<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 June 30, 1998
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.)
3102 Oak Lawn Avenue, Suite 215 75219
Dallas, Texas (Zip Code)
(Address of principal executive offices)
(214) 525-7700
(Registrant's telephone number, including area code)
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 practicable date.
<TABLE>
Class Outstanding at August 6, 1998
- ----- -----------------------------
<S> <C>
Class A Common Stock, $.001 Par Value 35,171,980
Class B Non-Voting Common Stock, $.001 Par Value 14,156,470
</TABLE>
<PAGE>
HEFTEL BROADCASTING CORPORATION
June 30, 1998
INDEX
PART I. FINANCIAL INFORMATION
<TABLE>
<S> <C> <C>
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of June 30, 1998
and December 31, 1997 2
Condensed Consolidated Statements of Operations for the
Three Months Ended June 30, 1998 and 1997 and the Six Months
Ended June 30, 1998 and 1997 3
Condensed Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 1998 and 1997 4
Notes to Condensed Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 6. Exhibits and Reports on Form 8-K 11
</TABLE>
1
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
HEFTEL BROADCASTING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
June 30, December 31,
1998 1997
------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 49,684,934 $ 6,553,271
Accounts receivable, net 34,310,894 29,324,324
Prepaid expenses and other current assets 2,193,114 817,456
------------- -------------
Total current assets 86,188,942 36,695,051
Property and equipment, at cost, net 30,116,757 33,299,917
Intangible assets, net 590,224,109 423,529,926
Deferred charges and other assets, net 20,160,049 18,723,785
------------- -------------
Total assets $ 726,689,857 $ 512,248,679
------------- -------------
------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 31,587,441 $ 25,285,382
Current portion of long-term debt 329,847 440,097
------------- -------------
Total current liabilities 31,917,288 25,725,479
------------- -------------
Long-term obligations, less current portion 1,942,951 14,122,019
------------- -------------
Deferred income taxes 85,341,601 82,441,601
------------- -------------
Stockholders' equity:
Preferred Stock, cumulative, $.001 par value
Authorized 5,000,000 shares; no shares issued
or outstanding - -
Class A Common Stock, $.001 par value
Authorized 50,000,000 shares at June 30, 1998 and
December 31, 1997; issued and outstanding
35,160,497 at June 30, 1998 and 29,978,748 at
December 31, 1997 35,160 29,979
Class B Common Stock, $.001 par value
Authorized 50,000,000 shares at June 30, 1998 and
December 31, 1997; issued and outstanding 14,156,470 14,156 14,156
Additional paid-in capital 664,942,650 459,567,282
Accumulated deficit (57,503,949) (69,651,837)
------------- -------------
Total stockholders' equity 607,488,017 389,959,580
------------- -------------
Total liabilities and stockholders' equity $ 726,689,857 $ 512,248,679
------------- -------------
------------- -------------
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE>
HEFTEL BROADCASTING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net revenues $44,392,528 $37,980,889 $75,739,616 $61,010,262
Operating expenses 25,375,655 22,941,668 45,512,179 39,385,474
----------- ----------- ----------- -----------
Operating income before depreciation,
amortization and corporate expenses 19,016,873 15,039,221 30,227,437 21,624,788
Depreciation and amortization 5,152,097 3,961,786 9,490,653 6,880,094
Corporate expenses 1,575,905 1,325,017 2,762,639 2,319,873
----------- ----------- ----------- -----------
Operating income 12,288,871 9,752,418 17,974,145 12,424,821
----------- ----------- ----------- -----------
Other income (expense):
Interest income (expense), net 1,113,313 (784,741) 2,791,475 (2,392,534)
Other, net - (12,602) - (133,907)
----------- ----------- ----------- -----------
1,113,313 (797,343) 2,791,475 (2,526,441)
----------- ----------- ----------- -----------
Income before income tax 13,402,184 8,955,075 20,765,620 9,898,380
Income tax 5,598,714 3,582,028 8,617,732 3,959,350
----------- ----------- ----------- -----------
Net income $ 7,803,470 $ 5,373,047 $12,147,888 $ 5,939,030
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net income per common share -
basic and diluted $ 0.16 $ 0.12 $ 0.25 $ 0.15
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted average common shares outstanding:
Basic 49,316,967 44,135,218 48,713,068 39,206,833
Diluted 49,617,324 44,150,810 49,040,084 39,215,296
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
HEFTEL BROADCASTING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
Six Months Ended
June 30,
------------------------------
1998 1997
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 12,147,888 $ 5,939,030
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Provision for bad debts 598,963 1,862,196
Depreciation and amortization 9,490,653 6,880,094
Deferred income taxes 2,900,000 2,328,317
Other (9,907) 710,548
Changes in operating assets and liabilities (617,934) (1,147,826)
------------- -------------
Net cash provided by operating activities 24,509,663 16,572,359
------------- -------------
Cash flows from investing activities:
Property and equipment acquisitions (1,887,647) (2,178,596)
Acquisitions of radio stations (170,954,029) (1,402,737)
Additions to intangible assets (107,047) (903,594)
Increase in deferred charges and other assets, net (1,678,513) (10,345,016)
------------- -------------
Net cash used in investing activities (174,627,236) (14,829,943)
------------- -------------
Cash flows from financing activities:
Borrowings on long-term obligations - 56,038,990
Payment of debt issue costs - (1,200,000)
Payments on long-term obligations (12,289,318) (226,643,234)
Proceeds from stock issuances 205,538,554 177,085,075
Other - 55,186
------------- -------------
Net cash provided by financing activities 193,249,236 5,336,017
------------- -------------
Net increase in cash and cash equivalents 43,131,663 7,078,433
Cash and cash equivalents at beginning of period 6,553,271 4,787,652
------------- -------------
Cash and cash equivalents at end of period $ 49,684,934 $ 11,866,085
------------- -------------
------------- -------------
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
HEFTEL BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1998
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 and six month periods ended June 30, 1998 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1998. For further information, refer to the consolidated
financial statements and notes thereto included in Heftel Broadcasting
Corporation's Annual Report on Form 10-K for the year ended December 31, 1997.
On November 6, 1997, the Board of Directors of the Company authorized a
two-for-one stock split payable in the form of a stock dividend of one share
of common stock for each issued and outstanding share of common stock. The
dividend was paid on December 1, 1997, to all holders of common stock at the
close of business on November 18, 1997. The net income per common share and
other per share information for all periods presented has been restated to
reflect this two-for-one stock split.
In 1997, the Company adopted Statement of Financial Accounting Standards
No. 128, "Earnings Per Share." Basic earnings per common share is based on
net earnings after preferred stock dividend requirements, if any, and the
weighted-average number of Class A and Class B common shares outstanding
during the period. Diluted earnings per common share assumes the exercise or
conversion of securities (such as stock options) into common stock at the
later of the beginning of the period or date of issuance and includes the
add-back of related interest expense and/or dividends, as required. The
adoption of this new accounting standard, which required the restatement of
all presented periods' earnings per share data, did not have a material
impact on previously reported earnings per share.
Effective with fiscal years beginning after December 15, 1997, companies
are required to adopt Statement of Financial Accounting Standards ("SFAS")
No. 130 "Reporting Comprehensive Income." The Statement establishes standards
for the reporting and display of comprehensive income and its components in a
full set of general-purpose financial statements. Comprehensive income
includes net income and other comprehensive income, which comprises certain
specific items previously reported directly in stockholders' equity. Other
comprehensive income comprises items such as unrealized gains and losses on
debt and equity securities classified as available-for-sale securities,
minimum pension liability adjustments, and foreign currency translation
adjustments. Since the Company does not currently have any of these other
comprehensive income items, the Company's comprehensive income equals its net
income. Therefore, SFAS No. 130 has no impact on the way the Company reports
or has reported its financial statements.
2. ACQUISITIONS AND DISPOSITIONS
On January 2, 1997, the Company acquired an option to purchase all of
the assets used in connection with the operation of KSCA(FM), Glendale,
California (the "KSCA Option"). In connection with the acquisition of the
KSCA Option, the Company began providing programming to KSCA(FM) under a time
brokerage agreement on February 5, 1997. The KSCA Option, which is
exercisable only upon the death of Gene Autry, the indirect principal
stockholder of the seller, had an initial term which expired on December 31,
1997. The KSCA Option is renewable for additional one-year terms during the
lifetime of Mr. Autry upon payment by the Company of $3.0 million on or
before the then scheduled
5
<PAGE>
expiration date of the KSCA Option. On February 4, 1997, the Company made an
initial payment of $10.0 million, as required under the option agreement. On
December 29, 1997, the Company renewed the KSCA Option through December 31,
1998. All such payments will be credited against the purchase price for the
KSCA(FM) assets if the KSCA Option is exercised. If the KSCA Option is not
exercised or renewed, all amounts paid will be charged to expense. The
purchase price for the KSCA(FM) assets is the greater of (a) $112.5 million,
or (b) the sum of (i) $105.0 million, plus (ii) an amount equal to $13,699
per day during the term of the time brokerage agreement. Consummation of the
purchase will be subject to a number of conditions, including approval by the
FCC of the transfer of the FCC licenses.
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 "Tichenor Merger"). At the time of the Tichenor
Merger, Tichenor owned or programmed 20 radio stations in six of the ten
largest Hispanic markets in the United States. The merger was effected
through the merger of a wholly-owned subsidiary of the Company with and into
Tichenor. In connection with the merger, management of Tichenor assumed
management responsibilities of the Company. Pursuant to the Tichenor Merger,
the former Tichenor shareholders and warrant holders received an aggregate of
11,379,756 shares of Common Stock. At the time of the Tichenor Merger,
Tichenor had outstanding approximately $72.0 million of long-term debt, which
was subsequently refinanced by the Company. In addition, all of Tichenor's
outstanding shares of 14% Senior Redeemable Cumulative Preferred Stock
("Tichenor Senior Preferred") were redeemed for approximately $3.4 million.
The total purchase price, including closing costs, allocated to net assets
acquired, was approximately $181.2 million.
On December 1, 1997, the Company entered into an asset exchange
agreement to exchange WPAT(AM), serving the New York City market, and $115.5
million in cash for the assets of WCAA(FM) (formerly WNWK(FM)), serving the
New York City market (the "WCAA(FM) Acquisition"). The WCAA(FM) Acquisition
closed on May 22, 1998. Immediately after closing, the station's programming
was converted to a Spanish language format.
On March 25, 1998, the Company entered into an asset purchase agreement
to acquire the assets of KLTN(FM) (the "KLTN(FM) Acquisition", formerly
KKPN(FM)) serving the Houston market for $54.0 million. The KLTN(FM)
Acquisition closed on May 29, 1998. Immediately after closing, the station's
programming was converted to a Spanish language format.
The Company entered into an asset purchase agreement on May 26, 1998 to
acquire the assets of KJQY(FM) and KKLQ(FM) serving the San Diego market (the
"San Diego Acquisition") for $65.2 million. Following the consummation of the
San Diego Acquisition, the Company plans to convert the stations' programming
to a Spanish language format. Consummation of the purchase is subject to a
number of conditions.
Pro forma results of operations for the three and six months ended June
30, 1998 and 1997, calculated as though the Tichenor Merger and completed
acquisitions had occurred at the beginning of 1997, is as follows (dollars in
thousands, except per share data):
<TABLE>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net revenues $44,991 $39,254 $77,374 $68,140
Operating income 11,771 8,879 16,604 9,613
Net income (loss) 6,619 2,989 8,704 (1,102)
Net income (loss) per common share --
basic and diluted 0.13 0.07 0.18 (0.03)
</TABLE>
6
<PAGE>
The pro forma results of operations does not purport to represent what
the Company's results of operations actually would have been had the Tichenor
Merger occurred at the date specified, or to project the Company's results of
operations for any future period.
1. LONG-TERM OBLIGATIONS
On January 29, 1998, the Company repaid the outstanding balance of the
$300.0 million revolving credit facility (the "Credit Facility") which was
$12.0 million. Proceeds from the January 1998 secondary public stock offering
(the "January 1998 Offering") were used to retire this obligation.
The Company's ability to borrow 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 subsidiaries. Borrowings under the Credit Facility bear interest at
a rate based on the LIBOR rate plus an applicable margin as determined by the
Company's leverage ratio. The Company has $300.0 million of credit available
and may elect under the terms of the Credit Facility to increase the facility
by $150.0 million. Availability under the Credit Facility decreases quarterly
commencing September 30, 1999 and ending December 31, 2004.
On February 12, 1997, the Company repaid borrowings of $142.5 million
outstanding under an existing $155 million credit facility with a portion of
the proceeds from the February 1997 secondary public stock offering (the
"February 1997 Offering"). On February 14, 1997, the Company entered into the
new Credit Facility, replacing the existing credit facility. The Company used
advances under the Credit Facility and a portion of the proceeds from the
February 1997 Offering to retire the outstanding debt and senior preferred
stock of Tichenor assumed on the date of the Tichenor Merger.
2. STOCKHOLDERS' EQUITY
On January 22, 1998, the Company completed the January 1998 Offering
selling 5,175,000 shares of Class A Common Stock in an underwritten public
offering for a total of approximately $205.5 million in proceeds. The Company
completed the February 1997 Offering on February 10, 1997, selling 4,830,000
(pre-split) shares of its Class A Common Stock in an underwritten public
offering for a total of approximately $176.4 million in proceeds.
3. LONG-TERM INCENTIVE PLAN
On May 21, 1997, the stockholders of the Company approved the Heftel
Broadcasting Corporation Long-Term Incentive Plan (the "Incentive Plan"). The
types of awards that may be granted under the Incentive Plan include (a)
incentive stock options, (b) non-qualified stock options, (c) stock
appreciation rights, (d) rights to receive a specified amount of cash or
shares of Class A Common Stock and (e) restricted stock. In addition, the
Incentive Plan provides that directors of the Company may elect to receive
some or all of their annual director compensation in the form of shares of
Class A Common Stock. Subject to certain exceptions set forth in the
Incentive Plan, the aggregate number of shares of Class A Common Stock that
may be the subject of awards under the Incentive Plan at one time shall be an
amount equal to (a) five percent of the total number of shares of Class A
Common Stock outstanding from time to time minus (b) the total number of
shares of Class A Common Stock subject to outstanding awards on the date of
calculation under the Incentive Plan and any other stock-based plan for
employees or directors of the Company (other than the Company's Employee
Stock Purchase Plan). The Company has granted incentive and non-qualified
stock options for 1,018,084 shares of Class A Common Stock to directors and
key employees. The exercise prices range from $16.44 to $43.94 per share and
were equal to the fair market value of the Class A Common Stock on the dates
such options were granted.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
The performance of a radio station group is customarily measured by its
ability to generate broadcast cash flow. The two components of broadcast cash
flow are net revenues (gross revenues net of agency commissions) and
operating expenses (excluding depreciation, amortization and corporate
general and administrative expense). The primary source of revenues is the
sale of broadcasting time for advertising. The Company's most significant
operating expenses for purposes of the computation of broadcast cash flow are
employee salaries and commissions, programming expenses, advertising and
promotion expenses. The Company strives to control these expenses by working
closely with local station management. The Company's revenues vary throughout
the year. As is typical in the radio broadcasting industry, the Company's
first calendar quarter generally produces the lowest revenues. The second and
third quarters generally produce the highest revenues.
