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Exhibit 10.3
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT ("AGREEMENT"), dated as of May 8, 2000,
by and between NEW WORLD BROADCASTERS CORP., a Texas corporation ("TRANSFEROR"),
910 BROADCASTING CORP., a Texas corporation (the "Company"), and SPANISH
BROADCASTING SYSTEM, INC., a Delaware corporation ("ACQUIRER").
W I T N E S S E T H:
WHEREAS, Transferor owns all the outstanding shares (the "SHARES") of
Common Stock, no par value, of the Company; and
WHEREAS, the Company owns and operates radio station KXEB-AM (Sherman,
Texas) (the "STATION") pursuant to certain authorizations issued by the Federal
Communications Commission (the "COMMISSION" or the "FCC"); and
WHEREAS, Transferor desires to transfer to Acquirer, and Acquirer
desires to acquire from Transferor, the Shares, subject to the approval of the
FCC; and
WHEREAS, the Company desires to join in the execution of this Agreement
for the purpose of evidencing its consent to the consummation of the foregoing
transaction and for the purpose of making certain representations and warranties
to and covenants and agreements with Acquirer; and
WHEREAS, Transferor has entered into an Asset Purchase Agreement, dated
as of the date hereof, whereby Acquirer will acquire from Transferor certain of
the assets and liabilities relating to radio station KTCY-FM (the "ASSET
PURCHASE AGREEMENT"); and
WHEREAS, Rodriguez Communications, Inc., a Delaware corporation
("RCI"), the stockholders of RCI and Acquirer have entered into a Stock Purchase
Agreement, dated as of the date hereof, whereby Acquirer will acquire all of the
outstanding capital stock of RCI (the "RCI STOCK PURCHASE AGREEMENT"); and
WHEREAS, Acquirer has agreed to lend funds to RCI and Transferor for
RCI to use to, among other things, consummate the purchase of certain radio
stations and for Transferor to use to repay certain indebtedness and to operate
and maintain radio station KTCY-FM and the Station, and Acquirer has agreed to
lend an additional amount of funds to Transferor and RCI, a portion of which RCI
will utilize to acquire certain other radio and television stations; and
WHEREAS, for federal income tax purposes, the parties intend that the
Merger shall qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the parties intend that this Agreement, as it relates to the
Merger, shall constitute a "plan of reorganization" within the meaning of
Treasury Regulation Section 1.368-3.
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NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties hereto agree as follows;
ARTICLE I
DEFINED TERMS
Section 1.01. CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings:
"ACTION" shall mean any claim, action, suit, arbitration, inquiry,
proceeding or investigation by any Governmental Authority or other third party.
"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.
"CODE" shall mean the United States Internal Revenue Code of 1986, as
amended.
"ENCUMBRANCES" shall mean liens, charges, pledges, options, mortgages,
deeds of trust, security interests, claims, restrictions (whether on voting,
sale, transfer, disposition or otherwise), easements and other encumbrances of
every type and description, whether imposed by Law, agreement, understanding or
otherwise.
"ENVIRONMENTAL LAW" shall mean any law, ordinance, or regulation,
whether national, Federal, state, local or other, pertaining to the protection
of human health or the environment, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Sections 11001, et seq., and the Resource Conversation and Recovery Act, 42
U.S.C. Sections 6901, et seq.
"GOVERNMENTAL AUTHORITY" shall mean any United States federal, state or
local or any foreign government, governmental, regulatory or administrative
authority, agency or commission or any court, tribunal or arbitral body.
"GOVERNMENTAL ORDER" shall mean any claim, action, suit, arbitration,
order, writ, judgment, injunction, decree, stipulation, determination or award
entered into by or with any Governmental Authority.
"HAZARDOUS MATERIALS" shall mean any waste or substance that is listed,
defined, designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, including any admixture or solution thereof, and specifically
including petroleum and all derivatives thereof or synthetic substitutes
therefor and asbestos or asbestos-containing materials.
"IRS" shall mean the United States Internal Revenue Service.
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"LAW" shall mean any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, Governmental Order, permit, franchise, grant,
authorization, easement, consent, certificate or requirement or rule of common
law of any Governmental Authority.
"LIABILITIES" shall mean any and all debts, liabilities and
obligations, whether accrued or fixed, absolute or contingent, matured or
unmatured, or determined or determinable, including, without limitation, those
arising under any Law (including, without limitation, any environmental law),
Action or Governmental Order and those arising under any contract agreement,
arrangement, commitment or undertaking.
"MATERIAL ADVERSE EFFECT" shall mean a single event, occurrence or fact
that (together with all other events, occurrences and facts that could
reasonably be expected to result in a loss) would have, or might reasonably be
expected to have, a material adverse effect on a Person's assets, business,
operations or financial condition, or that might reasonably be expected to
prevent such Person from consummating the transactions contemplated by this
Agreement.
"PERMITTED ENCUMBRANCES" shall mean any and all of the following
Encumbrances:
(a) Liens for taxes and assessments which are not yet due and payable
or, if due and payable, the validity of which is being contested in good faith
by appropriate legal proceedings;
(b) Rights existing under applicable laws or operating agreements or
similar contracts to assert liens against the relevant assets or properties, but
not including liens and other rights which have actually been asserted, unless
the relevant Person disputes the validity of any such lien or the amount claimed
to be owed in connection therewith, or such lien or other right is not
enforceable against the interest of such Person;
(c) Any obligations or duties affecting any property to any
municipality or public authority with respect to any franchise, grant, license
or permit and all applicable laws, rules and orders of any Governmental
Authority;
(d) Any other Encumbrance that is not substantial in character, amount
or extent and does not materially detract from the value of the property subject
thereto;
(e) Any Encumbrance created by or in favor of Acquirer or any of its
Affiliates; and
(f) Such Encumbrances or impairments to the quality of title arising as
a result of the sale to Acquirer of the Shares pursuant to this Agreement.
"PERSON" shall mean any individual, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor union,
or other entity or Governmental Authority.
"SUBSIDIARY" shall mean any corporation or other Person of which
securities or other interests having the power to elect a majority of that
corporation's or other person's board
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of directors or similar governing body, or otherwise having the power to direct
the business and policies of that corporation or other Person (other than
securities or other interests having such power only upon the happening of a
contingency that has not occurred) are held on the date in question by such
Person or one or more of its Subsidiaries; when used without reference to a
particular Person, "Subsidiary" means a Subsidiary on the date in question of
the Company.
"TAX" shall mean any federal, state, local or foreign tax (including,
without limitation, any income tax, franchise tax, doing business tax, branch
profits tax, capital gains tax, value-added tax, ad valorem tax, excise tax,
transfer tax, employment tax, social security tax, sales tax, use tax, property
tax, or any other kind of tax or payment in lieu of tax no matter how
denominated), levy, assessment, tariff, duty (including any customs duty),
deficiency or other fee, and any related charge or amount (including any fine,
penalty, interest or addition to tax), imposed, assessed or collected by or
under the authority of any Governmental Authority or payable pursuant to any
tax-sharing agreement or any other contract relating to the sharing or payment
of any such tax, levy, assessment, tariff, duty, deficiency or fee.
"TAX RETURN" shall mean any return (including any information return),
report, statement, schedule, notice, form or other document or information filed
with or submitted to or required to be filed with or submitted to, any
Governmental Authority in connection with the determination, assessment,
collection or payment of any Tax or in connection with the administration,
implementation or enforcement of or compliance with any legal requirement
relating to any Tax.
Section 1.02. OTHER DEFINED TERMS. The following terms shall have the
meanings defined for such terms in the Sections of this Agreement set forth
below:
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TERM SECTION
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Acquirer Preamble
Acquirer Common Stock Section 2.02
Acquirer Shares Section 2.02
Acquirer's Brokers Section 5.05
Agreement Preamble
Bridge Loan Agreement Section 3.02
Capital Lease Section 2.02
Cleanup Section 7.02
Client Service Agreement Section 7.02
Closing Section 3.01
Closing Date Section 3.01
Commission Preamble
Communications Act Section 2.03
Company Preamble
Company Agreements Section 4.22
Consideration Section 2.02
FCC Preamble
FCC Licenses Section 2.03
FCC Orders Section 2.03
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Final Orders Section 2.03
Financial Statements Section 4.14
GAAP Section 4.14
HSR Act Section 2.03
Indebtedness Section 2.02
Losses Section 7.02
Management Personnel Section 6.07
Modification Application Section 2.03
Proprietary Information Section 4.30
RCI Preamble
RCI Stock Purchase Agreement Preamble
Reference Balance Sheet Section 4.14
Securities Act Section 4.10
Shares Preamble
Station Preamble
Straddle Period Section 7.05
TBA Section 3.02
Transfer Taxes Section 6.03
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ARTICLE II
PURCHASE AND SALE
Section 2.01. ACQUISITION OF SHARES. At the Closing, and on the terms
and subject to the conditions set forth in this Agreement, Transferor shall
transfer and deliver to Acquirer, and Acquirer shall acquire and accept from
Transferor, the Shares.
Section 2.02. CONSIDERATION AND PAYMENT. In consideration of the
transfer of the Shares to Acquirer, at the Closing Acquirer shall issue to
Transferor $950,000, as adjusted in the manner set forth in this Section 2.02
(the "CONSIDERATION"), of shares (the "ACQUIRER SHARES") of Class A Common
Stock, par value $.0001 per share, of Acquirer ("ACQUIRER COMMON STOCK"). For
purposes of this Agreement, the number of shares constituting the Acquirer
Shares shall be $950,000 divided by the average last trade price per share of
Acquirer Common Stock for the 30-day period ending on the day immediately
preceding the closing date under the RCI Stock Purchase Agreement, as reported
under Nasdaq National Market Issues in THE WALL STREET Journal. The amount of
the Purchase Price shall be reduced by the sum of (i) any indebtedness for
borrowed money of the Company outstanding at the Closing, and any accrued
interest on and any redemption or prepayment premiums or penalties, breakage
costs and fees thereon and other expenses or amounts (including amounts due
pursuant to indemnification rights of lenders or holders of indebtedness)
("INDEBTEDNESS"), but excluding any Indebtedness under the Bridge Loan
Agreements, (ii) any lease of the Company required to be capitalized in
accordance with GAAP (each, a "CAPITAL LEASE"), (iii) the redemption or
repurchase price of (A) any options, warrants or convertible notes exercisable
or convertible for equity securities of the Company, or (B) any preferred stock,
common stock or other capital stock, including all liquidation payments and
accrued dividends, (iv) any liability for legal, accounting or any other
professional and brokerage/investment banking fees and expenses incurred by the
Company in connection with
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the transactions contemplated hereby, but only to the extent that they are not
reimbursable to the Company pursuant to the TBA, and (v) accrued but unpaid
salary and bonuses to employees of the Company, but only to the extent that they
are not reimbursable to the Company pursuant to the TBA.
The Shares shall be delivered without any representation or warranty by
Transferor or the Company except as expressly set forth in this Agreement, and
Acquirer acknowledges that it has not relied on or been induced to enter into
this Agreement by any representation or warranty other than those expressly set
forth in Article IV hereof.
Section 2.03. ASSIGNMENT OF GOVERNMENTAL LICENSES.
(a) The Company has filed with the FCC a major modification of license
application to modify the AM broadcast station license issued by the FCC
regarding the Station (the "MODIFICATION APPLICATION"). In order to consummate
the sale of the Shares, Acquirer and the Company and Transferor will file with
the FCC an application (the "ASSIGNMENT APPLICATION") requesting that the FCC
consent to the transfer of control of the Company to Acquirer with regard to the
licenses, permits and other authorizations that have been issued to the Company
by the FCC with respect to the Station (the "FCC LICENSES"). The parties shall
file the Assignment Application within 10 business days after Acquirer's and the
Company's respective FCC counsel determine that such application will not have
an adverse effect on the Modification Application. The parties agree that the
Assignment Application will be prosecuted in good faith and with due diligence.
Each party will be solely responsible for the expenses incurred by it in the
preparation, filing and prosecution of the Assignment Application (it being
understood that each of Transferor and Acquirer will pay one-half of the FCC
filing fee). As used herein, the term "FCC ORDERS" shall mean that the FCC has
granted or given its consent, without any condition materially adverse to
Acquirer, to the Assignment Application; the term "FINAL ORDERS" shall mean that
the FCC Orders shall have become final that such FCC Orders are not reversed,
stayed, enjoined or set aside, and with respect to such FCC Orders, no timely
request for stay, reconsideration, review, rehearing or notice of appeal is
pending, and as to which FCC Orders the time set forth in the FCC rules or the
Communications Act of 1934, as amended (the "COMMUNICATIONS ACT"), for filing
any such request, petition or notice of appeal or for review by the FCC staff on
its own motion has expired.
(b) Acquirer and Transferor shall make any and all necessary filings
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR ACT") with respect to the transactions contemplated by this Agreement.
Acquirer shall pay any notification filing fee associated with the filing under
the HSR Act.
