<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 September 30, 1999
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
HISPANIC 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>
<CAPTION>
Class Outstanding at November 1, 1999
- ----- -------------------------------
<S> <C>
Class A Common Stock, $.001 Par Value 37,193,488
Class B Non-Voting Common Stock, $.001 Par Value 14,156,470
</TABLE>
<PAGE>
HISPANIC BROADCASTING CORPORATION
SEPTEMBER 30, 1999
INDEX
PART I. FINANCIAL INFORMATION
<TABLE>
<S><C>
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of September 30, 1999
and December 31, 1998................................................................. 2
Condensed Consolidated Statements of Operations for the
Three Months Ended September 30, 1999 and 1998 and the Nine Months
Ended September 30, 1999 and 1998..................................................... 3
Condensed Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 1999 and 1998......................................... 4
Notes to Condensed Consolidated Financial Statements ................................. 5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations .................................................................... 8
Item 3. Quantitative and Qualitative Disclosures about
Market Risk ............................................................................. 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings........................................................................ 12
Item 6. Exhibits and Reports on Form 8-K ........................................................ 12
</TABLE>
1
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
HISPANIC BROADCASTING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- -------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 8,625,078 $ 10,293,241
Accounts receivable, net 39,811,641 34,309,106
Prepaid expenses and other current assets 1,124,987 456,843
------------- -------------
Total current assets 49,561,706 45,059,190
Property and equipment, at cost, net 39,250,184 36,005,235
Intangible assets, net 853,085,182 646,200,359
Deferred charges and other assets 11,033,252 19,424,215
------------- -------------
Total assets $ 952,930,324 $ 746,688,999
------------- -------------
------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $33,901,138 $27,769,816
Current portion of long-term obligations 124,942 121,052
------------- -------------
Total current liabilities 34,026,080 27,890,868
------------- -------------
Long-term obligations, less current portion 52,435,505 1,547,130
------------- -------------
Deferred income taxes 99,930,353 94,630,353
------------- -------------
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
100,000,000 shares; issued and outstanding
37,193,488 at September 30, 1999 and 35,171,980 at
December 31, 1998 37,193 35,172
Class B Common Stock, convertible, $.001 par value;
authorized 50,000,000 shares; issued and outstanding
14,156,470 shares 14,156 14,156
Additional paid-in capital 786,114,683 665,339,306
Accumulated deficit (19,627,646) (42,767,986)
------------- -------------
Total stockholders' equity 766,538,386 622,620,648
------------- -------------
Total liabilities and stockholders' equity $ 952,930,324 $ 746,688,999
------------- -------------
------------- -------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
2
<PAGE>
HISPANIC BROADCASTING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------- ------------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net revenues $ 52,370,206 $ 44,205,828 $141,984,388 $119,945,444
Operating expenses 27,607,829 25,204,547 78,722,891 70,716,726
Depreciation and amortization 6,965,963 5,580,111 19,692,498 15,070,764
------------ ------------ ------------ ------------
Operating income before corporate
expenses 17,796,414 13,421,170 43,568,999 34,157,954
Corporate expenses 1,724,360 1,374,888 4,950,357 4,137,527
------------ ------------ ------------ ------------
Operating income 16,072,054 12,046,282 38,618,642 30,020,427
Interest income, net 950,116 97,557 937,495 2,889,032
------------ ------------ ------------ ------------
Income before income tax 17,022,170 12,143,839 39,556,137 32,909,459
Income tax 7,176,871 5,039,693 16,415,797 13,657,425
------------ ------------ ------------ ------------
Net income $ 9,845,299 $ 7,104,146 $ 23,140,340 $ 19,252,034
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Net income per common share - basic
and diluted $ 0.19 $ 0.14 $ 0.46 $ 0.39
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Weighted average common shares
outstanding:
Basic 51,349,841 49,328,450 50,177,785 48,918,195
Diluted 52,158,080 49,611,164 50,791,941 49,230,444
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
HISPANIC BROADCASTING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
---------------------------------
1999 1998
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 23,140,340 $ 19,252,034
Adjustments to reconcile net income
to net cash provided by operating activities:
Provision for bad debts 987,063 831,794
Depreciation and amortization 19,692,498 15,070,764
Deferred income taxes 5,300,000 5,400,000
Other 141,799 (62,004)
Changes in operating assets and liabilities (1,032,909) 806,442
-------------- --------------
Net cash provided by operating activities 48,228,791 41,299,030
-------------- --------------
Cash flows from investing activities:
Property and equipment acquisitions (7,325,118) (2,780,110)
Dispositions of property and equipment 919,612 -
Additions to intangible assets (127,090) -
Increase in deferred charges and other assets (6,165,357) (1,909,352)
Acquisitions of radio stations (208,868,664) (236,563,901)
-------------- --------------
Net cash used in investing activities (221,566,617) (241,253,363)
-------------- --------------
Cash flows from financing activities:
Borrowings on long-term obligations 71,000,000 18,000,000
Payments on long-term obligations (20,107,735) (17,476,345)
Proceeds from stock issuances, net of costs 120,777,398 205,975,368
-------------- --------------
Net cash provided by financing activities 171,669,663 206,499,023
-------------- --------------
Net increase (decrease) in cash and cash equivalents (1,668,163) 6,544,690
Cash and cash equivalents at beginning of period 10,293,241 6,553,271
-------------- --------------
Cash and cash equivalents at end of period $ 8,625,078 $ 13,097,961
-------------- --------------
-------------- --------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
HISPANIC BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1999
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
of Hispanic Broadcasting Corporation (formerly 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 nine month periods ended September
30, 1999 are not necessarily indicative of the results that may be expected for
the year ending December 31, 1999. For further information, refer to the
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1998.
In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130 ("SFAS 130"), REPORTING COMPREHENSIVE
INCOME. SFAS 130 requires the reporting of comprehensive income in financial
statements by all entities that provide a full set of financial statements. The
Company's net income is the same as its comprehensive income for all periods
presented and no additional disclosures are necessary.
2. ACQUISITIONS AND DISPOSITIONS
1999 ACQUISITIONS
On January 27, 1999, the Company entered into an asset purchase
agreement to acquire for $18.3 million the assets of KHOT(FM), serving the
Phoenix market (the "KHOT(FM) Acquisition"). The KHOT(FM) Acquisition closed on
April 5, 1999. The asset acquisition was made with cash generated from
operations. Immediately after closing, the station's programming was converted
to a Spanish-language format. The Company is in the process of building out new
studios and office space in Phoenix. The anticipated capital costs will
approximate $0.8 million.
On March 1, 1999, the Company entered into an asset purchase agreement
to acquire for $20.3 million the assets of KISF(FM), serving the Las Vegas
market (the "KISF(FM) Acquisition"). The KISF(FM) Acquisition closed on April
30, 1999. The asset acquisition was financed with a $20.0 million borrowing from
the Company's $297.0 million revolving credit facility (the "Credit Facility")
and $0.3 million cash generated from operations. Immediately after closing, the
station's programming was converted to a Spanish-language format.
On January 2, 1997, the Company acquired an option to purchase all
of the assets used in connection with the operation of KSCA(FM), a radio
station serving the Los Angeles market (the "KSCA Option"). In connection
with the acquisition of the KSCA Option, the Company began providing
Spanish-language programming to KSCA(FM) under a time brokerage agreement on
February 5, 1997. The Company exercised the KSCA Option and on September 17,
1999, the Company acquired the assets of KSCA(FM) for $118.1 million. The
Company previously paid $13.0 million to acquire and renew the option to
purchase the assets of KSCA(FM) and such payments were subtracted from the
purchase price at closing. To fund the acquisition, the Company borrowed
$38.0 million from the Credit Facility and used $67.1 million of cash. The
cash was generated from operating activities and proceeds of the June 1999
secondary public stock offering (the "June 1999 Offering").
5
<PAGE>
On July 6, 1999, the Company entered into an agreement to acquire from
a nonaffiliated trust for $65.0 million, the FCC licenses and transmission
equipment of a radio station broadcasting at 94.1 MHz, serving the Dallas/Fort
Worth market (the "Dallas Acquisition"). The Dallas Acquisition closed September
24, 1999. To fund the acquisition, the Company borrowed $8.0 million from the
Credit Facility and used $57.0 million of cash. The cash was generated from
operating activities and proceeds of the June 1999 Offering.
With the Dallas Acquisition, the Company assumed a time brokerage
agreement whereby an unaffiliated party (the "Broker") provides the programming
to the radio station broadcasting at 94.1 MHz until the earlier of December 31,
1999 or the seventh day after the Broker notifies the Company in writing of its
desire to terminate the agreement. The time brokerage payments range from
$12,947 to $15,618 per day. Immediately after the time brokerage agreement
terminates, the station's programming will be converted to a Spanish-language
format.
To facilitate the Dallas Acquisition, the Company entered into a bridge
loan agreement (the "Bridge Loan") with a nonaffiliated partnership. The Bridge
Loan, in the amount of $57.0 million, was made on July 1, 1999. The partnership
sold the radio station broadcasting at 94.1 MHz to the aforementioned
nonaffiliated trust. The Bridge Loan interest rate was 7.0% and the principal
and accrued interest matured on September 22, 1999.
1998 ACQUISITIONS
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 asset exchange was financed
with a portion of the proceeds from the January 1998 secondary public stock
offering (the "January 1998 Offering"). 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 for $54.0 million, the assets of KLTN(FM) (formerly
KKPN(FM)), serving the Houston market (the "KLTN(FM) Acquisition"). The asset
acquisition was financed with a portion of the proceeds from the January 1998
Offering. 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 for $65.2 million, the assets of KLQV(FM) and KLNV(FM) (formerly
KJOY(FM) and KKLQ(FM)) serving the San Diego market (the "San Diego
Acquisition"). The asset acquisition was financed with a portion of the proceeds
from the January 1998 Offering, an additional $18.0 million borrowing under the
Company's Credit Facility and cash generated from operations. The San Diego
Acquisition closed on August 10, 1998. Immediately after closing, the
programming of the stations was converted to two Spanish-language formats.
6
<PAGE>
Pro forma results of operations for the nine months ended September 30,
1998, calculated as though the WCAA(FM) Acquisition had occurred at the
beginning of 1998, is as follows (dollars in thousands, except per share data):
<TABLE>
<CAPTION>
Nine Months Ended September 30,
------------------------------------------
Historical Pro forma
1999 1998
------------------ -----------------
<S> <C> <C>
Net revenues $ 141,984 $ 121,226
Operating income 38,619 29,477
Net income 23,140 17,100
Net income per common share:
Basic 0.46 0.35
Diluted 0.46 0.34
</TABLE>
PENDING TRANSACTIONS
On April 14, 1999, the Company entered into an agreement with Z-Spanish
Media Corporation ("Z"), to exchange the assets of KRTX(FM), a radio station
serving the Houston market, for the assets of KLNZ(FM), a radio station owned by
Z serving the Phoenix market. Although the asset exchange has received all
necessary governmental consents, the transaction has not closed. Pursuant to the
terms of the asset exchange agreement, the Company has instituted arbitration
proceedings seeking, among other relief, specific performance to compel the
closing of the transaction.
On October 15, 1999, the Company entered into an asset purchase
agreement to acquire for $75.0 million the assets of KACE(FM) and KRTO(FM),
serving the Los Angeles market. The closing of this acquisition is expected
to occur during the fourth quarter of 1999. Immediately after closing, the
stations' programming will be converted to a single Spanish-language format.
Consummation of the purchase is subject to a number of conditions, including
approval by the FCC of the transfer of the FCC licenses. This transaction
will be financed with a borrowing from the Credit Facility.
3. LONG-TERM OBLIGATIONS
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. As of September 30, 1999, the Company has $246.0 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.