Broadcast cash flow is not calculated in accordance with generally
accepted accounting principles. This measure should not be considered in
isolation or as a substitute for operating income, cash flows from operating
activities or any other measure for determining the Company's operating
performance or liquidity that is calculated in accordance with generally
accepted accounting principles. Broadcast cash flow does not take into
account the Company's debt service requirements and other commitments and,
accordingly, broadcast cash flow is not necessarily indicative of amounts
that may be available for dividends, reinvestment in the Company's business
or other discretionary uses.
COMPARISON OF THREE AND SIX MONTHS ENDED JUNE 30, 1998 TO THREE AND SIX
MONTHS ENDED JUNE 30, 1997
The results of operations for the three and six months ended June 30,
1998 are not comparable to results of operations for the same periods in 1997
primarily due to (a) the Tichenor Merger which closed February 14, 1997, and
(b) the start-up of radio stations KSCA(FM) in Los Angeles on February 5,
1997, WCAA(FM) in New York on May 22, 1998 and KLTN(FM) in Houston on May 29,
1998.
Net revenues increased by $6.4 million or 16.9% to $44.4 million in the
three months ended June 30, 1998 from $38.0 million in the same quarter of
1997. Net revenues for the six months ended June 30, 1998 increased by $14.7
million, or 24.1% to $75.7 million, compared to $61.0 million for the same
period in 1997. Net revenues increased for the three and six months ended
June 30, 1998 compared to the same periods in 1997 primarily because of the
Tichenor Merger, the operation of KSCA(FM) during all of the six months ended
June 30, 1998, compared to a portion of the same periods in 1997 and revenue
growth of start-up stations other than KSCA(FM). Had the Tichenor Merger and
WCAA(FM) acquisition occurred on January 1, 1997, net revenues for the three
and six months ended June 30, 1998 would have increased 14.6% and 13.6%,
respectively.
Operating expenses increased by $2.4 million, or 10.6% to $25.4 million
for the three months ended June 30, 1998 from $22.9 million for the same
period of 1997. Operating expenses for the six months ended June 30, 1998
increased by $6.1 million, or 15.6%, to $45.5 million, compared to $39.4
million for the six months ended June 30, 1997. Operating expenses increased
primarily due to the Tichenor Merger and the start-up of WCAA(FM) in New York
and KLTN(FM) in Houston. Bad debt expense (included in operating expenses)
decreased $1.3 million or 67.8% to $0.6 million for the six months ended June
30, 1998 from $1.9 million for the same period of 1997. The decrease in bad
debt expense in 1998 is due to the allowance for doubtful accounts needing a
smaller increase compared to the same period in 1997. Had the Tichenor Merger
occurred on January 1, 1997, operating expenses would have increased 9.4% and
3.8%, to $33.2 million and $60.8 million for the three and six months ended
June 30, 1998, respectively, on a pro forma basis compared to the same period
of 1997.
Operating income before corporate expenses, depreciation and
amortization ("broadcast cash flow") for the three and six months ended June
30, 1998 increased 26.5% and 39.8% to $19.0 million and $30.2 million,
respectively, compared to $15.0 million and $21.6 million, respectively, for
the three and six
8
<PAGE>
months ended June 30, 1997. Had the Tichenor Merger occurred on January 1,
1997, broadcast cash flow would have increased 24.5% and 32.5%, to $19.3
million and $30.9 million, respectively, on a pro forma basis for the three
and six months ended June 30, 1998, compared to the same periods of 1997.
Corporate expenses increased by $0.3 million, or 18.9%, to $1.6 million
for the three months ended June 30, 1998 compared to the same period of 1997.
Corporate expenses for the six months ended June 30, 1998 increased by $0.4
million, or 19.1%, to $2.8 million, compared to the same period of 1997. The
increase was primarily due to higher staffing costs of the Company after the
Tichenor Merger. Depreciation and amortization for the quarter ended June 30,
1998 increased 30.0% to $5.2 million compared to $4.0 million for the same
period in 1997. Depreciation and amortization for the six months ended June
30, 1998 increased 37.9% to $9.5 million compared to $6.9 million for the
same period of 1997. The increase in both periods is due to radio station
acquisitions, capital expenditures and the additional depreciation and
amortization associated with the Tichenor Merger included in all of the six
months ended June 30, 1998, compared to a portion of the same period in 1997.
Interest expense, net decreased from $0.8 and $2.4 million for the three
and six months ended June 30, 1997, respectively, to $1.1 and $2.4 million of
interest income, net for the three and six months ended June 30, 1998. The
reduction in interest expense was the result of the repayment of debt funded
from the January 1998 Offering. Interest income increased due to a $193.5
million increase in invested cash from the January 1998 Offering.
Federal and state income taxes are being provided at an effective rate
of 41.5% in 1998 and 40% in 1997. The increase in the effective tax rate in
1998 is due to goodwill amortization which is not deductible for tax purposes.
For the three months ended June 30, 1998, the Company's net income
totaled $7.8 million ($0.16 per common share) compared to $5.4 million ($0.12
per common share) in the same period of 1997. For the six months ended June
30, 1997, the Company's net income totaled $12.1 million compared to $5.9
million in the same period of 1997.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities for the six months ended June
30, 1998 was $23.5 million as compared to $16.6 million for the same period
of 1997. Capital expenditures totaled $1.9 million and $2.2 million for the
six months ended June 30, 1998 and 1997, respectively. The Company repaid on
January 29, 1998, the entire balance of $12.0 million outstanding under the
Credit Facility. For the six months ended June 30, 1998, the Company repaid
$0.3 million of other Company indebtedness. On February 12, 1997, the entire
balance of $142.5 million outstanding under the Company's prior credit
agreement was repaid with the proceeds from the February 1997 Offering. On
February 14, 1997, the Company entered into the Credit Facility. Also on
February 14, 1997, the Company borrowed $46.0 million under the Credit
Facility and used a portion of the remaining proceeds from the February 1997
Offering to repay approximately $72.0 million of Tichenor related debt and to
redeem the Tichenor Senior Preferred assumed in connection with the Tichenor
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 radio station acquisitions and capital expenditures. The Company
believes it will have sufficient cash on hand and cash provided by
operations, borrowings under the Credit Facility, and proceeds from
securities offerings to finance its operations and satisfy its debt service
requirements. The Company regularly reviews potential acquisitions. The
Company intends to finance acquisitions primarily through proceeds from
securities offerings, additional borrowings under the Credit Facility and/or
from cash provided by operations.
9
<PAGE>
ACCOUNTING PRONOUNCEMENTS
Statement of Position ("SOP") 98-5, "Reporting on the Costs of
Start-Up Activities," was issued by the American Institute of Certified
Public Accountants in April 1998. This SOP provides guidance on the financial
reporting of start-up and organizational costs. It requires start-up
activities and organization costs to be expensed as incurred. The Company
presently expenses start-up and organization costs as incurred.
YEAR 2000
The Year 2000 problem is the result of computer programs being
written using two digits rather than four to define the applicable year.
Programs that have time-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations.
The Company has been replacing its software as part of its long-term
technological plans. The new software being implemented functions properly
with respect to dates in the year 2000 and thereafter. Implementation of the
new software is not expected by the Company to materially effect future
financial results. The Company is relying on vendors' assurances that their
systems will function properly with respect to dates in the year 2000 and
thereafter.
FORWARD LOOKING STATEMENTS
Certain statements contained in this report are not based on
historical facts, but are forward looking statements that are based on
numerous assumptions made as of the date of this report. When used in the
preceding and following discussions, 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.
This report should be read in conjunction with the Company's Annual Report on
Form 10-K. The Company disclaims any obligation to update the forward looking
statements in this report.
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.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Company held its Annual Meeting of Stockholders on June 4,
1998 in Dallas, Texas
10
<PAGE>
(b) The stockholders of the Company voted to elect five members to
the Board of Directors as follows:
<TABLE>
VOTES
DIRECTORS FOR AGAINST ABSTENTIONS
--------- --- ------- -----------
<S> <C> <C> <C>
McHenry T. Tichenor, Jr. 27,411,138 0 174,513
McHenry T. Tichenor 27,406,248 0 179,403
Robert W. Hughes 27,436,438 0 149,213
James M. Raines 27,435,738 0 149,913
Ernesto Cruz 26,521,638 0 1,064,013
</TABLE>
The stockholders of the Company also voted to amend the Company's
Second Amended and Restated Certificate of Incorporation to increase the
number of authorized shares of Class A Common Stock of the Company from 50
million shares to 100 million shares as follows:
<TABLE>
FOR AGAINST ABSTENTIONS
--- ------- -----------
<S> <C> <C>
27,232,041 351,819 1,791
</TABLE>
The stockholders of the Company also voted to ratify the appointment
of KPMG Peat Marwick LLP as independent auditors for the fiscal year ending
December 31, 1998 as follows:
<TABLE>
BROKER
FOR AGAINST ABSTENTIONS NON-VOTES
--- ------- ----------- ---------
<S> <C> <C> <C>
27,581,484 1,050 3,117 0
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
Exhibit
No. Description of Exhibit
------- ----------------------
<S> <C>
3.1 Second Amended and Restated Certificate of
Incorporation of the Registrant dated February 14, 1997
(incorporated by reference to Exhibit 3.1 to the
Registrant's Form 8-K filed March 3, 1997)
3.2 Amended and Restated Bylaws of the Registrant
(incorporated by reference to Exhibit 3.1 to the
Company's Registration Statement on Form S-1, as amended
Reg. No. 33-78370)
4.1 Credit Agreement among the Registrant and its
subsidiaries, The Chase Manhattan Bank, as administrative
agent, and certain other lenders, dated February 14, 1997
without Exhibits (Schedules omitted) (incorporated by
reference to Exhibit 10.5 to the Registrant's Form 8-K
filed on March 3, 1997)
10.1 Assets Purchase Agreement, dated May 26, 1998, by and
between Citicasters Co. and Heftel Broadcasting
Corporation, HBC San Diego, Inc. and HBC San Diego
License Corporation
27 Financial Data Schedule
</TABLE>
11
<PAGE>
(b) Reports on Form 8-K
The Company filed a report on Form 8-K dated July 31, 1998
disclosing the acquisition of radio stations WCAA(FM) (formerly
WNWK(FM)) and KLTN(FM) (formerly KKPN(FM)).
The Company filed a report on Form 8-K/A dated July 31,
1998 which included the balance sheet of MultiCultural Radio
Broadcasting, Inc. ("MultiCultural") as of December 31, 1997 and
the related statements of income, stockholder's equity, and cash
flows for the year then ended, with an Independent Auditors'
Report dated February 26, 1998. MultiCultural operated radio
station WCAA(FM) (formerly WNWK(FM)). Unaudited financial
statements of MultiCultural included were (a) balance sheet as of
March 31, 1998, (b) a statement of stockholder's equity for the
three months ended March 31, 1998 and (c) statements of income
and cash flows for the three months ended March 31, 1998 and 1997.
Also included were unaudited pro forma condensed consolidated
statements of operations for the year ended December 31, 1997 and
the three months ended March 31, 1998 along with an unaudited pro
forma condensed consolidated balance sheet as of March 31, 1998.
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: August 6, 1998
12
<PAGE>
INDEX TO EXHIBITS
<TABLE>
Exhibit No. Description
- ----------- -----------
<S> <C>
3.1 Second Amended and Restated Certificate of Incorporation of the
Registrant dated February 14, 1997 (incorporated by reference to
Exhibit 3.1 to the Registrant's Form 8-K filed March 3, 1997)
3.2 Amended and Restated Bylaws of the Registrant (incorporated by
reference to Exhibit 3.1 to the Company's Registration Statement
on Form S-1, as amended Reg. No. 33-78370)
4.1 Credit Agreement among the Registrant and its subsidiaries, The
Chase Manhattan Bank, as administrative agent, and certain other
lenders, dated February 14, 1997 without Exhibits (Schedules
omitted) (incorporated by reference to Exhibit 10.5 to the
Registrant's Form 8-K filed on March 3, 1997)
10.1 Assets Purchase Agreement, dated May 26, 1998, by and between
Citicasters Co. and Heftel Broadcasting Corporation, HBC San Diego,
Inc. and HBC San Diego License Corporation
27 Financial Data Schedule
</TABLE>
13
<PAGE>
ASSETS PURCHASE AGREEMENT
BY AND AMONG
CITICASTERS CO.
AND
HEFTEL BROADCASTING CORPORATION,
HBC SAN DIEGO, INC.