ARTICLE III
CLOSING
Section 3.01. CLOSING. Subject to the terms of this Agreement, the sale
and purchase of the Shares shall take place at a closing of the transactions
contemplated hereby (the "CLOSING") to be held at the offices of Thompson &
Knight L.L.P., in Dallas, Texas, at 10:00 a.m., local time, on the date which is
the later of (i) the fifth day after the issuance of the FCC
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Orders, (ii) the date on which all closing conditions set forth in this Article
III have been satisfied or, to the extent permitted under applicable Law,
waived, and (iii) November 8, 2000, or at such other place or at such other time
or on such other date as Transferor and Acquirer may mutually agree upon in
writing (the day on which the Closing takes place being the "CLOSING DATE").
Section 3.02. CONDITIONS TO THE CLOSING.
(a) The obligations of Transferor and Acquirer hereunder shall be
subject to the satisfaction or written waiver on or prior to the Closing Date of
the following conditions:
(i) The waiting period (and any extension thereof), if any,
applicable to the transactions contemplated by this Agreement under the HSR Act,
shall have been terminated or shall have expired, and no restrictive order or
other requirements pursuant to the HSR Act shall have been placed on the
parties.
(ii) The FCC shall have approved the Assignment Application
(and such other applications as may be required by applicable law, rule or
regulation to permit the transfer to Acquirer of the Shares to be filed).
(iii) No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the transactions
contemplated hereby shall be in effect, nor shall any proceeding by or with any
Governmental Authority or third party seeking any of the foregoing be pending
(excluding, in each case, any such matter initiated by Transferor, the Company,
Acquirer or any of their Affiliates). There shall not be any Action taken, or
any Law enacted, entered, enforced or deemed applicable to the transactions
contemplated hereby, which makes the consummation of such transactions illegal
(excluding, in each case, any such matter initiated by Transferor, the Company,
Acquirer or any of their Affiliates).
(iv) Acquirer and the Company shall have entered into a time
brokerage agreement in substantially the form of EXHIBIT 3.02(A)(IV) with
respect to the Station concurrently with entering into this Agreement (the
"TBA").
(v) The "closing" of the transactions contemplated under the
RCI Stock Purchase Agreement and the Asset Purchase Agreement shall have
occurred or shall occur concurrently with the Closing.
(b) The obligations of Transferor to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment on or prior
to the Closing Date of each of the following conditions:
(i) Acquirer shall have entered into a loan agreement with the
Company and New World in substantially the same form as EXHIBIT 3.02(B)(I) (the
"BRIDGE LOAN AGREEMENT") and Acquirer shall have advanced all funds required to
be advanced under the Bridge Loan Agreement in accordance with the terms
thereof.
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(ii) All the representations and warranties of Acquirer
contained in this Agreement, and in any agreement, instrument, or document
delivered pursuant hereto or in connection herewith on or prior to the Closing
Date that are not qualified by materiality, Material Adverse Effect or a dollar
threshold shall be true and correct in all material respects, and all other
representations and warranties of Acquirer shall be true and correct, as of the
date made and (having been deemed to have been made again on and as of the
Closing Date) shall be true and correct in all material respects on and as of
the Closing Date, except to the extent that any such representation or warranty
is made as of a specified date, in which case such representation or warranty
shall have been true and correct as of such specified date.
(iii) Acquirer shall have performed and complied with in all
material respects all covenants and agreements required by this Agreement, and
any agreement, instrument, or document delivered pursuant hereto or in
connection herewith on or prior to the Closing Date, to be performed or complied
with by it on or prior to the Closing Date.
(iv) Acquirer shall not be in default under any TBA, which
default has resulted in a Material Adverse Effect on the Company or Transferor.
(c) The obligations of Acquirer to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment on or prior
to the Closing Date of each of the following conditions:
(i) All the representations and warranties of the Company and
Transferor contained in this Agreement, and in any agreement, instrument, or
document delivered pursuant hereto or in connection herewith on or prior to the
Closing Date, that are not qualified by materiality, Material Adverse Effect or
a dollar threshold, shall be true and correct in all material respects, and all
other representations and warranties of the Company and Transferor shall be true
and correct, as of the date made and (having been deemed to have been made again
on and as of the Closing Date) shall be true and correct in all material
respects on and as of the Closing Date, except as affected by actions taken or
omitted to be taken by Acquirer pursuant to the TBA, and except to the extent
that any such representation or warranty is made as of a specified date, in
which case such representation or warranty shall have been true and correct as
of such specified date.
(ii) Each of the Company and Transferor shall have performed
and complied with in all material respects all covenants and agreements required
by this Agreement, and any agreement, instrument, or document delivered pursuant
hereto or in connection herewith on or prior to the Closing Date, to be
performed or complied with by it on or prior to the Closing Date.
(iii) Charles J. Brooks shall have entered into an employment
agreement with Acquirer in substantially the form of EXHIBIT 3.02(C)(III).
(iv) Each of Marcos A. Rodriguez, James L. Anderson and James
A. Gammon shall have entered into Non-Competition Agreements with Acquirer
substantially in the form of EXHIBIT 3.02(C)(IV) hereto.
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(v) RCI shall have applied any amounts advanced under the
Bridge Loan Agreement in accordance with the terms thereof.
(vi) Only employees approved by Acquirer shall be employed by
the Company and the Company shall have incurred no additional liability in
terminating any of its employees.
(vii) Transferor shall have executed and delivered a Lock-Up
Letter in the form of EXHIBIT 3.02(C)(VII).
(viii) The Company shall have paid off or otherwise terminated
all Indebtedness of the Company and Transferor shall have furnished to Acquirer
evidence thereof in a form reasonably satisfactory to Acquirer.
Section 3.03. CLOSING DELIVERIES BY TRANSFEROR. At the Closing,
Transferor shall execute, acknowledge (where appropriate) and deliver, or cause
to be executed, acknowledged (where appropriate) and delivered, to Acquirer the
following:
(a) A certificate or certificates evidencing the Shares, duly endorsed
in blank or accompanied by appropriate stock powers.
(b) A certificate, executed by an officer of the Company and
Transferor, dated as of the Closing Date, certifying that (i) the
representations and warranties that are not qualified by materiality, Material
Adverse Effect or a dollar threshold of Transferor and the Company in this
Agreement are true and correct in all material respects, and all other
representations and warranties of the Company and Transferor are true and
correct, in each case, as of the Closing Date, with the same effect as though
made as of such date (or, in the case of representations and warranties which
address matters only as of a particular date, as of such particular date), (ii)
each covenant or agreement of Transferor or the Company in this Agreement to be
complied with at or prior to Closing shall have been complied with in all
material respects and (iii) no Action (excluding any such matter initiated by
Acquirer or any of its Affiliates) is pending or, to the Company's or
Transferor's knowledge, threatened before, and no injunction has been issued by,
any Governmental Authority seeking to enjoin or restrain or prohibit, delay, or
restrain the performance of or to obtain damages or other relief in connection
with this Agreement, or the consummation of the transactions contemplated
hereby.
(c) A certificate of such Transferor certifying that such Transferor is
not a "foreign person" within the meaning of Section 1445 of the Code in
substantially the form of EXHIBIT 3.03(C).
Section 3.04. CLOSING DELIVERIES BY ACQUIRER. At the Closing, Acquirer
shall execute, acknowledge (where appropriate) and deliver, or cause to be
executed, acknowledged (where appropriate) and delivered, to Transferor the
following:
(a) A certificate or certificates evidencing the Acquirer Shares, duly
issued and registered in the name of Transferor.
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(b) A certificate, executed by the duly authorized officer of Acquirer,
dated as of the Closing Date, certifying that (i) the representations and
warranties of Acquirer in this Agreement that are not qualified by materiality,
Material Adverse Effect or a dollar threshold are true and correct in all
material respects, and all other representations and warranties of Acquirer are
true and correct, in each case, as of the Closing Date, with the same effect as
though made as of such date (or, in the case of representations and warranties
which address matters only as of a particular date, as of such particular date),
(ii) each covenant or agreement of Acquirer in this Agreement to be complied
with at or prior to Closing shall have been complied with in all material
respects and (iii) no Action (excluding any such matter initiated by Transferor
or any of its Affiliates) is pending or, to Acquirer's knowledge, threatened
before, and no injunction has been issued by, any Governmental Authority seeking
to enjoin or restrain or prohibit, delay, or restrain the performance of or to
obtain damages or other relief in connection with this Agreement, or the
consummation of the transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TRANSFEROR AND THE COMPANY
Transferor and the Company, jointly and severally, represent and
warrant to Acquirer that:
Section 4.01. ORGANIZATION; GOOD STANDING. Each of Transferor and the
Company is a corporation, duly formed and validly existing under the laws of
Texas and has all requisite power and authority to own and lease its properties
and assets and to carry on its business as currently conducted.
Section 4.02. QUALIFICATION. Each of Transferor and the Company is duly
qualified or licensed to do business as a foreign corporation or other entity in
each of the jurisdictions set forth opposite its name on SCHEDULE 4.02, and is
in good standing in each of such jurisdictions, which are all the jurisdictions
in which such qualification or licensing is required for the conduct of its
business and the ownership and leasing of its properties, except jurisdictions
in which the failure to be so qualified or licensed would not, individually or
in the aggregate, have a Material Adverse Effect on the Company.
Section 4.03. CHARTER AND BYLAWS. The Company has made available to
Acquirer accurate and complete copies of (i) the charter and bylaws of the
Company as currently in effect, (ii) the stock records of the Company, and (iii)
the minutes of all meetings of the Board of Directors of the Company, any
committees of such Board, and the stockholders of the Company (and all consents
in lieu of such meetings).
Section 4.04. CAPITALIZATION OF THE COMPANY. The authorized capital
stock of the Company consists of 1,000,000 shares of Common Stock, no par value,
of which, as of the date hereof, 1,000 shares are outstanding and no shares are
held in the Company's treasury. All outstanding shares of capital stock of the
Company have been validly issued and are fully paid and nonassessable, and no
shares of capital stock of the Company are subject to, nor have any been issued
in violation of, preemptive or similar rights. The Shares constitute (and at the
Closing will constitute) all the outstanding shares of capital stock of the
Company. Except as set forth above in this Section or in SCHEDULE 4.04, there
are (and as of the Closing Date there
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will be) outstanding (i) no shares of capital stock or other voting securities
of the Company, (ii) no securities of the Company convertible into or
exchangeable for shares of capital stock or other voting securities of the
Company, (iii) no options or other rights to acquire from the Company, and no
obligation of the Company to issue or sell, any shares of capital stock or other
voting securities of the Company or any securities of the Company convertible
into or exchangeable for such capital stock or voting securities, and (iv) no
equity equivalents, interests in the ownership or earnings, or other similar
rights of or with respect to the Company. There are (and as of the Closing Date
there will be) no outstanding obligations of the Company to repurchase, redeem,
or otherwise acquire any of the foregoing shares, securities, options, equity
equivalents, interests, or rights. The Company is not a party to, and is not
aware of, any voting agreement, voting trust, or similar agreement or
arrangement relating to any class or series of its capital stock.
Section 4.05. DUE AUTHORIZATION; EXECUTION AND DELIVERY.
(a) Subject to the issuance of the Final Orders and any required
compliance with the HSR Act, the Company has full corporate power and authority
to enter into and perform this Agreement and any documents or instruments to be
entered into as contemplated or required by this Agreement (collectively, the
"ANCILLARY DOCUMENTS") and to which the Company is a party, and to carry out the
transactions contemplated hereby and thereby. Prior to the Closing, the Company
will have taken all requisite action to approve the execution and delivery of
this Agreement and the Ancillary Documents to which it is a party and the
transactions contemplated hereby and thereby. This Agreement and each of the
Ancillary Documents to which the Company is a party constitute the legal, valid
and binding obligation of the Company, 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 (whether such rights are considered at law
or in equity).
(b) Subject to the issuance of the Final Orders and any required
compliance with the HSR Act, Transferor has full power and authority to enter
into and perform this Agreement and any Ancillary Documents to which it is a
party, and to carry out the transactions contemplated hereby and thereby. Prior
to the Closing, Transferor will have taken all requisite action to approve the
execution and delivery of this Agreement and the Ancillary Documents to which it
is a party and the transactions contemplated hereby and thereby. This Agreement
and each of the Ancillary Documents to which Transferor is a party constitutes
the legal, valid and binding obligation of such Transferor, 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 (whether such
rights are considered at law or in equity).
Section 4.06. NONCONTRAVENTION.
(a) The execution, delivery and performance by the Company and
Transferor of this Agreement and the Ancillary Documents to which each is a
party, and the consummation by the Company and Transferor of the transactions
contemplated hereby and thereby do not and will not (i) conflict with or result
in a violation of any provision of the charter or bylaws of the
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Company or Transferor, (ii) conflict with or result in a violation of any
provision of, or constitute (with or without the giving of notice or the passage
of time or both) a default under, or give rise (with or without the giving of
notice or the passage of time or both) to any right of termination, cancellation
or acceleration under, or require any consent, approval, authorization or waiver
of, or notice to, any party to, any bond, debenture, note, mortgage or
indenture, or any material Company Agreement (as defined in Section 4.22) or
other material instrument or obligation, to which the Company is a party or by
which the Company or its assets may be bound or any FCC Licenses held by the
Company, (iii) result in the creation or imposition of any Encumbrance upon any
of the assets of the Company, except for Encumbrances in favor of Acquirer, or
(iv) assuming compliance with the matters referred to in Section 4.07, violate
any material Law binding upon the Company or its assets, except for (A) such
consents, approvals, authorizations and waivers that have been obtained and are
unconditional and in full force and effect and such notices that have been duly
given and (B) such consents, approvals, authorizations, waivers and notices that
are disclosed on SCHEDULE 4.06(A).
