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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
FOR THE FISCAL YEAR ENDED SEPTEMBER 29, 1996
Commission File Number 33-82114
SPANISH BROADCASTING SYSTEM, INC.
(Exact name of registrant as specified in its charter)
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Delaware 13-3827791
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(State or other jurisdiction of (I.R.S. employer identification)
incorporation or organization number)
26 West 56th Street
New York, New York 10019
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(Address of principal executive offices) (Zip Code)
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SEE TABLE OF ADDITIONAL REGISTRANTS
Registrant's telephone number, including area code: 212-541-9200
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
Title of Class: NONE
Name of each exchange on which registered: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
All of the Company's Common Stock is held by affiliates, accordingly,
as of September 29, 1996, the aggregate value of the Company's voting common
stock held by non-affiliates was $0.00.
Number of shares of the Registrant's Common Stock, par value $.01 per
share, outstanding as of September 29, 1996: 606,668 shares of Common Stock of
which 558,135 shares are designated Class A Common Stock and 48,533 shares are
designated Class B Common Stock.
Documents Incorporated by Reference: NONE
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STATE OR OTHER PRIMARY STANDARD I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NUMBER
NAME INCORPORATION CLASSIFICATION NUMBER
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SPANISH BROADCASTING SYSTEM, INC. New Jersey 4832 13-3181941
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SPANISH BROADCASTING SYSTEM OF California 4832 92-3952357
CALIFORNIA, INC.
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SPANISH BROADCASTING SYSTEM OF Florida 4832 58-1700848
FLORIDA, INC.
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SPANISH BROADCASTING SYSTEM OF New York 4832 13-3570696
NEW YORK, INC.
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ALARCON HOLDINGS, INC. New York 6512 13-3475833
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SPANISH BROADCASTING SYSTEM New York 4899 13-3511101
NETWORK, INC.
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SBS PROMOTIONS, INC. New York 7999 13-3456128
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SBS OF GREATER NEW YORK, INC. New York 4832 13-3888732
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TABLE OF CONTENTS
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ITEM PAGE
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1. BUSINESS ............................................................. 1
2. PROPERTIES............................................................ 13
3. LEGAL PROCEEDINGS..................................................... 14
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................... 14
5. MARKET FOR REGISTRANT'S COMMON STOCK AND
RELATED STOCKHOLDER MATTERS........................................... 14
6. SELECTED FINANCIAL DATA............................................... 15
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS................................... 17
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA........................... 21
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE................................ 22
10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.................... 21
11. EXECUTIVE COMPENSATION................................................ 23
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT........................................................ 25
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS........................ 25
14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K............................................... 27
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PART I.
ITEM 1. BUSINESS
GENERAL
Spanish Broadcasting System, Inc. ("the Company") is one of the leading
Spanish language radio broadcasting companies in the United States with nine
radio stations operating in the three largest Hispanic markets. The Company is
the only Spanish language radio company with AM/FM combinations in Los Angeles,
New York and Miami, the first, second and twelfth largest radio revenue markets
in the United States, respectively, where more than 39% of the United States
Hispanic population resides. In addition, with the recent acquisition of WPAT-FM
licensed at 93.1 Mhz and serving the New York metropolitan area, the Company has
created the first Spanish language radio company with an FM/FM duopoly serving
this market. See "Recent Acquisition" below.
The following table sets forth certain information concerning the radio
stations owned and operated by the Company and the markets they serve.
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Ranking of Station Rank and
Market by Ranking Number of Stations
Size of of Market Station Programming Primary in Market (4)
Market Served and Hispanic by Radio Format Demographic Date Of License
Station Call Letters (1) Population (2) Revenues Target (4) Acquisitions Expiration
(3) Spanish All (5)
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LOS ANGELES, CA 1 1
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KLAX-FM Ranchera 18-49 2/10 7/50 12/88 12/97
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KXMG-FM Grupo 25-54 7/10 33/50 12/84 12/97
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NEW YORK , NY 2 2
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WSKQ-FM Latin Power 18-49 1/5 5/44 1/89 6/98
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WXLX-AM Regional/Mexican 18-49 5/5 40/44 9/83 6/98
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WPAT-FM Adult Contemporary 25-54 2/5 11/44 3/96 6/98
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MIAMI, FL 3 12
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WCMQ-FM Adult Contemporary(6) 25-54 7/10 21/36 12/86 2/04
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WCMQ-AM News/Talk/Sports 25-54 8/10 22/36 12/86 2/04
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WZMQ-FM (7) Adult Contemporary 25-54 9/89 2/04
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WSKP-FM (7) News/Talk/Sports 25-54 7/95 2/04
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(1) Actual city of license may differ from the geographic market served.
KLAX-FM is licensed to Long Beach, California and serves the Los
Angeles metropolitan area. WXLX-AM is licensed to Newark, New Jersey
and serves the New York metropolitan area. WZMQ-FM is licensed to Key
Largo, Florida and WSKP-FM is licensed in Key West, Florida. Both of
these stations serve portions of the South Florida area. WPAT-FM is
licensed to Paterson , New Jersey and serves the New York metropolitan
area.
(2) Ranking by size of the Hispanic population in the principal market
served by the station among all United States markets. Source: The SRC
Study.
(3) Ranking of market by radio revenues in 1995 as reported by Duncan's
Radio Market Guide (1996 ed.).
(4) Rank as reported in Arbitron's Summer 1996 report. A station's
listening audience is measured by surveys of the number of radios tuned
to the station at various times of the day. The generally accepted
method of measuring the overall size of a radio station's audience
("ratings") is by reference to "12+ average quarter hour share" -- the
number of persons, aged 12 and over, who listen to the station for at
least five minutes in a quarter-hour segment Monday through Sunday, 6
a.m. to midnight, as published by Arbitron. A station's audience share
is calculated by dividing (i ) the average number of persons listening
to a particular station for at least five minutes during an average
quarter hour in a given time period by (ii) the average number of
persons listening to all stations in the market area.
(5) The dates shown represent the date of acquisition by the Company or its
subsidiaries.
(6) This station was reformatted with a "Spanish Oldies" format in October
1996.
(7) The markets served by WZMQ-FM and WSKP-FM are not rated by Arbitron.
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SOURCES OF INFORMATION
Unless otherwise indicated, all market revenue rankings that are
contained in this Annual Report are based on information for calendar year 1995
contained in James H. Duncan, Jr., Duncan's Radio Market Guide (1996 ed.).
Unless otherwise indicated, rank in audience share data in this Annual Report is
based on the "12+ average quarter hour share" -- the number of persons, aged 12
and over, who listen to a radio station for at least five minutes in a
quarter-hour segment Monday through Sunday, 6:00 a.m. to midnight in the most
recent survey periods (Summer 1996) as reported by the Arbitron Company
("Arbitron"), Arbitron Radio Market Reports (copyright 1996). Further, and
unless otherwise noted, references herein to the rank of a station among all the
radio stations within a market has been determined with reference to all radio
stations rated by Arbiton within the applicable market. Designated Market Area
("DMA") information contained herein is derived from Arbitron's 1995 DMA
definitions. Unless otherwise indicated, all references to the demographic
statistics in this Annual Report are derived from Strategy Research Corporation,
the 1996 United States Hispanic Study (the "SRC Study"), United States Census
Bureau and Hispanic Business Magazine. The SRC Study is sponsored by advertisers
and other businesses targeting the Hispanic market, including the Company and
many of its principal competitors. Information referring to the number of
Spanish format stations as well as the number of AM's and FM's and per capita
items was referenced from BIA's Publication Master Access.
INDUSTRY BACKGROUND
General. Radio reaches approximately 95% of all Americans over the age
of 12. Radio stations derive their gross revenues primarily from the sale of
advertising. Total radio advertising spending in the Untied States rose from
$5.1 billion in 1992 to an estimated $6.7 billion in 1995, an annual compound
rate of growth of 9.4%. Advertisers generally regard radio as an efficient means
of reaching specifically identified demographic groups. Stations are typically
identified by format, such as country, adult/contemporary, news/talk and Spanish
language, among others. Through a station's format, a broadcaster focuses on
specific demographic groups, making its station attractive to advertisers who
also target these groups. The ability to deliver an audience comprised of
individuals targeted by a particular advertiser may make a station attractive to
that advertiser even though the station may not command a large share of total
radio listeners in that market. Formats evolve or change as new formats gain
popularity and the composition of audiences change. The largest portion of a
radio station's programming is usually produced by the radio station itself.
This programming includes locally produced shows featuring recorded music, news
and talk shows. Additional programming may be obtained from various radio
syndication services on a cash, barter (the exchange of goods and services for
advertising) or cash-plus-barter basis.
THE HISPANIC MARKET IN THE UNITED STATES
The Company broadcasts primarily to United States Hispanics which is
one of the most rapidly growing segments of the United States population. With
approximately 27.2 million Hispanics, representing 10.3% of the total
population, the United States has the fifth largest Hispanic population in the
world. By the year 2010 the U.S. will have the second largest Hispanic
population. Hispanics currently account for approximately 10.3% of the total
United States population (up from approximately 6.5% in 1980), and are expected
to be the largest minority by the year 2010 at which time they are projected to
number 40 million, or approximately 13.5% of the United States population. In
addition, the Hispanic population in the United States is concentrated in
discrete geographic areas with approximately 59.8% of all Hispanics residing in
the ten largest Hispanic markets. Advertisers are responding to this growth in
the Hispanic population by increasing their advertising expenditures targeted to
Hispanic consumers.
In addition to its anticipated rapid growth, the Hispanic market has
several other characteristics which, the Company believes, make it attractive to
advertisers, including the following:
* the United States Hispanic population has aggregate disposable income
in excess of $228 billion;
* United States Census Bureau data indicate that Hispanic households are
larger than those of the general population, with 3.4 persons living in
an average Hispanic household compared to 2.6 persons living in the
average household;
* the Hispanic population is generally younger than the general
population, with a median age of 26.6 years compared to 34.0 years;
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* Hispanic consumers generally spend a higher percentage of their
disposable income on consumer goods than the general public; and
* market studies have shown that Hispanics are generally more brand
conscious than the general population.
Among Hispanics 18 years old or older, 79% speak Spanish more often
than English in their homes. Approximately 92% of the national Hispanic
population listens to the radio every day, and they are substantially more
likely to listen to Spanish language stations than English language stations. In
1996, 73% of adult Hispanics were most comfortable speaking Spanish. Given the
significant use of Spanish as the primary, or preferred language for so many
Hispanics in the United States, many advertisers have come to realize that
advertisements in Spanish rather than in English are more effective in reaching
the Hispanic population. In households where both English and Spanish are
spoken, studies have shown that there is a desire to listen to advertising for
certain types of products and receive information of particular relevance to the
Hispanic community in Spanish, particularly if the information is not readily
obtainable by listening to English language radio stations.
The Hispanic population is concentrated in major markets making it more
accessible to national advertisers. Approximately 36.5% of the Hispanic
population in the United States resides in the three largest Hispanic markets --
Los Angeles, New York and Miami. The following table sets forth the top ten
Hispanic markets in the United States and the percentage of the national
Hispanic population contained in each market.
TOP TEN UNITED STATES HISPANIC MARKETS
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PERCENTAGE OF
UNITED STATES
HISPANIC HISPANIC
POPULATION POPULATION
RANK MARKET FOR THE MARKET IN MARKET
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1. Los Angeles 6,012,300 22.1
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2. New York 3,278,100 9.4
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3. Miami 1,358,100 5.0
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4. San Francisco - San Jose 1,120,100 4.1
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5. Chicago 1,106,800 4.1
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6. Houston 1,078,600 4.0
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7. San Antonio 1,018,000 3.7
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8. McAllen/Brownsville 803,800 3.0
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9. Dallas - Ft. Worth 740,000 2.7
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10. El Paso 644,800 2.0
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There are currently 305 Spanish language radio stations serving the
United States with 49 FM radio stations and 92 AM radio stations in the top 10
Hispanic markets. On a per capita basis, there are 4.5 non-Spanish language
radio stations per 100,000 people in the United States compared to 1.1 Spanish
language radio stations per 100,000 Hispanic people in the United States and
only 0.9 Spanish language radio stations per 100,000 Hispanics in the top ten
Hispanic markets. The Company believes that these factors underscore the
attractiveness of its radio stations to advertisers targeting the Hispanic
market, particularly in light of the smaller number of Spanish language radio
stations, as compared to more numerous English language radio stations.
RECENT ACQUISITION
On March 25, 1996, the Company consummated the purchase of the FCC
broadcast license and substantially all of the assets used or useful in the
operation of radio station WPAT-FM for an aggregate purchase price of $84.6
million plus financing and closing costs of $1.8 million. The Company financed
the purchase price with a combination of the sale in a private placement of
37,500 shares of the Company's Redeemable Series A Preferred Stock ("Preferred
Stock"), $35.0 million of the Company's 12 1/4% Senior Secured Notes ("New
Senior Notes") due 2001 and the balance with cash on hand. The Company also
issued to the holders of the Preferred Stock and New Senior Notes warrants to
purchase, in the aggregate, 6% of the Company's common stock on a fully diluted
basis which are exercisable no later than June 29, 1998. Approximately $6.8
million of the gross proceeds was determined to be the value of the warrants. In
addition, financing and issuance costs related to the financing were $3.3
million.
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The Preferred Stock is entitled to dividends at the rate of 12.75% per
annum payable quarterly with the dividend rate increasing by 0.25% for each
period of three months from March 25, 1996 through March 24, 1997 and 0.50% for
each period of three months thereafter, provided that the dividend rate will at
no time exceed 15.25%. During the first three years, dividends may be paid in
cash or additional shares of Preferred Stock. In June, the Company issued an
additional 1,195 shares and in September it issued an additional 1,256 shares of
Preferred Stock in payment of the quarterly dividends due on the Preferred
Stock. The Company is required to redeem the Preferred Stock on December 1,
2002.
The New Senior Notes are secured by the FCC license for WPAT-FM and are
guaranteed by each of the Company's subsidiaries. The Notes are due on June 1,
2001 and bear interest at the rate of 12.25% per annum payable quarterly, with
the interest rate increasing by 0.25% for each three month period from March 25,
1996 to March 24, 1997, and 0.50% for each period of three months thereafter,
provided that the interest rate on the New Senior Notes may not exceed 14.75%
per annum. Until March 24, 1998, interest may be paid in cash or in additional
Notes. In June, the Company issued an additional $1,071,875 aggregate principal
of additional New Senior Notes and in September, the Company issued another
$1,127,246 of aggregate principal of additional New Senior Notes in satisfaction
of the quarterly interest payments due on outstanding New Senior Notes.
Covenants under the Indentures governing the 12 1/2% Senior Notes and the New
Senior Notes limit the Company's ability to pay dividends, repurchase or redeem
its Common Stock or the Notes or incur additional indebtedness, among other
things. (See Note 5 to the consolidated financial statements for additional
features of New Senior Notes and Preferred Stock).
WPAT-FM is licensed at 93.1 Mhz and transmits from an antenna on top of
the World Trade Center. The station's signal covers New York City, northern New
Jersey, much of Suffolk, Nassau and Westchester counties in New York and parts
of Fairfield county in Connecticut. WPAT-FM has a clarity of sound within the
New York metropolitan area comparable to other leading FM stations serving this
area. The acquisition of WPAT-FM allowed the Company to introduce a
complimentary Spanish language format to the operations of its two other radio
stations serving the New York metropolitan area.
PENDING ACQUISITIONS
WYSY-FM.
In August 1996, the Company entered into an acquisition agreement with
Infinity Holdings Corp. of Orlando ("Infinity") to acquire the FCC broadcast
license and substantially all of the assets used or useful in the operation of
radio station WYSY-FM serving the Chicago metropolitan area. The acquisition is
subject to, among other things, timely consent of the FCC and the Department of
Justice (the "DOJ") to the assignment of the broadcast license for this station
to the Company. The DOJ issued early termination on October 29, 1996.
Under the terms of the acquisition agreement, the aggregate purchase
price for WYSY-FM is $33.0 million including a $3 million seller note. The
closing of this acquisition is scheduled to occur on the latest of (i) the day
on which the merger of Infinity Broadcasting Corporation with and into
Westinghouse Electric Corporation is consummated; (ii) the day on which the
asset exchange agreement between Infinity Broadcasting Corporation and Cox
Broadcasting, Inc. and WCKG, Inc. is consummated and (iii) the fifth business
day following receipt of an FCC order granting consent to the assignment to the
Company of the FCC license for the station, but in no event later than June 30,
1997.
WXDJ-FM AND WRMA-FM.
In September 1996, the Company entered into an acquisition agreement
with New Age Broadcasting Inc. and The Seventies Broadcasting Corporation to
acquire the FCC broadcast licenses and substantially all of the assets useful in
the operation of radio stations WXDJ-FM and WRMA-FM serving the Miami
metropolitan area. The acquisition is subject to, among other things, timely
consent of the FCC and the DOJ to the assignment of the broadcast licenses for
the stations to the Company. The DOJ issued early termination on October 29,
1996. The Mass Media Bureau of the FCC consented to the assignment of the
station licenses to the Company on November 14, 1996, and absent a reversal or
court appeal, the grant will become final on December 24, 1996.
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Under the terms of the acquisition agreement, the aggregate purchase
price for WXDJ-FM and WRMA-FM is (i) $110.0 million and (ii) certain customary
closing adjustments and reimbursement obligations. In connection with this
agreement, the Company delivered a $10 million letter of credit to the Sellers
who may draw upon it if an event of default occurs, as defined in the agreement.
If an event of default occurs, liquidated damages are limited to $30 million as
defined in the agreement. The closing of this acquisition is scheduled to occur
on a date not later than 15 days following the date of receipt of an FCC order
granting consent to the assignments to the Company of the FCC licenses for the
stations which consent is final and not subject to appeal or, if the Company has
waived such requirement, following the later of the effective date of the FCC
consent, but in no event later than June 30, 1997.
The Company is in the process of arranging for the financing of the
purchase price for the Pending Acquisitions, and is exploring various financing
options. The Company expects to finance the purchase price with a combination of
one or more of the following: internally generated funds, proceeds from the sale
of non-strategic assets, proceeds from the sale of the Company's debt and/or
equity securities, and/or borrowings under a long-term credit facility. There
can be no assurance that the Company will be able to consummate the Pending
Acquisitions.
PLANNED DISPOSITIONS
In conjunction with the Pending Acquisitions, the Company has
reassessed its business strategy and has determined that, although its AM
Stations have been attractive to advertisers in the past, a better return could
be achieved from the capital invested in the AM Stations if it were instead
invested in acquiring FM Stations. Accordingly, the Company intends to sell
radio stations KXMG-AM, serving the Los Angeles metropolitan area, WXLX-AM
serving the New York metropolitan area, and WCMQ-AM, serving the Miami
metropolitan area. The Company also intends to sell WSKP-FM, its Key West,
Florida station.
OPERATIONS
Among the principal practices used by the Company to operate its
stations and improve station results are: (i) programming based on the results
of audience research and tailored to the tastes of its demographically targeted
listening audience; (ii) developing a high-quality sales force that utilizes
customer-focused marketing systems; and (iii) monitoring operating expenses. The
Company believes this strategy for improving and expanding operations should
provide the basis for increased advertising revenues in each market by
attracting advertising dollars into Spanish language media which have
traditionally been spent in mainstream English language media.
Local Staff and Management. The Company employs talented local
management teams responsible for the day-to-day operations of the stations. In
each of the Company's three markets, its stations are managed by a local
management team which is generally comprised of a general manager, a general
sales manager and a programming director. The Company generally prefers to staff
stations with managers who have experience and knowledge of the local radio
market and the local Hispanic population. Because of the diversity of the
Hispanic populations from region to region in the United States, this
team-oriented approach allows decisions regarding day-to-day programming, sales
and promotional efforts to be made by local managers and improves the Company's
flexibility and responsiveness to changing conditions in each of the markets it
serves. Corporate management regularly provide stations with advice and support
in the development of advertising and marketing strategies and in sales force
training, and is responsible for national sales development, long-range
strategic planning, corporate policies and procedures, resource allocation,
monitoring performance and maintaining overall control of the stations.
Programming. The Company formats the programming of each of its
stations to capture a dominant position within each market. Most of the
Company's stations emphasize music programming due to a strong audience
preference for music and the fact that music programming is comparatively less
expensive to produce than other radio formats.
The Company's FM stations generally target a slightly younger (aged 18
to 49) Hispanic audience than its AM stations. While the Company's FM stations
have regular news and weather segments, the stations primarily offer music
carefully chosen with the particular heritage of the targeted Hispanic listening
audience in mind. The Company's AM programming formats are designed to appeal to
a slightly older, more traditional segment of the Hispanic listening audience.
As with the Company's FM stations, AM station programming is keyed to the tastes
of the particular segment of the Hispanic listening audience served by the
station. The Company's AM programming generally includes more and longer news
segments than those on its FM stations.
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Promotion. Special promotional appearances, such as van appearances at
client events, concerts and tie-ins to major events form an important part of
the Company's marketing strategy. Many of these events enable the Company to
offer its advertisers an additional means of reaching their target markets. In
addition, the Company's stations use promotional events to promote audience
participation by having celebrities and radio personalities in attendance and by
running contests in conjunction with the event. Many of these activities are
co-sponsored by local television stations and newspapers, thus providing the
Company's advertisers with a larger combined audience. The Company's promotional
and marketing campaigns focus on increasing Hispanic consumer awareness of
advertisers' products, creating and reinforcing consumer awareness of stores
which sell specific brands, creating, consumer incentives to visit the stores
and to purchase the brands and building and sustaining the images of particular
brands and stores.
Community Involvement. The Company participates actively in the
communities it serves. Each of the Company's radio stations engages in public
service programming, fund raisers, disaster relief when needed and other
activities benefiting the local community and Hispanics overseas. Other examples
of the Company's community involvement include free public service
announcements, free equal-opportunity employment announcements, tours and
discussions held by station radio personalities with school and community groups
designed to limit drug and gang involvement and free concerts and events
designed to support the stability of the family and the local Hispanic
community. The Company's stations and members of its management have received
numerous community service awards and acknowledgments from governmental entities
and community and philanthropic organizations for their service to the
community.
KLAX-FM AND KXMG-AM
SERVING THE LOS ANGELES MARKET
Los Angeles. The Company's stations, KLAX-FM and KXMG-AM, serve the Los
Angeles market which is the #1 radio revenue market and the #1 Hispanic market
with a DMA population of approximately 16.1 million, of which approximately
37.3% is Hispanic.
KLAX-FM. In February 1988, the Company acquired the Los Angeles area
radio station KNOB-FM. The Company changed its easy-listening English music
format to contemporary Spanish music and its call letters to KSKQ-FM. In January
1992, the Company relocated its FM transmitter site from Long Beach to Baldwin
Hills which extended the station's signal in the San Fernando Valley and to the
more heavily Hispanic populated areas of East Los Angeles. In July 1992, the
Company hired a new general manager and program director. In August 1992, the
Company adopted new call letters KLAX-FM to replace KSKQ-FM, adopted the slogan
identified "La X" and developed and inaugurated a new Spanish language
"Contemporary Ranchera" music format to reach and retain adults aged 18 to 49 of
Mexican descent. Ranchera music is the most widely recognized Mexican regional
music worldwide; it originated in the state of Jalisco, but can be found in all
parts of Mexico. The Ranchera format also highlights Nortena (music from the
border states in the north of Mexico), Grupos (interpretations of romantic
ballads) and Tropical which is the Colombian tropical Cumbia rhythm modified to
add a Mexican flavor. Banda is another form of regional Mexican music with
tropical rhythms which is included in KLAX-FM's Ranchera programming. These
changes were made to appeal more effectively to the tastes and interests of the
station's listening audience and to increase the station's share of the Los
Angeles radio market.
KLAX-FM is licensed at 97.9 Mhz. With its transmitter site in Baldwin
Hills, California, KLAX-FM has a powerful radio signal which enables it to reach
Los Angeles County in addition to Orange County and parts of Ventura, San
Bernardino, Riverside and San Diego counties. The Company has an application
pending before the FCC to change its city of license from Long Beach to East Los
Angeles and to move its transmitting facilities to Flint Peak, thereby allowing
the station to extend its coverage to an additional 1.9 million listeners.
KLAX-FM has an auxiliary transmitter in Long Beach, California. See "Item 2.
Properties."
KXMG-AM. In December 1984, the Company acquired Los Angeles radio
station KZLA-AM. Following the acquisition, the Company changed the station's
call letters to KSKQ-AM and its English language country music format to
contemporary Spanish music. In 1996, the Company adjusted this station's format
to accentuate "Banda" and ballads. It also changed the station's call letters to
KXMG-AM and adopted the slogan identifier "MEGA."
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KXMG-AM is licensed at 1540 Khz. The company believes KXMG-AM's signal
provides market coverage of the Los Angeles metropolitan area comparable to
other AM stations licensed to this area. KXMG-AM's transmitter site, located in
El Sereno, California is owned by the Company and enables this station to reach
substantially all of Los Angeles's DMA.
WSKQ-FM, WXLX-AM AND WPAT-FM
SERVING THE NEW YORK METROPOLITAN MARKET
New York. The Company's stations, WSKQ-FM, WXLX-AM and WPAT-FM serve
the New York metropolitan area which is the #2 radio revenue market and the #2
Hispanic media market in the United States with a DMA population of
approximately 20.0 million, of which approximately 16.4% are Hispanic.
WSKQ-FM. The Company acquired WEVD-FM's broadcasting license and
facilities on January 26, 1989. Upon acquiring WEVD-FM, the Company changed the
station's call letters to WSKQ-FM and its format from an English and Yiddish
language station to contemporary Spanish music. Following this format change,
WSKQ-FM became the first Spanish language FM station to serve the New York
metropolitan area.
In fiscal 1993, in response to the changing tastes of its target
market, the Company developed and launched a new Spanish language music format
known as "Latin Power" designed to appeal to Hispanics of Puerto Rican and
Dominican descent aged 18 to 49. Latin Power features upbeat Latin rhythms of
popular Latin singers such as Luis Miguel, Tito Rojas and Jon Secada, Latin
dance music with regional beats, including Salsa (Puerto Rican/Cuban), Meringue
(Dominican), Cumbia (Central and South American), as well as English language
and dance club music hits of popular entertainers. In addition, as a result of
the increasing popularity among English speaking listeners as well as Hispanics
of the music of artists such as Gloria Estefan, and Boyz 2 Men, WSKQ-FM is
attracting an increasing number of English speaking listeners. In 1994, the
Company adopted a new slogan identifier -"Mega-97.9 FM."
WSKQ-FM is licensed at 97.9 Mhz. In 1994, WSKQ-FM began transmitting
from a new master antenna on top of the Empire State Building strengthening the
station's signal which now covers New York City, northern New Jersey, much of
Suffolk, Nassau and Westchester counties in New York, and parts of Fairfield
County in Connecticut. With modern transmitter equipment, WSKQ-FM's signal
within the New York metropolitan area is comparable to other leading FM stations
serving this area.
WXLX-AM. In September 1983, the Company acquired WVNJ-AM, a Newark, New
Jersey licensed easy-listening, English language radio station serving the New
York market. Upon acquiring WVNJ-AM, the Company changed its call letters to
WSKQ and its format to contemporary Spanish music. In August 1995, the Company
adopted new call letters WXLX and changed the station's programming to Regional
Mexican music to better appeal to the changing tastes of a younger local
Hispanic market composed of Hispanic adults aged 18 to 49. The station employs
veteran radio personalities, such as Martin Munoz, who are well known to the
station's New York radio audience. WXLX-AM broadcasts local and national news,
and sports, weather and traffic as well as call-in and talk shows.
WXLX-AM is licensed at 620 Khz. WXLX-AM currently broadcasts from
Livingston, New Jersey and its signal covers New York City, northern New Jersey,
Nassau and much of Suffolk County on Long Island, Westchester and Rockland
Counties in New York and much of Fairfield County in Connecticut. The Company
believes WXLX-AM's signal provides market coverage of the New York metropolitan
area comparable to other AM stations licensed to this area. The Company's
original lease for WXLX-AM's transmitter site in Livingston, New Jersey expired
on March 31, 1996. Since April, 1996, the Company has been renewing the terms of
the lease, pending the anticipated completion of the new transmitter site in
Lyndhurst, New Jersey. See "Item 2, Properties."
WPAT-FM. In March 1996, the Company acquired WPAT-FM. Upon its
acquisition, the Company changed the format of WPAT-FM from an English language
radio station to a Spanish language romantic adult contemporary format. WPAT-FM
is licensed at 93.1 Mhz and transmits from an antenna on top of the World Trade
Center. The station's signal covers New York City, northern New Jersey, much of
Suffolk, Nassau and Westchester counties in New York and parts of Fairfield
County in Connecticut. WPAT-FM has a clarity of sound within the New York
metropolitan area comparable to other leading FM stations serving this area.
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WCMQ-FM, WCMQ-AM, WZMQ-FM AND WSKP-FM
SERVING THE MIAMI AND SOUTH FLORIDA MARKETS
Miami/South Florida. Four of the Company's stations, WCMQ-FM/AM,
WZMQ-FM and WSKP-FM serve the South Florida market, which is the #12 radio
revenue market and the #3 Hispanic media market in the United States, with a DMA
population of approximately 3.7 million, of which approximately 37.1% are
Hispanic. The Company acquired the WCMQ-FM/AM combination in December 1986.
WCMQ-AM and FM's coverage area includes Dade and Broward counties.
WCMQ-FM. In connection with the pending acquisition of WXDJ-FM and
WRMA-FM, the Company reformatted WCMQ-FM from a "lite" adult contemporary Latin
format which includes a blend of romantic Spanish love songs and ballads
targeting an upscale adult audience aged 25 to 54 to a "Spanish Oldies" format.
WCMQ-FM is licensed at 92.3 Mhz. Its main transmitter location is on
top of the Biscayne Tower in downtown Miami and its auxiliary transmitter is
located in Hialeah, Florida. The Company believes WCMQ-FM's signal provides
market coverage of the Miami metropolitan area comparable to other FM stations
licensed to this area.
WCMQ-AM. WCMQ-AM was one of the first Spanish language radio stations
to serve Miami's large Hispanic population. Staff changes and a new programming
format targeting Hispanics in the 25 to 54 age group were implemented in April
1993, in response to the shifting demographics of Miami's Hispanic population
and in an effort to improve the operating performance of the radio station. The
Company reprogrammed WCMQ-AM to stress a news/talk/sports format. The station
offers a full complement of local, national and international news. In addition,
in 1993, WCMQ-AM became the Spanish voice of the Florida Marlins, a Major League
Baseball team, and has the exclusive right to broadcast all regular season
Marlins games through the 1998 season. In the fall of 1993, WCMQ-AM became the
exclusive Spanish language broadcaster of Florida Panthers home hockey games
through the 1998 season. In addition, beginning with the 1995 season, WCMQ-AM
became the exclusive Spanish language broadcaster of Miami Dolphins football
games. WCMQ-AM has the exclusive right to broadcast these games through the 1996
season.
WCMQ-AM is licensed at 1210 Khz. The WCMQ-AM transmitter site is in
Dade County, Florida. The Company believes WCMQ-AM's signal provides market
coverage of the Miami metropolitan area comparable to other AM stations licensed
to this area.
WZMQ-FM. WZMQ-FM, licensed to Key Largo, Florida, simulcasts programs
of WCMQ-FM and serves the Hispanic community in the Florida Keys and adjacent
communities just south of Miami. The Company acquired a construction permit to
build WZMQ-FM in September, 1989 and began broadcasting in January 1990. WZMQ is
licensed at 103.9 Mhz. WZMQ-FM's transmitter is located in Key Largo, Florida.
The Company believes WZMQ-FM's signal provides market coverage of the Key Largo
area comparable to other FM stations licensed to this area.
WSKP-FM. In July 1995, the company acquired WSKP-FM. The station
simulcasts the programs of WCMQ-AM and is licensed at 107.9 Mhz. The WSKP-FM
transmitter site is located in Key West, Florida. The Company believes WSKP-FM's
signal provides market coverage of the Key West area comparable to other FM
stations licensed to this area.
ADVERTISING
Virtually all radio station revenue is derived from advertising. This
revenue is usually classified in one of two categories - "national" and "local."
"National" connotes advertising that is solicited by a national representative
firm that represents the station and is compensated on a commission-only basis.
"Local" refers to advertising purchased by advertisers in the local community
served by a particular station.
The Company believes that radio is one of the most efficient and
cost-effective means for advertisers to reach targeted demographic groups.
Advertising rates charged by a radio station are based primarily on the
station's ability to attract listeners in a given market and on the
attractiveness to advertisers of the station's listener
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demographics. Rates vary depending upon a program's popularity among the
listeners an advertiser is seeking to attract, the number of advertisers vying
for available air time and the availability of alternative media in the market.
Radio advertising rates generally are highest during the morning and afternoon
drive-time hours which are the peak hours for radio audience listening. The
Company believes that its AM/FM combinations in Los Angeles and Miami and its
FM/FM duopoly in New York are desirable to national advertisers and, as a
result, command attractive advertising rates. However, because the Company
believes that FM/FM duopolies will be even more attractive to national
advertisers, it has decided to redeploy the capital invested in its AM stations
and focus on the development of its FM stations. See "Planned Dispositions." The
Company believes it will be able to increase its rates as new and existing
advertisers recognize the increasing desirability of targeting the growing
Hispanic population in the United States.
Each station broadcasts a predetermined number of advertisements each
hour with the actual number depending upon the format of a particular station.
The Company determines the number of advertisements broadcast hourly that can
maximize the station's available revenue dollars without jeopardizing its
audience listener levels. While there may be shifts from time to time in the
number of advertisements broadcast during a particular time of the day, the
total number of advertisements broadcast on a particular station generally does
not vary significantly from year to year.
The Company's revenue mix between local and national advertising varies
significantly by market. Management's objective for its stations is to increase
the level of national advertising since national advertising generally commands
a higher dollar rate per advertising spot than does local advertising.
Approximately 80% of the Company's advertising is local and 20% is national.
Until the Fall of 1993, a subsidiary of the company sold all national
advertising for the Company's stations. To increase its access to national
advertisers and agencies, including many that have not heretofore advertised on
Spanish language radio, the Company's stations entered into five-year agreements
with Katz Communications Inc. ("Katz") pursuant to which Katz, the largest
broadcasting national sales representative in the United States, is serving as
the Company's exclusive sales representative for national broadcast advertising.
Under the terms of the agreements, during fiscal 1996, the Company paid Katz a
commission of 14% of net revenues received from advertisers on account of
national advertising sales.
Although the majority of the Company's advertising contracts are
short-term (generally running for less than one month), the Company has
long-term relationships with some of its advertisers. In each of its three
broadcasting markets, the Company employs salespeople to obtain local
advertising revenues. The Company believes that its local sales force is crucial
in maintaining relationships with key local advertisers and agencies and
identifying new advertisers. The Company generally pays sales commissions to its
local sales staff upon the receipt from advertisers of the payments related to
such sales. The Company offers assistance to local advertisers by providing them
with studio facilities to produce 60-second commercials free of charge.
COMPETITION
Broadcasting is a highly competitive business. The Company's radio
stations compete for audiences and advertising revenues with other radio
stations of all formats, as well as other media, such as newspapers, magazines,
television, cable television, outdoor advertising and direct mail, within their
respective markets. Audience ratings and market shares are subject to change and
any adverse change in a particular market could have a material adverse effect
on the revenue of stations located in that market. Future operations are further
subject to many variables which could have an adverse effect upon the Company's
financial performance. These variables include: economic conditions, both
general and relative to the broadcasting industry; shifts in population and
other demographics; the level of competition for advertising dollars with other
radio stations and other entertainment and communications media; fluctuations in
operating cost; technological changes and innovations; changes in labor
conditions; and changes in governmental regulations and policies and actions of
federal regulatory bodies, including the FCC. Although the Company believes that
each of its stations is able to compete effectively in its respective market,
there can be no assurance that any such station will be able to maintain or
increase its current audience ratings and advertising revenues. Radio stations
can change format quickly. Any radio station currently broadcasting in either
English or Spanish could shift its format to duplicate the format of any of the
Company's stations. If a station converted its programming to a format similar
to that of a station owned by the Company, the ratings and broadcast cash flow
of the Company's stations could be adversely affected.
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SEASONALITY
The Company's revenues and cash flow are typically lowest in the first
calendar quarter and highest in the second calendar quarter. Seasonal
fluctuations are common in the radio broadcasting industry and are due primarily
to fluctuations in advertising expenditures.
MANAGEMENT AND PERSONNEL
As of September 29, 1996 the Company had approximately 203 full-time
employees of whom 11 were primarily involved in management, 102 in programming,
47 in sales, 35 in general administration and eight in technical activities.
The Company operates with a small headquarters' staff in New York. To
facilitate efficient management from its headquarters, the Company accesses and
utilizes computerized accounting systems from its properties to provide current
information to management on station operations and to assist in cost control
and the preparation of monthly financial statements. Corporate executives
regularly visit each station to monitor its operations and ensure that policies
are implemented.
FEDERAL REGULATION OF BROADCASTING
EXISTING REGULATION AND LEGISLATION. Radio broadcasting is subject to
the jurisdiction of the FCC under the Communications Act of 1934, as amended
(the "Communications Act"), as amended by, inter alia, the Telecommunications
Act of 1996 (the "1996 Act"). The Communications Act prohibits the operation of
a radio broadcasting station except under a license issued by the FCC and
empowers the FCC, among other things, to issue, renew, revoke and modify
broadcasting licenses; assign frequency bands; determine stations' frequencies,
locations, and power; regulate the equipment used by stations; adopt other
regulations to carry out the provisions of the Communications Act; impose
penalties for violation of such regulations; and impose fees for processing
applications and other administrative functions. The Communications Act
prohibits the assignment of a license or the transfer of control of a license
without prior approval of the FCC.
The 1996 Act represents the most comprehensive overhaul of the
country's telecommunications laws in more than 60 years. The 1996 Act and the
FCC's rules and policies adopted thereunder significantly change both the
broadcast ownership rules and the process for renewal of broadcast station
licenses. The 1996 Act and the rules also relax local radio ownership
restrictions and the FCC continues to explore implementation of new ownership
policies in a series of rule makings. The FCC has already implemented some
changes through FCC orders. The 1996 Act establishes a "two-step" renewal
process that limits the FCC's discretion to consider applications filed in
competition with an incumbent's renewal application. Additionally, the 1996 Act
and the rules substantially liberalize the national broadcast ownership rules,
eliminating the national radio limits.
This new regulatory flexibility has engendered aggressive local,
regional, and/or national acquisition campaigns. Liberalization of previous
station ownership limitations on leading incumbents (i.e., existing networks and
major station groups) has increased sharply the competition for, and the prices
of, attractive stations.
MULTIPLE OWNERSHIP RESTRICTIONS. The FCC has promulgated rules that,
among other things, limit the ability of individuals and entities to own or have
an official position or ownership interest above a certain level (an
"attributable" interest, as defined more fully below) in broadcast stations, as
well as other specified mass media entities. Prior to the passage of the 1996
Act, these rules included limits on the number of radio stations that could be
owned or operated under certain conditions on both a national and local basis.
On a national basis, the former FCC rules generally precluded any individual or
entity from having an attributable interest in more than 20 AM radio stations
and 20 FM radio stations.
The 1996 Act substantially relaxed the radio ownership limitations. The
FCC began its implementation of the 1996 Act with several orders issued on March
8, 1996. The Act and the FCC's subsequently issued rule changes eliminated the
national ownership restriction, allowing a single entity to own nationally any
number of AM or FM broadcast stations. The Act and the FCC's new rules also
greatly eased local radio ownership restrictions. As with the old rules, the
maximum allowable varies depending on the number of radio stations within a
market. In markets
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with more than 45 stations, one company may own, operate or control up to eight
stations, with no more than five in any one service; (AM or FM). In markets of
30-44 stations, one company may own up to seven stations, with no more than four
in any one service; in markets with 15-29 stations, one entity may own up to six
stations, with no more than four in any one service. In markets with 14
commercial stations or less, one company may own up to five stations or 50% of
all of the stations in the market, whichever is less, with no more than three in
any one service.
In 1992, the FCC placed limitations on time brokerage (local marketing)
agreements (L.M.A.'s) through which the licensee of one radio station provides
programming for another licensee's station in the same market. Commonly-owned or
controlled stations and licensees which program another station in the market
pursuant to time brokerage agreements, which stationers operate in the same
service (e.g., where both stations are AM) and in the same market, are
prohibited from simulcasting more than 25% of their programming. Moreover, in
determining the number of stations that a single entity may control, an entity
programming a station pursuant to an LMA is required, under certain
circumstances, to count that station toward its maximum ownership limits even
though it does not own the station.
A number of multiple-ownership rules pertain to licensees of television
and radio stations. FCC rules, the Communications Act or both generally prohibit
an individual or entity from having an attributable interest in both a
television station and a radio station, daily newspaper or cable television
system that is located in the same local market area served by the television
station. The FCC has employed a liberal waiver policy with respect to the
TV/radio multiple-ownership restriction (the so-called "one-to-a-market" rule),
generally permitting common ownership of one AM, one FM, and one TV station in
any of the 25 largest markets, provided there are at least 30 separately owned
stations in the market. The 1996 Act directed the FCC to extend its
one-to-a-market waiver policy to the top 50 markets, consistent with the public
interest, convenience and necessity; however, the FCC has not yet implemented
this provision. Moreover, in a pending 1995 rulemaking the FCC has proposed the
possibility of eliminating the one-to-a-market rule entirely. In addition, there
is now pending a Notice of Inquiry which explores possible changes in the
newspaper/radio cross-ownership waiver policy.
Expansion of the Company's broadcast operations in particular areas
nationwide will continue to be subject to the FCC's ownership rules and any
further changes the FCC or Congress may adopt. Significantly, the 1996 Act
requires the FCC to review its remaining ownership rules biennially -as part of
its regulatory reform obligations - to determine whether its various rules are
still necessary. The Company cannot predict the impact of the biennial review
process or any other agency or legislative initiatives upon the FCC's broadcast
rules. Further, the 1996 Act's relaxation of the FCC's ownership rules may
increase the level of competition in one or more of the markets in which the
Company's stations are located, particularly to the extent that any of the
Company's competitors may have greater resources and thereby be in a better
position to capitalize on such changes.
Under the FCC's ownership rules, a direct or indirect purchaser of
certain types of securities of the Company could violate FCC regulations if that
purchaser owned or acquired an "attributable" or "meaningful" interest in other
media properties in the same areas as stations owned by the Company or in a
manner otherwise prohibited by the FCC. All officers and directors of a
licensee, as well as general partners, limited partners who are not properly
"insulated" from management activities, and stockholders who own five percent or
more of the outstanding voting stock of a licensee (either directly or
indirectly), generally will be deemed to have an attributable interest in the
license. Certain institutional investors who exert no control or influence over
a licensee may own up to ten percent of such outstanding voting stock without
being considered "attributable." Under current FCC regulations, debt
instruments, non-voting stock, properly insulated limited partnership interests
(as to which the licensee certifies that the limited partners are not
"materially involved" in the management and operation of the subject media
property) and voting stock held by minority stockholders in cases in which there
is a single majority stockholder generally are not attributable. The FCC's
"cross-interest" policy, which generally precludes an individual or entity from
having a "meaningful" (even though not attributable) interest in one media
property and an attributable interest in a broadcast, cable or newspaper
property in the same area, may be invoked in certain circumstances to reach
interests not expressly covered by the multiple ownership rules. See the Notice
of Inquiry referred to SUPRA.