AND
HBC SAN DIEGO LICENSE CORPORATION
RESPECTING THE SALE OF
RADIO STATIONS KKLQ-FM AND KJQY-FM
<PAGE>
TABLE OF CONTENTS
<TABLE>
PAGE
----
<S> <C>
ARTICLE 1 PURCHASE OF ASSETS 2
1.1 TRANSFER OF ASSETS 2
1.2 EXCLUDED ASSETS 3
ARTICLE 2 ASSUMPTION OF OBLIGATIONS 4
2.1 ASSUMPTION OF OBLIGATIONS 4
2.2 RETAINED LIABILITIES 4
ARTICLE 3 CONSIDERATION 5
3.1 DELIVERY OF CONSIDERATION 5
3.2 RESERVE 5
3.3 PRORATION OF INCOME AND EXPENSES 5
3.4 ALLOCATION OF PURCHASE PRICE 6
ARTICLE 4 CLOSING 6
4.1 CLOSING 6
4.2 TIME BROKERAGE AGREEMENT 6
ARTICLE 5 GOVERNMENTAL CONSENTS 6
5.1 FCC CONSENT AND DEPARTMENT OF JUSTICE CONSENT 6
5.2 FCC APPLICATION 7
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF BUYER 8
6.1 ORGANIZATION AND STANDING 8
6.2 AUTHORIZATION AND BINDING OBLIGATION 8
6.3 QUALIFICATION 8
6.4 ABSENCE OF CONFLICTING AGREEMENTS OF REQUIRED CONSENTS 8
6.5 LITIGATION 9
6.6 COMMISSIONS OR FINDER'S FEES 9
6.7 AVAILABILITY OF FUNDS 9
ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF SELLER 9
7.1 ORGANIZATION AND STANDING 9
7.2 AUTHORIZATION AND BINDING OBLIGATION 9
7.3 ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS 10
7.4 GOVERNMENT AUTHORIZATIONS 10
7.5. COMPLIANCE WITH FCC REGULATIONS 11
7.6 TAXES 11
7.7 PERSONAL PROPERTY 11
ii
<PAGE>
7.8 REAL PROPERTY 11
7.9 CONTRACTS 12
7.10 STATUS OF CONTRACTS, ETC. 12
7.11 ENVIRONMENTAL 12
7.12 INTELLECTUAL PROPERTY 13
7.13 PERSONNEL INFORMATION 13
7.14 LITIGATION 13
7.15 COMMISSIONS OR FINDER'S FEES 14
7.16 INSURANCE 14
SECTION 8 COVENANTS OF BUYER 14
8.1 CLOSING 14
8.2 NOTIFICATION 14
8.3 NO INCONSISTENT ACTION 14
8.4 ACCOUNTS RECEIVABLE 14
SECTION 9 COVENANTS OF SELLER 15
9.1 SELLER'S PRE-CLOSING COVENANTS 15
9.2 NOTIFICATION 16
9.3 NO INCONSISTENT ACTION 16
9.4 CLOSING 16
9.5 OTHER ITEMS 16
SECTION 10 JOINT COVENANTS 17
10.1 CONFIDENTIALITY 17
10.2 COOPERATION 18
10.3 CONTROL OF STATIONS 18
10.4 CONSENTS TO ASSIGNMENT 18
10.5 FILINGS 18
10.6 EMPLOYEE MATTERS 19
10.7 SECTION 1031 ASSET EXCHANGE 19
10.8 KJQY CALL LETTERS 20
10.9 TRUST 20
10.10 TRAFFIC AGREEMENTS 20
10.11 STUDIO LEASE 21
10.12 CONTRACT TERMINATIONS 21
ARTICLE 11 CONDITIONS OF CLOSING BY BUYER 21
11.1 REPRESENTATIONS, WARRANTIES AND COVENANTS 21
11.2 GOVERNMENTAL CONSENTS 22
11.3 [RESERVED] 22
11.4 GOVERNMENTAL AUTHORIZATIONS 22
11.5 ADVERSE PROCEEDINGS 22
iii
<PAGE>
11.6 THIRD-PARTY CONSENTS, ETC. 22
11.7 CLOSING DOCUMENTS 22
11.8 TRUST 22
11.9 STUDIO LEASE. 22
ARTICLE 12 CONDITIONS OF CLOSING BY SELLER 23
12.1 REPRESENTATIONS, WARRANTIES AND COVENANTS 23
12.2 GOVERNMENTAL CONSENTS 23
12.3 ADVERSE PROCEEDINGS 23
12.4 CLOSING DOCUMENTS 23
12.5 THIRD-PARTY CONSENTS 23
12.6 NATIONWIDE CLOSING 24
12.7 TRUST 24
ARTICLE 13 TRANSFER TAXES; FEES AND EXPENSES 24
13.1 EXPENSES 24
13.2 TRANSFER TAXES AND SIMILAR CHARGES 24
13.3 GOVERNMENTAL FILING OR GRANT FEES 24
ARTICLE 14 DOCUMENTS TO BE DELIVERED AT CLOSING 24
14.1 SELLER'S DOCUMENTS 24
14.2 BUYER'S DOCUMENTS 25
ARTICLE 15 SURVIVAL; INDEMNIFICATION; ETC. 26
15.1 SURVIVAL OF REPRESENTATIONS, ETC. 26
15.2 INDEMNIFICATION 26
15.3 PROCEDURES; THIRD PARTY AND DIRECT INDEMNIFICATION CLAIMS 27
ARTICLE 16 TERMINATION RIGHTS 28
16.1 TERMINATION 28
16.2 LIABILITY 29
16.3 MONETARY DAMAGES, SPECIFIC PERFORMANCE AND OTHER REMEDIES 29
16.4 SELLER'S LIQUIDATED DAMAGES 30
ARTICLE 17 MISCELLANEOUS PROVISIONS 30
17.1 RISK OF LOSS 30
17.2 CERTAIN INTERPRETIVE MATTERS AND DEFINITIONS 30
17.3 FURTHER ASSURANCES 31
17.4 BENEFIT AND ASSIGNMENT 31
17.5 AMENDMENTS 31
17.6 HEADINGS 31
17.7 GOVERNING LAW 31
17.8 NOTICES 32
iv
<PAGE>
17.9 COUNTERPARTS 32
17.10 NO THIRD PARTY BENEFICIARIES 33
17.11 SEVERABILITY 33
17.12 ENTIRE AGREEMENT 33
17.13 HEFTEL GUARANTY 33
</TABLE>
v
<PAGE>
LIST OF SCHEDULES AND EXHIBITS
<TABLE>
<S> <C>
Schedule 1.2.9 Miscellaneous Excluded Assets
6.3 Buyer Qualifications
7.4 Station Licenses, Etc.
7.4.4 Restrictions on Operating Status
7.7 Tangible Personal Property
7.8 Real Property
7.9 (a) Contracts
7.9 (b) Material Contracts
7.11 Environmental Matters
7.12 Intellectual Property
7.13 Personnel Information
7.15 Litigation
7.16 Insurance
Exhibit
A Unwind Agreement
B Time Brokerage Agreement
C Assignment and Assumption Agreement
D KKLQ-FM Tower Site Lease
</TABLE>
vi
<PAGE>
ASSETS PURCHASE AGREEMENT
THIS ASSETS PURCHASE AGREEMENT (this "Agreement") is made and entered this
26 day of May, 1998, by and among CITICASTERS CO., an Ohio corporation
("Seller"), and HBC SAN DIEGO, INC., a Delaware corporation, and HBC SAN DIEGO
LICENSE CORPORATION, a Delaware corporation (together, "Buyer"), and HEFTEL
BROADCASTING CORPORATION, a Delaware corporation, solely for the purposes of
Section 17.13 ("Heftel").
RECITALS
WHEREAS, Seller owns and operates radio stations KKLQ(FM), 106.5 MHZ, and
KJQY(FM), 102.9 MHZ, each licensed to San Diego, California (the "Citicasters
Stations") pursuant to licenses issued by the Federal Communications Commission
("FCC"); and
WHEREAS, Seller has entered into an Agreement Of Sale dated December 19,
1997 with Nationwide Mutual Insurance Company, Employers Insurance Of Wausau A
Mutual Company, Nationwide Communications Inc., San Diego Lotus Corp., and The
Beak And Wire Corporation (collectively hereinafter referred to as
"Nationwide") (the "Nationwide Agreement") pursuant to which Seller will
purchase from Nationwide all of the assets, including without limitation the
licenses issued by the FCC, owned by Nationwide in connection with the
operation of radio stations KMCG(FM), licensed to Carlsbad, California and
KXGL(FM), licensed to San Diego, California (the "Nationwide Stations");
WHEREAS, Buyer and Seller desire that after, or simultaneously with, the
consummation of the transactions contemplated in the Nationwide Agreement (the
"Nationwide Closing"), in order to comply with FCC ownership limits, Seller
will sell and Buyer will purchase certain assets and assume certain obligations
associated with the ownership and operation of the Nationwide Stations, and
will purchase certain assets and assume certain obligations associated with the
ownership and operation of the Citicasters Stations, including but not limited
to the FCC licenses and authorizations of the Citicasters Stations
(collectively hereinafter the assets to be transferred comprise the
"Stations"), all on the terms and subject to the conditions set forth herein;
WHEREAS, if the consummation of the transactions contemplated herein does
not occur simultaneous with the Nationwide Closing, Seller and Buyer hereby
desire that Seller may, at Seller's option and with prior FCC consent, assign
and transfer the assets and licenses of the Nationwide Stations to a trustee
("Trustee") pursuant to a trust agreement (the "Trust"), and upon such
circumstances, if necessary, the Trustee would be charged with the realization
of the transactions contemplated hereunder on Seller's behalf and would be
required to perform Seller's duties hereunder with respect to the Stations
Assets held in the Trust; and
WHEREAS, if the consummation of the transactions contemplated herein does
not occur simultaneous with the Nationwide Closing, Seller and Buyer hereby
desire to enter into a time
<PAGE>
brokerage agreement ("Time Brokerage Agreement") whereby Buyer will broker the
Stations commencing on the Effective Date (as defined in the Time Brokerage
Agreement).
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements hereinafter set forth, the parties hereto, intending
to be legally bound, hereby agree as follows:
ARTICLE 1
PURCHASE OF ASSETS
1.1 TRANSFER OF ASSETS. On the terms and subject to the conditions
hereof and subject to Section 1.2, on the Closing Date (as hereinafter
defined), Seller shall sell, assign, transfer, convey and deliver to Buyer,
and Buyer shall purchase and assume from Seller, all of the right, title and
interest of Seller in and to all of the assets, properties, interests and
rights of Seller of whatsoever kind and nature, real and personal, tangible
and intangible, owned or leased (to the extent of Seller's leasehold interest)
by Seller as the case may be which are used exclusively or held for use
exclusively in the operation of the Stations AND which are specifically
described in this Section 1.1 (the "Stations Assets"):
1.1.1 all licenses, permits and other authorizations issued to
Seller by any governmental or regulatory authority including without
limitation those issued by the FCC ONLY with respect to the Citicasters
Stations (the licenses, permits and authorizations issued by the FCC are
hereafter referred to as the "Citicasters Stations Licenses") used or held for
use in connection with the operation of the Citicasters Stations as described
in SCHEDULE 7.4, along with renewals or modifications of such items between
the date hereof and the Closing Date;
1.1.2 all equipment, electrical devices, antennae, cables, tools,
hardware, office furniture and fixtures, office materials and supplies,
inventory, motor vehicles, spare parts and all other tangible personal
property of every kind and description, and Seller's or Nationwide's rights
therein, owned, leased (to the extent of Seller's or Nationwide's leasehold
interest) or held by Seller or Nationwide which are listed in SCHEDULE 7.7,
and such intangible and tangible property used or held for use exclusively at
the location(s) of the studio sites for the Nationwide Stations, PLUS any
additions made in the ordinary course of business of Nationwide or the Trustee
used exclusively at the studio location(s) for the Nationwide Stations, and
LESS any retirements or dispositions thereof made between the date hereof and
the Closing Date in the ordinary course of business and consistent with past
practices of Seller, Nationwide or the Trustee, as the case may be; provided
however, Seller agrees that the value of all such assets retired or disposed
of and not replaced with an asset of like kind and quality shall not exceed
$100,000 in the aggregate;
1.1.3 subject to Section 10.10, all Real Estate Contracts (as
defined in Section 7.8), and all other contracts, agreements, leases and
legally binding contractual rights, written or oral, relating to the operation
of the Stations which are listed in SCHEDULE 7.8 and SCHEDULE 7.9(a), together
with all contracts, agreements, leases and legally binding contractual rights
entered into or
<PAGE>
acquired by Seller, Nationwide or the Trustee, as the case may be, between the
date hereof and the Closing Date in the ordinary course of business relating
to the operation of the Stations Assets which are cancelable on ninety (90)
days notice or less (except for any employee contracts), or which are
otherwise expressly assumed by Buyer in writing (collectively, the
"Contracts");
1.1.4 all of Seller's or Nationwide's rights in and to the call
letters "KKLQ" and "KXGL" as well as all of Seller's or Nationwide's rights in
and to all trademarks, trade names, service marks, franchises, copyrights,
including registrations and applications for registration of any of them,
computer software, programs and programming material, jingles, slogans, the
Format Stations' (as defined in Section 1.1.5) logos and all other logos or
licenses to use same and all other intangible property rights of Seller or
Nationwide, which are used exclusively in connection with the operation of the
Format Stations (as defined in Section 1.1.5) and which are listed in SCHEDULE
7.12 (collectively, the "Intellectual Property");
1.1.5 all programming materials and elements of whatever form or
nature owned by Seller or Nationwide that are used exclusively in connection
with the operation of radio stations KKLQ(FM) and KXGL(FM) (the "Format
Stations"), whether recorded on tape or other medium or intended for live
performance, and all copyrights owned by or licensed to Seller or Nationwide
that are used or useful in connection with the operation of the Format
Stations; and
1.1.6 all of Seller's rights under manufacturers' and vendors'
warranties relating to items included in the Stations Assets and all similar
rights against third parties relating to items included in the Stations Assets;
The Stations Assets shall be transferred to Buyer free and clear of
all charges, conditions, community property interests, options, hypothecations,
attachments, conditional sales, title retentions, rights of first refusal,
debts, security interests, mortgages, trusts, claims, pledges or other liens,
liabilities, encumbrances or rights of third parties whatsoever ("Liens").
1.2 EXCLUDED ASSETS. Notwithstanding anything to the contrary contained
herein, it is expressly understood and agreed that the Stations Assets shall
not include the following assets along with all rights, title and interest
therein (the "Excluded Assets"):
1.2.1 all cash and cash equivalents of Seller or Nationwide on
hand and/or in banks, including without limitation certificates of deposit,
commercial paper, treasury bills, marketable securities, asset or money market
accounts and all such similar accounts or investments;
1.2.2 all accounts receivable or notes receivable for services
performed by Seller or Nationwide in connection with the operation of the
Stations prior to the Closing Date;
1.2.3 subject to the limitation set forth in Section 1.1.2, all
tangible and intangible personal property of Seller or Nationwide disposed of
or consumed in the ordinary course of business consistent with the past
practices of Seller or Nationwide between the date of this
3
<PAGE>
Agreement and the Closing Date and all of Seller's rights, including without
limitation FCC rights, trademark and service rights in and to the call letters
"KJQY" and "KJQY(FM)";
1.2.4 all employment contracts of any nature, and all Contracts
that have terminated or expired prior to the Closing Date in the ordinary
course of business consistent with the past practices of Seller or Nationwide;
1.2.5 Seller's or Nationwide's corporate seal, minute books,
charter documents, corporate stock record books and such other books and
records as pertain to the organization, existence or share capitalization of
Seller and duplicate copies of such records as are necessary to enable Seller
to file its tax returns and reports as well as any other records or materials
relating to Seller generally and not involving or relating to the Stations
Assets or the operation or operations of the Stations;
1.2.6 contracts of insurance, and all insurance proceeds or
claims made by Seller or Nationwide relating to property or equipment repaired,
replaced or restored by Seller or Nationwide prior to the Closing Date;
1.2.7 all pension, profit sharing or cash or deferred (Section
401(k)) plans and trusts and the assets thereof and any other employee benefit
plan or arrangement and the assets thereof, if any, maintained by Seller or
Nationwide;
1.2.8 all tangible and intangible personal property of Seller or
Nationwide which is the subject of a trade or barter agreement with third
parties; and
1.2.9 any right, property or asset described in SCHEDULE 1.2.9,
or any right, property or asset not specifically described in Section 1.1
herein.
ARTICLE 2
ASSUMPTION OF OBLIGATIONS
2.1 ASSUMPTION OF OBLIGATIONS. Subject to such obligations as may have
already been assumed pursuant to the Time Brokerage Agreement and subject to
the provisions of this Section 2.1, Section 2.2 and Section 3.3, on the
Closing Date, Buyer shall assume the obligations of Seller arising or to be
performed on and after the Closing Date (except to the extent such obligations
arise out of or are related to activities, events or transactions occurring,
or conditions existing, on or prior to the Closing Date) under the Contracts.
All of the foregoing liabilities and obligations shall be referred to herein
collectively as the "Assumed Liabilities."
2.2 RETAINED LIABILITIES. Notwithstanding anything contained in this
Agreement to the contrary, Buyer expressly does not, and shall not, assume or
agree to pay, satisfy, discharge or perform and will not be deemed by virtue
of the execution and delivery of this Agreement or any
4
<PAGE>
agreement, instrument or document delivered pursuant to or in connection with
this Agreement or otherwise by reason of or in connection with the
consummation of the transactions contemplated hereby or thereby, to have
assumed or to have agreed to pay, satisfy, discharge or perform, any
liabilities, obligations or commitments of Seller of any nature whatsoever
whether accrued, absolute, contingent or otherwise and whether or not
disclosed to Buyer, other than the Assumed Liabilities.
ARTICLE 3
CONSIDERATION
3.1 DELIVERY OF CONSIDERATION. In consideration for the sale of the
Stations Assets to Buyer, in addition to the assumption of certain obligations
of Seller pursuant to Section 2.1 above, Buyer shall, at the Closing (as
hereinafter defined), deliver to Seller Sixty Five Million One Hundred Fifty
Thousand Dollars ($65,150,000) by wire transfer of immediately available
funds, subject to adjustment pursuant to the provisions of Sections 3.2 and
3.3 below (the "Purchase Price").
3.2 RESERVE. At the Closing, Seller shall set aside and pay to Buyer a
portion of the Purchase Price in the amount of Six Hundred Fifty Thousand
Dollars ($650,000) (the "Reserve"), which Buyer shall be entitled to use in
its sole discretion in order to satisfy certain obligations assumed under the
Contracts.