(b) The execution, delivery and performance by Transferor of this
Agreement and the Ancillary Documents to which Transferor is a party, and the
consummation by Transferor of the transactions contemplated hereby and thereby
do not and will not (i) conflict with or result in a violation of any provision
of, or constitute (with or without the giving of notice or the passage of time
or both) a default under, or give rise (with or without the giving of notice or
the passage of time or both) to any right of termination, cancellation or
acceleration under, or require any consent, approval, authorization or waiver
of, or notice to, any party to, any bond, debenture, note, mortgage or
indenture, or any material lease, contract, agreement or other instrument or
obligation, to which Transferor is a party or by which Transferor or any of the
assets of Transferor may be bound, (ii) result in the creation or imposition of
any Encumbrance upon any of the assets of Transferor, except for Permitted
Encumbrances, or (iii) assuming compliance with the matters referred to in
Section 4.07, violate any Law binding upon Transferor or the assets of
Transferor, except, in the case of clause (i) above, for (A) such consents,
approvals, authorizations and waivers that have been obtained and are
unconditional and in full force and effect and such notices that have been duly
given and (B) such consents, approvals, authorizations, waivers and notices that
are disclosed on SCHEDULE 4.06(B).
Section 4.07. GOVERNMENTAL APPROVALS. No material 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 Company and Transferor of this Agreement or
the consummation of the transactions contemplated hereby, other than those of
the FCC or those under the HSR Act, and other than (i) filings with or approvals
by other Governmental Authorities to occur in the ordinary course following the
consummation of the transaction contemplated by this Agreement, and (ii) filings
with, or approvals of, Governmental Authorities which may be necessary due to
the status of Acquirer or any Affiliate of Acquirer. Each of the filings and
approvals included in clauses (i) and (ii) above is described on SCHEDULE 4.07.
Section 4.08. SUBSIDIARIES. The Company does not own (and at the time
of the Closing will not own), directly or indirectly, any capital stock or other
securities of any corporation or have any direct or indirect equity or ownership
interest in any other Person.
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Section 4.09. SHARES. Transferor is (and at the Closing will be) the
sole record and beneficial owner of, and upon consummation of the transactions
contemplated hereby Acquirer will acquire valid title to, the Shares, free and
clear of all Encumbrances, other than Encumbrances in favor of Acquirer, or
restrictions on transfer that may be imposed by federal or state securities
laws.
Section 4.10. INVESTMENT INTENT. Transferor is acquiring the Acquirer
Shares for its own account for investment and not with a view to, or for sale or
other disposition in connection with, any distribution of all or any part
thereof. Transferor understands that it must bear the economic risk of this
investment indefinitely unless it sells the Purchase Shares (i) in an offering
covered by a registration statement filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "SECURITIES ACT"),
covering such Acquirer Shares or (ii) pursuant to an applicable exemption under
the Securities Act. In acquiring such Acquirer Shares, Transferor is not
offering or selling, and will not offer or sell, for Acquirer in connection with
any distribution of the Acquirer Shares, and Transferor does not have a
participation and will not participate in any such undertaking or in any
underwriting of such an undertaking except in compliance with applicable federal
and state securities laws.
Section 4.11. DISCLOSURE OF INFORMATION. Transferor acknowledges that
it or its representatives have been furnished with substantially the same kind
of information regarding Acquirer and its business, assets, results of
operation, and financial condition as would be contained in a registration
statement prepared in connection with a public sale of the Acquirer Shares.
Transferor further represents that it has had an opportunity to ask questions of
and receive answers from Acquirer regarding Acquirer and its business, assets,
results of operation and financial condition and the terms and conditions of the
issuance of the Acquirer Shares. The foregoing, however, shall not limit or
modify the representations and warranties of Acquirer in Article V and shall not
limit the disclosure requirements of applicable federal and state securities
laws.
Section 4.12. RESTRICTED SECURITIES. Transferor understands that the
Acquirer Shares will not have been registered pursuant to the Securities Act or
any applicable state securities laws, that the Acquirer Shares will be
characterized as "restricted securities" under federal securities laws, and that
under such laws and applicable regulations the Acquirer Shares cannot be sold or
otherwise disposed of without registration under the Securities Act or an
exemption therefrom. In this connection, Transferor represents that it is
familiar with Rule 144 promulgated under the Securities Act, as currently in
effect, and understands the resale limitations imposed thereby and by the
Securities Act. Stop transfer instructions may be issued to the transfer agent
for securities of Acquirer (or a notation may be made in the appropriate records
of Acquirer) in connection with the Acquirer Shares.
Section 4.13. LEGEND. It is agreed and understood by Transferor that
the certificates representing the Acquirer Shares shall each conspicuously set
forth on the face or back thereof, in addition to any legends required by Law or
other agreement, a legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
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OFFERED OR SOLD EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER
(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSITITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN
"ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THE
SECURITY IN AN OFFSHORE TRANSACTION, OR (D) HAS RECEIVED SUCH SHARES PURSUANT TO
A VALID PRIVATE PLACEMENT UNDER SECTION 4 OF THE SECURITIES ACT, (2) AGREES THAT
IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL
OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY
THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES
TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
TRANSFER AGENT A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
(THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRANSFER AGENT), (D) OUTSIDE
THE UNITED STATES TO PERSONS OTHER THAN U.S. PERSONS IN OFFSHORE TRANSACTIONS
MEETING THE REQUIREMENTS OF RULE 904 UNDER REGULATION S UNDER THE SECURITIES
ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE SECURITIES ACT (IF AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH
PERSON TO WHOM THIS SECURITIY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED
STATES" AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT.
Section 4.14. FINANCIAL STATEMENTS. The Company has delivered to
Acquirer copies of (i) the Company's December 31, 1999 unaudited balance sheet
and (ii) the Company's March 31, 2000 (the "BALANCE SHEET DATE") unaudited
balance sheet (the "REFERENCE BALANCE SHEET"), copies of which are included in
SCHEDULE 4.14 (collectively, the "FINANCIAL STATEMENTS"). The Financial
Statements have been prepared from the books and records of the Company in
conformity with generally accepted accounting principles ("GAAP") applied on a
basis consistent with preceding periods throughout the periods involved, except
that the unaudited Financial Statements are not accompanied by notes or other
textual disclosure required by GAAP. No financial statements of any other Person
other than the Company are required under GAAP to be included in the Financial
Statements.
Section 4.15. ABSENCE OF UNDISCLOSED LIABILITIES. The Company does not
have any liability or obligation (whether accrued, absolute, contingent,
unliquidated, or otherwise, whether or not known to the Company, and whether due
or to become due), except (i) Liabilities reflected on the Reference Balance
Sheet, (ii) Liabilities which have arisen as a result of Acquirer's actions or
inaction pursuant to the TBA, (iii) Liabilities specifically set forth on
SCHEDULE 4.15, (iv) Liabilities created or incurred as a result of the action or
inaction of Acquirer or its Affiliates under the TBA, (v) Liabilities created or
incurred under the Bridge
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Loan Agreement and (vi) other Liabilities which, in the aggregate, are not
material to the Company.
Section 4.16. ABSENCE OF CERTAIN CHANGES. Except as disclosed on
SCHEDULE 4.16, since the Balance Sheet Date (i) there has not been any event or
condition that might reasonably be expected to result in a Material Adverse
Effect on the Company, (ii) the Company has not taken any of the actions set
forth in Section 6.01 or in Articles VI or VII of the Bridge Loan Agreement,
except as permitted thereunder and (iii) no negative change with respect to the
FCC Licenses (other than any such changes which have resulted from Acquirer's or
its Affiliates actions or inaction pursuant to the TBA) has occurred.
Section 4.17. TAX MATTERS. Except as disclosed on SCHEDULE 4.17, the
Company has (i) duly filed all Tax Returns required to be filed by or with
respect to it with the IRS or other applicable taxing authority (other than Tax
Returns where a failure to file would not be, in the aggregate, material), (ii)
paid all Taxes due, or claimed by any taxing authority to be due, from or with
respect to it (other than Taxes where a failure to pay would not, in the
aggregate, be material), except Taxes that are being contested in good faith and
for which adequate reserves have been set aside as disclosed on SCHEDULE 4.17,
and (iii) made all material deposits required with respect to Taxes. All Tax
Returns referred to in the preceding sentence were, and in the case of Tax
Returns not yet filed, will be, true, correct and complete when filed in all
material respects. All material Taxes that the Company is or was required to
withhold or collect have been duly withheld or collected, including, without
limitation, all employment related Taxes and withholdings, and, to the extent
required, have been or will be timely paid to the proper Governmental Authority.
To the knowledge of the Company and Transferor, there has been no issue raised
or adjustment proposed (and none is pending) by the IRS or any other taxing
authority in connection with any Tax Returns of the Company. No waiver or
extension of any statute of limitations as to any federal, state, local or
foreign tax matter has been given by or requested from the Company. The Company
has not filed a consent under Section 341(f) of the Code. There are no tax liens
upon any of the properties or assets of the Company, other than liens for Taxes
not yet due and payable. None of the property of the Company (i) is "tax- exempt
use property" within the meaning of Section 168(h) of the Code, (ii) is subject
to a tax benefit transfer lease subject to the provisions of former Section
168(f)(8) of the Internal Revenue Code of 1954, or (iii) secures any debt the
interest on which is exempt from income Tax under Section 103 of the Code. The
charges, accruals and reserves with respect to Taxes on the books of the Company
(excluding any provision for deferred income Taxes established to reflect timing
differences between book and tax income) for all tax periods (or portions
thereof) ending on or before the Closing Date (including any period for which no
Tax Return has yet been filed) are adequate in all material respects. There is
no tax sharing agreement that will require any payment by the Company after the
date of this Agreement. Except as set forth on SCHEDULE 4.17, the Company has
not (i) applied for any tax ruling, (ii) entered into a closing agreement with
any taxing authority, (iii) filed an election under Section 338(g) or Section
338(h)(10) of the Code or (iv) been a party to any agreement or arrangement that
would result in the payment of any "excess parachute payment" within the meaning
of Section 280G of the Code, or the payment of any compensation that is not
deductible under Section 162(m) of the Code. The Company is not, and has not
been, a "United States real property holding corporation" within the meaning of
Section 897 of the Code. The Company (i) has not agreed to and is not required
to make any adjustment pursuant to Section 481(a) of the Code; and
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0(ii) has no knowledge that the IRS has proposed any such adjustment or change
in accounting method with respect to the Company or that there is pending an
application with any Taxing authority requesting permission for any change in
accounting method. The Company does not own an interest in any (i) domestic
international sales corporation, (ii) foreign sales corporation, (iii)
controlled foreign corporation or (iv) passive foreign investment company.
Except as set forth on SCHEDULE 4.17, during the previous two years, the Company
has not engaged in any exchange under which the gain realized on such exchange
was not recognized due to Section 1031 of the Code. Except as set forth on
SCHEDULE 4.17, the Company does not have in effect any election for federal
income tax purposes under Sections 108, 1017, 1033 or 4977 of the Code. The
Company has not been informed or notified that any of its income, business,
assets, operations or activities is subject to Tax by a Governmental Authority
where the required Tax Return(s) have not been filed by the Company. The Company
has disclosed on its federal income Tax Returns all positions taken therein that
could give rise to a substantial understatement of federal income Tax within the
meaning of the Code Section 6662. The Company has no liability for the Taxes of
any other party under Reg. Section 1.1502-6 (or any similar provision of state,
local or foreign law).
Section 4.18. COMPLIANCE WITH LAWS. The Company has complied with all
material Laws (including without limitation the rules, regulations and practices
of the Commission), and neither the Company nor Transferor has received any
written notice of any claim, which has not been dismissed or otherwise disposed
of, that the Company has not so complied.
Section 4.19. TITLE TO PROPERTIES.
(a) As of the Closing Date, the Company will have good and marketable
title, or with respect to the material assets which it then leases, valid
leasehold rights, to all of the material assets owned by it, free and clear of
all Encumbrances other than Permitted Encumbrances.
(b) SCHEDULE 4.19 sets forth a complete and accurate list of all
material real property, leasehold interests in real property and other interests
in real property owned by the Company, and the Company has made available to
Acquirer true and correct copies of all deeds, title documents and mortgages
with respect thereto.
(c) As of the Closing Date, the buildings, plants, structures and
equipment, if any, of the Company will be (i) in reasonably good operating
condition, ordinary wear and tear excepted, and will have been maintained by the
Company in accordance with standard industry practice, (ii) suitable for the
purposes used and (iii) adequate and sufficient for the normal operation of the
Station, as presently conducted.
Section 4.20. FCC LICENSES.
(a) The FCC Licenses identified on SCHEDULE 4.20(A) comprise all of the
FCC licenses, permits and other authorizations, including any temporary waiver
or special temporary authorization, required in order to operate the Station as
currently operated.