As of September 30, 1999, the Company had a $51.0 million outstanding
balance due on the Credit Facility. On April 30, 1999, the Company borrowed
$20.0 million on the Credit Facility and repaid the entire amount by June 30,
1999 from the proceeds of the June 1999 Offering. In September 1999, the Company
borrowed $51.0 million on the Credit Facility.
On January 29, 1998, the Company repaid the $12.0 million outstanding
balance on the Credit Facility from the proceeds of the January 1998 Offering.
In the quarter ended September 30, 1998, the Company borrowed $18.0 million on
the Credit Facility and repaid $5.0 million.
7
<PAGE>
4. STOCKHOLDERS' EQUITY
On June 7, 1999, the Company completed the June 1999 Offering, selling
2,000,000 shares of Class A Common Stock at $60.03 per share, net of
underwriters' discounts and commissions. The net proceeds of the offering were
approximately $119.9 million.
On January 22, 1998, the Company completed the January 1998 Offering,
selling 5,175,000 shares of Class A Common Stock at $39.75 per share, net of
underwriters' discounts and commissions. The net proceeds of the offering were
approximately $205.1 million.
The following is a reconciliation of the denominators of the basic and
diluted earnings per share computations:
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
--------------------------------- -------------------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Denominator for basic earnings
per share 51,349,841 49,328,450 50,177,785 48,918,195
Effect of dilutive securities:
Stock options 804,794 275,891 607,201 304,104
Employee Stock Purchase Plan 3,445 6,823 6,955 8,145
---------- ---------- ---------- ----------
Denominator for diluted earnings
per share 52,158,080 49,611,164 50,791,941 49,230,444
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
5. LONG-TERM INCENTIVE PLAN
On May 21, 1997, the stockholders of the Company approved the Hispanic
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 1,413,184 shares of Class A Common Stock to
directors and key employees. The exercise prices range from $16.44 to $76.00 per
share and were equal to the fair market value of the Class A Common Stock on the
dates such options were granted.
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, and advertising and
8
<PAGE>
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.
Another measure of operating performance is EBITDA. EBITDA consists of
operating income or loss excluding depreciation and amortization.
Broadcast cash flow and EBITDA are not calculated in accordance with
generally accepted accounting principles. These measures should not be
considered in isolation or as substitutes 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 and EBITDA do not
take into account the Company's debt service requirements and other commitments
and, accordingly, broadcast cash flow and EBITDA are not necessarily indicative
of amounts that may be available for dividends, reinvestment in the Company's
business or other discretionary uses.
RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999
COMPARED TO THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998
The results of operations for the three and nine months ended September
30, 1999 are not comparable to results of operations for the same periods in
1998 primarily due to the start-up of radio stations WCAA(FM) in New York on May
22, 1998 (WPAT(AM) was exchanged for WCAA(FM)), KRTX(AM/FM) in Houston on May
29, 1998, KLQV(FM) and KLNV(FM) in San Diego on August 10, 1998, KHOT(FM) in
Phoenix on April 5, 1999, and the start-up of HBC Radio Network (a radio network
sales and programming division) on January 1, 1999.
Net revenues increased by $8.2 million or 18.6% to $52.4 million for
the three months ended September 30, 1999 from $44.2 million for the same
period in 1998. Net revenues for the nine months ended September 30, 1999
increased by $22.1 million, or 18.4% to $142.0 million, compared to $119.9
million for the same period in 1998. Net revenues increased for the three and
nine months ended September 30, 1999, compared to the same periods in 1998
primarily because of (a) revenue growth of same stations, and (b) revenues
from start-up stations which were not operating for all or part of the three
and nine months ended September 30, 1998. Had the WCAA(FM) Acquisition
occurred on January 1, 1998, net revenues, on a pro forma basis, for the nine
months ended September 30, 1999 would have increased 17.1% compared to the
same period in 1998.
Operating expenses increased by $2.4 million or 9.5% to $27.6
million for the three months ended September 30, 1999 from $25.2 million for
the same period in 1998. Operating expenses for the nine months ended
September 30, 1999 increased by $8.0 million or 11.3% to $78.7 million,
compared to $70.7 million for the same period in 1998. Operating expenses
increased primarily due to operating expenses of start-up stations. As a
percentage of net revenues, operating expenses decreased to 52.7% from 57.0%
for the three months ended September 30, 1999 and 1998, respectively, and
decreased to 55.4% from 59.0% for the nine months ended September 30, 1999
and 1998, respectively. Had the WCAA(FM) Acquisition occurred on January 1,
1998, operating expenses, on a pro forma basis, for the nine months ended
September 30, 1999 would have increased 10.2% compared to the same period in
1998.
Operating income before corporate expenses, depreciation and
amortization ("broadcast cash flow") for the three and nine months ended
September 30, 1999 increased 30.5% and 28.7%, to $24.8 million and $63.3
million, respectively, compared to $19.0 million and $49.2 million,
respectively, for the three and nine months ended September 30, 1998. As a
percentage of net revenues, broadcast cash flow increased to 47.3% from 43.0%
for the three months ended September 30, 1999 and 1998, respectively, and
increased to
9
<PAGE>
44.6% from 41.0% for the nine months ended September 30, 1999 and 1998,
respectively. Had the WCAA(FM) Acquisition occurred on January 1, 1998,
broadcast cash flow, on a pro forma basis, for the nine months ended September
30, 1999 would have increased 27.0% compared to the same period in 1998.
Corporate expenses increased by $0.4 million or 28.6% to $1.8
million for the three months ended September 30, 1999 from $1.4 million for
the same period in 1998. Corporate expenses for the nine months ended
September 30, 1999 increased by $0.9 million, or 22.0%, to $5.0 million,
compared to $4.1 million for the same period of 1998. The increase was
primarily due to higher staffing costs of the Company and the one-time
expenses related to the resignation of an executive officer in the first
quarter of 1999. As a percentage of net revenues, corporate expenses
increased to 3.4% from 3.2% for the three months ended September 30, 1999 and
1998, respectively, and increased to 3.5% from 3.4% for the nine months ended
September 30, 1999 and 1998, respectively.
EBITDA for the three and nine months ended September 30, 1999 increased
30.7% and 29.3%, to $23.0 million and $58.3 million, respectively, compared to
$17.6 million and $45.1 million, respectively, for the three and nine months
ended September 30, 1998. As a percentage of net revenues, EBITDA increased to
43.9% from 39.8% for the three months ended September 30, 1999 and 1998,
respectively, and increased to 41.1% from 37.6% for the nine months ended
September 30, 1999 and 1998, respectively.
Depreciation and amortization for the three months ended September 30,
1999 increased 25.0% to $7.0 million compared to $5.6 million for the same
period in 1998. Depreciation and amortization for the nine months ended
September 30, 1999 increased 30.5% to $19.7 million compared to $15.1 million
for the same period in 1998. The increases in both periods are due to radio
station acquisitions and capital expenditures.
Interest income, net increased to $1.0 million from $0.1 million for
the three months ended September 30, 1999 and 1998, respectively. Interest
income, net decreased to $0.9 million from $2.9 million for the nine months
ended September 30, 1999 and 1998, respectively. The increase for the three
months ended September 30, 1999 compared to the same period in 1998 was because
in 1999 the unspent proceeds of the June 1999 Offering were invested most of the
quarter, whereas in 1998 the unspent proceeds of the January 1998 Offering were
spent in early August. The decrease for the nine months ended September 30, 1999
compared to the same period in 1998 was because the proceeds from the June 1999
Offering were smaller in amount and were received later in the year in
comparison to the proceeds of the January 1998 Offering.
Federal and state income taxes are being provided at an effective rate
of 41.5% in 1999 and 1998.
For the three months ended September 30, 1999, the Company's net income
totaled $9.8 million ($0.19 per common share) compared to $7.1 million ($0.14
per common share) in the same period in 1998. For the nine months ended
September 30, 1999, the Company's net income totaled $23.1 million compared to
$19.2 million in the same period in 1998.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities for the nine months ended
September 30, 1999 was $48.2 million as compared to $41.3 million for the same
period in 1998. Net cash used in investing activities was $221.6 and $241.3
million for the nine months ended September 30, 1999 and 1998, respectively. The
$19.7 million decrease from 1998 to 1999 is mostly due to $27.7 million more
spent during the first nine months of 1998 on radio station acquisitions than
the comparable period of 1999 offset somewhat by a $4.5 million increase in 1999
in property and equipment acquisitions. Net cash provided by financing
activities was $171.7 and $206.5 million for the nine months ended September 30,
1999 and 1998, respectively. The $34.8 million decrease from 1998 to 1999 is due
to the proceeds of the January 1998 Offering being larger than
10
<PAGE>
those of the June 1999 Offering offset somewhat by the increased borrowing in
1999 against the Credit Facility versus the amount borrowed in the comparable
period in 1998.
Generally, capital expenditures are made with cash provided by
operations. Capital expenditures totaled $7.3 and $2.8 million for the nine
months ended September 30, 1999 and 1998, respectively. Approximately $4.1
million of the capital expenditures incurred during the nine months ended
September 30, 1999 related to radio signal upgrade projects for four different
radio stations and the build-out of studios related to acquisitions made in New
York, Phoenix and Los Angeles.
Available cash on hand plus cash flow provided by operations was
sufficient to fund the Company's operations, meet its debt obligations, and to
fund capital expenditures. The Company believes it will have sufficient cash on
hand and cash provided by operations to finance its operations, satisfy its debt
service requirements, and to fund capital expenditures. The Company regularly
reviews potential acquisitions. The Company intends to finance acquisitions
primarily through proceeds from borrowings under the Credit Facility, proceeds
from securities offerings, and/or from cash provided by operations.
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 system failures or
miscalculations.
All software used in the accounting system has been replaced. The key
software components used in the accounting system are the general ledger and
traffic system. The general ledger is used to record all transactional activity
whereas the traffic system is used to record the airing of commercials, perform
billing and maintain the accounts receivable detail. The new Year 2000 compliant
general ledger software has been implemented in all locations in which the
Company operates. All locations in which the Company operates have implemented
traffic software which is Year 2000 compliant. The Company has reviewed the
hardware used in its operations that might be affected by the Year 2000 problem.
Hardware which was not Year 2000 compliant has been replaced and is now Year
2000 compliant.
The Company decided, after the merger with Tichenor Media System, Inc.
in February 1997, to change its general ledger and traffic system software so
all locations would be on the same system. The replacement of the general ledger
and traffic system software was not accelerated due to Year 2000 issues.
Inquiries of the Company's top twenty customers regarding Year 2000
compliance have been made during 1999. The customer responses which have been
received by the Company indicate they are Year 2000 compliant.
The Company does not believe the costs related to the Year 2000
compliance project have been and will be material to its financial position or
results of operations. Unanticipated failures by critical customers, vendors and
service providers, as well as the failure by the Company to have adequately
executed its own remediation efforts, could have a material adverse effect on
the cost of the Year 2000 project, its completion date, and the Company's
financial position or results of operations. The Company has established a
contingency plan in the event of the failure of its system and the systems of
its significant customers, vendors and service providers, with regard to Year
2000 compliance. There is no assurance that such a contingency plan will be
adequate to meet the Company's needs in the event of any disruption in the
Company's operations.
11
<PAGE>
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, industry-wide 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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company is subject to interest rate risk on both the interest
earned on cash and cash equivalents and interest paid on borrowings under the
Credit Facility. A change of 10% in the interest rate earned on short-term
investments and interest paid under the Credit Facility would not have had a
significant impact on the Company's historical financial statements.
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 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. Description
----------- -----------
3.1 Second Amended and Restated Certificate of Incorporation of
the Company dated February 14, 1997 (incorporated by
reference to Exhibit 3.1 to the Company's Form 8-K filed on
March 3, 1997).
