no provision
of this Agreement shall be construed against any party on the ground that such
party drafted the provision or caused it to be drafted or the provision contains
a covenant of such party.
15.14 RELATED AGREEMENTS. Pending the occurrence of the Closing, the
Option Agreement and the Time Brokerage Agreement shall remain in full force and
effect. Each of the parties acknowledges that the other is not in default
thereunder or under any related agreements or waives any such default. Upon the
occurrence of the Closing, each of such agreements shall terminate immediately.
In the event of the termination of this Agreement prior to the Closing the
$330,000 portion of the purchase price paid on the date hereof shall be deemed
to be a prepayment of fees under the Time Brokerage Agreement for an additional
three-year period, (ii) the term of the Time Brokerage Agreement shall be
correspondingly extended to November 30, 2004, and (iii) in the event that
Seller exercises its right to terminate the Time Brokerage Agreement, pursuant
to the second sentence of Section 2.2 hereof, the payment otherwise required to
be made to TMS in consideration of such early termination shall be increased by
$300,000 (which payment shall be in addition to, and not as a credit towards,
the Unearned Portion referenced in the Second Addendum to the Time Brokerage
Agreement or the $750,000 referenced in Section 2.2 of such agreement).
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
TICHENOR MEDIA SYSTEM, INC.
By: /s/ McHenry T. Tichenor, Jr.
----------------------------------------
McHenry T. Tichenor, Jr.
President
23
<PAGE>
ROY E. HENDERSON
By: /s/ Roy E. Henderson
----------------------------------------
Roy E. Henderson
FORT BEND BROADCASTING COMPANY, INC.
By: /s/ Roy E. Henderson
----------------------------------------
Roy E. Henderson
President
24
<PAGE>
INDEX TO EXHIBITS
A Excluded Assets
B Description of Real and Personal Property included in the Station Assets
C Assumed Liabilities
D Seller's Disclosure Schedule
<PAGE>
Exhibit A
Excluded Assets
1. The cash and cash equivalents of the Seller
2. Seller's corporate seal, minute books, charter documents, corporate stock
record books and other books and records that pertain to the organization
or Seller
<PAGE>
Exhibit B
Real Property and Tangible Property
DESCRIPTION OF REAL PROPERTY
1.5 acres out of 17.382, R.H. Hunter Survey AB-205, Fort Bend County
LISTING OF OTHER TANGIBLE PROPERTY
Transmitter, antenna, transmission tower and other equipment located at the
transmitter site.
Other equipment to be provided.
<PAGE>
Exhibit C
Assumed Liabilities
None.
<PAGE>
OPTION AGREEMENT
THIS OPTION AGREEMENT is made as of the 3rd day of February, 1997, by
and between Tichenor Media System, Inc., a Texas corporation ("Grantor"), and
Heart Unlimited Company, a Delaware corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantor is the licensee of radio station KXTN-AM (the "Station")
authorized by the Federal Communications Commission; and
WHEREAS, the Grantee desires to have the right and option to purchase
(the "Purchase Option") from Grantor all of the radio station properties and
assets used or useful in the ownership and operation of the Station (the
"Station Assets") under the terms and conditions herein set forth, and
Grantor desires to grant to the Grantee such right and option; and
WHEREAS, the Grantor and the Grantee have entered into a Time Brokerage
Agreement pursuant to which the Grantee will broadcast certain programs on
the Station;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, the parties hereto agree as follows:
1. In consideration of the entering of the Time Brokerage Agreement,
Grantor hereby grants the Purchase Option in favor of Grantee. Grantee may
exercise the Purchase Option by giving written notice to Grantor of its
exercise of the Purchase Option during the Option Period (as defined herein).
Upon exercise of the Purchase Option, Grantor shall be required, subject to
the terms and conditions set forth herein, to sell the Station Assets used or
useful in the operation of the Station to Grantee. As used herein, the term
"Option Period" means the period commencing on the date hereof and
terminating 21 months after the date hereof; provided, however, if the
Grantor terminates the Time Brokerage Agreement pursuant to the early
termination provisions contained in Section 2.2 of the Time Brokerage
Agreement, then the Option Period will terminate on the 30th day after such
termination date.