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(b) No action or proceeding is pending or threatened before the
Commission or other Governmental Authority for the cancellation or material
adverse modification of the FCC Licenses. The Company is current with all
reports, filings and other matters relating to the Station that the Company is
required to file with the Commission and the Company is not delinquent in the
payment of any material fees and charges relating to the Station that are due to
the Commission.
(c) As of the Closing Date, the Company will be the authorized legal
holder of each of the FCC Licenses and the FCC Licenses will be in full force
and effect and no action or proceeding will be pending or threatened before the
Commission for the cancellation of the FCC Licenses.
Section 4.21. LITIGATION. There are no Governmental Orders and no
Actions pending or, to the Company's and Transferor's knowledge, threatened
against or affecting the Company, Transferor or the Station which challenges the
validity or propriety of any of the transactions contemplated by this Agreement.
Section 4.22. CERTAIN AGREEMENTS. Set forth on SCHEDULE 4.22 is an
accurate and complete list of all contracts, agreements, leases, licenses,
plans, arrangements or commitments, written or oral (collectively, "agreements")
(i) relating to the borrowing of money by the Company or to the guarantee or
assumption by the Company of any obligations of others, or (ii) pursuant to
which the Company is obligated to expend or has the right to receive more than
$50,000 in any 12-month period and which is not subject to cancellation by the
Company upon less than 60 days' notice without penalty, or (iii) not entered
into in the ordinary course of business, or (iv) that is a collective bargaining
agreement to or with any labor union or other employee representative of a group
of employees, or (v) creating any joint venture, partnership or other
arrangement (however named) involving a sharing or payment of profits, losses,
costs, liabilities, sales or purchases. Each of such agreements (the "COMPANY
AGREEMENTS") is a valid and binding agreement of the Company and (to the
knowledge of the Company) the other party or parties thereto, enforceable
against the Company and (to the knowledge of the Company) such other party or
parties in accordance with its terms. The Company is not in breach of or in
default under, nor has any event occurred which (with or without the giving of
notice or the passage of time or both) would constitute a default by the Company
under, any provision of any Company Agreement (other than any breach or default
resulting from the action or inaction of Acquirer or any of its Affiliates under
the TBA), and the Company has not received any notice from, or given any notice
to, any other party indicating that the Company is in breach of or in default
under any of such agreements. To the knowledge of the Company and Transferor, no
other party to any of such agreements is in breach of or in default under such
agreements, nor has any assertion been made by the Company of any such breach or
default.
Section 4.23. ERISA. Neither the Company nor any of its affiliates
sponsor, maintain, contribute to (other than indirectly through the Administaff
Client Service Agreement referred to below) or administer any employee benefit
plan within the meaning of Section 3(3) of ERISA, including a multiemployer plan
(within the meaning of Section 4001(a) of ERISA). All fees required to be paid
by the Company to Administaff Companies, Inc. pursuant to the Client Service
Agreement between the Company and Administaff Companies, Inc. are current
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as of the date of this Agreement and will be current as of the Closing Date. For
purposes of this Section and Section 7.02(d) only, an "affiliate" of any person
means any other person which, together with such person, would be treated as a
single employer under Section 414 of the Code.
Section 4.24. INSURANCE. The Company maintains the policies of
insurance described on SCHEDULE 4.24. All such policies are in full force and
effect and all premiums have been paid in full to the extent payment was due.
Section 4.25. BROKERAGE FEES. Neither Transferor nor its Affiliates
have retained any financial advisor, broker, agent, or finder or paid or agreed
to pay any financial advisor, broker, agent, or finder on account of this
Agreement or any transaction contemplated hereby, other than Bluestone Capital
Partners, L.P. and Americom Radio Brokers, Inc. (the "TRANSFEROR'S BROKERS").
Transferor shall pay all costs and expenses of Transferor's Brokers in
accordance with agreements therewith and jointly and severally indemnify and
hold harmless Acquirer from and against any and all losses, claims, damages and
liabilities (including legal and other expenses reasonably incurred in
connection with investigating or defending any claims or actions) with respect
to any finder's fee, brokerage commission or similar payment in connection with
any transaction contemplated hereby asserted by any person on the basis of any
act or statement made or alleged to have been made by Transferor.
Section 4.26. CERTAIN PAYMENTS. Since the inception of the Company,
none of the Company or its Subsidiaries, or any director, officer, employee, or,
to the knowledge of the Company, any agent (or employee thereof) of the Company
or any Subsidiary or any other Person associated with or acting for or on behalf
of the Company or any Subsidiary, other than Acquirer or any Affiliate of
Acquirer, has directly or indirectly (a) made any illegal contribution, gift,
bribe, rebate, payoff, influence payment, kickback or other payment to any
Person, private or public, regardless of form, whether in money, property or
services (i) to obtain favorable treatment in securing business, (ii) to pay for
favorable treatment for business secured or (iii) to obtain special concessions
or for special concessions already obtained, for or in respect of the Company.
Section 4.27. EMPLOYEES. Except as set forth on SCHEDULE 4.27, the
Company has no employees as of the date of this Agreement, and, as of the
Closing Date, it shall have no employees or obligations or liabilities with
respect to former employees, other than those hired pursuant to the transactions
contemplated hereby or as may be required under applicable Law.
Section 4.28. LABOR AGREEMENTS AND ACTIONS. The Company is not bound by
or subject to (and none of the Company's assets or properties is bound by or
subject to) any written or oral, express or implied, contract, commitment or
arrangement with any labor union, and no labor union has requested or, to the
knowledge of the Company, has sought to represent any of the employees,
representatives or agents of the Company. There is no strike or other labor
dispute involving the Company pending, or, to the knowledge of the Company,
threatened, nor is the Company aware of any labor organization activity
involving employees of the Company.
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Section 4.29. ENVIRONMENTAL. The Company has not received any written
notice of any investigation or inquiry by any Governmental Authority under any
Environmental Laws relating to the ownership or operation of the Station. The
Company has not disposed of any Hazardous Material on any of the assets of the
Company in violation of Environmental Laws and, to the Company's knowledge, no
condition exists on any of the assets of the Company which would subject the
assets of the Company to any remedial obligations under any Environmental Laws.
Section 4.30. PROPRIETARY INFORMATION AND OTHER RIGHTS. The Company has
title and ownership of all patents, patent applications, trademarks, service
marks, trade names, copyrights, trade secrets, licenses, information,
proprietary rights, domain names and processes (collectively, "PROPRIETARY
INFORMATION") necessary for its business as now conducted without any conflict
with or infringement of the rights of others. The Company is not aware of any
particular intellectual property that it believes is essential to its product or
service development, to which it cannot obtain sufficient rights on reasonable
terms. There are no outstanding options, licenses, or agreements of any kind
relating to the foregoing, nor is the Company bound by or a party to any
options, licenses or agreements of any kind with respect to the Proprietary
Information of any other Person. The Company has not violated and has not
received any communications alleging that the Company has violated or, by
conducting its business as proposed, would violate any of the Proprietary
Information of any other Person. To the knowledge of the Company, none of its
employees is obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would interfere with
the use of his or her best efforts to promote the interests of the Company or
that would conflict with the Company's business as currently conducted. Neither
the execution nor delivery of this Agreement nor the carrying on of the
Company's business by the employees of the Company nor the conduct of the
Company's business as currently proposed, will, to the Company's knowledge,
conflict with or result in a breach of the terms, conditions or provisions of,
or constitute a default under, any contract, covenant or instrument under which
any of such employees is now obligated.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACQUIRER
Acquirer hereby represents and warrants to the Company and Transferor
as follows:
Section 5.01. ORGANIZATION AND GOOD STANDING. Acquirer 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.
Section 5.02. DUE AUTHORIZATION; EXECUTION AND DELIVERY. Subject to the
issuance of the Final Orders and any required compliance with the HSR Act,
Acquirer has full power and authority to enter into this Agreement and the
Ancillary Documents to which it is a party and to carry out its obligations
hereunder. The execution and delivery by Acquirer of this Agreement and the
Ancillary Documents to which it is a party and the consummation by it of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action
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on the part of Acquirer. This Agreement and the Ancillary Documents to which
Acquirer is a party have been duly executed and delivered by Acquirer and
constitute the legal, valid and binding obligations of Acquirer, enforceable
against it in accordance with their respective terms, except as may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally or general equitable principles. Neither
the execution and delivery by Acquirer of this Agreement or the Ancillary
Documents to which it is a party, nor the consummation of the transactions
contemplated hereby and thereby will: (i) conflict with or result in a breach of
the organizational documents of Acquirer; (ii) subject to the issuance of the
Final Orders, 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 Acquirer or any of its Affiliates is a
party or by which it or any of its Affiliates is bound or affected.
Section 5.03. GOVERNMENTAL CONSENTS. No consent, approval,
authorization, license, exemption of, filing or registration with any court,
governmental authority or administrative agency is required by Acquirer 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.
Section 5.04. 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 Acquirer's knowledge,
threatened against or affecting Acquirer which challenges the validity or
propriety of any of the transactions contemplated by this Agreement.
Section 5.05. BROKERAGE FEES. No broker, finder, financial advisor or
investment banker is entitled to any brokerage, finder's or other fee,
commission or expense reimbursement in connection with the transactions
contemplated by this Agreement as a result of any agreement or action of
Acquirer, other than Lehman Brothers, Inc. (the "ACQUIRER'S BROKER"). Acquirer
shall pay all costs and expenses of the Acquirer's Broker in accordance with
agreements therewith, and indemnify and hold harmless Transferor and its
Affiliates from and against any and all losses, claims, damages and liabilities
(including legal and other expenses reasonably incurred in connection with
investigating or defending any claims or actions) with respect to any finder's
fee, brokerage commission or similar payment in connection with any transaction
contemplated hereby asserted by any person on the basis of any act or statement
made or alleged to have been made by Acquirer or any of its Affiliates.
Section 5.06. QUALIFICATION. Acquirer is legally, financially and
otherwise qualified to be the licensee of, acquire, own and operate the Station
under the Communications Act and the rules, regulations and policies of the FCC.
There are no facts that would, under existing law and the existing rules,
regulations, policies and procedures of the FCC, disqualify Acquirer as an
assignee of the FCC Licenses or as the owner and operator of the Station. No
waiver of any FCC rule or policy is necessary for the FCC Consents to be
obtained. There is no action, suit or proceeding pending or, to the knowledge of
Acquirer, threatened against Acquirer which questions the legality or propriety
of the transactions contemplated by this Agreement or could materially adversely
affect Acquirer's ability to perform its obligations hereunder. Acquirer
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has and will have available on the Closing Date sufficient funds to enable it to
consummate the transactions contemplated hereby.
Section 5.07. ACQUIRER SHARES. The Acquirer Shares have been duly
authorized for issuance and, if and when delivered by Acquirer in accordance
with the provisions of this Agreement, will be validly issued fully paid and
nonassessable. The issuance of the Acquirer Shares pursuant to this Agreement is
not subject to any preemptive or similar rights.
ARTICLE VI
CERTAIN COVENANTS AND OTHER AGREEMENTS
Section 6.01. CONDUCT AND PRESERVATION OF BUSINESS.
(a) Except actions or inaction of Acquirer or its Affiliates pursuant
to the TBA, or as expressly provided in this Agreement, during the period from
the date hereof to the Closing, the Company shall not, and Transferor shall not
permit the Company to, without the prior written consent of Acquirer:
(i) incur, guarantee or assume any indebtedness for borrowed
money in respect of the Station, other than indebtedness to Acquirer, or in
accordance with the Bridge Loan Agreement;
(ii) mortgage or pledge any of the assets of the Company to
any person other than Acquirer, and other than in accordance with the Bridge
Loan Agreement, or create or suffer to exist any Encumbrance thereupon, other
than the Permitted Encumbrances and Encumbrances in favor of Acquirer, or in
accordance with the Bridge Loan Agreement;
(iii) sell, lease, transfer or otherwise dispose of, directly
or indirectly, any material part of the assets of the Company, other than in
accordance with the Bridge Loan Agreement;
(iv) amend, modify or change any existing material lease,
contract, FCC License or agreement relating to the Station;
(v) take any action which would or might make any of the
representations or warranties of Transferor or the Company contained in this
Agreement untrue or inaccurate as of any time from the date of this Agreement to
the Closing or would or might result in any of the conditions set forth in this
Agreement not being satisfied;
(vi) issue or sell any of the capital stock of the Company, or
grant or commit to grant any options, warrants or other rights to subscribe for,
or purchase, or otherwise acquire, any shares of capital stock of the Company,
or issue or commit to issue any securities convertible into or exchangeable for
shares of capital stock of the Company;
(vii) change or amend the Articles of Incorporation or Bylaws
of the Company;
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(viii) allow any material contract of the Company to be
terminated or to be modified prior to the full term of the contract; or
(ix) authorize or propose, or agree in writing or otherwise to
take, any of the actions described in this Section.