3.2 Certificate of Amendment to the Second Amended and Restated
Certificate of Incorporation of the Registrant dated June 4,
1998 (incorporated by reference to Exhibit 3.1 to the
Company's Form 10-Q filed on November 11, 1998).
3.3 Certificate of Amendment to the Second Amended and Restated
Certificate of Incorporation of the Registrant dated June 3,
1999 (incorporated by reference to Exhibit 3.3 to the
Company's Form 10-Q filed on August 12, 1999).
3.4 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).
12
<PAGE>
Exhibit No. Description
----------- -----------
10.1 Assignment and Assumption dated September 24, 1999, by and
between SBT Communications 10.1 Statutory Trust, HBC License
Corporation and HBC Broadcasting Texas, L.P.
10.2 Time Brokerage Agreement dated September 22, 1999, by and
between SBT Communications 10.2 Statutory Trust and Sunburst
Dallas, LP.
10.3 Asset Purchase Agreement dated October 15, 1999, by and
between Cox Radio, Inc. and Hispanic Broadcasting
Corporation.
27 Financial Data Schedule.
(b) Reports on Form 8-K
None
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.
Hispanic Broadcasting Corporation
---------------------------------
(Registrant)
/s/ Jeffrey T. Hinson
----------------------------------
Jeffrey T. Hinson
Senior Vice President/
Chief Financial Officer
Dated: November 1, 1999
13
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
----------- -----------
3.1 Second Amended and Restated Certificate of Incorporation of
the Company dated February 14, 1997 (incorporated by
reference to Exhibit 3.1 to the Company's Form 8-K filed on
March 3, 1997).
3.2 Certificate of Amendment to the Second Amended and
Restated Certificate of Incorporation of the Registrant
dated June 4, 1998 (incorporated by reference to Exhibit 3.1
to the Company's Form 10-Q filed on November 11, 1998).
3.3 Certificate of Amendment to the Second Amended and Restated
Certificate of Incorporation of the Registrant dated June 3,
1999 (incorporated by reference to Exhibit 3.3 to the
Company's Form 10-Q filed on August 12, 1999).
3.4 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 Assignment and Assumption dated September 24, 1999, by and
between SBT Communications 10.1 Statutory Trust, HBC License
Corporation and HBC Broadcasting Texas, L.P.
10.2 Time Brokerage Agreement dated September 22, 1999, by and
between SBT Communications 10.2 Statutory Trust and Sunburst
Dallas, LP.
10.3 Asset Purchase Agreement dated October 15, 1999, by and
between Cox Radio, Inc. and Hispanic Broadcasting
Corporation.
27 Financial Data Schedule.
14
<PAGE>
ASSIGNMENT AND ASSUMPTION
(Time Brokerage Agreement KLTY-FM, Ft. Worth, Texas)
This Assignment and Assumption is entered into by and between SBT
COMMUNICATIONS STATUTORY TRUST, a Connecticut statutory trust (referred to
herein as "Assignor") and HBC LICENSE CORPORATION, a Delaware corporation and
HBC BROADCASTING TEXAS, L.P., a Texas limited partnership (collectively
referred to herein as "Assignee").
R E C I T A L S:
A. Reference is hereby made for all purposes to that one certain
Asset Purchase Agreement dated July 6, 1999 by and between SBT Communications
Statutory Trust, as the Seller, and HBC Broadcasting Texas, L.P., a Texas
limited partnership, as the Purchaser (the "APA").
B. Reference is hereby made for all purposes to the following
described agreement (referred to herein as the "TBA"):
TIME BROKERAGE AGREEMENT dated September 22, 1999 by and between SBT
Communications Statutory Trust, as the Licensee, and Sunburst
Dallas, LP, as the Broker, a true, correct and complete copy of
which, together with all amendments thereto, if any, is attached
hereto as Exhibit "A".
C. This Assignment and Assumption is executed and delivered in
connection with the closing of the transactions under the APA.
NOW, THEREFORE, for and in consideration of the sum of Ten Dollars
and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, (i) Assignor does hereby sell, assign and
transfer unto the Assignee, and Assignee hereby accepts, all of the rights,
titles and interests of the Assignor arising under the TBA and (ii) Assignor
does hereby delegate unto the Assignee, and the Assignee hereby assumes, all
of the obligations, duties and commitments of the Assignor arising for the
first time from and after the date hereof under the TBA.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the Assignor and Assignee have executed this
Assignment and Assumption effective as of the 24th day of September, 1999.
ASSIGNOR:
SBT COMMUNICATIONS STATUTORY TRUST
By: Drumcree Capital, Inc., not in its
individual capacity, but solely as Trustee
By: /s/ W. Lawrence Patrick
-----------------------------------
W. Lawrence Patrick
Its: President
ASSIGNEE:
HBC BROADCASTING TEXAS, L.P.
By: HBC GP Texas, Inc.
Its: General Partner
By: /s/ McHenry T. Tichenor, Jr.
-------------------------------------
McHenry T. Tichenor, Jr.
President and Chief Executive Officer
AND
HBC LICENSE CORPORATION
By: /s/ McHenry T. Tichenor, Jr.
-------------------------------------
McHenry T. Tichenor, Jr.
President and Chief Executive Officer
<PAGE>
TIME BROKERAGE AGREEMENT
This Time Brokerage Agreement (this "Agreement") is entered into by
and between SBT COMMUNICATIONS STATUTORY TRUST, a Connecticut statutory trust
("Licensee") and SUNBURST DALLAS, LP, a Delaware limited partnership
("Broker") as of the 22nd day of September, 1999.
W I T N E S S E T H:
WHEREAS, Licensee has available broadcasting time and is engaged in
the business of radio broadcasting on radio station KLTY(FM), operating on
94.1 MHZ, licensed to Fort Worth, Texas (the "Station"); and
WHEREAS, Broker desires to avail itself of Station's broadcast time
for the presentation of programming service, including the sale of
advertising time; and
WHEREAS, Licensee is the holder of all licenses issued by the Federal
Communications Commission (the "Commission") used in the operation of the
Station;
NOW, THEREFORE, for and in consideration of the mutual covenants
herein contained, the parties hereto have agreed and do agree as follows:
1. FACILITIES. Licensee agrees to make broadcasting transmission
facilities available to Broker and to broadcast on the Station, or cause to
be broadcast, Broker's programs.
2. TERM OF AGREEMENT. This Agreement shall commence at 12:01
a.m., Dallas, Texas time, on the date hereof (the "Effective Date"), and,
subject to the terms and conditions of this Agreement, shall continue until
the earlier of (i) December 31, 1999 and (ii) the seventh day after Broker
advises Licensee in writing that it elects to terminate this Agreement.
3. PAYMENTS.
3.1 AMOUNT OF PAYMENTS. Broker hereby agrees to pay
Licensee for the broadcast of the programs hereunder the "Monthly Sum," which
shall mean that amount determined for the month in question that is the
product of multiplying (a) the actual number of days in that month that fall
during the term of this Agreement (as provided in Section 2 hereof) times (b)
the Applicable Daily Rate (herein so called) for the particular month in
question, as follows:
<TABLE>
<CAPTION>
APPLICABLE PERIOD APPLICABLE DAILY RATE
----------------------------------------------------------------------
<S> <C>
September 22, 1999 $ 0.00
From September 23, through September 30, 1999 $12,947
October 1, 1999 through October 31, 1999 $13,837
November 1, 1999 through November 30, 1999 $14,728
December 1, 1999 through December 31, 1999 $15,618
</TABLE>
3.2 MANNER OF PAYMENTS. Monthly payments shall be due and
payable in full in advance on the first business day of each month during the
term hereof with the first payment hereunder paid upon the execution of this
Agreement and shall be prorated for partial months. The failure of Licensee
to demand or insist upon prompt payment in accordance herewith shall not
constitute a waiver of its right to do so. If Broker shall have produced and
made available programming to air on the Station as provided herein and such
programming does not air due to Licensee preempting such programming other in
accordance with Section 10 or 11 below, or if for any reason Licensee is
unable to broadcast such programming through no fault of Broker, or if this
Agreement is terminated for any reason (other than a breach of this Agreement
by Broker) prior to the end of a month, then Broker shall receive a payment
credit to be determined by multiplying (i) the Monthly Sum by (ii) the ratio
of the amount of time not aired to the total number of broadcast hours
allotted to Broker each month pursuant to Section 5.1 below. To the extent
the payment credit is not used by the end of the term as described in Section
2, Licensee shall pay the amount thereof to Broker within ten (10) days
following the end of the term.
4. PROGRAMS. Broker shall furnish or cause to be furnished the
artistic personnel and material for the programs as provided by this
<PAGE>
Agreement, and all programs shall be in accordance with the requirements and
regulations of the Commission. All programs shall be prepared and presented
in conformity with the regulations of the Commission. All advertising spots
and promotional material or announcements shall comply with all applicable
federal, state and local regulations and policies and shall be produced in
accordance with quality standards established by Licensee.
5. STATION FACILITIES.
5.1 OPERATION OF STATION. Throughout the term of this
Agreement, Licensee shall make the Station available to the Broker for
operation with the authorized facilities 24 hours a day, seven days a week,
except for (i) at least one hour each week on Sunday morning between the
hours of 7:00 a.m. and 11:00 a.m. during which Licensee will be responsible
for public affairs programming dealing with issues affecting the Station's
service area or at such other time as requested by Broker and agreeable to
Licensee and (ii) downtime occasioned by routine maintenance not to exceed
two hours each Sunday morning between the hours of 1:00 a.m. and 5:00 a.m.
Any maintenance work affecting the operation of the Station at full power
shall be scheduled upon at least 48 hours' prior notice with the agreement of
the Broker, such agreement not to be unreasonably withheld. It is further
understood and agreed that Licensee shall continue to retain full authority
and control over operation of the Station during the course of this
Agreement; to be responsible for assessment of the needs and interests of the
community; and to determine that the programs presented are responsive to
such needs and interests, and that all programming continues to meet all
federal, state and local laws, including those that govern political
broadcast time, presentation of lottery material, proper sponsor
identification, and other programming in the public interest. Broker also
agrees that all such programming as presented by Broker will be in full
compliance with all such applicable rules and regulations. Licensee shall
also continue to be responsible for maintenance of the Station's public file
in good order as required by the Commission, including timely placement of a
copy of this Agreement in that file; to prepare and timely file in such file
the quarterly issues/programs list as required by the Commission's rules; to
timely file with the Commission all required reports or other records as
required by the Commission; and to otherwise comply in all respects with the
Commission rules and regulations, including those rules and regulations
regarding requests for political advertising. Broker agrees to cooperate
fully in the gathering, compilation and completion of all such reports as may
be required by Licensee.
5.2 INTERRUPTION OF NORMAL OPERATIONS. If the Station
suffers loss or damage of any nature to its transmission facilities which
results in the interruption of service or the inability of the Station to
operate with its authorized facilities, Licensee shall immediately notify
Broker, and shall undertake (or authorize Broker to undertake on Licensee
behalf and at Licensee's expense) such repairs as necessary to restore the
full-time operation of the Station with its authorized facilities as soon as
practicable.
5.3 STUDIO LOCATION. Licensee shall maintain a main studio
capable of providing a broadcast quality signal to the Station's transmission
facility, such main studio to be located in compliance with applicable
Commission regulations.
5.4 TRANSMISSION FACILITY. Licensee shall operate the
Station's transmission facility in accordance with the authorizations issued
to Licensee by the Commission.
6. HANDLING OF MAIL. Except as required to comply with Commission
rules and policies, including those regarding the maintenance of the public
inspection file (which shall at all times remain the responsibility of
Licensee), Licensee shall not be required to receive or handle mail, cables,
telegraph or telephone calls in connection with programs broadcast hereunder
unless Licensee at the request of Broker has agreed in writing to do so.