In January 1995, the FCC initiated a rulemaking proceeding designed to
permit a "thorough review of [its] broadcast media attribution rules." Among the
issue on which comment was sought were (i) whether to change the voting stock
attribution benchmarks from five percent to ten percent and, for passive
investors, from ten percent to twenty percent; (ii) whether there are any
circumstances in which non-voting stock interests, which are currently
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considered non-attributable, should be considered attributable; (iii) whether
the FCC should eliminate its single majority shareholder exception (pursuant to
which voting interests in excess of five percent are not considered cognizable
if a single shareholder own more than fifty percent of the voting power); (iv)
whether to relax insulation standards for business development companies and
other widely-held limited partnerships; (v) how to treat limited liability
companies and other new business forms for attribution purposes; (vi) whether to
eliminate or modify the cross-interest policy; and (vii) whether to adopt a new
policy which would consider whether multiple cross interests or other
significant business relationships (such as time brokerage agreements, debt
relationships or holdings of non attributable interests), which individually do
not raise concern, raise issues with respect to diversity and competition. In
November 1996, the FCC issued a Further Notice of Proposed Rulemaking intended
to change rules regarding attribution in light of the 1996 Act. The Company
cannot predict with certainty when this proceeding will be concluded or whether
any of these standards will be changed. Should the attribution rules be changed,
the Company is unable to predict what effect, if any, such changes would have on
the Company or its activities.
License Grant and Renewal. Prior to the passage of the 1996 Act, radio
broadcasting licenses generally were granted or renewed for a period of seven
years upon a finding by the FCC that the "public interest, convenience, and
necessity" would be served thereby. Under the former FCC rules, the time an
application was made for renewal of a radio license, parties in interest could
file petitions to deny the application, and such parties, including members of
the public, could comment upon the service the station provided during the
preceding license term. In addition, prior to passage of the 1996 Act, and under
the former FCC rules any person was permitted to file a competing application
for authority to operate on the station's channel and replace the incumbent
licensee. Renewal applications were granted without a hearing if there were not
competing applications or if issues raised by petitioners to deny informal
objectors or the FCC itself were not serious enough to cause the FCC to order a
hearing. If competing applications were filed, a full comparative hearing was
required, sometimes encompassing years of expensive litigation and uncertainty.
Under the 1996 Act, a number of important changes to FCC license
renewal procedures were instituted. First, the statutory restriction on the
length of broadcast licenses has been amended to allow the FCC to grant
broadcast licenses for terms of up to eight years, although the FCC has not yet
implemented this provision. The 1996 Act also eliminated the consideration of
competing applications for the incumbent's frequency unless the FCC first denied
the incumbents renewal applications. The 1996 Act requires renewal of a
broadcast license if the FCC finds that (1) the station has served the public
interest, convenience, and necessity; (2) there have been no serious violations
of either the Communications Act or the FCC's rules and regulations by the
licensee; and (3) there have been no other serious violations which taken
together constitute a pattern of abuse. In making its determination, the FCC may
still consider petitions to deny and informal objections but cannot consider
whether the public interest would be better served by a person other than the
renewal applicant.
By order dated April 12, 1996, the FCC modified its rules to implement
the new two-step renewal procedure and to eliminate the right to file an
application that is mutually exclusive with a license renewal application. Also
on April 12, 1996, the FCC issued a notice of Proposed Rulemaking to consider
how to implement the new (longer) license term provision of the 1996 Act.
Although in the vast majority of cases broadcast licenses are granted
by the FCC even if petitions to deny or informal objections are filed against
them, there can be no assurance that any of the Company's stations' licenses
will be renewed, or if renewed, when they will be renewed, whether they will be
renewed for the full normal term or a lesser term, or whether they will be
subject to any special conditions.
Alien Ownership Restrictions. The Communications Act restricts the
ability of foreign entities or individuals to own or hold certain interests in
broadcast licenses. Foreign governments, representatives of foreign governments,
non-U.S. citizens, representatives of non-U.S. citizens, and corporations or
partnerships organized under the laws of a foreign nation are barred from
holding broadcast licenses. Non-U.S. citizens, collectively, may directly or
indirectly own or vote up to twenty percent of the capital stock of an FCC
licensee. In addition, a broadcast license may not be granted to representatives
or held by any corporation that is controlled, directly or indirectly, by any
other corporation more than one-fourth of whose capital stock is owned or voted
by non-U.S. citizens or their representatives by foreign governments or their
representatives or by non-U.S. corporations, if the FCC finds that the public
interest will be served by the refusal or revocation of such license. The FCC
has interpreted this provision of the Communications Act to require an
affirmative public interest finding before a broadcast license may be controlled
by any such corporation, and the FCC has made such an affirmative finding
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only in very few limited circumstances. The Communications Act previously also
prohibited grant of a broadcast station license (i) to any corporation with an
alien officer or director, or (ii) to any corporation controlled by another
corporation with any alien officers or more than one-fourth alien directors. The
restrictions on non-U.S. citizens serving as officers or directors of licensees
and their parent corporations have been eliminated, however, by the 1996 Act.
Other Regulations Affecting Radio Broadcasting Stations. The FCC has
significantly reduced its past regulation of broadcast stations, including
elimination of formal ascertainment requirements and guidelines concerning
amounts of certain types of programming and commercial matter that may be
broadcast. In 1990, the U.S. Supreme Court refused to review a lower court
decision that upheld the FCC's 1987 action invalidating most aspects of the
Fairness Doctrine, which had required broadcasters to present contrasting views
on controversial issues of public importance. The FCC has, however, continued to
regulate other aspects of fairness obligations in connection with certain types
of broadcasts. In addition, there are FCC rules and policies, and rules and
policies of other federal agencies, that regulate matters such as political
advertising practices, equal employment opportunity, application procedures and
other areas affecting the business or operations of broadcast stations.
Recent Developments, Proposed Legislation and Regulation. Congress has
enacted legislation that eliminated the minority tax certificate program of the
FCC, which previously gave favorable tax treatment to entities selling broadcast
stations to entities controlled by an ethnic minority. In addition, a recent
Supreme Court decision has cast into doubt the continued validity of other FCC
programs designed to increase minority ownership of mass media facilities.
Congress and the FCC currently have under consideration, and may in the
future adopt, new laws, regulations and policies regarding a wide variety of
matters that could affect, directly or indirectly, the operation and ownership
of the Company's broadcast properties. In addition to the changes and proposed
changes noted above, such matters include, for example, the license renewal
process, spectrum use fees, political advertising rates, potential restrictions
on the advertising of certain products (liquor, beer and wine, for example) and
the rules and policies to be applied in enforcing the FCC's equal employment
opportunity regulations. Other matters that could affect the Company's broadcast
properties include technological innovations and developments generally
affecting competition in the mass communications industry.
The foregoing does not purport to be a complete summary of all the
provisions of the Communications Act, or the 1996 Act, nor of the regulations
and policies of the FCC thereunder. The 1996 Act also covers satellite and
terrestrial delivery or digital audio radio service, and direct broadcast
satellite systems. Proposals for additional or revised regulations and
requirements are pending before and are being considered by Congress and federal
regulatory agencies from time to time. Also, various of the foregoing matters
are now, or may become, the subject of court litigation, and the Company cannot
predict the outcome of any such litigation or the impact on its broadcast
business.
ITEM 2. PROPERTIES
The Company's corporate headquarters are located in New York City. The
types of properties required to support each of the Company's radio stations
include offices, broadcasting studios and antenna towers where its broadcasting
transmitters and antenna equipment are located. The Company owns the building
housing its corporate headquarters in New York City which also houses the
WSKQ-FM, WPAT-FM, and WXLX-AM studios In the Fall of 1995, the Company relocated
the offices and studios of KLAX-FM and KXMG-FM in Los Angeles to a new facility
which the Company purchased in October 1994. During fiscal 1996 the building
located on Sunset Boulevard, which was part of the assets acquired with the Los
Angeles A.M. station, was written down. (See Note 4 to the financial
statements). The studios and offices of the Company's Miami and South Florida
stations are located in leased facilities with a lease term that expires in
2012. See "Item 13. Certain Relationships and Related Transactions." The Company
owns its transmitter site for KXMG-AM in Los Angeles and the auxiliary
transmitter site for KLAX-FM in Long Beach, California and leases its other
transmitter sites, with lease terms that expire from 1996 to 1998, assuming all
renewal options are exercised.
The Company's lease for WXLX-AM's transmitter site in Livingston, New
Jersey expired on March 31, 1996. The Company has identified a new site for the
relocation of the WXLX-AM transmitter within the New Jersey Meadowlands, has
signed a new long-term lease and has applied to the FCC for approval to
designate Jersey
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City, New Jersey, as its community of license. The Company has also received
certain of the local governmental approvals necessary to move to this new site.
The Company has no assurance that it will receive all necessary FCC, state
environmental or local building permits or sign an acceptable lease and complete
new construction or continue to arrange an extension of its Livingston lease.
While the Company believes that it may obtain special temporary operating
authority to continue broadcasting WXLX-AM from other locations so as not to
interrupt the station's operations, it may be unable to do so and accordingly,
upon the expiration of its lease extension for WXLX-AM's transmitter site in
March 1997, there is no assurance that this station will be able to continue
broadcasting without interruption. Except for the transmitter site in
Livingston, New Jersey, the Company does not anticipate any difficulties in
renewing those leases that expire within the next five years or in leasing other
space if required.
The transmitter sites for the Company's stations are material to the
Company's overall operations. Management believes that its properties are in
good condition and are suitable for its operations; however, the Company
continually seeks opportunities to upgrade its properties. The Company owns
substantially all of the equipment used in its radio broadcasting business.
ITEM 3. LEGAL PROCEEDINGS
Alfredo Rodriguez v. Spanish Broadcasting System of California, Inc.:
Spanish Broadcasting System, Inc.: Raul Alarcon, Los Angeles Superior Court Case
No. BC156965. A former general manager of SBS' Los Angeles' radio stations filed
suit in October 1996 alleging wrongful termination and breach of contract, and
damages of approximately $2 million. SBS believes that the claim is without
merit, since the general manger voluntarily resigned. The case is at the very
beginning of litigation, and has been tendered to SBS' insurance carrier for
coverage. SBS is vigorously defending the claim.
From time to time the Company is involved in litigation incidental to
the conduct of its business, such as contractual matters and employee-related
matters. The Company is not currently a party to any other litigation which, in
the opinion of management, is likely to have a materially adverse effect on the
Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
PART II.
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK
AND RELATED STOCKHOLDERS MATTERS
MARKET INFORMATION
The Company's Common Stock has not been registered under the Securities
Act or the Securities Exchange Act of 1934, as amended, and is not listed on any
national securities exchange. There is no established public trading market for
the Company's Common Stock. There are currently three holders of the Company's
Common Stock. See "Item 12. Security Ownership of Certain Beneficial Owners and
Management".
DIVIDENDS
The Company has not paid cash dividends on its Common Stock and does
not expect to do so in the foreseeable future. The Indenture governing the
Company's 12 1/2% Senior Notes due 2002 and the Indenture governing the
Company's 12 1/4% Senior Secured Notes due 2001 limit the Company's ability to
pay dividends on the Common Stock. The payment of cash dividends in the future
will depend on limitations in the Indenture governing the Notes, the Company's
earnings, financial condition, capital needs and on other factors deemed
relevant by the Board of Directors at the time. It is the current policy of the
Company's Board of Directors to retain earnings to finance the operations and
growth of the Company's business. See "Item 14. Exhibits, Financial
14
<PAGE> 18
Statement Schedules and Reports on Form 8-K" and, Note 5 of Notes to
Consolidated Financial Statements of the Company.
ITEM 6. SELECTED FINANCIAL DATA
The selected consolidated financial data presented below under the
captions "Statement of Operations Data" and "Balance Sheet Data" as of and for
each of the fiscal years in the five-year period ended September 29, 1996, are
derived from the consolidated financial statements of the Company, which
consolidated financial statements have been audited by KPMG Peat Marwick LLP,
independent certified public accountants. The consolidated financial statements
for each of the years in the three-year period ended September 29, 1996, and the
report thereon, are included elsewhere in this Annual Report. The selected
consolidated financial data of the Company should be read in conjunction with
the consolidated financial statements of the Company as of and for each of the
fiscal years in the three-year period ended September 29, 1996, the related
notes and independent auditor's report, included elsewhere in this Annual
Report. For additional information see "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations."
15
<PAGE> 19
FISCAL YEAR ENDED
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------------------------------
9/27/92 9/26/93 9/25/94 9/24/95 9/29/96
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Gross broadcasting revenues $ 27,991 $ 35,744 $ 45,825 $ 54,152 $ 55,338
Less: Agency Commissions (3,024) (4,116) (5,688) (6,828) (6,703)
-------- -------- -------- -------- --------
Net Revenues 24,967 31,628 40,137 47,324 48,635
OPERATING EXPENSES:
Station operating expenses (1) 15,399 19,461 22,144 22,998 27,876
Corporate expenses 1,484 2,518 2,884 4,281 3,748
Depreciation and amortization 3,911 3,598 3,256 3,389 4,556
Write-down of franchise costs (2) -- 16,365 -- -- --
-------- -------- -------- -------- --------
Operating income (loss) 4,173 (10,314) 11,852 16,656 12,455
Interest expense, net 14,025 14,132 14,203 12,874 16,533
Financing costs 221 555 3,458 -- 876
Other expense (income) 70 (48) (35) 381 698
-------- -------- -------- -------- --------
Income (loss) before income
taxes and extraordinary item (10,143) (24,953) (5,774) 3,401 (5,652)
Income tax expense (benefit) 24 46 (2,231) 1,411 (1,166)
-------- -------- -------- -------- --------
Income (loss) before
extraordinary item (10,167) (24,999) (3,543) 1,990 (4,486)
Extraordinary item (3) -- -- 70,255 -- --
-------- -------- -------- -------- --------
Net Income (Loss) ($10,167) ($24,999) $ 66,712 $ 1,990 ($ 4,486)
======== ======== ======== ======== ========
OTHER DATA:
Broadcast cash flow (5) $ 9,568 $ 12,167 $ 17,993 $ 24,326 $ 20,759
Broadcast cash flow margin (5) 38.3% 38.5% 44.8% 51.4% 42.7%
EBITDA (6) $ 8,084 $ 9,649 $ 15,109 $ 20,045 $ 17,011
EBITDA margin (6) 32.4% 30.5% 37.6% 42.4% 35.0%
AS OF
9/27/92 9/26/93 9/25/94 9/24/95 9/29/96
BALANCE SHEET DATA:
Cash and cash equivalents $ 2,691 $ 4,398 $ 12,137 $ 17,817 $ 5,468
Net working capital (deficiency) (135,587) (142,807) 11,981 22,194 9,172
Total assets 97,107 81,630 98,733 103,629 176,860
Total long term debt, including
current maturities, but excluding
accrued interest 120,877 123,076 93,573 95,523 135,914
Stockholders' equity (deficiency)(4) (47,829) (75,218) (2,960) (1,150) (3,569)
- - ---------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTES TO SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
(1) Station operating expenses include engineering, programming, selling
and general administrative expenses.
(2) Concurrently with the refinancing described below in note 3, the
Company obtained appraisals for the assets of its radio stations. The
appraised values of certain stations were less than the carrying values
of such assets, including franchise costs by $16,365,255, in the
aggregate. Based on the appraisals and management's own evaluation of
the recoverability of franchise costs in relation to the then current
market conditions in the broadcasting industry, the Company reduced the
carrying amounts of the applicable franchise costs by $16,365,255
through a charge to operations in the 1993 consolidated statement of
operations.
(3) On June 29, 1994, the Company sold 107,059 units, each consisting of
$1,000 principal amount of the Company's 12 1/2% Senior Notes due 2002
(the "Notes") and a Warrant. The Notes were issued at a substantial
discount from their principal amount. The sale of the Notes and
Warrants generated gross proceeds of $94,000,000 and net proceeds to
the Company of $87,774,002, net of financing costs of $6,225,998. Of
the $94,000,000 of gross proceeds from the sale of the Notes and
Warrants, $88,603,000 was allocated to the Notes and $5,397,000 was
determined to be the value of the Warrants. Of the net proceeds from
the sale of the Notes and Warrants, $83,000,000 was used to satisfy in
full the Company's obligations to
16
<PAGE> 20
its two former principal lenders, and the balance was used to settle
litigation with a former stockholder and for general corporate
purposes. The Company realized a gain of $70,254,772 in connection with
its repayment of all obligations to its two former principal lenders
because it was able to satisfy in full these obligations at substantial
discounts to their face amounts in accordance with restructuring
agreements between the Company and such lenders.
(4) In connection with the sale of the Notes and Warrants discussed in note
3 above, in fiscal 1994, the Company consolidated its radio operations
through the contribution by the principal stockholders to the Company
of their interests in eight corporations in exchange for common stock
of the Company. As a result of the contribution, the Company issued new
shares of Class A and Class B Common Stock in exchange for the then
outstanding common stock. The periods presented have been restated to
reflect the effect of the aforementioned transaction.
(5) The term "broadcast cash flow" means operating income before
depreciation and amortization, write-down of franchise costs and
corporate expenses. Broadcast cash flow should not be considered in
isolation from, or as a substitute for, net income or cash flow
statement data or as a measure of the Company's profitability or
liquidity. Although broadcast cash flow is not a measure of performance
calculated in accordance with generally accepted accounting principles,
broadcast cash flow is widely used in the broadcasting industry as a
measure of a broadcasting company's operating performance. Broadcast
cash flow margin is defined as the percentage derived by dividing
broadcast cash flow by net revenues.
(6) EBITDA represents net income before extraordinary item, net interest
expense, financing costs, income taxes, depreciation and amortization,
write-down of franchise costs and other expenses and income. The
Company has included information concerning EBITDA in this Annual
Report because it is used by certain investors as a measure of a
company's ability to service its debt obligations and it is also the
basis for determining compliance with certain covenants in the
Indenture governing the Company's senior indebtedness. EBITDA should
not be used as an alternative to, or be considered more meaningful
than, operating income, net income or cash flow as an indicator of the
Company's operating performance. EBITDA margin is defined as the
percentage derived by dividing EBITDA by net revenues.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
GENERAL
The Company's financial results depend on a number of factors,
including the strength of the national economy and the local economies served by
the Company's stations, total advertising dollars dedicated to the markets
served by the Company's stations, advertising dollars targeted to the Hispanic
consumers in the markets served by the Company's stations, the Company's
stations' audience ratings, the Company's ability to provide popular
programming, local market competition from other radio stations and other
advertising media, and government regulation and policies.
As is true of other radio groups, the Company's performance is
customarily measured by its ability to generate broadcast cash flow and EBITDA.
Although broadcast cash flow and EBITDA are not measures of performance
calculated in accordance with generally accepted accounting principles, the
Company believes that broadcast cash flow and EBITDA are useful in evaluating
the Company because such measures are accepted by the broadcasting industry as
generally recognized measures of performance and are used by securities industry
analysts who publish reports on the performance of broadcasting companies. In
addition, the Company has included information concerning EBITDA in this Annual
Report because it is used by certain investors as a measure of a company's
ability to service its debt obligations and it is also the basis for determining
compliance with certain covenants in the Indenture governing the Notes.
Broadcast cash flow and EBITDA are not intended to be substitutes for operating
income (as determined in accordance with generally accepted accounting
principles), or alternatives to cash flow from operating activities (as a
measure of liquidity), or alternatives to net income.
In the radio broadcasting industry, stations may utilize trade or
barter agreements to provide advertising time in exchange for goods or services
(such as travel and products used in promotional campaigns or "give-always")
instead of cash compensation. In each of fiscal years 1994, 1995 and 1996, the
Company sold approximately 91%, 94% and 94%, respectively, of its available
advertising time for cash. The Company believes that its percentage of
advertising time sold for cash will increase in the future as its stations'
ratings increase.
17
<PAGE> 21
The Company reports its revenues and expenses on a broadcast month
basis. For fiscal 1996, the Company reported 53 weeks of revenues and expenses
compared to 52 weeks reported in fiscal 1995.
In March 1996, the Company acquired WPAT-FM for $86.4 million including
financing costs. Pursuant to the terms of the acquisition agreement the Company
began operating WPAT-FM on January 26, 1996 and the Company's results include
the operations of WPAT-FM from such date.
RESULTS OF OPERATIONS
FISCAL YEAR 1996 COMPARED TO FISCAL YEAR 1995
Net revenue. Net revenues increased to $48.6 million for fiscal 1996
from $47.3 million for fiscal 1995, an increase of $1.3 million, or 2.7% . This
increase was due primarily to an increase in net revenues generated by the
Company's stations in New York and Miami, offset by lower net revenues from the
Los Angeles stations. The newly acquired radio station WPAT-FM, which commenced
operations in January 1996 had net revenues of $4.6 million. In addition, the
Company's other New York radio stations experienced net revenue increases
primarily as a result of rating increases that allowed the stations to increase
their advertising rates. The Miami stations contributed to the net revenues
growth due to more effective sales efforts. These increases were partially
offset by a decrease in the net revenues of the Los Angeles stations which were
adversely effected by a decline in ratings. In fiscal 1996, net revenues from
national advertising decreased 5% while local advertising increased by 3%.
Operating Expenses. Total operating expenses increased to $36.2 million
during fiscal 1996 from $30.7 million during fiscal 1995, an increase of $5.5
million or 17.9%. As a percentage of net revenues total operating expenses
increased to 74.4% in fiscal 1996 from 64.8% in fiscal 1995. The increase was
caused by increases of $1.1 million in engineering and programming expenses,
$3.7 million in selling , general and administrative expenses and $1.2 million
in depreciation and amortization, partially offset by a $0.5 million decline in
corporate expenses.
The primary reasons for the increase in engineering and programming
expenses were the costs associated with operating the newly acquired station in
New York, WPAT-FM, the settlement of a lawsuit with an ex-employee in Miami, the
increase in salary and a starting bonus for a new on-air personality in Miami
and increased engineering costs in the New York and Miami markets. Selling,
general and administrative expenses were also impacted by the operation of
WPAT-FM. Additionally the Company's other stations in the New York market
experienced increases in selling salaries, bonuses and national representative
commissions due to the sales improvements, the settlement of a lawsuit with a
former customer and the reserve of a loan to a former employee. The Los Angeles
stations' advertising and promotional expenses increased primarily due to
billboard and television campaigns. The Miami stations experienced a rise in
salaries and commissions resulting from higher revenues. Sports related
programming increased due to the first year of the Company broadcasting the
Miami Dolphins football games.
The lower corporate expenses were caused by lower bonuses, as well as
lower professional fees. An increase in depreciation and amortization resulted
mainly from the amortization of the franchise costs related to the WPAT-FM
purchase.
Operating income. Operating income decreased from $16.7 million in
fiscal 1995 to $12.5 million in fiscal year 1996, a decrease of $4.2 million, or
25.1%. This decrease was due to the increase in operating expenses partially
offset by the increase in net revenues.
EBITDA. EBITDA decreased to $17.0 million from $20.0 million, a
decrease of $3.0 million, or 15.0%. Such decrease, similar to operating income,
was caused by the increase in operating expenses exclusive of depreciation and
amortization, partially offset by the increase in net revenues. EBITDA margin
decreased to 35.0% from 42.4%.
Other expenses. Other expenses comprised of interest expense, net of
interest income and refinancing costs increased to $18.1 million from $13.3
million, an increase of $4.8 million, or 36.1%. The increase resulted mainly
from the additional interest incurred on the New Senior Secured Notes issued
during this fiscal year to partially finance the acquisition of WPAT-FM.
Additionally, the Company incurred non-recurring financing costs and wrote down
the carrying value of a building in Los Angeles (See Item 2 "Properties").
18
<PAGE> 22
Net income (loss). The Company had a net loss of $4.5 million in fiscal
year 1996 compared to net income of $2.0 million in fiscal year 1995. This
change was caused by the decrease in operating income combined with the increase
in other expenses, previously discussed.
FISCAL YEAR 1995 COMPARED TO FISCAL YEAR 1994
Net Revenues. Net revenues increased to $47.3 million for fiscal 1995
from $40.1 million for fiscal 1994, an increase of $7.2, million, or 18.0%. The
increase in net revenues primarily was due to the significant growth in net
revenues in New York as a result of advertising price increases related to
WSKQ-FM's improved Arbitron ranking, growth in net revenues in Miami due to
promotional and sports programming events, and to a lesser extent, growth in net
revenues in Los Angeles due to a 41.5% increase in national advertising at
KLAX-FM and KXMG-AM. In fiscal 1995, net revenues from national and local
advertising increased 41% and 18%, respectively.
Operating Expenses. Total operating expenses increased to $30.7 million
in fiscal 1995 from $28.3 million in fiscal 1994, an increase of $2.4 million or
8.5%. However, as a percentage of net revenues, total operating expenses
decreased to 64.8% in fiscal 1995 from 70.5% in fiscal 1994. Operating expenses
increased in fiscal 1995 as follows: corporate expenses increased by $1.4
million, selling, general and administrative expenses increased by $0.6 million,
engineering and programming expenses increased by $0.2 million and depreciation
and amortization increased by $0.1 million. Corporate expenses increased as a
result of higher salaries, bonuses (principally to Messrs. Alarcon Jr. and
Garcia totaling approximately $783,000), professional fees and insurance costs.
Selling, general and administrative expenses increased in all markets, primarily
as a result of higher promotion expenses and higher sales commissions due to
increased net revenues. The increase in engineering and programming expenses
resulted primarily from higher music license fees related to increased sales in
New York and the settlement of a lawsuit relating to music license fees.
Operating income. For fiscal 1995, the Company had operating income of
$16.7 million compared to operating income of $11.9 million for fiscal 1994, an
increase of $4.8 million, or 40.3%. This growth was caused by the increase in
net revenues in fiscal 1995, which was offset by the increase in operating
expenses discussed above.
EBITDA. EBITDA increased to $20.0 million during fiscal 1995 from $15.1
million during fiscal 1994, an increase of $4.9 million or 32.5%. The growth in
EBITDA was caused by an increase in net revenues which was partially offset by
the increase in operating expenses discussed above. EBITDA margin increased to
42.4% during fiscal 1995 from 37.6% during fiscal 1994.
Other expenses. Other expenses comprised of interest expense, net of
interest income, and refinancing costs, decreased to $13.3 million in fiscal
1995, from $17.6 million in fiscal 1994, a decrease of $4.3 million or 24.4%.
The principal reasons for the decrease were the absence of refinancing costs in
fiscal 1995, higher interest income of $0.5 million, as well as lower interest
expenses. These decreases were offset by a charge of $0.4 million related to the
settlement of litigation with a former stockholder.
Net income. The Company had net income of $2.0 million for fiscal 1995
compared to net income of $66.7 million for fiscal 1994. This decrease was due
primarily to the absence in fiscal 1995 of an extraordinary gain of $70.3
million (net of income taxes) associated with the refinancing of the Company's
indebtedness in fiscal 1994. Excluding the extraordinary gain, the Company had a
net loss of $3.5 million in fiscal 1994 compared to net income of $2.0 million
for fiscal 1995. The increase in net income before extraordinary items in fiscal
1995 was due primarily to the increase in the Company's operating income in
fiscal 1995 described above and the decrease in other expenses.
FISCAL YEAR 1994 COMPARED TO FISCAL YEAR 1993
Net Revenues. Net revenues increased to $40.1 million for fiscal 1994
from $31.6 million for fiscal 1993, an increase of $8.5 million, or 26.9%. The
increase in net revenues primarily was due to the significant growth in net
revenues in Los Angeles as a result of advertising price increases related to
KLAX-FM's improved Arbitron ranking. Increases in net revenues for the Los
Angeles market were supplemented by increases in net revenues in Miami, as a
result of the programming change to a news/talk/sports format.
19
<PAGE> 23
Operating expenses: Total operating expenses decreased to $28.3 million
in fiscal 1994 from $41.9 million in fiscal 1993, a decrease of $13.6 million,
or 32.5%. As a percentage of net revenues, total operating expenses decreased
from 132.6% to 70.5%. The decrease in total operating expenses was due to the
absence in fiscal 1994 of a one-time write-down of franchise costs of $16.4
million incurred in fiscal 1993. Excluding this one-time charge, total operating
expenses in fiscal 1993 were $25.6 million, or 80.9% of net revenues. Operating
expenses increased in fiscal 1994 as follows: engineering and programming
expenses increased by $0.8 million, selling, general and administrative expenses
increased by $1.9 million, and corporate expenses increased by $0.4 million.
These increases were offset by a $0.3 million decline in depreciation and
amortization.
Contributing to the increase in operating expenses were increases in
programming expenses in the Miami and Los Angeles markets. Programming expenses
of the Company's Miami radio stations increased due to the hiring of new on-air
personalities and a programming director and programming expenses of the
Company's Los Angeles stations increased due to the higher music license fees
related to increased revenues. The $1.9 million increase in selling, general and
administrative expenses from fiscal 1993 to fiscal 1994 was due primarily to
increased sales commissions, outside representative commissions related to the
Katz agreements, increased salary expenses due to the hiring of additional
employees and increased trade expenses related to higher promotional activity.
These increases were offset by a significant decrease in bad debt expense due to
improved collections. The increase in corporate expenses was due to an increase
in the number of employees and increases in travel expenses associated with the
refinancing of the Company's indebtedness.
Operating income (loss). For fiscal 1994, the Company had operating
income of $11.9 million compared to an operating loss of $10.3 million during
fiscal 1993. This change was caused by an increase in net revenues in fiscal
1994 and the absence of the write-down of franchise costs incurred in fiscal
1993, offset by the increase in other operating expenses discussed above.
Excluding the write-down of franchise costs, operating income was $6.1 million
in fiscal 1993.
EBITDA. EBITDA increased to $15.1 million during fiscal 1994 from $9.6
million during fiscal 1993, an increase of $5.5 million, or 57.3%. This increase
was caused by an increase in net revenues which was partially offset by the
increase in operating expenses. EBITDA margin increased to 37.6% during fiscal
1994 from 30.5% during fiscal 1993.
Net interest expense. Net interest expense was relatively constant in
fiscal 1994 at $14.2 million compared to $14.1 million during fiscal 1993.
Net income (loss). The Company had net income of $66.7 million for
fiscal 1994 compared to a net loss of $25.0 million for fiscal 1993. The change
was due primarily to an extraordinary gain of $70.3 million (net of income
taxes) in fiscal 1994 associated with the refinancing of the Company's
indebtedness and the increase in operating income discussed above. Excluding
this extraordinary gain, the Company had a loss of $3.5 million in fiscal 1994.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company's capital expenditures primarily have been
for the improvements and technical upgrades of its broadcasting equipment as
well as for acquisitions and upgrades of its facilities. In fiscal 1994, capital
expenditures of $0.9 million were primarily related to tower improvements at the
New York FM station, construction of a new transmitting facility in Key West,
Florida, and equipment purchases for all of the radio stations. In fiscal 1995,
the Company's capital expenditures aggregated $5.0 million, of which $3.6
million was used to purchase and upgrade a building to which the company
relocated the studio and administrative facilities for its Los Angeles radio
stations; $0.3 million was used to upgrade the studio and technical equipment
used in the operation of the Los Angeles stations; and $0.4 million was used to
purchase the antenna and broadcast license for WSKP-FM in Key West, Florida. The
Company anticipates that capital expenditures for fiscal 1997 will be
approximately $2.0 million. For fiscal year 1996 cash flow generated from
operations was $8.8 million. A portion of the Company's cash flow was used to
make its semiannual interest payment on the Company's 12 1/2% Senior Notes due
2001. Additionally, the Company invested $3.8 million in capital expenditures,
mostly for the construction of a new tower and antenna system at its newly
leased site in New Jersey for WXLX-AM and the upgrade of the Los Angeles
building which is used for its radio operations.
20
<PAGE> 24
In March 1996, the Company purchased the radio station WPAT-FM for
$86.4 million, including financing costs, which was financed through the
proceeds of $33.4 million of the Company's New Senior Secured Notes and the
proceeds of $35.8 million from the issuance of the Company's Preferred Stock,
net of financing and issuance costs respectively.
Net cash provided by financing activities primarily have been used for
working capital and debt service obligations related to existing indebtedness.
In fiscal 1994, the Company refinanced substantially all of its then outstanding
indebtedness through the sale of Notes and Warrants. In fiscal 1995, the Company
made scheduled cash interest payments on the Notes in the amount of $8.0
million. Principal of the Notes is due in 2002.
The Company's revenues fluctuate throughout the year. The Company's
second fiscal quarter (January through March) generally produces the lowest
revenues for the year and the third fiscal quarter (April through June)
generally produces the highest revenues, primarily due to increased levels of
advertising during this period. The Company's operating results in any period
may also be affected by the occurrence of advertising and promotional expenses
that do not produce commensurate revenues in the period in which the expenses
are incurred. As a result of Arbitron's practice of reporting radio ratings on a
quarterly basis, the potential effects of changes in audience ratings on the
Company's advertising revenues may be delayed.
The Company is in the process of arranging for the financing of the
purchase price for the Pending Acquisitions, and is exploring various financing
options. The Company expects to finance the purchase price with a combination of
one or more of the following: internally generated funds, proceeds from the sale
of non-strategic assets, proceeds from the sale of the Company's debt and/or
equity securities, and/or borrowings under a long-term credit facility. There
can be no assurance that the Company will consummate the Pending Acquisitions.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information called for by this Item 8 is included following "Item
14. Index to Consolidated Financial Statements and Schedules, and Reports on
Form 8-K" appearing at the end of this Annual Report on From 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES
BIOGRAPHICAL INFORMATION
The following table sets forth the names, ages and positions of the
directors, executive officers and certain key employees of the Company as of
September 29, 1996. Each director of the Company serves until his successor is
elected and qualifies.
<TABLE>
<CAPTION>
- - --------------------------- -------- --------------------------------------------------------------------------------
NAME AGE CURRENT POSITION WITH THE COMPANY
- - --------------------------- -------- --------------------------------------------------------------------------------
<S> <C> <C>
Pablo Raul Alarcon Sr. 70 Chairman of the Board of Directors of the Company
- - --------------------------- -------- --------------------------------------------------------------------------------
Raul Alarcon Jr* 40 President and Chief Executive Officer and a Director of the Company
- - --------------------------- -------- --------------------------------------------------------------------------------
Jose Grimalt 68 Secretary and a Director of the Company
- - --------------------------- -------- --------------------------------------------------------------------------------
Joseph Garcia 51 Vice President and Chief Financial Officer of the Company
- - --------------------------- -------- --------------------------------------------------------------------------------
Walter F. McLallen IV* 29 Director of the Company
- - --------------------------- -------- --------------------------------------------------------------------------------
Arnold Sheiffer* 63 Director of the Company
- - --------------------------- -------- --------------------------------------------------------------------------------
Russell Oasis 46 Executive Vice President-Programming, Chief Operating Officer of Miami Stations
- - --------------------------- -------- --------------------------------------------------------------------------------
Eugenio Bryan 38 Vice President/Sales - N.Y. Stations
- - --------------------------- -------- --------------------------------------------------------------------------------
</TABLE>
21
<PAGE> 25
*Member of the Audit and the Compensation Committees of the Board of Directors.
Pablo Raul Alarcon Sr. has been the Chairman of the Board of Directors
of the Company since its formation in June 1994. He also serves as the Chairman
of the Board of Spanish Broadcasting System, Inc., a New Jersey corporation that
is wholly-owned by the Company ("SBS-NJ"), and those of the Company's other
subsidiaries that own and operate the Company's radio stations. Mr. Alarcon Sr.
has been involved in Spanish language radio broadcasting for much of his life.
In 1956, he established the first radio network, "Radio Cadena Agramonte," in
Camaguey Province, Cuba. By the late 1950's he owned three stations and co-owned
six others in Cuba's Camaguey and Oriente provinces. After his stations were
confiscated by the Castro regime, Mr. Alarcon Sr. moved to the United States in
1960 where he joined WBNX-AM in New York as a radio personality and later became
a program director and station manager. In 1972, he created "La Grande" on
WEVD-FM which became one of the most successful Spanish radio programs in New
York. Mr. Alarcon Sr. helped found SBS-NJ which purchased the Company's first
radio station, WXLX-AM, which serves the New York City metropolitan area.
(Before the Company was formed in June 1994, SBS-NJ was the parent Company of
all other subsidiaries of the Company.) Mr. Alarcon Sr. is the father of Raul
Alarcon Jr.
Raul Alarcon Jr. has been the President and Chief Executive Officer of
the Company since its formation in June 1994. He also serves as the President
and a Director of SBS-NJ and President or Vice President of those of the
Company's other subsidiaries that own and operate the Company's radio stations.
Mr. Alarcon Jr. joined SBS-NJ as a sales manager in 1983 and become a Director
and the President and Chief Executive Officer of SBS-NJ in 1986. Mr. Alarcon,
Jr. is responsible for the Company's long range strategic planning and was
instrumental in the acquisition and financing of each of the Company's radio
stations. Mr. Alarcon Jr. is the son of Mr. Alarcon Sr. and the son-in-law of
Mr. Grimalt.
Jose Grimalt has been the Secretary of the Company since its formation
in June 1994. He also serves as a Director and the Secretary of SBS-NJ and those
of the Company's subsidiaries that own and operate the Company's radio stations.
From 1969 to 1986, Mr. Grimalt owned and operated Spanish language station
WLVH-FM, in Hartford, Connecticut with a contemporary Spanish language music
format. In 1984, Mr. Grimalt became a stockholder and the President of the
Company's California subsidiary which operates KXMG-AM in Los Angeles. Mr.
Grimalt is Mr. Alarcon Jr.'s father-in-law.
Joseph Garcia has been the Chief Financial Officer of the Company since
the Company was formed in June 1994. He was appointed Vice President in March
1996. He joined SBS-NJ in 1984 and since then has served as the Chief Financial
Officer of SBS-NJ and those of the Company's subsidiaries that own and operate
the Company's radio stations. Before joining SBS-NJ, Mr. Garcia spent thirteen
years in financial positions with General Foods, Philip Morris and Revlon, where
he was Manager of Financial Planning for Revlon-Latin America. In addition to
conventional financial duties, Mr. Garcia assists the Company's President in
formulating strategic plans for the acquisition of radio properties and
negotiating for bank financing and capital formation. Mr. Garcia holds a B.B.A.
in Accounting from Baruch College and an M.B.A. from St. John's University.
Walter F. McLallen IV was elected to the Board of Directors in December
1994. He is a Managing Director of CIBC Wood Gundy Securities Corp., the
successor to The Argosy Group L.P., an investment banking firm that acted as a
placement agent in connection with the sale of the Notes and Warrants and for
which it was paid approximately $3,123,000 in fiscal 1994. Mr. McLallen has been
employed by CIBC Wood Gundy Securities Corp. since it acquired The Argosy Group
L.P. in 1995. Mr. McLallen had been employed by the Argosy Group L.P. since
1990. From 1988 to 1990, Mr. McLallen was a member of the mergers and
acquisitions department of the investment banking firm Drexel Burnham Lambert
Incorporated.
Arnold Sheiffer was elected to the Company's Board of Directors in
December 1994. He is a private investor. From January 1990 until September
30,1994, Mr. Scheiffer was an Executive Vice President and Chief Financial
Officer of Katz Communications, Inc. ("Katz") and a director and stockholder of
Katz, the largest national sales representation firm in the broadcasting
industry. From January 1992 until September 30, 1994, Mr. Sheiffer served as
Executive Vice President and Chief Operating Officer of Katz. From June 1989
until January 1990, Mr. Sheiffer was retained by Katz as a financial consultant.
For approximately 30 years prior thereto, Mr. Sheiffer was the managing partner
of A. Sheiffer & Company, certified public accountants. Since September 1993,
Katz has served as the exclusive national advertising sales representative for
the Company's eight stations in Los Angeles, New York and Miami (excluding
WPAT-FM).
22
<PAGE> 26
Russell Oasis has been the Executive Vice President-Programming of the
Company and Chief Operating Officer of WCMQ-FM in Miami since September 1996.
Upon the acquisitions of WXDJ-FM and WRMA-FM in Miami, Mr. Oasis will also be
the Chief Operating Officer of such stations. He began his career at WFUN in
Miami in 1973. In 1979 Mr. Oasis formed the Ad Team advertising agency where he
remained a principal until 1993. During 1987 he purchased WXDJ-FM in Miami.
Subsequently, in 1994, he purchased WRMA-FM in Fort Lauderdale. The Company has
entered into agreements to acquire WXDJ-FM and WRMA-FM. ("See Pending
Acquisitions".)
Eugenio Bryan joined SBS-NJ in 1993 and was the Vice President of Sales
of SBS-NJ until his resignation in November 1996. For twelve years Mr. Bryan has
been involved in media advertising and sales. During 1993, Mr. Bryan served as a
Vice President of Multi-Local Media, Inc., a company engaged in the sale of
advertising in the Yellow Pages. From 1987 to 1993, he was the Vice President
and General Sales Manager for Katz Hispanic Media, a division of Katz. Between
1982 and 1986, Mr. Bryan held positions in media planning with Young & Rubicam,
Inc. in New York City and in sales management with Infinity Broadcasting
Corporation Houston and with Caballero Radio Network in New York City. Mr.
Bryan's employment with the Company ceased in November, 1996.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is comprised of Messrs. Alarcon Jr.,
McLallen and Sheiffer. Mr. Alarcon, Jr. is the President and Chief Executive
Officer of the Company. See "Certain Relationships and Related Transactions."
The Compensation Committee did not meet in fiscal 1996. Compensation of
the Company's executive officers for fiscal 1996 was determined by Mr. Alarcon,
Jr.
ITEM 11. EXECUTIVE COMPENSATION
The following sets forth all compensation awarded to, earned by or paid
for services rendered to the Company and its subsidiaries in all capacities
during the fiscal years 1996, 1995 and 1994 by the Company's Chief Executive
Officer and the Company's next four highest paid executive officers at September
29, 1996, whose annual salary and bonus exceeded $100,000 (the "named executive
officers.").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- - -------------------------- ----------------------- ---------- --------------- ----------- ----------------------------
OTHER ANNUAL COMPENSATION
NAME PRINCIPAL POSITION YEAR SALARY BONUS
- - -------------------------- ----------------------- ---------- --------------- ----------- ----------------------------
<S> <C> <C> <C> <C> <C>
RAUL ALARCON JR. President and Chief 1996 $ 746,584 (1) $ 237,000 (2)
Executive Officer 1995 $ 374,725 (1) $ 552,000 (2)
1994 $ 412,221 (1) - 0 - (2)
- - -------------------------- ----------------------- ---------- --------------- ----------- ----------------------------
PABLO RAUL ALARCON SR. Chairman of the Board 1996 $ 464,000 $ 12,000 (2)
of Directors 1995 $ 424,246 - 0 - (2)
1994 $ 271,698 (3) $ 100,000 (2)
- - -------------------------- ----------------------- ---------- --------------- ----------- ----------------------------
JOSE GRIMALT Secretary and Director 1996 $ 250,000 $ 12,000 (2)
1995 $ 235,576 - 0 - (2)
1994 $ 129,808 - 0 - 253,230 (4)
- - -------------------------- ----------------------- ---------- --------------- ----------- ----------------------------
JOSEPH A. GARCIA Chief Financial Officer 1996 $ 214,659 $ 5,000 (2)
1995 $ 182,807 $ 231,000 (2)
1994 $ 124,211 $ 20,000 (2)
- - -------------------------- ----------------------- ---------- --------------- ----------- ----------------------------
EUGENIO BRYAN (5) Vice President/ 1996 $ 152,330 $ 101,131 (2)
Sales 1995 $ 120,000 $ 61,890 (2)
N.Y. Stations 1994 $ 97,423 - 0 - (2)
- - -------------------------- ----------------------- ---------- --------------- ----------- ----------------------------
</TABLE>
(1) Excludes amount paid by the Company in connection with the lease by the
Company of an apartment in New York, New York owned by Mr. Alarcon Jr. and
used by the Company's employees and customers. See "Item. 13. Certain
Relationships and Related Transaction."