3.3 PRORATION OF INCOME AND EXPENSES.
3.3.1 Subject to such prorations as may have been already been
made pursuant to the Time Brokerage Agreement and except as otherwise provided
herein, all deposits, reserves and prepaid and deferred income and expenses
relating to the Stations Assets or the Assumed Liabilities and arising from the
conduct of the business and operations of the Stations shall be prorated
between Buyer and Seller in accordance with generally accepted accounting
principles as of 11:59 p.m., Pacific time, on the date immediately preceding
the Closing Date. Such prorations shall include, without limitation, all ad
valorem, real estate and other property taxes (but excluding taxes arising by
reason of the transfer of the Stations Assets as contemplated hereby which
shall be paid as set forth in Section 13.2), business and license fees, music
and other license fees (including any retroactive adjustments thereof, which
retroactive adjustments shall not be subject to the ninety-day limitation set
forth in Section 3.3.3), utility expenses, amounts due or to become due under
Contracts, rents, lease payments and similar prepaid and deferred items. Real
estate taxes shall be apportioned on the basis of taxes assessed for the
preceding year, with a reapportionment, if any, as soon as the new tax rate and
valuation can be ascertained.
3.3.2 Subject to such prorations as may have been already been
made pursuant to the Time Brokerage Agreement and except as otherwise provided
herein, the prorations and adjustments contemplated by this Section 3.3, to the
extent practicable, shall be made on the Closing Date. As to those prorations
and adjustments not capable of being ascertained on the Closing Date, an
adjustment and proration shall be made within ninety (90) calendar days of the
Closing Date.
5
<PAGE>
3.3.3 In the event of any disputes between the parties as to such
adjustments, the amounts not in dispute shall nonetheless be paid at the time
provided in Section 3.3.2 and such disputes shall be determined by an
independent certified public accountant mutually acceptable to the parties, and
the fees and expenses of such accountant shall be paid one-half by Seller and
one-half by Buyer. Notwithstanding the foregoing, if the aggregate amount in
dispute is $5,000 or less, the disputed amount shall be shared equally by Buyer
and Seller.
3.4 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Assets in a manner as mutually agreed between the parties based upon
an appraisal prepared by Bond & Pecaro, and such appraisal and allocation
shall be completed prior to Closing unless otherwise agreed to by the parties.
Seller and Buyer agree to use the allocations determined pursuant to this
Section 3.4 for all tax purposes, including without limitation, those matters
subject to Section 1060 of the Internal Revenue Code of 1986, as amended.
ARTICLE 4
CLOSING
4.1 CLOSING. Except as otherwise mutually agreed upon by Buyer and
Seller, the consummation of the transactions contemplated herein (the
"Closing") shall not occur prior to July 26, 1998, but thereafter shall occur
upon the later to occur of: (a) the satisfaction or waiver of each condition
to closing contained herein (excluding conditions that by their terms cannot
be satisfied until the Closing Date), and provided that each party hereto
shall use its reasonable best efforts to cause each condition to closing to be
satisfied so that the Closing may occur at the earliest possible date; (b)
after the release of initial FCC approval on public notice that it has
consented to the transaction contemplated hereby without the imposition of any
conditions adverse to Seller, Buyer or any Affiliate (as hereinafter defined)
of Seller or Buyer with respect to the assignment of the Citicasters Stations
Licenses to Buyer or the continued operation of the Stations Assets (the
"Initial Approval"), or (iii) such other date as may be mutually agreed by the
parties hereto (the "Closing Date"). Seller shall use its best efforts to
notify Buyer of the scheduled Closing Date at the earliest practicable time.
The Closing shall be held in the offices of Graydon, Head & Ritchey, 1900
Fifth Third Center, 511 Walnut Street, Cincinnati, Ohio, or at such place and
in such manner as the parties hereto may agree.
4.2 TIME BROKERAGE AGREEMENT. Buyer and Seller have entered into the
Time Brokerage Agreement, in the form of EXHIBIT B hereto, pursuant to which
Seller has agreed to make available to Buyer the broadcasting transmission
facilities of the Citicasters Stations and/or cause to be broadcast on the
Citicasters Stations Buyer's programming from the Commencement Date through
the Closing Date.
6
<PAGE>
ARTICLE 5
GOVERNMENTAL CONSENTS
5.1 FCC CONSENT AND DEPARTMENT OF JUSTICE CONSENT. It is specifically
understood and agreed by Buyer and Seller that the Closing, the assignment of
the Citicasters Stations Licenses and the transfer of the Stations Assets are
expressly conditioned on and are subject to the prior consent and approval of
(i) the FCC without the imposition of any conditions materially adverse to
either party or their respective Affiliates (the "FCC Consent") and (ii) the
United States Department of Justice without the imposition of any conditions
materially adverse to either party or their respective Affiliates ("DOJ
Consent"); provided that, Buyer and Seller hereby agree that a condition that
Buyer "step into the shoes" of Seller in connection with the pending renewals
of the Citicasters Stations Licenses ("Renewals") or otherwise that Buyer be
responsible for obtaining such Renewals would not be a materially adverse
condition on the FCC Consent. In the event that the Closing occurs before the
Renewals are obtained, the parties shall enter into an Unwind Agreement in the
form attached hereto as EXHIBIT A.
5.2 FCC APPLICATION. If the same has not already been filed as of the
time of the execution hereof, then within five (5) business days after the
execution of this Agreement, Buyer and Seller shall file an application with
the FCC for the FCC Consent (the "FCC Application"). Buyer and Seller shall
prosecute the FCC Application with all reasonable diligence and otherwise use
their best efforts to obtain the FCC Consent as expeditiously as practicable
(but neither Buyer nor Seller shall have any obligation to satisfy
complainants or the FCC by taking any steps which would have a material
adverse effect upon Buyer or Seller or upon any of their respective
Affiliates). If the FCC Consent imposes any condition on Buyer or Seller or
any of their respective Affiliates (other than as set forth in Section 5.1
with respect to the Renewals) such party shall use its best efforts to comply
with such condition; provided, however, that neither Buyer nor Seller shall be
required hereunder to comply with any condition that would have a material
adverse effect upon it or any of its Affiliates. If reconsideration or
judicial review is sought with respect to the FCC Consent, the party affected
shall vigorously oppose such efforts for reconsideration or judicial review;
provided, however, that nothing herein shall be construed to limit either
party's right to terminate this Agreement pursuant to Article 16 hereof.
5.3 HSR APPLICATION. Within ten (10) business days after the execution
of this Agreement, Buyer and Seller shall make any and all required
governmental filings pursuant to the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act") with respect to the transactions
contemplated hereby, and shall use their best efforts to respond as promptly as
practicable to all inquiries received from the applicable governmental agencies
or committees for additional information or documentation. Buyer and Seller
will notify each other of all correspondence, filings or communications between
such party or its representatives, on the one hand, and the applicable
governmental agencies or committees, on the other hand, with respect to this
Agreement and the transaction contemplated hereby. Buyer and Seller will
furnish each other with such necessary information and reasonable assistance as
such other parties may request in connection with their preparation of all
filings pursuant to the HSR Act.
7
<PAGE>
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby makes the following representations and warranties to Seller,
each of which is true and correct on the date hereof, shall survive the Closing
and shall be unaffected by any investigation heretofore or hereafter made by
Seller:
6.1 ORGANIZATION AND STANDING. Each of Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware, and HBC San Diego, Inc. will, as of the Closing, be authorized to
transact business in, and be in good standing under the laws of, the State of
California.
6.2 AUTHORIZATION AND BINDING OBLIGATION. Buyer has all necessary
corporate power and authority to enter into and perform this Agreement and the
transactions contemplated hereby, and to own or lease the Stations Assets and
to carry on the business of the Stations upon the consummation of the
transactions contemplated by this Agreement. Buyer's execution, delivery and
performance of this Agreement and the transactions contemplated hereby have
been duly and validly authorized by all necessary action on its part and,
assuming the due authorization, execution and delivery of this Agreement by
Seller, this Agreement will constitute the valid and binding obligation of
Buyer, enforceable against it in accordance with its terms, except as limited
by laws affecting creditors' rights or equitable principles generally.
6.3 QUALIFICATION. Buyer is legally, financially and otherwise
qualified to be the licensee of, acquire, own and operate the Stations under
the Communications Act of 1934, as amended, and the rules, regulations and
policies of the FCC. There are no facts that would, under existing law and the
existing rules, regulations, policies and procedures of the FCC, disqualify
Buyer as an assignee of the Citicasters Stations Licenses or as the owner and
operator of the Stations Assets. No waiver of any FCC rule or policy is
necessary to be obtained as a result of Buyer's qualifications for the grant
of the application for the assignment of the Citicasters Stations Licenses to
Buyer.
6.4 ABSENCE OF CONFLICTING AGREEMENTS OF REQUIRED CONSENTS. Except as
set forth in Article 5 hereof with respect to governmental consents, the
execution, delivery and performance of this Agreement by Buyer: (a) do not
conflict with the provisions of the articles of incorporation, operating
agreement, or by-laws of Buyer or with any other similar instrument of
corporate governance; (b) do not require the consent of any third party not
affiliated with Buyer, except for the consent of the lenders of Buyer or any
Affiliate; (c) will not violate any applicable law, judgment, order,
injunction, decree, rule, regulation or ruling of any governmental authority
to which Buyer is bound; and (d) will not, either alone or with the giving of
notice or the passage of time, or both, conflict with, constitute grounds for
termination of or result in a breach of the terms, conditions or provisions
of, or constitute a default under, any agreement, instrument, license or
permit to which Buyer is now subject.
8
<PAGE>
6.5 LITIGATION. There is no claim, litigation, proceeding or
investigation pending or, to the best of Buyer's knowledge, threatened against
Buyer, that could materially adversely affect Buyer's ability to perform its
obligations pursuant to this Agreement. Buyer is not in violation of any law,
regulation, or ordinance or any other requirement of any governmental body or
court which could have a material adverse effect on Buyer's ability to perform
its obligations pursuant to this Agreement.
6.6 COMMISSIONS OR FINDER'S FEES. Neither Buyer nor any person or entity
acting on behalf of Buyer has agreed to pay a commission, finder's fee or
similar payment in connection with this Agreement or any matter related hereto.
6.7 AVAILABILITY OF FUNDS. Buyer has and will have available on the
Closing Date sufficient funds to enable it to consummate the transactions
contemplated hereby.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller makes the following representations and warranties to Buyer, each
of which is true and correct on the date hereof, and shall survive the Closing
subject to the limitations provide for herein; provided however, that Seller
and Buyer have entered into the Time Brokerage Agreement and such parties
understand that any (i) actions or omissions to act taken by Buyer (or any
assignee or Affiliate of Buyer), including actions or omissions arising out of
or related to the Time Brokerage Agreement; (ii) changes in market conditions
in the radio broadcasting industry in San Diego, California following the
Commencement Date; (iii) factors affecting the radio broadcasting industry
generally following the Commencement Date; or (iv) general, national, regional
or local economic or financial conditions following the Commencement Date
(collectively, "TBA Events"); which would cause any of Seller's representations
and warranties to be untrue, shall not be deemed to result in a breach or
inaccuracy of such representations or warranties:
7.1 ORGANIZATION AND STANDING. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Ohio, is
authorized to conduct business within the State of California and has the
power and authority to own, lease and operate the Stations Assets and to carry
on the business of the Citicasters Stations as now being conducted and as
proposed to be conducted between the date hereof and the Closing Date.
7.2 AUTHORIZATION AND BINDING OBLIGATION. Subject to the consummation
of the transactions contemplated pursuant to the Nationwide Agreement and the
Trust, Seller has the power and authority, and has taken all necessary and
proper action to enter into and perform this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly authorized,
executed and delivered by Seller and, assuming the due authorization,
execution and delivery of this Agreement by Buyer, constitutes the valid and
binding obligation of Seller enforceable against Seller in accordance with its
terms, except as limited by laws affecting the enforcement of creditor's
rights or equitable principles generally.
9
<PAGE>
7.3 ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS. Subject to
the consummation of the transactions contemplated pursuant to the Nationwide
Agreement and the Trust, except as set forth in Article 5 with respect to
governmental consents and in SCHEDULE 7.8 or SCHEDULE 7.9(a) with respect to
consents required in connection with the assignment of certain Contracts, the
execution, delivery and performance of this Agreement by Seller: (a) do not
require the consent of any third party (including, without limitation, the
consent of any governmental, regulatory, administrative or similar authority);
(b) will not conflict with, result in a breach of, or constitute a violation
of or default under, the provisions of Seller's articles of incorporation,
code of regulations, by-laws or other charter documents or any applicable law,
judgment, order, injunction, decree, rule, regulation or ruling of any
governmental authority to which Seller is a party or by which Seller or any of
the Stations Assets are bound; (c) will not either alone or with the giving of
notice or the passage of time, or both, conflict with, constitute grounds for
termination of or result in a breach of the terms, conditions or provisions
of, or constitute a default under, any Contract, agreement, instrument,
license or permit to which Seller or any of the Stations Assets is now
subject; and (d) will not result in the creation of any Liens on any of the
Stations Assets.
7.4 GOVERNMENT AUTHORIZATIONS.
7.4.1 SCHEDULE 7.4 hereto contains a true and complete list of
the Citicasters Stations Licenses and other licenses, permits or other
authorizations from governmental and regulatory authorities which are required
for the lawful conduct of the business and operations of the Citicasters
Stations in the manner and to the full extent they are presently conducted
(including, without limitation, auxiliary licenses associated with the
Citicasters Stations).
7.4.2 Seller is the authorized legal holder of the Citicasters
Stations Licenses and the other licenses, permits and authorizations listed in
SCHEDULE 7.4, which, except as set forth in SCHEDULE 7.4, are in full force and
effect, in good standing and are, to the knowledge of Seller, unimpaired by any
act of Seller or its directors, officers, employees, agents or Affiliates, and
none of which is subject to any restrictions or conditions which would limit in
any respect the full operation of the Citicasters Stations as now operated.
7.4.3 Except as set forth in SCHEDULE 7.4, there are no
applications, complaints, petitions or proceedings pending or, to Seller's
knowledge, threatened as of the date hereof before the FCC or any other
governmental or regulatory authority relating to the business or operations of
the Citicasters Stations. The operations of the Citicasters Stations are in
accordance with the Citicasters Stations Licenses and the underlying
construction permits and the other licenses, permits and authorizations listed
in SCHEDULE 7.4.
7.4.4 Except as set forth in SCHEDULE 7.4, all reports, forms,
and statements required to be filed by Seller with the FCC with respect to the
Citicasters Stations since the latter of the (i) acquisition of the Citicasters
Stations by Seller or (ii) grant of the last renewal of the Citicasters
Stations Licenses have been filed and are substantially complete and accurate.
10
<PAGE>
7.4.5 Except as set forth in SCHEDULE 7.4, to the best knowledge
of Seller, there are no facts which, under the Communications Act of 1934, as
amended, or the existing rules and regulations of the FCC, would disqualify
Seller as assignor of the Citicasters Stations Licenses or cause the
Citicasters Stations Licenses and the other licenses, permits and
authorizations listed in SCHEDULE 7.4 not to be renewed in their ordinary
course.
7.5. COMPLIANCE WITH FCC REGULATIONS. Except as set forth in SCHEDULE 7.4,
the operation of the Citicasters Stations and all of the Stations Assets are
in compliance in all material respects with: (a) all applicable engineering
standards required to be met under applicable FCC rules; and (b) all other
applicable federal, state and local rules, regulations, requirements and
policies, including, but not limited to, equal employment opportunity
policies of the FCC, and all applicable painting and lighting requirements of
the FCC and the Federal Aviation Administration to the extent required to be
met under applicable FCC rules and regulations, and to Seller's knowledge,
there are no existing claims to the contrary.