7. PROGRAMMING AND OPERATIONS STANDARDS. Broker understands that
broadcast program content must comply with certain proscriptions including
but not limited to those governing the broadcast of obscenity and indecency;
presentation of contests; lottery information; credit terms; broadcast of
telephone conversations; and political equal access and covenants that any
such programming supplied by Broker will be in full compliance with such
restrictions. In addition, Broker will immediately notify Licensee of any
violation of any such restriction that takes place and agrees to hold
Licensee harmless for any damages, fines or other liability or loss that
2
<PAGE>
might result from any such broadcast program. Broker further agrees to
cooperate fully with Licensee in the compliance with the Commission's
applicable rules and regulations that govern sale and placement of political
advertising.
8. RESPONSIBILITY FOR EMPLOYEES AND EXPENSES.
8.1 EMPLOYEES. Broker shall employ and be responsible for
the salaries, taxes, insurance and related costs for all personnel used in
the production and transmission of its programming (including without
limitation salespeople, traffic personnel, board operators and programming
staff). Broker agrees to abide by any and all legal provisions relating to
its own employees, including any equal employment policies contained in Title
VII of the CIVIL RIGHTS ACT OF 1964 or in any other applicable federal, state
or local statute or regulation and any rule or policy applied or enforced by
the Equal Employment Opportunity Commission or by the Commission, as
applicable. Licensee will provide and be responsible for the Station
personnel specified in Section 10 hereof. All personnel shall be subject to
the overall supervision of Licensee consistent with the Broker's right to the
use of the Station's facilities as provided hereunder.
8.2 OPERATING EXPENSES. Broker shall be responsible for all
costs associated with the production and delivery to the Station's
transmitter site of Broker's programming and shall also pay for all telephone
calls associated with production and listener responses, for all fees to
ASCAP, BMI and SESAC, license fees and for any other copyright fees
attributable to its programming broadcast or revenues generated on the
Station.
8.3 TRANSMITTER SITE EXPENSES. Licensee shall remain
responsible for the costs associated with the transmission of all programming
at the Station's transmitter site (including but not limited to rent,
utilities, taxes and insurance).
9. ADVERTISING AND PROGRAM REVENUES. Broker shall retain all
revenues for the sale of advertising time on the programs it delivers to the
Station and may sell such advertising in combination with the sale of
advertising on any other broadcast stations of its choosing. Licensee shall
retain the revenue from the sale of any advertising on the Station on
programs not produced or delivered to it by Broker. Notwithstanding any
other provision of this Agreement to the contrary (including the provisions
of Section 3.2 hereof), if Licensee shall preempt Broker's programming with
Licensee's programming for any reason other than Broker's programming being
in violation of Commission rules and policies, then Broker shall receive a
payment credit equal to twice the payment credit computed in the manner
provided in Section 3.2.
10. CONTROL OF STATION. Notwithstanding anything to the contrary
in this Agreement, Licensee shall have full authority and power over the
operation of the Station during the period of this Agreement. Licensee shall
provide and pay for a management level employee and another employee who
shall report solely to and be accountable solely to Licensee and who shall
direct the day-to-day operation of the Station. Licensee shall retain
control over the policies, programming and operations of the Station,
including, without limitation, the right to decide whether to accept or
reject any programming or advertisements, the right to preempt any programs
in order to broadcast a program deemed by Licensee to be of greater national,
regional or local interest, and the right to take any other actions necessary
for compliance with the laws of the United States; the State of Texas; the
rules, regulations, and policies of the Commission (including the prohibition
on unauthorized transfers of control); and the rules, regulations and
policies of other federal governmental authorities. From time to time as
requested by Licensee, Broker shall provide Licensee with information to
enable Licensee to prepare records, reports and logs required by the
Commission or other local, state or federal governmental agencies.
11. SPECIAL EVENTS. Licensee reserves the right, in its
discretion, to preempt any of the broadcasts of the programs referred to
herein, and to use part or all of the time contracted for herein by Broker
for the broadcast of events of special importance. In all such cases,
Licensee will use its best efforts to give Broker reasonable notice of its
intention to preempt such broadcast or broadcasts.
12. FORCE MAJEURE. Any failure or impairment of the Station
facilities or any delay or interruption in broadcasting programs, or the
failure at any time to furnish facilities, in whole or in part, for
3
<PAGE>
broadcasting, due to acts of God, strikes, or threats thereof, FORCE MAJEURE,
or to causes beyond the control of Licensee, shall not constitute a breach of
this Agreement, and Licensee will not be liable to Broker, except to the
extent allowing in each such case an appropriate payment credit for time not
provided or broadcasts not carried based upon a PRO RATA adjustment to
amounts due as specified in Section 3 calculated upon the length of time
during which the failure or impairment exists or continues.
13. RIGHT TO USE THE PROGRAMS AND CALL LETTERS. The right to use
the programs produced by Broker and to authorize their use in any manner and
in any media whatsoever shall be, and remain, vested solely in Broker.
Broker shall retain all copyrights to programs, slogans, trade names, logos
and all other rights associated with the programs produced by Broker.
Licensee hereby grants to Broker an irrevocable license for the term of this
Agreement to use the call letters "KLTY-FM" or "KLTY" in conjunction with the
programming aired on the Station. Licensee further agrees that during the
term of this Agreement, it will not, without the consent of Broker, (1) apply
to the Commission to change the Station's call letters from KLTY, or (2)
consent to the use of the call sign KLTY by any other entity. Licensee
acknowledges that at the end of the term hereof, Broker intends to move its
programming (broadcast on the Station during the term hereof) to radio
station KRJT-FM, operating on 100.7 MHZ, presently licensed to Bowie, Texas
("100.7"). Accordingly, it is the agreement of Licensee and Broker that
effective as of the end of the term of this Agreement, Licensee shall have
made available the "KLTY" call letters for Broker by timely filing and
diligently prosecuting an application to change the "KLTY" call letters for
the Station to another selected by Licensee so that Broker can at that same
time apply to the Commission for a change of the call letters for 100.7 from
"KRJT-FM" to "KLTY." Licensee agrees to coordinate with Broker in the filing
and prosecution of all applications necessary to effect the call letter
"transfer" described above as close to the end of the term hereof as is
reasonably possible.
14. PAYOLA. Broker agrees that it will not accept any compensation
or any kind of gift or gratuity of any kind whatsoever, regardless of its
value or form, including, but not limited to, a commission, discount, bonus,
materials, supplies or other merchandise, services or labor, whether or not
pursuant to written contracts or agreements between Broker and merchants or
advertisers, unless the payer is identified in the program as having paid for
or furnished such consideration in accordance with the Commission's
requirements.
15. COMPLIANCE WITH LAW. Broker agrees that, throughout the term
of this Agreement, Broker will comply with all laws and regulations
applicable in the conduct of Licensee's business and Broker acknowledges that
Licensee has not urged, counseled or advised the use of any unfair business
practice. In the event that any new law or regulation is adopted which
results in a material change in the terms of this arrangement (for example,
but not limited to, a restriction on the number of hours which may be
brokered), the parties agree to negotiate in good faith to modify this
Agreement to conform as closely as possible to the interests of both Broker
and Licensee and, in the event of their inability to so modify the Agreement,
Broker or Licensee may without penalty terminate the Agreement on 60 days'
notice to the other or such earlier time as the Commission may require.
16. INDEMNIFICATION; WARRANTY.
16.1 BY BROKER. Broker will indemnify and hold Licensee and
its officers, directors, agents, stockholders, employees, and subsidiaries
harmless against all liability for libel, slander, illegal competition or
trade practice, infringement of trade marks, trade names, or program titles,
violation of rights of privacy, and infringement of copyrights and
proprietary rights resulting from the broadcast or programming furnished by
Broker. Further, Broker warrants that the broadcasting of its programs will
not knowingly violate any rights of others and Broker agrees to indemnify and
hold the Station, Licensee, and Licensee's officers, directors, agents,
stockholders, employees, and subsidiaries, harmless from any and all claims,
damages, liability, costs and expenses, including reasonable attorneys' fees,
arising from the broadcasting of such programs. Licensee reserves the right
to refuse to broadcast any and all programs containing matter which is, or in
the reasonable opinion of Licensee may be, or which a third-party claims to
be, violative of any right of theirs or which may constitute a personal
attack as the term is and has been defined by the Commission.
16.2 BY LICENSEE. Licensee will indemnify and hold Broker
harmless against any and all liability for libel, slander, illegal
4
<PAGE>
competition or trade practice, infringement of trade marks, trade names, or
program titles, violation of rights of privacy, and infringement of
copyrights and proprietary rights arising from Licensee's preemption and
broadcast of Licensee's own programs. Without in any way limiting the rights
or remedies available to Broker for a breach of this Agreement by Licensee,
Licensee hereby agrees to indemnify and hold Broker free and harmless from
and against any and all loss, liability, damage or expense (including
reasonable attorneys' fees) arising from the breach of any of Licensee's
representations, warranties, agreements and covenants made in this Agreement.
16.3 GENERAL PROVISIONS. Broker's and Licensee's obligation
to hold each other harmless against the liabilities specified in this Section
16 shall survive any termination of this Agreement until the expiration of
all applicable statutes of limitation. Unless an indemnifying party assumes
the defense of a claim for which indemnity is sought hereunder on behalf of
the indemnified party, the indemnified party shall have the right to employ
its own counsel to conduct such defense (which shall be at the expense of the
indemnifying party). The indemnified party shall render to the indemnifying
party and its counsel such assistance as they may reasonably require in order
to ensure the proper and adequate defense of any claim for which indemnity is
sought hereunder. Neither party will settle any claim for which indemnity is
sought or owed under this Section 16 in a manner which imposes any cost or
penalty on the other party without the other party's prior written consent.
17. EVENTS OF DEFAULT; CURE PERIODS AND REMEDIES.
17.1 EVENTS OF DEFAULT. The following shall, after the
expiration of the applicable cure periods, constitute Events of Default under
the Agreement:
17.1.1 NON-PAYMENT. Broker's failure to timely pay the
consideration provided for in Section 3 hereof ("Payment Default").
17.1.2 DEFAULT IN COVENANTS. The default by either
party hereto in the observance or performance of any material covenant,
condition or agreement contained herein.
17.2 CURE PERIODS. An Event of Default shall not be deemed
to have occurred until 20 business days (five business days for Payment
Defaults) after the non-defaulting party has provided the defaulting party
with written notice specifying the event or events that if not cured would
constitute an Event of Default and specifying the actions necessary to cure
within such period, except for such Events of Default which threaten to
affect the validity of the Station's licenses which must be cured
immediately. Except in the event of a Payment Default or a default by
Licensee which results in Licensee's inability or unwillingness to make
available to Broker the Station's facilities as provided herein, this period
shall be extended for a reasonable period of time if the defaulting party is
acting in good faith to cure and such delay is not materially adverse to the
other party, except for such Events of Default which threaten to affect the
validity of the Station's licenses which must be cured immediately. The
defaulting party shall use its best efforts to cure any event which might
constitute an Event of Default.
17.3 TERMINATION UPON DEFAULT. If an Event of Default
occurs, the non-defaulting party may terminate this Agreement and receive
from the defaulting party such damages or other remedies as are available at
law or at equity.
17.4 LIABILITIES UPON TERMINATION. Broker shall be
responsible for all liabilities, debts and obligations of Broker accrued from
the purchase of air time and transmission facilities including, without
limitation, accounts payable, barter agreements and unaired advertisements.
Upon termination, Broker shall return to Licensee any equipment or property
of the Station used by Broker, its employees or agents, in substantially the
same condition as such equipment existed on the Effective Date, ordinary wear
and tear excepted.
18. TIME BROKERAGE CHALLENGE. If this Agreement is challenged at
the Commission, Licensee and Broker will jointly defend this Agreement. If
portions of this Agreement do not thereafter receive the approval of the
Commission staff, the parties shall reform this Agreement, or at Broker's
option and expense, seek reversal of the staff decision and approval from the
full Commission on appeal.