Section 6.02. ACCESS TO RECORDS AND PROPERTIES. Subject to requirements
of confidentiality imposed by contract or by law, Transferor will, and
Transferor will cause the Company to, (a) make available to Acquirer and its
accountants, counsel and other representatives, access during normal business
hours to the properties, books and records of Transferor relating to the Company
and to the properties, books and records of the Company, and will allow
Transferor's and the Company's officers and representatives to be available to
Acquirer for consultation, and (b) furnish Acquirer with copies of all such
contracts, books and records, and other existing documents and data relating to
the Company or the assets of the Company as Acquirer may reasonably request, and
(c) furnish Acquirer with such additional financial, operating, and other data
and information relating to the Company or the assets of the Company as Acquirer
may reasonably request.
Section 6.03. TAXES; OTHER CHARGES. All sales, use, value added,
transfer, registration, stamp, deed and similar Taxes ("TRANSFER TAXES")
resulting from the consummation of the transactions contemplated hereby shall be
borne by Transferor. The parties shall cooperate in obtaining all exemptions
from such Transfer Taxes. Transferor shall file all necessary documentation with
respect to, and make all payments of, such Transfer Taxes on a timely basis.
Section 6.04. BEST EFFORTS. The Company, Transferor and Acquirer shall
take all reasonable action necessary to consummate the transactions contemplated
by this Agreement and will use all necessary and reasonable means at its
disposal to obtain all necessary consents and approvals of other persons and
Governmental Authorities required to enable it to consummate the transactions
contemplated by this Agreement, including the consent of the FCC and any
necessary filings and consents under the HSR Act. Except as otherwise provided
herein, each of the Company, Transferor and Acquirer acknowledges and agrees
that it shall pay all costs, fees and expenses incurred by it in obtaining such
necessary consents and approvals (it being understood that Acquirer shall pay
all filing fees in connection with notification filings under the HSR Act). Each
party shall promptly 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, to the extent practicable, negotiate in good faith
to amend, modify or restructure the transactions contemplated hereby so as to be
consistent with FCC rules and regulations.
Section 6.05. PUBLIC ANNOUNCEMENTS. Prior to the Closing Date, all
notices to third parties and other publicity relating to the transactions
contemplated by this Agreement shall be jointly planned by Transferor and
Acquirer; it being understood by the Company and
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Transferor that Acquirer is a public company subject to disclosure requirements,
and this covenant shall be subject to Acquirer's requirements thereunder.
Section 6.06. REGISTRATION RIGHTS. Upon Closing, Acquirer and
Transferor shall enter into a registration rights agreement in substantially the
same form as the Form of Registration Rights Agreement attached hereto as
EXHIBIT 6.06.
Section 6.07. COMPLIANCE WITH COVENANTS. Between the date hereof and
the Closing, the Company and Transferor will comply in all material respects
with all covenants set forth in Articles VI and VII of the Bridge Loan Agreement
and Acquirer shall comply, and shall cause its Affiliates to comply, in all
material respects with all covenants of Acquirer and its Affiliates set forth in
the TBA.
Section 6.08. NOTIFICATION. Between the date hereof and the Closing,
the Company and Transferor will promptly notify Acquirer in writing if the
Company or Transferor become aware of any fact or condition that causes or
constitutes a breach of any of the Company's or Transferor's representations and
warranties as of the date hereof, or if the Company or Transferor become aware
of the occurrence after the date hereof of any fact or condition that would
(except as expressly contemplated by this Agreement) cause or constitute a
breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition. During the same period, the Company and Transferor will promptly
notify Acquirer of the occurrence of any breach of any covenant of the Company
or Transferor in this Section 6 or Article VI or VII of the Bridge Loan
Agreement or of the occurrence of any event that may make the satisfaction of
the conditions in Section 3 impossible or unlikely. During the same period,
Acquirer will promptly notify the Company and Transferor of the occurrence of
any breach of any covenant of the Acquirer in this Section 6 or the TBA or of
the occurrence of any event that may make the satisfaction of the conditions in
Section 3 impossible or unlikely.
Section 6.09. NO NEGOTIATION. Until such time, if any, as this
Agreement is terminated pursuant to Article VIII, the Company and Transferor
will not directly or indirectly solicit, initiate, or encourage any inquiries or
proposals from, discuss or negotiate with, or provide any non-public information
to, any person (other than Acquirer) relating to any transaction involving the
sale of the assets of the Company, or any of the capital stock of the Company,
or any merger, consolidation, business combination, or similar transaction
involving the Company.
Section 6.10. TAX COVENANTS.
(a) Without the prior written consent of Acquirer, which consent shall
not be unreasonably withheld, the Company shall not make or change any material
Tax election, change any annual Tax accounting period, adopt or change any
method of Tax accounting, file any material amended Tax Return, enter into any
closing agreement, settle any Tax claim or assessment, surrender any right to
claim a Tax refund, consent to the extension or waiver of the limitations period
applicable to any Tax claim or assessment, surrender any right to claim a Tax
refund or take or omit to take any other action outside the ordinary course of
business if such
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action or omission would have the effect of materially increasing the Tax
liability of the Company (including any such increase that would occur in Tax
periods after the Closing Date).
(b) All Tax Returns not required to be filed on or before the date of
this Agreement (i) will, to the extent required to be filed on or before the
Closing Date, be filed in accordance with applicable Laws, and (ii) as of the
time of filing, will correctly reflect the income, business, assets, operations,
activities and status of the Company and any other information required to be
shown therein in all material respects.
Section 6.11. POST-CLOSING TAX MATTERS.
(a) Transferor shall file or cause to be filed when due all Tax Returns
due to be filed on or prior to the Closing Date and all U.S. federal, state and
local income and franchise Tax Returns with respect to the Company with respect
to the taxable periods ending on or before the Closing Date.
(b) Acquirer shall file or cause to file when due all other Tax Returns
with respect to the Company due to be filed after the Closing Date.
(c) After the Closing Date, each of Transferor and Acquirer shall:
(i) assist (and cause their respective Affiliates to assist)
the other party in preparing any Tax Returns which such other party is
responsible for preparing and filing in accordance with this Agreement;
(ii) cooperate fully in preparing for any audits of, or
disputes with taxing authorities regarding, any Tax Returns and payments in
respect thereof;
(iii) make available to the other and to any taxing authority
as reasonably requested all relevant information, records, and documents
relating to Taxes;
(iv) provide timely notice to the other in writing of any
pending or proposed audits or assessments with respect to Taxes for which the
other may have a liability under this Agreement;
(v) furnish the other with copies of all relevant
correspondence received from any taxing authority in connection with any audit
or information request with respect to any Taxes referred to in subsection (iv)
above; and
(vi) bear the other party's reasonable out-of-pocket expenses
in complying with a request by a party for the other party's assistance or
cooperation to the extent that those expenses are attributable to fees and other
costs of unaffiliated third- party service providers.
6.12. MODIFICATION APPLICATION. Neither Transferor nor the Company
shall take any action to terminate the Modification Application without the
prior written consent of Acquirer. Transferor and the Company shall, with the
agreement of Acquirer and at Acquirer's expense,
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take such actions as are required by the Commission in order to obtain the FCC's
approval of the Modification Application.
6.13. EMPLOYMENT MATTERS. Set forth on SCHEDULE 6.13 is an accurate and
complete list of the names, positions and salaries of the local management
personnel of the Company (the "MANAGEMENT PERSONNEL"). Between the date hereof
and the Closing, The Company shall deliver to Purchaser a revised SCHEDULE 6.13
updating the information as to the Management Personnel.
ARTICLE VII
INDEMNIFICATION
Section 7.01. 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 for twelve months after the Closing Date, except for
(i) the representations and warranties provided in Sections 4.01, 4.04, 4.05,
4.06(a)(i), 4.20(c), 4.23, 4.25, 5.01, 5.02, 5.05, 5.06 and 5.07, which shall
survive indefinitely, and (ii) the representations and warranties provided in
Section 4.17, which shall not survive the Closing.
Section 7.02. INDEMNIFICATION BY TRANSFEROR. Subject to the limitations
set forth in Sections 7.01 and 7.04, Transferor shall indemnify and hold
harmless Acquirer and its officers, directors, employees, agents, permitted
assigns, Affiliates and successors thereof 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 (collectively,
"LOSSES") suffered, sustained, incurred or required to be paid by Acquirer and
arising from the breach of any written representation, warranty, agreement or
covenant of Transferor or the Company contained in this Agreement, except to the
extent that the same result in a reduction in the Purchase Price pursuant to
Section 2.02;
(b) all customary costs and expenses (including, without limitation,
customary attorneys' fees, interest and penalties) incurred by Acquirer in
connection with any action, suit, proceeding, demand, assessment or judgment
incident to any of the matters indemnified against in this Section 7.02;
(c) any Losses arising from any cleanup or other remediation of or
arising from any cleanup, removal, containment or other remediation
(collectively, "CLEANUP") required by applicable law or regulation of, or any
other damage arising from, any Hazardous Substance, Cleanup or breach of
Environmental Law; and
(d) any Losses arising from or in connection with the maintenance by
Transferor, the Company or any affiliate of Transferor of any employee benefit
plan (as defined in Section 3(3) of ERISA), or by reason of the Company's
contractual arrangement with the Administaff Companies, Inc. (the "CLIENT
SERVICE AGREEMENT"), including, without limitation, any liability to the Pension
Benefit Guaranty Corporation, the IRS, a Multiemployer Plan or
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employees or former employees (or their beneficiaries) of Transferor, the
Company or any affiliate of Transferor or the Company arising out of or relating
to the Client Service Agreement and/or the maintenance, administration or
termination or any other reason of any such plans, the trusts related to such
plans, or employment with Transferor, the Company or any affiliate of Transferor
or the Company on or prior to the Closing Date.
THE PROVISIONS OF THIS INDEMNITY SHALL NOT BE THE SOLE REMEDY IN THE
CASE OF INTENTIONAL MISREPRESENTATIONS, FRAUD, WILLFUL MISCONDUCT OR GROSS
NEGLIGENCE.
Section 7.03. INDEMNIFICATION BY ACQUIRER. Subject to the limitations
set forth in Sections 7.01 and 7.04, Acquirer shall indemnify and hold the
Company and Transferor and the officers, directors, employees, trustees, agents,
permitted assigns, Affiliates and successors thereof harmless from, against, for
and in respect of:
(a) any and all Losses suffered, sustained, incurred or required to be
paid by Transferor and arising from the breach of any written representation,
warranty, agreement or covenant of Acquirer contained in this Agreement, or the
ownership and operation by Acquirer of the Station after the Closing;
(b) any and all Losses relating to the Liabilities of the Company
arising from and after the Closing Date;
(c) all reasonable costs and expenses (including, without limitation,
attorneys' fees, interest and penalties) incurred by Transferor or the Company
in connection with any action, suit, proceeding, demand, assessment or judgment
incident to any of the matters indemnified against in this Section 7.03; and
(d) Notwithstanding any other provision in this Agreement, any
indemnification payment made by Acquirer to the Transferor pursuant to this
Section VII shall be made in Acquirer's shares based on the fair market value of
such shares on the date of delivery of such shares, rather than in cash or other
consideration. For this purpose, the "fair market value" of a share of stock for
any date shall be the average closing price per share of such stock as listed on
NASDAQ for the ten (10) trading day period immediately preceding the business
day preceding such date.
The PROVISIONS OF THIS INDEMNITY SHALL NOT BE THE SOLE REMEDY IN THE
CASE OF INTENTIONAL MISREPRESENTATIONS, FRAUD, WILLFUL MISCONDUCT OR GROSS
NEGLIGENCE.
Section 7.04. INDEMNIFICATION PROCEDURES. 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
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in Article VII hereof, stating the nature and basis of said claims and the
amounts thereof, to the extent known. The failure to so notify, or any delay in
so notifying, the indemnifying party will not relieve the indemnifying party of
its obligations under Article VII, except solely to the extent that the
indemnifying party can demonstrate that such failure actually and materially
prejudices the defense of the Action by the indemnifying party. Within 10 days
of delivery of such notice, the indemnifying party shall advise the indemnified
party (i) whether it disputes the claim for indemnification and (ii) whether the
indemnifying party desires at its sole cost and expense to defend such Action.
(b) In the event that the indemnifying party notifies the indemnified
party within the notice period specified in clause (a) of this Section 7.04 that
the indemnifying party does not dispute the indemnifying party's obligation to
indemnify hereunder and desires to defend the indemnified party against such
claim and, except as hereunder provided, the indemnifying party shall have the
right to defend by appropriate proceedings, which proceedings shall be promptly
settled or prosecuted by the indemnifying party to final conclusion; provided
that, unless the indemnified party otherwise agrees, the indemnifying party may
not compromise or settle any matter (in whole or in part) (i) without obtaining
a complete and unconditional release of the indemnified party, (ii) unless the
sole relief provided is monetary damages that are paid in full by the
indemnifying party, and (iii) unless there is no finding or admission of any
violation of law or any violation of the rights of any other Person and no
effect on any claims that may be made against the indemnified party. If the
indemnifying party elects not to defend the indemnified party against such
claim, whether by failure of the indemnifying party to give the indemnified
party timely notice as provided above or otherwise, then the indemnified party
may assume the defense thereof, shall have the right to undertake the defense
of, compromise or settle such proceedings and the indemnifying party shall, upon
request of the indemnified party, pay to such indemnified party, in accordance
with the terms of this Article VII, the amount of Losses resulting from such
proceeding; provided, however, that such proceeding shall not be compromised or
settled without the written consent of the indemnifying party, which consent
shall not be unreasonably withheld. Notwithstanding the foregoing, the
indemnifying party's right to object to any proposed compromise or settlement
shall be conditioned upon such indemnifying party acknowledging to the
indemnified party that such indemnifying party shall be solely responsible (as
between the indemnifying party and the indemnified party) for all liabilities
and obligations arising from the matter proposed to be compromised or settled.