2. Upon the exercise of the Purchase Option, Grantee and Grantor shall
negotiate and execute a mutually acceptable Asset Purchase Agreement,
providing for a purchase price of $1.0 million and containing customary
representations and warranties (the "Asset Purchase Agreement"). A closing
(the "Closing") for the sale and purchase of the Station Assets shall be held
at such time and at such place as designated in the Asset Purchase Agreement
(the "Closing Date").
3. Prior to the Closing Date, all notices to third parties and other
publicity relating to the transaction contemplated by this Agreement shall be
jointly planned and agreed to by the Grantor and Grantee.
<PAGE>
4. Except as otherwise expressly provided herein, each party shall pay
the fees and expenses incurred by it in connection with the transactions
contemplated by this Agreement. If any action is brought for breach of this
Agreement or to enforce any provision of this Agreement, the prevailing party
shall be entitled to recover court costs, arbitration expenses and reasonable
attorneys' fees.
5. This Agreement may be amended at any time but only by an instrument
in writing signed by the parties hereto.
6. All notices and other communications hereunder shall be in writing
and shall be deemed given if delivered by certified mail, return receipt
requested, or by nationally recognized "next-day" delivery service, to the
parties at the addresses set forth in the Time Brokerage Agreement.
7. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors, heirs and permitted assigns.
8. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
9. This Agreement shall be governed by and construed in accordance with
the laws of the State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
TICHENOR MEDIA SYSTEM, INC.
By: /s/ McHenry T. Tichenor, Jr.
-------------------------------------
McHenry T. Tichenor, Jr.
President
[GRANTEE]
HEART UNLIMITED COMPANY
By: /s/ McHenry T. Tichenor
-------------------------------------
2
<PAGE>
TIME BROKERAGE AGREEMENT
This Time Brokerage Agreement, dated as of the 3rd day of February, 1997,
is made by and between Tichenor Media System, Inc., a Texas corporation
("Licensee"), and Heart Unlimited Company, a Delaware corporation ("Broker").
W I T N E S S E T H:
WHEREAS, Licensee has available broadcasting time and is engaged in the
business of radio broadcasting on radio station KXTN-AM in San Antonio, Texas
(the "Station"); and
WHEREAS, Broker desires to avail itself of Station's broadcast time for
the presentation of programming service, including the sale of advertising
time; and
WHEREAS, Licensee is the holder of all licenses issued by governmental
authorities used in the operation of the Station; and
WHEREAS, Broker and Licensee have entered into an Option Agreement (the
"Option Agreement");
NOW, THEREFORE, for and in consideration of the mutual covenants herein
contained, the parties hereto have agreed and do agree as follows:
1. FACILITIES. Licensee agrees to make broadcasting transmission
facilities available to Broker and to broadcast on the Station, or cause to
be broadcast, Broker's programs which will originate from Broker's studios.
Broker will provide a broadcast quality signal to the Station's transmitter
site, either by STL or phone lines, from its broadcast and transmission
studios.
2. TERM OF AGREEMENT. This Agreement shall commence at 12:01 a.m. on
March 1, 1997 (the "Effective Date") and, subject to the terms and
conditions of this Agreement, shall continue for a period of 24 months.
Notwithstanding the foregoing, (A) if in any 30-day period Licensee rejects,
fails to accept or preempts broadcast programs provided by Broker in the
aggregate amount of 48 hours, Broker may terminate this Agreement in its
discretion without any further liability to Licensee; and (B) Licensee may
terminate this Agreement upon 90 days notice to Broker and upon payment to
Broker of an amount in cash equal to the greater of (i) the sum of the
payments received by Licensee from the Broker during the 12 month period
preceding the termination date or (ii) $50,000.
3. PAYMENTS.
3.1 AMOUNT OF PAYMENTS. Broker hereby agrees to pay Licensee for
the broadcast of the programs hereunder the sum of $4,000 per month during
the first
<PAGE>
12 months of the term hereof and $5,000 per month during months 13 through 24
of the term hereof. Broker further agrees to reimburse Licensee, on a
monthly basis, for the costs of operating Licensee's transmitter in the
amount set forth on Schedule 3.1 hereto.