5
<PAGE>
19. MODIFICATION AND WAIVER. No modification or waiver of any
provision of this Agreement shall in any event be effected unless the same
shall be in writing and signed by the party adversely affected by the waiver
or modification, and then such waiver and consent shall be effective only in
the specific instance and for the purpose for which given.
20. NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the
part of Licensee or Broker in exercising any right or power hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of Licensee
and Broker herein provided are cumulative and are not exclusive of any right
or remedies which it may otherwise have.
21. CONSTRUCTION. This Agreement shall be construed in accordance
with the laws of the State of Texas, and the obligations of the parties
hereto are subject to all federal, state or municipal laws or regulations now
or hereafter in force and to the regulations of the Commission and all other
governmental bodies or authorities presently or hereafter to be constituted.
22. HEADINGS. The headings contained in this Agreement are
included for convenience only and no such heading shall in any way alter the
meaning of any provision.
23. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
assigns, including, without limitation, any assignee of the Commission
license for the Station. Licensee and Broker agree that in the event of an
assignment of the licenses of the Station to HBC License Corporation or any
other affiliate of Hispanic Broadcasting Corporation ("HBC"), Licensee will
assign and delegate to HBC, and HBC will accept and assume, all of the
Licensee's rights and obligations under this Agreement in respect of periods
on and after the date of such assignment, and HBC will thereby become the
Licensee hereunder.
24. COUNTERPART SIGNATURES. This Agreement may be signed in one or
more counterparts, each of which shall be deemed a duplicate original,
binding on the parties hereto notwithstanding that the parties are not
signatory to the original or the same counterpart.
25. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given if mailed by certified mail, return
receipt requested, or delivered by nationally recognized "next-day" delivery
service, to the parties at the addresses set forth below (or at such other
address for a party as shall be specified by like notice), or sent by
facsimile to the number set forth below (or such other number for a party as
shall be specified by proper notice hereunder):
If to Licensee prior to assignment to HBC:
SBT Communications Statutory Trust
c/o Drumcree Capital, Inc., Trustee
5074 Dorsey Hall Drive, Suite 205
Ellicott City, MD 21042
Attn: W. Lawrence Patrick
Fax: 410-740-7222
If to Licensee after assignment to HBC:
HBC License Corporation
3102 Oak Lawn Avenue, Suite 215
Dallas, Texas 75201
Attn: McHenry T. Tichenor, Jr., President & CEO
Fax: (214) 525-7750
6
<PAGE>
If to Broker:
Sunburst Dallas, L.P.
1350 One Galleria Tower
13355 Noel Road
Dallas, Texas 75240
Attn: John Borders, President
Fax: (972) 503-2183
26. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
between the parties and there are no other agreements, representations,
warranties, or understandings, oral or written, between them with respect to
the subject matter hereof. No alterations, modification or change of this
Agreement shall be valid unless by like written instrument.
27. SEVERABILITY. The event that any of the provisions contained
in this Agreement is held to be invalid, illegal or unenforceable shall not
affect any other provision hereof, and this Agreement shall be construed as
if such invalid, illegal or unenforceable provisions had not been contained
herein.
28. INTENDED BENEFICIARIES. The rights and obligations contained
in this Agreement are hereby declared by the parties hereto to have been
provided expressly for the exclusive benefit of such entities as set forth
herein and shall not benefit, and do not benefit, any unrelated third parties.
29. MUTUAL CONTRIBUTION. The parties to this Agreement and their
counsel have mutually contributed to its drafting. Consequently, no
provision of this Agreement shall be construed against any party on the
ground that such party drafted the provision or caused it to be drafted or
the provision contains a covenant of such party.
30. FCC CERTIFICATION. Licensee hereby certifies that it will
maintain ultimate control over the Station's facilities, including
specifically control over station finances, personnel and programming.
Notwithstanding the foregoing, Licensee shall have no power to set the terms
and conditions of employment for on-air personnel utilized for or in
connection with programming broadcast on the Station originated by or in
conjunction with Broker. Broker hereby certifies that this Agreement
complies with Section 73.3555(a)(1) of the Commission's rules, 47 C.F.R.
73.3555(a)(1). In addition, neither Broker nor any person or entity
associated with Broker shall have the ability to set the terms and conditions
for on-air personnel utilized for programming originated by Licensee and
broadcast on the Station during the term of this Agreement.
[SIGNATURE PAGE FOLLOWS IMMEDIATELY]
7
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
Licensee:
SBT COMMUNICATIONS STATUTORY TRUST
By: Drumcree Capital, Inc., not in its
individual capacity, but solely as Trustee
By: /s/ W. Lawrence Patrick
------------------------------------
W. Lawrence Patrick
Its: President
SUNBURST DALLAS, LP
By Sunburst Dallas, Inc. (general partner)
By: /s/ John M. Borders
-------------------------------------
John M. Borders
Its: President
8
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made as of the 15th day of October,
1999, by and between Cox Radio, Inc. ("Seller"), and Hispanic Broadcasting
Corporation ("Purchaser").
W I T N E S S E T H:
WHEREAS, Seller is the licensee of Radio Stations KACE(FM) and KRTO(FM)
(collectively, the "Stations"), licensed to Inglewood, California and West
Covina, California, respectively, and authorized by the Federal Communications
Commission (the "Commission" or "FCC"), and the Seller owns the assets which are
used in the operation of the Station; and
WHEREAS, the Seller desires to sell to Purchaser, and Purchaser desires
to purchase from the Seller, certain of the radio station properties and assets
relating to the Station as described herein under the terms and conditions
herein set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties hereto agree as follows:
1. PURCHASE AND SALE OF ASSETS.
1.1 PURCHASE AND SALE OF STATION ASSETS. Subject to the conditions
set forth in this Agreement, at the Closing (as defined hereinafter), the
Seller shall assign, transfer, convey and deliver to Purchaser, and Purchaser
shall purchase from the Seller, all right, title and interest in and to the
following assets relating to the Station (the "Purchased Assets"), free and
clear of all liens, security interests, charges, encumbrances and rights of
others (other than liens and charges for which a proration adjustment is made
pursuant to Section 15.2 hereof):
(a) All licenses, construction permits or authorizations issued by
or pending before the FCC or any other governmental authority for use in the
operation of the Stations that are set forth on Schedule I attached hereto,
together with any and all renewals, extensions and modifications thereof (the
"Governmental Licenses");
(b) All real and personal property, tangible or intangible, owned
by Seller which is necessary to the operation of the Stations as currently
operated, including broadcast towers and antennas, main and back-up
transmitters and generators, STL and/or T-1 equipment, on-air control and
studio equipment, production studio equipment, engineering shop equipment
exclusive to the Stations, antennae for the Stations, feed lines,
accessories, vans and other vehicles, promotional materials, inflatables, and
tapes and record libraries, together with replacements thereof and additions
thereto made between the date hereof and the Closing, listed on Schedule II
hereto;
<PAGE>
(c) Programming materials, market data, research and similar items
relating to the Stations' intellectual property (to the extent that Seller has
any transferable interest therein);
(d) The KACE(FM) and KRTO(FM) call letters, trademarks, tradenames,
internet domain names and web properties specifically designed and operated for
the Stations, listed on Schedule III hereto;
(e) All deposits made by the Seller to third parties in connection
with the transmitter site and the Assumed Contracts (defined below), for
which proration shall be made in accordance with Section 15.2; and
(f) Copies of the Stations' FCC logs, all materials maintained in the
Stations' FCC public file, technical data and records relating to the Purchased
Assets.
The foregoing notwithstanding, in no event shall the Purchased Assets be deemed
to include (i) the cash and cash equivalents of the Seller (except for normal
and customary deposits), (ii) any accounts receivable, notes receivable or other
receivables of the Seller (including tax refunds), (iii) the Seller's corporate
seal, minute books, charter documents, corporate stock record books and other
books and records that pertain to the organization of Seller, (iv) securities of
any kind owned by Seller, (v) insurance contracts or proceeds thereof or (vi)
claims arising out of acts occurring before the Closing Date.
1.2 ASSUMED CONTRACTS. At the Closing, the Purchaser shall assume the
specified contractual obligations of the Stations listed on Schedule IV hereto
(the "Assumed Contracts"), and the Purchaser agrees to pay and perform the
Assumed Contracts after the Closing Date. Except as specifically set forth on
such Schedule IV, Purchaser does not assume and shall in no event be liable for
any debt, obligation, responsibility or liability of the Stations or Seller,
including without limitation, employee obligations, taxes, accounts payable and
barter obligations of the Stations.
2. CONSIDERATION; CLOSING.
2.1 PURCHASE PRICE. The consideration to be received by the Seller in
exchange for the Purchased Assets shall be $75 million.
2.2 TIME OF CLOSING.
(a) A closing (the "Closing") for the sale and purchase of the
Purchased Assets shall be held at the offices of Crouch & Hallett, L.L.P. at 717
N. Harwood, Suite 1400, Dallas, Texas (or such other place as may be agreed upon
by the parties in writing). The Closing shall occur on such date (the "Closing
Date") that
<PAGE>
is the 10th business day after the FCC Order (defined below) has become a Final
Order (defined below); provided that the Seller may accelerate the Closing Date
to any date after the FCC Order has been issued upon 15 business days prior
written notice of such acceleration. The Closing shall be deemed to be effective
as of 12:01 a.m. on the Closing Date.
(b) In order to consummate the transfer of the Purchased Assets,
Seller and Purchaser agree to file, within five business days after the date
hereof, an assignment of license application (the "Application") requesting
FCC consent to the assignment from the Seller to Purchaser of all
Governmental Licenses relating to the operation of the Stations. The parties
agree that the Application will be prosecuted with commercially reasonable
best efforts, in good faith and with due diligence. The parties agree to use
their commercially reasonable best efforts to file additional information or
amendments requested by the FCC orally or in writing within five business
days after such request and, in any event, to commence preparation of such
additional information or amendments immediately upon request and to complete
and file the same with the FCC as rapidly as practical. Each party will be
solely responsible for the expenses incurred by it in the preparation, filing
and prosecution of the Application (it being understood that the parties will
bear equally the FCC filing fee). As used herein, the term "FCC Order" shall
mean that the FCC staff has granted or given its consent, without any
condition materially adverse to Purchaser or Seller, to the assignment of the
Governmental Licenses; and the term "Final Order" shall mean that the FCC
Order shall have become final, that the time period for filing any protests,
requests for stay, reconsideration by the FCC, petitions for rehearing or
appeal of such order shall have expired, and that no protest, request for
stay, reconsideration by the FCC, petition for rehearing or appeal of such
order shall be pending.
(c) To the extent required by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder (the "HSR Act"), the parties further agree to use their best efforts
to make any necessary filings under the HSR Act. The fees associated with any
filings made pursuant to the HSR Act shall be paid equally by the Purchaser and
the Seller.
2.3 CLOSING PROCEDURE. At the Closing, the Seller shall deliver to
Purchaser such bills of sale, instruments of assignment, transfer and conveyance
and similar documents as Purchaser shall reasonably request. Against such
delivery, Purchaser shall (i) issue and deliver to Seller the purchase price in
accordance with Section 2.1 above and (ii) execute and deliver the assumption
agreements with respect to the Assumed Contracts as are contemplated by Section
1.2 hereof. Each party will cause to be prepared, executed and delivered all
other documents required to be delivered by such party pursuant to this
Agreement and all other appropriate and customary documents as another party or
its counsel may reasonably request for the purpose of consummating the
transactions contemplated by this Agreement. All actions taken at the Closing
shall be deemed to have been taken simultaneously
<PAGE>
at the time the last of any such actions is taken or completed.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
The Seller hereby represents and warrants to the Purchaser, as follows:
3.1 ORGANIZATION; GOOD STANDING. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware, and has all requisite corporate power and authority to own and lease
its properties and carry on its business as currently conducted.