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 Article VII hereof, the Action, suit or proceeding
shall, upon the written acknowledgment by the indemnifying party that it is
obligated to indemnify under such indemnity agreement, be defended (including
all proceedings on appeal or for review which counsel for the indemnified party
shall deem appropriate) by the indemnifying party. The indemnified party shall
have the right to employ its own counsel in any such case, but the fees and
expenses of such counsel shall be at the indemnified party's own expense unless
(i) 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 (ii)
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
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beyond the scope of the indemnity agreements contained in Article VII 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
Article VII 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 defending party shall make available to the non-defending party
and its attorneys and accountants all books and records of the non-defending
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) There shall be no indemnification recoverable against a party
otherwise obligated to provide indemnification therefor under this Article VII
until the Losses by the party seeking such indemnification exceed $150,000 in
the aggregate (the "BASKET AMOUNT") (other than the payment of Taxes relating to
the Straddle Period), and once all such Losses exceed the Basket Amount, such
party shall only be obligated to the other party for Losses in excess of the
Basket Amount (other than the payment of Taxes relating to the Straddle Period).
(e) Transferor shall not be required to pay any amount in satisfaction
of the indemnification obligations of Transferor pursuant to this Article VII in
excess of the Purchase Price received by Transferor.
(f) A waiver of a condition to Closing hereunder shall not preclude the
waiving party from being indemnified hereunder.
Section 7.05 TAX INDEMNIFICATION BY TRANSFEROR.
(a) Transferor shall pay, indemnify and hold harmless Acquirer, the
Company and its successors, from and against all liabilities for Taxes of the
Company for taxable periods ending on or before the Closing Date. For purposes
of the preceding sentence, the Closing Date shall be treated as the last day of
a taxable period whether or not the taxable period in fact ends on the Closing
Date. For purposes of this Section, in the case of any Taxes that are imposed on
a periodic basis and are payable for a taxable period that includes (but does
not end on) the Closing Date (the "STRADDLE PERIOD"), the portion of such Tax
which relates to the portion of such a taxable period ending on the Closing Date
shall, (i) in the case of any Taxes other than Taxes based upon or related to
income or receipts, be deemed to be the amount of such Tax for the entire
taxable period multiplied by a fraction the numerator of which is the number of
days in the taxable period ending on the Closing Date and the denominator of
which is the number of days in the entire taxable period, and (ii) in the case
of any Tax based upon or related to income or receipts deemed equal to the
amount which would be payable if the relevant taxable period ended on the
Closing Date, except that exemptions, allowances and deductions that are
calculated on an annual basis (such as depreciation) shall be
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apportioned on a per diem basis. All determinations necessary to give effect to
the foregoing allocations shall be made in a manner consistent with prior
practice of the Company. Transferor and Acquirer shall each bear their own costs
in determining the amount due under this Section 7.05. For purposes of this
Section 7.05 (and the calculation of any indemnity), any interest, penalties or
additions to tax accruing after the Closing Date with respect to a liability for
Taxes for which Transferor indemnifies Acquirer, the Company shall be deemed to
be attributable to a taxable period ending on or before the Closing Date.
(b) (i) Acquirer and the Company shall include in their notice of any
claim for indemnification pursuant to this Section 7.05 a calculation of the
amount of the requested indemnity payment. If Transferor disagrees with the
calculation of the indemnity payment, Transferor and Acquirer shall attempt to
resolve such disagreement within a period of 45 days from the date Transferor
receives the notice of claim for indemnification. If the parties fail to reach
an agreement at the end of such period, such disagreement shall be submitted to
a nationally-recognized firm of independent certified public accountants
mutually selected by Transferor and Acquirer, whose determination shall be final
and binding on all parties. The cost of such nationally-recognized firm of
independent certified public accounts shall be borne equally by Transferor and
Acquirer.
(ii) Within 10 days after the indemnity calculation has been
resolved or determined, Transferor shall pay to Acquirer and the Company (and
their successors) such amounts as have been determined to be due Acquirer and
the Company (and their successors) as a result of the indemnification provided
in Section 7.05; provided, however, that Transferor's indemnification
obligations under this Section 7.05 shall be subject to the limitations on
indemnification set forth in this Article VII.
(c) (i) Each of Acquirer, the Company and Transferor will provide the
other parties with such assistance as may reasonably be requested by any of them
in connection with the preparation of any Tax Return, any audit or other
examination by any Governmental Authority, any judicial or administrative
proceedings relating to liability for Taxes, or any other claim arising under
this Agreement, and each will retain and provide the others with any records or
information that may be relevant to any such Tax Return, audit or examination,
proceeding or claim. The party requesting assistance hereunder shall reimburse
the other parties for reasonable , out-of-pocket expenses incurred in providing
such assistance. Notwithstanding any other provision of this Section 7.05(c),
each party hereby agrees that it will retain, until all appropriate statutes of
limitations (including any extensions) expire, copies of all Tax Returns,
supporting work schedules and other records or information which may be relevant
to such Tax Returns, except for such Tax Returns, supporting work schedules and
other records which another party shall acquire as a consequence of this
Agreement, and that it will not destroy or otherwise dispose of such materials
without first providing the other relevant party with a reasonable opportunity
to review and copy such materials.
(ii) If Transferor or Acquirer, as the case may be, fails to
provide any information requested by another party within a reasonable period,
or otherwise fail to do any act required of them under Section 7.05, then such
party shall be obligated, notwithstanding any other provision of this Agreement,
to indemnify such other party and shall so indemnify such other party and hold
such other party harmless from and against any and all costs, claims,
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or damages, including, without limitation, all Taxes or deficiencies thereof,
payable as a result of such failure, subject, however, to the limitations on
indemnification set forth in this Article VII.
Section 7.06. TAX INDEMNIFICATION BY ACQUIRER.
(a) Acquirer shall be solely liable for Taxes of the Company for all
Taxable Years and periods commencing after the Closing Date. Acquirer shall
cause to be prepared and duly file all Tax Returns of the Company for Taxable
Periods commencing after the Closing Date. Acquirer shall pay all Taxes whether
or not shown to be due on such Tax Returns for all periods covered by such Tax
Returns. Notwithstanding the foregoing, except to the extent provided in Section
7.06(b), Acquirer shall be liable for, and shall indemnify and hold harmless
Transferor against, any and all Taxes for any Taxable Year or Taxable Period
commencing after the Closing Date due or payable by the Company.
(b) Acquirer shall cause the Company to pay all Taxes due for any
Taxable year or Taxable period relating to the Straddle Period (subject to
Purchaser's right to indemnification under Section 7.05(a)). To the extent that
the Taxes that would have been due if the Straddle Period had ended on the
Closing Date are less than the Taxes for the Straddle Period paid by the Company
or Transferor prior to the Closing Date, such shortfall shall be paid by
Acquirer to Transferor at the time that any payment for such Taxes is due.
Acquirer shall be liable for, and shall indemnify and hold harmless Transferor
against, all Taxes for the Straddle Period for which Transferor is not
responsible under Section 7.05(a).
(c) Except as otherwise set forth in this Agreement, to the extent any
refunds or credits with respect to the Taxes paid by the Company are
attributable to Taxable periods commencing before and ending before the Closing
Date, such refunds or credits shall belong to Transferor. Except as provided in
the immediately succeeding sentence, to the extent that any refunds or credits
with respect to Taxes paid by the Company are attributable to Taxable periods
commencing on or after the Closing Date, such refunds or credits shall belong to
Acquirer. To the extent that any refunds or credits with respect to Taxes paid
by the Company are attributable to the Straddle Period, such refunds and credits
shall belong to the party who bears responsibility for such Taxes pursuant to
Sections 7.05 and 7.06. Acquirer shall cause the Company to forward to
Transferor or to reimburse Transferor for any refunds or credit belonging to
Transferor within two business days from receipt thereof by any of Acquirer or
the Company. Transferor shall forward to Acquirer or reimburse Acquirer for any
refunds or credits belonging to Acquirer within two business days from receipt
thereof by Transferor. Any refunds or reimbursements not made within the
two-business day period specified above shall bear interest from the date
received by the refunding or reimbursing party at the rate for Tax deficiencies
under Section 6621 of the Code.
(d) In addition to the provisions in this Section 7.06, it is intended
that the provisions in Section 7.05 will apply to Acquirer to the extent
appropriate.
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ARTICLE VIII
TERMINATION
Section 8.01. TERMINATION. This Agreement may be terminated and the
transactions contemplated hereby abandoned at any time prior to the Closing in
the following manner:
(a) by mutual written consent of Transferor and Acquirer; or
(b) by either Transferor on the one hand (following repayment of all
amounts due to Acquirer by any party under the Bridge Loan Agreement in
accordance with the terms thereof) or Acquirer on the other hand if the Closing
shall not have occurred on or before June 1, 2001, unless such failure to close
shall be due to a breach of this Agreement by the party seeking to terminate
this Agreement pursuant to this clause (b); or
(c) by either Transferor on the one hand (following repayment of all
amounts due to Acquirer by any party under the Bridge Loan Agreement in
accordance with the terms thereof) or Acquirer on the other hand if there shall
be any Law that makes consummation of the transactions contemplated hereby
illegal or otherwise prohibited or a Governmental Authority shall have issued an
order, decree or ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the consummation of the transactions
contemplated hereby, and such order, decree, ruling or other action shall have
become final and nonappealable; or
(d) by Transferor (following repayment of all amounts due to Acquirer
by any party under the Bridge Loan Agreement in accordance with the terms
thereof), if (i) any of the material representations and warranties of Acquirer
contained in this Agreement shall not be true and correct in any material
respect, when made or at any time prior to the Closing as if made at and as of
such time (except to the extent that any such representation or warranty is made
as of a specified date, in which case such representation or warranty shall have
been true and correct in all material respects as of such specified date), in
any respect which is material to Acquirer or the ability of Acquirer to
consummate the transactions contemplated hereby, or (ii) Acquirer shall have
failed to fulfill in any material respect any of its material obligations under
this Agreement, which failure is material to the obligations of Acquirer under
this Agreement, and, in the case of each of clauses (i) and (ii), such
misrepresentation, breach of warranty, or failure (provided it can be cured) has
not been cured within 30 days after written notice thereof from Transferor to
Acquirer; provided that Acquirer shall have no opportunity to cure its failure
to timely pay the Purchase Price; or
(e) by Acquirer, if (i) any of the material representations and
warranties of the Company or Transferor contained in this Agreement shall not be
true and correct in any material respect, when made or at any time prior to the
Closing as if made at and as of such time (except to the extent that any such
representation or warranty is made as of a specified date, in which case such
representation or warranty shall have been true and correct in all material
respects as of such specified date), in any respect which is material to
Transferor or the ability of Transferor to consummate the transactions
contemplated hereby, or (ii) Transferor or the Company shall have failed to
fulfill in any material respect any of its material obligations under this
Agreement, which failure is material to the obligations of the Company or
Transferor
31
<PAGE> 32
under this Agreement, and, in the case of each of clauses (i) and (ii), such
misrepresentation, breach of warranty, or failure (provided it can be cured) has
not been cured within 30 days after written notice thereof from Acquirer to the
Company and Transferor.
Section 8.02. CERTAIN REMEDIES NOT EXCLUSIVE. Except as specifically
set forth herein, the rights and remedies herein provided shall be cumulative
and not exclusive of any rights or remedies provided by law. The rights and
remedies of any party based upon, arising out of or otherwise in respect of any
inaccuracy in or breach of any representation, warranty, covenant or agreement
contained in this Agreement shall in no way be limited by the fact that the act,
omission, occurrence or other state of facts upon which any claim of any such
inaccuracy or breach is based may also be the subject matter of any other
representation, warranty, covenant or agreement contained in this Agreement (or
in any other agreement between the parties) as to which there is no inaccuracy
or breach.
Section 8.03. SPECIFIC PERFORMANCE. It is understood and agreed that
money damages would not be sufficient remedy for Transferor's or Acquirer's
failure to perform under this Agreement, the Bridge Loan Agreement and the
Ancillary Documents, including Transferor's failure to transfer the Shares to
Acquirer and Acquirer's payment of the Purchase Price and advancement of funds
under the Bridge Loan Agreement in accordance with the terms thereof, that
Acquirer or Transferor, as the case may be, would be irreparably harmed by such
a breach and that Acquirer and Transferor shall be entitled to specific
performance and injunctive relief as remedies for any such breach.
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01. EXPENSES. Except as otherwise expressly provided herein,
each party shall pay the fees and expenses incurred by it in connection with the
transactions contemplated by this Agreement. If any action is brought for breach
of this Agreement or to enforce any provision of this Agreement, the prevailing
party shall be entitled to recover court costs, arbitration expenses and
reasonable attorneys' fees.