23
<PAGE> 27
(2) Excludes perquisites and other personal benefits, securities or property
which aggregate the lesser of $50,000 or 10% of the total of annual salary
and bonus.
(3) Includes $30,000 paid in connection with Mr. Alarcon Sr.'s daily morning
broadcasts.
(4) Includes $166,782 paid as a one percent commission on revenues from
advertisers on the Company's radio stations in Los Angeles for the year
ended September 25, 1994, $75,000 worth of advertising time bartered by the
Company for an automobile used by Mr. Grimalt. Excludes $24,000 of interest
paid by the Company to Mr. Grimalt during the year ended September 25, 1994,
on account of a loan made by Mr. Grimalt to the Company. See "Item 13.
Certain Relationships and Related Transactions."
(5) Mr. Bryan is no longer employed by the Company.
EMPLOYMENT AGREEMENTS AND ARRANGEMENTS
In September 1996, the Company entered into a one-year employment
agreement with Russell Oasis pursuant to which Mr. Oasis will serve as the
Executive Vice President-Programming of the Company and Chief Operating Officer
of WCMQ-FM, and upon their acquisition, WXDJ-FM and WRMA-FM in Miami. Mr. Oasis
will be paid a base salary of $450,000. Additionally, he will be paid a cash
bonus if the Company's Broadcast Cash Flow percentage increases to certain
agreed-upon levels.
LIMITATIONS ON DIRECTORS' AND OFFICERS' LIABILITY
The Company's Restated Certificate of Incorporation limits the
liability of directors to the maximum extent permitted by Delaware law, which
specifies that a director of a company adopting such a provision will not be
personally liable for monetary damages for breach of fiduciary duty as a
director, except for liability: (i) for any breach of the director's duty of
loyalty to the company or its stockholders; (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law; (iii) for unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General Corporation Law;
or (iv) for any transaction from which the director derived an improper personal
benefit.
The Company's By-laws provide for mandatory indemnification of
directors and authorize indemnification for officers (and others) in such
manner, under such circumstances and to the fullest extent permitted by the
Delaware General Corporation Law, which generally authorizes indemnification as
to all expenses incurred or imposed as a result of actions, suits or proceedings
if the indemnified parties act in good faith and in a manner they reasonably
believe to be in or not opposed to the best interests of the Company. The
Company believes that these provisions are necessary or useful to attract and
retain qualified persons as directors and officers.
There is no pending litigation or proceeding involving a director or
officer as to which indemnification is being sought.
OPTION PLAN
In 1994, the Company adopted a stock option plan pursuant to which
shares of the Company's Class A Common Stock are reserved for issuance upon the
exercise of options. Officers, directors and/or key employees are eligible to
participate in the plan. As of September 29, 1996, no options had been granted
under the plan.
ITEM 12. SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information concerning the beneficial
ownership of the Company's Common Stock by (i) each person known to the Company
to own beneficially more than 5% of any class of Common Stock, (ii) each
director and each named executive officer and (iii) all directors and executive
officers of the Company as a group. All shares are owned with sole voting and
investment power.
24
<PAGE> 28
<TABLE>
<CAPTION>
-------------------------- --------------------------
CLASS A COMMON STOCK CLASS B COMMON STOCK
-------------------------- --------------------------
- - ------------------------- ------------ ------------- ------------- ------------ -------------- -------------
PERCENTAGE
OF ECONOMIC PERCENTAGE
OWNERSHIP OF VOTING
NAMES OF OF ALL POWER OF ALL
STOCKHOLDERS, PERCENT OF PERCENT OF COMMON COMMON
DIRECTORS AND CLASS A CLASS B STOCK STOCK
EXECUTIVE OFFICERS (1) SHARES (2) SHARES SHARES (2) SHARES
- - ------------------------- ------------ ------------- ------------- ------------ -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Pablo Raul Alarcon, Sr. - - 36,400 75% 6% 31%
- - ------------------------- ------------ ------------- ------------- ------------ -------------- -------------
Raul Alarcon Jr. 558,135 100% - - 92% 59%
- - ------------------------- ------------ ------------- ------------- ------------ -------------- -------------
Jose Grimalt - - 12,133 25% 2% 10%
- - ------------------------- ------------ ------------- ------------- ------------ -------------- -------------
Walter F. McLallen IV - - - - - -
- - ------------------------- ------------ ------------- ------------- ------------ -------------- -------------
Arnold Sheiffer - - - - - -
- - ------------------------- ------------ ------------- ------------- ------------ -------------- -------------
Joseph Garcia - - - - - -
- - ------------------------- ------------ ------------- ------------- ------------ -------------- -------------
Russell Oasis - - - - - -
- - ------------------------- ------------ ------------- ------------- ------------ -------------- -------------
Eugenio Bryan* - - - - - -
========================= ============ ============= ============= ============ ============== =============
Directors and Officers
as a group 558,135 100% 48,533 100% 100% 100%
- - ------------------------- ------------ ------------- ------------- ------------ -------------- -------------
</TABLE>
*No longer employed by the Company
(1) The address of all persons in this table, unless otherwise specified,
is c/o Spanish Broadcasting System, Inc., 26 West 56th Street, New
York, New York 10019.
(2) As used in this table, "beneficial ownership" means the sole or shared
power to vote or direct the voting of a security or the sole or shared
investment power with respect to a security(i.e., the power to dispose,
or direct the disposition, of a security). A person is deemed as of any
date to have "beneficial ownership" of any security that such person
has the right to acquire within 60 days after such date. For purposes
of computing the percentage of outstanding shares held by each person
named above, any security that such person has the right to acquire
within 60 days of the date of calculation is deemed to be outstanding,
but is not deemed to be outstanding for purposes of computing the
percentage ownership of any other person.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1992, Raul Alarcon Jr. organized Nuestra Telefonica, Inc., a New
York corporation ("Nuestra") to operate long distance telephone service in
Spanish to serve the Hispanic population in the markets served by the Company's
radio stations. In February 1993, Nuestra entered into an access agreement with
a common carrier and commenced operations. From May 1993 until July 1994,
Nuestra regularly advertised its Spanish language long distance telephone
service on the Company's radio stations in Los Angeles and New York and while
Nuestra purchased this air time at standard station rates, it has deferred
payment to the Company until Nuestra has generated sufficient revenues to make
these payments. Since July 1994, while the Company has sold air time and
provided services to Nuestra on substantially the same terms and conditions as
with unrelated third parties, Nuestra has only sporadically advertised its
services on the Company's stations in Los Angeles and New York. As of September
29, 1996, Nuestra owed the company approximately $663,059 primarily for
advertising services. Mr. Alarcon Jr. has personally guaranteed the payment of
the aggregate amount of Nuestra's obligations to the Company incurred on or
prior to June 29, 1994, which aggregated approximately $533,124, since these
obligations were not paid by December 31, 1995. Nuestra and the Company entered
into a barter agreement in which phone service was provided to the Company by
Nuestra in exchange for advertising time. Mr. Alarcon Jr., the Company's
President and Chief Executive Officer, is Nuestra's Chairman and majority
shareholder. Joseph A. Garcia, the Company's Chief Financial Officer, is
Nuestra's President and a minority shareholder. Since June 1995, Nuestra has not
utilized any time on the Company's radio stations.
In 1992, Messrs. Alarcon Sr. and Alarcon Jr. acquired a building in
Coral Gables, FL, for the purpose of housing the studios of WCMQ-AM and FM. In
June 1992, SBS-Florida, a subsidiary of the Company, entered into a 20-year net
lease with Messrs. Alarcon Sr. and Alarcon Jr. for the Coral Gables building
which provides for a base monthly rent of $9,000. This building currently houses
the offices and studies of WCMQ-AM and FM and WZMQ-FM. The lease on the
stations' previous studios expired in October 1993, was for less than half the
space of the
25
<PAGE> 29
stations' present studios and had a monthly rental of approximately $7,500.
Based upon its prior lease for studio space, the Company believes that the lease
for the current studio is at market rates.
Effective July 1993, Messrs. Alarcon Sr. and Alarcon Jr., executed
promissory notes to the Company for the principal amounts of $492,173 and
$1,617,086, respectively. The promissory notes represent loans made by the
Company to Messrs. Alarcon Sr. and Alarcon Jr. over several prior years. The
promissory notes were due in 2001 and bore interest at the rate of six (6%)
percent per annum until July 19, 1994 and thereafter at the lesser of nine (9%)
per annum or the prime rate charged by The Chase Manhattan Bank, N.A. Principal
on the notes is payable at maturity and interest on the unpaid principal amount
was payable annually. In December 1995, the Company exchanged the promissory
notes for amended and restated notes in the principal amounts of $577,323 and
$1,896,913, due from Messrs. Alarcon Sr. and Alarcon Jr., respectively. The
amended and restated notes of Messrs. Alarcon Sr. and Alarcon Jr. bear interest
at the rate of 6.36% per annum, mature on December 30, 2025 and are payable in
thirty (30) equal annual installments of $43,570 and $143,158, respectively on
December 30th of each year commencing December 30, 1996.
For the year ended September 29, 1996, the Company paid operating
expenses aggregating approximately $126,000 for a boat owned by CMQ Radio, Inc.
("CMQ"), a North Carolina corporation owned equally by Messrs. Alarcon Sr. and
Alarcon Jr. The boat is used by the Company for business entertainment. For the
year ended September 29, 1996 the amount paid by the Company for its use of the
boat owned by CMQ was comparable to amounts it would have paid had the Company
leased the boat from an unaffiliated party.
The Company leases a two-bedroom furnished condominium apartment in
midtown Manhattan from Mr. Alarcon Jr. for a monthly rent of $9,000. The lease
commenced in August 1987 and will end in August 1997, unless sooner terminated
by Mr. Alarcon Jr. Generally the apartment is used by Company's executives,
customers and business associates. The Company believes that the lease for this
apartment is at market rates.
Mr. Alarcon Sr.'s brother-in-law is employed by the Company as the
Operations Manager of the Company's Miami stations for which he was paid $82,062
(including bonus) for the year ended September 29, 1996.
Mr. Grimalt's son is currently employed as a commissioned salesman for
which he was paid $100,912 for the year ended September 29, 1996.
In August 1995, the Company loaned $200,000 to a former employee, which
amount remains outstanding. The amount is fully reserved as discussed in the
"Management's Discussion and Analysis of Financial Results" section of this
document.
In September 1996, the Company entered in an acquisition agreement to
acquire radio stations WXDJ-FM and WRMA-FM. Russell Oasis is one of the sellers
of such stations. See "Pending Acquisitions."
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) (1) FINANCIAL STATEMENTS
* Consolidated Balance Sheets as of September 24, 1995
and September 29, 1996.
* Consolidated Statements of Operations for each of the
years in the three-year period ended September 29,
1996
* Consolidated Statements of Changes in Stockholders'
Deficiency for each of the years in the three-year
period ended September 29, 1996.
* Consolidated Statements of Cash Flows for each of the
years in the three-year period ended September 29,
1996.
* Notes to Consolidated Financial Statements
(2) FINANCIAL STATEMENT SCHEDULES
* Schedule II Valuation and Qualifying Accounts
26
<PAGE> 30
(b) REPORTS ON FORM 8-K
* None
(c) EXHIBITS
EXHIBIT NUMBER DESCRIPTION
3.1.1 -- Amended and Restated Certificate of Incorporation
of the Company. Incorporated by reference to
Exhibit 3.1.1 of the Company's Current Report on
Form 8-K, dated March 25, 1996 (the "Current
Report").
3.1.2 -- Bylaws of the Company. Incorporated by reference
to Exhibit 3.1.2. of the Company's Registration
Statement on Form S-4 No. 33-82114 (the "1994
Registration Statement").
3.2 -- Certificate of Designations of Series A
Exchangeable Preferred Stock. Incorporated by
reference to Current Report.
3.9.1 -- Certificate of Incorporation of SBS of Greater New
York, Inc. ("SBS-GNY"). Incorporated by reference
to Current Report.
3.9.2 -- Bylaws of SBS-GNY. Incorporated by reference to
Current Report.
4.1 -- Indenture dated June 29, 1994 among the Company,
IBJ Schroder Bank & Trust Company, as Trustee, the
Guarantors named therein and the Purchasers named
therein. Incorporated by reference to Exhibit 4.1
of the 1994 Registration Statement.
4.2.2 -- First Supplemental Indenture dated as of March 25,
1996 to Indenture dated as of June 29, 1994 among
the Company, the Guarantors named therein and IBJ
Schroder Bank & Trust Company, as Trustee.
Incorporated by reference to Current Report.
4.3 -- Indenture dated as of March 25, 1996 among the
Company, the Guarantors named therein, IBJ
Schroder Bank & Trust Company, as Trustee, and the
Purchasers named therein. Incorporated by
reference to Current Report.
10.1 -- Securities Purchase Agreement dated as of June 29,
1994 by and among the Company, the Guarantors
named therein and each of the purchasers referred
to therein. Incorporated by reference to Exhibit
10.1 of the 1994 Registration Statement.
10.2 -- Warrant Agreement dated as of June 29, 1994
between the Company and IBJ Schroder Bank & Trust
Company, as Warrant Agent. Incorporated by
reference to Exhibit 10.2 of the 1994 Registration
Statement.
10.3 -- Common Stock Registration Rights and Stockholders
Agreement dated as of June 29, 1994 among the
Company, certain management stockholders and each
of the purchasers named therein. Incorporated by
reference to Exhibit 10.3 of the 1994 Registration
Statement.
10.4 -- 1994 Stock Option Plan of the Company.
Incorporated by reference to Exhibit 10.4 of the
1994 Registration Statement.
10.5.1 -- Broadcast Station License dated September 20, 1983
issued by the Federal Communications Commission
("FCC") to Sabre Broadcasting Corporation in
connection with WXLX-AM, together with an
Assignment thereof from Sabre Broadcasting
Corporation to Spanish Broadcasting System, Inc.,
a New Jersey
27
<PAGE> 31
Corporation ("SBS-NJ") and evidence of license
renewal. Incorporated by reference to Exhibit
10.8.1 of the 1994 Registration Statement.
10.5.2 -- Construction Permit dated July 21, 1993 issued by
the FCC to SBS-NJ in connection with WXLX-AM.
Incorporated by reference to Exhibit 10.8.2 of the
Registration Statement.
10.5.3 -- AM Broadcast Station Construction Permit dated
February 1, 1991 issued by the FCC to Spanish
Broadcasting System, Inc., a New Jersey
corporation ("SBS-NJ") in connection with WXLX.
Incorporated by reference to Current Report.
10.5.4 -- Ground Lease dated December 18, 1995 between Louis
Viola Company and SBS-NJ. Incorporated by
reference to Current Report.
10.5.5 -- Ground Lease dated December 18, 1995 between Frank
F. Viola and Estate of Thomas C. Viola and SBS-NJ.
Incorporated by reference to Current Report.
10.6 -- Broadcast Station License dated November 23, 1994
issued by the FCC to Spanish Broadcasting System
of New York, Inc., ("SBS-NY") in connection with
WSKQ-FM. Incorporated by reference to the
Company's Annual Report on Form 10-K for the
fiscal year ended September 24, 1994 (the "1994
10-K").
10.7 -- Broadcast Station License dated September 25, 1990
issued by the FCC to Spanish Broadcasting System
of Florida, Inc. ("SBS-Fla") in connection with
WCMQ-AM, together with evidence of license
renewal. Incorporated by reference to Exhibit
10.10 of the 1994 Registration Statement.
10.7.2 -- Evidence of renewal of Federal Communications
Commission ("FCC") Broadcast Radio License of
WCMQ-AM. Incorporated by reference to Current
Report.
10.8 -- Broadcast Station License dated April 1, 1994
issued by the FCC to SBS-Fla in connection with
WCMQ-FM, together with evidence of license.
Incorporated by reference to Exhibit 10.11 of the
1994 Registration Statement.
10.8.2 -- Evidence of renewal of FCC Broadcast Radio License
for WCMQ-FM. Incorporated by reference to Current
Report.
10.9 -- Broadcast Station License dated July 28, 1993
issued by the FCC to SBS-Fla in connection with
WZMQ-FM. Incorporated by reference to Exhibit
10.12 of the 1994 Registration Statement.
10.9.2 -- Evidence of renewal of FCC Broadcast Radio License
for WZMQ-FM. Incorporated by reference to Current
Report.
10.10 -- Broadcast Station License dated April 8, 1986
issued by the FCC to SBS-NJ in connection with
KXMG-AM, together with evidence of license
renewal. Incorporated by reference to Exhibit
10.13 of the 1994 Registration Statement.
10.11 -- Broadcast Station License dated February 21, 1992
issued by the FCC to SBS-Fla in connection with
KLAX-FM, together with evidence of license
renewal. Incorporated by reference to Exhibit
10.14 of the 1994 Registration Statement.
10.12.1 -- Broadcast Station License dated June 26, 1995
issued by the FCC to CSJ Investments, Inc. in
connection with WSKP-FM (the "WSKP Broadcast
License"). Incorporated by reference to Annual
Report on Form 10-K for the fiscal year ended
September 26, 1995 (the "1995 10-K")
28
<PAGE> 32
10.12.2 -- Consent to Assignment of the WSKP Broadcast
License from CSJ Investments, Inc. to SBS-Fla
issued by the FCC. Incorporated by reference to
1995 10-K
10.12.3 -- Evidence of renewal of FCC Broadcast Radio License
for WSKP-FM. Incorporated by reference to Current
Report.
10.13.1 -- Lease and License Agreement dated February 1, 1991
between Empire State Building Company, as
landlord, and SBS-NY, as tenant. Incorporated by
reference to Exhibit 10.15.1 of the 1994
Registration Statement.
10.13.2 -- Modification of Lease and License dated June 30
1992 between Empire State Building Company and
SBS-NY related to WSKQ-FM. Incorporated by
reference to Exhibit 10.15.2 of the 1994
Registration Statement.
10.13.3 -- Lease and License Modification and Extension
Agreement dated as of June 30, 1992 between Empire
State Building Company, as landlord, and SBS-NY as
tenant. Incorporated by reference to Exhibit
10.15.3 of the 1994 Registration Statement.
10.14.1 -- Employment Agreement dated April 26, 1993 by and
between SBS-NY, and Alfredo Rodriguez.
Incorporated by reference to Exhibit 10.16 of the
1994 Registration Statement.
10.14.2 -- Employment Agreement dated June 23, 1995 by and
between Spanish Broadcasting Systems of
California, Inc. ("SBS-CA") and Alfredo Rodriquez.
Incorporated by reference to Exhibit 10.15 to 1995
10-K.
10.14.3 -- Employment Agreement dated July 19,1993 by and
between SBS-NJ and Alfredo Alonso. Incorporated by
reference to Exhibit 10.18 of the 1994
Registration Statement.
10.14.4 -- Employment Agreement dated May 3, 1994 by and
between SBS-Fla and Claudia Puig. Incorporated by
reference to Exhibit 10.19 of the 1994
Registration Statement.
10.14.5 -- Employment Agreement dated October 24, 1995
between SBS-NY and Beatriz Pino. Incorporated by
reference to Exhibit 10.18 of 1995 10-K.
10.16 -- Representation Agreement dated as of September 27,
1993 between Katz Communications, Inc. and SBS-NJ
in connection with WXLX-AM. Incorporated by
reference to Exhibit 10.20 of the 1994
Registration Statement.
10.17 -- Representation Agreement dated as of September 27,
1993 between Katz Communications, Inc. and SBS-NY
in connection with WSKQ-FM. Incorporated by
reference to Exhibit 10.21 of the 1994
Registration Statement.
10.18 -- Representation Agreement dated as of September 27,
1993 between Katz Communications, Inc. and SBS-CA
in connection with KXMG-AM. Incorporated by
reference to Exhibit 10.22 of the 1994
Registration Statement.
10.19 -- Representation Agreement dated as of September 27,
1993 between Katz Communications, Inc. and SBS-CA
in connection with KLAX-FM. Incorporated by
reference to Exhibit 10.23 of the 1994
Registration Statement.
10.20 -- Representation Agreement dated as of September 27,
1993 between Katz Communications, Inc. and SBS-Fla
in connection with WCMQ-AM. Incorporated by
reference to Exhibit 10.24 of the 1994
Registration Statement.
29
<PAGE> 33
10.21 -- Representation Agreement dated as of September 27,
1993 between Katz Communications, Inc. and SBS-Fla
in connection with WCMQ-FM. Incorporated by
reference to Exhibit 10.25 of the 1994
Registration Statement.
10.22 -- Representation Agreement dated as of September 27,
1993 between Katz Communications, Inc. and SBS-Fla
in connection with WZMQ-FM. Incorporated by
reference to Exhibit 10.26 of the 1994
Registration Statement.
10.23 -- Promissory Note, dated as of December 31, 1995 of
Raul Alarcon, Sr. to SBS-NJ in the principal
amount of $577,323. Incorporated by reference to
Exhibit 10.26 to 1995 10-K.
10.24 -- Promissory Note, dated as of December 31, 1995 of
Raul Alarcon, Jr. to SBS-NJ in the principal
amount of $1,896,913. Incorporated by reference to
Exhibit 10.27 to 1995 10-K.
10.25 -- Lease Agreement dated June 1, 1992 among Raul
Alarcon, Sr., Raul Alarcon, Jr., and SBS-Fla.
Incorporated by reference to Exhibit 10.30 of the
1994 Registration Statement.
10.26 -- Transmitted Facility Sublicense (KTYM/KSKQ-FM)
dated as of June 1, 1991 between Trans-America
Broadcasting Corporation and SBS-CA relating to
KSKQ-FM (Baldwin Hills Tower Lease). Incorporated
by reference to Exhibit 10.31 of the 1994
Registration Statement.
10.27 -- Indenture dated October 12, 1988 between Alarcon
Holdings, Inc. and SBS-NJ related to the studio
located at 26 West 56th Street, NY, NY.
Incorporated by reference to Exhibit 10.32 of the
1994 Registration Statement.
10.28 -- Communications Equipment Site Lease Agreement
between Freeman Properties, Inc. and SBS-Fla dated
July 1, 1992 (WZMQ/WKLG-FM). Incorporated by
reference to Exhibit 10.33 of the 1994
Registration Statement.
10.29.2 -- Lease Option Agreement made as of October 1, 1995
between KPWR, Inc. and the Company relating to
Flint Peak. Incorporated by reference to Current
Report.
10.29.3 -- Form of Lease Agreement by and between KPWR, Inc.
and the Company relating to KLAX. Incorporated by
reference to Current Report. Incorporated by
reference to Current Report.
10.32.1 -- Asset Purchase Agreement dated as of October
30,1995 between SBS-NJ and Park Radio of Greater
New York, Inc. ("Park Radio"). Incorporated by
reference to Exhibit 10.32 of the 1995 10-K.
10.32.2 -- First Amendment dated as of March 18,1996 to the
Asset Purchase Agreement dated as of October 1995,
among SBS-NJ, Park Radio and SBS-GNY. Incorporated
by reference to Current Report
10.33 -- Escrow Agreement dated as of October 30, 1995 by
and among SBS-NJ, Park Radio and Media Ventures.
Incorporated by reference to Current Report.
10.34 -- Time Brokerage Agreement dated as of January 20,
1995 between the SBS-GNY and Park Radio.
Incorporated by reference to Current Report.
10.35 -- Broadcast Station License dated June 1, 1984
issued by the FCC to Capital Cities
Communications, Inc. ("Capital Cities") in
connection with WPAT-FM, together with FCC License
Renewal authorization granted October 29, 1991 to
Park Radio, as
30
<PAGE> 34
assignee of Capital Cities and the assignment of
the Broadcast Station License for WPAT-FM from
Park Radio to SBS-NY. Incorporated by reference to
Current Report.
10.36 -- Agreement of Lease dated as of March 1, 1996. No
WT-1744-A-119 1067 between The Port Authority of
New Jersey and SBS-GNY as assignee of Park Radio.
Incorporated by reference to Current Report.
10.37 -- Securities Purchase Agreement dated as of March
25, 1996 by and among the Company, the Guarantors
named therein and each of the purchasers named
therein. Incorporated by reference to Current
Report.
10.38 -- Warrant Agreement dated as of March 25, 1996 by
and among the Company and IBJ Schroder Bank and
Trust Company, as Warrant Agent. Incorporated by
reference to Current Report.
10.39 -- Common Stock Registration Rights and Stockholders
Agreement dated as of March 25, 1996 among the
Company, certain management stockholders and each
of the purchasers named herein. Incorporated by
reference to Current Report.
10.40 -- Senior Secured Note and Exchangeable Preferred
Stock Registration Rights Agreement dated as of
March 25, 1996 among the Company and each of the
purchasers named therein. Incorporated by
reference to Current Report.
10.41 -- Pledge and Security Agreement dated as of March
25, 1996 by and among SBS-NJ, SBS-GNY and IBJ
Schroder Bank & Trust Company, as agent.
Incorporated by reference to Current Report.
10.42 -- Employment Agreement dated September 27, 1996
between Russell Oasis and the Company.*
10.43 -- Asset Purchase Agreement dated September 16, 1996
among Raul Alarcon Jr., New Age Broadcasting,
Inc., The Seventies Broadcasting Corporation and
the Company, and with respect only to Section 9.3
thereof, Alan Potamkin, Russell Oasis and Robert
Potamkin.*
10.44 -- Asset Purchase Agreement dated August 22, 1996
between Infinity Holdings Corp. of Orlando and the
Company.*
21.1 -- List of Subsidiaries. Incorporated by reference to
the 1994 10-K
- - ----------------------------------------------------
*Filed herewith
31
<PAGE> 35
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
Consolidated Financial Statements
September 25, 1994, September 24, 1995 and
September 29, 1996
(With Independent Auditors' Report Thereon)
<PAGE> 36
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
Index to Consolidated Financial Statements and
Financial Statement Schedule Covered by Independent Auditors' Report
(Item 14 (A) 1)
<TABLE>
<S> <C>
Independent Auditors' Report F - 1
Consolidated Balance Sheets as of September 24, 1995 and September 29, 1996 F - 2
Consolidated Statements of Operations for each of the fiscal years in the
three-year period ended September 29, 1996 F - 3
Consolidated Statements of Changes in Stockholders' Deficiency for each
of the fiscal years in the three-year period ended September 29, 1996 F - 4
Consolidated Statements of Cash Flows for each of the fiscal years in the
three-year period ended September 29, 1996 F - 5
Notes to Consolidated Financial Statements F - 6
Financial statement schedule for each of the fiscal years in the three-year
period ended September 29, 1996:
Schedule II Valuation and Qualifying Accounts F - 23
</TABLE>
All other schedules have been omitted because the required information either is
not applicable or is included in the consolidated financial statements or notes
thereto.
<PAGE> 37
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Spanish Broadcasting System, Inc.:
We have audited the consolidated financial statements of Spanish Broadcasting
System, Inc. and subsidiaries as listed in the accompanying index. In connection
with our audits of the consolidated financial statements, we have also audited
the financial statement schedule as listed in the accompanying index. These
consolidated financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Spanish Broadcasting
System, Inc. and subsidiaries as of September 24, 1995 and September 29, 1996,
and the results of their operations and their cash flows for each of the fiscal
years in the three-year period ended September 29, 1996, in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
As discussed in note 2(d) to the consolidated financial statements, effective
September 25, 1995, the Company adopted Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of."
KPMG Peat Marwick LLP
New York, New York
November 21, 1996
F-1
<PAGE> 38
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
September 24, 1995 and September 29, 1996
<TABLE>
<CAPTION>
ASSETS 1995 1996
---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $17,817,119 5,468,079
Receivables:
Trade (note 7) 12,614,434 12,104,500
Barter 3,770,316 3,236,289
----------- -----------
16,384,750 15,340,789
Less allowance for doubtful accounts 5,184,886 4,510,763
----------- -----------
Net receivables 11,199,864 10,830,026
Other current assets 549,270 1,115,332
----------- -----------
Total current assets 29,566,253 17,413,437
Property and equipment, net of accumulated depreciation
of $11,824,873 in 1995 and $13,662,458 in 1996
(notes 4 and 9) 17,596,572 18,873,036
Franchise costs, net of accumulated amortization
of $13,955,089 in 1995 and $16,673,482
in 1996 (notes 3 and 5) 50,251,987 133,917,182
Deferred financing costs, net of accumulated
amortization of $990,194 in 1995 and
$1,974,195 in 1996 (note 5) 5,647,915 6,235,341
Due from related party (note 7) 286,947 289,869
Other assets 279,566 131,294
------------- -----------
$ 103,629,240 176,860,159
============= ===========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' DEFICIENCY 1995 1996
---- ----
<S> <C> <C>
Current liabilities:
Current portion of long-term debt (note 6) $ 61,565 53,572
Accounts payable 1,253,641 1,564,015
Accrued expenses 3,061,724 3,354,192
Accrued interest 2,341,919 2,394,621
Income taxes payable 196,835 --
Unearned revenue 656,875 875,256
------------- -------------
Total current liabilities 7,572,559 8,241,656
Senior secured notes, net of unamortized discount of
$12,743,913 in 1995 and $7,612,631 in 1996 (note 5) 94,315,087 99,446,369
New senior secured notes, net of unamortized discount
of $1,818,118 (note 5) -- 35,381,003
Deferred income taxes payable 1,745,682 387,960
Long-term debt, less current portion (note 6) 1,146,066 1,033,368
Redeemable Series A Preferred Stock, $.01 par value
Authorized 49,201 shares; issued and outstanding
39,951 shares (liquidation value $39,951,000) (note 5) -- 35,938,659
Stockholders' deficiency (notes 5 and 8):
Class A common stock, $.01 par value. Authorized
5,000,000 shares; issued and outstanding
558,135 shares in 1995 and 1996 5,581 5,581
Class B common stock, $.01 par value. Authorized
200,000 shares; issued and outstanding
48,533 shares in 1995 and 1996 485 485
Additional paid-in capital 5,690,934 10,806,004
Accumulated deficit (4,425,882) (11,906,690)
------------- -------------
1,271,118 (1,094,620)
Less loans receivable from stockholders (note 7) (2,421,272) (2,474,236)
------------- -------------
Total stockholders' deficiency (1,150,154) (3,568,856)
------------- -------------
Commitments and contingencies (notes 3, 9 and 11)
$ 103,629,240 176,860,159
============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
F-2
<PAGE> 39
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
Consolidated Statements of Operations
Fiscal years ended September 25, 1994, September 24, 1995 and
September 29, 1996
<TABLE>
<CAPTION>
1994 1995 1996
------------ ------------ ------------
<S> <C> <C> <C>
Gross revenues $ 45,825,089 54,152,328 55,337,720
Less agency commissions 5,688,219 6,828,430 6,702,302
------------ ------------ ------------
Net revenues 40,136,870 47,323,898 48,635,418
------------ ------------ ------------
Operating expenses (notes 7 and 9):
Engineering 1,439,983 1,484,585 1,773,027
Programming 4,853,155 5,044,967 5,864,066
Selling 10,141,557 11,106,770 13,864,695
General and administrative 5,709,679 5,361,320 6,374,622
Corporate expenses 2,884,328 4,281,141 3,747,714
Depreciation and amortization 3,255,672 3,389,034 4,555,978
------------ ------------ ------------
28,284,374 30,667,817 36,180,102
------------ ------------ ------------
Operating income 11,852,496 16,656,081 12,455,316
Other income (expense):
Interest expense, net of interest income of $318,463
in 1994, $826,821 in 1995 and $547,952 in 1996 (14,203,446) (12,874,392) (16,533,278)
Financing costs (3,457,611) -- (876,579)
Other, net (notes 4 and 11) 34,709 (380,660) (697,741)
Income (loss) before income ------------ ------------ ------------
taxes and extraordinary item (5,773,852) 3,401,029 (5,652,282)
Income tax expense (benefit) (note 10) (2,231,070) 1,411,394 (1,165,800)
Income (loss) before extraordinary ------------ ------------ ------------
item (3,542,782) 1,989,635 (4,486,482)
Extraordinary item - gain on extinguishment of debt,
net of deferred Federal income taxes of $2,895,014
and current state and local income taxes of $165,910
(note 5) 70,254,772 -- --
------------ ------------ ------------
Net income (loss) $ 66,711,990 1,989,635 (4,486,482)
============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 40
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Deficiency
Fiscal years ended September 25, 1994, September 24, 1995 and September 29, 1996
<TABLE>
<CAPTION>
No par value common stock Class A common stock
----------------------------- ----------------------------
No. of shares Stated value No. of shares Par value
------------- ------------ ------------- ---------
<S> <C> <C> <C> <C>
Balance at September 26, 1993 1,449 $ 300,000 -- $ --
Exchange of common shares (note 8) (1,449) (300,000) 558,135 5,581
Issuance of warrants (note 5) -- -- -- --
Decrease in loans receivable from stockholders -- -- -- --
Net income -- -- -- --
----------- ----------- ----------- --------
Balance at September 25, 1994 -- -- 558,135 5,581
Increase in loans receivable from stockholders -- -- -- --
Net income -- -- -- --
----------- ----------- ----------- --------
Balance at September 24, 1995 -- -- 558,135 5,581
Increase in loans receivable from stockholders -- -- -- --
Costs associated with issuance of Redeemable
Series A Preferred Stock (note 5) -- -- -- --
Issuance of warrants (note 5) -- -- -- --
Accretion of preferred stock -- -- -- --
Preferred stock issued as dividends (note 5) -- -- -- --
Net loss -- -- -- --
----------- ----------- ----------- --------
Balance at September 29, 1996 -- $ -- 558,135 $5,581
=========== =========== =========== ========
</TABLE>
<TABLE>
<CAPTION>
Class B common stock
-------------------------------- Total par value
No. of shares Par value common stock
------------- --------- ---------------
<S> <C> <C> <C>
Balance at September 26, 1993 -- $ -- 300,000
Exchange of common shares (note 8) 48,533 485 (293,934)
Issuance of warrants (note 5) -- -- --
Decrease in loans receivable from stockholders -- -- --
Net income -- -- --
----------- ----------- -----------
Balance at September 25, 1994 48,533 485 6,066
Increase in loans receivable from stockholders -- -- --
Net income -- -- --
----------- ----------- -----------
Balance at September 24, 1995 48,533 485 6,066
Increase in loans receivable from stockholders -- -- --
Costs associated with issuance of Redeemable
Series A Preferred Stock (note 5) -- -- --
Issuance of warrants (note 5) -- -- --
Accretion of preferred stock -- -- --
Preferred stock issued as dividends (note 5) -- -- --
Net loss -- -- --
----------- ----------- -----------
Balance at September 29, 1996 48,533 $485 6,066
=========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Additional Less loans Total
paid-in Accumulated receivable from stockholders'
capital deficit stockholders deficiency
---------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Balance at September 26, 1993 -- (73,127,507) (2,390,444) (75,217,951)
Exchange of common shares (note 8) 293,934 -- -- --
Issuance of warrants (note 5) 5,397,000 -- -- 5,397,000
Decrease in loans receivable from stockholders -- -- 148,476 148,476
Net income -- 66,711,990 -- 66,711,990
----------- ----------- ----------- -----------
Balance at September 25, 1994 5,690,934 (6,415,517) (2,241,968) (2,960,485)
Increase in loans receivable from stockholders -- -- (179,304) (179,304)
Net income -- 1,989,635 -- 1,989,635
----------- ----------- ----------- -----------
Balance at September 24, 1995 5,690,934 (4,425,882) (2,421,272) (1,150,154)
Increase in loans receivable from stockholders -- -- (52,964) (52,964)
Costs associated with issuance of Redeemable
Series A Preferred Stock (note 5) (1,718,437) -- -- (1,718,437)
Issuance of warrants (note 5) 6,833,507 -- -- 6,833,507
Accretion of preferred stock -- (541,416) -- (541,416)
Preferred stock issued as dividends (note 5) -- (2,452,910) -- (2,452,910)
Net loss -- (4,486,482) -- (4,486,482)
----------- ----------- ----------- -----------
Balance at September 29, 1996 10,806,004 (11,906,690) (2,474,236) (3,568,856)
=========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 41
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Fiscal years ended September 25, 1994, September 24, 1995 and
September 29, 1996
<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 66,711,990 1,989,635 (4,486,482)
------------ ------------ ------------
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Gain on extinguishment of debt (73,315,696) -- --
Depreciation and amortization 3,255,672 3,389,034 4,555,978
Change in allowance for doubtful accounts (243,110) 1,379,365 (674,123)
Amortization of debt discount 1,094,591 4,617,496 5,591,004
Interest satisfied through the issuance of New Notes -- -- 2,199,121
Amortization of deferred financing costs 192,428 797,766 984,001
Write down of fixed assets -- -- 697,741
Imputed interest 2,460,781 95,559 --
Deferred income taxes 663,944 1,081,738 (1,357,722)
Changes in operating assets and liabilities:
(Increase) decrease in receivables (1,138,634) (2,843,053) 1,043,961
Increase in other current assets (189,358) (223,518) (566,062)
(Increase) decrease in other assets (4,096,060) 3,900,002 148,272
(Decrease) increase in accounts payable (830,189) (249,024) 310,374
Increase in accrued expenses 692,001 275,432 292,468
Increase in accrued interest 8,671,077 38,179 52,702
Increase (decrease) in income taxes payable 112,578 (8,101) (196,835)
Increase in unearned revenue 79,189 197,468 218,381
------------ ------------ ------------
Total adjustments (62,590,786) 12,448,343 13,299,261
Net cash provided by operating activities 4,121,204 14,437,978 8,812,779
------------ ------------ ------------
Cash flows from investing activities:
Additions to property and equipment (896,781) (4,888,188) (3,811,436)
Acquisition of radio license -- (100,305) (86,358,962)
Increase in franchise costs -- -- (24,980)
------------ ------------ ------------
Net cash used in investing activities (896,781) (4,988,493) (90,195,378)
------------ ------------ ------------
Cash flows from financing activities:
Repayments of debt, including
accrued interest in 1994 (83,385,784) (2,843,176) (120,691)
Proceeds from senior notes, net of financing costs
of $6,225,998 in 1994 and $1,605,426 in 1996 87,774,002 -- 33,394,574
Proceeds from Redeemable Series A Preferred Stock,
net of issuance costs of $1,718,437 -- -- 35,781,563
(Increase) decrease in deferred financing costs -- (412,111) 33,999
Decrease (increase) in loans receivable from
stockholders 148,476 (179,304) (52,964)
Repayment of loan payable to stockholder -- (200,000) --
Advances to related party (22,834) (134,342) (2,922)
------------ ------------ ------------
Net cash provided by (used in) financing
activities 4,513,860 (3,768,933) 69,033,559
------------ ------------ ------------
Net increase (decrease) in cash and
cash equivalents 7,738,283 5,680,552 (12,349,040)
Cash and cash equivalents at beginning of year 4,398,284 12,136,567 17,817,119
------------ ------------ ------------
Cash and cash equivalents at end of year $ 12,136,567 17,817,119 5,468,079
============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 42
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 25, 1994, September 24, 1995 and
September 29, 1996
(1) ORGANIZATION AND NATURE OF BUSINESS
Spanish Broadcasting System, Inc. (the "Company") was organized under the
laws of the State of Delaware on June 1, 1994 to serve as a holding
company, directly or indirectly, for seven active corporations, each of
which either owns or services radio stations and each of which was owned
by three Principal Stockholders. The Principal Stockholders and the
Company entered into a contribution agreement pursuant to which on June
29, 1994, upon FCC approval, among other releases, the Principal
Stockholders contributed to the Company all of the capital stock in eight
of the corporations beneficially owned by them in exchange for common
stock of the Company (the "Reorganization").
The Company owns and operates nine Spanish-language radio stations
serving the New York, Miami and Los Angeles markets through its direct
and indirect subsidiaries, Spanish Broadcasting System of New York, Inc.,
SBS of Greater New York, Inc., Spanish Broadcasting System of Florida,
Inc. and Spanish Broadcasting System of California, Inc. Additionally,
the Company's other direct and indirect subsidiaries include Alarcon
Holdings, Inc. ("Alarcon"), Spanish Broadcasting System Network, Inc.
("SBS Network") and SBS Promotions, Inc. ("SBS Promotions"). Alarcon owns
and operates the building where the Company's corporate offices are
located. SBS Network and SBS Promotions are currently dormant. SBS
Network was formerly the Company's exclusive agency representative for
national advertising sales. SBS Promotions formerly performed promotional
services for the Company's radio stations.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED MATTERS
(a) BASIS OF PRESENTATION
The consolidated financial statements include the accounts of the
Company and its direct and indirect subsidiaries. The Company is a
holding company with no independent assets or operations other
than its investments in subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.
The Reorganization was accounted for as a transaction between
companies under common control, in a manner similar to a pooling
of interests. Accordingly, the operations of the Company's
subsidiaries have been included in the accompanying consolidated
financial statements for the periods prior to the effective date
of the Reorganization.
F-6
<PAGE> 43
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(2), CONTINUED
The Company's subsidiaries (hereinafter referred to in this
paragraph collectively as "Subsidiary Guarantors") are fully,
unconditionally, and jointly and severally liable for the
Company's senior unsecured notes and new senior secured notes
referred to in note 5. The Subsidiary Guarantors are wholly owned
and constitute all of the Company's direct and indirect
subsidiaries, except for certain subsidiaries that are not
consequential. The Company has not included separate financial
statements of the aforementioned subsidiaries because (i) the
aggregate assets, liabilities, earnings and equity of such
subsidiaries are substantially equivalent to the assets,
liabilities, earnings and equity of the Company on a consolidated
basis, and (ii) the separate financial statements and other
disclosures concerning such subsidiaries are not deemed material
to investors.
The Company's fiscal year is the 52-week period which ends on the
last Sunday of September.
(b) REVENUE RECOGNITION
Revenues are recognized when advertisements are aired.
(c) PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. The Company depreciates
the cost of its property and equipment using the straight-line
method over the respective estimated useful lives. Leasehold
improvements are amortized on a straight-line basis over the
shorter of the remaining life of the lease or the useful life of
the improvements.
The Company capitalized interest in connection with the renovation
of its facilities. The capitalized interest is recorded as part of
the related building and is amortized over the estimated useful
life of the building.
(d) LONG-LIVED ASSETS
In March 1995, Statement of Financial Accounting Standards No.
121, (Statement 121) "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of," was issued.
Statement 121 requires that long-lived assets and certain
identifiable intangibles to be held and used or disposed of by an
entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may
not be recoverable. In the fourth quarter of
fiscal 1996, the Company elected early adoption of Statement 121.
See note 4 for impairment loss related to fixed assets.
F-7
<PAGE> 44
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(2), CONTINUED
(e) FRANCHISE COSTS
Franchise costs represent the excess cost to acquire the Company's
radio station assets over the allocated fair value of the net
tangible assets acquired and are amortized on a straight-line
basis over periods not exceeding 40 years, based on the industry
practice of renewing franchises periodically. In evaluating the
recoverability of franchise costs, management gives consideration
to a number of factors, including analysis of the estimated future
undiscounted cash flows from operations for each market, the
dispositions of other radio properties in specific markets and
input from appraisers.
(f) FINANCING COSTS
During fiscal 1994, the Company expensed $3,457,611 of costs
related to unsuccessful refinancings. During fiscal 1996, the
Company expensed $876,579 of costs related to an initial public
offering that was aborted. The net deferred financing costs at
September 24, 1995 and September 29, 1996 of $5,647,915 and
$6,235,341, respectively, relate to the successful refinancing of
the Company's debt and additional financing obtained in connection
with the acquisition of radio station WPAT-FM as discussed in note
5.
Deferred financing costs are being amortized on a straight-line
basis over the respective lives of the related indebtedness.