7.6 TAXES. Seller has with respect to the Citicasters Stations filed
all federal, state, local and foreign income, franchise, sales, use, property,
excise, payroll and other tax returns required by law to be filed by it and
has paid in full all taxes, estimated taxes, interest, assessments, and
penalties due and payable by it.
7.7 PERSONAL PROPERTY. SCHEDULE 7.7 hereto contains a list of all
material items of tangible personal property owned by Seller or Nationwide
and used or held for use exclusively in the conduct of the business and
operations of the Stations Assets. SCHEDULE 7.7 also separately lists any
material tangible personal property leased by Seller or by Nationwide
pursuant to leases included within the Contracts. Except for the assets
comprising the Nationwide Stations and except as disclosed in SCHEDULE 7.7,
Seller has, and following the Closing, Buyer will have, good and marketable
title to all of the Stations Assets (other than those subject to lease) and
none of the Stations Assets is, or at the Closing will be, subject to any
Liens or title defects, except for liens for taxes not yet due and payable.
The Stations Assets listed in SCHEDULE 7.7, along with those properties
subject to lease and included among the Contracts and any tangible personal
property used or held for use exclusively at the location(s) of the studio
sites for the Nationwide Stations, constitute all material tangible personal
property relating to the Stations Assets, and such Stations Assets relating
to the Citicasters Stations are, and to the knowledge of Seller the Stations
Assets relating to the Nationwide Stations are: (i) being operated in all
material respects in accordance with the specifications of the Citicasters
Stations Licenses, or the licenses for the Nationwide Stations, respectively,
and (ii) being maintained in a good and workmanlike manner. Seller has made
available true, complete and correct copies of the maintenance records
respecting the Stations Assets which are in Seller's possession.
7.8 REAL PROPERTY.
7.8.1 SCHEDULE 7.8 hereto contains a complete and accurate list
and description of the real property (including without limitation, real
property relating to the towers, transmitters, studio sites and offices of the
Stations Assets) used by Seller or Nationwide in connection with the
11
<PAGE>
operations of the Stations Assets pursuant to agreements, leases and other
contracts and which are to be assigned to Buyer and the obligations under the
same to be assumed by Buyer pursuant to this Agreement (the "Real Estate
Contracts").
7.8.2 The Real Estate Contracts listed on SCHEDULE 7.8 and
SCHEDULE 7.9(a) are in full force and effect and are valid, binding and
enforceable in accordance with their terms. Seller enjoys quiet possession of
all real property subject to the Real Estate Contracts. Seller is not in
default under any Real Estate Contract nor, to Seller's knowledge, is any other
party thereto, and, to Seller's knowledge, there are no present disputes or
claims with respect to offsets or defenses by any party against the other under
any of the Real Estate Contracts. Seller has delivered to Buyer true and
complete copies of all Real Estate Contracts. Except as expressly set forth in
SCHEDULE 7.8 hereto, the assignment of the Real Estate Contracts to Buyer will
not permit the other party to accelerate the rent, cause the terms thereof to
be renegotiated or constitute a default thereunder, and will not require the
consent of any such party to the assignment thereof to Buyer.
7.8.3 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 the real
estate subject to the Real Estate Contracts. To the knowledge of Seller, no
fact or condition exists which would result in the termination or impairment of
access of the Stations Assets to the real estate subject to the Real Estate
Contracts, or discontinuation of necessary sewer, water, electrical, gas,
telephone or other utilities or services.
7.9 CONTRACTS. SCHEDULE 7.9(a) lists all Contracts respecting the
Stations (excepting Time Sales Agreements) to which Seller or Nationwide is a
party AND which are to be assigned to Buyer pursuant to the terms of this
Agreement, as of the date of this Agreement. Those Contracts, if any,
requiring the consent of a third party to assignment are identified with an
asterisk on SCHEDULE 7.9(a). Those Contracts, if any, that Seller and Buyer
have agreed are material to the operation of the Stations Assets and the
valid assignment of which is a condition to the consummation of the
transactions contemplated hereby (the "Material Contracts") are listed on
SCHEDULE 7.9(b).
7.10 STATUS OF CONTRACTS, ETC. All of the Contracts are in full force
and effect and are valid, binding and enforceable in accordance with their
respective terms, except as limited by laws affecting creditors' rights or
equitable principles generally. Seller has complied in all respects with all
written and oral Contracts, and is not in default beyond any applicable grace
periods under any thereof and, to Seller's knowledge, no other contracting
party is in default under any thereof.
7.11 ENVIRONMENTAL. Except as set forth in SCHEDULE 7.11, to Seller's
knowledge Seller has in all material respects complied with all federal,
state and local environmental laws, rules and regulations as in effect on the
date hereof applicable to the Stations Assets which are used or useful in the
operation of the Citicasters Stations, including but not limited to the FCC's
guidelines regarding RF radiation. To Seller's knowledge the technical
equipment included within the Stations Assets which are used or useful in the
operation of the Citicasters Stations does not contain any PCBs. To Seller's
knowledge, no hazardous or toxic waste, substance, material or pollutant (as
12
<PAGE>
those or similar terms are defined under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C.
Section 9601 ET SEQ., Toxic Substances Control Act, 15 U.S.C. Section 2601 ET
SEQ., the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section
6901 ET SEQ. or any other applicable federal, state and local environmental
law, statute, ordinance, order, judgment, rule or regulation relating to the
environment or the protection of human health ("Environmental Laws")),
including but not limited to, any asbestos or asbestos related products, oils
or petroleum-derived compounds, CFCs, PCBs, or underground storage tanks,
have been released, emitted or discharged or are currently located in, on,
under, or about the real property on which the Stations Assets used or
useful in the operation of the Citicasters Stations are situated including
the transmitter sites or contained in the tangible personal property included
within the Stations Assets which are used or useful in the operation of the
Citicasters Stations.
7.12 INTELLECTUAL PROPERTY. SCHEDULE 7.12 hereto is a true and complete
list of all Intellectual Property applied for, registered or issued to, and
owned by Seller or under which Seller is a licensee which is used in the
conduct of the Seller's business and operations of the Stations Assets, AND
which is being transferred to Buyer pursuant to this Agreement. Except as
set forth on SCHEDULE 7.12: (a) Seller's right, title and interest in the
Intellectual Property as owner or licensee, as applicable, is free and clear
of all Liens and, to the extent any of the Intellectual Property is licensed
to Seller, such interest is valid and uncontested by the licensor thereof or
any third party; and (b) all of Seller's right, title and interest in and to
the Intellectual Property shall be assignable to Buyer at Closing, and upon
such assignment, Buyer shall receive complete and exclusive right, title, and
interest in and to all tangible and intangible property rights existing in
the Intellectual Property.
7.13 PERSONNEL INFORMATION.
7.13.1 Except as disclosed in SCHEDULE 7.13, Seller is not a party
to any contract or agreement with any labor organization, nor has Seller agreed
to recognize any union or other collective bargaining unit, nor has any union
or other collective bargaining unit been certified as representing any
employees of Seller relating to the Citicasters Stations. Seller has no
knowledge of any organizational effort currently being made or threatened by or
on behalf of any labor union with respect to employees of the Stations.
7.13.2 Except as disclosed in SCHEDULE 7.13, Seller has complied
with all laws relating to the employment of labor, including, without
limitation, the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and those laws relating to wages, hours, collective bargaining,
unemployment insurance, workers' compensation, equal employment opportunity and
payment and withholding of taxes.
7.14 LITIGATION. Except as set forth in SCHEDULE 7.14, Seller is not
subject to any judgment, award, order, writ, injunction, arbitration decision
or decree relating to the conduct of the business or the operation of the
Citicasters Stations or any of the Stations Assets, and, except as set forth
in SCHEDULES 7.4 and 7.14, there is no litigation, administrative action,
arbitration, proceeding or
13
<PAGE>
investigation pending or, to the knowledge of Seller, threatened against
Seller or the Citicasters Stations in any federal, state or local court, or
before any administrative agency or arbitrator (including, without
limitation, any proceeding which seeks the forfeiture of, or opposes the
renewal of, any of the Citicasters Stations Licenses), or before any other
tribunal duly authorized to resolve disputes.
7.15 COMMISSIONS OR FINDER'S FEES. Neither Seller or any person or
entity acting on behalf of Seller has agreed to pay a commission, finder's
fee or similar payment in connection with this Agreement or any matter
related hereto to any person or entity, except for Gary Stevens & Co., whose
fees shall be paid by Seller and Seller shall hold harmless and indemnify
Buyer therefor.
7.16 INSURANCE. Seller now has in force adequate fire and other risk
insurance covering the full replacement value of the Stations Assets and
shall cause such insurance to be maintained in full force until the Closing
Date. Except as set forth in SCHEDULE 7.16, Seller also shall maintain in
full force until the Closing Date, adequate general public liability
insurance in amounts consistent with broadcasting industry standards for
similar stations.
SECTION 8
COVENANTS OF BUYER
8.1 CLOSING. Subject to Article 11 hereof, on the Closing Date, Buyer
shall purchase the Stations Assets from Seller as provided in Article 1
hereof and shall assume the Assumed Liabilities of Seller as provided in
Article 2 hereof.
8.2 NOTIFICATION. Buyer will provide Seller prompt written notice of
any change in any of the information contained in the representations and
warranties made in Article 6. Buyer shall also notify Seller of any
litigation, arbitration or administrative proceeding pending or, to its
knowledge, threatened against Buyer which challenges the transactions
contemplated hereby.
8.3 NO INCONSISTENT ACTION. Buyer shall not take any action which (i)
is materially inconsistent with its obligations under this Agreement; (ii)
would cause any representation or warranty of Buyer contained herein to be or
become false or invalid, or (iii) could unreasonably hinder or delay the
consummation of the transactions contemplated by this Agreement.
8.4 ACCOUNTS RECEIVABLE. Buyer acknowledges that all accounts
receivable arising prior to the Closing Date in connection with the operation
of the Stations and Stations Assets, including but not limited to accounts
receivable for advertising revenues for programs and announcements performed
prior to the Closing Date and other broadcast revenues for services performed
prior to the Closing Date, shall remain the property of Seller (the "Seller
Accounts Receivable") and that Buyer shall not acquire any beneficial right
or interest therein or responsibility therefor.
14
<PAGE>
SECTION 9
COVENANTS OF SELLER
9.1 SELLER'S PRE-CLOSING COVENANTS. Subject to Buyer's time brokering
of the Citicasters Stations pursuant to the Time Brokerage Agreement, Seller
covenants and agrees with respect to the Station that, between the date
hereof and the Closing Date, except as expressly permitted by this Agreement
or with the prior written consent of Buyer, Seller shall act in accordance
with the following; provided however, that Seller and Buyer acknowledge that
concurrent with the execution of this Agreement Buyer and Seller have entered
into the Time Brokerage Agreement and such parties understand that any TBA
Events which would cause any of Seller's covenants and agreements to be
breached by Seller, shall not be deemed to result in a breach or
nonperformance of such covenants and agreements by Seller:
9.1.1 Seller shall conduct the business and operations of the
Citicasters Stations in the ordinary course of business consistent with past
practice;
9.1.2 Seller shall operate the Citicasters Stations in all
material respects in accordance with FCC rules and regulations and the
Citicasters Stations Licenses and with all other laws, regulations, rules and
orders, and shall not cause or permit by any act, or failure to act, any of the
Citicasters Stations Licenses or other licenses, permits or authorizations
listed in SCHEDULE 7.4 to expire, be surrendered, adversely modified (other
than as set forth in SCHEDULE 7.4 or as specifically permitted by this
Agreement), or otherwise terminated, or the FCC to institute any proceedings
for the suspension, revocation or adverse modification of any of the
Citicasters Stations Licenses, or fail to prosecute with due diligence any
pending applications to the FCC.
9.1.3 Should any fact relating to Seller which would cause the
FCC to deny its consent to the transactions contemplated by this Agreement come
to Seller's attention, Seller will promptly notify Buyer thereof and will use
its reasonable efforts to take such steps as may be necessary to remove any
such impediment to the FCC's consent to the transactions contemplated by this
Agreement.
9.1.4 Subject to the rights and obligations of the parties set
forth in, and actions taken by the parties pursuant to the Time Brokerage
Agreement, Seller shall not, and shall use its best efforts to cause Nationwide
to not: (a) sell, lease or dispose of or commit to sell, lease or dispose of
any of the Stations Assets, except as permitted pursuant to Section 1.1.2
hereof; (b) sell broadcast time on a prepaid basis with regard to the
Citicasters Stations (other than in the course of existing credit practices);
(b) change the advertising rates with regard to the Citicasters Stations in
effect as of the date hereof except in accordance with ordinary course of
business pricing policies; or (c) create, assume or permit to exist any Liens
or rights affecting any of the Stations Assets, except for those in existence
on the date of this Agreement and disclosed in SCHEDULE 7.8 or SCHEDULE 7.9(a).
15
<PAGE>
9.1.5 Except for changes resulting from Buyer's actions pursuant
to the Time Brokering Agreement, Seller shall provide Buyer prompt written
notice of any change in any of the information contained in the representations
and warranties made in Article 7 or any Schedule.
9.1.6 In order that Buyer may have full opportunity to make such
investigation as it desires of the affairs of the Stations, Seller shall give
or cause the Citicasters Stations to give Buyer and Buyer's counsel,
accountants, engineers and other representatives, at Buyer's reasonable request
and upon reasonable notice, full and reasonable access during normal business
hours to all of Seller's personnel, properties, books, Contracts, reports and
records (including, without limitation, financial information and tax returns
relating to the Citicasters Stations, and environmental audits in existence
with respect to the Stations Assets), real estate, buildings and equipment
relating to the Stations and to the Stations' employees, and to furnish Buyer
with information and copies of all documents and agreements relating to the
Stations and the operation thereof (including but not limited to financial and
operating data and other information concerning the financial condition,
results of operations and business of the Stations) that Buyer may reasonably
request. Until the Commencement Date, at Buyer's request Seller shall promptly
deliver to Buyer an unaudited statement of revenue and expenses of the Stations
and a balance sheet for the month then ended. The rights of Buyer under this
Section 9.1.6 shall not be exercised in such a manner as to interfere
unreasonably with the business of the Stations.
9.1.7 Seller shall use its reasonable best efforts to (i) obtain
any third party consents necessary for the assignment of any Contract (which
shall not require any payment to any such third party except for such amounts
contemplated by the Contract to be assigned, any amount then owing by Seller to
such third party or the reasonable expenses incurred by such third party in
connection with such assignment), (ii) obtain the amendments set forth in
Section 14.1.8, and (iii) reasonably cooperate with Buyer in negotiating with
the landlord with respect to the studio lease for the current Nationwide
Stations ("Studio Lease").
9.2 NOTIFICATION. Seller agrees to notify Buyer of any litigation,
arbitration or administrative proceeding pending or, to the best of its
knowledge, threatened, which challenges the transactions contemplated hereby.
9.3 NO INCONSISTENT ACTION. Subject to Section 10.9 hereof, Seller
shall not take any action which is materially inconsistent with its
obligations under this Agreement, or take any action which would cause any
representation or warranty of Seller contained herein to be or become false
or invalid or which could hinder or delay the consummation of the
transactions contemplated by this Agreement.