3.2 MANNER OF PAYMENTS. Monthly payments shall be due and payable
in full in advance on the first business day of each month during the term
hereof with the first payment hereunder paid upon the execution of this
Agreement and shall be prorated for partial months. The failure of Licensee
to demand or insist upon prompt payment in accordance herewith shall not
constitute a waiver of its right to do so. If Broker shall have produced and
made available programming to air on the Station as provided herein and such
programming does not air due to Licensee preempting such programming other in
accordance with Section 10 or 11 below, or if for any reason Licensee is
unable to broadcast such programming through no fault of Broker, or if this
Agreement is terminated for any reason (other than a breach of this Agreement
by Broker) prior to the end of a month, then Broker shall receive a payment
credit to be determined by multiplying the monthly payment by the ratio of
the amount of time not aired to the total number of broadcast hours allotted
to Broker each month pursuant to Section 5.1 below.
4. PROGRAMS. Broker shall furnish or cause to be furnished the
artistic personnel and material for the programs as provided by this
Agreement, and all programs shall be in accordance with the requirements and
regulations of the Federal Communications Commission ("Commission"). All
programs shall be prepared and presented in conformity with the regulations
of the Commission. All advertising spots and promotional material or
announcements shall comply with all applicable federal, state and local
regulations and policies and shall be produced in accordance with quality
standards established by Licensee.
5. STATION FACILITIES.
5.1 OPERATION OF STATION. Throughout the term of this Agreement,
Licensee shall make the Station available to the Broker for operation with
the authorized facilities 24 hours a day, seven days a week, except for (i)
at least two hours each week on Sunday morning between the hours of 7:00 a.m.
and 11:00 a.m. during which Licensee will be responsible for public affairs
programming dealing with issues affecting the Station's service area and (ii)
downtime occasioned by routine maintenance not to exceed two hours each
Sunday morning between the hours of 1:00 a.m. and 5:00 a.m. Any maintenance
work affecting the operation of the Station at full power shall be scheduled
upon at least 48 hours' prior notice with the agreement of the Broker, such
agreement not to be unreasonably withheld. It is further understood and
agreed that Licensee shall continue to retain full authority and control over
operation of the Station during the course of this Agreement; to be
responsible for assessment of the needs and interests of the community; and
to
2
<PAGE>
determine that the programs presented are responsive to such needs and
interests, and that all programming continues to meet all federal, state and
local laws, including those that govern political broadcast time,
presentation of lottery material, proper sponsor identification, and other
programming in the public interest. Broker also agrees that all such
programming as presented by Broker will be in full compliance with all such
applicable rules and regulations. Licensee shall also continue to be
responsible for maintenance of the Station's public file in good order as
required by the Commission, including timely placement of a copy of this
Agreement in that file; to prepare and timely file in such file the quarterly
issues/programs list as required by the Commission's rules; to timely file
with the Commission all required reports or other records as required by the
Commission; and to otherwise comply in all respects with the Commission rules
and regulations, including those rules and regulations regarding requests for
political advertising. Broker agrees to cooperate fully in the gathering,
compilation and completion of all such reports as may be required by Licensee.
5.2 INTERRUPTION OF NORMAL OPERATIONS. If the Station suffers loss
or damage of any nature to its transmission facilities which results in the
interruption of service or the inability of the Station to operate with its
authorized facilities, Licensee shall immediately notify Broker, and shall
undertake (or authorize Broker to undertake on Licensee behalf and at
Licensee's expense) such repairs as necessary to restore the full-time
operation of the Station with its authorized facilities as soon as
practicable.
5.3 STUDIO LOCATION. Licensee shall maintain a main studio capable
of providing a broadcast quality signal to the Station's transmission
facility, such main studio to be located within the Station's city-grade
contour. Broker shall be responsible for providing a broadcast quality
signal for its programming either to such main studio location or directly to
the Station's transmission facility.
5.4 TRANSMISSION FACILITY. Licensee shall operate the Station's
transmission facility in accordance with the authorizations issued to
Licensee by the Commission.
6. HANDLING OF MAIL. Except as required to comply with Commission
rules and policies, including those regarding the maintenance of the public
inspection file (which shall at all times remain the responsibility of
Licensee), Licensee shall not be required to receive or handle mail, cables,
telegraph or telephone calls in connection with programs broadcast hereunder
unless Licensee at the request of Broker has agreed in writing to do so.