(g) BARTER TRANSACTIONS
The Company records barter transactions at the fair value of goods
or services received.
(h) CASH EQUIVALENTS
Cash equivalents, consisting primarily of interest-bearing money
market accounts and certificates of deposits, totalled
approximately $17,527,000 and $4,697,000 at September 24, 1995 and
September 29, 1996, respectively.
(i) INCOME TAXES
The Company files a consolidated Federal income tax return with
its direct and indirect subsidiaries. The Company accounts for
income taxes in accordance with the Financial Accounting Standards
Board's Statement of Financial Accounting Standards No. 109
(Statement 109), "Accounting for Income Taxes." Under the asset
and liability method of Statement 109, deferred tax assets and
liabilities are recognized for the future tax consequences
attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be
recovered or settled. Under Statement 109, the effect on deferred
tax assets and liabilities of a change in tax rates is recognized
in income in the period that includes the enactment date.
F-8
<PAGE> 45
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(2), CONTINUED
(j) USE OF ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities, and disclosure of contingent assets and
liabilities at the date of the financial statements, and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
(k) CONCENTRATION OF RISK
All of the Company's business is conducted in the New York, Miami
and Los Angeles markets. Net revenues earned from radio stations
located in New York. Miami and Los Angeles represented 32%, 16%
and 52%, respectively, of total revenues for the year ended
September 24, 1994; 37%, 16% and 47%, respectively, of total
revenues for the year ended September 24, 1995; and 51%, 17% and
32%, respectively, of total revenues for the year ended September
29, 1996. The increase in market concentration risk in New York in
fiscal 1996 results from the acquisition of WPAT-FM as discussed
in note 3.
(3) ACQUISITIONS
During fiscal 1994, the Company entered into an agreement to construct a
tower to broadcast over radio station WSKP-FM in Key West, Florida
("WSKP-FM") with an option to purchase the newly constructed station. In
July 1995, the Company consummated its purchase of WSKP-FM for a total
purchase price of $180,305. A portion of the purchase price was financed
by the seller through a note payable of $80,000 (see note 6). The FCC
license and assets of the station have been pledged as collateral under
this note payable. During fiscal 1996, this note was repaid in full.
On March 25, 1996, the Company acquired the FCC broadcast license and
substantially all of the assets used or useful in the operation of radio
station WPAT-FM for $84,550,000, plus financing and closing costs of
$1,808,962. The Company financed this purchase with a combination of the
proceeds from the issuance of the Company's Redeemable Series A
Preferred Stock, 12-1/4% Senior Secured Notes due 2001 (see note 5)
together with cash on hand. The Company assumed operational
responsibility of WPAT-FM on January 20, 1996 under an interim
agreement, at which time the Company changed the musical format of
WPAT-FM to Spanish language adult contemporary.
F-9
<PAGE> 46
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(3), CONTINUED
The Company's consolidated results of operations include the results of
WPAT-FM from the date of acquisition. The acquisition of WPAT-FM was
accounted for by the purchase method of accounting. The purchase price
has been allocated to the assets acquired, principally franchise costs,
based on their estimated fair values at the date of acquisition. The
following unaudited pro forma summary presents the consolidated results
of operations as if the acquisition had occurred as of the beginning of
fiscal 1995, after giving effect to certain adjustments, including
amortization of franchise costs and interest expense on the acquisition
debt. These pro forma results have been prepared for comparative purposes
only and do not purport to be indicative of what would have occurred had
the acquisition been made as of that date or of results which may occur
in the future.
<TABLE>
<CAPTION>
Year ended
---------------------------------------------
September 24, 1995 September 29, 1996
------------------ ------------------
(unaudited)
<S> <C> <C>
Net revenues $55,070,000 51,214,000
Net loss (1,060,000) (8,894,000)
</TABLE>
In August 1996, the Company entered into an agreement to purchase
substantially all of the assets of radio station WYSY-FM in Chicago from
Infinity Broadcasting Corporation for $33 million. The transaction is
subject to FCC approval, among other things, and is expected to be
financed with a $3 million note payable to Infinity Broadcasting
Corporation and $30 million to be obtained through outside financing.
In September 1996, the Company entered into an agreement to purchase
substantially all of the assets of radio stations WRMA-FM and WXDJ-FM
from New Age Communications and the Seventies Broadcasting Corporation
(the "Sellers"), respectively, under a combined contract for
approximately $110 million. The pending acquisition is subject to, among
other things, FCC approval and is expected to be financed through outside
financing. In connection with this agreement , the Company delivered a
$10 million letter of credit to the Sellers. The Sellers may draw upon
the letter of credit if an event of default occurs, as defined in the
agreement. If an event of default occurs, liquidated damages are limited
to $30 million, as defined in the agreement. In September 1996, one of
the Sellers became the executive vice president and chief operating
officer of the Company.
F-10
<PAGE> 47
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(4) PROPERTY AND EQUIPMENT
Property and equipment consist of the following at September 24, 1995 and
September 29, 1996:
<TABLE>
<CAPTION>
Estimated
1995 1996 useful lives
----------- ----------- ------------
<S> <C> <C> <C>
Land 2,350,000 1,798,785 --
Building and building leasehold
improvements 14,768,299 15,349,050 20 years
Tower and antenna systems 3,172,696 5,517,659 7-15 years
Studio and technical equipment 4,343,344 4,562,969 10 years
Furniture and fixtures 1,529,233 1,543,918 3-10 years
Transmitter equipment 991,889 1,264,093 7-10 years
Leasehold improvements 1,074,557 1,085,922 5-13 years
Computer equipment 840,584 935,563 5 years
Other 350,843 477,535 5 years
----------- -----------
29,421,445 32,535,494
Less accumulated depreciation
and amortization 11,824,873 13,662,458
----------- -----------
$17,596,572 18,873,036
=========== ===========
</TABLE>
During fiscal 1996, the Company wrote down the value of its land and
building located on Sunset Boulevard in Los Angeles (which was part of
the assets acquired in the purchase of the Los Angeles AM radio station)
by $697,741. The write down was based on current market values of real
estate in the Los Angeles area. This amount is included in other, net in
the accompanying consolidated statement of operations.
(5) SENIOR NOTES AND PREFERRED STOCK
On June 29, 1994, the Company, through a private placement offering (the
"Offering") completed the sale of 107,059 units (the "Units"), each
consisting of $1,000 principal amount of 12-1/2% Senior Notes (the
"Notes") due 2002 and 107,059 Warrants (the "Warrants") each to purchase
one share of Class A voting common stock at a price of $0.01 per share.
The Notes and Warrants became separately transferable on June 29, 1994.
The Notes were issued at a substantial discount from their principal
amount and generated proceeds to the Company of $87,774,002, net of
financing costs of $6,225,998. Of the $94,000,000 of gross proceeds,
$88,603,000 was allocated to the Notes and $5,397,000 was determined to
be the value of the Warrants. The net proceeds were used (i) to satisfy
in full all obligations to the Company's two principal lenders for a
total of approximately $83,000,000 in cash; this satisfaction resulted in
the release of the assets and stock held as collateral by the principal
lenders, (ii) to deposit $4,000,000 into a blocked account which was
subsequently used to cover the settlement of litigation relating to the
obligations to a
F-11
<PAGE> 48
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(5), CONTINUED
former stockholder under certain noncompete and redemption agreements
(see note 11), and (iii) for general corporate purposes. The satisfaction
of the obligations to the principal lenders were made at discounts to
their face values, resulting in a gain on extinguishment of this debt of
$70,254,772, net of income taxes of $3,060,924. Such amount has been
classified as an extraordinary item in the accompanying fiscal 1994
consolidated statement of operations.
The Notes bear interest at a rate of 7-1/2% per annum from the date of
original issue until June 15, 1997 and at a rate of 12-1/2% per annum
from and after such date until maturity on June 15, 2002. Interest is
payable semiannually on June 15 and December 15, commencing December 15,
1994. The Notes will not be redeemable at the option of the Company,
except that the Company may redeem up to $20 million aggregate principal
amount of the Notes on or prior to June 15, 1997 at 110% of the accreted
value of the Notes, plus accrued and unpaid interest to the redemption
date, out of the proceeds of one or more public offerings of the
Company's common stock. The Notes are senior unsecured obligations of the
Company and are unconditionally guaranteed, on a senior unsecured basis,
as to payment of principal, premium, if any, and interest, jointly and
severally, by each subsidiary of the Company. In the event of a change of
control, as defined, the Company will be required to make an offer to
purchase all of the outstanding Notes at a purchase price equal to 101%
of their accreted value, in the case of a purchase prior to June 15,
1997, and thereafter at a purchase price equal to 101% of the principal
amount thereof, in each case plus accrued and unpaid interest to the date
of purchase. The indenture pursuant to which the Notes are issued
contains covenants restricting the incurrence of additional indebtedness,
the payment of dividends and distributions, the creation of liens, asset
sales, mergers or consolidations, among other things. The Company
registered the Notes with the Securities and Exchange Commission, which
registration became effective on October 26, 1994. The discount on the
Notes is being amortized over the term of the Notes to result in an
effective interest rate of 12-1/2% per annum.
The Warrants will expire on June 30, 1999. Each warrant entitles the
holder to acquire, on or after the exercise date, as defined, and prior
to the expiration date, one share of Class A voting common stock at $0.01
per share, subject to adjustment from time to time upon the occurrence of
certain changes in common stock, common stock distributions, issuances of
options or convertible securities, dividends and distributions and
certain other increases in the number of shares of common stock, as
defined.
F-12
<PAGE> 49
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(5), CONTINUED
On March 25, 1996 the Company financed the purchase of radio station
WPAT-FM with a combination of the proceeds from the sale in a private
placement of 37,500 shares of the Company's Redeemable Series A
Preferred Stock (Preferred Stock) and $35 million of the Company's
12-1/4% Senior Secured Notes (the "New Senior Notes") due 2001 together
with cash on hand. The Company also issued to the holders of the
Preferred Stock and New Senior Notes warrants (the "New Warrants") to
purchase, in the aggregate, 6% of the Company's common stock on a fully
diluted basis which are exercisable no later than June 29, 1998. Of the
gross proceeds of $72.5 million, $35 million relates to the New Senior
Notes and $37.5 million relates to the Preferred Stock. The value of
the New Warrants was determined to be $6,833,507 of which $2,277,840
was allocated to the warrants associated with the New Senior Notes and
$4,555,667 was allocated to the warrants associated with the Preferred
Stock. In connection with this transaction, the Company capitalized
deferred financing costs of $1,605,426 related to the New Senior Notes
and charged issuance costs of $1,718,437 related to the Preferred Stock
to additional paid-in capital.
The New Senior Notes are secured by the FCC license of radio station
WPAT-FM and are guaranteed by each of the Company's subsidiaries. They
will be senior obligations of the Company that will rank senior in right
of payment to all subordinated indebtedness of the Company and equally
ranked with all existing and future senior indebtedness of the Company
including the Notes. The New Senior Notes are due on June 1, 2001 and
bear interest at the rate of 12-1/4% per annum payable quarterly,
increasing by 0.25% for each three-month period from the issue date to
March 1997, and 0.50% for each period of three months thereafter,
provided that the interest rate on the New Senior Notes may not exceed
14.75% per annum. The discount on the New Senior Notes is being amortized
over the term of the New Senior Notes to result in an effective interest
rate of 15.9% per annum, inclusive of interest rate escalations. Until
March 24, 1998, interest may be paid in cash or in additional New Senior
Notes. In June 1996 and September 1996, the Company elected to satisfy
interest due through the issuance of $2,199,121 additional New Senior
Notes issued at face value.
The carrying value of the Notes and New Senior Notes approximates market
value at September 29, 1996.
The Preferred Stock is entitled to dividends at the rate of 12.75% per
annum payable quarterly, increasing by 0.25% for each period of three
months from issue date through March 1997 and 0.50% for each period of
three months thereafter, provided that the dividend rate will at no time
exceed 15.25%. During the first three years, dividends may be paid in
cash or additional shares of Preferred Stock. In June 1996 and September
1996, the Company elected to satisfy the dividends due of $2,452,910
through the issuance of 2,451 additional preferred shares and $1,910 in
cash (for fractional shares). The holders of the Preferred Stock may, at
their option, exchange Preferred Stock into New Senior Notes in an amount
equal to the accreted value of Notes that are redeemed or otherwise
retired by the Company. The Company is required to redeem the Preferred
Stock on December 1, 2002.
Covenants under the indentures governing the New Senior Notes and
Preferred Stock are substantially identical to the covenants of the
Notes.
F-13
<PAGE> 50
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(5), CONTINUED
The Company will be required to make an offer to purchase the New Senior
Notes and Preferred Stock upon a change of control, as defined. The
Company will be required to make an offer to purchase the Preferred Stock
upon the sale of certain assets but only after satisfying the offer to
purchase obligations under the outstanding Notes.
The New Senior Notes and the Preferred Stock will be redeemable, at the
Company's option, during the first 18 months following issuance at 100%
of the principal amount and liquidation value, respectively, provided,
however, that the New Senior Notes will not be redeemable until all of
the Preferred Stock is redeemed or exchanged into Notes or New Senior
Notes. The New Senior Notes and the Preferred Stock will be redeemable at
the following premium to principal amount and liquidation value,
respectively, during the periods set forth below:
<TABLE>
<CAPTION>
Period Following Issuance Premium
------------------------- -------
<S> <C> <C>
18-24 months 105%
24-26 months 103%
36-48 months 101%
Thereafter 100%
</TABLE>
Under the terms of the indentures, the Company is required to commence an
orderly auction process for radio stations WXLX-AM and KXED-AM. The
Company will also be required to waive its rights to reinvest the
proceeds of such sales and immediately offer to purchase outstanding
Notes at 100% of accreted value as required under the indenture. All
remaining proceeds must be utilized to make an offer to purchase or
mandatorily redeem Preferred Stock.
The Company is permitted to repurchase the New Warrants during the first
two years from issuance, assuming no New Senior Notes or Preferred Stock
are outstanding and such purchase is permitted under the Indenture, at
prices ranging from $182.70 per Warrant to $439.38 per Warrant.
If on the first, second or third anniversaries of the issuance of the New
Senior Notes and Preferred Stock, the sum of the aggregate principal
amount of the New Senior Notes and the aggregate liquidation value of the
Preferred Stock outstanding exceeds the sum of $50 million plus the
accreted value of the Notes that have been repurchased, redeemed or
otherwise retired by the Company, the Company will issue the holders of
the New Senior Notes and Preferred Stock, on a pro rata basis, ten-year
warrants (the "Penalty Warrants") to purchase, in the aggregate, 10% of
the Company's common stock at an aggregate exercise price of $5 million.
Thereafter, in the event that the New Senior Notes and the Preferred
Stock are fully redeemed prior to the first anniversary of the issuance
of Penalty Warrants, the Company will have the option to repurchase
Penalty Warrants for an aggregate purchase price of $5 million (or, if
the Penalty Warrants have been exercised, the option to repurchase the
underlying warrant shares for an aggregate purchase price of $10
million).
F-14
<PAGE> 51
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(5), CONTINUED
If any New Senior Notes or Preferred Stock are outstanding 18 months
following the issuance thereof, the Company will use its best efforts to
publicly register the outstanding New Senior Notes and Preferred Stock.
In the event that New Senior Notes or Preferred Stock remain outstanding
on the second anniversary of issuance, the interest and/or dividend rates
will increase by 100 basis points to the extent such New Senior Notes or
Preferred Stock are not then publicly registered.
(6) LONG-TERM DEBT
Long-term debt consists of the following at September 24, 1995 and
September 29, 1996:
<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C> <C>
Obligation under capital lease with related party payable in
monthly installments of $9,000, including interest at 6.25%,
commencing June 1992
(see note 9) $1,116,005 1,075,314
Note payable in monthly installments
of $1,547, plus interest at 6%, commencing
January 1996 (see note 3) 80,000 -
Other 11,626 11,626
--------- ------------
1,207,631 1,086,940
Less current portion 61,565 53,572
--------- ------------
$1,146,066 1,033,368
========= ============
</TABLE>
The scheduled maturities of long-term debt are as follows at September
29, 1996:
<TABLE>
<CAPTION>
Fiscal year ending September
----------------------------
<S> <C> <C>
1997 $ 53,572
1998 44,644
1999 47,516
2000 50,572
2001 53,825
Thereafter 836,811
----------
$1,086,940
==========
</TABLE>
F-15
<PAGE> 52
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(7) LOANS WITH STOCKHOLDERS AND RELATED PARTY TRANSACTIONS
At September 24, 1995, the Company had loans receivable from stockholders
totalling $2,421,272 including interest of $312,012. In May 1994, these
stockholders entered into agreements with the Company pursuant to which
these loans would bear interest at a rate that varied with the prime rate
and mature in 2001. Effective in December 1995, the Company exchanged the
existing notes for amended and restated notes in the aggregate principal
amounts of $2,474,236, including accrued interest through that date. The
amended and restated notes bear interest at 6.36% per annum and mature on
December 30, 2025. The notes are payable in 30 equal annual aggregate
installments of $186,728, commencing on December 30, 1996. The board of
directors approved the terms of the exchange of the notes. Loans
receivable from stockholders have been classified as an increase in
stockholders' deficiency in the accompanying consolidated balance sheets.
Interest receivable on stockholder loans of $118,021 is included in other
current assets.
At September 24, 1995 and September 29, 1996, the Company has advances
totalling $286,947 and $289,869, respectively, due from a party related
through common ownership. Payment of this balance is guaranteed by an
officer of the Company. Additionally, at September 24, 1995 and September
29, 1996, the Company had trade receivables totalling $373,190 due from
this related party which have been fully reserved.
The Company pays the operating expenses for a boat owned by a party
related through common ownership which is used by the Company for
business entertainment purposes. Such expenses approximated $77,000,
$99,000 and $126,000 for the fiscal years ended September 25, 1994,
September 24, 1995 and September 29, 1996, respectively. The Company
leases an apartment from a stockholder of the Company for annual rentals
of $108,000 through August 1997. Additionally, the Company occupies a
building under a capital lease agreement with certain stockholders (see
note 9).
The Company had a loan payable to a stockholder of $200,000 at September
25, 1994 which bore interest at 10% per annum. This loan was repaid in
June 1995.
(8) CAPITAL STOCK
During fiscal 1994, in connection with the Reorganization and the
Offering, the Company consolidated its radio station operations through
the contribution by the Principal Stockholders to the Company of their
interests in eight corporations in exchange for common stock of the
Company. As a result of the contribution, the Company issued 558,135
shares of Class A common stock and 48,533 shares of Class B common stock.
The difference between the par value of the previously issued shares of
$300,000 and the newly issued shares of $6,066 was reflected as
additional paid-in capital of $293,934.
F-16
<PAGE> 53
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(8), CONTINUED
During fiscal 1996, the Company amended and restated its Certificate of
Incorporation to increase the aggregate number of authorized shares of
$0.01 par value Class A common stock from 2,000,000 to 5,000,000 and
create and authorize 500,000 shares of $0.01 par value preferred stock.
Characteristics and privileges concerning the preferred stock are at the
discretion of the board of directors. During fiscal 1996, 49,201 of
preferred shares were designated as Redeemable Series A Preferred Stock
(see note 5). In addition, the Company has authorized 200,000 shares of
$0.01 par value Class B common stock. The Class A common stock is
entitled to one vote per share and the Class B common stock is entitled
to eight votes per share. Shares of Class B common stock may be converted
into an equal number of shares of Class A common stock, at the option of
the holder, at any time. Each share of Class B common stock automatically
converts into one share of Class A common stock on the exercise date, as
defined in the Warrant agreement relating to the Notes discussed in note
5.
In 1994 the Company adopted a stock option plan pursuant to which the
Company has reserved up to 26,750 shares of Class A common stock for
issuance upon the exercise of options granted under the plan. The plan
covers all regular salaried employees of the Company and its
subsidiaries. No options have been granted under this plan to date.
(9) COMMITMENTS
The Company occupies a building under a capital lease agreement with
certain stockholders of the Company expiring in June 2012. The amount
capitalized under this lease agreement and included in property and
equipment at September 24, 1995 and September 29, 1996 is $1,025,000 and
$963,500, net of accumulated depreciation of $205,000 and $266,500,
respectively.
The Company leases office space and facilities and certain equipment
under operating leases, one of which is with a related party (see note
7), that expire at various dates through 2013. Certain leases provide for
base rental payments plus escalation charges for real estate taxes and
operating expenses.
F-17
<PAGE> 54
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(9), CONTINUED
At September 29, 1996, future minimum lease payments under such leases
are as follows:
<TABLE>
<CAPTION>
Capital Operating
Fiscal year lease leases
----------- ----- ------
<S> <C> <C> <C>
1997 $ 149,000 597,600
1998 149,000 461,100
1999 149,000 294,900
2000 149,000 149,600
2001 149,000 148,200
Thereafter 1,589,333 2,050,200
--------- ---------
Total minimum lease payments 2,334,333 $3,701,600
==========
Less executory costs 642,333
----------
1,692,000
Less interest at 6.25% 616,686
----------
Present value of minimum lease
payments $1,075,314
==========
</TABLE>
Total rent expense for the fiscal years ended September 25, 1994,
September 24, 1995 and September 29, 1996 amounted to $971,398, $943,107
and $1,097,144, respectively.
The Company has agreements to sublease its radio frequencies and portions
of its tower sites. Such agreements provide for payments through 2002.
The future minimum rental income to be received under these agreements as
of September 29, 1996 is as follows:
<TABLE>
<CAPTION>
Fiscal year Amount
----------- ---------
<S> <C> <C>
1997 $ 466,060
1998 485,130
1999 504,477
2000 236,674
2001 256,143
Thereafter 109,330
---------
$2,057,814
==========
</TABLE>
F-18
<PAGE> 55
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(9), CONTINUED
At September 29, 1996, the Company is committed to the purchase of
broadcast rights for various sports, news and other programming and has
employment contracts for certain on-air talent and general managers
expiring through 2000. Future payments under such contracts are as
follows:
<TABLE>
<CAPTION>
Programming Employment
Fiscal year contracts contracts Total
----------- --------- --------- -----
<S> <C> <C> <C> <C>
1997 $450,406 1,436,249 1,886,655
1998 289,653 639,284 928,937
1999 31,283 368,867 400,150
2000 14,286 232,200 246,486
2001 4,012 19,350 23,362
------- --------- ---------
$789,640 2,695,950 3,485,590
======= ========= =========
</TABLE>
Certain sports programming contracts provide for sharing in a portion of
advertising revenues or sharing of net profits relating to the specific
broadcasts. In addition, certain employment contracts provide for
additional amounts to be paid if station ratings or cash flow targets are
met.
The Company has a five-year agreement with Katz Communications, Inc.
("KCI") expiring in fiscal 1998, whereby KCI became the Company's
exclusive national sales agent and representative. In connection with
this agreement, SBS Network ceased representation for the Company's
stations in this capacity. In consideration for this agreement, KCI paid
SBS Network $500,000 during fiscal 1994. Under the terms of the
agreement, the Company agreed to pay KCI a commission on the net national
advertising billings, which ranges between 14% and 20%, over the life of
the agreement.
(10) INCOME TAXES
Total income tax expense (benefit) for the fiscal year ended September
25, 1994 was deferred and allocated as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Loss from operations $(2,231,070)
Extraordinary item - gain on extinguishment of debt 3,060,924
-----------
$ 829,854
===========
</TABLE>
F-19
<PAGE> 56
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(10), CONTINUED
The provision (benefit) for income taxes for the fiscal years ended
September 24, 1995 and September 29, 1996 consists of the following:
<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C> <C>
Current:
State and local $ 329,656 191,922
Deferred:
Federal 1,081,738 (1,357,722)
--------- ----------
$1,411,394 (1,165,800)
========= ==========
</TABLE>
During fiscal 1995 and 1996, the Company utilized net operating loss
carryforwards of approximately $837,000 and $686,000, respectively.
The difference between the fiscal 1994 income tax benefit (attributable
to operations) at the Federal statutory rate and the effective rate was
due to state and local income tax benefits. The difference between the
fiscal 1995 income tax expense at the Federal statutory rate and the
effective rate was attributable to the utilization of net operating loss
carryforwards, as well as state and local income taxes. The difference
between the fiscal 1996 income tax benefit at the Federal statutory rate
and the effective rate was primarily attributable to state and local
income taxes, recurring non-deductible expenses and non-deductible
expenses incurred in connection with the Company's financing
transactions.
The tax effect of temporary differences and carryforwards that give rise
to deferred tax assets and deferred tax liabilities at September 24, 1995
and September 29, 1996 is as follows:
<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $31,320,000 27,627,781
Deferred interest - 4,963,048
Allowance for doubtful accounts 2,073,954 1,804,305
Fixed assets - 279,095
----------- ----------
Total deferred tax assets 33,393,954 34,674,229
----------- ----------
Deferred tax liabilities:
Depreciation and amortization 9,097,466 8,932,667
Intangible assets 8,382,950 8,382,950
Deferred debt forgiveness 17,396,470 17,396,470
Unearned revenue 262,750 350,102
----------- ----------
Total deferred tax liabilities 35,139,636 35,062,189
----------- ----------
Net deferred tax liability $(1,745,682) (387,960)
=========== ==========
</TABLE>
F-20
<PAGE> 57
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(10), CONTINUED
During fiscal 1994, as a result of the refinancing of the Company's debt
discussed in note 5, the Company recognized an extraordinary gain on debt
extinguishment of $70,254,772, net of income taxes of $3,060,924, for
financial statement purposes. For Federal income tax purposes, income
from the discharge of this indebtedness reduced available net operating
loss carryforwards and reduced the tax basis of certain assets. As a
result, the valuation allowance for gross deferred tax assets was
eliminated in fiscal 1994, reflecting the utilization, as a result of the
extraordinary gain, of net operating loss carryforwards for financial
statement purposes. In addition, certain timing differences were created
which gave rise to deferred tax liabilities that will result in taxable
income in future years when the assets are realized or settled.
During fiscal 1995, the recognition of the $70,254,772 gain on debt
extinguishment for Federal income tax purposes was redistributed upon
filing of the fiscal 1994 tax returns. This resulted in additional
amounts used to reduce the tax basis of certain assets, additional
deferred debt forgiveness and preservation of available net operating
loss carryforwards. The net effect of the redistribution of the discharge
of indebtedness for Federal income tax purposes did not significantly
affect the Company's net deferred tax position.
At September 29, 1996, the Company has net operating loss carryforwards
of approximately $69,069,000 available to offset future taxable income
expiring as follows:
<TABLE>
<CAPTION>
Net
operating loss
Expiring in September carryforwards
--------------------- -------------
<S> <C> <C>
2004 $ 5,210,000
2005 12,578,000
2006 14,233,000
2007 13,390,000
2008 12,213,000
2009 11,445,000
----------
$69,069,000
==========
</TABLE>
(11) LITIGATION
The Company is the defendant in a number of lawsuits and claims
incidental in its ordinary course of business, certain of which have been
brought by former employees. It is not possible at the present time to
estimate the ultimate liability, if any, of the Company with respect to
such litigation. However, management believes that the ultimate
liability, if any, would not be material to the Company's consolidated
financial position or results of operations.
F-21
<PAGE> 58
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(11), CONTINUED
In April 1995, the Company settled ongoing litigation with a former
stockholder for $3.5 million, including imputed interest. The difference
between the amount accrued by the Company and the settlement amount
totalled $352,878 and is recorded in other expense in the accompanying
consolidated statement of operations for the fiscal year ended September
24, 1995.
(12) SUPPLEMENTAL CASH FLOW INFORMATION
The Company paid $2,295,489, $8,152,213 and $8,254,402 for interest and
$53,332, $337,757 and $632,990 for income taxes during fiscal 1994, 1995
and 1996, respectively. During the year ended September 24, 1995, the
Company financed $80,000 of the purchase price of radio station WSKP-FM
through the issuance of a note payable to the seller. During the year
ended September 29, 1996, the Company issued $2,199,121 of New Notes as
payment for interest and issued $2,452,910 of Preferred Stock as
payment of dividends.
F-22
<PAGE> 59
SCHEDULE II
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
Valuation and Qualifying Accounts
Fiscal years ended September 25, 1994, September 24, 1995
and September 29, 1996
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Additions
---------------------------
Balance at Charged to Charged to Balance at
beginning costs and other end
Description of period expenses accounts Deductions of period
----------- --------- -------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C>
FISCAL YEAR 1994
Allowance for doubtful
accounts $ 4,048,631 5,796,083 - 6,039,193 3,805,521
FISCAL YEAR 1995
Allowance for doubtful
accounts $ 3,805,521 4,195,746 - 2,816,381 5,184,886
FISCAL YEAR 1996
Allowance for doubtful
accounts $ 5,184,886 4,908,699 - 5,582,822 4,510,763
</TABLE>
F-23
<PAGE> 60
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, as amended, SPANISH BROADCASTING SYSTEM, INC., a Delaware
corporation, has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on December 22,1996.
SPANISH BROADCASTING SYSTEM, INC.
By: /s/ Raul Alarcon Jr.
------------------------------
RAUL ALARCON JR.,
President and Director
(principal executive officer)
Pursuant to the requirements of the Securities and Exchange Act of
1934, as amended, this report has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- - --------- ----- ----
<S> <C> <C>
/s/ Pablo Raul Alarcon
- - -------------------------------------------
Pablo Raul Alarcon Director December 22, 1996
/s/ Raul Alarcon
- - -------------------------------------------
Raul Alarcon President and Director December 22, 1996
(principal executive officer)
/s/ Joseph Garcia
- - -------------------------------------------
Joseph Garcia Chief Financial Officer December 22, 1996
(principal financial and
accounting officer)
/s/ Jose Grimalt
- - -------------------------------------------
Jose Grimalt Executive Vice President December 22, 1996
and Director
Walter F. McLallen IV
- - -------------------------------------------
Walter F. McLallen IV Director December 22, 1996
Arnold Sheiffer
- - -------------------------------------------
Arnold Sheiffer Director December 22, 1996
</TABLE>
32
<PAGE> 61
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, each of SPANISH BROADCASTING SYSTEM, INC., a New Jersey corporation,
SPANISH BROADCASTING SYSTEM OF NEW YORK, INC., SPANISH BROADCASTING SYSTEM OF
FLORIDA, INC., SPANISH BROADCASTING SYSTEM NETWORK, INC., SBS PROMOTIONS, INC.,
SBS OF GREATER NEW YORK, INC. and ALARCON HOLDINGS, INC. has duly caused this
Annual Report to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of New York, New York on December 22, 1996.
SPANISH BROADCASTING SYSTEM, INC.,
a New Jersey Corporation
SPANISH BROADCASTING SYSTEM OF NEW YORK, INC.
SPANISH BROADCASTING SYSTEM OF FLORIDA, INC.
SPANISH BROADCASTING SYSTEM NETWORK, INC.
SBS PROMOTIONS, INC.
SBS OF GREATER NEW YORK, INC.
ALARCON HOLDINGS, INC.
BY: /S/ RAUL ALARCON JR.
--------------------------------------
RAUL ALARCON JR.
President and Director
(principal executive officer)
Pursuant to the requirements of the Securities Act of 1993, as amended,
this Annual Report has been signed by the following persons in the capacities
and on the dates indicated.
<TABLE>
<CAPTION>
- - ------------------------------------------- --------- --------------------------------- --- -------------------------
SIGNATURE TITLE DATE
- - ------------------------------------------- --------- --------------------------------- --- -------------------------
<S> <C> <C>
/s/ Raul Alarcon
- - -------------------------------------------
Raul Alarcon President and Director December 22, 1996
(principal executive officer)
/s/ Pablo Raul Alarcon
- - -------------------------------------------
Pablo Raul Alarcon Chairman of the Board December 22, 1996
(director)
/s/ Jose Grimalt
- - -------------------------------------------
Jose Grimalt Secretary and Director December 22, 1996
/s/ Joseph Garcia
- - -------------------------------------------
Joseph Garcia Chief Financial Officer and December 22, 1996
Assistant Secretary
(principal financial and
accounting officer)
</TABLE>
33
<PAGE> 62
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, SPANISH BROADCASTING SYSTEM OF CALIFORNIA, INC. has duly caused this
Annual Report to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of New York, New York on December 22, 1996.
SPANISH BROADCASTING SYSTEM OF CALIFORNIA, INC.
BY: /S/ RAUL ALARCON
--------------------------------------
RAUL ALARCON JR.
Vice President
Pursuant to the requirements of the Securities Act of 1993, as amended,
this Annual Report has been signed by the following persons in the capacities
and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- - --------- ----- ----
<S> <C> <C>
/s/ Raul Alarcon
- - -------------------------------------------
Raul Alarcon Vice President and Director December 22, 1996
(principal executive officer)
/s/ Pablo Raul Alarcon
- - -------------------------------------------
Pablo Raul Alarcon Chairman of the Board December 22, 1996
(Director)
/s/ Joseph Garcia
- - -------------------------------------------
Joseph Garcia Chief Financial Officer and December 22, 1996
Assistant Secretary
(principal financial and
accounting officer)
/s/ Jose Grimalt
- - -------------------------------------------
Jose Grimalt President and Director December 22, 1996
</TABLE>
34
<PAGE> 63
EXHIBIT INDEX
-------------
EXHIBIT NUMBER DESCRIPTION
3.1.1 -- Amended and Restated Certificate of Incorporation
of the Company. Incorporated by reference to
Exhibit 3.1.1 of the Company's Current Report on
Form 8-K, dated March 25, 1996 (the "Current
Report").
3.1.2 -- Bylaws of the Company. Incorporated by reference
to Exhibit 3.1.2. of the Company's Registration
Statement on Form S-4 No. 33-82114 (the "1994
Registration Statement").
3.2 -- Certificate of Designations of Series A
Exchangeable Preferred Stock. Incorporated by
reference to Current Report.
3.9.1 -- Certificate of Incorporation of SBS of Greater New
York, Inc. ("SBS-GNY"). Incorporated by reference
to Current Report.
3.9.2 -- Bylaws of SBS-GNY. Incorporated by reference to
Current Report.
4.1 -- Indenture dated June 29, 1994 among the Company,
IBJ Schroder Bank & Trust Company, as Trustee, the
Guarantors named therein and the Purchasers named
therein. Incorporated by reference to Exhibit 4.1
of the 1994 Registration Statement.
4.2.2 -- First Supplemental Indenture dated as of March 25,
1996 to Indenture dated as of June 29, 1994 among
the Company, the Guarantors named therein and IBJ
Schroder Bank & Trust Company, as Trustee.
Incorporated by reference to Current Report.
4.3 -- Indenture dated as of March 25, 1996 among the
Company, the Guarantors named therein, IBJ
Schroder Bank & Trust Company, as Trustee, and the
Purchasers named therein. Incorporated by
reference to Current Report.
10.1 -- Securities Purchase Agreement dated as of June 29,
1994 by and among the Company, the Guarantors
named therein and each of the purchasers referred
to therein. Incorporated by reference to Exhibit
10.1 of the 1994 Registration Statement.
10.2 -- Warrant Agreement dated as of June 29, 1994
between the Company and IBJ Schroder Bank & Trust
Company, as Warrant Agent. Incorporated by
reference to Exhibit 10.2 of the 1994 Registration
Statement.
10.3 -- Common Stock Registration Rights and Stockholders
Agreement dated as of June 29, 1994 among the
Company, certain management stockholders and each
of the purchasers named therein. Incorporated by
reference to Exhibit 10.3 of the 1994 Registration
Statement.
10.4 -- 1994 Stock Option Plan of the Company.
Incorporated by reference to Exhibit 10.4 of the
1994 Registration Statement.
10.5.1 -- Broadcast Station License dated September 20, 1983
issued by the Federal Communications Commission
("FCC") to Sabre Broadcasting Corporation in
connection with WXLX-AM, together with an
Assignment thereof from Sabre Broadcasting
Corporation to Spanish Broadcasting System, Inc.,
a New Jersey
<PAGE> 64
Corporation ("SBS-NJ") and evidence of license
renewal. Incorporated by reference to Exhibit
10.8.1 of the 1994 Registration Statement.
10.5.2 -- Construction Permit dated July 21, 1993 issued by
the FCC to SBS-NJ in connection with WXLX-AM.
Incorporated by reference to Exhibit 10.8.2 of the
Registration Statement.
10.5.3 -- AM Broadcast Station Construction Permit dated
February 1, 1991 issued by the FCC to Spanish
Broadcasting System, Inc., a New Jersey
corporation ("SBS-NJ") in connection with WXLX.
Incorporated by reference to Current Report.
10.5.4 -- Ground Lease dated December 18, 1995 between Louis
Viola Company and SBS-NJ. Incorporated by
reference to Current Report.
10.5.5 -- Ground Lease dated December 18, 1995 between Frank
F. Viola and Estate of Thomas C. Viola and SBS-NJ.
Incorporated by reference to Current Report.
10.6 -- Broadcast Station License dated November 23, 1994
issued by the FCC to Spanish Broadcasting System
of New York, Inc., ("SBS-NY") in connection with
WSKQ-FM. Incorporated by reference to the
Company's Annual Report on Form 10-K for the
fiscal year ended September 24, 1994 (the "1994
10-K").
10.7 -- Broadcast Station License dated September 25, 1990
issued by the FCC to Spanish Broadcasting System
of Florida, Inc. ("SBS-Fla") in connection with
WCMQ-AM, together with evidence of license
renewal. Incorporated by reference to Exhibit
10.10 of the 1994 Registration Statement.
10.7.2 -- Evidence of renewal of Federal Communications
Commission ("FCC") Broadcast Radio License of
WCMQ-AM. Incorporated by reference to Current
Report.
10.8 -- Broadcast Station License dated April 1, 1994
issued by the FCC to SBS-Fla in connection with
WCMQ-FM, together with evidence of license.
Incorporated by reference to Exhibit 10.11 of the
1994 Registration Statement.
10.8.2 -- Evidence of renewal of FCC Broadcast Radio License
for WCMQ-FM. Incorporated by reference to Current
Report.
10.9 -- Broadcast Station License dated July 28, 1993
issued by the FCC to SBS-Fla in connection with
WZMQ-FM. Incorporated by reference to Exhibit
10.12 of the 1994 Registration Statement.
10.9.2 -- Evidence of renewal of FCC Broadcast Radio License
for WZMQ-FM. Incorporated by reference to Current
Report.
10.10 -- Broadcast Station License dated April 8, 1986
issued by the FCC to SBS-NJ in connection with
KXMG-AM, together with evidence of license
renewal. Incorporated by reference to Exhibit
10.13 of the 1994 Registration Statement.
10.11 -- Broadcast Station License dated February 21, 1992
issued by the FCC to SBS-Fla in connection with
KLAX-FM, together with evidence of license
renewal. Incorporated by reference to Exhibit
10.14 of the 1994 Registration Statement.
10.12.1 -- Broadcast Station License dated June 26, 1995
issued by the FCC to CSJ Investments, Inc. in
connection with WSKP-FM (the "WSKP Broadcast
License"). Incorporated by reference to Annual
Report on Form 10-K for the fiscal year ended
September 26, 1995 (the "1995 10-K")
<PAGE> 65
10.12.2 -- Consent to Assignment of the WSKP Broadcast
License from CSJ Investments, Inc. to SBS-Fla
issued by the FCC. Incorporated by reference to
1995 10-K
10.12.3 -- Evidence of renewal of FCC Broadcast Radio License
for WSKP-FM. Incorporated by reference to Current
Report.
10.13.1 -- Lease and License Agreement dated February 1, 1991
between Empire State Building Company, as
landlord, and SBS-NY, as tenant. Incorporated by
reference to Exhibit 10.15.1 of the 1994
Registration Statement.
10.13.2 -- Modification of Lease and License dated June 30
1992 between Empire State Building Company and
SBS-NY related to WSKQ-FM. Incorporated by
reference to Exhibit 10.15.2 of the 1994
Registration Statement.
10.13.3 -- Lease and License Modification and Extension
Agreement dated as of June 30, 1992 between Empire
State Building Company, as landlord, and SBS-NY as
tenant. Incorporated by reference to Exhibit
10.15.3 of the 1994 Registration Statement.
10.14.1 -- Employment Agreement dated April 26, 1993 by and
between SBS-NY, and Alfredo Rodriguez.
Incorporated by reference to Exhibit 10.16 of the
1994 Registration Statement.
10.14.2 -- Employment Agreement dated June 23, 1995 by and
between Spanish Broadcasting Systems of
California, Inc. ("SBS-CA") and Alfredo Rodriquez.
Incorporated by reference to Exhibit 10.15 to 1995
10-K.
10.14.3 -- Employment Agreement dated July 19,1993 by and
between SBS-NJ and Alfredo Alonso. Incorporated by
reference to Exhibit 10.18 of the 1994
Registration Statement.
10.14.4 -- Employment Agreement dated May 3, 1994 by and
between SBS-Fla and Claudia Puig. Incorporated by
reference to Exhibit 10.19 of the 1994
Registration Statement.
10.14.5 -- Employment Agreement dated October 24, 1995
between SBS-NY and Beatriz Pino. Incorporated by
reference to Exhibit 10.18 of 1995 10-K.
10.16 -- Representation Agreement dated as of September 27,
1993 between Katz Communications, Inc. and SBS-NJ
in connection with WXLX-AM. Incorporated by
reference to Exhibit 10.20 of the 1994
Registration Statement.
10.17 -- Representation Agreement dated as of September 27,
1993 between Katz Communications, Inc. and SBS-NY
in connection with WSKQ-FM. Incorporated by
reference to Exhibit 10.21 of the 1994
Registration Statement.
10.18 -- Representation Agreement dated as of September 27,
1993 between Katz Communications, Inc. and SBS-CA
in connection with KXMG-AM. Incorporated by
reference to Exhibit 10.22 of the 1994
Registration Statement.
10.19 -- Representation Agreement dated as of September 27,
1993 between Katz Communications, Inc. and SBS-CA
in connection with KLAX-FM. Incorporated by
reference to Exhibit 10.23 of the 1994
Registration Statement.
10.20 -- Representation Agreement dated as of September 27,
1993 between Katz Communications, Inc. and SBS-Fla
in connection with WCMQ-AM. Incorporated by
reference to Exhibit 10.24 of the 1994
Registration Statement.
<PAGE> 66
10.21 -- Representation Agreement dated as of September 27,
1993 between Katz Communications, Inc. and SBS-Fla
in connection with WCMQ-FM. Incorporated by
reference to Exhibit 10.25 of the 1994
Registration Statement.
10.22 -- Representation Agreement dated as of September 27,
1993 between Katz Communications, Inc. and SBS-Fla
in connection with WZMQ-FM. Incorporated by
reference to Exhibit 10.26 of the 1994
Registration Statement.
10.23 -- Promissory Note, dated as of December 31, 1995 of
Raul Alarcon, Sr. to SBS-NJ in the principal
amount of $577,323. Incorporated by reference to
Exhibit 10.26 to 1995 10-K.
10.24 -- Promissory Note, dated as of December 31, 1995 of
Raul Alarcon, Jr. to SBS-NJ in the principal
amount of $1,896,913. Incorporated by reference to
Exhibit 10.27 to 1995 10-K.
10.25 -- Lease Agreement dated June 1, 1992 among Raul
Alarcon, Sr., Raul Alarcon, Jr., and SBS-Fla.
Incorporated by reference to Exhibit 10.30 of the
1994 Registration Statement.
10.26 -- Transmitted Facility Sublicense (KTYM/KSKQ-FM)
dated as of June 1, 1991 between Trans-America
Broadcasting Corporation and SBS-CA relating to
KSKQ-FM (Baldwin Hills Tower Lease). Incorporated
by reference to Exhibit 10.31 of the 1994
Registration Statement.