3.2 DUE AUTHORIZATION. Subject to the FCC Order and the Final Order,
the Seller has full power and authority to enter into and perform this Agreement
and to carry out the transactions contemplated hereby. The Seller has taken all
necessary corporate action to approve the execution and delivery of this
Agreement and the transactions contemplated hereby. This Agreement constitutes
the legal, valid and binding obligation of the Seller, enforceable against it in
accordance with its terms, except as may be limited by the availability of
equitable remedies or by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally.
3.3 EXECUTION AND DELIVERY. Neither the execution and delivery by the
Seller of this Agreement nor the consummation by it of the transactions
contemplated hereby will: (i) conflict with or result in a breach of the
Articles of Incorporation or bylaws of Seller (ii) to Seller's knowledge,
subject to the FCC Order and Final Order and the making of any required filings
under the HSR Act, violate any statute, law, rule or regulation or any order,
writ, injunction or decree of any court or governmental authority, which
violation, either individually or in the aggregate, might reasonably be expected
to have a material adverse effect on the business or operations of the Seller or
Purchaser's ownership of the Purchased Assets; or (iii) violate or conflict with
or constitute a default under (or give rise to any right of termination,
cancellation or acceleration under), or result in the creation of any lien on
any of the Purchased Assets pursuant to, any material agreement, indenture,
mortgage or other instrument to which the Seller is a party or by which it or
its assets may be bound or affected. As used throughout this Agreement, "to
Seller's knowledge" shall mean to the actual knowledge of Robert F. Neil,
President and Chief Executive Officer of Seller, Richard Ferguson and Marc
Morgan, Co-Chief Operating Officers of Seller and Maritza Pichon, Chief
Financial Officer of Seller, which actual knowledge shall be based on reasonable
and due inquiry.
3.4 GOVERNMENTAL CONSENTS. No approval, authorization, consent, order
or other action of, or filing with, any governmental authority or administrative
agency is required in connection with the execution and delivery by the Seller
of this Agreement or the consummation of the transactions contemplated hereby or
thereby, other than those of the FCC or under the HSR Act.
<PAGE>
3.5 TITLE TO PERSONAL PROPERTY ASSETS. Except for leased property,
the Seller is the sole and exclusive legal owner of all right, title and
interest in, and has good and marketable title to, all of the Purchased
Assets constituting personal property, free and clear of liens, claims and
encumbrances except (i) liens for taxes not yet payable and (ii) the Assumed
Contracts.
3.6 TRANSMITTER SITES.
(a) Seller has valid, binding and enforceable leasehold interests,
which are (except as disclosed in the Transmitter Site Leases (defined below)
relating thereto) free and clear of liens, claims, encumbrances, subleases or
other restrictions known to Seller or relating to or caused by Seller or its
operation of the Stations, in and to the transmitter sites from which the
Stations' signals are broadcast, and the buildings, structures and improvements
situated thereon (the "Transmitter Sites"). True, complete and correct copies of
the leases evidencing such interests (the "Transmitter Site Leases") have been
furnished to Purchaser. Neither Seller nor, to Seller's knowledge, any other
party is in default under the Transmitter Site Leases and no notice of
termination or default has been given.
(b) Seller has not received any notice of, and has no knowledge
of, any material violation of any zoning, building, health, fire, water use
or similar statute, ordinance, law, regulation or code in connection with the
Transmitter Sites. To the knowledge of Seller, no fact or condition exists
which would result in the termination or impairment of access of the Stations
to the Transmitter Sites or discontinuation of necessary sewer, water,
electrical, gas, telephone or other utilities or services.
(c) To Seller's knowledge, no hazardous or toxic material (as
hereinafter defined) exists in any structure located on, or exists on or under
the surface of, the Transmitter Sites which is, in any case, in material
violation by Seller of applicable environmental law. For purposes of this
Section, "hazardous or toxic material" shall mean waste, substance, materials,
smoke, gas or particulate matter designated as hazardous, toxic or dangerous
under any environmental law. For purposes of this Section, "environmental law"
shall include the Comprehensive Environmental Response Compensation and
Liability Act, the Clean Air Act, the Clean Water Act and any other applicable
federal, state or local environmental, health or safety law, rule or regulation
relating to or imposing liability or standards concerning or in connection with
hazardous, toxic or dangerous waste, substance, materials, smoke, gas or
particulate matter.
3.7 CONDITION OF ASSETS. All of the Purchased Assets viewed as a
whole and not on an asset by asset basis are in good condition and working
order, ordinary wear and tear excepted, and are suitable for the uses for
which intended, free from any known defects except such minor defects that do
not interfere with the continued use thereof.
<PAGE>
3.8 GOVERNMENTAL LICENSES. Schedule I lists and accurately describes
all of the Governmental Licenses necessary for the lawful ownership and
operation of the Stations and the conduct of their businesses, except where the
failure to hold such Governmental License would not have a material adverse
effect on the Stations. The Seller has furnished to Purchaser true and accurate
copies of all of the Governmental Licenses. Each such Governmental License is in
full force and effect and is valid under applicable federal, state and local
laws; the Stations are being operated in compliance in all material respects
with the Communications Act of 1934, as amended (the "Act"), and all rules,
regulations and policies of the FCC; and to the knowledge of the Seller, no
event has occurred which (whether with or without notice, lapse of time or the
happening or occurrence of any other event) is reasonably likely to result in
the revocation or termination of any Governmental License or the imposition of
any restriction of such a nature as might adversely affect the ownership or
operation of the Stations as now conducted, except for proceedings of a
legislative or rule-making nature intended to affect the broadcasting industry
generally. The Stations, their physical facilities, electrical and mechanical
systems and transmitting and studio equipment are being operated in all material
respects in accordance with the specifications of the Governmental Licenses. To
Seller's knowledge, the Governmental Licenses are unimpaired by any act or
omission of the Seller or any of the Seller's officers, directors or employees
and the Seller has fulfilled and performed all of its obligations with respect
to the Governmental Licenses and has full power and authority thereunder. To
Seller's knowledge, no application, action or proceeding is pending for the
renewal or modification of any of the Governmental Licenses. No event has
occurred which, individually or in the aggregate, and with or without the giving
of notice or the lapse of time or both, would constitute ground for revocation
thereof and would have a materially adverse effect on the business or financial
conditions of the Stations.
3.9 REPORTS. The Seller has duly filed all reports required to be
filed by law or applicable rule, regulation, order, writ or decree of any
court, governmental commission, body or instrumentality and has made payment
of all charges and other payments, if any, shown by such reports to be due
and payable, except where the failure to so file or make payment would not
have a material adverse effect upon the operations of the Stations. All
reports required to be filed by the Seller with the FCC with respect to the
Stations have been filed, except where the failure to so file would not
materially and adversely affect the business, operations, properties, assets
or conditions (financial or otherwise) of the Stations or which challenges
the validity or propriety of any of the transactions contemplated by this
Agreement. Such reports and disclosures are complete and accurate in all
material respects.
3.10 TAXES. All tax reports and returns required to be filed by or
relating to the Purchased Assets or operations of the Stations (including sales,
use, property and employment taxes) have been filed with the appropriate
federal, state and local governmental agencies, and there have been paid all
taxes, penalties, interest,
<PAGE>
deficiencies, assessments or other charges due as reflected on the filed returns
or claimed to be due by such federal, state or local taxing authorities (other
than taxes, deficiencies, assessments or claims which are being contested in
good faith and which in the aggregate are not material); (ii) Seller has not
received any written notice of any examinations or audits pending or unresolved
examinations or audit issues with respect to the Seller's federal, state or
local tax returns; (iii) all additional taxes, if any, assessed as a result of
such examinations or audits have been paid; and (iv) to Seller's knowledge,
there are no pending claims or proceedings relating to, or asserted for, taxes,
penalties, interest, deficiencies or assessments against the Purchased Assets.
3.11 LITIGATION. There is no order of any court, governmental
agency or authority and no action, suit, proceeding or investigation,
judicial, administrative or otherwise that is pending or, to Seller's
knowledge, threatened against or affecting the Stations which, if adversely
determined, might materially and adversely affect the business, operations,
properties, assets or conditions (financial or otherwise) of the Stations or
which challenges the validity or propriety of any of the transactions
contemplated by this Agreement.
3.12 CONTRACTS AND AGREEMENTS. The Stations are not in default with
respect to any of the contracts contained on Schedule IV hereto, and, as of the
Closing Date, the Stations will have paid all sums and performed all obligations
under such contracts which are required to be paid or performed prior to the
Closing Date. True and complete copies of such contracts have been delivered to
Purchaser on or prior to the date hereof.
3.13 INTANGIBLE PROPERTY. The Seller has, and after the Closing,
Purchaser will have, the right to use the intangible property included in the
Purchased Assets, free and clear of any royalty or other payment obligations.
Seller's use of such intangible property does not conflict with, violate or
infringe upon any rights of any other person or entity with respect to such
intangible property and Seller has not received any notice of any such claimed
conflict, violation or infringement.
3.14 FINANCIAL STATEMENTS AND RECORDS OF THE BUSINESS. Seller has
delivered or will deliver to Purchaser true, correct and complete copies of the
unaudited financial statements for the Stations as of the end of the most recent
calendar year end and the unaudited financial Statements of the Stations for the
three, six or nine months ended for the most recent quarter end of the current
calendar year. Since the date of such financial statements, the Stations have
not suffered any change in their results of operations, working capital, assets,
liabilities or condition (financial or otherwise) or the manner of conducting
their business other than changes in the ordinary course of business that,
individually or in the aggregate, have not had a material adverse effect on the
business of the Stations.
3.15 YEAR 2000. To Seller's knowledge, all operating system,
application and other computer software included in the Purchased Assets is
currently Year 2000 compliant, or to the extent that such software or hardware
is not currently Year
<PAGE>
2000 compliant, Seller has in place and is implementing detailed plans to ensure
that such software and hardware will be Year 2000 compliant no later than the
Closing Date.
3.16 FINDERS AND BROKERS. No person has as a result of any
agreement entered into by the Seller any valid claim against any of the parties
hereto for a brokerage commission, finder's fee or other like payment.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser hereby represents and warrants to the Seller as follows:
4.1 ORGANIZATION AND GOOD STANDING. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of Delaware and
has all requisite power and authority to own and lease its properties and carry
on its business as currently conducted.
4.2 DUE AUTHORIZATION. Subject to the FCC Order and Final Order,
Purchaser has full power and authority to enter into this Agreement and to carry
out its obligations hereunder. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Purchaser. This
Agreement has been duly executed and delivered by Purchaser and constitutes the
legal, valid and binding obligation of Purchaser, enforceable against it in
accordance with its respective terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally or general equitable principles.
4.3 EXECUTION AND DELIVERY. Neither the execution and delivery by
Purchaser of this Agreement nor the consummation of the transactions
contemplated hereby will: (i) conflict with or result in a breach of the
Articles of Incorporation or Bylaws of Purchaser; (ii) subject to the FCC Order
and Final Order and the making of any required filings under the HSR Act,
violate any law, statute, rule or regulation or any order, writ, injunction or
decree of any court or governmental authority; or (iii) violate or conflict with
or constitute a default under (or give rise to any right of termination,
cancellation or acceleration under) any indenture, mortgage, lease, contract or
other instrument to which Purchaser is a party or by which it is bound or
affected.
<PAGE>
4.4 CONSENTS. No consent, approval, authorization, license, exemption
of, filing or registration with any court, governmental authority, commission,
board, bureau, agency or instrumentality, domestic or foreign, is required by
Purchaser in connection with the execution and delivery of this Agreement or the
consummation by it of any transaction contemplated hereby, other than the
consent of the FCC or under the HSR Act. No approval, authorization or consent
of any other third party is required in connection with the execution and
delivery by Purchaser of this Agreement and the consummation of the transactions
contemplated hereby, except as may have been previously obtained by Purchaser.