Section 9.02. AMENDMENT. This Agreement may be amended at any time but
only by an instrument in writing signed by the parties hereto.
Section 9.03. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if (i) 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 (ii) sent by
facsimile to the number set forth below (or such other number for a party as
shall be specified by proper notice hereunder), or (iii) sent by email to the
email address set forth below (or such other email address for a party as shall
be specified by proper notice hereunder):
32
<PAGE> 33
If to Acquirer, to: Spanish Broadcasting System, Inc.
3191 Coral Way
Miami, Florida 33145
Attention: Joseph A. Garcia
Facsimile: (305) 446-5148
Email: [email protected]
with copies (which shall not constitute notice) to:
Kaye, Scholer, Fierman, Hays & Handler, LLP
901 Fifteenth Street, N.W.
Washington, D.C. 20005
Attention: Jason L. Shrinsky
Facsimile: 202-682-3580
Email:
If to Transferor, to: New World Broadcasters Corp.
1333 Corporate Drive, Suite 350
Irving, Texas 75038
Attention: James L. Anderson
Facsimile: 972-550-5517
Email: [email protected]
with copies (which shall not constitute notice) to:
Thompson & Knight L.L.P.
1700 Pacific Ave., Suite 3300
Dallas, Texas 75201
Attention: David Emmons
Facsimile: (214) 969-1751
Email: [email protected]
Section 9.04. ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
heirs and permitted assigns. This Agreement may not be assigned by either party
without the prior written consent of the other, except that Acquirer may assign
to any wholly owned subsidiary of Acquirer or to Acquirer's lender that will
lend to Acquirer the funds that Acquirer will in turn lend pursuant to the
Bridge Loan Agreement any of Acquirer's rights, interests or obligations
hereunder, upon notice to the Company and Transferor; provided that no such
assignment shall relieve Acquirer of its obligations hereunder or delay Closing.
Section 9.05. 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.
Section 9.06. HEADINGS. The headings of the Sections of this Agreement
are inserted for convenience only and shall not constitute a part hereof.
33
<PAGE> 34
Section 9.07. 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.
Section 9.08. 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.
Section 9.09. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
Section 9.10. SEVERABILITY. If any term or other provision of this
Agreement is held invalid, illegal or incapable of being enforced under any rule
or law, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in a materially adverse
manner with respect to either party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
Section 9.11. 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.
Section 9.12. CONSENT TO JURISDICTION.
(a) The parties hereto hereby irrevocably submit to the jurisdiction of
the courts of the State of Delaware and the federal courts of the United States
of America located in Delaware, and appropriate appellate courts therefrom, over
any dispute arising out of or relating to this Agreement or any of the
transactions contemplated hereby and each party hereby irrevocably agrees that
all claims in respect of such dispute or proceeding may be heard and determined
in such courts. The parties hereby irrevocably waive, to the fullest extent
permitted by Law, any objection which they may now or hereafter have to the
laying of venue of any dispute arising out of or relating to this Agreement or
any of the transactions contemplated hereby brought in such court or any defense
of inconvenient forum for the maintenance of such dispute. Each of the parties
hereto agrees that a judgment in any such dispute may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
This consent to jurisdiction is being given solely for purposes of this
34
<PAGE> 35
Agreement and is not intended to, and shall not, confer consent to jurisdiction
with respect to any other dispute in which a party to this Agreement may become
involved.
(b) Each of the parties hereto hereby consents to process being served
by any party to this Agreement in any suit, action, or proceeding of the nature
specified in subsection (a) above by the mailing of a copy thereof in the manner
specified by the provisions of Section 9.03.
Section 9.13. 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.
Section 9.14. HSR ACT. Marcos A. Rodriguez represents and warrants
that, for the purposes of the HSR Act, he is the ultimate parent entity of
Transferor and that he does not have total assets of more than $10 million as
such assets are calculated pursuant to regulations adopted under the HSR Act,
and Mr. Rodriguez agrees to indemnify and hold harmless Acquirer and its
officers, directors, employees, agents, permitted assigns, Affiliates and
successors from, against, for and in respect of any Losses arising from his
failure to file under and comply with the HSR Act with respect to the
transactions contemplated hereby.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
35
<PAGE> 36
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement
to be duly executed as of the date first above written by their respective
officers thereunto duly authorized.
THE "COMPANY"
910 BROADCASTING CORP.
By: /s/ MARCOS A. RODRIGUEZ
-----------------------
Marcos A. Rodriguez,
Chairman of the Board
and Chief Executive Officer
"TRANSFEROR"
NEW WORLD BROADCASTERS CORP.
By: /s/ MARCOS A. RODRIGUEZ
-----------------------
Marcos A. Rodriguez,
Chairman of the Board
and Chief Executive Officer
"ACQUIRER"
SPANISH BROADCASTING SYSTEM, INC.
By: /s/ RAUL ALARCON, JR.
-----------------------
Raul Alarcon, Jr.,
Chairman of the Board, Chief Executive
Officer and President
Marcos A. Rodriguez has executed this Agreement for the sole purpose of
making the representations, and warranties with respect to himself set forth in
Section 9.14 and for the purpose of making the agreements set forth in such
section.
/s/ MARCOS A. RODRIGUEZ
-----------------------
Marcos A. Rodriguez
36
<PAGE> 37
910 Broadcasting, Inc.
Schedules
<PAGE> 38
SCHEDULE 4.02
FOREIGN QUALIFICATIONS
ENTITY JURISDICTION
------ ------------
Seller None
The Company None
<PAGE> 39
SECTION 4.04
OTHER EQUITY INTERESTS
None
<PAGE> 40
SCHEDULE 4.06(A)
NONCONTRAVENTION - COMPANY
None
<PAGE> 41
SCHEDULE 4.06(B)
NONCONTRAVENTION - SELLER
None
<PAGE> 42
SCHEDULE 4.07
GOVERNMENTAL APPROVALS
None
<PAGE> 43
SCHEDULE 4.14
FINANCIAL STATEMENTS
(i) December 31, 1999 Balance Sheet - See attached
(ii) March 31, 2000 Balance Sheet - See attached
<PAGE> 44
NEW WORLD BROADCASTERS CORP.
BALANCE SHEET
AS OF 12/31/1999
<TABLE>
<CAPTION>
1999
ACTUALS
Sub Account
K X E B 910 AM
<S> <C> <C> <C>
ASSETS
Current Assets:
Accounts Receivable 61,645.95
Bad Debt Reserve (5,668.36)
Accounts Receivable - Employee 2,042.00
4,337.19
-------------
Total Current Assets $62,356.78
Fixed Assets:
Studio Equipment 1,000.00
Tower 75,000.00
Transmitter Equipment 88,500.00
Description & Amortization (50,719.00)
-------------
Total Fixed Amounts $113,781.00
Other Assets:
FCC License 535,500.00
Intercompany - Stations (99,921.90)
Intercompany - N W B C (777, 836.71)
-------------
Total Other Assets $ (342,250.70)
-------------
TOTAL ASSETS $(166,120.92)
------------
</TABLE>
2
<PAGE> 45
NEW WORLD BROADCASTERS CORP.
BALANCE SHEET
AS OF 12/31/1999
<TABLE>
<CAPTION>
1999
ACTUALS
Sub Account
X X E B 910 AM
<S> <C> <C>
LIABILITIES AND EQUITY
Current Liabilities:
Customer Deposits 1,200.00
Accrued Miscellaneous Expenses 1,040.00
Settlement Agrmnt/T. Rodriguez 25,000.00
------------
Total Current Liabilities $ 27,240.00
Long Term Liabilities
------------
Total Long Term Disabilities $ 0.00
-------------
TOTAL LIABILITIES $ 27,240.00
EQUITY:
Retained Earnings (57,874.71)
Current Your Retained Earnings $(135,486.21)
TOTAL EQUITY $(193,360.92)
-------------
TOTAL LIABILITIES & EQUITY $(166,120.92)
</TABLE>
3
<PAGE> 46
NEW WORLD BROADCASTERS CORP.
INCOME STATEMENT
PERIOD: 12/01/1999 TO 12/31/1999
<TABLE>
<CAPTION>
1999 CURRENT PERIOD 1999 YEAR-TO-DATE 1999 CURRENT PERIOD 1999 YEAR-TO-DATE
ACTUALS ACTUALS BUDGETS BUDGETS
Budget: OPERATING Budget: OPERATING
Sub Account Sub Account Sub Account Sub Account
K X E B 910 AM K X E B 910 AM K X E B 910 AM K X E B 910 AM
Amount Amount Amount Ratio Amount Ratio
<S> <C> <C> <C> <C> <C> <C>
REVENUE
Local Direct 38,285.00 66,810.00 0.00 0.00 16,600.00 999.99
Local Agency 825.00 4,325.00 0.00 0.00 2,700.00 999.99
Brokered Time 4,200.00 50,100.00 45,000.00 999.99 67,000.00 999.99
Sports 0.00 14,300.00 0.00 0.00 15,850.00 999.99
---------- ----------- ---------- ------ ----------- ------
Total Time Income $43,310.00 $135,535.00 $45,000.00 999.99 $102,150.00 999.99
Miscellaneous Income 1,370.00 1,395.00 0.00 0.00 0.00 0.00
---------- ----------- ---------- ------ ----------- ------
Total Other Income $1,370.00 $1,395.00 $0.00 0.00 $0.00 0.00
========== =========== ========== ====== =========== ======
TOTAL REVENUE $44,680.00 $136,930.00 $45,000.00 999.99 $102,150.00 999.99
</TABLE>
4
<PAGE> 47
NEW WORLD BROADCASTERS CORP.
INCOME STATEMENT
PERIOD 12/01/1999 TO 12/31/1999
<TABLE>
<CAPTION>
1999 CURRENT PERIOD 1999 YEAR-TO-DATE 1999 CURRENT PERIOD 1999 YEAR-TO-DATE
ACTUALS ACTUALS BUDGETS BUDGETS
Budget: OPERATING Budget: OPERATING
Sub Account Sub Account Sub Account Sub Account
K X E B 910 AM K X E B 910 AM K X E B 910 AM K X E B 910 AM
Amount Amount Amount Ratio Amount Ratio
<S> <C> <C> <C> <C> <C> <C>
VARIABLE DEPARTMENT
Agency Commissions 0.00 705.00 6,750.00 999.99 10,455.00 999.99
Bad Debt Expense 651.90 2,034.91 675.00 999.99 1,532.00 999.99
Music License Fee 9,478.59 12,672.44 1,277.00 999.99 3,223.00 999.99
---------- ---------- --------- ------ ----------
TOTAL VARIABLE $10,130.49 $15,412.35 $8,702.00 999.99 $15,210.00 999.99
</TABLE>
5
<PAGE> 48
NEW WORLD BROADCASTERS CORP.
INCOME STATEMENT
PERIOD: 12/01/1999 TO 12/31/1999
<TABLE>
<CAPTION>
1999 CURRENT PERIOD 1999 YEAR-TO-DATE 1999 CURRENT PERIOD 1999 YEAR-TO-DATE
ACTUALS ACTUALS BUDGETS BUDGETS
Budget: OPERATING Budget: OPERATING
Sub Account Sub Account Sub Account Sub Account
K X E B 910 AM K X E B 910 AM K X E B 910 AM K X E B 910 AM
Amount Amount Amount Ratio Amount Ratio
<S> <C> <C> <C> <C> <C> <C>
ENGINEERING DEPARTMENT
Eng. Salaries 1,770.84 10,625.02 2,361.00 999.99 14,166.00 999.99
Auto Expense 0.00 161.40 50.00 999.99 300.00 999.99
Computer System Repair & Maint. 0.00 814.13 0.00 0.00 0.00 0.00
Maintenance - Studio 0.00 0.00 250.00 999.99 1,500.00 999.99
Maintenance - Transmitter 0.00 0.00 225.00 999.99 1,350.00 999.99
Tower Rent 5,250.00 18,375.00 2,625.00 999.99 15,750.00 999.99
Telephone 285.28 969.14 285.00 999.99 1,710.00 999.99
Transmitter Lines 0.00 4,515.20 1,063.00 999.99 6,378.00 999.00
Utilities - Transmitter 217.01 1,476.02 281.00 999.99 1,686.00 999.99
-------- --------- -------- ------ ---------
TOTAL ENGINEERING $7,523.13 $36,935.91 $7,140.00 999.99 $42,840.00 999.99
</TABLE>
6
<PAGE> 49
NEW WORLD BROADCASTERS CORP.
INCOME STATEMENT
PERIOD: 12/01/1999 TO 12/31/1999
<TABLE>
<CAPTION>
1999 CURRENT PERIOD 1999 YEAR-TO-DATE 1999 CURRENT PERIOD 1999 YEAR-TO-DATE
ACTUALS ACTUALS BUDGETS BUDGETS
Budget: OPERATING Budget: OPERATING
Sub Account Sub Account Sub Account Sub Account
K X E B 910 AM K X E B 910 AM K X E B 910 AM K X E B 910 AM
Amount Amount Amount Ratio Amount Ratio
<S> <C> <C> <C> <C> <C> <C>
PROGRAMMING DEPARTMENT
Prog. Salaries - Other 3,370.83 13,950.82 1,392.00 999.00 8,352.00 999.99
Music Service 0.00 0.00 90.00 999.99 540.00 999.99
--------- ---------- --------- ------ ---------
TOTAL ENGINEERING $3,370.83 $13,950.82 $1,482.00 999.99 $8,892.00 999.99
</TABLE>
7
<PAGE> 50
NEW WORLD BROADCASTERS CORP.