10.27 -- Indenture dated October 12, 1988 between Alarcon
Holdings, Inc. and SBS-NJ related to the studio
located at 26 West 56th Street, NY, NY.
Incorporated by reference to Exhibit 10.32 of the
1994 Registration Statement.
10.28 -- Communications Equipment Site Lease Agreement
between Freeman Properties, Inc. and SBS-Fla dated
July 1, 1992 (WZMQ/WKLG-FM). Incorporated by
reference to Exhibit 10.33 of the 1994
Registration Statement.
10.29.2 -- Lease Option Agreement made as of October 1, 1995
between KPWR, Inc. and the Company relating to
Flint Peak. Incorporated by reference to Current
Report.
10.29.3 -- Form of Lease Agreement by and between KPWR, Inc.
and the Company relating to KLAX. Incorporated by
reference to Current Report. Incorporated by
reference to Current Report.
10.32.1 -- Asset Purchase Agreement dated as of October
30,1995 between SBS-NJ and Park Radio of Greater
New York, Inc. ("Park Radio"). Incorporated by
reference to Exhibit 10.32 of the 1995 10-K.
10.32.2 -- First Amendment dated as of March 18,1996 to the
Asset Purchase Agreement dated as of October 1995,
among SBS-NJ, Park Radio and SBS-GNY. Incorporated
by reference to Current Report
10.33 -- Escrow Agreement dated as of October 30, 1995 by
and among SBS-NJ, Park Radio and Media Ventures.
Incorporated by reference to Current Report.
10.34 -- Time Brokerage Agreement dated as of January 20,
1995 between the SBS-GNY and Park Radio.
Incorporated by reference to Current Report.
10.35 -- Broadcast Station License dated June 1, 1984
issued by the FCC to Capital Cities
Communications, Inc. ("Capital Cities") in
connection with WPAT-FM, together with FCC License
Renewal authorization granted October 29, 1991 to
Park Radio, as
<PAGE> 67
assignee of Capital Cities and the assignment of
the Broadcast Station License for WPAT-FM from
Park Radio to SBS-NY. Incorporated by reference to
Current Report.
10.36 -- Agreement of Lease dated as of March 1, 1996. No
WT-1744-A-119 1067 between The Port Authority of
New Jersey and SBS-GNY as assignee of Park Radio.
Incorporated by reference to Current Report.
10.37 -- Securities Purchase Agreement dated as of March
25, 1996 by and among the Company, the Guarantors
named therein and each of the purchasers named
therein. Incorporated by reference to Current
Report.
10.38 -- Warrant Agreement dated as of March 25, 1996 by
and among the Company and IBJ Schroder Bank and
Trust Company, as Warrant Agent. Incorporated by
reference to Current Report.
10.39 -- Common Stock Registration Rights and Stockholders
Agreement dated as of March 25, 1996 among the
Company, certain management stockholders and each
of the purchasers named herein. Incorporated by
reference to Current Report.
10.40 -- Senior Secured Note and Exchangeable Preferred
Stock Registration Rights Agreement dated as of
March 25, 1996 among the Company and each of the
purchasers named therein. Incorporated by
reference to Current Report.
10.41 -- Pledge and Security Agreement dated as of March
25, 1996 by and among SBS-NJ, SBS-GNY and IBJ
Schroder Bank & Trust Company, as agent.
Incorporated by reference to Current Report.
10.42 -- Employment Agreement dated September 27, 1996
between Russell Oasis and the Company.*
10.43 -- Asset Purchase Agreement dated September 16, 1996
among Raul Alarcon Jr., New Age Broadcasting,
Inc., The Seventies Broadcasting Corporation and
the Company, and with respect only to Section 9.3
thereof, Alan Potamkin, Russell Oasis and Robert
Potamkin.*
10.44 -- Asset Purchase Agreement dated August 22, 1996
between Infinity Holdings Corp. of Orlando and the
Company.*
21.1 -- List of Subsidiaries. Incorporated by reference to
the 1994 10-K
- - ----------------------------------------------------
*Filed herewith
<PAGE> 1
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into as
of the 28th day of September, 1996 by and between SPANISH BROADCASTING SYSTEM,
INC., a Delaware corporation with its principal office located at 28 West 56th
Street, New York, New York 10019 (the "Company"), and RUSSELL A. OASIS (the
"Executive"), whose address is 4840 S.W. 80th Street, Miami, Florida 33143.
Recitals
A. Executive is the Chief Executive Officer and 50% shareholder of New Age
Broadcasting, Inc. and The Seventies Broadcasting Corporation (collectively,
"The Selling Companies"). The Selling Companies own and operate WXDJ-FM,
Homestead, Florida and WRMA-FM, Ft. Lauderdale, Florida (collectively, the
"Stations"). The Selling Companies have entered into an asset purchase agreement
dated as of September 16, 1996 to sell the Stations to the Company ("Asset
Purchase Agreement").
B. The Asset Purchase Agreement requires the Company to enter into an
employment agreement with the Executive as provided in the Asset Purchase
Agreement.
C. The Executive, subject to his duties and obligations as Chief Executive
Officer ("CEO") and principal shareholder of the Selling Companies, which duties
and obligations supersede duties and obligations of Executive hereunder, wishes
to commence his employment with the Company prior to the closing of the Asset
Purchase Agreement.
D. The Board of Directors of the Company (the "Board") believes that the
Executive can contribute to the growth and success of the Company, and desires
to assure the Company of the Executive's employment and to compensate him
therefor.
E. The Board has determined that this Agreement will encourage the
Executive's attention and dedication to the Company.
F. The Executive is willing to make his services available to the Company
on the terms and conditions hereinafter set forth.
Agreement
NOW, THEREFORE, in consideration of the premises and mutual covenants set
forth herein, the parties agree as follows:
<PAGE> 2
1. Employment.
1.1 General. Subject to the termination provisions of this
Agreement, the Company hereby agrees to employ the Executive, and the Executive
hereby agrees to serve the Company on the terms and conditions set forth herein.
1.2 Duties of the Executive. During the term of this Agreement, the
Executive shall serve as the Executive Vice President of Programming for Company
and Chief Operating Officer of Stations and WCMQ-FM, shall diligently perform
all duties as may be assigned to him by Raul Alarcon, Jr., the Company's Chief
Executive Officer, consistent with his position, and shall exercise such power
and authority, consistent with his position, as may from time to time be
delegated to him by Raul Alarcon, Jr. Subsequent to the closing of the Asset
Purchase Agreement, the Executive shall devote substantially all of his business
time and attention to the business and affairs of the Company, render such
services to the best of his ability, and use his best efforts to promote the
interests of the Company; provided, however, that the Executive may be involved,
as an investor, officer, director or otherwise (as long as the Executive is not
actively employed in such business) in any business that is not primarily
engaged in Spanish radio broadcasting. Prior to the closing of the Asset
Purchase Agreement, the Company agrees that Executive's responsibility shall be
to the Stations and any duties or obligations of Executive under this Agreement
shall be subordinate to his duties and obligations to the Stations and the
Selling Companies as its CEO and principal shareholder. Subject to the direction
of Raul Alarcon, Jr., the Chief Executive Officer, the Executive shall be
responsible for the day-to-day operations of the Company's radio stations
(including those directly or indirectly controlled by the Company).
2. Term. This Agreement shall be for a term of one (1) year, commencing on
the date hereof and ending on September 25, 1997, unless sooner terminated as
hereinafter set forth (the "Term"). The Term may be extended by mutual written
agreement of the parties within 60 days prior to the expiration of the Term.
Without in any way committing or otherwise legally obligating the Company or the
Executive, the parties understand that in order for the Executive to extend the
term of this Agreement, the Executive must be offered a compensation package,
including an equity participation in the Company, satisfactory to the Executive.
3. Compensation.
3.1 Base Salary. The Executive shall receive a base salary at the
annual rate of Four Hundred Fifty Thousand Dollars ($450,000) (the "Base
Salary") during the Term of this Agreement, with such Base Salary payable in
installments consistent with the Company's normal payroll schedule, subject to
applicable withholding and other taxes.
3.2 Bonus. The Executive shall receive a bonus (the "Bonus") in the
amounts, and in accordance with the terms and conditions, set forth in Schedule
A hereto.
2
<PAGE> 3
4. Expense Reimbursement and Other Benefits.
4.1 Other Reimbursable Expenses. During the term of the Executive's
employment hereunder, the Company, shall reimburse the Executive for all
reasonable expenses actually and necessarily paid or incurred by the Executive
in the course of and pursuant to the business of the Company. The Executive
shall comply with the Company's policy for reimbursement of expenses for its
senior executives.
4.2 Other Benefits. The Executive and his immediate family shall be
entitled to participate in all medical and hospitalization, group life
insurance, and any and all other plans as are presently and hereinafter provided
by the Company to any of its executives. The Executive shall also be entitled to
four (4) weeks paid vacation time, as well as paid time off for holidays and
sick leave in accordance with the Company's prevailing policy for any of its
senior executives generally.
4.3 Working Facilities. The Company shall furnish the Executive with
an office, secretarial help and such other facilities and services suitable to
his position and adequate for the performance of his duties hereunder.
4.4 Automobile Allowance. The Executive shall be entitled to an
automobile allowance of $500 per month, which amount is intended to compensate
Executive for wear and tear and, in addition, reimburse the Executive for all
costs of gasoline, oil, repairs, maintenance, insurance and other expenses
incurred by the Executive by reason of the use of the Executive's automobile for
Company business from time to time.
4.5 Place of Employment. In connection with his employment by the
Company, the Executive shall be based at the Company's offices located in Dade
County, Florida except for travel on the Company's business deemed necessary by
the Executive from time to time.
4.6 Indemnification. The Company agrees to indemnify, defend and
make whole Executive for any action or inaction of Executive in pursuit of his
obligations under this Agreement on behalf of the Company, its subsidiaries and
affiliates to the fullest extent permitted by the corporate laws of the State of
Delaware, including the monthly payment of legal fees and costs necessary in any
defense. This right of indemnification shall not include nor cover any action by
the Executive that exceeds the scope of his authority under this Agreement. This
right of indemnification is subject to the obligation of Executive to reimburse
the Company if it is ultimately and judicially determined that the Executive is
not entitled to indemnification under Delaware corporate law.
5. Termination.
5.1 Termination for Cause. The Company shall at all times have the
right, upon written notice to the Executive, to terminate the Executive's
employment hereunder for "Cause" (as hereinafter defined). For purpose of this
Agreement, the term "Cause" shall mean (i) the willful failure or refusal of the
Executive to perform the duties or render the services
3
<PAGE> 4
reasonably assigned to him from time to time by the Board (except during
vacation periods or sick leave), which failure or refusal to perform is not
cured by the Executive within thirty (30) days of receipt of written notice from
the Company (ii) the conviction of the Executive of a felony or (iii) the
willful violation of the provisions of Section 6 hereof relating to
non-competition and non-disclosure, which violation is not cured within thirty
(30) days or receipt of notice from the Company. Any written notice delivered to
the Executive pursuant to this Section 5.1 shall set forth in reasonable detail
the acts or omissions of the Executive that constitute grounds for termination
for "Cause" and the actions required by the Executive to adequately cure any
such default.
5.2 Disability. The Company shall at all times have the right, upon
written notice to the Executive, to terminate the Executive's employment
hereunder if the Executive shall, as the result of mental or physical
incapacity, illness or disability, become unable to perform his hereunder for in
excess of ninety (90) days in any 12-month period. Upon any termination pursuant
to this Section 5.2, the Company shall pay to the Executive any unpaid amounts
of his Base Salary accrued through the effective date of termination and the
amount, if any, of the unpaid Bonus to which the Executive would have been
entitled at the expiration of the Term in accordance with Section 3.2 hereof,
and an amount to be determined by the Board of Directors in their sole and
absolute discretion, and the Company shall have no further liability hereunder
(other than for reimbursement for reasonable business expenses incurred prior to
the date of termination, subject, however to the provisions of Section 4.1).
5.3 Death. In the event of the death of the Executive during the
term of his employment hereunder, the Company shall pay to the estate of the
deceased Executive any unpaid amounts of his Base Salary accrued through the
effective date of his death and the amount, if any, of the unpaid Bonus to which
the Executive would have been entitled at the expiration of the Term in
accordance with Section 3.2 hereof, and the Company shall have no further
liability hereunder (other than for reimbursement for reasonable business
expenses incurred prior to the date of the Executive's death, subject, however
to the provisions of Section 4.1).
5.4 Resignation by the Executive. The Executive shall at all times
have the right, upon 30 days' written notice to the Company, to terminate the
Executive's employment hereunder. Upon any termination pursuant to this Section
5.4, the Employee shall be entitled to be paid his Base Salary to the date of
termination, and the Company shall have no further liability hereunder (other
than for reimbursement of reasonable business expenses incurred prior to the
date of termination, subject, however, to the provisions of Section 4.1).
5.5 COBRA Benefits. Upon any termination of the employment of the
Executive, including any termination as a result of the expiration of the term
of this Agreement, the Executive shall be entitled to COBRA benefits for a
period of 18 months.
4
<PAGE> 5
6. Restrictive Covenants.
6.1 Non-competition. While employed by the Company and subsequent to
the closing of the Asset Purchase Agreement, the Executive shall not, directly
or indirectly, own, operate, manage, be employed by, consult or provide any
services to any radio broadcast station that broadcasts in the Spanish language
whose main studio or transmitter is located within a fifty (50) mile radius of
any radio station owned, under contract to purchase or operated by the Company
or any of the Company's subsidiaries or affiliates during the term of this
Agreement.
6.2 Nondisclosure. While employed by the Company and subsequent to
the closing of the Asset Purchase Agreement, the Executive shall not divulge,
communicate, use to the detriment of the Company or any affiliate or for the
benefit of any other person or persons, or misuse in any way, any confidential
information pertaining to the business of the Company or any of the Company's
subsidiaries or affiliates. While employed by the Company and subsequent to the
closing of the Asset Purchase Agreement, any confidential information or data
now known or hereafter acquired by the Executive with respect to the business of
the Company or any affiliate (which shall include, but not be limited to,
information concerning the Company's or any affiliates' financial condition,
prospects, sources, and methods of doing business) shall be deemed a valuable,
special and unique asset of the Company that is received by the Executive in
confidence and as a fiduciary, and the Executive shall remain a fiduciary to the
Company with respect to all such information while employed by the Company.
6.3 Nonsolicitation of Employees and Customers. While employed by
the Company, the Executive shall not, directly or indirectly, hire any employee
of the Company or otherwise solicit or induce any employee of the Company to
terminate such employment or become employed by any person or entity other than
the Company or any of its affiliates.
6.4 Books and Records. All books, records and accounts relating in
any manner to the customers or clients of the Company, whether prepared by the
Executive or otherwise coming into the Executive's possession, shall be the
exclusive property of the Company and shall be returned immediately to the
Company on termination of the Executive's employment hereunder or on the
Company's request at any time.
7. Injunction. It is recognized and hereby acknowledged by the parties
hereto that a breach by the Executive of any or the covenants contained in
Section 6 of this Agreement will cause irreparable harm and damage to the
Company, the monetary amount of which may be virtually impossible to ascertain.
As a result, the Executive recognizes and hereby acknowledges that the Company
shall be entitled to an injunction from any court of competent jurisdiction
enjoining or restraining any violation of any or all of the covenants contained
in Section 6 of this Agreement by the Executive or any of his affiliates,
associates, partners or agents, either directly or indirectly, and that such
right to injunction shall be cumulative and in addition to whatever remedies the
Company may possess.
8. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida without regard to any conflict
of law, rule or principle that would give effect to the laws of another
jurisdiction.
5
<PAGE> 6
9. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and, upon
its effectiveness, shall supersede all prior agreements, understandings and
arrangements, both oral and written, between the Executive and the Company with
respect to such subject matter. This Agreement may not be modified in any way
unless by a written instrument signed by both the Company and the Executive.
10. Notices. Any notice required or permitted to be given hereunder shall
be deemed given when delivered by hand (including Federal Express) or when
deposited in the United States mail, by registered or certified mail, return
receipt requested, postage prepaid, to the parties hereto at their respective
address first stated herein, or to such other address as either party hereto may
from time to time give notice of to the other.
11. Benefits; Binding Effect. This Agreement shall be for the benefit of
and binding upon the parties hereto and their respective heirs, personal
representative, legal representatives, successors and, where applicable,
assigns, including, without limitation, any successor to the Company, whether by
merger, consolidation, sale of stock, sale of assets or otherwise; provided,
however that the Executive shall not delegate his employment obligations
hereunder, or any portion thereof, to any other person.
12. Severability. The invalidity of any one or more of the words, phrases,
sentences, clauses or sections contained in this Agreement shall not affect the
enforceability of the remaining portions of this Agreement or any part thereof,
all of which are inserted conditionally on their being valid in law, and, in the
event that any one or more of the words, phrases, sentences, clauses or sections
contained in this Agreement shall be declared invalid, this Agreement shall be
construed as if such invalid word or words, phrase or phrases, sentence or
sentences, clause or clauses, or section or sections had not been inserted. If
such invalidity is caused by length of time or size of area, or both, the
otherwise invalid provision will be considered to be reduced to a period or area
which would cure such invalidity.
13. Waivers. The waiver by either party hereto of a breach or violation of
any term or provision of this Agreement shall not operate nor be construed as a
waiver of any subsequent breach or violation.
14. Damages. Nothing contained herein shall be construed to prevent the
Company or the Executive from seeking and recovering from the other damages
sustained by either or both of them as a result of its or his breach of any term
or provision of this Agreement. In the event that either party hereto brings
suit for the collection of any damages resulting from, or for the injunction of
any action constituting, a breach of any of the terms or provisions of this
Agreement, then the party found to be at fault shall pay all reasonable court
costs and attorneys' fees of the other. Notwithstanding anything in this
Agreement to the contrary, the Executive shall have no duty to mitigate his
damages upon termination of this Agreement for any reason whatsoever.
15. Section Headings. The section headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this
6
<PAGE> 7
Agreement.
16. No Third Party Beneficiary. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
other than the Company, the Executive and their respective heirs, personal
representatives, legal representatives, successors and assigns, as applicable,
any rights or remedies under or by reason of this Agreement.
17. Right of Termination. Either the Company or the Executive may at any
time for any reason or for no reason prior to the closing of the Asset Purchase
Agreement give the other party 1 business day prior written notice and terminate
this Agreement without any further obligation of the Executive to the Company or
the Company to the Executive as a result of this Agreement other than the
reimbursement of expenses and the payment of compensation to the date of
termination.
18. No Liability. Notwithstanding anything to the contrary contained in
this Agreement, under no set of circumstances shall Executive be liable to
anyone because of any action or inaction of Executive prior to the closing of
the Asset Purchase Agreement is alleged to favor or benefit, or in fact favors
or benefits, the Stations or the Selling Companies to the detriment of the
Company, its subsidiaries or affiliates.
19. No Effect on the rights and obligations of the parties under the Asset
Purchase Agreement. The rights and obligations of the parties to the Asset
Purchase Agreement shall not be affected, amended or changed in any manner by
the performance or non-performance, or the termination, of this Agreement by any
of the parties prior, or subsequent to, the closing of the Asset Purchase
Agreement. The breach or termination of this Agreement prior to the closing of
the Asset Purchase Agreement will not relieve the Company of its obligation to
offer the employment agreement required by the Asset Purchase Agreement (the
"Required Asset Purchase Agreement"). If this Agreement is in effect subsequent
to the closing of the Asset Purchase Agreement, this Agreement shall be deemed
to be the Required Employment Agreement for all purposed under the Asset
Purchase Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
SPANISH BROADCASTING SYSTEM, INC.
By: /s/ Raul Alarcon, Jr.
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
/s/ Russell A. Oasis
-----------------------------------------
RUSSELL A. OASIS
7
<PAGE> 8
Schedule A
BONUS
Executive shall be entitled to a cash bonus, payable within 45 days
after the end of the term of this Agreement, based on the percentage increase of
Broadcast Cash Flow for the full 12 calendar months following the effective date
of the Agreement, from the Base Cash Flow. Base Cash Flow shall be determined by
adding the following broadcast cash flow amounts: (i) for stations owned by the
Company or its subsidiaries for over one (1) year, the actual broadcast cash
flow for such stations for the twelve (12) full calendar months prior to the
effective date of this Agreement; (ii) for stations owned by the Company or its
subsidiaries for less than one (1) year but greater than six (6) months, the
actual broadcast cash flow for the previous three (3) full calendar months for
those stations multiplied by four (4); and (iii) for stations owned by the
Company or its subsidiaries for less than six months, an amount equal to 4-1/2%
of the purchase price for such stations. In the event any stations of the
Company or its subsidiaries are disposed of or acquired during the term of this
Agreement, the Company and the Executive shall in good faith determine a fair
adjustment to the Base Cash Flow as a result of any such acquisitions or
dispositions. Broadcast cash flow for purposes of this Bonus shall be determined
in the same manner as broadcast cash flow is determined for the latest public
filing of the Company with the Securities and Exchange Commission prior to the
effective date of this Agreement. The Bonus shall be as follows:
<TABLE>
<CAPTION>
Percentage increase Cash Bonus
------------------- ----------
<S> <C>
0-9% increase in Broadcast Cash Flow
over Base Cash Flow............................. No Bonus
10-14%................................................ $ 100,000
15-19%................................................ $ 300,000
20-24%................................................ $ 550,000
25-29%................................................ $ 750,000
30-34%................................................ $1,000,000
35-39%................................................ $1,250,000
40-44%................................................ $1,500,000
45-50%................................................ $1,750,000
51-55%................................................ $2,000,000
</TABLE>
For each 5% increase after 56%, the Bonus will be increased by $250,000 from the
previous cash bonus amount.
8
<PAGE> 1
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated as of September 16, 1996, by and
among Spanish Broadcasting System, Inc., a Delaware corporation ("Buyer"), Raul
Alarcon, Jr., New Age Broadcasting, Inc., a Florida corporation ("New Age"),
The Seventies Broadcasting Corporation, a Florida corporation ("Seventies",
and together with New Age, individually, a "Seller" and collectively, the
"Sellers") and, with respect to Section 9.3 hereof only, Alan Potamkin, Russell
A. Oasis and Robert Potamkin.
RECITALS
A. Sellers are the licensees of and own and operate radio stations
WXDJ-FM, Homestead, Florida and WRMA-FM, Ft. Lauderdale, Florida (the
"Stations") pursuant to licenses issued by the Federal Communications
Commission.
B. Sellers desire to sell, and Buyer wishes to buy, substantially all
the assets that are used or useful in the business or operations of the
Stations, for the price and on the terms and conditions set forth in this
Agreement.
AGREEMENTS
In consideration of the above recitals and of the mutual agreements and
covenants contained in this Agreement, Buyer and Sellers, intending to be bound
legally, agree as follows:
SECTION 1 DEFINITIONS
The following terms, as used in this Agreement, shall have the meanings
set forth in this Section:
"Accounts Receivable" means the rights of Sellers to cash payment for
the sale of advertising time and other revenues which are outstanding on the
Closing Date, which shall be reflected on the list to be provided to Buyer by
Sellers pursuant to Section 6.4(a).
"Affiliate" of any Person means any Person which is directly or
indirectly controlled by, under common control with or controlling such Person.
The term "control" means possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person or
the beneficial ownership, directly or indirectly, of a general partnership
interest in, or 10% or more of the equity of such Person.
<PAGE> 2
"Assets" means the assets to be sold, transferred, or otherwise
conveyed to Buyer under this Agreement, as specified in Section 2.1.
"Assumed Contracts" means (i) all Contracts listed in Schedule 3.7,
(ii) contracts entered into prior to the date of this Agreement with
advertisers for the sale of advertising time for cash at rates consistent with
Sellers' past practices, (iii) any Contracts entered into by any Seller between
the date of this Agreement and the Closing Date that Buyer agrees in writing to
assume, and (iv) Contracts entered into by Sellers in compliance with Section
5.3.
"Closing" means the consummation of the purchase and sale of the Assets
pursuant to this Agreement in accordance with the provisions of Section 8.
"Closing Date" means the date on which the Closing occurs, as
determined pursuant to Section 8.
"Consents" means the consents, permits, or approvals of government
authorities and other third parties necessary to transfer the Assets to Buyer
or otherwise to consummate the transactions contemplated by this Agreement,
including the written consents to the assignment of the Assumed Contracts.
"Contracts" means all contracts, leases, non-governmental licenses, and
other agreements (including leases for personal or real property and employment
agreements), written or oral (including any amendments and other modifications
thereto) to which any Seller is a party or which are binding upon any Seller
and which relate to or affect the Assets or the business or operations of the
Stations, and (i) which are in effect on the date of this Agreement or (ii)
which are entered into by Sellers between the date of this Agreement and the
Closing Date.
"Designated Officers" means (i) with respect to New Age, Russell A.
Oasis as President, Alan H. Potamkin as Secretary and Robert M. Potamkin as
Vice President and (ii) with respect to Seventies, Russell A. Oasis as
President, Alan H. Potamkin as Secretary and Robert M. Potamkin as Treasurer.
"Effective Time" means 12:01 a.m., local Florida time, on the Closing
Date.
"FAA" means the Federal Aviation Administration.
"FCC" means the Federal Communications Commission.
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<PAGE> 3
"FCC Consent" means action by the FCC granting its consent to the
assignment of the FCC Licenses to Buyer as contemplated by this Agreement.
"FCC Licenses" means all Licenses issued by the FCC to any Seller in
connection with the existing or currently authorized business or operations of
the Stations.
"Final Order" means an action by the FCC that has not been reversed,
stayed, enjoined, set aside, annulled, or suspended, and with respect to which
no timely filed requests are pending for administrative or judicial review,
reconsideration, appeal, or stay, and the time for filing any such requests and
the time for the FCC to set aside the action on its own motion have expired.
"Intangibles" means all copyrights, trademarks, trade names, service
marks, service names, call signs, licenses, patents, permits, jingles,
proprietary information, technical information and data, machinery and
equipment warranties, and other similar intangible property rights and
interests (and any goodwill associated with any of the foregoing) applied for,
issued to, or owned by any Seller or under which any Seller is licensed or
franchised and which are used or useful in the business and operations of the
Stations, material items of which (other than those set forth in Schedule 3.4)
are set forth on Schedule 3.9, together with any additions thereto between the
date of this Agreement and the Closing Date, excluding the names "New Age" and
"The Seventies".
"Licenses" means all licenses, permits, construction permits and other
authorizations issued by the FCC, the FAA or any other federal, state, or local
governmental authorities to any Seller, currently in effect and used in
connection with the conduct of the business or operations of the Stations,
which Licenses are set forth on Schedule 3.4, together with any additions
thereto between the date of this Agreement and the Closing Date.
"Liens" means security interests, mortgages, pledges, charges and other
liens and encumbrances.
"Permitted Liens" means (i) Liens for taxes not yet due and payable,
(ii) Liens arising pursuant to the Assumed Contracts and Liens securing
obligations assumed by Buyer at the Closing as provided in Section 2.4, (iii)
Liens disclosed on Schedules 3.5 and 3.6 hereto and other Liens which shall be
discharged prior to the Closing, (iv) mechanics' Liens and other similar Liens
incurred in the ordinary course of business which shall be discharged prior to
the Closing, and (v) with respect to leasehold interests, the rights and
interests of lessors and other owners and Liens granted by such Persons and all
Liens and other matters of record.
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<PAGE> 4
"Person" means an individual or corporation, partnership, trust, sole
proprietorship or other entity.
"Purchase Price" means the purchase price specified in Section 2.3.
"Real Property" means all real property and interests in real property,
including fee estates, leaseholds and subleaseholds, purchase options,
easements, licenses, rights to access, and rights of way, and all buildings and
other improvements thereon, and other real property interests of Sellers which
are used or useful in the business or operations of the Stations, together with
any additions thereto between the date of this Agreement and the Closing Date.
"Tangible Personal Property" means all of Sellers' interests in
machinery, equipment, tools, vehicles, furniture, leasehold improvements,
office equipment, inventory, spare parts, and other tangible personal property
which is used or useful in the conduct of the business or operations of the
Stations, together with any additions thereto between the date of this
Agreement and the Closing Date.
SECTION 2 PURCHASE AND SALE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and conditions
set forth in this Agreement, Sellers hereby agree to sell, transfer, and
deliver to Buyer on the Closing Date, and Buyer agrees to purchase from
Sellers, all of Sellers' rights, title and interest in and to the tangible and
intangible assets used or useful in connection with the conduct of the business
or operations of the Stations, together with any additions thereto between the
date of this Agreement and the Closing Date, but excluding the assets described
in Section 2.2, free and clear of Liens (except for Permitted Liens), including
the following:
(a) The Tangible Personal Property;
(b) The Real Property;
(c) The Licenses;
(d) The Assumed Contracts;
(e) The Intangibles;
(f) All of Sellers' proprietary information, technical
information and data, transferrable warranties, maps, computer discs and tapes,
plans, diagrams, blueprints, and schematics, including filings with the FCC
relating to the business and operation of the Stations; and
-4-
<PAGE> 5
(g) All of Sellers' books and records relating to the business
and operations of the Stations, and all of Sellers' records required by the FCC
to be kept by the Stations.
2.2 Excluded Assets. The Assets shall exclude the following assets:
(a) Sellers' cash on hand as of the Closing and any of Sellers'
interests in their bank accounts and all of Sellers other cash, cash
equivalents, securities, investments, deposits, prepayments (including prepaid
taxes and insurance), tax refunds and overpayments;
(b) Any insurance policies and proceeds thereof, promissory
notes, amounts due from employees, bonds, letters of credit, certificates of
deposits or other similar items and cash surrender value in regard thereto;
(c) Any pension, profit-sharing, or employee benefit plans,
including all of Sellers' interest in any Welfare Plan, Pension Plan, or
Benefit Arrangement (as defined in Section 3.13), and any collective bargaining
agreements;
(d) The Accounts Receivable;
(e) Any Contracts not included among the Assumed Contracts;
(f) All tax returns and supporting materials, all original
financial statements and supporting materials, all books and records that
Sellers are required by law to retain, all corporate minutes and records, and
all records of Sellers relating to the sale of the Assets;
(g) Any interest in and to any refunds of federal, state, or
local franchise, income or other taxes for periods prior to the Closing Date;
(h) the assets listed on Schedule 2.2.
Buyer acknowledges that Sellers' shareholders own a company that holds
an option to acquire a tower site in the Miami area and neither such company
nor such option are included in the Assets.
2.3 Purchase Price.
(a) The Purchase Price for the Assets shall be One hundred ten
million dollars ($110,000,000), subject to adjustment as provided in Section
2.3(c) hereof. The Purchase Price shall be paid by Buyer in full at Closing by
confirmed wire transfer or transfers of immediately available funds pursuant to
wire instruc-
-5-
<PAGE> 6
tions signed by at least two of Alan Potamkin, Russell Oasis or Robert
Potamkin; provided, however, that the signature of only one such individual
shall be required if the other two individuals are not alive or legally
competent on the Closing Date.
(b) Prorations. All revenues and expenses arising from the operation
of the Stations, including revenues and expenses arising under Assumed
Contracts, tower rentals, business and license fees, utility charges, real and
personal property taxes and assessments levied against the Assets (including
those prepaid by Sellers and those payable by Sellers after Closing), property
and equipment rentals, applicable copyright or other fees, sales and service
charges, taxes (except for income taxes and taxes arising from the transfer of
the Assets under this Agreement), and similar prepaid and deferred items, shall
be prorated between Buyer and Sellers in accordance with the principle that
Sellers shall receive all revenues and shall be responsible for all expenses,
costs, and liabilities allocable to the operations of the Stations for the
period prior to the Effective Time, and Buyer shall receive all revenues and
shall be responsible for all expenses, costs, and obligations allocable to the
operations of the Stations for the period after the Effective Time, subject to
the following:
(1) Contracts. There shall be no adjustment for, and Sellers
shall remain solely liable and receive all benefits with respect to, any
Contracts not included in the Assumed Contracts. An adjustment and proration
shall be made in favor of Buyer to the extent that Buyer assumes any liability
under any Assumed Contract to refund (or to credit against payments otherwise
due) any security deposit or similar prepayment paid to Sellers by any lessee
or other third party which is not otherwise credited to Buyer. Any adjustment
and proration shall be made in favor of Sellers to the extent that Sellers have
made (i) any security deposit under any Assumed Contract whether or not there
is a proration under such Assumed Contract or (ii) other prepayment under any
Assumed Contracts for which there is a proration.
(2) Employee Compensation. Except as otherwise provided
herein, Sellers shall be responsible for the payment of all compensation and
commissions owed to the Stations' employees up to the Effective Time. Buyer
may, as of the Effective Time, employ those employees of the Stations as Buyer
may elect on terms and conditions determined by Buyer and Buyer shall be
responsible for the payment of all compensation and commissions payable to the
Stations' employees retained by Buyer after the Effective Time. The parties
agree that Buyer shall be entitled to a proration crediting the Buyer for any
obligations of the Sellers to any employees that relate to accrued and unpaid
vacation time, sick leave or severance pay existing on and as of the Closing
Date, after which Sellers shall no longer be liable for such obligations and
Buyer shall assume and discharge such obligations.
- 6 -
<PAGE> 7
(3) Music Licenses. There shall be no proration of music
license fees. Sellers are responsible for filing and paying all music license
fees (ASCAP, BMI, SESAC, etc.) due and payable as of the Effective Time, and
Buyer is responsible for filing and paying all such fees after the Effective
Time.
(c) Subject to Sections 7.1(e) and 7.2(e) hereof, in the event that the
minimum combined "Broadcast Cash Flow" of the Sellers is less than nine million
one hundred thousand dollars ($9,100,000) (the "Target Broadcast Cash Flow")
for the 12 consecutive whole months immediately preceding the Closing for which
monthly financial statements have been prepared and are available (the
"Trailing 12 months"), then the Purchase Price shall be reduced by an amount
equal to (i) (A) the Target Broadcast Cash Flow minus (B) the actual Broadcast
Cash Flow of the Sellers for the Trailing 12 Months multiplied by (ii) 12.09.
For example, if the actual Broadcast Cash Flow of the Sellers for the Trailing
12 Months is $8,900,000, then the Purchase Price shall be reduced pursuant to
this Section 2.3(c) by $2,418,000. For purposes of this Agreement, "Broadcast
Cash Flow" shall mean the Sellers' combined operating income, as determined by
generally accepted accounting principles ("GAAP") as applied by Sellers on a
basis consistent with their most recent audited financial statements, before
any reduction for depreciation and amortization, interest, taxes, write-down of
franchise costs, trade expense and trade income, corporate expenses (including,
without limitation, Russ Oasis' compensation and benefits), legal fees and all
expenses associated with the sale or attempted sale of the Stations and the
legal fees and costs and any judgment associated with the litigation described
in Schedule 3.16. By way of example only, Exhibit 2.3(c) hereto sets forth an
itemized determination of Broadcast Cash Flow.
(d) Manner of Determining Prorations. The prorations pursuant to
Section 2.3(b) will be determined finally in accordance with the following
procedures:
(1) Sellers shall prepare and deliver to Buyer not later than
seven (7) days before the Closing Date a preliminary settlement statement which
shall set forth Sellers' good faith determination of the prorations under
Section 2.3(b). The Sellers' settlement statement (A) shall contain all
information reasonably necessary to determine the prorations under Section
2.3(b) to the extent such prorations can be determined or estimated as of the
date thereof and such other information as may be reasonably requested by
Buyer, and (B) shall be certified by Sellers to be true and complete to the
best of Sellers' knowledge as of the date thereof.
(2) No later than three (3) days prior to the Closing Date,
Buyer will deliver to Sellers a settlement statement setting forth Buyer's good
faith determination of the prorations
- 7 -
<PAGE> 8
under Section 2.3(b). Buyer's settlement statement (A) shall contain all
information reasonably necessary to determine the prorations under Section
2.3(b), and such other information as may have been reasonably requested by
Sellers, and (B) shall be certified by Buyer to be true and complete to the
best of Buyer's knowledge as of the date thereof.
(3) In the event the Buyer and the Sellers are in agreement with
respect to the amounts of the prorations under Section 2.3(b) hereof, at the
Closing payment in cash or other immediately available funds shall be made by
either the Buyer or the Sellers, as applicable, to give effect to such
prorations. The parties shall resolve any dispute relating to the amount of
such prorations under Section 2.3(b) in accordance with Section 2.3(d)(4)
below.
(4) Buyer and Sellers shall use good faith efforts to resolve any
dispute involving the determination of the prorations pursuant to Section
2.3(b) at or prior to Closing. If the parties are unable to resolve the dispute
at Closing, all prorations which are not in dispute shall be made in accordance
with Section 2.3(b) and, with respect to the disputed prorations, Buyer and
Sellers shall each (at its own expense) designate an accountant to resolve the
dispute within 15 days following the Closing, and if such accountants are
unable to resolve the dispute, such accountants shall appoint a third
accountant independent of Buyer and Sellers (such two or three accountants, "the
Accountants") to resolve the dispute. Any fees of any third Accountant shall be
divided equally between the parties. In the event that either Buyer or Sellers
fail to designate an Accountant, then the determination of the Accountant which
has been designated shall be final and binding upon the parties. In the event
that the Accountants designated by Buyer and Sellers are unable to resolve the
dispute and are also unable to agree upon a third Accountant within 30 days
following the Closing, then such third Accountant shall be selected within 60
days of the Closing (or as soon thereafter as practicable) by arbitration in
accordance with Section 11.2 hereof. With respect to any prorations disputed by
the parties (collectively, the "Disputed Amount") on the Closing Date, Buyer
and Sellers shall each submit in writing to the Accountants their determination
of the Disputed Amount. The Accountants' resolution of the dispute shall be
made within thirty (30) days after the Closing Date (unless the Accountants are
unable to agree, if required by the terms hereof, upon a third Accountant, in
which case the resolution of the dispute by the Accountants shall be made
within 15 days of the selection of a third Accountant), in accordance with this
Agreement by unanimous decision of the initial one or two Accountants or
majority decision of three Accountants, and shall be final and binding on the
parties, and a judgment may be entered thereon in any court of competent
jurisdiction. In the event the total amount of the
- 8 -
<PAGE> 9
proration sought by or on behalf of either party exceeds the final
determination of the Accountants by more than ten percent (10%), then such party
shall bear all costs and expenses associated with the resolution of the
dispute; provided, that if the total amount of the proration sought by both
parties exceeds such final determination of the Accountants by more than ten
percent (10%), then the parties shall bear equally all costs and expenses
associated with the resolution of such dispute. It is expressly understood and
agreed that any dispute under this Section 2.3 (d) shall not delay or prevent
the Closing in any manner, and that the transactions contemplated hereby shall
be consummated notwithstanding such dispute in accordance herewith. Any claims
to the Escrow Amount shall be paid following the Closing.
2.4 Assumption of Liabilities and Obligations.
(a) As of the Closing Date, Buyer shall assume and undertake to
pay, discharge and perform (i) any obligations or liabilities under the Assumed
Contracts insofar as they relate to the period after the Closing Date except
insofar as an adjustment therefor is made in favor of Sellers under Section 2.3
(b), (ii) any claims or litigation or proceedings insofar as they relate to the
operation of the Stations after the Closing, and (iii) any obligations or
liabilities relating to the business operations of the Stations after the
Closing, and all such obligations and liabilities shall become and be the
obligations and liabilities solely of Buyer.
(b) Buyer shall not assume any other obligations or liabilities
of Sellers, including (i) any obligations or liabilities under any Contract not
included in the Assumed Contracts, (ii) any obligations or liabilities under the
Assumed Contracts insofar as they relate to the period prior to the Closing Date
except insofar as an adjustment therefor is made in favor of Buyer under Section
2.3(b), (iii) any claims or pending litigation or proceedings insofar as they
relate to the operation of the Stations prior to the Closing, (iv) any
obligations or liabilities of Sellers under any employee pension, retirement, or
other benefit plans, (v) any obligations or liabilities of Sellers under any
collective bargaining agreements, (vi) any obligation to any employee of any of
the Stations for severance benefits, vacation time, or sick leave accrued prior
to the Closing Date, or (vii) any obligations or liabilities other than the
liabilities being assumed by Buyer pursuant to Section 2.4(a) caused by, arising
out of, or resulting from any action or omission of Sellers prior to the
Closing, and all such obligations and liabilities shall remain and be the
obligations and liabilities solely of Sellers.
2.5 Allocation of Purchase Price. Subject to the following
sentence, the Purchase Price shall be allocated between Sellers and among the
Assets, as of the Closing Date, pursuant to the appraisal
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of the current value of the Assets on the Closing Date to be paid for by the
Buyer and supplied by Buyer to Sellers within 30 days following the Closing
Date, which appraisal shall be subject to the approval of Sellers, which
approval shall not be unreasonably withheld. It is expressly understood and
agreed that an aggregate of $200,000 of the Purchase Price shall be "allocated"
to the Non-Competition Agreement referred to in Section 8.2(f) hereof.
Notwithstanding the foregoing, in the event that the parties are unable to
agree upon the allocation of the Purchase Price within 30 days following the
Closing Date, then the parties shall submit such dispute to arbitration
pursuant to Section 11.2 hereof within 45 days following the Closing.
SECTION 3 REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers represent and warrant to Buyer as follows:
3.1 Organization, Standing, and Authority. Each Seller is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Florida. Such Seller has all requisite power and authority (i) to own,
lease, and use the Assets as now owned, leased, and used in all material
respects, (ii) to conduct the business and operations of the Stations as now
conducted in all material respects, and (iii) to execute and deliver this
Agreement and the documents contemplated hereby, and to perform and comply with
all of the terms, covenants, and conditions to be performed and complied with
by such Seller hereunder and thereunder. Except as set forth on Schedule 3.1,
neither Seller is a participant in any joint venture or partnership with any
other person or entity with respect to any material part of the operations of
the Stations or any of the material Assets.
3.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement by Sellers have been duly authorized by all
necessary corporate actions on the part of Sellers and their shareholders. This
Agreement has been duly executed and delivered by Sellers and constitutes the
legal, valid, and binding obligation of Sellers, enforceable against them in
accordance with its terms except as the enforceability of this Agreement may be
affected by bankruptcy, insolvency, or similar laws affecting creditors' rights
generally, and by judicial discretion in the enforcement of equitable remedies.
3.3 Absence of Conflicting Agreements. Except as otherwise provided
herein including, without limitation, Section 6.10 hereof, subject to obtaining
the FCC Consent, and the filing of a Notification and Report Form and the
expiration of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act", and together with the FCC Consent, the
"Required Consents"), and the Consents listed on Schedule 3.3 (as
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defined below), the execution, delivery, and performance of this Agreement and
the documents contemplated hereby (with or without the giving of notice, the
lapse of time, or both): (i) do not conflict with any provision of the Articles
of Incorporation or Bylaws of Sellers; (ii) do not as of the date hereof
conflict with, result in a breach of, or constitute a default under, any law,
judgment, order, ordinance, injunction, decree, rule, regulation, or ruling of
any court or governmental instrumentality; (iii) do not as of the date hereof
constitute grounds for termination of, result in a breach of, constitute a
default under, or accelerate or permit the acceleration of any performance
required by the terms of, any agreement, instrument, license, or permit to
which any Seller is a party or by which any Seller may be legally bound which
would have a material adverse effect on Sellers or the Stations; and (iv) will
not create any Lien of any material nature whatsoever upon the Assets, except
in the case of each of clauses (ii), (iii) and (iv) above, for such violations,
conflicts, breaches, defaults, terminations, accelerations or creations of
Liens which would not, individually or in the aggregate, have a material
adverse effect on Sellers ability to consummate the transactions contemplated
hereby.