Purchaser warrants that it is legally qualified to become a licensee of the
Stations and is aware of no impediment to the approval by the FCC of the
assignment of the Governmental Licenses to Purchaser.
4.5 FINDERS AND BROKERS. No person has as a result of any agreement
entered into by the Purchaser any valid claim against any of the parties hereto
for a brokerage commission, finder's fee or other like payment.
4.6 PURCHASER'S QUALIFICATION. The Purchaser is in all material
respects qualified legally, financially and otherwise to be the licensee of the
Stations, and has or shall have sufficient resources to pay in full all amounts
due to the Seller under this Agreement when such amounts are due.
5. CERTAIN COVENANTS AND AGREEMENTS.
5.1 REASONABLE EFFORTS. Each of the Seller and Purchaser shall
take all commercially reasonable action necessary to consummate the
transactions contemplated by this Agreement and will use all necessary and
reasonable means at its disposal to obtain all necessary consents and
approvals of other persons and governmental authorities required to enable it
to consummate the transactions contemplated by this Agreement. Except as
otherwise provided herein, each of the Seller and Purchaser acknowledges and
agrees that it shall pay all costs, fees and expenses incurred by it in
obtaining such necessary consents and approvals. Each party shall make all
filings, applications, statements and reports to all governmental agencies or
entities which are required to be made prior to the Closing Date by or on its
behalf pursuant to any statute, rule or regulation in connection with the
transactions contemplated by this Agreement, and copies of all such filings,
applications, statements and reports shall be provided to the other. If the
FCC determines that the transactions contemplated hereby or a portion thereof
are inconsistent or violative of FCC rules or regulations, the parties agree
that they will negotiate in good faith to amend, modify or restructure the
transactions contemplated hereby so as to be consistent with FCC rules and
regulations.
5.2 PUBLIC ANNOUNCEMENTS. Prior to the Closing Date, all public
announcements and other publicity relating to the transaction contemplated by
this Agreement shall be jointly planned and agreed to by the Seller and
Purchaser.
<PAGE>
5.3 ORDINARY COURSE OF BUSINESS. During the period from the date
hereof to the Closing Date, unless the prior consent of Purchaser is first
obtained, the Seller shall use its commercially reasonable best efforts to
(i) conduct the operations of the Stations in the ordinary course of business
consistent with past and current practices and (ii) not knowingly take any
action which would cause any representation contained in Article 3 to be
untrue as of the Closing Date.
5.4 SECTION 1031 ASSET CHANGE. The Seller intends that the transfer
of the Purchased 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
1.103(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 provided written notice of such assignment to Purchaser.
Purchaser shall cooperate with the reasonable requests of the Seller's
Qualified Intermediary in arranging and affecting this exchange and any
additional exchange as would qualify under Section 1031 of the Internal
Revenue Code; provided that, Seller shall reimburse to Purchaser any costs
and expenses incurred by Purchaser directly and solely as a result of
Seller's use of a Qualified Intermediary to consummate the transaction
contemplated herein. Without limiting the generality of the foregoing, if
Seller has given notice of its intention to affect an exchange using a
Qualified Intermediary, Purchaser shall promptly provide Seller with written
acknowledgment of such notice. If requested by Seller, Purchaser shall pay
the Purchase Price for the Purchased Assets to the Qualified Intermediary of
Seller (and not to Seller), and such payment shall satisfy the obligations of
Purchaser 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 Purchaser set forth in this
Section, Purchaser shall not have any liability or obligation to Seller for
the failure of the contemplated exchange to qualify as a like kind of
exchange under Section 1031 of the Internal Revenue Code unless such failure
is the result of the material breach by Purchaser of its representations,
warranties, covenants and obligations herein.
5.5 RIGHT TO HIRE EMPLOYEES. Seller hereby grants to the Purchaser
the right, but not the obligation, after the Closing, to offer employment to
any employee of Seller involved in the operation of the Stations prior to the
Closing.
5.6 THIRD PARTY CONSENTS. By the Closing Date, the Seller will use
all commercially reasonable efforts to obtain all consents from any person or
entity which are required in connection with the execution and delivery by
Purchaser of this Agreement and the consummation of the transactions
contemplated hereby, which consents are described on Schedule V.
<PAGE>
6. CONDITIONS TO PURCHASER'S CLOSING.
All obligations of Purchaser under this Agreement shall be subject
to the fulfillment at or prior to the Closing of the following conditions, it
being understood that Purchaser may, in its sole discretion, waive any or all
of such conditions in whole or in part:
6.1 REPRESENTATIONS, ETC. The Seller shall have performed in all
material respects the covenants and agreements contained in this Agreement
that are to be performed by it at or prior to the Closing, and the
representations and warranties of the Seller contained in this Agreement
shall be true and correct in all material respects as of the Closing Date
with the same effect as though made at such time (except as contemplated or
permitted by this Agreement).
6.2 CONSENTS. All consents and approvals from the FCC and
governmental agencies required to consummate the transactions contemplated by
this Agreement shall have been obtained without material cost or other
materially adverse consequence to Purchaser and shall be in full force and
effect, and the FCC Order shall, at the Closing, be in full force and effect.
6.3 NO ADVERSE LITIGATION. No order or temporary, preliminary or
permanent injunction or restraining order shall have been entered and no
action, suit or other legal or administrative proceeding by any court or
governmental authority, agency or other person shall be pending or threatened
on the Closing Date which may have the effect of (i) making any of the
transactions contemplated hereby illegal or (ii) materially adversely
affecting the value of the Purchased Assets.
6.4 TRANSMITTER SITE LEASES. Seller shall have renegotiated, amended
and reexecuted the Transmitter Site Lease for KACE(FM), which lease shall be
in substantially the same form as Attachment A hereto. The Transmitter Site
Lease for KRTO(FM) shall be deemed to include that certain letter dated
October _____, 1999 from Glendale Electronics to Cox Radio, Inc., which lease
shall be in the form attached hereto as Attachment B. The lessors of the
Transmitter Site Leases shall have consented to the assignment of such
amended Transmitter Site Leases to Purchaser without additional cost to the
Purchaser.
6.5 CLOSING DELIVERIES. Purchaser shall have received each of the
documents or items required to be delivered to it pursuant to Section 8.1
hereof.
7. CONDITIONS TO SELLER'S CLOSING.
All obligations of the Seller under this Agreement shall be subject
to the fulfillment at or prior to the Closing of the following conditions, it
being understood that the Seller may, in its sole discretion, waive any or
all of such conditions in whole or in part:
<PAGE>
7.1 REPRESENTATIONS, ETC. Purchaser shall have performed in all
material respects the covenants and agreements contained in this Agreement
that are to be performed by Purchaser as of the Closing, and the
representations and warranties of Purchaser contained in this Agreement shall
be true and correct in all material respects as of the Closing Date with the
same effect as though made at such time (except as contemplated or permitted
by this Agreement).
7.2 NO ADVERSE LITIGATION. No order or temporary, preliminary or
permanent injunction or restraining order shall have been entered and no
action, suit or other legal or administrative proceeding by any court or
governmental authority, agency or other person shall be pending or threatened
on the Closing Date which may have the effect of (i) making any of the
transactions contemplated hereby illegal or (ii) materially adversely
affecting the value of the Purchased Assets.
7.3 CLOSING DELIVERIES. The Seller shall have received each of the
documents or items required to be delivered to it pursuant to Section 8.2.
7.4 CONSENTS. All consents and approvals from the FCC and
governmental agencies required to consummate the transactions contemplated by
this Agreement shall have been obtained without material cost or other
materially adverse consequence to Seller and shall be in full force and
effect, and the FCC Order shall, at the Closing, be in full force and effect.
8. DOCUMENTS AND ITEMS TO BE DELIVERED AT CLOSING.
8.1 TO PURCHASER. At the Closing, there shall be delivered to
Purchaser:
(a) The bills of sale, agreements of assignment and similar
instruments of transfer to the Purchased Assets contemplated by Section 2.3
hereof.
(b) A certificate, signed by an executive officer of Seller, as to
the fulfillment of the conditions set forth in Sections 6.1 through 6.3
hereof.
(c) If the Closing occurs prior to the Final Order, an Unwind
Agreement in the form of Exhibit A hereto (the "Unwind Agreement").
(d) An adjustment for increases in the license fees equal to the
product of (a) the difference between: (i) the monthly amount owed by
Purchaser under the amended Transmitter Site Lease for KACE(FM) from and
after the Closing Date through the expiration of the term of such Lease and
(ii) $700 multiplied by (b) the number of months that Purchaser will pay the
license fee after the Closing Date under such amended Transmitter Site Lease.
The adjustment amount shall: (i) be adjusted to reflect its present value
calculated by using an interest rate of seven percent (7%), (ii) be paid in
cash at the Closing, and (iii) not exceed $50,000.
<PAGE>
8.2 TO SELLER. At the Closing, there shall be delivered to the
Seller:
(a) The purchase price contemplated by Section 2.1 hereof, in the
form of wire transfer or cashier's or certified check as the Seller may
direct.
(b) A certificate, signed by an executive officer of Purchaser, as
to the fulfillment of the conditions set forth in Sections 7.1 and 7.2 hereof.
(c) An assumption agreement pursuant to which Purchaser shall assume
the Assumed Contracts.
(d) If the Closing occurs prior to the Final Order, the Unwind
Agreement.
9. SURVIVAL.
All representations, warranties, covenants and agreements made by
any party to this Agreement or pursuant hereto shall be deemed to be material
and to have been relied upon by the parties hereto and shall survive the
Closing; provided, however, that notice of any claim against the Purchaser or
Seller, whether made under the indemnification provisions hereof or
otherwise, based on a breach of a representation, warranty, covenant or
agreement must be given within one year from the Closing Date. The
representations and warranties hereunder shall not be affected or diminished
by any investigation at any time by or on behalf of the party for whose
benefit such representations and warranties were made. No representation or
warranty contained herein shall be deemed to be made at any time after the
date of this Agreement.
10. INDEMNIFICATION OF PURCHASER.
Subject to the limitations set forth in Sections 9 and 12, the
Seller shall indemnify and hold Purchaser harmless from, against, for and in
respect of:
(a) any and all damages, losses, settlement payments, obligations,
liabilities, claims, actions or causes of action and encumbrances suffered,
sustained, incurred or required to be paid by Purchaser because of the breach
of any written representation, warranty, agreement or covenant of the Seller
contained in this Agreement;
(b) any and all liabilities, obligations, claims and demands arising
out of the ownership and operation of the Stations at all times prior to the
Closing Date (other than the contractual liabilities specifically assumed as
set forth in Section 1.2 hereto); and
(c) all reasonable costs and expenses (including, without
limitation, attorneys' fees, interest and penalties) incurred by Purchaser in
connection with any action, suit, proceeding, demand, assessment or judgment
incident to any of
<PAGE>
the matters indemnified against in this Section 10.
11. INDEMNIFICATION OF SELLER.
Subject to the limitations set forth in Sections 9 and 12, Purchaser
shall indemnify and hold the Seller harmless from, against, for and in
respect of:
(a) any and all damages, losses, settlement payments, obligations,
liabilities, claims, actions or causes of action and encumbrances suffered,
sustained, incurred or required to be paid by the Seller because of the
breach of any written representation, warranty, agreement or covenant of
Purchaser contained in this Agreement;
(b) any and all liabilities, obligations, claims and demands arising
out of the ownership and operation of the Stations on and after the Closing
Date, except to the extent the same arises from a breach of any written
representation, warranty, agreement or covenant of the Seller contained in
this Agreement or any document, certificate or agreement executed in
connection with this Agreement;
(c) any of the Assumed Contracts specifically assumed as set forth
in Section 1.2; and
(d) all reasonable costs and expenses (including, without
limitation, attorneys' fees, interest and penalties) incurred by the Seller
in connection with any action, suit, proceeding, demand, assessment or
judgment incident to any of the matters indemnified against in this Section
11.