9.4 CLOSING. Subject to Section 10.9 and Article 12 hereof, on the
Closing Date Seller shall transfer, convey, assign and deliver to Buyer the
Stations Assets and the Assumed Liabilities as provided in Articles 1 and 2
of this Agreement.
9.5 OTHER ITEMS. Except as otherwise specifically contemplated by this
Agreement and subject to Section 10.9 hereof, until the Closing Date, Seller
shall not: (a) transfer or grant any material rights under any of the
Citicasters Stations Licenses; (b) enter into any commitment for
16
<PAGE>
capital expenditures for which Buyer would become liable after the Closing
Date; or (c) introduce any material changes in the broadcast hours or in the
format of the Citicasters Stations or any other material change in the
Citicasters Stations' programming policies.
SECTION 10
JOINT COVENANTS
Buyer and Seller hereby covenant and agree that between the date hereof
and the Closing Date, each shall act in accordance with the following:
10.1 CONFIDENTIALITY.
10.1.1 Subject to the requirements of applicable law, Buyer and
Seller shall each keep confidential all information obtained by it with respect
to the other parties hereto in connection with this Agreement and the
negotiations preceding this Agreement ("Confidential Information"); provided
that, the parties hereto may furnish such Confidential Information to its
employees, agents and representatives who need to know such Confidential
Information (including its financial and legal advisers, its banks and other
lenders) (collectively, "Representatives"). Each party hereto shall, and shall
cause each of such party's Representatives to, use the Confidential Information
solely in connection with the transactions contemplated by this Agreement. If
the transactions contemplated hereby are consummated, the confidentiality
covenants set forth in this Section 10.1 are hereby extinguished as of the
Closing. If the transactions contemplated hereby are not consummated for any
reason, the confidentiality obligations hereunder continue, and each party
shall return to such other party hereto, without retaining a copy thereof, any
schedules, documents or other written information obtained from such other
party in connection with this Agreement and the transactions contemplated
hereby.
10.1.2 Notwithstanding anything contained in Section 10.1.1, no
party shall be required to keep confidential or return any Confidential
Information which: (a) is known or available through other lawful sources, not
bound by a confidentiality agreement with the disclosing party; (b) is or
becomes publicly known through no fault of the receiving party or its agents;
(c) is required to be disclosed pursuant to an order or request of a judicial
or governmental authority (provided the disclosing party is given reasonable
prior notice of the order or request and the purpose of the disclosure); or (d)
is developed by the receiving party independently of the disclosure by the
disclosing party.
10.1.3 Notwithstanding anything to the contrary in this Agreement,
Buyer and its Affiliates shall, and Seller and its Affiliates shall, in
accordance with their respective legal obligations, including but not limited
to filings permitted or required by the Securities Act of 1933 and the
Securities and Exchange Act of 1934, the NASDAQ National Market and other
similar regulatory bodies, make (i) such press releases and other public
statements and announcements ("Releases") as such parties deem necessary and
appropriate in connection with this Agreement and the transactions contemplated
hereby, and (ii) any and all statements such parties deem to be
17
<PAGE>
necessary and appropriate in any and all filings, prospectuses and other
similar documents. Each party shall use commercially reasonable efforts to
provide the other party with a copy of any Releases before any publication of
same. The other party may make comments to the party seeking to make the
Release, provided however, that the party seeking to make the release is not
required to incorporate any such comments into the Release.
10.2 COOPERATION. Subject to express limitations contained elsewhere
herein, Buyer and Seller agree to cooperate fully with one another in taking
any reasonable actions (including without limitation, reasonable actions to
obtain the required consent of any governmental instrumentality or any third
party) necessary or helpful to accomplish the transactions contemplated by
this Agreement, including but not limited to the satisfaction of any
condition to closing set forth herein.
10.3 CONTROL OF STATIONS. Subject to the Time Brokerage Agreement,
Buyer shall not, directly or indirectly, control, supervise or direct the
operations of the Stations prior to the Closing. Such operations, including
complete control and supervision of all Stations programs, employees and
policies, shall be the sole responsibility of Seller, or in the case of the
Nationwide Stations, of their licensee.
10.4 CONSENTS TO ASSIGNMENT. Except for the consents to Material
Contracts set forth on SCHEDULE 7.9(b), to the extent that any Contract
identified in the Schedules is not capable of being sold, assigned,
transferred, delivered or subleased without the waiver or consent of any
third person (including a government or governmental unit), or if such sale,
assignment, transfer, delivery or sublease or attempted sale, assignment,
transfer, delivery or sublease would constitute a breach thereof or a
violation of any law or regulation, this Agreement and any assignment
executed pursuant hereto shall not constitute a sale, assignment, transfer,
delivery or sublease or an attempted sale, assignment, transfer, delivery or
sublease thereof. Subject to the provisions of Section 11.6, in those cases
where consents, assignments, releases and/or waivers have not been obtained
at or prior to the Closing to the transfer and assignment to Buyer of the
Contracts, this Agreement and any assignment executed pursuant hereto, to the
extent permitted by law, shall constitute an equitable assignment by Seller
to Buyer of all of Seller's rights, benefits, title and interest in and to
the Contracts, and where necessary or appropriate, Buyer shall be deemed to
be Seller's agent for the purpose of completing, fulfilling and discharging
all of Seller's rights and liabilities arising after the Closing Date under
such Contracts. Seller shall use its best efforts to provide Buyer with the
financial and business benefits of such Contracts (including, without
limitation, permitting Buyer to enforce any rights of Seller arising under
such Contracts), and Buyer shall, to the extent Buyer is provided with the
benefits of such Contracts, assume, perform and in due course pay and
discharge all debts, obligations and liabilities of Seller under such
Contracts to the extent that Buyer was to assume those obligations pursuant
to the terms hereof.
10.5 FILINGS. In addition to the covenants of the parties set forth in
Article 5 hereto, as promptly as practicable after the execution of this
Agreement, Buyer and Seller shall use their reasonable best efforts to
obtain, and to cooperate with each other in obtaining, all authorizations,
consents, orders and approvals of any governmental authority that may be or
become necessary in
18
<PAGE>
connection with the consummation of the transactions contemplated by this
Agreement, and to take all reasonable actions to avoid the entry of any order
or decree by any governmental authority prohibiting the consummation of the
transactions contemplated hereby, including without limitation, any reports
or notifications that may be required to be filed with the FCC or to be filed
under the HSR Act with the Federal Trade Commission and the Antitrust
Division of the Department of Justice, and each shall furnish to one another
all such information in its possession as may be necessary for the completion
of the reports or notifications to be filed by the other.
10.6 EMPLOYEE MATTERS. The parties acknowledge and agree that this
Section 10.6 shall be subject to the rights and obligations of the parties
set forth in, and any prior actions taken by the parties pursuant to, the
Time Brokerage Agreement. The parties acknowledge and agree that Buyer shall
have the right (but not the obligation) to interview and to elect which of
the employees, if any, of Seller employed at the Stations that it will hire.
In that regard, Seller shall provide Buyer access to its personnel records
and personnel files, and shall provide such other information regarding
Seller's employees as Buyer may reasonably request prior to the Closing Date.
Buyer shall have the sole and exclusive right to establish the wage, any
other compensation and all other terms and conditions of employment of any
person hired by Buyer. Seller shall be responsible for the payment of all
compensation and accrued employee benefits payable to all employees of Seller
through the Closing Date. All employees of Seller who are offered and accept
employment with Buyer shall be considered terminated employees of Seller and
shall not be entitled to receive from Buyer credit for any accrued vacation
days, sick days, personal days, paid time off or other such days. Seller
acknowledges and agrees that Seller, and not Buyer, is and shall after
Closing remain solely responsible for any and all wages, compensation,
commission, bonuses, severance pay, insurance, supplemental pension, deferred
compensation, retirement and any other benefits, premiums and claims, due, to
become due, committed, accrued or otherwise promised to any person who, as of
the Closing Date, is a retiree, former employee, current employee of Seller,
relating to the period up to and including the Closing Date. Buyer, as
purchaser of the Stations Assets, shall assume no employee benefit plans,
programs, policies, or practices, whether or not set forth in writing,
maintained by Seller at any time.
10.7 SECTION 1031 ASSET EXCHANGE. The Seller intends that the transfer
of the Stations Assets contemplated by this Agreement will be part of an
exchange of assets that will qualify, pursuant to Section 1031 of the
Internal Revenue Code and regulations thereunder, as a deferred like-kind
exchange by Seller. In keeping with that intention, it is expressly
acknowledged that Seller, its assignee or transferee, may, at or prior to
Closing, assign its rights (in whole or in part) under this Agreement to a
qualified intermediary as defined in Treasury regulation section
1.1031(k)-1(g)(4), or a similar entity or arrangement ("Qualified
Intermediary"), subject to all of Seller's rights and obligations herein and
shall promptly provide written notice of such assignment to Buyer. Buyer
shall cooperate with the reasonable requests of the Seller's Qualified
Intermediary in arranging and effecting this exchange and any additional
exchange as would qualify under Section 1031 of the Internal Revenue Code;
provided that, Seller shall reimburse to Buyer any incremental costs and
expenses incurred by Buyer as a result of Seller's use of a Qualified
Intermediary to consummate the transactions contemplated herein. Without
limiting the generality of the foregoing, if Seller has
19
<PAGE>
given notice of its intention to effect an exchange using a Qualified
Intermediary, Buyer shall promptly provide Seller with written acknowledgment
of such notice. If requested by Seller, Buyer shall pay the Purchase Price
for the Stations Assets to the Qualified Intermediary of Seller (and not to
Seller), and such payment shall satisfy the obligations of Buyer to make
payment of the Purchase Price herein. Seller's assignment to a Qualified
Intermediary will not relieve Seller of any of its duties or obligations
herein. Except for the obligations of Buyer set forth in this Section, Buyer
shall not have any liability or obligation to Seller for the failure of the
contemplated exchange to qualify as a like kind exchange under Section 1031
of the Internal Revenue Code unless such failure is the result of the
material breach by Buyer of its representations, warranties, covenants and
obligations herein.
10.8 KJQY CALL LETTERS. The parties agree that the Seller is to retain
all of Seller's rights in and to the call letters "KJQY" and the Buyer is to
obtain as part of the Stations Assets all of Seller's rights in and to the
call letters "KXGL." Buyer and Seller agree to cooperate fully with one
another in taking any reasonable actions (including without limitation,
reasonable actions to obtain the required consent of any governmental
instrumentality or any third party) necessary or helpful to complete the
exchange of the above described call letters.
10.9 TRUST. If the consummation of the transactions contemplated herein
does not occur simultaneous with the Nationwide Closing, Seller and Buyer
hereby agree that Seller may, at Seller's option and with prior FCC approval,
assign the assets and licenses of the Nationwide Stations to the Trustee who
would operate and maintain the Nationwide Stations between the closing under
the Nationwide Agreement and the Closing Date hereunder, pursuant to the
Trust, and upon such circumstances, if necessary, the Trustee would be
charged with the realization of the transactions contemplated hereunder on
Seller's behalf and would be required to perform Seller's duties and
obligations hereunder with respect to the Stations Assets held in the Trust.
10.10 TRAFFIC AGREEMENTS. Within thirty (30) days of the date hereof,
Buyer will use its reasonable best efforts to negotiate amendments to, or
replacements for, the current agreements with Metro Traffic ("New Metro
Terms") for the Stations. In the event Buyer is unable to negotiate New
Metro Terms for the Stations by the end of such 30-day period, at the earlier
to occur of the Commencement Date of the Time Brokerage Agreement or the
Closing Date, Seller will assign and Buyer will assume the current Metro
Traffic contracts listed on SCHEDULE 7.9(a) as of such date. In the event
Buyer does negotiate New Metro Terms within the 30-day period, within five (5)
days thereafter Buyer shall give Airwatch Communications the right to match
the New Metro Terms. If Airwatch does not match the New Metro Terms within
72 hours thereafter, Buyer shall contract with Metro Traffic under the New
Metro Terms (conditioned upon the Closing of the transactions contemplated
herein), and Buyer shall not be required to assume the current Metro Traffic
agreements listed on SCHEDULE 7.9(a). If Airwatch does not match the New
Metro Terms and Buyer contracts with Metro Traffic under the New Metro Terms,
Buyer will not be required to assume the Metro Traffic agreements listed on
SCHEDULE 7.9(a).
20
<PAGE>
10.11 STUDIO LEASE. Buyer and Seller shall each use its reasonable best
efforts to obtain the consent of the landlord ("Landlord's Consent") under the
lease for studio space at One American Plaza ("Studio Lease") to (i) allow
Buyer to subdivide the lease space under terms reasonably acceptable to Buyer,
and (ii) permit Buyer to exercise the renewal or extension rights contained in
the antenna lease after the initial term ends for the Citicasters Stations.
In addition, Buyer shall determine, in its reasonable discretion, if the
reciprocal easement agreements and objectionable interference terms of the
Studio Lease ("Objectionable Studio Lease Terms") have a material adverse
impact on the operation of the Stations.
10.12 CONTRACT TERMINATIONS. Seller agrees to use its best efforts to,
or cause Nationwide to, send cancellations on all Contracts listed on SCHEDULE
7.9(a) which do not constitute, and are not listed as, Material Contracts on
SCHEDULE 7.9(b) within fifteen (15) days after receiving written notice from
Buyer that it wishes to terminate such non-material Contracts; provided that,
Buyer shall defend, indemnify and hold harmless Seller from and against any
and all Damages incurred by Seller arising out of or related to termination
fees or other Damages (as defined in Section 15.2.1) incurred by Seller as a
result of sending such termination notices.
ARTICLE 11
CONDITIONS OF CLOSING BY BUYER
The obligations of Buyer hereunder are, at its option, subject to
satisfaction, on or prior to the Closing Date or such earlier date as
specifically provided below, of each of the following conditions:
11.1 REPRESENTATIONS, WARRANTIES AND COVENANTS.
11.1.1 All representations and warranties of Seller made in this
Agreement or in any Exhibit, Schedule or document delivered pursuant hereto,
shall be true and complete in all material respects as of the date hereof and
on and as of the Closing Date as if made on and as of that date.
11.1.2 All of the terms, covenants and conditions to be complied
with and performed by Seller on or prior to the Closing Date shall have been
complied with or performed in all material respects.
11.1.3 Buyer shall have received a certificate, dated as of the
Closing Date, from Seller, executed by an authorized officer of Seller to the
effect that except for changes expressly permitted or contemplated by the terms
of this Agreement or occurring as a result of Buyer's actions under the Time
Brokerage Agreement: (a) the representations and warranties of Seller contained
in this Agreement are true and complete in all material respects on and as of
the Closing Date as if made on and as of that date; and (b) Seller has complied
with or performed in all material respects all terms, covenants and conditions
to be complied with or performed by it on or prior to the Closing Date.
21
<PAGE>
11.2 GOVERNMENTAL CONSENTS. The FCC Consent and DOJ Consent shall have
been obtained and any waiting period under the HSR Act with respect to the
transactions contemplated by this Agreement shall have elapsed or been
terminated.
11.3 [RESERVED]
11.4 GOVERNMENTAL AUTHORIZATIONS. Seller shall be the holder of the
Citicasters Stations Licenses and all other licenses, permits and other
authorizations listed in SCHEDULE 7.4, and there shall not have been any
modification (other than as specifically permitted by this Agreement) of any
of such licenses, permits and other authorizations which has an adverse effect
on the Citicasters Stations or the operations thereof.