INCOME STATEMENT
PERIOD: 12/01/1999 TO 12/31/1999
<TABLE>
<CAPTION>
1999 CURRENT PERIOD 1999 YEAR-TO-DATE 1999 CURRENT PERIOD 1999 YEAR-TO-DATE
ACTUALS ACTUALS BUDGETS BUDGETS
Budget: OPERATING Budget: OPERATING
Sub Account Sub Account Sub Account Sub Account
K X E B 910 AM K X E B 910 AM K X E B 910 AM K X E B 910 AM
Amount Amount Amount Ratio Amount Ratio
<S> <C> <C> <C> <C> <C> <C>
NEWS DEPARTMENT
----- ----- ----- ---- -----
TOTAL NEWS $0.00 $0.00 $0.00 0.00 $0.00 0.00
</TABLE>
8
<PAGE> 51
NEW WORLD BROADCASTERS CORP.
INCOME STATEMENT
PERIOD: 12/01/1999 TO 12/31/1999
<TABLE>
<CAPTION>
1999 CURRENT PERIOD 1999 YEAR-TO-DATE 1999 CURRENT PERIOD 1999 YEAR-TO-DATE
ACTUALS ACTUALS BUDGETS BUDGETS
Budget: OPERATING Budget: OPERATING
Sub Account Sub Account Sub Account Sub Account
K X E B 910 AM K X E B 910 AM K X E B 910 AM K X E B 910 AM
Amount Amount Amount Ratio Amount Ratio
<S> <C> <C> <C> <C> <C> <C>
SALES DEPARTMENT
Sales Salaries - Guarantees 10,773.53 46,208.32 4,556.00 999.99 27,336.00 999.99
---------- ---------- --------- ------ ----------
TOTAL SALES $10,773.53 $46,208.32 $4,556.00 999.99 $27,336.00 999.99
</TABLE>
9
<PAGE> 52
NEW WORLD BROADCASTERS CORP.
INCOME STATEMENT
PERIOD: 12/01/1999 TO 12/31/1999
<TABLE>
<CAPTION>
1999 CURRENT PERIOD 1999 YEAR-TO-DATE 1999 CURRENT PERIOD 1999 YEAR-TO-DATE
ACTUALS ACTUALS BUDGETS BUDGETS
Budget: OPERATING Budget: OPERATING
Sub Account Sub Account Sub Account Sub Account
K X E B 910 AM K X E B 910 AM K X E B 910 AM K X E B 910 AM
Amount Amount Amount Ratio Amount Ratio
<S> <C> <C> <C> <C> <C> <C>
ADVERTISING & PROMOTION DEPARTMENT
Advertising 0.00 143.08 0.00 0.00 0.00 0.00
------- --------
TOTAL ADVERTISING & PROMOTION $0.00 $143.08 $0.00 0.00 $0.00 0.00
</TABLE>
10
<PAGE> 53
NEW WORLD BROADCASTERS CORP.
INCOME STATEMENT
PERIOD: 12/01/1999 TO 12/31/1999
<TABLE>
<CAPTION>
1999 CURRENT PERIOD 1999 YEAR-TO-DATE 1999 CURRENT PERIOD 1999 YEAR-TO-DATE
ACTUALS ACTUALS BUDGETS BUDGETS
Budget: OPERATING Budget: OPERATING
Sub Account Sub Account Sub Account Sub Account
K X E B 910 AM K X E B 910 AM K X E B 910 AM K X E B 910 AM
Amount Amount Amount Ratio Amount Ratio
<S> <C> <C> <C> <C> <C> <C>
GENERAL & ADMINISTRATIVE DEPARTMENT
G&A Salaries - General Manager 0.00 12,314.58 5,556.00 999.99 33,336.00 999.99
G&A Salaries - Other 8,668.09 32,363.41 3,619.00 999.99 21,714.00 999.99
Administaff Charges 3,421.85 16,147.42 3,005.00 999.99 14,110.00 999.99
Accounting Fees 208.00 1,040.00 208.00 999.99 1,248.00 999.99
Dues & Subscriptions & Fees 25.00 150.00 0.00 0.00 0.00 0.00
Gen Bus Liability Ins 0.00 3,585.51 750.00 999.99 4,500.00 999.99
Maintenance - Equipment 75.54 608.75 215.00 999.99 1,290.00 999.99
Maintenance - Office 90.66 327.81 0.00 0.00 0.00 0.00
Postage 0.00 0.00 100.00 999.99 600.00 999.00
Rent - Equipment 20.78 141.72 0.00 0.00 0.00 0.00
Rent - Office 2,057.50 8,915.84 1,383.00 999.99 8,298.00 999.99
Staff/Vendor/Client Relations 0.00 0.00 75.00 999.99 450.00 999.99
Supplies - Office 0.00 0.00 75.00 999.99 450.00 999.99
Taxes - Property (641.40) 190.60 208.00 999.99 1,248.00 999.99
Telephone - Line Charges 0.00 4,911.57 388.00 999.99 2,328.00 999.99
Telephone - Long Distance 0.00 0.00 50.00 999.99 300.00 999.99
Traffic Software 208.84 1,461.85 100.00 999.99 600.00 999.99
---------- ---------- ---------- ------ ----------
TOTAL GENERAL & ADMINISTRATIVE $14,138.16 $82,159.06 $15,732.00 999.99 $90,472.00 999.99
---------- ---------- ---------- ------ ----------
TOTAL OPERATING EXPENSE $45,936.14 $194,809.54 $37,612.00 999.99 $184,750.00 999.99
---------- ---------- ---------- ------ ----------
TOTAL OPERATING CASH FLOW $(1,256.14) $(57,879.54) $7,388.00 999.99 $(82,600.00) 999.99
========== =========== ========= ====== ===========
TOTAL OPERATING INCOME/(LOSS) $(1,256.14) $(57,879.54) $7,388.00 999.99 $(82,600.00) 999.99
========== =========== ========= ====== ===========
</TABLE>
11
<PAGE> 54
NEW WORLD BROADCASTERS CORP.
INCOME STATEMENT
PERIOD: 12/01/1999 TO 12/31/1999
<TABLE>
<CAPTION>
1999 CURRENT PERIOD 1999 YEAR-TO-DATE 1999 CURRENT PERIOD 1999 YEAR-TO-DATE
ACTUALS ACTUALS BUDGETS BUDGETS
Budgets: OPERATING Budget: OPERATING
Sub Account Sub Account Sub Account Sub Account
K X E B 910 AM K X E B 910 AM K X E B 910 AM K X E B 910 AM
Amount Amount Amount Ratio Amount Ratio
<S> <C> <C> <C> <C> <C> <C>
CORPORATE INCOME & EXPENSE
Non-Operating Income
Time Brokerage Income 0.00 3,000.00 0.00 0.00 0.00 0.00
Miscellaneous Income 0.00 4,331.75 0.00 0.00 0.00 0.00
Total Non-Operating Income $0.00 $7,331.75 $0.00 0.00 $0.00 0.00
---------- ------------ ---------- ------ -----------
Non-Operating Expense
Corporate Charges 0.00 0.00 (3,333.00) 999.99 (19,998.00) 999.99
Interest Expense 0.00 84,938.42 0.00 0.00 0.00 0.00
---------- ------------ ---------- ------ -----------
Total Non-Operating Expense $0.00 $84,938.42 $(3,333.00) 999.99 $(19,998.00) 999.99
========== ============ ========== ====== ===========
NET INCOME BEFORE TAXES $(1,256.14) $(135,486.21) $10,721.00 999.99 $(62,602.00) 999.99
---------- ------------ ---------- ------ -----------
Total Taxes $0.00 $0.00 $0.00 0.00 $0.00 0.00
---------- ------------ ---------- ------ -----------
NET INCOME/LOSS $(1,256.14) $(135,486.21) $10,721.00 999.99 $(62,602.00) 999.99
========== ============ ========== ====== ===========
</TABLE>
12
<PAGE> 55
910 BROADCASTING
BALANCE SHEET
MARCH 31, 2000
ACCOUNT DESCRIPTION 910
BROADCASTERS,
CORP.
ASSETS
CURRENT ASSETS
Cash 0.00
Accounts Receivable 45,540.45
Allowance for Doubtful Accts 7,870.59
Employee Advances 1,022.00
Deposits 0.00
Prepaid Expenses 2,168.58
TOTAL CURRENT ASSETS 56,601.62
FIXED ASSETS
Automobiles 0.00
Buildings, Homes, and Land 0.00
Computer Equipment 0.00
Furniture & Fixtures 0.00
Leasehold Improvements 0.00
Construction in Process 0.00
Studio Equipment 1,541.59
Tower 75,000.00
Transmitter Equipment 88,500.00
FCC License 510,500.00
Accum Deprec/Amort -91,874.00
TOTAL FIXED ASSETS 583,667.59
OTHER ASSETS
Intercompany Receivables
MRI 0.00
RCI-Delaware (formerly RCL) 0.00
Stations -58,863.43
Stock or Other Investments
Raymond James 0.00
Investment in 910 Broadcasting 0.00
Amortization of FCC Option -48,280.00
Intangible Assets 0.00
Accum Amort - Intangibles 0.00
Organizational Costs 0.00
TOTAL OTHER ASSETS -107,143.43
TOTAL ASSETS 533,125.78
13
<PAGE> 56
910 BROADCASTING
BALANCE SHEET
MARCH 31, 2000
ACCOUNT DESCRIPTION 910
BROADCASTERS,
CORP.
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts Payable 0.00
Accrued Expenses 18,531.32
LegacyMaker Payable 0.00
TOTAL CURRENT LIABILITIES 18,531.32
Total Liabilities 18,531.32
EQUITY
Preferred Stock 777,836.71
Common Stock 0.00
CCI/NW Merger 0.00
Retained Earnings -282,794.92
Current Year Retained Earnings 19,552.67
TOTAL EQUITY 514,594.46
TOTAL LIABILITIES AND EQUITY 533,125.78
NW owns 100%
of 910 stock
14
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SCHEDULE 4.15
UNDISCLOSED LIABILITIES
None
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SCHEDULE 4.16
ABSENCE OF CERTAIN CHANGES
None
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SCHEDULE 4.17
TAX MATTERS
None
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SCHEDULE 4.19
REAL PROPERTY INTERESTS
Lease Agreement with R. Thomas Gibson dated May 23, 1997 for the KXEB
Transmitter Site
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SCHEDULE 4.20(A)
FCC LICENSES
(a) FCC AM Broadcast License for KXEB-AM Sherman, Texas
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SCHEDULE 4.22
CERTAIN AGREEMENTS
Broadcast Music, Inc. - Single Station Radio Blanket License Agreement dated
November 4, 1999
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SCHEDULE 4.24
INSURANCE
See attached
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Rodriguez Communications, Inc.
DESCRIPTION OF OPERATIONS
Radio & TV broadcasting
NARRATIVE OUTLINE
SCHEDULE OF NAMED INSUREDS:
1. Rodriguez Communications, LLC
2. Rodriguez Capital Holdings, Inc.
3. Agility, Inc. (part of trust that controls operations-personal estate
planning)
4. Legacy Maker, Inc. (dormant)
5. Marcos & Sonya Rodriguez, Jr., Individually
6. Marcos & Sonya Rodriguez, Jr., Ins. Trust
7. Marcos & Sonya Rodriguez Family Trust
8. Marcos & Sonya Rodriguez Children's Trust #1
9. Marcos & Sonya Rodriguez Children's Trust #2
10. Sonya Nance Trust
11. Marcos Rodriguez, Inc. DBA KDMM Radio 1150 AM (Highland Park, TX)
12. New World Broadcasters, Corp. (KTCY 104.9 FM; Channel 25 T.V.)
13. Rodriguez Foundation
14. Rodriguez Oil & Gas, Inc.
15. Turnkey Promotions, Inc. DBA International Interiors (now dormant-used to
buy furnishings for his home)
16. KZIP AM, Inc. - Amarillo, TX
17. EquityMedia.com, Inc. (investigative "think tank" ISP company)
18. PC Media, Inc. (dormant ISP Co.)
19. KeepConnected, Inc. (dormant ISP Co.)
20. 910 Broadcasting Corp. (KXEB - 910 AM)
SCHEDULE OF RISK LOCATIONS:
1. 7700 Carpenter Freeway, Dallas, TX 75247 $600,000 BPP
2. 1333 Corporate #350, Irving, TX 75038 $ 5,000 BPP
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Burdensome and immaterial schedules omitted.
The omitted schedules are available from the Company upon request.
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SCHEDULE 4.27
EMPLOYEES
None
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SCHEDULE 6.13
MANAGEMENT PERSONNEL
None