12. GENERAL RULES REGARDING INDEMNIFICATION.
The obligations and liabilities of each indemnifying party hereunder
with respect to claims resulting from the assertion of liability by the other
party or indemnified third parties shall be subject to the following terms
and conditions:
(a) The indemnified party shall give prompt written notice (which in
no event shall exceed 30 days from the date on which the indemnified party
first became aware of such claim or assertion) to the indemnifying party of
any claim which might give rise to a claim by the indemnified party against
the indemnifying party based on the indemnity agreements contained in Section
10 or 11 hereof, stating the nature and basis of said claims and the amounts
thereof, to the extent known;
(b) If any action, suit or proceeding is brought against the
indemnified party with respect to which the indemnifying party may have
liability under the indemnity agreements contained in Section 10 or 11
hereof, the action, suit or proceeding shall, upon the written acknowledgment
by the indemnifying party that it is obligated to indemnify under such
indemnity agreement, be defended (including
<PAGE>
all proceedings on appeal or for review which counsel for the indemnified
party shall deem appropriate) by the indemnifying party. The indemnified
party shall have the right to employ its own counsel in any such case, but
the fees and expenses of such counsel shall be at the indemnified party's own
expense unless (A) the employment of such counsel and the payment of such
fees and expenses both shall have been specifically authorized in writing by
the indemnifying party in connection with the defense of such action, suit or
proceeding, or (B) counsel to such indemnified party shall have reasonably
concluded and specifically notified the indemnifying party that there may be
specific defenses available to it which are different from or additional to
those available to the indemnifying party or that such action, suit or
proceeding involves or could have an effect upon matters beyond the scope of
the indemnity agreements contained in Sections 10 and 11 hereof, in any of
which events the indemnifying party, to the extent made necessary by such
defenses, shall not have the right to direct the defense of such action, suit
or proceeding on behalf of the indemnified party. In the latter such case
only that portion of such fees and expenses of the indemnified party's
separate counsel reasonably related to matters covered by the indemnity
agreements contained in Section 10 or 11 hereof shall be borne by the
indemnifying party. The indemnified party shall be kept fully informed of
such action, suit or proceeding at all stages thereof whether or not it is
represented by separate counsel.
(c) The indemnified party shall make available to the indemnifying
party and its attorneys and accountants all books and records of the
indemnified party relating to such proceedings or litigation and the parties
hereto agree to render to each other such assistance as they may reasonably
require of each other in order to ensure the proper and adequate defense of
any such action, suit or proceeding.
(d) The indemnified party shall not make any settlement of any
claims without the written consent of the indemnifying party, which consent
shall not be unreasonably withheld or delayed.
(e) If any claims are made by third parties against an indemnified
party for which an indemnifying party would be liable, and it appears likely
that such claims might also be covered by the indemnified party's insurance
policies, the indemnified party shall make a timely claim under such policies
and to the extent that such party obtains any recovery from such insurance,
such recovery shall be offset against any sums due from an indemnifying party
(or shall be repaid by the indemnified party to the extent that an
indemnifying party has already paid any such amounts). The parties
acknowledge, however, that if an indemnified party is self-insured as to any
matters, either directly or through an insurer which assesses retroactive
premiums based on loss experience, then to the extent that the indemnified
party bears the economic burden of any claims through self-insurance or
retroactive premiums or insurance ratings, the indemnifying party's
obligation shall only be reduced by any insurance recovery in excess of the
amount paid or to be paid by the indemnified party in insurance premiums.
<PAGE>
(f) No claim or indemnification shall be made unless and until the
indemnified party has first incurred, in the aggregate, damages, losses and
expenses for which it would be entitled to be indemnified hereunder of at
least $25,000.
(g) Except as herein expressly provided, the remedies provided in
Sections 10 through 12 hereof shall be cumulative and shall not preclude
assertion by any party of any other rights or the seeking of any other rights
or remedies against any other party hereto.
13. TERMINATION. This Agreement may be terminated by the mutual consent of
Purchaser and Seller, or by either Purchaser or Seller, if the terminating
party is not then in material breach of its obligations hereunder, upon
written notice to the other upon the occurrence of any of the following:
(a) By the terminating party, if the other party is in material
breach of its obligations hereunder, and such breach has not been cured by
the other party within 30 days of written notice of such breach (or such
longer period of time if the breach cannot be reasonably cured within 30 days
and the breaching party is diligently attempting to cure such breach);
(b) If the FCC designates the FCC Application contemplated by
Section 2.2(b) hereof for hearing at any time; or
(c) If the Closing has not occurred on or before June 30, 2000.
14. RISK OF LOSS. The Seller shall bear the risk of all damage to, loss of or
destruction of any of the Purchased Assets between the date of this Agreement
and the Closing Date. If any material portion of the Purchased Assets shall
suffer any material damage or destruction prior to the Closing Date, the
Seller shall promptly notify the Purchaser in writing of such damage or
destruction, shall promptly take all necessary steps to restore, repair or
replace such assets at its sole expense, and shall advise the Purchaser in
writing of the estimated cost to complete such restoration, repair or
replacement and all amounts actually paid as of the date of the estimate. The
Purchaser or Seller may extend the Closing Date for a period not exceeding 45
days to accomplish such restoration, repair or replacement, but is not
required to do so. If such restoration, repair or replacement is not
accomplished prior to the Closing Date, as the same may be extended as
provided herein, the Purchaser may, at its option:
(a) terminate this Agreement upon written notice to Seller; or
(b) receive all insurance proceeds paid or payable to Seller, close
this Agreement and thereafter complete such restoration, repair or
replacement at its sole expense; provided, however, Seller shall have no
further liabilities with respect to such damage or destruction after payment
to Purchaser of such insurance
<PAGE>
proceeds.
15. MISCELLANEOUS PROVISIONS.
15.1 EXPENSES. Except as otherwise expressly provided herein, each
party shall pay the fees and expenses incurred by it in connection with the
transactions contemplated by this Agreement. If any action is brought for
breach of this Agreement or to enforce any provision of this Agreement, the
prevailing party shall be entitled to recover court costs and reasonable
attorneys' fees.
15.2 PRORATIONS. All items of income and expense arising from the
operation of the Stations with respect to the Purchased Assets and the
Assumed Contracts on or before the close of business on the Closing Date
shall be for the account of the Seller and thereafter shall be for the
account of the Purchaser. Proration of the items described below between the
Seller and the Purchaser shall be effective as of 11:59 p.m., local time, on
such date and shall occur as follows with respect to those rights,
liabilities and obligations of the Seller transferred to and assumed by the
Purchaser hereunder.
(a) Liability for state and local taxes assessed on the Purchased
Assets payable with respect to the tax year in which the Closing Date falls
and the annual FCC regulatory fee for the Stations payable with respect to
the year in which the Closing Date falls shall each be prorated as between
the Seller and the Purchaser on the basis of the number of days of the tax
year elapsed to and including such date.
(b) Prepaid items, deposits, credits and accruals such as water,
electricity, telephone, other utility and service charges, lease expenses,
license fees (if any) and payments under any contracts to be assumed by the
Purchaser shall be prorated between the Seller and the Purchaser on the basis
of the period of time to which such liabilities, prepaid items and accruals
apply.
All prorations shall be made and paid insofar as feasible on the Closing
Date; any prorations not made on such date shall be made as soon as
practicable (not to exceed 90 days) thereafter. The Seller and the Purchaser
agree to assume, pay and perform all costs, liabilities and expenses
allocated to each of them pursuant to this Section 15.2.
15.3 AMENDMENT. This Agreement may be amended at any time but only
by an instrument in writing signed by the parties hereto (it being understood
that email does not constitute a signed writing).
15.4 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given if mailed by certified mail, return
receipt requested, or by nationally recognized "next-day" delivery service,
to the parties at the addresses set forth below (or at such other address for
a party as shall be
<PAGE>
specified by like notice), or sent by facsimile to the number set forth below
(or such other number for a party as shall be specified by proper notice
hereunder):
If to the Purchaser:
3102 Oak Lawn, Suite 215
Dallas, Texas 75219
Attn: Jeffrey T. Hinson, Senior Vice President and
Chief Financial Officer
Fax: (214) 525-7750
If to the Seller:
1400 Lake Hearn Drive
Atlanta, Georgia 30319
Attn: Maritza Pichon, Chief Financial Officer
Fax: (404) 843-5890
15.5 ASSIGNMENT. This Agreement may not be assigned by either party
without the prior consent of the other party, which shall not be unreasonably
withheld; provided, however, that Purchaser may assign its rights to one or
more subsidiaries This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, heirs and
permitted assigns.
15.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
15.7 HEADINGS. The headings of the Sections of this Agreement are
inserted for convenience only and shall not constitute a part hereof.
15.8 ENTIRE AGREEMENT. This Agreement and the documents referred to
herein contain the entire understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties, conveyances or undertakings other than those expressly set forth
herein. This Agreement supersedes any prior agreements and understandings
between the parties with respect to the subject matter.
15.9 WAIVER. No attempted waiver of compliance with any provision or
condition hereof, or consent pursuant to this Agreement, will be effective
unless evidenced by an instrument in writing by the party against whom the
enforcement of any such waiver or consent is sought.
15.10 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware. Venue with
respect to any dispute or controversy shall be proper only in Wilmington,
Delaware.
<PAGE>
15.11 CERTAIN DEFINITIONS. As used in this Agreement, "affiliates" of a
party shall mean persons or entities that directly, or indirectly through one or
more intermediaries, control or are controlled by, or are under common control
with, such party.
15.12 INTENDED BENEFICIARIES. The rights and obligations contained in
this Agreement are hereby declared by the parties hereto to have been provided
expressly for the exclusive benefit of such entities as set forth herein and
shall not benefit, and do not benefit, any unrelated third parties.
15.13 MUTUAL CONTRIBUTION. The parties to this Agreement and their
counsel have mutually contributed to its drafting. Consequently, no provision of
this Agreement shall be construed against any party on the ground that such
party drafted the provision or caused it to be drafted or the provision contains
a covenant of such party.
[signatures on following page]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
PURCHASER:
Hispanic Broadcasting Corporation
By: /s/ Jeffrey T. Hinson
-------------------------------
Jeffrey T. Hinson
Senior Vice President and
Chief Financial Officer
SELLER:
Cox Radio, Inc.
By: /s/ Robert F. Neil
-------------------------------
Name: Robert F. Neil
----------------------------
Title: President/CEO
----------------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE FINANCIAL STATEMENTS AS OF AND FOR THE NINE MONTH PERIOD ENDED
SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 8,625
<SECURITIES> 0
<RECEIVABLES> 42,130
<ALLOWANCES> 2,318
<INVENTORY> 0
<CURRENT-ASSETS> 49,562
<PP&E> 59,880
<DEPRECIATION> 20,630
<TOTAL-ASSETS> 952,930
<CURRENT-LIABILITIES> 34,026
<BONDS> 52,436
0
0
<COMMON> 51
<OTHER-SE> 766,487
<TOTAL-LIABILITY-AND-EQUITY> 952,930
<SALES> 0
<TOTAL-REVENUES> 141,984
<CGS> 0
<TOTAL-COSTS> 102,378
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 987
<INTEREST-EXPENSE> 962
<INCOME-PRETAX> 39,556
<INCOME-TAX> 16,416
<INCOME-CONTINUING> 23,140
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,140
<EPS-BASIC> 0.46
<EPS-DILUTED> 0.46
</TABLE>