7. PROGRAMMING AND OPERATIONS STANDARDS. Broker understands that
broadcast program content must comply with certain proscriptions including
but not limited to those governing the broadcast of obscenity and indecency;
presentation of contests; lottery information; credit terms; broadcast of
telephone conversations; and political equal access and covenants that any
such programming supplied by Broker
3
<PAGE>
will be in full compliance with such restrictions. In addition, Broker will
immediately notify Licensee of any violation of any such restriction that
takes place and agrees to hold Licensee harmless for any damages, fines or
other liability or loss that might result from any such broadcast program.
Broker further agrees to cooperate fully with Licensee in the compliance with
the Commission's applicable rules and regulations that govern sale and
placement of political advertising.
8. RESPONSIBILITY FOR EMPLOYEES AND EXPENSES.
(a) Broker shall employ and be responsible for the salaries, taxes,
insurance and related costs for all personnel used in the production and
transmission of its programming (including without limitation salespeople,
traffic personnel, board operators and programming staff). Broker agrees to
abide by any and all legal provisions relating to its own employees,
including any equal employment policies contained in Title VII of the CIVIL
RIGHTS ACT OF 1964 or in any other applicable federal, state or local statute
or regulation and any rule or policy applied or enforced by the Equal
Employment Opportunity Commission or by the Commission, as applicable, and to
cooperate fully with Licensee in the preparation of any Annual Employment
Report (Commission Form 395-B or similar such form) that may be required.
Licensee will provide and be responsible for the Station personnel specified
in Section 10 hereof. All personnel shall be subject to the overall
supervision of Licensee consistent with the Broker's right to the use of the
Station's facilities as provided hereunder.
(b) Broker shall be responsible for all costs associated with the
production and delivery to the Station's transmitter site of Broker's
programming and shall also pay for all telephone calls associated with
production and listener responses, for all fees to ASCAP, BMI and SESAC,
license fees and for any other copyright fees attributable to its programming
broadcast or revenues generated on the Station.
(c) Licensee shall remain responsible for costs associated with the
transmission of all programming at the Station's transmitter site (including
but not limited to rent, utilities, taxes and insurance). Licensee shall be
reimbursed for such costs as provided in Section 3.1 hereof.
9. ADVERTISING AND PROGRAM REVENUES. Broker shall retain all revenues
for the sale of advertising time on the programs it delivers to the Station
and may sell such advertising in combination with the sale of advertising on
any other broadcast stations of its choosing. Licensee shall retain the
revenue from the sale of any advertising on the Station on programs not
produced or delivered to it by Broker.
10. CONTROL OF STATION. Notwithstanding anything to the contrary in
this Agreement, Licensee shall have full authority and power over the
operation of the Station during the period of this Agreement. Licensee shall
provide and pay for a management level employee and another employee who
shall report solely to and be
4
<PAGE>
accountable solely to Licensee and who shall direct the day-to-day operation
of the Station. Licensee shall retain control over the policies, programming
and operations of the Station, including, without limitation, the right to
decide whether to accept or reject any programming or advertisements, the
right to preempt any programs in order to broadcast a program deemed by
Licensee to be of greater national, regional or local interest, and the right
to take any other actions necessary for compliance with the laws of the
United States; the State of Texas; the rules, regulations, and policies of
the Commission (including the prohibition on unauthorized transfers of
control); and the rules, regulations and policies of other federal
governmental authorities. From time to time as requested by Licensee, Broker
shall provide Licensee with information to enable Licensee to prepare
records, reports and logs required by the Commission or other local, state or
federal governmental agencies.
11. SPECIAL EVENTS. Licensee reserves the right, in its discretion, to
preempt any of the broadcasts of the programs referred to herein, and to use
part or all of the time contracted for herein by Broker for the broadcast of
events of special importance. In all such cases, Licensee will use its best
efforts to give Broker reasonable notice of its intention to preempt such
broadcast or broadcasts.