11.5 ADVERSE PROCEEDINGS. No suit, action, claim or governmental
proceeding shall be pending or threatened against, and no order, decree or
judgment of any court, agency or other governmental authority shall have been
rendered against, any party hereto which could reasonably be expected to
result in: (a) rendering it unlawful, as of the Closing Date, to effect the
transactions contemplated by this Agreement in accordance with its terms; (b)
seeking to enjoin any transaction contemplated hereby; (c) seeking material
damages on account of the consummation of any transaction contemplated hereby;
or (d) a petition of bankruptcy by or against Seller, an assignment by Seller
for the benefit of its creditors, or other similar proceeding.
11.6 THIRD-PARTY CONSENTS, ETC. All Contracts shall be in full force and
effect on the Closing Date. Seller shall have obtained and shall have
delivered to Buyer all third-party consents to the assignment of the Material
Contracts (without conditions materially adverse to Buyer), and all amendments
set forth in Sections 14.1.8.
11.7 CLOSING DOCUMENTS. Seller shall have delivered or caused to be
delivered to Buyer, on the Closing Date, all deeds, bills of sale,
endorsements, assignments and other instruments of conveyance and transfer
reasonably satisfactory in form and substance to Buyer, effecting the sale,
transfer, assignment and conveyance of the Stations Assets to Buyer,
including, without limitation, each of the documents required to be delivered
by Seller pursuant to Article 14.
11.8 TRUST. If the Nationwide Stations are transferred into the Trust
and if necessary, the Trustee shall have assigned the assets and licenses of
the Nationwide Stations which comprise all or part of the Stations Assets to
Buyer (with the remainder of the assets comprising the Nationwide Stations
being transferred by the Trustee to Seller simultaneous with the Closing
hereunder) in accordance with this Agreement.
11.9 STUDIO LEASE. Buyer shall have obtained the Landlord's Consent, and
the Objectionable Studio Lease Terms shall not have, in Buyer's judgment
reasonably exercised, a material adverse impact on the operation of the
Stations.
22
<PAGE>
ARTICLE 12
CONDITIONS OF CLOSING BY SELLER
The obligations of Seller hereunder are, at its option, subject to
satisfaction, on or prior to the Closing Date, of each of the following
conditions:
12.1 REPRESENTATIONS, WARRANTIES AND COVENANTS.
12.1.1 All representations and warranties of Buyer made in this
Agreement or in any Exhibit, Schedule or document delivered pursuant hereto,
shall be true and complete in all material respects as of the date hereof and
on and as of the Closing Date as if made on and as of that date, except for
changes expressly permitted or contemplated by the terms of this Agreement.
12.1.2 All the terms, covenants and conditions to be complied with
and performed by Buyer on or prior to the Closing Date shall have been complied
with or performed in all material respects.
12.1.3 Seller shall have received a certificate, dated as of the
Closing Date, executed by an authorized officer of Buyer, to the effect that:
(a) the representations and warranties of Buyer contained in this Agreement are
true and complete in all material respects on and as of the Closing Date as if
made on and as of that date; and (b) that Buyer has complied with or performed
in all material respects all terms, covenants and conditions to be complied
with or performed by it on or prior to the Closing Date.
12.2 GOVERNMENTAL CONSENTS. The FCC Consent and DOJ Consent shall have
been obtained and, any waiting period under the HSR Act with respect to the
transactions contemplated by this Agreement shall have elapsed or been
terminated.
12.3 ADVERSE PROCEEDINGS. No suit, action, claim or governmental
proceeding shall be pending or threatened against, and no order, decree or
judgment of any court, agency or other governmental authority shall have been
rendered against, any party hereto which: (a) would render it unlawful, as of
the Closing Date, to effect the transactions contemplated by this Agreement in
accordance with its terms; (b) questions the validity or legality of any
transaction contemplated hereby; (c) seeks to enjoin any transaction
contemplated hereby; or (d) is a petition of bankruptcy by or against Seller,
an assignment by Seller for the benefit of its creditors, or other similar
proceeding.
12.4 CLOSING DOCUMENTS. Buyer shall have delivered or caused to be
delivered to Seller, on the Closing Date, each of the documents and Purchase
Price required to be delivered by it pursuant to Article 14.
23
<PAGE>
12.5 THIRD-PARTY CONSENTS. Seller shall have obtained all third-party
consents to the assignment of the Material Contracts.
12.6 NATIONWIDE CLOSING. The transactions that are the subject of the
Nationwide Agreement shall have been consummated.
12.7 TRUST. If the Nationwide Stations are transferred into the Trust
and if necessary, the Trustee shall have assigned the assets and licenses of
the Nationwide Stations which comprise all or part of the Stations Assets to
Buyer (with the remainder of the assets comprising the Nationwide Stations
being transferred by the Trustee to Seller simultaneous with the Closing
hereunder) in accordance with this Agreement.
ARTICLE 13
TRANSFER TAXES; FEES AND EXPENSES
13.1 EXPENSES. Except as set forth in Section 13.2 and 13.3 hereof or
otherwise expressly set forth in this Agreement, each party hereto shall be
solely responsible for all costs and expenses incurred by it in connection
with the negotiation, preparation and performance of and compliance with the
terms of this Agreement including, but not limited to the costs and expenses
incurred pursuant to Article 5 hereof and the fees and disbursements of
counsel and other advisors.
13.2 TRANSFER TAXES AND SIMILAR CHARGES. All costs of transferring the
Stations Assets in accordance with this Agreement, including recordation,
transfer and documentary taxes and fees, and any excise, sales or use taxes,
shall be paid equally by Buyer and Seller.
13.3 GOVERNMENTAL FILING OR GRANT FEES. Any filing or grant fees imposed
by any governmental authority the consent of which or the filing with which is
required for the consummation of the transactions contemplated hereby shall be
paid equally by Buyer and Seller.
ARTICLE 14
DOCUMENTS TO BE DELIVERED AT CLOSING
14.1 SELLER'S DOCUMENTS. At the Closing, Seller shall deliver or cause
to be delivered to Buyer the following:
14.1.1 Certified resolutions of the Board of Directors of Seller
approving the execution and delivery of this Agreement and authorizing the
consummation of the transactions contemplated hereby;
14.1.2 A certificate of Seller, dated the Closing Date, in the
form described in Section 11.1.3;
24
<PAGE>
14.1.3 Governmental certificates showing that Seller is duly
organized and in good standing in the State of Ohio, and authorized to do
business in the State of California each certified as of a date not more than
thirty (30) business days before the Closing Date;
14.1.4 Such certificates, bills of sale, assignments, general
warranty deeds, documents of title and other instruments of conveyance,
assignment and transfer (including without limitation any necessary consents to
conveyance, assignment or transfer), and Lien releases, all in form
satisfactory to Buyer and Buyer's counsel, as shall be effective to vest in
Buyer good, marketable and insurable title in and to the Stations Assets, free,
clear and unencumbered.
14.1.5 An Assignment and Assumption Agreement in the form of
EXHIBIT C effectuating the assignment and assumption of the Assumed Liabilities
(the "Assignment and Assumption Agreement").
14.1.6 At the time and place of Closing, originals and all copies
of all program, operations, transmission or maintenance logs and all other
records required to be maintained by the FCC with respect to the Citicasters
Stations, including the public files of the Citicasters Stations, shall be left
at the Citicasters Stations and thereby delivered to Buyer;
14.1.7 Execute and deliver to Buyer the KKLQ(FM) tower site lease
in the form of EXHIBIT D; and
14.1.8 Deliver to Buyer either (a) an amended lease with the
University of California San Diego ("UCSD") that (i) extends the initial lease
term to at least ten (10) years, with options to extend for at least two (2)
terms of (5) years, (ii) eliminates Buyer's obligations regarding the covering
of UCSD events, the airing of certain UCSD programming, and the hiring of UCSD
students as interns, and (iii) does not increase the annual cost of the current
lease; or (b) alternative transmitter site arrangements which are reasonably
satisfactory to Buyer;
14.1.9 The Unwind Agreement in the form of EXHIBIT A, if
necessary.
14.1.10 Such additional information, materials, agreements, documents
and instruments as Buyer and its counsel may reasonably request in order to
consummate the Closing.
14.2 BUYER'S DOCUMENTS. At the Closing, Buyer shall deliver or cause to
be delivered to Seller the following:
14.2.1 Certified resolutions of the Board of Directors of Buyer
approving the execution and delivery of this Agreement and authorizing the
consummation of the transactions contemplated hereby;
14.2.2 A certificate of Buyer, dated the Closing Date, in the form
described in Section 12.1.3.
25
<PAGE>
14.2.3 The Assignment and Assumption Agreement;
14.2.4 The Purchase Price in accordance with Section 3.1 hereof;
14.2.5 The Unwind Agreement, if necessary.
14.2.6 The KKLQ-FM Tower Lease; and
14.2.7 Such additional information, materials, agreement,
documents and instruments as Seller and its counsel may reasonably request in
order to consummate the Closing.
ARTICLE 15
SURVIVAL; INDEMNIFICATION; ETC.
15.1 SURVIVAL OF REPRESENTATIONS, ETC. It is the express intention and
agreement of the parties to this Agreement that all covenants and agreements
(together, "Agreements") and all representations and warranties (together,
"Warranties") made by Buyer and Seller in this Agreement shall survive the
Closing (regardless of any knowledge, investigation, audit or inspection at
any time made by or on behalf of Buyer or Seller) for a period of sixteen (16)
months from the Closing Date.
15.1.1 The right of any party to recover Damages (as defined in
Section 15.2.1) pursuant to Section 15.2 shall not be affected by the
expiration of any Warranties as set forth herein, provided that notice of the
existence of any Damages (but not necessarily the fixed amount of any such
Damages) has been given by the indemnified party to the indemnifying party
prior to such expiration.
15.1.2 Notwithstanding any provision hereof to the contrary, there
shall be no contractual time limit in which Buyer or Seller may bring any
action for actual fraud (a "Fraud Action"), regardless of whether such actual
fraud also included a breach of any Agreement or Warranty; provided, however,
that any Fraud Action must be brought within the period of the applicable
statute of limitations plus any extensions or waivers granted or imposed with
respect thereto.
15.2 INDEMNIFICATION.
15.2.1 Seller shall defend, indemnify and hold harmless Buyer from
and against any and all losses, costs, damages, liabilities and expenses,
including reasonable attorneys' fees and expenses ("Damages") incurred by Buyer
arising out of or related to: (a) any breach of the Agreements or Warranties
given or made by Seller in this Agreement; (b) the conduct of the business and
operations of the Citicasters Stations or any portion thereof or the use or
ownership of the Stations Assets prior to the Closing Date; provided, however,
that (i) Seller shall have no liability
26
<PAGE>
to Buyer hereunder until, and only to the extent that, Buyer's aggregate
Damages exceed Three Hundred Thousand Dollars ($300,000) and (ii) the maximum
liability of Seller hereunder shall be Six Million Five Hundred Thousand
Dollars ($6,500,000).
15.2.2 Buyer shall defend, indemnify and hold harmless Seller from
and against any and all Damages incurred by Seller arising out of or related
to: (a) any breach of the Agreements and Warranties given or made by Buyer in
this Agreement; (b) Seller's cancellation of any non-material Contracts
pursuant to Section 10.12 hereof; (c) the Assumed Liabilities; and (d) the
conduct of the business and operations of the Stations Assets or any portion
thereof or the use or ownership of any of the Stations Assets on or after the
Closing Date; provided, however, that (i) Buyer shall have no liability to
Seller hereunder until, and only to the extent that, Seller's aggregate Damages
exceed Three Hundred Thousand Dollars ($300,000) and (ii) the maximum
liability of Buyer hereunder shall be Six Million Five Hundred Thousand Dollars
($6,500,000).
15.3 PROCEDURES; THIRD PARTY AND DIRECT INDEMNIFICATION CLAIMS. The
indemnified party agrees to give written notice as soon as reasonably
practicable to the indemnifying party of any demand, suit, claim or assertion
of liability by third parties or other circumstances that could give rise to
an indemnification obligation hereunder against the indemnifying party
(hereinafter collectively "Claims," and individually a "Claim"), it being
understood that the failure to give such notice shall not affect the
indemnified party's right to indemnification and the indemnifying party's
obligation to indemnify as set forth in this Agreement, unless the
indemnifying party's ability to contest, defend or settle with respect to such
Claim is thereby prejudiced. The parties also agree that any claim for
Damages arising directly between the parties relating to this Agreement may be
brought at any time within the period specified in Section 15.1, and that the
only notice required with respect thereto shall be as specified in Section
15.1.5.
The obligations and liabilities of the parties hereto with respect to
their respective indemnities pursuant to Section 15.2 resulting from any Claim
shall be subject to the following additional terms and conditions:
15.3.1 The indemnifying party shall have the right to undertake,
by counsel or other representatives of its own choosing, the defense or
opposition to such Claim.
15.3.2 In the event that the indemnifying party shall elect not to
undertake such defense or opposition, or within ten days after notice of any
such Claim from the indemnified party shall fail to defend or oppose, the
indemnified party (upon further written notice to the indemnifying party) shall
have the right to undertake the defense, opposition, compromise or settlement
of such Claim, by counsel or other representatives of its own choosing, on
behalf of and for the account and risk of the indemnifying party (subject to
the right of the indemnifying party to assume defense of or opposition to such
Claim at any time prior to settlement, compromise or final determination
thereof).
15.3.3 Anything in this Section 15.3 to the contrary
notwithstanding: (a) the indemnified party shall have the right, at its own
cost and expense, to participate in the defense,
27
<PAGE>
opposition, compromise or settlement of the Claim; (b) the indemnifying party
shall not, without the indemnified party's written consent, settle or
compromise any Claim or consent to entry of any judgment which does not
include as an unconditional term thereof the giving by the claimant or the
plaintiff to the indemnified party of a release from all liability in respect
of such Claim; and (c) in the event that the indemnifying party undertakes
defense of or opposition to any Claim, the indemnified party, by counsel or
other representative of its own choosing and at its sole cost and expense,
shall have the right to consult with the indemnifying party and its counsel or
other representatives concerning such Claim and the indemnifying party and the
indemnified party and their respective counsel or other representatives shall
cooperate in good faith with respect to such Claim.
15.3.4 The parties agree that all claims not disputed by the
indemnifying party shall be paid by the indemnifying party within thirty (30)
days after receiving notice of the Claim. "Disputed Claims" shall mean claims
for Damages by an indemnified party which the indemnifying party objects to in
writing within thirty (30) days after receiving notice of the Claim. In the
event there is a Disputed Claim with respect to any Damages, the indemnifying
party shall be required to pay the indemnified party the amount of such Damages
for which the indemnifying party has, pursuant to a final determination, been
found liable within ten (10) days after there is a final determination with
respect to such Disputed Claim. As used in this Section 15.3.4, a final
determination of a Disputed Claim shall be (i) a judgment of any court
determining the validity of a Disputed Claim, if no appeal is pending from such
judgment and if the time to appeal therefrom has elapsed; (ii) an award of any
arbitration determining the validity of such disputed claim, if there is not
pending any motion to set aside such award and if the time within which to move
to set aside such award has elapsed; (iii) a written termination of the dispute
with respect to such claim signed by all of the parties thereto or their
attorneys; (iv) a written acknowledgment of the indemnifying party that it no
longer disputes the validity of such claim; or (v) such other evidence of final
determination of a disputed claim as shall be acceptable to the parties.