3.4 Governmental Licenses. Schedule 3.4 includes a true and complete
list of the FCC Licenses. Sellers have made available to Buyer true and
complete copies of the FCC Licenses (including any amendments and other
modifications thereto). To Sellers' knowledge, the Licenses have been validly
issued, and Sellers are the authorized legal holders thereof (respectively, as
indicated on such schedule). The FCC Licenses listed on Schedule 3.4 comprise
all of the licenses, permits, and other authorizations required from the FCC
for the lawful conduct of the business and operations of the Stations in the
manner and to the full extent they are now conducted. Subject to the foregoing,
the FCC Licenses are in full force and effect and the conduct of the business
and operations of the Stations are in accordance therewith.
3.5 Interests in Real Property.
(a) Schedule 3.5 contains a complete and accurate description of
all Sellers' interests in and to all leases of real property. The leases listed
on Schedule 3.5 comprise all real property interests used by Sellers to conduct
the business and operations of the Stations as now conducted. Sellers own no
real property in fee.
(b) With respect to each leasehold interest listed on Schedule
3.5 (the "Leased Property"), except as set forth in Schedule 3.5, Sellers hold
such leasehold interests subject to the terms of the relevant Assumed Contract,
free and clear of Liens, except for Permitted Liens. Except as set forth in
Schedule 3.5, (i) each such lease or sublease that is an Assumed Contract is in
full force and effect, and is valid, binding and enforceable in all
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material respects in accordance with its respective terms except as
enforceability thereof may be affected by bankruptcy, insolvency, or similar
laws affecting creditors' rights generally, and by judicial discretion in the
enforcement of equitable remedies, (ii) all accrued and currently payable rents
and other payments required to be paid by Sellers under such leases have been
paid, (iii) neither any Seller nor to Sellers' knowledge as of the date hereof,
any other party is in default in any material respect under any such leases,
(iv) to Sellers' knowledge as of the date hereof, no party has asserted any
material defense, set off or counterclaim thereunder, and (v) as of the date
hereof no notice of material default or termination has been given or received
by Sellers thereunder, as of the date hereof no event of material default has
occurred by any Seller thereunder or to Sellers' knowledge, by any other party
thereto, and as of the date hereof no condition exists and no event has
occurred that, with the giving of notice, the lapse of time, or the happening
of any further event would become a material default by any Seller thereunder
or to Sellers' knowledge, by any other party thereto. Except as set forth in
Schedule 3.5 hereto, no third-party consent or approval is required for the
assignment of any such lease to Buyer. As of the date hereof, all Real Property
(including the improvements thereon) is available for immediate use in the
conduct of the business or operations of the Stations as now conducted and, to
Sellers' knowledge, complies in all material respects with all applicable
building and zoning codes and the regulations of any governmental authority
having jurisdiction, except to the extent the current use, while permitted,
constitutes a "nonconforming use" under current zoning or land use regulations.
All improvements included in the Assets, if any, are located entirely on the
Real Property.
3.6 Title to and Condition of Tangible Personal Property. Schedule 3.6
lists all items of Tangible Personal Property having a value in excess of
$1,000. The Tangible Personal Property listed on Schedule 3.6 comprises all
material items of tangible personal property used by Sellers to conduct the
business and operations of the Stations as now conducted and, except as set
forth on Schedule 3.6, all such property is in good working order and repair
and is suitable for the operation of the Stations by Buyer in a manner
consistent with the manner in which the Stations have heretofore been operated
by Sellers, in conformity with all applicable FCC rules and regulations. Except
as described in Schedule 3.6, Sellers own and have good title to each item of
Tangible Personal Property, and none of the Tangible Personal Property owned by
Sellers is subject to any Lien, except for Permitted Liens. Except as set forth
on Schedule 3.6, all items of transmitting and studio equipment included in the
Tangible Personal Property permit the Stations and any auxiliary broadcast
facilities related thereto to operate in accordance with the terms of the FCC
Licenses and the rules and regulations of the FCC (other than FCC engineering
specifications). The representations and warranties set forth in
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this Section 3.6 shall not be deemed untrue or incomplete at any time by reason
of any disposition, repair or replacement of Tangible Personal Property in
compliance with Section 5.4 or 6.5 or otherwise in compliance with this
Agreement.
3.7 Contracts. Schedule 3.7 is a true and complete list of all
Contracts as of the date hereof except contracts for the sale of advertising
time on the Stations for cash at rates consistent with past practices and other
contracts which may be canceled by Sellers without penalty on not more than
ninety (90) days' notice. Sellers have delivered to Buyer true and complete
copies of all written Assumed Contracts, true and complete descriptions (in all
material respects) of all oral Assumed Contracts (including any amendments and
other modifications to such Contracts) and a schedule summarizing Sellers'
material obligations under trade and barter agreements relating to the Stations
as of the date hereof. To Sellers' knowledge as of the date hereof, all of the
Assumed Contracts are in full force and effect, in all material respects, and,
to Sellers' knowledge, are valid, binding and enforceable, in all material
respects, in accordance with their terms except as otherwise disclosed on
Schedule 3.7 or except as the enforceability thereof may be affected by
bankruptcy, insolvency, or similar laws affecting creditors' rights generally,
and by judicial discretion in the enforcement of equitable remedies.
3.8 Consents. As of the date hereof, except for the Required
Consents and the other Consents described in Schedule 3.3, to Sellers'
knowledge, no consent, approval, permit, or authorization of, or declaration to
or filing with any governmental or regulatory authority, or any other third
party is required to permit Sellers to assign or transfer the Assets to Buyer,
excluding Consents which, if not obtained, would not have a material adverse
effect on any Station.
3.9 Intangibles. Schedule 3.9 is a true and complete list of all
Intangibles (exclusive of Licenses listed in Schedule 3.4) that are used by
Sellers to conduct the business and operations of the Stations as now
conducted, all of which to Sellers' knowledge are on the date hereof valid and
in good standing and uncontested except as otherwise set forth on Schedule 3.9.
Sellers have delivered to Buyer copies of all existing documents that establish
or evidence any of the Intangibles. As of the date hereof, other than with
respect to matters generally affecting the radio broadcasting industry and not
particular to Sellers, Sellers have not received any notice or demand alleging
that any Seller is infringing upon or otherwise acting adversely to any
trademarks, trade names, service marks, service names, copyrights, patents,
patent applications, know-how, methods, or processes owned by any other person
or persons, and to the knowledge of Sellers, there is no claim or action
pending or threatened with respect thereto.
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3.10 Financial Statements. Sellers have furnished Buyer with true and
complete copies of (i) audited financial statements of New Age containing the
balance sheet, statement of income and retained earnings and statement of cash
flow at and for New Age's fiscal year ended September 30, 1994, (ii) audited
combined financial statements of New Age and Seventies containing the balance
sheet, statement of income and retained earnings and statement of cash flows at
and for the fiscal year ended September 30, 1995, (iii) unaudited combined
financial statements of Sellers containing the balance sheet, statement of
income and retained earnings and statement of cash flows at and for the three
month periods ended December 31, 1994 and December 31, 1995, and (iv) unaudited
statement of income and expenses for Sellers for the period of January 1996
through July 1996 (collectively, the "Financial Statements"). The Financial
Statements have been prepared in accordance with GAAP as applied by Sellers on a
consistent basis, accurately reflect the books, records and accounts of the
Stations (which books, records and accounts are complete and correct in all
material respects) and present fairly the financial condition of the Stations as
at their respective dates and the results of operations for the periods then
ended, and do not, in accordance with GAAP as applied by the Sellers on a
consistent basis, materially overstate income or understate expenses.
3.11 Insurance. Schedule 3.11 is a true and complete list of all
insurance policies of Sellers that insure any part of the Assets or the
business of the Stations as of the date hereof. All policies of insurance
listed in Schedule 3.11 are in full force and effect.
3.12 Reports. All returns, reports and statements that the Stations
are currently required to file with the FCC or FAA have been filed, and all
reporting requirements of the FCC and FAA have been complied with. All of such
returns, reports, and statements, as filed, satisfy all applicable legal
requirements.
3.13 Personnel.
Employees and Compensation. As of the date hereof, Schedule 3.13
contains a true and complete list of all employees of the Stations and all
persons retained as independent contractors at the Stations (collectively, the
"Employees") and a description of all compensation arrangements affecting them.
As of the date hereof, no Seller has any employee benefit plans or arrangements
applicable to its respective Employees other than as set forth on Schedule
3.13.
3.14 Labor Relations. Each Seller has complied in all material
respects with all laws, rules, and regulations relating to the employment of
labor, including those related to wages, hours, collective bargaining,
occupational safety, discrimination, and the
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payment of social security and other payroll related taxes, except where the
failure to so comply would not have a material adverse effect on the Sellers or
the Stations, and it has not received any notice alleging that it has failed to
comply with any such laws, rules, or regulations. No material controversies,
disputes, or proceedings are pending or, to the knowledge of Sellers,
threatened, between any Seller and any employee (individually or collectively)
of the Stations. To Sellers' knowledge as of the date hereof, no labor union or
other collective bargaining unit represents or claims to represent any of the
employees of the Stations. To Sellers' knowledge as of the date hereof, there
is no union campaign being conducted to solicit cards from employees to
authorize a union to request a National Labor Relations Board certification
election with respect to any employees at the Stations.
3.15 Taxes. Except as set forth on Schedule 3.15, Sellers have
filed or caused to be filed all federal income tax returns and all other
federal, state, county, local, or city tax returns which are required to have
been filed, and they have paid or caused to be paid all taxes shown on those
returns or on any tax assessment received by them to the extent that such taxes
have become due and payable, or have set aside on their books adequate reserves
with respect thereto. As of the date hereof, there are no legal,
administrative, or tax proceedings pursuant to which any Seller is or could be
made liable for any taxes, penalties, interest, or other charges, the liability
for which could extend to Buyer as transferee of the business of the Stations.
3.16 Claims and Legal Actions. As of the date hereof, except as
disclosed on Schedule 3.16 or Schedule 3.4 and except for rulemaking
proceedings generally affecting the radio broadcasting industry, there is no
claim, legal action, counterclaim, suit, arbitration or other legal,
administrative, or tax proceeding, nor any order, decree or judgment, in
progress or pending or, to the knowledge of Sellers, threatened, against or
relating to any Seller with respect to its ownership or operation of the
Stations or otherwise relating to the Assets or the business or operations of
the Stations, nor do Sellers know of any reasonable basis for the same. In
particular, but without limiting the generality of the foregoing as of the date
hereof, except as disclosed on such schedules, there are no applications,
complaints or proceedings pending or, to Sellers' knowledge, threatened (i)
before the FCC relating to the business or operations of the Stations other
than rulemaking proceedings which affect the radio industry generally, (ii)
before any federal or state agency relating to the business or operations of
the Stations involving charges of illegal discrimination under any federal or
state employment laws or regulations, or (iii) before any federal, state, or
local agency relating to the business or operations of the Stations involving
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zoning issues under any federal, state, or local zoning law, rule, or
regulation.
3.17 Environmental Matters.
Subject to the disclosure on Schedule 3.17 and excluding environmental
matters as may affect the radio broadcasting industry as a whole:
(a) To Sellers' knowledge, Sellers have complied in all
material respects with all laws, rules, and regulations of all federal, state,
and local governments (and all agencies thereof) concerning the environment,
public health and safety, and employee health and safety, and to Sellers'
knowledge as of the date hereof, no charge, complaint, action, suit,
proceeding, hearing, claim, demand, or notice has been filed or commenced
against any Seller in connection with its ownership or operation of any Station
alleging any failure to comply with any such law, rule, or regulation.
(b) To Sellers' knowledge, no Seller has any material liability
relating to its ownership and operation of the Stations (and to Sellers'
knowledge, there is no reasonable basis related to Sellers' past or present
operations of the Stations, for any present or future charge, complaint, action,
suit, proceeding, hearing, investigation, claim, or demand against any Seller
giving rise to any such liability) under the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), the Resource Conservation
and Recovery Act ("RCRA"), the Federal Water Pollution Control Act, the Clean
Air Act, the Safe Drinking Water Act, the Toxic Substances Control Act, the
Refuse Act or the Emergency Planning and Community Right-to-Know Act (each as
amended), or any other law, rule, or regulation of any federal, state, or local
government (or agency thereof) concerning release or threatened release of
hazardous substances (as such term is defined in CERCLA and RCRA ("Hazardous
Substances")), public health and safety, or pollution or protection of the
environment.
(c) To Sellers' knowledge, no Seller has any liability relating
to its ownership or operation of the Stations (and no Seller has handled or
disposed of any Hazardous Substances, arranged for the disposal of any
Hazardous Substances, or owned or operated any property or facility in any
manner that could reasonably be expected to form the basis for any present or
future charge, complaint, action, suit, proceeding, hearing, investigation,
claim, or demand (under the common law or pursuant to any statute) against any
Seller giving rise to any such liability) for material damage to any site,
location, or body of water (surface or subsurface) or for illness or personal
injury.
(d) To Sellers' knowledge, no Seller has any material liability
relating to its ownership or operation of the Stations
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(and there is no reasonable basis for any charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand against any Seller giving
rise to any such liability) under the Occupational Safety and Health Act, as
amended, or under any other law, rule, or regulation of any federal, state, or
local government (or agency thereof) concerning employee health and safety.
(e) In connection with its ownership or operation of the
Stations, to Sellers' knowledge, each Seller has obtained and is in material
compliance with all of the terms and conditions of all permits, licenses, and
other authorizations which are required under, and, to Sellers' knowledge, has
complied in all material respects with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules, and
timetables which are contained in, all federal, state, and local laws, rules
and regulations (including all codes, plans, judgments, orders, decrees,
stipulations, injunctions and charges thereunder) relating to public health and
safety, worker health and safety, and pollution or protection of the
environment, including laws relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants, or chemical, industrial,
hazardous or toxic materials or wastes into ambient air, surface water, ground
water or lands or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, or chemical, industrial, hazardous or toxic materials
or wastes.
(f) All properties and equipment used in the business of the
Stations are and have been free of PCB's and, to Sellers' knowledge, asbestos
and asbestos-related products, methylene chloride, trichloroethylene, 1,
2-trans-dichloroethylene, dioxins, dibenzofurans, and Extremely Hazardous
Substances (as defined in Section 302 of the Emergency Planning and Community
Right-to-Know Act).
3.18 Compliance with Laws. Sellers have complied with the FCC
Licenses and, to Sellers' knowledge, in all material respects with all federal,
state, and local laws, rules, regulations, and ordinances applicable or
relating to the ownership and operation of the Stations by Sellers.
3.19 Conduct of Business in Ordinary Course. Except as set forth in
Schedule 3.19, since July 31, 1996, and continuing through the date hereof,
Sellers have conducted the business and operations of the Stations only in the
ordinary course and have not:
(a) Suffered any material adverse change in the Tangible
Personal Property, including any damage, destruction, or loss affecting in any
material respect any assets used or useful in the conduct of the business of
the Stations;
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(b) Subject to Section 5.2 hereof, except for increases,
payments and changes reflected in the information set forth in Schedule 3.13,
made any material increase in compensation payable or to become payable to any
of the employees of the Stations, or any bonus payment made or promised to any
employee of the Stations, or any material change in personnel policies,
employee benefits, or other compensation arrangements affecting the employees
of the Stations;
(c) Made any sale, assignment, lease or other transfer of any
of the Stations' properties other than in the normal and usual course of
business consistent with past business practices with suitable replacements
being obtained therefor;
(d) Canceled any debts owed to or claims held by any Seller
with respect to the Stations;
(e) Suffered any material write-down of the value of any Assets
or any material write-off as uncollectible of any accounts receivable of the
Stations; or
(f) Transferred or granted any right under, or entered into any
settlement regarding the breach or infringement of, any license, patent,
copyright, trademark, trade name, franchise, or similar right, or modified any
existing right relating to the Stations.
3.20 Transactions with Affiliates. Except as disclosed on Schedule
3.20, neither Seller has been involved in any material business arrangement or
relationship relating to the Stations with any Affiliate of any Seller, and no
Affiliate of any Seller owns any material property or right, tangible or
intangible, which is used in the business of the Stations.
3.21 Broker. Neither Sellers nor any person or entity acting on their
behalf have incurred any liability for any finders' or brokers' fees or
commissions in connection with the transactions contemplated by this Agreement.
SECTION 4 REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Sellers as follows:
4.1 Organization, Standing, and Authority. Buyer is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Delaware. Buyer has all requisite corporate power and authority to
execute and deliver this Agreement and the documents contemplated hereby, and
to perform and comply with all of the terms, covenants, and conditions to be
performed and complied with by Buyer hereunder and thereunder.
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4.2 Authorization and Binding Obligation. The execution, delivery,
and performance of this Agreement by Buyer has been duly authorized by all
necessary corporate actions on the part of Buyer. This Agreement has been duly
executed and delivered by Buyer and constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms
except as the enforceability of this Agreement may be affected by bankruptcy,
insolvency, or similar laws affecting creditors' rights generally and by
judicial discretion in the enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements. Except as set forth on Schedule
4.3, the execution, delivery, and performance by Buyer of this Agreement and the
documents contemplated hereby (with or without the giving of notice, the lapse
of time, or both): (i) do not require the consent of any third party under any
agreement, license or law applicable to Buyer; (ii) will not conflict with any
organizational documents of Buyer; (iii) will not conflict with, judgment,
order, injunction, decree, rule, regulation, or ruling of any court or
governmental instrumentality applicable to Buyer; or (iv) will not conflict
with, constitute grounds for termination of, result in a breach of, constitute a
default under, or accelerate or permit the acceleration of any performance
required by the terms of, any agreement, instrument, license, or permit to which
Buyer is a party or by which Buyer may be bound.
4.4 Broker. Neither Buyer nor any person or entity acting on its
behalf has incurred any liability for any finders' or brokers' fees or
commissions in connection with the transactions contemplated by this Agreement.
4.5 Buyer Qualifications. Buyer is qualified to be the licensee of,
acquire, own and operate the Stations under the Communications Act of 1934, as
now in effect, and the rules, regulations and policies of the FCC as now in
effect including without limitation under the multiple ownership standards of
the Act and the FCC, without need for a waiver thereof. Buyer knows of no fact
that would, under existing law and the existing rules, regulations, policies
and procedures of the FCC (a) disqualify Buyer as an assignee of the FCC
Licenses or as the owner and operator of the Stations or (b) cause the FCC to
fail to approve in timely fashion the application for the FCC Consent. Buyer
and no Affiliate of Buyer has ever had an application for transfer of an FCC
License or any filing under the Hart-Scott-Rodino Act denied.
4.6 Financing. Buyer will have as of the Closing sufficient finances
to enable it to close on the transactions contemplated hereby and to pay the
Purchase Price to Sellers in accordance with the terms hereof.
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4.7 Claims and Legal Actions. There is no claim, legal action,
counterclaim, suit, arbitration or other legal proceeding, nor any order,
decree or judgment in progress or pending or, to the knowledge of Buyer,
threatened, against or relating to the Buyer, that may adversely affect its
ability to consummate the transactions contemplated hereby.
SECTION 5 OPERATIONS OF THE STATIONS PRIOR TO CLOSING
Between the date of this Agreement and the Closing Date, Sellers and
Buyer, as applicable, shall comply with the covenants set forth in this Section
5, unless approved in advance by Buyer (in the case of covenants relating to
conduct of Sellers) or by Sellers (in the case of covenants relating to the
conduct of Buyer).
5.1 Generally. Sellers shall operate the Stations diligently in
the ordinary course of business substantially in accordance with their past
practices (except where such operations would conflict with the following
covenants or with Sellers' other obligations under this Agreement or under the
Contracts or Licenses), and in accordance with the other covenants in this
Section 5. Sellers shall have the right to amend the Schedules to this
Agreement, including, without limitation, Schedule 3.20 hereof, to reflect the
occurrence of any transactions of Sellers in the ordinary course of business
substantially in accordance with their past business practices during the last
two years between the date hereof and the Closing Date.
5.2 Compensation. Other than in accordance with existing
contracts, Sellers shall not increase the compensation, bonuses, or other
benefits payable following the Closing or to be payable to any person employed
in connection with the conduct of the business or operations of the Stations;
provided that Sellers shall have the right to (i) extend the term of or renew
existing employment agreements in a manner generally consistent with its past
business practices and (ii) increase the amount of compensation payable to any
employee consistent with its past business practices.
5.3 Contracts. Sellers will not, without Buyer's approval, enter
into any contract or commitment relating to the Stations or the Assets, or
incur any obligation (including obligations relating to the borrowing of money
or the guaranteeing of indebtedness and obligations arising from the amendment
of any existing Assumed Contract) that will impose any liability on Buyer after
Closing, except for (a) cash time sales agreements made in the ordinary course
of business consistent with Sellers' past practices, (b) other contracts
entered into in the ordinary course of business consistent with Sellers' past
practices that do not involve consideration payable by Buyer after the Closing,
in the aggregate,
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in excess of $50,000 measured at Closing, and (c) agreements permitted by
Section 5.20 hereof. Prior to the Closing Date, Sellers shall deliver to Buyer
a list of all Contracts entered into between the date of this Agreement and the
Closing Date and shall make available to Buyer copies of such Contracts.
5.4 Disposition of Assets. Sellers shall not sell, assign, lease, or
otherwise transfer or dispose of any of the material Assets, except assets that
are replaced by property of substantially equivalent kind and value.
5.5 Encumbrances. Sellers shall not create or assume any Lien of any
material nature upon the Assets, except for Permitted Liens.
5.6 Licenses. Sellers shall not cause or permit, by any act or
failure to act, any of the Licenses required to be listed on Schedule 3.4 to
expire or to be revoked, suspended, or modified, or take any action that could
reasonably be expected to cause the FCC or any other governmental authority to
institute proceedings for the suspension, revocation, or material adverse
modification of any of the material Licenses. Sellers shall not fail to
prosecute with due diligence any material applications to any governmental
authority necessary for the operation of the Stations and shall file with the
FCC any request necessary to extend the expiration date of any outstanding
construction permit if applicable.
5.7 Obligations. Sellers shall pay all obligations relating to the
Stations as they become due so that all such obligations shall be current as of
the Closing Date, except for obligations contested in good faith which shall be
disclosed in writing to Buyer on or prior to the Closing Date.
5.8 Access to Information. Sellers shall give Buyer and its counsel,
accountants, engineers, investment bankers, lenders and other authorized
representatives reasonable access to the Assets and the Stations and to all of
Sellers other properties, equipment, books, records, Contracts, and documents
relating to the Stations for the purpose of audit and inspection and will
furnish or cause to be furnished to Buyer or its authorized representatives all
information of Sellers with respect to the affairs and business of the Stations
that Buyer may reasonably request (including any financial reports and
operations reports produced with respect to the affairs and business of the
Stations), all at Buyer's expense. Without limiting the generality of the
foregoing, Sellers shall give Buyer and its counsel, accountants and other
authorized representatives reasonable access to Sellers' financial records and
Sellers' employees, counsel, accountants and other representatives for the
purpose of preparing and auditing such financial statements as Buyer
determines, in its judgment, are required or advisable to comply with federal
or state securities laws and the rules and
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regulations of securities markets as a result of the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby.
5.9 Maintenance of Assets. Sellers shall maintain all of the Assets in
good working order and repair (ordinary wear and tear and casualty excepted),
and use, operate, and maintain all of the Assets in good working order and
repair. Sellers shall maintain inventories of spare parts at levels consistent
with past practices. Subject to the provisions of Section 6.5, if any insured
or indemnified loss, damage, impairment, confiscation, or condemnation of or to
any of the Assets occurs, Sellers shall substantially repair, replace, or
restore the Assets to their prior condition as represented in this Agreement as
soon thereafter as possible (after receipt of the insurance or the
indemnification proceeds), and Sellers shall use the proceeds of any claim
under any property damage insurance policy or other recovery solely to repair
or restore (or in Sellers' discretion, replace) any of the Assets that are
lost, damaged, impaired, or destroyed.
5.10 Insurance. Sellers shall maintain comparable insurance coverage
provided by the existing insurance policies on the Stations and the Assets.
5.11 Consents. Sellers shall obtain the Required Consents and shall use
their best efforts to obtain the other Consents described on Schedule 3.3,
without any material change in the terms or conditions of any material Contract
that could reasonably be expected to be materially less advantageous to Buyer
than those pertaining under such Contract as in effect on the date of this
Agreement. Sellers shall promptly advise Buyer of any difficulties experienced
in obtaining any of the Consents and of any conditions proposed, considered, or
requested for any of the Consents, and shall deliver Buyer a copy of any
written Consent that may be obtained by Sellers. Sellers shall have no
obligation to bring or threaten legal action or to materially increase their
obligations thereunder to obtain any of the Consents.
5.12 Book and Records. Sellers shall maintain their books and records
relating to the Stations in accordance with past practices.
5.13 Notification. Sellers and Buyer shall promptly notify each other in
writing of any material change in any of the information contained in their
respective representations and warranties contained in Section 3 or 4 of this
Agreement of which such party, as applicable, has actual knowledge, provided
that such notification shall not relieve such party of any obligations
hereunder.
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5.14 Financial Information. Sellers shall furnish Buyer with operating
results of the Stations on a monthly basis and shall furnish to Buyer within
twenty-one days after the end of each month ending between the date of this
Agreement and the Closing Date a statement of income and expenses for the month
just ended and such other financial information (including information on
payables and receivables) as Buyer may reasonably request. In connection with
any audit by Buyer of Sellers' financial records for the past three years,
Sellers shall furnish Buyer with the report or other information prepared by
Sellers' accountants with respect to the Financial Statements immediately upon
Sellers' receipt of such report of other information and with such other
financial information in their possession as Buyer may reasonably request.
Within five days prior to the Effective Time, Sellers shall also furnish Buyer
with unaudited combined financial statements of New Age and Seventies containing
the balance sheet, statement of income and retained earnings and statement of
cash flows of Sellers through the end of the most recent fiscal quarters of each
of New Age and Seventies ended on or prior to 45 days prior to the Closing Date
(the "Closing Unaudited Financial Statements").
5.15 Compliance with Laws. Sellers shall use their best efforts to comply
in all material respects with all laws, rules, and regulations applicable or
relating to the ownership and operation of the Stations, it being understood
that at the Closing Sellers shall deliver to the Buyer title to the Assets,
free and clear of any Liens; provided, however, that any tax returns which
Sellers may be obligated to file as a result of or in connection with the
transactions contemplated hereby may be filed by Sellers within ninety (90)
days after the Closing.
5.16 Programming. Sellers shall not make any material changes in the
Stations' programming policies, except such changes as in the good faith
judgment of Sellers are required by the public interest or otherwise in the
best interest of the Stations.
5.17 Preservation of Business. Sellers shall use their commercially
reasonable efforts consistent with their past practices to preserve the
business and organization of the Stations and to keep available to the Stations
their present employees and to preserve the audience of the Stations and the
Stations' present relationships with suppliers, advertisers, and others having
business relations with them.
5.18 Collection of Accounts Receivable. Sellers shall collect the
accounts receivable of the Stations only in the ordinary course consistent with
their past practices.
5.19 Inconsistent Action. Sellers and Buyer shall not take any action
that is inconsistent with their obligations under this Agreement in any
material respect or that could reasonably be
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expected to materially hinder or delay the consummation of the transactions
contemplated by this Agreement.
5.20 Trade Agreements. Sellers may enter into trade agreements for
use by the Stations subject to Section 5.1; provided that trade agreements
having an aggregate value of less than $100,000 shall be deemed to be made by
Sellers in the ordinary course of business.
5.21 Buyer Approvals. Buyer shall not unreasonably withhold, delay
or condition any approval or consent requested by Sellers hereunder, provided,
however, that Buyer shall not be obligated to incur any obligation it
reasonably deems is material or agree to any material change in any Contract or
License to be assumed hereunder; and provided, further, that any requirement of
Buyer to pay a security deposit under one or more of the leases described on
Schedule 3.5 shall not be deemed to be material. Buyer shall respond to each
request for an approval or consent hereunder within five business days after
such approval or consent has been received from Sellers in writing and if Buyer
shall fail to respond in writing to such a request within such period, Buyer
shall be deemed to have granted such approval or consent.
5.22 SBS and Raul Alarcon, Jr. ("Alarcon") agree, jointly and
severally, that they will not, directly or indirectly, enter into an agreement
("Sale Agreement") with any Person whatsoever to sell all or substantially all
of the assets of SBS or its Affiliates, or a majority of the radio stations
owned or controlled by SBS or its Affiliates, or a majority of the capital
stock of SBS. Upon any breach by SBS or Alarcon of this Section 5.22, then
Sellers' sole remedy for such breach shall be governed by Section 9.4 hereof,
and Sellers shall not have the right to terminate this Agreement solely as a
consequence of the breach of this Section 5.22.
SECTION 6 SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent.
(a) The assignment of the FCC Licenses in connection with the
purchase and sale of the Assets pursuant to this Agreement shall be subject to
the prior consent and approval of the FCC.
(b) Sellers and Buyer shall promptly prepare appropriate
applications for the FCC Consent and shall file such applications with the FCC
on or before the fifth business day after the date of this Agreement. The
parties shall prosecute the applications with all reasonable diligence and
otherwise use their reasonable commercial efforts to obtain a grant of the
applications as expeditiously as practicable. Each party agrees to comply with
any condition imposed on it by the FCC Consent, except that no party
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shall be required to comply with a condition if (1) the condition sought to be
imposed on it is the result of a circumstance, the existence of which does not
constitute a breach by such party of any of its representations, warranties, or
covenants under this Agreement, and (2) compliance with such condition would
have a material adverse effect upon it. Buyer and Sellers shall oppose any
petitions to deny or other objections filed with respect to the application for
the FCC Consent and any requests for reconsideration or judicial review of the
FCC Consent. If the Closing shall not have occurred for any reason within the
original effective period of the FCC Consent, and neither party shall have
terminated this Agreement under Section 9, either party hereto may request an
extension of the effective period of the FCC Consent and the other party hereto
shall cooperate with such request. No extension of the FCC Consent shall limit
the exercise by either party of its rights under Section 9. Sellers and Buyer
are not aware of any condition which would materially adversely affect the
parties' ability to obtain the FCC Consent.
6.2 HSR Filing. As soon as practicable after the execution hereof
but in no event later than fifteen (15) business days after the execution
hereof, Buyer and Sellers shall each make the filings required by the HSR act.
Each party shall bear one-half (1/2) of all filing fees under the HSR Act. Each
party will cooperate with the other in accomplishing such filings and will keep
the other party appraised of the status of any inquiries made of such party by
the Federal Trade Commission ("FTC"), the U.S. Department of Justice ("DOJ") or
any other governmental agency with respect to this Agreement or the transaction
contemplated hereby. The transfer of the Assets hereunder is expressly
conditioned upon the waiting period relating to any such filings having duly
expired or been terminated by the appropriate government agencies without the
enforcement of any action by any such agencies to restrain or postpone the
transactions contemplated hereby.
6.3 Control of the Stations. Prior to Closing, Buyer shall not,
directly or indirectly, control, supervise, direct, or attempt to control,
supervise, or direct, the operations of the Stations; such operations,
including complete control and supervision of all of the Stations' programs,
employees, and policies, shall be the sole responsibility of Sellers until the
Closing.
6.4 Accounts Receivable.
(a) Collection. At the Closing, Sellers shall designate Buyer
as their agent solely for the purposes of collecting the Accounts Receivable.
Sellers shall deliver to Buyer on or as soon as practicable after the Closing
Date a complete and detailed statement showing the name, amount and age of each
Account Receivable. Buyer shall make reasonable efforts in accordance with
Buyer's customary business practices to collect the Accounts
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Receivable during the "Collection Period," which shall be the period beginning
on the Closing Date and ending on the last day of the fifth full calendar month
beginning after the Closing Date. Buyer shall not be obligated to use any
efforts to collect any of the Accounts Receivable that are more extensive than
the efforts that Buyer uses to collect its own accounts receivable. Buyer shall
not refer any Accounts Receivable to a collection agency or attorney for
collection, and Buyer shall not make any such referral or compromise, nor
settle or adjust the amount of any of the Accounts Receivable, except with the
approval of Sellers. During the Collection Period, upon delivery of prior
written notice to the Buyer, Sellers shall be entitled to assume all collection
efforts with respect to any of the Accounts Receivable which are in dispute or
have not been paid within 90 days from their incurrence in its sole and
absolute discretion. Collections by Buyer (or Sellers, if applicable) of the
Stations' receivables shall be applied first to the oldest unpaid billing of an
account debtor of any Station.
(b) Payments to Sellers. On or before the fifteenth day
after the end of each full calendar month during the Collection Period, Buyer
shall furnish to Sellers (i) a list of the amounts collected before the end of
such month with respect to the Accounts Receivable, and (ii) the amount
collected during such month with respect to the Accounts Receivable. On or
before the fifteenth day after the end of the Collection Period, Buyer shall
furnish Sellers with a list of all of the Accounts Receivable which remain
uncollected at the end of the Collection Period.
(c) Further Obligations. After the expiration of the
Collection Period, Buyer shall have no further obligation hereunder other than
to make the payment under Section 6.4(b), and the agency relationship
established pursuant to this Section 6.4 shall end.
6.5 Risk of Loss.
(a) The risk of any loss, damage, impairment, confiscation,
or condemnation of any of the Assets from any cause whatsoever shall be borne
by Sellers at all times prior to the Closing. For purposes of this Agreement, a
Stations' transmission signal shall be deemed not operating in the normal and
usual manner only if (i) with respect to radio station WRMA-FM, Ft. Lauderdale,
Florida, such Station's transmission facilities operate at less than 20,000
watts ERP, (ii) with respect to radio station WXDJ-FM, Homestead, Florida, such
Station's transmission facilities operate at less than 10,000 watts ERP, except
during the period in which the new permanent directional antenna for such
Station is being installed (which will permit such Station to broadcast at less
than 10,000 watts ERP) and (iii) any event occurs which prevents a signal
transmission by either Station in the normal and usual manner (as described in
(i) and (ii) above) for a period of seven or more consecutive days after the
date hereof. Sellers shall
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promptly give Buyer notice of the occurrence of any event described in this
Section 6.5(a), and Buyer shall have the right to terminate this Agreement upon
the occurrence of the event described in Section 6.5(a)(iii) hereof. Buyer
shall be required to notify Sellers in writing of Buyer's decision to terminate
this Agreement pursuant to this Section 6.5(a) hereof within three days of
receipt of Sellers' written notification of the event described in Section
6.5(a)(iii) hereof, or Buyer shall be deemed to have waived such termination
right.
(b) If any damage or destruction of the Assets or any other event
occurs which prevents in any material respect signal transmission by any
Station in the normal and usual manner and Sellers are unable to restore or
replace the Assets so that such conditions are cured and normal and usual
transmission is resumed in all material respects before the Closing Date, the
Closing Date shall be postponed, for a period of up to sixty days, to permit
the repair or replacement of the damage or loss.
(c) In the event of any damage or destruction of the Assets described
above, if such Assets have not been restored or replaced and such Station's
normal and usual transmission resumed within the sixty day period specified
above, Buyer may terminate this Agreement forthwith without any further
obligation hereunder by written notice to Sellers; provided, however, that such
written notice to be effective must be given by Buyer within five calendar days
following the end of such sixty day period or Buyer shall have waived such
termination rights. Alternatively, Buyer may, at its option, proceed to close
this Agreement and complete the restoration and replacement of such damaged
Assets after the Closing Date, in which event Sellers shall deliver to Buyer all
insurance proceeds received in connection with such damage or destruction of
the Assets; provided, however, that Sellers may retain the proceeds of any
business interruption insurance with respect to periods prior to the Closing.
Notwithstanding any of the foregoing, Sellers shall have no obligation to
expend their own funds to restore any damage or destruction.
6.6 Confidentiality. Except as necessary for the consummation of the
transactions contemplated by this Agreement, including Buyer's obtaining of
financing related hereto, and except as and to the extent required by law,
including, without limitation, disclosure requirements of federal or state
securities laws and rules and regulations of securities markets, each party will
keep confidential any information of a confidential nature obtained from the
other parties in connection with the transactions contemplated by this
Agreement. In the event that any party hereto desires to disclose any
information concerning any other party to any third party who is not a
representative of such party, such party shall inform the other party in advance
of the reason for such disclosure, the information to be disclosed and the
identities
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of the recipients thereof. If this Agreement is terminated, each party will
return to the other parties all information obtained by such party from the
other parties in connection with the transactions contemplated by this
Agreement. The provisions of this Section shall survive and continue in full
force and effect following any termination of this Agreement.
6.7 Cooperation.
(a) The parties hereto shall cooperate fully with each other and
their respective counsel and accountants in connection with any actions
required to be taken as part of their respective obligations under this
Agreement, and the parties hereto shall execute such other documents as may be
reasonably necessary and desirable to the implementation and consummation of
this Agreement, and otherwise use their best efforts to consummate the
transaction contemplated hereby and to fulfill their obligations under this
Agreement.
(b) Buyer will exercise its best efforts to have Sellers released, to
the extent reasonably possible, from further liability under the Assumed
Contracts; provided that the release of Sellers from any Assumed Contract shall
not be a condition of Sellers' or Buyer's obligations at Closing.
Notwithstanding the foregoing, and except as otherwise expressly provided in
this Agreement, Buyer shall have no obligation (i) to obtain the release of
Sellers from any Assumed Contract or to expend funds to obtain any of the
Consents and (ii) neither Buyer nor Sellers shall have any obligation to agree
to any material adverse change in any License or Assumed Contract in order to
obtain a Consent required with respect thereto or to obtain the release of
Sellers from any Assumed Contract, and Sellers shall have no obligation to
expend funds to obtain any of the Consents, except as may be required to cure
any default by Sellers under any License or Assumed Contract. In the event
Buyer is unable to successfully obtain a release of the Sellers from liability
under any Assumed Contract, Buyer shall perform its obligations, and shall
comply with all requirements, under the terms of each such Assumed Contract.
Buyer shall indemnify and hold harmless Sellers from and against any claims,
losses, damages or liabilities (including court costs and reasonable attorneys'
fees incurred at both trial and appellate levels) as a result of any actual or
alleged non-performance or non-compliance by the Buyer or any third party under
any Assumed Contract. Buyer shall timely pay any deposits required under the
terms of the Assumed Contracts.
(c) In the event that the parties are unable to obtain any Consent,
the parties shall enter into such arrangements as are deemed reasonably
necessary to provide Buyer (as Sellers' assignee), to the extent reasonably
possible, with the benefits and
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obligations of such Assumed Contract from and after the Closing Date.
6.8 Access to Books and Records. Sellers shall provide Buyer
access and the right to copy for a period of three years from the Closing Date
any books and records relating to the Assets but not included in the Assets.
Buyer shall provide Sellers access and the right to copy for a period of five
years from the Closing Date any books and records relating to the Assets that
are included in the Assets.
6.9 Observation Rights. Sellers and their representatives shall
have the right to observe any investigation of the Stations conducted by Buyer
and shall with reasonable promptness receive copies of all reports and
correspondence issued in connection therewith, which shall be subject to the
confidentiality provisions contained herein.
6.10 Tower Consents. For a period of 45 days from the date hereof,
Sellers shall use their best efforts to obtain promptly the approval by the
owners of the radio broadcasting towers used by the Sellers in connection with
the operations of the Stations (the "Tower Consents"). In the event the Sellers
are unable to obtain the Tower Consents prior to the expiration of such 45-day
period, Sellers shall promptly so notify Buyer and Buyer shall, within ten (10)
days thereafter by written notice to the Sellers, either (i) terminate this
Agreement and rescind the transaction contemplated hereby, in which case
Sellers shall have no liability or obligation to Buyer under this Agreement,
or, (ii) if Buyer shall fail to so terminate this Agreement, Buyer shall be
deemed to have waived the requirement that Sellers obtain the Tower Consents
and to have agreed to hold Sellers harmless from and against any claims
resulting from the failure to obtain the Tower Consents. Buyer shall, if
applicable, execute all such instruments and agreements reasonably required to
effectuate the intent of subsection (ii) of this Section 6.10.
SECTION 7 CONDITIONS TO OBLIGATIONS OF BUYER AND SELLERS AT CLOSING
7.1 Conditions to Obligations of Buyer. All obligations of Buyer
at the Closing are subject at the option of Buyer to the fulfillment prior to
or at the Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations and
warranties of Sellers contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date as though made at and as of
that time, but only to the extent that the failure to be so would prevent the
transfer to Buyer of good
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and valid title in and to the FCC Licenses pursuant to this Agreement.
(b) Covenants and Conditions. Sellers shall have performed and
complied in all material respects with all covenants, agreements, and conditions
required by this Agreement to be performed or complied with by them prior to or
on the Closing Date, but only to the extent that the failure to so perform and
comply would prevent the transfer to Buyer of good and valid title in and to the
FCC Licenses and all material assets necessary to operate the Stations pursuant
to this Agreement.
(c) FCC Consent. The FCC Consent shall have been granted
without the imposition on Buyer of any conditions that need not be complied with
by the Buyer under Section 6.1 hereof and Sellers shall have complied with any
conditions imposed on them by the FCC Consent.
(d) HSR Act. The waiting period under the HSR Act shall have
expired or been terminated without unresolved action by the Department of
Justice ("DOJ") or the Federal Trade Commission ("FTC") to prevent the Closing.
(e) Minimum Purchase Price. The Purchase Price shall not have
been reduced to below $104,210,500 as a result of the adjustment provided by
Section 2.3(c) hereof.
7.2 Conditions to Obligations of Sellers. All obligations of
Sellers at the Closing are subject at Sellers' option to the fulfillment prior
to or at the Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations and
warranties of Buyer contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date as though made at and as of
that time.
(b) Covenants and Conditions. Buyer shall have paid the
Purchase Price and performed and complied in all material respects with all
covenants, agreements, and conditions required by this Agreement to be
performed or complied with by it prior to or on the Closing Date.
(c) FCC Consent. The FCC Consent shall have been granted
without the imposition on Sellers of any conditions that need not be complied
with by Sellers under Section 6.1 hereof and Buyer shall have complied with any
conditions imposed on it by the FCC Consent.
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(d) HSR Act. The waiting period under the HSR Act thereunder shall
have expired or been terminated without unresolved action by the DOJ or FTC to
prevent the Closing.
(e) Minimum Purchase Price. The Purchase Price shall not have been
reduced to below $104,210,500 as a result of the adjustment provided by Section
2.3(c) hereof.
(f) Employment Agreement. Buyer shall have executed the Employment
Agreement between Buyer and Russell A. Oasis in the form attached hereto as
Exhibit A.
SECTION 8 CLOSING AND CLOSING DELIVERIES
8.1 Closing.
(a) Closing Date. Subject to the satisfaction or, to the extent
permissible by law, waiver (by the party for whose benefit the closing
condition is imposed) on the date scheduled for Closing of the closing
conditions described in Section 7 hereof, the Closing shall take place at 12:01
p.m., Miami, Florida time, on a date not later than fifteen days following the
date on which the FCC Consent has become a Final Order, which date of Closing
shall be specified by Buyer to Sellers on not less than ten nor more than
twelve days written notice to Sellers, or, if Buyer shall have waived the
condition precedent of a Final Order on the date specified by Buyer to Sellers,
on not less than ten nor more than twelve days written notice, following the
later of the effective date of the FCC Consent or the waiver by Buyer of such
condition precedent (or, if either such date is a Saturday, Sunday or federal
holiday, on the next business day thereafter) or on such other date as may be
set by mutual agreement of Buyer and Sellers; provided that if the Closing as
determined hereunder would occur prior to January 1, 1997, Sellers may in their
sole and absolute discretion extend the Closing to a date prior to February 28,
1997; and provided, further, that, in the event that the wire transfer of the
Purchase Price is received by each of the Sellers later than 2:00 p.m., Miami,
Florida time on the Closing Date, then Sellers shall be entitled to interest on
the Purchase Price from the Closing Date to the next business day following the
Closing Date at a rate equal to the prime rate as publicly announced on the
Closing Date by Citibank N.A. as its prime rate. Notwithstanding the foregoing,
if on the date otherwise scheduled for Closing pursuant to the preceding
sentence, the conditions have not been satisfied, the party for whose benefit
such conditions have been imposed may elect to postpone the Closing, and the
Closing shall thereafter take place on a date specified by written notice from
such party, which date shall be not less than five days nor more than ten days
after the satisfaction or waiver of such conditions precedent (but not later
than June 30, 1997). The Closing shall take place at the
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offices of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A., Miami,
Florida.