12. FORCE MAJEURE. Any failure or impairment of the Station facilities
or any delay or interruption in broadcasting programs, or the failure at any
time to furnish facilities, in whole or in part, for broadcasting, due to
acts of God, strikes, or threats thereof, FORCE MAJEURE, or to causes beyond
the control of Licensee, shall not constitute a breach of this Agreement, and
Licensee will not be liable to Broker, except to the extent allowing in each
such case an appropriate payment credit for time not provided or broadcasts
not carried based upon a PRO RATA adjustment to amounts due as specified in
Section 3 calculated upon the length of time during which the failure or
impairment exists or continues.
13. RIGHT TO USE THE PROGRAMS AND CALL LETTERS. The right to use the
programs produced by Broker and to authorize their use in any manner and in
any media whatsoever shall be, and remain, vested solely in Broker. Broker
shall retain all copyrights to programs, slogans, trade names, logos and all
other rights associated with the programs produced by Broker. Licensee shall
retain all rights to the use of the call sign KXTN-AM. However, Licensee
recognizes the substantial investment to be made by Broker in the programming
and promotion of Broker's programming on the Station, and Licensee agrees
that Licensee will assign to Broker the right to use any new call sign
assigned to the Station during the term hereof. Licensee agrees to apply for
a new call sign specified by Broker upon Broker's request.
14. PAYOLA. Broker agrees that it will not accept any compensation or
any kind of gift or gratuity of any kind whatsoever, regardless of its value
or form, including, but not limited to, a commission, discount, bonus,
materials, supplies or other merchandise, services or labor, whether or not
pursuant to written contracts or
5
<PAGE>
agreements between Broker and merchants or advertisers, unless the payer is
identified in the program as having paid for or furnished such consideration
in accordance with the Commission's requirements.
15. COMPLIANCE WITH LAW. Broker agrees that, throughout the term of
this Agreement, Broker will comply with all laws and regulations applicable
in the conduct of Licensee's business and Broker acknowledges that Licensee
has not urged, counseled or advised the use of any unfair business practice.
In the event that any new law or regulation is adopted which results in a
material change in the terms of this arrangement (for example, but not
limited to, a restriction on the number of hours which may be brokered), the
parties agree to negotiate in good faith to modify this Agreement to conform
as closely as possible to the interests of both Broker and Licensee and, in
the event of their inability to so modify the Agreement, Broker or Licensee
may without penalty terminate the Agreement on 60 days' notice to Licensee or
such earlier time as the FCC may require.
16. INDEMNIFICATION; WARRANTY. Broker will indemnify and hold Licensee
harmless against all liability for libel, slander, illegal competition or
trade practice, infringement of trade marks, trade names, or program titles,
violation of rights of privacy, and infringement of copyrights and
proprietary rights resulting from the broadcast or programming furnished by
Broker. Further, Broker warrants that the broadcasting of its programs will
not violate any rights of others and Broker agrees to indemnify and hold
Licensee, the Station, and their respective officers, directors, agents,
stockholders, employees, and subsidiaries, harmless from any and all claims,
damages, liability, costs and expenses, including reasonable attorneys' fees,
arising from the broadcasting of such programs. Licensee reserves the right
to refuse to broadcast any and all programs containing matter which is, or in
the reasonable opinion of Licensee may be, or which a third-party claims to
be, violative of any right of theirs or which may constitute a personal
attack as the term is and has been defined by the Commission. Licensee will
indemnify and hold Broker harmless against any and all liability for libel,
slander, illegal competition or trade practice, infringement of trade marks,
trade names, or program titles, violation of rights of privacy, and
infringement of copyrights and proprietary rights arising from Licensee's
preemption and broadcast of Licensee's own programs. Further, Broker's and
Licensee's obligation to hold each other harmless against the liabilities
specified above shall survive any termination of this Agreement until the
expiration of all applicable statutes of limitation. Unless an indemnifying
party assumes the defense of a claim for which indemnity is sought hereunder
on behalf of the indemnified party, the indemnified party shall have the
right to employ its own counsel to conduct such defense (which shall be at
the expense of the indemnifying party). The indemnified party shall render
to the indemnifying party and its counsel such assistance as they may
reasonably require in order to ensure the proper and adequate defense of any
claim for which indemnity is sought hereunder. Neither party will settle any
claim for which indemnity is sought or owed under this
6
<PAGE>
Section 16 in a manner which imposes any cost or penalty on the other party
without the other party's prior written consent.