15.3.5 No undertaking of defense or opposition to a Claim shall be
construed as an acknowledgment by such party that it is liable to the party
claiming indemnification with respect to the Claim at issue or other similar
Claims.
ARTICLE 16
TERMINATION RIGHTS
16.1 TERMINATION. This Agreement may be terminated at any time prior to
Closing as follows:
16.1.1 Upon the mutual written consent of Buyer and Seller this
Agreement may be terminated on such terms and conditions as so agreed; or
28
<PAGE>
16.1.2 By written notice of Buyer to Seller if Seller breaches in
any material respect any of its representations or warranties or defaults in
any material respect in the observance or in the due and timely performance of
any of its covenants or agreements herein contained and such breach or default
shall not be cured within thirty (30) days of the date of notice of breach or
default served by Buyer; provided, however, that with respect to breaches which
cannot reasonably be cured within such thirty day period, Buyer shall have no
right to terminate pursuant to this paragraph so long as Seller is diligently
continuing to cure such breach; or
16.1.3 By written notice of Seller to Buyer if Buyer breaches in
any material respect any of its representations or warranties or defaults in
any material respect in the observance or in the due and timely performance of
any of its covenants or agreements herein contained and such breach or default
shall not be cured within thirty (30) days of the date of notice of breach or
default served by Buyer; provided, however, that with respect to breaches which
cannot reasonably be cured within such thirty day period, Seller shall have no
right to terminate pursuant to this paragraph so long as Buyer is diligently
continuing to cure such breach or
16.1.4 By written notice of Buyer to Seller, or by Seller to
Buyer, if the FCC denies the FCC Application or designates it for a trial-type
hearing; or
16.1.5 By written notice of Buyer to Seller, or by Seller to
Buyer, if any court of competent jurisdiction shall have issued an order,
decree or ruling or taken any other action restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement; or
16.1.6 By written notice of Buyer to Seller, or by Seller to
Buyer, if the Closing shall not have been consummated on or before April 30,
1999; or
16.1.7 By written notice of Seller to Buyer if the DOJ Consent is
not obtained, or is denied or rescinded; or
16.1.8 By written notice of Seller to Buyer if the Nationwide
Agreement is terminated or expires pursuant to its terms.
Notwithstanding the foregoing, no party hereto may effect a
termination hereof if such party is in material default or breach of this
Agreement.
16.2. LIABILITY. Except as set forth in Section 16.4 below, the
termination of this Agreement under Section 16.1 shall not relieve any party
of any liability for breach of this Agreement prior to the date of termination.
16.3. MONETARY DAMAGES, SPECIFIC PERFORMANCE AND OTHER REMEDIES. The
parties recognize that if either party refuses to perform under the provisions
of this Agreement or either party otherwise breaches ("Breaching Party") such
that the Closing has not occurred, monetary damages alone will not be adequate
to compensate the non-breaching party ("Non-Breaching
29
<PAGE>
Party") for its injury. Such Non-Breaching Party shall therefore be entitled
to obtain specific performance of the terms of this Agreement in lieu of, and
not in addition to, any other remedies, including but not limited to monetary
damages, that may be available to it; provided however, that Seller may elect
to recover liquidated damages in lieu of obtaining specific performance, or
vice versa, in accordance with Section 16.4. If any action is brought by the
Non-Breaching Party to enforce this Agreement, the Breaching Party shall waive
the defense that there is an adequate remedy at law. In the event of a
default by the Breaching Party which results in the filing of a lawsuit for
damages, specific performance, or other remedy, the Non-Breaching Party shall
be entitled to reimbursement by the Breaching Party of reasonable legal fees
and expenses incurred by the Non-Breaching Party; provided that, the
Non-Breaching Party is successful in such lawsuit.
16.4 SELLER'S LIQUIDATED DAMAGES. Subject to Section 16.3, if the parties
hereto shall fail to consummate this Agreement on the Closing Date due solely
to Buyer's material breach of this Agreement, and Seller is not at that time
in material breach hereof, then Buyer shall pay to Seller the sum of Three
Million Dollars ($3,000,000), which amount shall constitute liquidated
damages. It is understood and agreed that such liquidated damages amount
represents Buyer's and Seller's reasonable estimate of actual damages and does
not constitute a penalty. If Seller elects to recover liquidated damages in
lieu of the remedy of specific performance, recovery of liquidated damages
shall be the sole and exclusive remedy of Seller against Buyer for failing to
consummate this Agreement as a result of Buyer's material breach hereof,
regardless of the actual amount of damages sustained, and all other remedies
are deemed waived by Seller.
ARTICLE 17
MISCELLANEOUS PROVISIONS
17.1 RISK OF LOSS. Prior to the Closing, the risk of any loss, damage or
destruction shall be borne by Seller. Upon the occurrence of any loss or
damage to any of the Stations Assets as a result of fire, casualty or other
causes prior to the Closing Date, Seller shall, at its expense, restore,
replace and/or repair the Stations Assets which have been damaged or suffered
loss; provided that, if the damage or loss is not fully remedied on the
Closing Date, Buyer and Seller shall consummate the transaction on the Closing
Date, but Buyer shall receive a credit toward the Purchase Price of the amount
reasonably and in good faith jointly determined by Buyer and Seller to
constitute the costs of restoring, replacing and/or repairing such damage or
loss (less any amounts paid by Seller or on Seller's behalf in order to
restore, replace and/or repair the damage or loss, and the amount of any
insurance under any insurance policy insuring such loss or damage), and Seller
shall assign to Buyer all rights under any insurance claim(s) covering the
loss(es). Notwithstanding the above, Buyer has the right to delay the Closing
if the Citicasters Stations are off the air on the Closing Date, or have not
been on the air for twenty-four (24) consecutive hours immediately prior to
the Closing Date until the Citicasters Stations are on the air for such time.
17.2 CERTAIN INTERPRETIVE MATTERS AND DEFINITIONS. Unless the context
otherwise requires: (a) all references to Sections, Articles, Schedules or
30
<PAGE>
Exhibits are to Sections, Articles, Schedules or Exhibits of or to this
Agreement; (b) each term defined in this Agreement has the meaning assigned to
it; (c) each accounting term not otherwise defined in this Agreement has the
meaning assigned to it in accordance with generally accepted accounting
principles as in effect on the date hereof; (d) "or" is disjunctive but not
necessarily exclusive; (e) words in the singular include the plural and vice
versa; (f) the term "Affiliate" has the meaning given it in Rule 12b-2 of
Regulation 12B under the Securities Exchange Act of 1934, as amended; and (g)
all references to "$" or dollar amounts will be to lawful currency of the
United States of America.
17.3 FURTHER ASSURANCES. After the Closing, Seller shall from time to
time, at the request of and without further cost or expense to Buyer, execute
and deliver such other instruments of conveyance and transfer and take such
other actions as may reasonably be requested in order to more effectively
consummate the transactions contemplated hereby to vest in Buyer good and
marketable title to the Stations Assets being transferred hereunder, free,
clear and unencumbered, and Buyer shall from time to time, at the request of
and without further cost or expense to Seller, execute and deliver such other
instruments and take such other actions as may reasonably be requested in
order more effectively to relieve Seller of any obligations being assumed by
Buyer hereunder.
17.4 BENEFIT AND ASSIGNMENT. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Subject to the provisions of Section 10.7
with respect to the Seller assigning its rights (in whole or in part) under
this Agreement to a Qualified Intermediary, and provided that Seller shall be
permitted to sell, assign and/or transfer some or all of the Station Assets
and/or this Agreement (in whole or in part) to its designee, assignee, trustee
or other entity if it determines that it would be advisable to make such a
transfer in order to make more certain or otherwise facilitate the
consummation of the transactions contemplated hereby or the transactions
contemplated by the Nationwide Agreement ("Permitted Assignment"), neither
party may voluntarily or involuntarily assign its interest under this
Agreement without the prior written consent of the other party hereto. Buyer
agrees with respect to any Permitted Assignment that it shall take all such
actions as are reasonably requested by Seller to effectuate such Permitted
Assignment, including but not limited to cooperating in any appropriate
filings with the FCC or other governmental authorities. All covenants,
agreements, statements, representations, warranties and indemnities in this
Agreement by and on behalf of any of the parties hereto shall bind and inure
to the benefit of their respective successors and permitted assigns of the
parties hereto.
17.5 AMENDMENTS. No amendment, waiver of compliance with any provision
or condition hereof or consent pursuant to this Agreement shall be effective
unless evidenced by an instrument in writing signed by the party against whom
enforcement of any waiver, amendment, change, extension or discharge is sought.
17.6 HEADINGS. The headings set forth in this Agreement are for
convenience only and will not control or affect the meaning or construction of
the provisions of this Agreement.
31
<PAGE>
17.7 GOVERNING LAW. The construction and performance of this Agreement
shall be governed by the laws of the State of California without giving effect
to the choice of law provisions thereof. Any action, suit or proceeding
brought by any party to this Agreement relating to or arising out of this
Agreement or any other agreement, instrument, certificate or other document
delivered pursuant hereto (or the enforcement hereof or thereof) must be
brought and prosecuted as to all parties in, and each of the parties hereby
consents to service of process, personal jurisdiction and venue in, the state
and Federal courts of general jurisdiction located in San Diego County,
California.
17.8 NOTICES. Any notice, demand or request required or permitted to be
given under the provisions of this Agreement shall be in writing, including by
facsimile, and shall be deemed to have been duly delivered and received on the
date of personal delivery, on the third day after deposit in the U.S. mail if
mailed by registered or certified mail, postage prepaid and return receipt
requested, on the day after delivery to a nationally recognized overnight
courier service if sent by an overnight delivery service for next morning
delivery or when dispatched by facsimile transmission (with the facsimile
transmission confirmation being deemed conclusive evidence of such dispatch)
and shall be addressed to the following addresses, or to such other address as
any party may request, in the case of Seller, by notifying Buyer, and in the
case of Buyer, by notifying Seller:
To Seller: Randy Michaels, President
Citicasters Co.
50 East RiverCenter Boulevard
12th Floor
Covington, Kentucky 41011
Fax: (606) 655-9345
Copy to: Graydon, Head & Ritchey
1900 Fifth Third Center
511 Walnut Street
Cincinnati, Ohio 45202
Attention: John J. Kropp, Esq.
Fax: (513) 651-3836
To Buyer
or Heftel: Heftel Broadcasting Corporation
100 Crescent Court, Suite 1777
Dallas, Texas 75201-6981
Attention: Jeff Hinson, Senior Vice President
and Chief Financial Officer
Fax: (214) 855-5581
32
<PAGE>
Copies to: Mr. Bruce Hallett
Crouch & Hallett
717 N. Harwood, Ste. 1400
Dallas, TX 75201
Fax: (214) 953-3154
17.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which
together will constitute one and the same instrument.
17.10 NO THIRD PARTY BENEFICIARIES. Nothing herein expressed or implied
is intended or shall be construed to confer upon or give to any person or
entity other than the parties hereto and their successors or permitted
assigns, any rights or remedies under or by reason of this Agreement.
17.11 SEVERABILITY. The parties agree that if one or more provisions
contained in this Agreement shall be deemed or held to be invalid, illegal or
unenforceable in any respect under any applicable law, this Agreement shall be
construed with the invalid, illegal or unenforceable provision deleted, and
the validity, legality and enforceability of the remaining provisions
contained herein shall not be affected or impaired thereby.
17.12 ENTIRE AGREEMENT This Agreement and the Exhibits hereto embody the
entire agreement and understanding of the parties hereto and supersede any and
all prior agreements, arrangements and understandings relating to the matters
provided for herein.
17.13 HEFTEL GUARANTY.
17.13.1 GUARANTY OF PERFORMANCE. To induce Seller to enter into
this Agreement and to consummate the transactions, and in consideration of the
benefits which will inure to Heftel from the consummation of such
transactions, Heftel hereby unconditionally represents, warrants and covenants
that it is the surety for and guarantees the performance of all obligations of
Buyer hereunder for the benefit of Seller.
17.13.2 ORGANIZATION. Heftel is a corporation duly organized
validly existing and in good standing and authorized to do business under the
laws of the State of Delaware, is duly authorized under applicable law to
carry on its business as presently conducted, and has all requisite corporate
power and authority to own, lease and operate its assets, properties and
business and to carry on its business as now being and heretofore conducted.
17.13.3 AUTHORITY. Heftel has all requisite corporate power and
authority to execute and deliver 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 Heftel and this Agreement has
been duly executed and delivered by Heftel and constitutes the valid and
legally binding obligation of Heftel, enforceable against it in accordance
with its terms, except as enforceability may be limited
33
<PAGE>
by applicable bankruptcy, insolvency, reorganization, moratorium,
rehabilitation, or similar laws affecting the enforcement of creditors' rights
generally.
17.13.4 NO BREACH. Neither the execution and the delivery of this
Agreement by Heftel, nor the consummation of the transactions contemplated
hereby, will (i) violate any statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any governmental bodies
or court to which Heftel is subject or any provision of the charter or by laws
of Heftel or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement or license to which Heftel is a party or by which it is bound or to
which any of its assets is subject (or result in the imposition of any Lien
upon any of its assets).
17.13.5 NO CONFLICTING AGREEMENTS. There are not any agreements,
contracts, understandings or commitments which will restrain or inhibit the
right of Heftel to enter into this Agreement, make any representations or
warranties herein and/or consummate any of the transactions contemplated
herein.
17.13.6 NO LITIGATION. There are no suits, legal proceedings or
investigations of any nature pending or, to Heftel's knowledge, threatened
against or affecting it that would affect Heftel's ability to carry out the
transactions contemplated by this Agreement, and Heftel is unaware of any
facts which could reasonably result in any such proceeding.
34
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date and year first above written.
CITICASTERS CO.
By: /s/ R. Christopher Weber
--------------------------------
Name: R. Christopher Weber
------------------------------
Title: Sr. V.P. & Asst. Sec.
-----------------------------
HBC SAN DIEGO LICENSE CORPORATION
By: /s/ McHenry T. Tichenor, Jr.
--------------------------------
Name: McHenry T. Tichenor, Jr.
------------------------------
Title: President & CEO
-----------------------------
HBC SAN DIEGO, INC.
By: /s/ McHenry T. Tichenor, Jr.
--------------------------------
Name: McHenry T. Tichenor, Jr.
------------------------------
Title: President & CEO
-----------------------------
HEFTEL BROADCASTING CORPORATION
By: /s/ McHenry T. Tichenor, Jr.
--------------------------------
Name: McHenry T. Tichenor, Jr.
------------------------------
Title: President & CEO
-----------------------------
35
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS AS OF AND FOR THE SIX MONTH PERIOD ENDED JUNE 30, 1998
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 49,685
<SECURITIES> 0
<RECEIVABLES> 36,773
<ALLOWANCES> 2,462
<INVENTORY> 0
<CURRENT-ASSETS> 86,189
<PP&E> 43,098
<DEPRECIATION> 12,981
<TOTAL-ASSETS> 726,690
<CURRENT-LIABILITIES> 31,917
<BONDS> 0
0
0
<COMMON> 49
<OTHER-SE> 607,439
<TOTAL-LIABILITY-AND-EQUITY> 726,690
<SALES> 0
<TOTAL-REVENUES> 75,740
<CGS> 0
<TOTAL-COSTS> 57,765
<OTHER-EXPENSES> (4,157)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,366
<INCOME-PRETAX> 20,766
<INCOME-TAX> 8,618
<INCOME-CONTINUING> 12,148
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,148
<EPS-PRIMARY> 0.25
<EPS-DILUTED> 0.25
</TABLE>