8.2 Deliveries by Sellers. Prior to or on the Closing Date, Sellers
shall deliver to Buyer the following, in form and substance reasonably
satisfactory to Buyer:
(a) Transfer Documents. Duly executed warranty bills of sale, motor
vehicle titles, assignments, and other transfer documents which shall be
sufficient to vest good and marketable title to the Assets in the name of
Buyer, free and clear of any Liens other than Permitted Liens;
(b) Officer's Certificate. A certificate, dated as of the Closing
Date, executed by an executive officer of Sellers on behalf of Sellers,
certifying (1) that the representations and warranties of Sellers contained in
this Agreement are true and complete in all material respects as of the Closing
Date as though made on and as of that date; and (2) that Sellers have in all
material respects performed and complied with all of their obligations,
covenants, and agreements set forth in this Agreement to be performed and
complied with on or prior to the Closing Date;
(c) Opinion of Counsel. Opinion of Sellers' counsel dated as of the
Closing Date, in substantially the form attached hereto as Exhibit B;
(d) Corporate Documents. (i) Resolutions of Sellers' shareholders
and Board of Directors authorizing the execution, delivery and performance of
the transactions contemplated hereby certified by Sellers' secretary and (ii)
the certificates of incorporation and good standing certificates of Sellers
certified by the Secretary of State of Florida as of a date no earlier than
thirty days prior to the Closing Date; and
(e) Financial Statements. The Closing Unaudited Financial Statements
required by Section 5.14 hereof.
(f) Non-competition Agreements. Non-competition Agreements,
substantially in the form attached hereto as Exhibit C, duly executed by each
of Russell A. Oasis and Alan Potamkin in favor of the Buyer.
8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer shall
deliver to Sellers the following, in form and substance reasonably satisfactory
to Sellers:
(a) Purchase Price. The Purchase Price as provided in Section 2.3(a);
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(b) Assumption Agreements. Duly executed assumption
agreements pursuant to which Buyer shall assume and undertake to perform
Sellers' obligations under the Licenses and Assumed Contracts arising on or
after the Closing Date;
(c) Officer's Certificate. A certificate, dated as of the
Closing Date, executed by an executive officer of Buyer certifying (1) that the
representations and warranties of Buyer contained in this Agreement are true
and complete in all material respects as of the Closing Date as though made on
and as of that date, and (2) that Buyer has in all material respects performed
and complied with all of its obligations, covenants, and agreements set forth
in this Agreement to be performed and complied with on or prior to the Closing
Date;
(d) Opinion of Counsel. An opinion of Buyer's counsel dated
as of the Closing Date in substantially the form attached hereto as Exhibit D;
(e) Corporate Documents. (i) Resolutions of Buyer's Board of
Directors authorizing the execution, delivery and performance of the
transactions contemplated hereby certified by Buyer's secretary and (ii) the
certificate of incorporation and a good standing certificate of Buyer certified
by the Secretary of State of Delaware as of a date no earlier than thirty days
prior to the Closing Date.
SECTION 9 TERMINATION
9.1 Termination by Sellers. This Agreement may be terminated by
Sellers without prejudice to its rights hereunder and the purchase and sale of
the Stations abandoned, if Sellers are not then in material default, upon
written notice to Buyer, upon the occurrence of any of the following:
(a) Conditions. If on the date that would otherwise be the
Closing Date any of the conditions precedent to the obligations of Sellers set
forth in this Agreement have not been satisfied in all material respects or
waived in writing by Sellers.
(b) Judgments. If there shall be in effect on the date that
would otherwise be the Closing Date any judgment, decree, or order that would
prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred by
June 30, 1997.
9.2 Termination by Buyer. This Agreement may be terminated by
Buyer and the purchase and sale of the Stations abandoned, if
- 33 -
<PAGE> 34
Buyer is not then in material default, upon written notice to Sellers, upon the
occurrence of any of the following:
(a) Conditions. If on the date that would otherwise be the
Closing Date any of the conditions precedent to the obligations of Buyer set
forth in this Agreement have not been satisfied in all material respects or
waived in writing by Buyer (or otherwise waived pursuant to the terms of this
Agreement).
(b) Judgments. If there shall be in effect on the date that
would otherwise be the Closing Date any judgment, decree, or order that would
prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred by
June 30, 1997.
(d) Interruption of Service. If Buyer exercises its right to
terminate as set forth in Section 6.5(a)(iii).
9.3 Letter of Credit. Simultaneously with the execution and
delivery of this Agreement, Buyer has delivered to Sellers a letter of credit
in the principal amount of ten million dollars ($10,000,000) (the "Letter of
Credit") for purposes of securing all or a portion of Buyer's obligations under
the terms of this Agreement. The parties acknowledge and understand that the
terms of the Letter of Credit shall provide that in the event of a default
under this Agreement by the Buyer which would allow Seller to terminate this
Agreement, the full face amount of the Letter of Credit, or ten million dollars
($10,000,000) (the "Face Amount"), shall be drawn by the Sellers upon
presentment to the bank of an affidavit signed by at least two of the
Designated Officers or their respective personal representatives or executors
attesting under oath to such default by the Buyer. Each of Alan Potamkin,
Russell Oasis and Robert Potamkin shall individually indemnify and hold
harmless Buyer from and against any amount drawn on the Letter of Credit, plus
any interest paid by Buyer on such amount, in the event it is determined in
accordance with Section 11.2 of this Agreement that Sellers presentment of the
Letter of Credit was wrongful.
9.4 Rights on Termination. If this Agreement is terminated by
Sellers in the event of a default of this Agreement by Buyer that would permit
Sellers to terminate this Agreement and if Buyer has not breached Section 5.22
of this Agreement, then the payment of $10,000,000 to Sellers pursuant to the
Letter of Credit shall be deemed to be liquidated damages and shall constitute
full payment and the exclusive remedy for any damages suffered by Sellers due
to such breach of this Agreement by Buyer, except as provided below. Sellers
and Buyer agree in advance that actual damages are difficult to ascertain and
that the payment of $10,000,000 pursuant to the Letter of Credit would be a
fair and equitable payment upon
- 34 -
<PAGE> 35
a default of this Agreement by Buyer that would permit Sellers to terminate
this Agreement, if Buyer has not breached Section 5.22 hereof. In the event
that Buyer breaches the provisions of Section 5.22 and fails to close the
transaction contemplated by this Agreement for any reason other than as a
result of a breach by Sellers of the provisions of this Agreement that would
permit Buyer to terminate this Agreement pursuant to Section 9.2, then in
addition to the $10,000,000 payment to Sellers pursuant to the Letter of
Credit, Buyer shall be required to pay Sellers an additional $20,000,000 (the
"Additional Payment"), or a total of $30,000,000 including the Letter of Credit
(together, the "Liquidated Payment") upon written demand of Sellers, (together
with interest at the highest rate permitted by Florida law commencing three
business days following receipt by Buyer of such written demand and until paid).
The Liquidated Payment shall be deemed to be liquidated damages and shall
constitute full payment for the damages suffered by Sellers due to such breach
of this Agreement by Buyer, including a breach of Section 5.22 hereof. Sellers
and Buyer agree in advance that actual damages are difficult to ascertain and
that the Liquidated Payment is fair and equitable, to reimburse Sellers for
damages sustained due to such breach of this Agreement by Buyer, including the
breach of Section 5.22 hereof, particularly because the consummation of any
transaction contemplated by said Section 5.22 would likely eliminate all viable
competing interests to acquire the Stations, thereby significantly diminishing
the value of the Stations. If Buyer enters into a Sale Agreement within 6
months of a termination of this Agreement, and Sellers shall not have been in
breach of this Agreement at the time the Agreement was terminated, which breach
would have permitted Buyer to terminate this Agreement pursuant to Section 9.2
hereof, such Sale Agreement will be deemed for purposes of this Agreement to
have been entered into as of a period of time 6 months prior to the execution
thereof and Sellers will be entitled to the Liquidated Payment as provided
above. If this Agreement is terminated by Buyer due to Sellers' breach of any
provision of this Agreement, the amount of damages which Buyer shall be
entitled to recover against Sellers in the event that Sellers fail to
consummate the transactions contemplated hereunder shall be limited as set
forth in Section 10.5(c) hereof.
9.5 Specific Performance. The parties recognize that if, prior to
Closing, Sellers breach this Agreement and refuse to perform under the
provisions of this Agreement, monetary damages alone would not be adequate to
compensate Buyer for its injury. Buyer shall therefore be entitled, in addition
to any other remedies that may be available, to obtain specific performance of
the terms of this Agreement prior to Closing. If any action is brought by
Buyer to specifically perform this Agreement prior to Closing, Sellers shall
waive the defense that there is an adequate remedy at law. Following the
Closing, Buyer shall be entitled, in addition to any other remedies that may be
available, to seek
- 35 -
<PAGE> 36
specific performance of the terms of this Agreement if such remedy is available
at equity. If Buyer obtains specific performance of Sellers' agreement to sell
the Stations to Buyer, Sellers shall not be liable to Buyer for money damages
as a result of Sellers' breach of their agreement to sell the Stations, but
Sellers shall nevertheless continue to be required to indemnify Buyer under
Section 10 of this Agreement. Notwithstanding anything to the contrary, in no
event shall Buyer be entitled to acquire by specific performance or otherwise a
single station constituting the Stations.
9.6 Procedure to Obtain Injunction upon Termination. Upon
termination by Sellers of this Agreement, in the event Buyer desires to obtain
an injunction (an "Injunction") prohibiting the sale of the Stations by the
Sellers to a third party, Buyer shall be required to commence a legal
proceeding seeking such Injunction (a "Legal Proceeding") within 20 days
following such termination in a court of competent jurisdiction in Dade county,
Florida (the "Court"). Prior to or contemporaneous with the commencement of any
Legal Proceeding by Buyer seeking an Injunction, Buyer shall either (i) post
with the Court a bond issued by a A+Best rated insurance company licensed to
do business in Florida in the amount of $110,000,000 or (ii) deposit
$110,000,000 in cash with the Registry of the Court. In the event that Buyer
does not obtain an Injunction issued by the Court which enjoins the sale of the
Stations within 30 days following the commencement of the Legal Proceeding,
Sellers shall be permitted to enter into a transaction or a series of
transactions with a third party involving a sale of the Sellers, the Stations
or the Assets.
Upon termination by Buyer of this Agreement, then Buyer must tender the
Purchase Price to the Court in the Legal Proceeding to be able to obtain an
Injunction if Buyer is otherwise permitted to obtain such Injunction.
9.7 Buyer Covenants on Termination. If this Agreement is
terminated without a Closing for any reason, Buyer shall not, and Buyer shall
ensure that no Affiliate of Buyer shall, for a period of two years after
termination, directly or indirectly hire any employee of either of the Stations
that is employed at any time from the date hereof or induce any such employee
to leave employment with either of the Stations.
SECTION 10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES
10.1 Representations and Warranties. All representations and
warranties contained in this Agreement shall survive the Closing Date for a
period of eighteen months.
- 36 -
<PAGE> 37
10.2 Indemnification by Sellers. After the Closing, Sellers hereby
agree to indemnify and hold Buyer harmless against and with respect to, and
shall reimburse Buyer for:
(a) Any and all losses, liabilities, or damages resulting from
any untrue representation, breach of warranty, or nonfulfillment of any
covenant by Sellers contained in this Agreement or in any certificate,
document, or instrument delivered to Buyer under this Agreement which by its
express terms survives the Closing.
(b) Any and all obligations of Sellers not assumed by Buyer
pursuant to this Agreement, including, without limitation, any liabilities
arising at any time under any Contract not included in the Assumed Contracts.
(c) Any and all losses, liabilities, or damages resulting from
the operation or ownership of the Stations prior to the Closing, including any
liabilities arising under the Licenses or the Assumed Contracts which relate to
events occurring prior the Closing Date.
(d) Any and all out-of-pocket costs and expenses, including
reasonable legal fees and expenses, incident to any action, suit, proceeding,
claim, demand, assessment, or judgment, incident to the foregoing or incurred
in investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
10.3 Indemnification by Buyer. After the Closing, Buyer hereby
agrees to indemnify and hold Sellers harmless against and with respect to, and
shall reimburse Sellers for:
(a) Any and all losses, liabilities, or damages resulting from
any untrue representation, breach of warranty, or nonfulfillment of any
covenant by Buyer contained in this Agreement or in any certificate, document,
or instrument delivered to Sellers under this Agreement which by its express
terms survives the Closing.
(b) Any and all obligations of Sellers assumed by Buyer
pursuant to this Agreement.
(c) Any and all losses, liabilities, or damages resulting from
the operation or ownership of the Stations on and after the Closing.
(d) Any and all out-of-pocket costs and expenses, including
reasonable legal fees and expenses, incident to any action, suit, proceeding,
claim, demand, assessment, or judgment, incident to the foregoing or incurred
in investigating or attempt-
- 37 -
<PAGE> 38
ing to avoid the same or to oppose the imposition thereof, or in enforcing this
indemnity.
10.4 Procedure for Indemnification. The procedure for
indemnification shall be as follows:
(a) The party claiming indemnification (the "Claimant")
shall promptly give notice to the party from which indemnification is claimed
(the "Indemnifying Party") of any claim, whether between the parties or brought
by a third party, specifying in reasonable detail the factual basis for the
claim. If the claim relates to an action, suit, or proceeding filed by a third
party against Claimant, such notice shall be given by Claimant within ten
business days after written notice of such action, suit, or proceeding was
given to Claimant.
(b) With respect to claims solely between the parties,
following receipt of notice from the Claimant of a claim, the Indemnifying
Party shall have thirty days to make such investigation of the claim as the
Indemnifying Party deems necessary or desirable. For the purposes of such
investigation, the Claimant agrees to make available to the Indemnifying Party
and/or its authorized representatives the information relied upon by the
Claimant to substantiate the claim. If the Claimant and the Indemnifying Party
agree at or prior to the expiration of the thirty-day period (or any mutually
agreed upon extension thereof) to the validity and amount of such claim, the
Indemnifying Party shall immediately pay to the Claimant the full amount of the
claim and the Indemnifying Party shall have no further obligation with respect
thereto. If the Claimant and the Indemnifying Party do not agree within the
thirty-day period (or any mutually agreed upon extension thereof), the Claimant
may seek appropriate remedy at law or equity or under the arbitration
provisions of this Agreement, as applicable.
(c) With respect to any claim by a third party as to which
the Claimant is entitled to indemnification under this Agreement, the Claimant
shall have the right at its own expense, to participate in or assume control of
the defense of such claim, and the Claimant shall cooperate fully with the
Indemnifying Party, subject to reimbursement for actual out-of-pocket expenses
incurred by the Claimant as the result of a request by the Indemnifying Party.
If the Indemnifying Party elects to assume control of the defense of any
third-party claim, it shall do so at its own expense and the Claimant shall
have the right to participate in the defense of such claim at its own expense.
If the Indemnifying Party does not elect to assume control or otherwise
participate in the defense of any third party claim, it shall be bound by the
results obtained in good faith by the Claimant with respect to such claim;
provided, however, that the Claimant shall not agree to any settlement with
respect to any claim requiring payment or other consideration in
- 38 -
<PAGE> 39
excess of $10,000 without giving the Indemnifying Party at least five business
days' prior written notice.
(d) If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible.
(e) The Indemnification rights provided in Sections 10.2, 10.3
and 10.4 shall extend to the shareholders, partners, directors, officers,
employees, representatives and successors of any Claimant although for the
purpose of the procedures set forth in this Section 10.4, any indemnification
claims by such parties shall be made by and through the Claimant, to the extent
reasonably possible. Claims of such Persons shall be deemed claims solely
between the parties and not third party claims.
10.5 Certain Limitations. Notwithstanding anything in this Agreement
to the contrary,
(a) Sellers shall not indemnify or otherwise be liable for any
breach of a representation or warranty, or for the breach of any covenant
contained in this Agreement, except to the extent the losses, obligations,
liabilities, costs and expenses arising therefrom exceed in the aggregate
$25,000;
(b) Buyer shall not indemnify or otherwise be liable for any
breach of a representation or warranty of for the breach of any covenant
contained in this Agreement, except to the extent the losses, obligations,
liabilities, costs and expenses arising therefrom exceed in the aggregate
$25,000;
(c) Sellers shall not indemnify or otherwise be liable with
respect to any claim for any breach of a representation or warranty, for the
breach of any covenant in this Agreement or for any other reason unless notice
of the claim is given within eighteen months after the Closing Date and,
provided further, that Sellers' liability hereunder shall be limited to three
million dollars ($3,000,000) in the aggregate for all claims.
10.6 Attorneys' Fees. In the event of a default by either party which
results in a lawsuit or other proceeding for any remedy available under this
Agreement, the prevailing party shall be entitled to reimbursement from the
other party of its reasonable legal fees and expenses (whether incurred in
arbitration, at trial or an appeal).
- 39 -
<PAGE> 40
SECTION 11 MISCELLANEOUS
11.1 Fees and Expenses. Sellers and Buyer shall each pay one-half of any
filing fees, transfer taxes, sales taxes, or other similar charges levied by
any governmental entity, in connection with the sale transactions contemplated
by this Agreement. Buyer and Sellers shall each pay one-half of (i) the fees
payable to the FCC in connection with the filing of the applications for the
FCC Consent and (ii) the fee imposed by the FTC made pursuant to the HSR Act.
Except as otherwise provided in this Agreement, each party shall pay its own
expenses incurred in connection with the authorization, preparation, execution,
and performance of this Agreement, including all fees and expenses of counsel,
accountants, agents and representatives, and each party shall be responsible
for all fees or commissions payable to any finder, broker, advisor, or similar
person retained by or on behalf of such party. Sellers shall not pay any
fees or expenses relating to the financing by Buyer of the transactions
contemplated hereby.
11.2 Arbitration. Except as provided in Section 2.3(d)(4) hereof, any
dispute arising out of or related to this Agreement that Sellers and Buyer are
unable to resolve by themselves shall be settled by arbitration in the State of
Florida, by a panel of three arbitrators. Sellers as a group and Buyer shall
each designate one arbitrator, and the two arbitrators so designated shall
select the third arbitrator. Before undertaking to resolve the dispute, each
arbitrator shall be duly sworn faithfully and fairly to hear and examine the
matters in controversy and to make a just award according to the best of his or
her understanding in accordance with the terms of this Agreement. The
arbitration hearing shall be conducted in accordance with the commercial
arbitration rules of the American Arbitration Association. The written decision
of a majority of the arbitrators shall be final and binding on Sellers and
Buyer. The costs and expenses of the arbitration proceeding shall be assessed
among the parties hereto in a manner to be decided by a majority of the
arbitrators, and the assessment shall be set forth in the decision and award of
the arbitrators. Judgment on the award, if it is not paid within thirty days,
may be entered in any court having jurisdiction over the matter as set forth in
Section 11.3.
11.3 Submission to Jurisdiction; Venue. The parties hereto hereby
irrevocably consent that any suit, legal action or proceeding against any party
or its property with respect to this Agreement must be brought in any court
(whether state or federal) located in Dade County, Florida, as the party filing
the action elects, and, by execution and delivery of this Agreement, each of
the parties hereto hereby irrevocably submits to and accepts the jurisdiction
of the aforesaid courts. The parties hereby irrevocably waive any objection
they may now or hereafter have to the laying of venue of any suit, legal action
or proceeding relating to
- 40 -
<PAGE> 41
this Agreement in any court located in Dade County, Florida and hereby further
irrevocably waive any claim that a court located in Dade County, Florida is not
a convenient forum for any such suit, legal action or proceeding.
11.4 Notices. All notices, demands, and requests required or permitted to
be given under the provisions of this Agreement shall be (a) in writing, (b)
delivered by personal delivery, or sent by commercial delivery service or
registered or certified mail, return receipt requested, (c) deemed to have been
given on the date of personal delivery or the date set forth in the records of
the delivery service or on the return receipt, and (d) addressed as follows:
If to Sellers: NEW AGE BROADCASTING, INC.
3191 Coral Way, Suite 805
Miami, Florida 33145
Attention: Russ Oasis, President
THE SEVENTIES BROADCASTING CORPORATION
3191 Coral Way, Suite 805
Miami, Florida 33145
Attention: Russ Oasis, President
With copies to: Cesar L. Alvarez, Esq.
Greenberg, Traurig, Hoffman,
Lipoff, Rosen & Quentel, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Alan H. Potamkin
4675 S.W. 74th Street
Miami, Florida 33143
Robert Potamkin
130 Spruce Street
Suite O-B
Philadelphia, Pennsylvania 19106
Russell Oasis
4840 S.W. 80th Street
Miami, Florida 33143
If to Buyer: Spanish Broadcasting System, Inc.
26 West 56 Street
New York, New York
Attn: Raul Alarcon, President
- 41 -
<PAGE> 42
With a copy to: Jason L. Shrinsky, Esq.
Kaye, Scholer, Fierman,
Hays & Handler, LLP
901 Fifteenth Street, N.W.
Washington, D.C. 20005-2327
or to any other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
11.3.
11.5 Benefit and Binding Effect. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interest or obligations hereunder shall be
assigned by any party hereto without the prior written consent of the other
party. This Agreement is not intended to, and shall not, confer upon any other
person except the parties hereto any rights or remedies hereunder.
11.6 Further Assurances; Reasonable Consent. The parties shall take
any actions and execute any other documents that may reasonably be necessary or
desirable to the implementation and consummation of this Agreement, including,
in the case of Sellers, any additional bills of sale, or other transfer
documents that, in the reasonable opinion of Buyer, may be necessary to ensure,
complete, and evidence the full and effective transfer of the Assets to Buyer
pursuant to this Agreement. When its consent under this Agreement is requested,
each party agrees to respond promptly and reasonably to the request.
11.7 Governing Law. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED, AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA (WITHOUT REGARD TO
THE CHOICE OF LAW PROVISIONS THEREOF).
11.8 Headings. The headings in this Agreement are included for ease
of reference only and shall not control or affect the meaning or construction
of the provisions of this Agreement.
11.9 Gender and Number. Words used in this Agreement, regardless of
the gender and number specifically used, shall be deemed and construed to
include any other gender, masculine, feminine or neuter, and any other number,
singular or plural, as the context requires.
11.10 Entire Agreement. This Agreement, the schedules hereto, and all
documents, certificates, and other documents to be delivered by the parties
pursuant hereto, collectively represent the entire understanding and agreement
among the parties hereto with respect to the subject matter hereof. This
Agreement supersedes all prior negotiations, agreements and understandings
between
- 42 -
<PAGE> 43
the parties and cannot be amended, supplemented or changed or any of its terms
waived except by an agreement in writing that makes specific reference to this
Agreement and which is signed (in the case of Sellers by the Designated
Officers) by the party against which enforcement of any such amendment,
supplement, or modification is sought.
11.11 Waiver of Compliance; Consents. Except as otherwise provided in
this Agreement, any failure of any of the parties to comply with any
obligation, representation, warranty, covenant, agreement or condition herein
may be waived by the party entitled to the benefits thereof only by a written
instrument signed by the party granting such waiver, but such waiver or failure
to insist upon strict compliance with such obligation, representation,
warranty, covenant, agreement, or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in Section 11.10 and in this Section
11.11.
11.12 Counterparts. This Agreement may be signed in counterparts with
the same effect as if the signature on each counterpart were upon the same
instrument.
11.13 Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, remainder of this Agreement and the application of
such provision to other persons or circumstances shall not be affected thereby
and shall be enforced to the greatest extent permitted by law.
11.14 Press Releases. No press releases or other public announcements
concerning this Agreement shall be made by any party hereto without the prior
written consent of the other party unless the first such party is legally
compelled to do so, including, because of disclosure requirements of federal or
state securities laws or rules and regulations of securities markets, in which
case such party shall be obligated to consult with the other party concerning
the content of such announcement and the reasons therefor.
11.15 Sellers' Knowledge. Whenever a representation, warranty or
covenant contained herein is qualified by the phrase "to Sellers' knowledge" or
other similar phrase, such representation, warranty or covenant is made based on
the actual knowledge of the officers of Sellers.
[SIGNATURE PAGE FOLLOWS]
- 43 -
<PAGE> 44
IN WITNESS WHEREOF, the parties hereto have duly executed this Asset
Purchase Agreement as of the day and year first above written.
SPANISH BROADCASTING SYSTEM, INC.
By: /s/ Raul Alarcon, Jr.
------------------------------
Raul Alarcon, Jr.
President
/s/ Raul Alarcon Jr.
------------------------------
Raul Alarcon, Jr.
(as to Section 5.22 hereof only)
NEW AGE BROADCASTING, INC.
By: /s/ Russell A. Oasis
------------------------------
Russell A. Oasis
President
THE SEVENTIES BROADCASTING CORPORATION
By: /s/ Russell A. Oasis
-------------------------------
Russell A. Oasis
President
THE FOLLOWING PERSONS ARE SIGNATORIES TO THIS
AGREEMENT WITH RESPECT ONLY TO SECTION 9.3
HEREOF:
/s/ Alan Potamkin
---------------------------------
Alan Potamkin
/s/ Russell Oasis
--------------------------------
Russ Oasis
/s/ Robert Potamkin
--------------------------------
Robert Potamkin
- 44 -
<PAGE> 45
EX 2.3(c)
<TABLE>
<CAPTION>
COMBINED STATEMENT OF CASH FLOW
12 MONTHS ENDING AUGUST 31, 1996
<S> <C> <C> <C>
NET INCOME PER STATEMENTS $5,769,722
ADD: DEPRECIATION $ 323,761
AMORTIZATION 786,635
INTEREST 2,197,383
OFFICER'S SALARY 272,918
OFFICER'S HEALTH INS. 3,660
TRADE EXPENSES 245,892
NAT'L REP COMM. 13,197
LEGAL RE: TAK 158,963
LEGAL RE: CITY OF LIC. 13,204
LEGAL RE: PAXSON 63,805
LEGAL RE: OTHER ACQ. 684
ENG. RE: CITY OF LIC. 9,312
ENG. RE: AUX. SITE 4,218
TRAVEL RE: TAK 10,628
TRAVEL RE: ACQUIS. 2,397
WRMA-FM TOWER 48,220 4,154,877
----------
LESS: NAT'L REP COMM. $ 60,367
TRADE INCOME 180,116
INTEREST INCOME 48,138 (288,621)
---------- ----------
NET CASH FLOW COMBINED $9,635,978
</TABLE>
<PAGE> 1
EXECUTION COPY
--------------------------------------------------------
ASSET PURCHASE AGREEMENT
for the sale of radio station
WYSY, Aurora, Illinois
from
Infinity Holdings Corp. of Orlando
to
Spanish Broadcasting System, Inc.
-------------------------------------------------
Dated as of August 22, 1996
--------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE 1
ASSETS TO BE CONVEYED............................................ -2-
1.1. Closing.................................................. -2-
1.2. Transfer of Assets....................................... -2-
1.3. Excluded Assets.......................................... -3-
ARTICLE 2
PURCHASE PRICE................................................... -3-
2.1. Purchase Price........................................... -3-
2.2. Payment of Purchase Price................................ -4-
2.3. Allocation............................................... -4-
ARTICLE 3
ASSUMPTION OF OBLIGATIONS........................................ -5-
3.1. Assumption of Obligations................................ -5-
3.2. Limitation............................................... -5-
ARTICLE 4
PRORATIONS....................................................... -5-
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER......................... -5-
5.1. Organization and Standing................................ -5-
5.2. Authorization and Binding Obligation..................... -6-
5.3. Absence of Conflicting Agreements or Required Consents... -6-
5.4. FCC Authorizations....................................... -6-
5.5. Title to and Condition of Personal Property.............. -7-
5.6. Assumed Contracts........................................ -7-
5.7. Litigation............................................... -7-
5.8. Compliance With Laws..................................... -7-
5.9. Broker's Fees............................................ -8-
5.10. Bankruptcy............................................... -8-
5.11. Utilities................................................ -9-
5.12. Assets for Operations.................................... -9-
5.13. FCC Processing........................................... -9-
<PAGE> 3
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER.......................... -9-
6.1. Organization and Standing................................ -9-
6.2. Authorization and Binding Obligation..................... -9-
6.3. FCC Qualifications....................................... -9-
6.4. Absence of Conflicting Agreements or Required Consents... -10-
6.5. Broker's Fees............................................ -10-
6.6. Bankruptcy............................................... -10-
ARTICLE 7
GOVERNMENTAL CONSENTS............................................ -10-
7.1. FCC Application.......................................... -10-
7.2. Compliance with HSRA..................................... -11-
7.3. Other Governmental Consents.............................. -12-
ARTICLE 8
COVENANTS........................................................ -12-
8.1. Conduct of Business...................................... -12-
8.2. Notification............................................. -13-
8.3. Third-Party Consents..................................... -13-
8.4. Pre-Closing Efforts...................................... -14-
8.5. Risk of Loss............................................. -14-
8.6. Confidentiality.......................................... -14-
8.7. Further Assurances....................................... -15-
8.8. Access................................................... -15-
8.9. Employee Matters......................................... -15-
ARTICLE 9
CONDITIONS PRECEDENT............................................. -15-
9.1. To Buyer's Obligations................................... -15-
9.2. To Seller's Obligations.................................. -16-
ARTICLE 10
DOCUMENTS TO BE DELIVERED AT THE CLOSING......................... -17-
10.1. Documents to be Delivered by Seller...................... -17-
10.2. Documents to be Delivered by Buyer....................... -18-
-ii-
<PAGE> 4
ARTICLE 11
INDEMNIFICATION, SURVIVAL.......................................... 18
11.1. Seller's Indemnities....................................... 18
11.2. Buyer's Indemnities........................................ 19
11.3. Procedure for Indemnification.............................. 19
11.4. Limitations................................................ 20
11.5. Survival of Representations, Warranties and Covenants...... 20
11.6. Sole Remedy................................................ 21
ARTICLE 12
TERMINATION RIGHTS................................................. 21
12.1. Termination................................................ 21
12.2. Effect of Termination...................................... 21
ARTICLE 13
REMEDIES UPON DEFAULT; SPECIFIC PERFORMANCE........................ 22
13.1. Default by Seller; Specific Performance.................... 22
13.2. Default by Buyer; Liquidated Damages....................... 22
ARTICLE 14
OTHER PROVISIONS................................................... 22
14.1. Transfer Taxes and Expenses................................ 22
14.2. Benefit and Assignment..................................... 23
14.3. Entire Agreement; Schedules; Amendment; Waiver............. 23
14.4. Headings................................................... 23
14.5. Computation of Time........................................ 23
14.6. Governing Law; Waiver of Jury Trial........................ 23
14.7. Attorneys' Fees............................................ 24
14.8. Severability............................................... 24
14.9. Notices.................................................... 24
14.10. Counterparts............................................... 25
14.11. Exclusive Dealings......................................... 25
ARTICLE 15
DEFINITIONS........................................................ 26
15.1. Defined Terms.............................................. 26
15.2. Miscellaneous Terms........................................ 29
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EXHIBITS
Exhibit A Promissory Note
Exhibit B Unwind Agreement
SCHEDULES
Schedule 1.2(a) FCC Licenses
Schedule 1.2(e) Main Studio and Transmitter Site Leases
Schedule 1.2(f) Office Lease
Schedule 5.3 Seller's Required Consents
Schedule 5.4 Equipment Leases
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<PAGE> 6
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement"), made as of
the 22nd day of August 1996, is between Infinity Holdings Corp. of
Orlando, a Delaware corporation ("Seller"), and Spanish Broadcasting
System, Inc., a Delaware corporation ("Buyer").
Seller is a wholly-owned subsidiary of Infinity Broadcasting
Corporation, a Delaware corporation ("Infinity"). Seller is in the process of
acquiring radio station WYSY-FM, 107.9 mHz, Aurora, Illinois (the "Station"),
along with radio station WCKG(FM), Chicago, Illinois, from Cox Broadcasting,
Inc. and WCKG, Inc. pursuant to an Asset Exchange Agreement dated as of June
26, 1996 (the "Cox Agreement").
Infinity has entered into an Agreement and Plan of Merger dated as of
June 20, 1996 (the "Merger Agreement"), pursuant to which Infinity will become
a wholly owned subsidiary of Westinghouse Electric Corporation, a Pennsylvania
corporation ("Westinghouse"). Under the Communications Act of 1934, as amended
(the "Act"), Westinghouse may not own more than five FM radio stations in the
Chicago market. Infinity and Westinghouse, through subsidiaries, each is
currently the licensee of two FM radio stations in the Chicago market.
Infinity, through the Cox Agreement, is in the process of acquiring two more FM
stations. But for the divesture of one FM radio station, Westinghouse, after
the merger with Infinity (the "Merger"), and consummation of the asset exchange
under the Cox Agreement, would be directly or indirectly the licensee of six FM
radio stations in the Chicago market, one in excess of the maximum number
permitted by the Act.
To ensure compliance with the Act, Infinity and Westinghouse have
committed to the Federal Communications Commission (the "FCC") to divest one of
their FM radio stations in the Chicago market prior to consummation of the
Merger.
Buyer has expressed an interest in acquiring certain assets used in the
operation of the Station, including its FCC Licenses (as defined below), and
other assets currently held by Infinity Broadcasting Corporation of Illinois, a
Delaware corporation ("Infinity-Illinois") and a wholly owned subsidiary of
Infinity. Infinity has agreed to sell the Station Assets (as defined below) to
Buyer, subject to consummation of the asset exchange pursuant to the Cox
Agreement and the Merger pursuant to the Merger Agreement.
<PAGE> 7
Therefore, the parties agree as follows:
ARTICLE I
ASSETS TO BE CONVEYED
1.1. CLOSING. Subject to SECTION 12.1 (Termination Rights), the closing
(the "Closing") of the sale and purchase of the Station Assets, as defined
below, shall take place in the offices of Leventhal, Senter & Lerman, 2000 K
Street, N.W., Washington, D.C., at 10:00 a.m., local time, on the last to occur
of the following: (a) the day on which the Merger is being consummated; (b) the
day on which the asset exchange pursuant to the Cox Agreement is being
consummated; and (c) the fifth (5th) business day following the FCC's grant of
the FCC Application, or at such other place, time or date as Buyer and Seller
may agree in writing.
1.2. TRANSFER OF ASSETS. At the Closing, Seller shall sell, assign,
transfer and convey, or cause Infinity-Illinois to sell, assign, transfer and
convey, to Buyer, and Buyer shall purchase from Seller and Infinity-Illinois,
the following assets (the "Station Assets"):
(a) all of Seller's rights in and to the FCC licenses, permits and
other authorizations, including any temporary waiver or special temporary
authorization, issued to or held by Seller exclusively in connection with the
conduct of the business and operation of the Station, including any pending
applications therefor, as set forth in SCHEDULE 1.2(a) (the "FCC Licenses").
(b) all of Seller's right, title and interest in the equipment, spare
parts and other tangible personal property located at the Station's transmitter
and used or held for use exclusively in the operation of the Station (the
"Transmitter Site Equipment");
(c) all of Seller's right, title and interest in the equipment, spare
parts and other tangible personal property located at 620 Eola Road, Aurora,
Illinois, and used in the operation of the Station (the "Main Studio
Equipment");
(d) all of Infinity-Illinois's right, title and interest in the
equipment, spare parts, furniture and other physical property located at 180 N.
Michigan Avenue, Chicago, Illinois, and used or held for use exclusively in the
operation of FM radio station WJMK, Chicago, Illinois (the "WJMK Studio
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<PAGE> 8
Equipment," and together with the Transmitter Site Equipment and the Main
Studio Equipment, the "Personal Property");
(e) all of Seller's rights under and interest in, to the extent
assignable, the lease contained in SCHEDULE 1.2(e) (the "Main Studio and
Transmitter Site Leases");
(f) all of Infinity-Illinois's rights under and interest in, to the
extent assignable, the lease for office space at 180 N. Michigan Avenue,
Chicago, Illinois, contained in SCHEDULE 1.2(f) (the "Office Space Lease," and
together with the Main Studio and Transmitter Site Leases, the "Assumed
Contracts"); and
(g) the Station's public inspection file, filings with the FCC
related to the Station, executed copies of all written Assumed Contracts, and
such technical information, engineering data, rights under manufacturers'
warranties as exist at Closing and relate exclusively to the Personal Property
being conveyed hereunder.
The Station Assets shall be delivered without any representation or warranty by
Seller except as expressly set forth in this Agreement, and Buyer acknowledges
that is 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 5
hereof. The Station Assets shall be conveyed to Buyer free and clear of all
Liens, except as otherwise expressly provided in this Agreement.
1.3. EXCLUDED ASSETS. Except as set forth in SECTION 1.2, the Station
Assets shall not include any properties, assets, privileges, rights, interests
and claims, real and personal, tangible and intangible, of every type and
description, wherever located, of Seller, Infinity-Illinois, Infinity,
Westinghouse or any of their affiliates.
ARTICLE 2
PURCHASE PRICE
2.1. PURCHASE PRICE.
(a) The purchase price ("Purchase Price") for the Station Assets
shall be $33,000,000.
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<PAGE> 9
(b) The parties stipulate that the Purchase Price is not
based upon the ratings or financial performance of the Station, because Buyer
is neither purchasing the Station as a going concern nor acquiring any goodwill
or intellectual property of the Station. Therefore, the Seller makes no
representation or warranty as to the Station's ratings or cash flow from the
date of this Agreement to and after the Closing, and Buyer's obligations under
this Agreement are not conditioned in any way on the Station's financial
performance between the date of this Agreement and the Closing.
2.2. PAYMENT OF PURCHASE PRICE. Buyer shall pay the Purchase Price
as follows:
(a) On the Closing Date, Buyer shall pay $30,000,000 by
wire transfer prior to 3:00 p.m., Washington, D.C. time, of immediately
available federal funds to an account at a bank or financial institution
pursuant to wire instructions that Seller shall deliver to Buyer at least one
(1) business day prior to the Closing Date.
(b) On the Closing Date, Buyer shall execute and deliver to
Seller a promissory note with a principal amount of $3,000,000 and otherwise in
a form reasonably acceptable to Seller and containing the provisions set forth
in Exhibit A (the "Promissory Note").
2.3. ALLOCATION. If Buyer and Seller are unable to agree between
the date hereof and the Closing on an allocation of the Purchase Price for
income tax purposes, Buyer shall arrange for an appraisal of the value of the
tangible assets included in the Station Assets. Any such appraisal shall be
completed within one hundred eighty (180) days after the Closing, and, based
upon such appraisal, if prepared, Buyer shall prepare an initial draft of IRS
Form 8594. Buyer shall forward such form to Seller for its approval. If the
parties reach an agreement on the contents of IRS Form 8594, Buyer and Seller
shall each file the IRS Form 8594 finally agreed upon by the parties with their
respective federal income tax return for the tax year in which the Closing
occurs.
ARTICLE 3
ASSUMPTION OF OBLIGATIONS
3.1. ASSUMPTION OF OBLIGATIONS. At the Closing, Buyer shall assume
and undertake to pay, satisfy or discharge (a) all liabilities, obligations and
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commitments of Seller or Infinity-Illinois under the Assumed Contracts, arising
or accruing after 12:01 a.m., Chicago time, on the Closing Date (the "Effective
Time"), and (b) all liabilities, obligations and commitments arising from or
relating to the ownership of the Station Assets after the Effective Time.
3.2. LIMITATION. Except as set forth in this SECTION 3.1, Buyer
expressly does not, and shall not, assume or be deemed to assume, under this
Agreement or otherwise by reason of the transactions contemplated hereby, any
liabilities,obligations or commitments of Seller or Infinity-Illinois of any
nature whatsoever.
ARTICLE 4
PRORATIONS
All expenses arising from the operation of the Station Assets prior to
Closing shall be paid by Seller. All expenses arising from the operation of the
Station Assets after Closing shall be paid by Buyer. Any real estate taxes
shall be apportioned on the basis of the number of days that each party owned
such real property during the relevant tax year.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
5.1. ORGANIZATION AND STANDING. Seller is a corporation duly
formed, validly existing and in good standing under the laws of the State of
Delaware, and has all necessary corporate power and authority to own, lease and
operate and to carry on the business of the Station.
5.2. AUTHORIZATION AND BINDING OBLIGATION. Seller has all
necessary power and authority to enter into and perform this Agreement and the
transactions contemplated hereby, and Seller's execution, delivery and
performance of this Agreement have been duly and validly authorized by all
necessary action on its part. This Agreement has been duly executed and
delivered by Seller and constitutes its valid and binding obligation
enforceable against Seller in accordance with its terms.
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<PAGE> 11
5.3. ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS. Except as
set forth in ARTICLE 7 and in Schedule 5.3 hereto, the execution, delivery and
performance of this Agreement by Seller: (a) do not and will not violate any
provisions of Seller's organizational documents; (b) do not and will not
require the consent or approval of or any filing with any third party or
governmental authority; (c) do not and will not violate any applicable law,
judgment, order, injunction, decree, rule, regulation or ruling of any
governmental authority; and (d) do not and will not, either alone or with the
giving of notice or the passage of time, or both, conflict with, constitute
grounds for termination or acceleration of or result in a breach of the terms,
conditions or provisions of, or constitute a default under any agreement,
lease, instrument, license or permit to which Seller is now subject.
5.4. FCC AUTHORIZATIONS.
(a) Schedule 1.2(a) contains a true and complete list of the
FCC Licenses, and there are no other licenses, permits or other authorizations
from the FCC required for the lawful conduct of the business and operation of
the Station in the manner now conducted. The FCC Licenses are in full force and
effect. All required FCC regulatory fees with respect to the FCC Licenses have
been paid. The FCC licenses have been issued for the full terms customarily
issued to a radio broadcast station in the State of Illinois, and the FCC
Licenses are not subject to any condition except for conditions shown on the
face of the FCC Licenses, applicable to radio broadcast licenses generally or
otherwise disclosed in Schedule 1.2(a).
(b) Except as set forth in Schedule 1.2(a), to Seller's
knowledge, there are no applications, petitions, complaints, proceedings or
other actions pending or threatened before the FCC relating to the Station,
other than proceedings affecting the radio broadcasting industry generally.
(c) Seller has no reason to believe that the FCC assignment
contemplated herein might be challenged or might not be granted by the FCC in
the ordinary course.
5.5. TITLE TO AND CONDITION OF PERSONAL PROPERTY. At the Closing,
Seller or Infinity-Illinois, as the case may be, will have good title in the
Personal Property free and clear of all Liens. At the Closing, the Personal
Property will be in good operating condition and repair (ordinary wear and tear
excepted), will be performing satisfactory and will be in material compliance
with the rules and regulations of the FCC and all other applicable federal,
state and local statues,
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<PAGE> 12
ordinances, rules and regulations. The operating equipment, at Closing, will be
sufficient to permit the Station to operate in accordance with the FCC Licenses
and the rules and regulations of the FCC.