17. EVENTS OF DEFAULT; CURE PERIODS AND REMEDIES.
17.1 EVENTS OF DEFAULT. The following shall, after the expiration
of the applicable cure periods, constitute Events of Default under the
Agreement:
17.1.1 NON-PAYMENT. Broker's failure to timely pay the
consideration provided for in Section 3 hereof ("Payment Default").
17.1.2 DEFAULT IN COVENANTS. The default by either party
hereto in the observance or performance of any material covenant, condition
or agreement contained herein.
17.2 CURE PERIODS. An Event of Default shall not be deemed to
have occurred until 20 business days (five business days for Payment
Defaults) after the non-defaulting party has provided the defaulting party
with written notice specifying the event or events that if not cured would
constitute an Event of Default and specifying the actions necessary to cure
within such period, except for such Events of Default which threaten to
affect the validity of the Station's licenses which must be cured
immediately. Except in the event of a Payment Default or a default by
Licensee which results in Licensee's inability or unwillingness to make
available to Broker the Station's facilities as provided herein, this period
shall be extended for a reasonable period of time if the defaulting party is
acting in good faith to cure and such delay is not materially adverse to the
other party, except for such Events of Default which threaten to affect the
validity of the Station's licenses which must be cured immediately. The
defaulting party shall use its best efforts to cure. In the event of default
by Licensee which can be cured by payment of money, Broker has the right to
cure default by directly making such payment, in which case Broker may offset
such payment against Broker's obligations in Section 3 above.
17.3 TERMINATION UPON DEFAULT. If an Event of Default occurs, the
non-defaulting party may terminate this Agreement and receive from the
defaulting party such damages or other remedies as are available at law or at
equity.
17.4 LIABILITIES UPON TERMINATION. Broker shall be responsible
for all liabilities, debts and obligations of Broker accrued from the
purchase of air time and transmission facilities including, without
limitation, accounts payable, barter agreements and unaired advertisements.
Upon termination, Broker shall return to Licensee any equipment or property
of the Station used by Broker, its employees or agents, in substantially the
same condition as such equipment existed on the Effective Date, ordinary wear
and tear excepted.
7
<PAGE>
18. REPRESENTATION AND WARRANTIES.
18.1 CORPORATE AUTHORITY. Each of Licensee and Broker represents
to the other that it is legally qualified, empowered and able to enter into
this Agreement, and that the execution, delivery and performance hereof shall
not constitute a breach or violation of any agreement, contract or other
obligation to which it is subject or by which it is bound.
18.2 TIME BROKERAGE CHALLENGE. If this Agreement is challenged at
the Commission, Licensee and Broker will jointly defend this Agreement. If
portions of this Agreement do not thereafter receive the approval of the
Commission staff, the parties shall reform this Agreement, or at Broker's
option and expense, seek reversal of the staff decision and approval from the
full Commission on appeal.
19. MODIFICATION AND WAIVER. No modification or waiver of any provision
of this Agreement shall in any event be effected unless the same shall be in
writing and signed by the party adversely affected by the waiver or
modification, and then such waiver and consent shall be effective only in the
specific instance and for the purpose for which given.
20. NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part of
Licensee or Broker in exercising any right or power hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such
right or power, or any abandonment or discontinuance of steps to enforce such
a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of Licensee
and Broker herein provided are cumulative and are not exclusive of any right
or remedies which it may otherwise have.
21. CONSTRUCTION. This Agreement shall be construed in accordance with
the laws of the State of Texas, and the obligations of the parties hereto are
subject to all federal, state or municipal laws or regulations now or
hereafter in force and to the regulations of the Commission and all other
governmental bodies or authorities presently or hereafter to be constituted.
22. HEADINGS. The headings contained in this Agreement are included for
convenience only and no such heading shall in any way alter the meaning of
any provision.
23. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
assigns, including, without limitation, any assignee of the Commission
license for the Station.
24. COUNTERPART SIGNATURES. This Agreement may be signed in one or more
counterparts, each of which shall be deemed a duplicate original, binding on the
parties
8
<PAGE>
hereto notwithstanding that the parties are not signatory to the original or
the same counterpart. This Agreement shall be effective as of the date on
which the executed counterparts are exchanged by the parties.
25. NOTICES. Any notice required hereunder shall be in writing and any
payment, notice or other communications shall be deemed given when delivered
by certified mail or Federal Express, postage prepaid, with return receipt
requested, and addressed as follows:
If to Licensee, to:
Tichenor Media System, Inc.
100 Crescent Court, Suite 1777
Dallas, Texas 75201
Attention: McHenry T. Tichenor, Jr., President
If to Broker, to:
Heart Unlimited Company
5372 Fredericksburg Road, Suite 240
San Antonio, Texas 78229
26. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
between the parties and there are no other agreements, representations,
warranties, or understandings, oral or written, between them with respect to
the subject matter hereof. No alterations, modification or change of this
Agreement shall be valid unless by like written instrument.
27. SEVERABILITY. The event that any of the provisions contained in
this Agreement is held to be invalid, illegal or unenforceable shall not
affect any other provision hereof, and this Agreement shall be construed as
if such invalid, illegal or unenforceable provisions had not been contained
herein.
28. PURCHASE OPTION. This Agreement is subject to a purchase option
contained in the Option Agreement.
29. INTENDED BENEFICIARIES. The rights and obligations contained in
this Agreement are hereby declared by the parties hereto to have been
provided expressly for the exclusive benefit of such entities as set forth
herein and shall not benefit, and do not benefit, any unrelated third parties.
30. MUTUAL CONTRIBUTION. The parties to this Agreement and their counsel
have mutually contributed to its drafting. Consequently, no provision of this
Agreement shall be construed against any party on the ground that such party
drafted
9
<PAGE>
the provision or caused it to be drafted or the provision contains a covenant
of such party.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
TICHENOR MEDIA SYSTEM, INC.
By: /s/ McHenry T. Tichenor, Jr.
-------------------------------------
[BROKER]
HEART UNLIMITED COMPANY
By: /s/ McHenry T. Tichenor
-------------------------------------
10
<PAGE>
CERTIFICATION
Tichenor Media System, Inc., licensee of Station KXTN-AM, San Antonio,
Texas, hereby certifies pursuant to Section 73.3555(a)(2)(ii) of the Rules
and Regulations of the Federal Communications Commission, 47 C.F.R. Section
73.3555(a)(2)(ii) (1992), that it has and will continue to maintain ultimate
control over the facilities of Station KXTN-AM in connection with the
implementation of the Time Brokerage Agreement of even date herewith,
including specifically with respect to control over station finances,
personnel and programming.
TICHENOR MEDIA SYSTEM, INC.
By: /s/ McHenry T. Tichenor, Jr.
-------------------------------------
<PAGE>
CERTIFICATION
Heart Unlimited Co., in compliance with Section 73.3555(a)(2)(ii) of the
Rules and Regulations of the Federal Communications Commission, hereby
verifies that the Time Brokerage Agreement dated as of February 3, 1997, by and
between Tichenor Media System, Inc. and the undersigned complies with the
provisions of paragraph (a)(1), the radio contour overlap rule, and with the
provisions of paragraph (e)(1), the national multiple ownership rule, of
Section 73.3555, the multiple ownership rule, of the Commission's rules.
[BROKER]
HEART UNLIMITED COMPANY
By: /s/ McHenry T. Tichenor, Jr.
-------------------------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 3/31/97
CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 15,476
<SECURITIES> 0
<RECEIVABLES> 23,352
<ALLOWANCES> 3,037
<INVENTORY> 0
<CURRENT-ASSETS> 41,518
<PP&E> 28,797
<DEPRECIATION> 8,093
<TOTAL-ASSETS> 493,812
<CURRENT-LIABILITIES> 20,287
<BONDS> 0
0
0
<COMMON> 22
<OTHER-SE> 371,740
<TOTAL-LIABILITY-AND-EQUITY> 493,812
<SALES> 23,029
<TOTAL-REVENUES> 23,029
<CGS> 16,444
<TOTAL-COSTS> 20,357
<OTHER-EXPENSES> 1,729
<LOSS-PROVISION> 794
<INTEREST-EXPENSE> 1,730
<INCOME-PRETAX> 943
<INCOME-TAX> 377
<INCOME-CONTINUING> 566
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 566
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0.03
</TABLE>