5.6 ASSUMED CONTRACTS. Seller has delivered to Buyer true and
complete copies of all the Assumed Contracts. At the Closing, all Assumed
Contracts will be valid, binding and enforceable by Seller or Infinity-Illinois
in accordance with their respective terms, except as limited by laws affecting
creditors' rights or equitable principles generally. At the Closing, Seller and
Infinity-Illinois will have complied in all material respects with all Assumed
Contracts. To Seller's knowledge, no other contracting party will be in material
default under any of the Assumed Contracts as of the Closing. Except as set
forth in Schedule 5.3 of the Closing, Seller and Infinity-Illinois will have
full legal power and authority to assign their rights under the Assumed
Contracts to Buyer in accordance with this Agreement on terms and conditions no
less favorable than those in effect on the date hereof, and such assignment
will not require the consent of any third party or affect the validity,
enforceability and continuity of any of the Assumed Contracts.
5.7 LITIGATION. There is no claim, litigation, arbitration,
proceeding or investigation pending or, to Seller's knowledge, threatened
against or affecting the Station or the Station Assets in any court or before
any arbitrator, or before or by any governmental department, commission,
bureau, board, agency or instrumentality, domestic or foreign, or that seeks to
enjoin or prohibit, or otherwise questions the validity of, any action taken or
to be taken in connection with this Agreement.
5.8. COMPLIANCE WITH LAWS. Except as disclosed on Schedule 5.8,
Seller has complied in all material respects with, and is not in violation of
any federal, state or local laws, regulations or orders relating to the
operation of the Station. Without limiting the generality of the foregoing:
(a) The Station's transmitting and studio equipment is
operating in accordance with the terms and conditions of the FCC Licenses and
all underlying construction permits, and the rules, regulations and policies of
the FCC, including, without limitation all regulations concerning equipment
authorization and human exposure to radio frequency radiation.
(b) Seller has, in the conduct of the Station's business,
complied in all material respects with all applicable laws, rules and
regulations relating to the employment of labor, including those concerning
wages, hours, equal
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<PAGE> 13
employment, collective bargaining, pension and welfare benefit plans, and the
payment of social security and similar taxes, and Seller is not liable for any
arrearages of wages or any tax penalties due to any failure to comply with any
of the foregoing.
(c) Seller has received no notification from the FCC or any
other governmental agency that Seller's employment practices fail to comply
with established laws, rules and/or policies.
(d) All ownership reports, employment reports and other
documents required to be filed by the Seller with the FCC have been so filed.
Such items as are required to be placed in the Station's local public record
files have been placed in such files. All proofs of performance and
measurements that are required to be made by Seller with respect to the
Station's transmission facilities have been completed and filed at the Station.
All information contained in the foregoing documents is true, complete and
accurate in all material respects.
5.9 BROKER'S FEES. Neither Seller nor any person or entity acting
on his behalf has agreed to pay a commission, finder's fee or similar payment
in connection with this Agreement or any matter related hereto to any person or
entity, and no person or entity is entitled to any such payment from Seller in
connection with the transactions contemplated by this Agreement.
5.10 BANKRUPTCY. No insolvency proceedings of any character,
including without limitation, bankruptcy, receivership, reorganization,
composition or arrangement with creditors, voluntary or involuntary, affecting
Seller, are pending or threatened, and Seller has not made any assignment for
the benefit of creditors or taken any action in contemplation of or which would
constitute the basis for the institution of such insolvency proceedings.
5.11 UTILITIES. All utilities that are required for the current
occupancy and use of the leased premises for the purpose for which such
properties are presently being used by Seller, including, without limitation,
electric, water, sewer, telephone and similar devices, have been connected and,
to the knowledge of Seller, are in working order.
5.12. ASSETS FOR OPERATIONS. At Closing, the Station's Assets will
constitute all tangible assets necessary for the operation of the Station by
Buyer consistent with the FCC Licenses.
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<PAGE> 14
5.13 FCC PROCESSING. There are no facts known to Seller that would
delay the consummation of the transactions contemplated by this Agreement,
beyond the date of consummation of the Merger and the asset exchange under the
Cox Agreement and Seller has no reason to believe that the FCC Application
might be challenged or might not be granted by the FCC in the ordinary course.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyers represents and warrants to Seller as follows:
6.1. ORGANIZATION AND STANDING. Buyer is a corporation duly formed,
validly existing and in good standing under the laws of the State of New York
and has all necessary corporate power and authority to own, lease and operate
the Station Assets and to carry on the businesses of the Station on and after
the Closing Date.
6.2. AUTHORIZATION AND BINDING OBLIGATION. Buyer has all necessary
power and authority to enter into and perform this Agreement and the
transactions contemplated hereby, and Buyer's execution, delivery and
performance of this Agreement has been duly and validly authorized by all
necessary action on its part. This Agreement has been duly executed and
delivered by Buyer and constitutes its valid and binding obligation enforceable
against Buyer in accordance with its terms.
6.3 FCC QUALIFICATIONS. Buyer is qualified under the
Communications Act of 1934, as amended, and the rules and regulations of the
FCC to be the assignee of the FCC Licenses. There are no facts known to Buyer
that would delay the consummation of the transactions contemplated by this
Agreement based upon Buyer's qualifications. Buyer has no reason to believe
that the FCC assignment contemplated herein might be challenged or might not be
granted by the FCC in the ordinary course because of its qualifications. Buyer
is financially qualified to consummate the transactions contemplated by this
Agreement.
6.4. ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS. Except
as set forth in ARTICLE 7, the execution, delivery and performance of this
Agreement by Buyer: (a) do not and will not violate any provision of Buyer's
organizational documents; (b) do not and will not require the consent of any
third
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party or governmental authority; (c) do not and will not violate any law,
judgment, order, injunction, decree, rule, regulation or ruling of any
governmental authority; and (d) do not and will not, either alone or with the
giving of notice or the passage of time, or both, conflict with, constitute
grounds for termination or acceleration of or result in a breach of the terms,
conditions or provisions of, or constitute a default under any agreement,
lease, instrument, license or permit to which Buyer is now subject.
6.5. BROKER'S FEES. Neither Buyer nor any person or entity acting
on its behalf has agreed to pay a commission, finder's fee or similar payment
in connection with this Agreement or any matter related hereto to any person or
entity, other than Media Venture Partners, and Buyer is responsible for paying
any fees or commissions due to Media Venture Partners in connection with the
transactions contemplated by this Agreement.
6.6. BANKRUPTCY. No insolvency proceedings of any character,
including, without limitation, bankruptcy, receivership, reorganization,
composition or arrangement with creditors, voluntary or involuntary, affecting
Buyer are pending or threatened, and Buyer has made no assignment for the
benefit of creditors or taken any action in contemplation of or which would
constitute the basis for the institution of such insolvency proceedings.
ARTICLE 7
GOVERNMENTAL CONSENTS
7.1. FCC APPLICATION. (a) The assignment of the FCC Licenses as
contemplated by this Agreement is subject to the prior consent and approval of
the FCC. Between the date of this Agreement and the Closing, Buyer shall not
directly or indirectly, control the operation of the Station.
(b) No later than five (5) business days after the date of
this Agreement, Buyer and Seller shall each prepare and jointly file a complete
and grantable FCC Application. Seller and Buyer shall thereafter prosecute the
FCC Application in good faith and with all reasonable diligence and otherwise
use their best efforts to obtain the grant of the FCC Application as
expeditiously as practicable; provided, however, that neither Seller nor Buyer
shall have any obligation to satisfy any complainant or the FCC by taking any
steps which would have a material adverse effect upon Seller or Buyer or upon
any affiliated entity, but neither the expense nor inconvenience to a party of
defending against a complainant or an inquiry by the FCC shall be considered a
material adverse
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effect on such party. If the FCC Consent imposes any condition on any party
hereto, such party shall use its best efforts to comply with such condition;
provided, however, that no party shall be required to comply with any condition
that would have a material adverse effect upon it or any affiliated entity. If
reconsideration or judicial review is sought with respect to the FCC Consent,
the party or parties affected shall vigorously oppose such efforts for
reconsideration or judicial review; provided, however, that nothing herein
shall be construed to limit either party's right to terminate this Agreement
pursuant to ARTICLE 12 (Termination Rights).
(c) All FCC filing or grant fees shall be borne equally by
Buyer and Seller. Each party shall otherwise bear its own costs and expenses
(including the fees and disbursements of its counsel) in connection with the
preparation of the portion of the FCC Application to be prepared by it and in
connection with the processing and defense of that application.
7.2 COMPLIANCE WITH HSRA. Each party shall make or cause to be
made in a timely fashion, and in any event within thirty (30) days following
the date of this Agreement, all filings which are required in connection with
the transactions contemplated hereby under the HSRA, and shall furnish to the
other party all information that the other reasonably requests in connection
with such filings. The transfer of the Station Assets hereunder is conditioned
upon the expiration of the applicable waiting period under the HSRA without the
institution or threat of any action with respect to the consummation of the
transactions contemplated hereunder. Buyer and Seller shall split the cost of
any HSRA filing fees. Each party shall otherwise bear its own costs and
expenses (including the fees and disbursements of its counsel) in connection
with the preparation of any HSRA filing to be prepared by it and in connection
with the prosecution and defense of that filing; provided however, that Seller
shall reimburse Buyer for all reasonable attorneys' fees and expenses incurred
in responding on behalf of Buyer to any inquiry from the Federal Trade
Commission or the Antitrust Division of the Department of Justice.
7.3 OTHER GOVERNMENTAL CONSENTS. Promptly following the execution
of this Agreement, the parties shall prepare and file with the appropriate
governmental authorities any other requests for approval or waiver that are
required from such governmental authorities in connection with the transactions
contemplated hereby and shall diligently and expeditiously prosecute, and shall
cooperate fully with each other in the prosecution of, such requests for
approval or waiver and all proceedings necessary to secure such approvals and
waivers.
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<PAGE> 17
Each party shall bear its own costs and expenses in connection with the
preparation of any filings, documents or requests to be prepared by it in order
to obtain such governmental consents, approvals or waivers and in connection
with any prosecution or defense by it of such filings, documents or requests.
ARTICLE 8
COVENANTS
8.1 CONDUCT OF BUSINESS. Between the date of this Agreement and
the Closing Date, except as expressly permitted by this Agreement or with the
prior written consent of Buyer, which shall not be unreasonably withheld,
Seller shall:
(a) comply in all material respects with all laws and
contractual obligations applicable to the Station or to the conduct of the
business of the Station;
(b) perform all material obligations relating to the business
of the Station;
(c) not sell, assign, lease or otherwise transfer or dispose of
any of the Station Assets, except for assets consumed or disposed of in the
ordinary course of business;
(d) maintain the Station Assets in customary repair,
maintenance and condition, replace all items of equipment at time intervals
consistent with prior practice, and repair or replace (subject to Section 8.5
(Risk of Less)) any asset that may be damaged or destroyed with items of equal
or greater value and utility unless Seller determines in good faith that such a
repair or replacement is not necessary or useful for the continued operation of
the Station; and
(e) not modify the Assumed Contracts, as amended through the
date of this Agreement.
8.2 NOTIFICATION.
(a) Between the date of this Agreement and the Closing Date,
Seller shall promptly notify Buyer of (i) any litigation, arbitration or
administrative proceeding pending or, to its knowledge, threatened against
Seller to revoke, cancel, rescind, modify or fail to renew in the ordinary
course any of the FCC Licenses or which challenges the transactions
contemplated hereby,
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including any challenges to the FCC Application; (ii) the issuance of any order
to show cause, notice of violation, notice of apparent liability or notice of
forfeiture with respect to the Station; (iii) the submission, to Seller's
knowledge, of any material complaint against the Station or Seller with respect
to the Station or (iv) any notification from the Federal Trade Commission or
the Department of Justice;
(b) Seller shall promptly notify Buyer of any developments
that occur prior to closing that cause or might cause a material adverse
consequence to the assets or the operation of the Station; provided, however,
that Seller's compliance with the disclosure requirement of SECTION 8.2 shall
not release Seller of any obligations with respect to any representation,
warranty or covenant of Seller in this Agreement or waive any condition to
Buyer's obligation under this Agreement;
(c) If Seller receives any fine, order, complaint, citation
or notice prior to the Closing Date which states that any aspect of the
Station's operation violates any rule or regulation of the FCC or any other
governmental authority (an "Administrative Violation"), including, without
limitation, any rules or regulations concerning the employment of labor or equal
employment opportunity, Seller shall notify Buyer of the Administrative
violation, remove or correct the Administrative violation, and be responsible
for the payment of all costs associated therewith, including any fines or back
pay that may be assessed.
8.3 THIRD-PARTY CONSENTS. Between the date of this Agreement and
the Closing Date, Seller shall use reasonable efforts to obtain the consent of
any third party necessary for the assignment to Buyer of any of the Assumed
Contracts; provided, that Seller shall not be obligated to pay any money to
obtain such consent. In the event a consent or waiver required with respect to
the assignment by Seller to Buyer of any of the Assumed contract has not been
obtained on or before the closing Date, Seller shall use reasonable efforts to
provide Buyer with the benefits of any such Assumed Contract (including,
without limitation, permitting Buyer to enforce any rights of Seller under such
Assumed Contract), and Buyer shall, to the extent Buyer is provided with the
benefits of such Assumed Contract, perform all obligations of Seller
thereunder.
8.4 PRE-CLOSING EFFORTS. Between the date of this Agreement and
the Closing, each party shall use its reasonable efforts to cause the
fulfillment at the earliest practicable date of all of the conditions to the
obligations of the other party to consummate the sale and purchase under this
Agreement. Neither party shall take any action which is materially inconsistent
with its obligations under
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this Agreement or that would materially hinder or delay the consummation of the
transactions contemplated by this Agreement. In particular, neither party shall
take any action that would result in its disqualification to hold the FCC
Licenses or in any way delay grant of the FCC Application or consummation of
the transactions contemplated by this Agreement. Should either party become
aware of any such fact or circumstance, such party shall promptly inform the
other.
8.5. RISK OF LOSS. The risk of loss or damage to the Station Assets
prior to the Effective Time shall be upon Seller. Seller shall repair, replace
and restore any damaged or lost item of Personal Property to its prior
condition as soon as possible and in no event later than the Effective Time,
unless such item was obsolete and unnecessary for the continued operation of
the Station consistent with past practice. If Seller is unable or fails to
repair, restore or replace a lost or damaged item required to be repaired or
replaced by Seller prior to the Closing, Buyer shall reimburse Buyer for the
cost of the repair, restoration or replacement of such item incurred by Buyer
after the Closing.
8.6. CONFIDENTIALITY.
(a) Buyer and Seller shall each keep confidential all
information obtained by it with respect to the other in connection with this
Agreement, except where such information is known or available through other
lawful sources or where its disclosure is required in accordance with applicable
law. If the transactions contemplated hereby are not consummated for any
reason, Buyer and Seller shall return to the other, without retaining a copy
thereof, any schedules, documents or other written information, including all
financial information, obtained from the other in connection with this
Agreement and the transactions contemplated hereby.
(b) Except as required by the FCC in connection with the
filing of the FCC application, without the prior consent of both Buyer and
Seller, there shall be no public announcement relating to this Agreement or the
transactions proposed herein.
8.7. FURTHER ASSURANCES. Seller and Buyer shall cooperate and take
such actions,, and execute such other documents at the Closing or
subsequently, as may be reasonably requested by the other in order to carry out
the provisions and purposes of this Agreement.
8.8. ACCESS. Between the date hereof and the Closing Date, Seller
shall give, upon prior reasonable notice, Buyer or representatives of Buyer
(including
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consultants and advisors) reasonable access to the Station and its assets. It
is expressly understood that, pursuant to this SECTION 8.8, Buyer, at its sole
expense, shall be entitled to make such engineering and inspection of the
Station and its assets as Buyer may desire, so long as the same do not
unreasonably interfere with Seller's operation of the Station in Seller's
reasonable judgment.
8.9. EMPLOYEE MATTERS. It is specifically understood and agreed that
Buyer does not plan to offer employment to any of Station's employees on the
Closing Date. Rather, Seller shall be responsible for and pay all termination,
vacation and sick leave payments to all of its employees as of the Closing
Date.
ARTICLE 9
CONDITIONS PRECEDENT
9.1. TO BUYER'S OBLIGATIONS. The obligations of Buyer hereunder are, at
its option, subject to satisfaction, at or prior to the Closing Date, of each
of the following conditions:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS.
(i) All representations and warranties made by Seller in this
Agreement shall be true and complete in all material respects on and as of the
Closing Date (except to the extent they expressly relate to an earlier time, in
which case they shall have been true and correct only as of such earlier time)
as if made on and as of that date, except to the extent changes are permitted
under SECTION 8.1 of this Agreement.
(ii) All of the terms, covenants and conditions to be complied
with and performed by Seller under this Agreement on or prior to Closing Date
shall have been complied with or performed in all material respects.
(b) FCC CONSENT. The FCC Consent shall have been obtained and shall
be effective.
(c) NO INJUNCTION. No order of any court or administrative agency
shall be in effect which restrains or prohibits the transactions contemplated
by this Agreement in accordance with its terms.
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<PAGE> 21
(d) DELIVERIES. Seller shall have made or stand willing to make all
deliveries required under SECTION 10.1.
9.2 TO SELLER'S OBLIGATIONS. The obligations of Seller hereunder are, at
its option, subject to satisfaction, at or prior to the Closing Date, of each
of the following conditions:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS.
(i) All representations and warranties made by Buyer in this
Agreement shall be true and complete in all material respects on and as of the
Closing Date (except to the extent they expressly relate to an earlier time, in
which case they shall have been true and correct only as of such earlier time)
as if made on and as of that date.
(ii) All of the terms, covenants and conditions to be complied
with and performed by Buyer under this Agreement on or prior to the Closing
Date shall have been complied with or performed in all material respects.
(b) FCC CONSENT. The FCC Consent shall have been obtained and shall
be effective.
(c) NO INJUNCTION. No order of any court or administrative agency
shall be in effect which restrains or prohibits the transactions contemplated
by this Agreement in accordance with its terms.
(d) ACQUISITION OF THE STATION. The asset exchange pursuant to the
Cox Agreement shall have been consummated.
(e) MERGER. The Merger pursuant to the Merger Agreement shall have
been consummated (or all conditions thereto shall have been satisfied and/or
waived and such consummation shall be taking place on the same day as the
Closing Date).
(f) DELIVERIES. Buyer shall have made or stand willing to make all
the deliveries required under SECTION 10.2 and shall have paid or stand willing
to pay the Purchase Price as provided in SECTION 2.2.
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<PAGE> 22
ARTICLE 10
DOCUMENTS TO BE DELIVERED AT THE CLOSING
10.1 DOCUMENTS TO BE DELIVERED BY SELLER. At the Closing, Seller shall
deliver to Buyer the following:
(a) a copy of the resolution of the board of directors of Seller,
certified by an authorized officer of Seller, authorizing the execution,
delivery and performance of this Agreement;
(b) instruments of conveyance and transfer, in form and substance
reasonably satisfactory to counsel to Buyer, effecting the sale, transfer,
assignment and conveyance of the Station Assets to Buyer, including, but not
limited to, the following:
(i) an assignment of the FCC Licenses;
(ii) bills of sale for all Personal Property;
(iii) assignments of the Assumed Contracts, together with all
third party consents as provided in SECTION 8.3;
(c) if by the Closing the FCC Consent has not become a Final Order,
an unwind agreement in the form attached at Exhibit B (the "Unwind Agreement")
executed by Seller; and
(d) such other documents as may reasonably be requested by Buyer's
counsel.
10.2. DOCUMENTS TO BE DELIVERED BY BUYER. At the Closing, Buyer shall
deliver to Seller the following:
(a) a copy of the resolution of the board of directors of Buyer,
certified by an authorized officer of Buyer, authorizing the execution,
delivery and performance of this Agreement;
(b) instruments, in form and substance reasonably satisfactory to
Seller and its counsel, pursuant to which Buyer assumes the obligations,
liabilities and commitments of Sellers as provided in ARTICLE 3;
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(c) immediately available wire transferred federal funds as provided
in SECTION 2.2;
(d) the Promissory Note executed by Buyer;
(e) if by the Closing the FCC Consent has not become a Final Order,
the Unwind Agreement executed by Buyer; and
(f) such other documents as may reasonably be requested by Seller's
counsel.
ARTICLE II
INDEMNIFICATION, SURVIVAL
11.1 SELLER'S INDEMNITIES. From and after the Closing, Seller shall
indemnify, defend, and hold harmless Buyer and its affiliates and their
respective directors, officers, employees, and representatives, and the
successors and assigns of any of them, from and against, and reimburse them
for, all claims, damages, costs and expenses, including, without limitation,
interest, penalties, court costs and reasonable attorneys' fees and expenses,
resulting from:
(a) any liabilities of Seller or its affiliates not assumed by Buyer
under this Agreement;
(b) the breach of any covenant set forth in this Agreement to be
performed prior to or after the Closing by Seller; or
(c) any failure to comply with any "bulk sales" laws applicable to
the transactions contemplated hereby.
11.2 BUYER'S INDEMNITIES. From and after the Closing, Buyer shall
indemnify, defend and hold harmless Seller and its affiliates and their
respective directors, officers, employees, and representatives, and the
successors and assigns of any of them, from and against, and reimburse them
for, all claims, damages, costs and expenses, including, without limitation,
interest, penalties, court costs and reasonable attorneys' fees and expenses,
resulting from the failure of Buyer to perform any of its obligations under
this Agreement or from the operation of Station by Buyer.
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<PAGE> 24
11.3. PROCEDURE FOR INDEMNIFICATION. The procedure for
indemnification shall be as follows:
(a) The party seeking indemnification under this ARTICLE 11
(the "Claimant") shall give notice to the party from whom indemnification is
sought (the "Indemnitor") of any claim, whether solely between the parties or
brought by a third party, reasonably specifying (i) the factual basis for the
claim, and (ii) the amount of the claim if then known. If the claim relates to
an action, suit or proceeding filed by a third party against Claimant, notice
shall be given by Claimant within fifteen (15) days after written notice of the
action, suit or proceeding was given to Claimant. In all other circumstances,
notice shall be given by Claimant within thirty (30) days after Claimant
becomes, or should have become, aware of the facts giving rise to the claim.
Notwithstanding the foregoing, Claimant's failure to give Indemnitor timely
notice shall not preclude Claimant from seeking indemnification from Indemnitor
if Claimant's failure has not materially prejudiced Indemnitor's ability to
defend the claim or litigation.
(b) with respect to claims between the parties, following
receipt of notice from the Claimant of a claim, the Indemnitor shall have
thirty (30) days to make any investigation of the claim that the Indemnitor
deems necessary or desirable. For the purposes of this investigation, the
Claimant agrees to make available to the Indemnitor and/or its authorized
representatives the information relied upon by the Claimant to substantiate the
claim. If the Claimant and the Indemnitor cannot agree as to the validity and
amount of the claim within the 30-day period (or any mutually agreed upon
extension thereof), the Claimant may seek appropriate legal remedy.
(c) With respect to any claim by a third party as to which the
Claimant is entitled to indemnification hereunder, the Indemnitor shall have
the right at its own expense to participate in or assume control of the defense
of the claim with counsel reasonably acceptable to Claimant, and the Claimant
shall cooperate fully with the Indemnitor, subject to reimbursement for
reasonable expenses incurred by the Claimant as the result of a request by the
Indemnitor. If the Indemnitor elects to assume control of the defense of any
third-party claim, the Claimant shall have the right to participate in the
defense of the claim at its own expense. If the Indemnitor does not elect to
assume control or otherwise participate in the defense of any third party
claim, Claimant may, but shall have no obligation to, defend or settle such
claim or litigation in such a manner as it deems appropriate, and in any event
Indemnitor shall be bound by the results obtained by the Claimant with respect
to the claim (by default or otherwise) and shall promptly reimburse Claimant
for the amount of all expenses (including the amount of any judgment rendered),
legal or otherwise, incurred in connection
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with such claim or litigation. The Indemnitor shall be subrogated to all rights
of the Claimant against any third party with respect to any claim for which
indemnity was paid.
11.4. LIMITATIONS.
(a) Neither Seller nor Buyer shall have any obligation to the
other party for any matter described in SECTION 11.1 or SECTION 11.2, as the
case may be, except upon compliance by the other party with the provisions of
this ARTICLE 11, particularly SECTION 11.3.
(b) Neither party shall be required to indemnify the other
party under this ARTICLE 11 unless (i) written notice of a claim under this
ARTICLE 11 was received by the party within the pertinent survival period
specified in SECTION 11.5 and (ii) unless and until the aggregate amount of
claims against the party to which the other party (as a Claimant) is entitled
to be indemnified under this Agreement exceeds $5,000, and then only for the
excess over $5,000. Neither party shall have any liability to the other party
under any circumstances for special, consequential, punitive or exemplary
damages.
11.5. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations, warranties, covenants, indemnities and agreements contained in
this Agreement or in any certificate, document or instrument delivered pursuant
to this Agreement are and will be deemed and construed to be continuing
covenants, indemnities and agreements and shall survive the Closing for a period
of twelve (12) months after the Closing Date (the "Survival Period"). No claim
may be brought under this Agreement unless written notice describing in
reasonable detail the nature and basis of such claim is given on or prior to the
last day of the Survival Period. In any event such notice is given, the right to
indemnification with respect thereto shall survive the Survival Period until
such claim is finally resolved and any obligations thereto are fully satisfied.
Any investigation by or on behalf of any party hereto shall not constitute a
waiver as to enforcement of any representation, warranty, covenant or agreement
contained herein.
11.6. SOLE REMEDY. After the Closing, the right to indemnification
under this ARTICLE 11 shall be the exclusive remedy of any party in connection
with any breach or default by another party under this Agreement.
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ARTICLE 12
TERMINATION RIGHTS
12.1. TERMINATION.
(a) This Agreement may be terminated by either Buyer or Seller,
if the party seeking to terminate is not in material default or breach of this
Agreement, upon written notice to the other upon the occurrence of any of the
following:
(i) if the other party is in material breach of this
Agreement and such breach has been neither cured within ten (10)
days after written notice of such breach nor waived by the
party giving such termination notice;
(ii) if there shall be in effect any order or decree
from the Department of Justice or any judgment, final decree
or order that would prevent or make unlawful the Closing or
if the FCC shall have released a hearing designation order
requiring a formal hearing on the FCC Application; or
(iii) if the Closing has not occurred by June 30, 1997.
(b) This Agreement may be terminated by mutual written consent
of Buyer and Seller.
12.2. EFFECT OF TERMINATION.
In the event of termination of this Agreement pursuant to
SECTION 12.1, this Agreement (other than SECTION 8.6 (Confidentiality), which
shall remain in full force and effect) shall forthwith become null and void,
and no party hereto (nor any of their respective affiliates, directors,
officers or employees) shall have any liability or further obligation, except
as provided in this ARTICLE 12 and in ARTICLE 13; provided, that nothing in
this SECTION 12.2 shall relieve any party from liability for any breach of
this Agreement.
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ARTICLE 13
REMEDIES UPON DEFAULT; SPECIFIC PERFORMANCE
13.1. DEFAULT BY SELLER; SPECIFIC PERFORMANCE. Seller recognizes that,
in the event Seller defaults in the performance of its obligations under this
Agreement, monetary damages alone will not be adequate. In such event, Buyer
shall be entitled to obtain specific performance of the terms of this
Agreement. In addition, Buyer shall be entitled to obtain from Seller court
costs and reasonable attorneys' fees and expenses incurred by it in enforcing
its rights hereunder. As a condition to seeking specific performance, Buyer
shall not be required to have tendered the Purchase Price specified in ARTICLE
2 of this Agreement, but shall be ready, willing and able to do so.
13.2. DEFAULT BY BUYER; LIQUIDATED DAMAGES. If Buyer breaches or
defaults in its obligations under this Agreement, Seller may pursue any legal
or equitable remedies available to it and shall be entitled to obtain from
Buyer court costs and reasonable attorneys' fees and expenses incurred by it in
enforcing its rights hereunder.
ARTICLE 14
OTHER PROVISIONS
14.1. TRANSFER TAXES AND EXPENSES. All recordation, transfer,
documentary, excise, sales or use taxes or fees imposed on this transaction
shall be split by Buyer and Seller. Except as otherwise provided in this
Agreement, each party shall be solely responsible for and shall pay all other
costs and expenses incurred by it in connection with the negotiation,
preparation and performance of and compliance with the terms of this Agreement.
14.2. BENEFIT AND ASSIGNMENT. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and assigns. Neither Buyer nor Seller may assign its rights under
this Agreement without the prior written consent of the other party hereto;
provided, however, that Seller may, without the consent of Buyer, assign its
rights hereunder, together with the FCC Licenses and other of the Station
Assets owned or held by Seller, to a trust of which Seller or its affiliates is
the sole beneficiary (the "Disposition Trust"), whether directly or through a
transfer of such rights and assets to a subsidiary which is then conveyed to
such trust, all in accordance with applicable FCC rules and regulations.
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14.3. ENTIRE AGREEMENT; SCHEDULES; AMENDMENT; WAIVER. This Agreement,
and the exhibits and schedules hereto and thereto, embody the entire agreement
and understanding of the parties hereto and supersede any and all prior
agreements, arrangements and understandings relating to the matters provided for
herein. Any matter that is disclosed in a Schedule hereto in such a way as to
make its relevance to the information called for by another Schedule readily
apparent shall be deemed to have been included in such other Schedule,
notwithstanding the omission of an appropriate cross-reference. No amendment,
waiver of compliance with any provision or condition hereof, or consent pursuant
to this Agreement shall be effective unless evidenced by an instrument in
writing signed by the party against whom enforcement of any waiver, amendment,
change, extension or discharge is sought. No failure or delay on the part of
Buyer or Seller in exercising any right or power under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power.
14.4. HEADINGS. The headings set forth in this Agreement are for
convenience only and shall not control or affect the meaning or construction of
the provisions of this Agreement.
14.5. COMPUTATION OF TIME. If after making computations of time
provided for in this Agreement, a time for action or notice falls on Saturday,
Sunday or a Federal holiday, then such time shall be extended to the next
business day.
14.6. GOVERNING LAW; WAIVER OF JURY TRIAL. The construction and
performance of this Agreement shall be governed by the laws of the State of New
York without regard to its principles of conflict of law. BUYER AND SELLER
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING IN ANY WAY TO THIS AGREEMENT, INCLUDING ANY COUNTERCLAIM
MADE IN SUCH ACTION OR PROCEEDING, AND AGREE THAT ANY SUCH ACTION OR PROCEEDING
SHALL BE DECIDED SOLELY BY A JUDGE. Buyer and Seller hereby acknowledge that
they have each been represented by counsel in the negotiation, execution and
delivery of this Agreement and that their lawyers have fully explained the
meaning of the Agreement, including in particular the jury-trial waiver. Any
question of doubtful interpretation shall not be resolved by any rule providing
for interpretation against the party who causes the uncertainty to exist or
against the drafter of this Agreement.
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14.7. ATTORNEYS' FEES. In the event of any dispute between the parties
to this Agreement, Seller or Buyer, as the case may be, shall reimburse the
prevailing party for its reasonable attorneys' fees and other costs incurred in
enforcing its rights or exercising its remedies under this Agreement. Such
right of reimbursement shall be in addition to any other right or remedy that
the prevailing party may have under this Agreement.
14.8. SEVERABILITY. If any term or provision of this Agreement, or the
application thereof to any person or circumstance shall, to any extent be held
invalid or unenforceable, the remainder of this Agreement, or the application
of such term or provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected thereby, and
each such term and provision of this Agreement shall be valid and be enforced
to the fullest extent permitted by law.
14.9. NOTICES. Any notice, demand or request required or permitted to
be given under the provisions of this Agreement shall be in writing, addressed
to the following addresses, or to such other address as any party may request.
If to Seller:
c/o Infinity Broadcasting Corporation
600 Madison Avenue, 4th Floor
New York, NY 10022
Attention: Mr. Mel Karmazin
Telephone: 212-750-6400
Facsimile: 212-888-2959
With a copy (which shall not constitute notice) to:
Leventhal, Senter & Lerman
2000 K Street, N.W., Suite 600
Washington, D.C. 20006-1809
Attention: Steven A. Lerman, Esq.
Telephone: 202-429-8970
Facsimile: 202-293-7783
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If to Buyer:
Mr. Raul Alarcon, Jr.
Spanish Broadcasting System, Inc.
26 West 56th Street
New York, NY 10019
Telephone: 212-541-9200
Facsimile: 212-541-6904
With a copy (which shall not constitute notice) to:
Kaye Scholer Fierman Hays & Handler, LLP
901 15th Street, N.W., Suite 1100
Washington, D.C. 20005
Attention: Jason L. Shrinsky, Esq.
Telephone: 202-682-3500
Facsimile: 202-682-3580
Any such notice, demand or request shall be deemed to have been duly delivered
and received (a) on the date of personal delivery, or (b) on the date of
transmission, if sent by facsimile (but only if a hard copy is also sent by
overnight courier), or (c) on the date of receipt, if mailed by registered or
certified mail, postage prepaid and return receipt requested, or (d) on the
date of a signed receipt, if sent by an overnight delivery service, but only if
sent in the same manner to all persons entitled to receive notice or a copy.
14.10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which
together will constitute one and the same instrument.
14.11. EXCLUSIVE DEALINGS. For so long as this Agreement remains in
effect, if Buyer is not in breach, neither Seller, its officers, directors or
employees, nor any person acting on Seller's behalf, shall directly or
indirectly solicit or initiate any offer from, or conduct any negotiations
with, any person other than Buyer concerning the acquisition of the Station.
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ARTICLE 15
DEFINITIONS
15.1. DEFINED TERMS. Unless otherwise stated in this Agreement, the
following terms when used herein shall have the meanings assigned to them below
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined).
"Agreement" shall mean this Asset Purchase Agreement.
"Act" shall have the meaning set forth in the preamble of this
Agreement.
"Assumed Contracts" shall have the meaning set forth in SECTION 1.2.
"Buyer" shall have the meaning set forth in the preamble to this
Agreement.
"Claimant" shall have the meaning set forth in SECTION 11.3.
"Closing" shall have the meaning set forth in SECTION 1.1.
"Closing Date" shall mean the date on which the Closing is completed.
"Cox Agreement" shall have the meaning set forth in the preamble to
this Agreement.
"Disposition Trust" shall have the meaning set forth in SECTION 14.2.
"Effective Time" shall have the meaning set forth in SECTION 3.1.
"FCC" shall have the meaning set forth in the preamble to this
Agreement.
"FCC Application" shall mean the application that Seller and Buyer must
file with the FCC requesting its consent to the assignment of the FCC Licenses
from Seller to Buyer.
"FCC Consent" shall mean the action by the FCC granting the FCC
Application.
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"FCC Licenses" shall have the meaning set forth in SECTION 1.2.
"Final Order" shall mean action by the FCC, with respect to the FCC
Application (i) which has not been vacated, reversed, stayed, or suspended;
(ii) with respect to which no timely appeal, request for stay or petition for
rehearing, reconsideration or review by any party or by the FCC on its own
motion, is pending; and (iii) as to which the time for filing any such appeal
request, petition, or similar document or for the reconsideration or review by
the FCC on its own motion under the Communications Act of 1934, as amended, and
the rules and regulations of the FCC, has expired.
"GAAP" shall mean generally accepted accounting principles,
consistently applied.
"HSRA" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
1976, as amended, and the regulations adopted thereunder.
"Indemnitor" shall have the meaning set forth in SECTION 11.3.
"Infinity" shall have the meaning set forth in the preamble to this
Agreement.
"Liens" shall mean mortgages, deeds of trust, liens, security
interests, pledges, collateral assignments, conditional sales agreements,
leases, encumbrances, claims, or other defects of title, but shall not include
(i) liens for current taxes not yet due and payable, (ii) other liens imposed
by law (such as materialman's, mechanic's, carrier's, worker's and repairman's
liens) arising in the ordinary course of business (provided that such liens do
not interfere in any material respect with the use of the Station Assets as
currently used), (iii) valid leases or subleases to third parties with respect
to property not used in the operation of the Station, and (iv) defects in
title or other matters that are not material to the owner or lessee, as the
case may be.
"Main Studio Equipment" shall have the meaning set forth in SECTION 1.2.
"Main Studio and Transmitter Site Leases" shall have the meaning set
forth in SECTION 1.2.
"Merger" shall have the meaning set forth in the preamble to this
Agreement.
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"Merger Agreement" shall have the meaning set forth in the preamble
to this Agreement.
"Notice of Disagreement" shall have the meaning set forth in SECTION
4.2.
"Office Space Lease" shall have the meaning set forth in SECTION 1.2.
"Personal Property" shall have the meaning set forth in SECTION 1.2.
"Prime Rate" shall mean the "prime rate" as published daily in the
Money Rates column of the Wall Street Journal (or the average of such rates if
more than one rate is indicated).
"Promissory Note" shall mean a promissory note in the amount of
$3,000,000 in substantially the form attached at Exhibit A.
"Proration Schedule" shall have the meaning set forth in SECTION 4.2.
"Purchase Price" shall have the meaning set forth in SECTION 2.1.
"Referee" shall have the meaning set forth in SECTION 4.2.
"Seller" shall have the meaning set forth in the preamble to this
Agreement.
"Seller's Proration Amount" shall have the meaning set forth in SECTION
4.2.
"Station" shall have the meaning set forth in the preamble to this
Agreement.
"Station Assets" shall mean the assets to be transferred to Buyer
hereunder, as more fully specified in SECTION 1.2.
"Survival Period" shall have the meaning set forth in SECTION 11.5.
"To Buyer's knowledge," or words of similar import, shall mean to the
actual knowledge of the president or chief financial officer of Buyer.
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<PAGE> 34
"To Seller's knowledge," or words of similar import, shall mean to the
actual knowledge of the president or chief financial officer of Seller.
"Transmitter Site Equipment" shall have the meaning set forth in
SECTION 1.2.
"Unwind Agreement" shall mean an unwind agreement in the form attached
at Exhibit B.
"Westinghouse" shall have the meaning set forth in the preamble to
this Agreement.
15.2. MISCELLANEOUS TERMS. The term "or" is disjunctive; the term
"and" is conjunctive. The term "shall" is mandatory; the term "may" is
permissive. Masculine terms apply to females; feminine terms apply to males.
The term "includes" or "including" is by way of example and not limitation.
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IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase
Agreement to be duly executed as of the date first written above.
SELLER:
INFINITY HOLDINGS CORP.
OF ORLANDO
By:
------------------------------
Name:
-------------------------
Title:
------------------------
BUYER:
SPANISH BROADCASTING SYSTEM, INC.
By:
------------------------------
Name:
-------------------------
Title:
------------------------
<PAGE> 36
EXHIBIT A
PROVISIONS OF PROMISSORY NOTE
Set forth below are the terms of the Promissory Note (the "Promissory
Note") to be delivered on the Closing Date by Buyer to Seller pursuant to
Section 2.2(b) of the Agreement to which Exhibit A is attached (capitalized
terms used but not defined herein shall have the meaning set forth in the
Agreement).
Principal: $3,000,000
Interest: 3-month LIBOR (as reported by Reuters)+450 basis points,
with quarterly adjustments,
Interest and
Principal
Payments: Year Following Closing Payment
---------------------- -------
1 - 2 Interest accrues quarterly and
is added to the principal
balance of the Promissory Note;
no principal or interest
payment due.
3 - 7 Interest payments due quarterly
in arrears on the new principal
balance plus amortization of
original principal.
On 7th anniversary of Balance of principal and
Closing Date interest due in full.
<PAGE> 37
Mandatory
Prepayment: Upon the sale, directly or indirectly, of all or any portion
of the Station Assets, out all proceeds of such sale until
the Promissory Note and interest are paid in full.
Optional
Prepayments: At option of Buyer, the Promissory Note may be prepaid
at any time in whole or in part without penalty.
Manner
of Payment: All payments due hereunder shall be made by wire
transfer of immediately available fund to the account(s)
(and, if more than one account, in the respective amounts)
directed in writing by Sellers. There shall be no set-off or
similar rights with respect to any payments due
hereunder.
Default: Standard events of default, including (i) failure to pay
principal when due, or failure to pay interest within 3
business days of when due, (ii) default by Buyer on any
indebtedness for borrowed money with a principal balance in
excess of $[ ] in the aggregate, which default shall have
occurred and be continuing for the period under which Buyer
shall be permitted to effect a cure of such default under the
applicable agreements governing such indebtedness and (iii)
commencement of voluntary or involuntary bankruptcy or
insolvency proceedings with respect to Buyer, which in the
case of an involuntary proceeding shall have continued for a
period of 30 days.
Restrictive
Covenants: Cross default provisions mirror senior lenders in Buyer's
senior lenders documents.
-2-
<PAGE> 38
EXHIBIT B
UNWIND AGREEMENT
This Unwind Agreement ("Unwind Agreement"), dated as of _______________,
1996, is by and between Infinity Holdings Corp. of Orlando, a Delaware
corporation ("Seller"), and Spanish Broadcasting System, Inc., a New York
corporation ("Buyer"), and is made with reference to that certain Asset
Purchase Agreement, dated August 22, 1996 by and between Buyer and Seller (the
"Purchase Agreement").
W I T N E S S E T H :
WHEREAS, on __________________, the Federal Communications Commission
("FCC") granted its consent (the "FCC Consent") to the assignment of the
licenses of Radio Station WYSY-FM, Aurora, Illinois (the "Station"), pursuant
to the Purchase Agreement; and
WHEREAS, on the date hereof, the FCC Consent has not become a "Final
Order" as defined in the Purchase Agreement; and
WHEREAS, Seller and Buyer have elected to proceed with the Closing without
the FCC Consent having become a Final Order, but desire to do so in accordance
with the terms and conditions hereof.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein, the parties hereby agree as follows:
<PAGE> 39
1. DEFINITIONS.
1.1. "FCC Reversal" shall mean a Final Order that reverses, rescinds,
vacates, sets aside or annuls the FCC Consent.
1.2. "Purchase Price" shall mean the consideration set forth in
Paragraph 2.1 of the Purchase Agreement.
1.3. "Closing Documents" shall mean the documents listed and
described on the Closing Agenda executed by Seller and Buyer and exchanged on
even date herewith.
1.4. "Interim Period" shall mean the period commencing with the
Closing and ending with the retransfer to Seller of the Station Assets.
1.5. All other terms used in this Unwind Agreement shall have the
meanings assigned to them in Purchase Agreement except as expressly provided
otherwise herein.
2. FCC REVERSAL. If an FCC Reversal should occur (and no other
disposition or rearrangement mutually acceptable to the parties has been or can
be agreed upon), the parties agree to cooperate fully with one another to
retransfer the Station Assets to Seller, or at Seller's election, to the
Disposition Trust, subject to any necessary prior FCC approval, to provide for
the assumption by Seller or the Disposition Trust of any liabilities,
obligations or commitments of the type assumed by Buyer pursuant to the
Purchase Agreement, and to use their respective best efforts to restore the
status quo ante existing prior to the closing. Without limitation, the parties
agree to do the following:
-2-
<PAGE> 40
2.1. Seller shall return, or cause the return of, the Purchase Price
to Buyer.
2.2. Buyer shall return, or cause the return of, all of the Station
Assets then existing to Seller. If requested by Seller, Buyer shall execute a
Bill of Sale and such other documents of transfer as Seller may reasonably
request evidencing the transfer or assignment of the Station Assets to Seller.
2.3. Seller and Buyer shall prepare and execute any and all required
applications, documents and instruments for filing with the FCC in order to
enable the parties to comply with any FCC or judicial reversal order, and any
other applications, agreements or instruments necessary to implement the
purposes of this Unwind Agreement.
2.4. The parties agree to prorate the income and expenses arising
from the conduct of the business and operation of the Station during the
Interim Period in the manner prescribed by Article 4 of the Purchase Agreement.
3. INDEMNITIES. Buyer shall hold Seller harmless with respect to all
claims arising from the operation of the Station during the Interim Period and
shall indemnify Seller against any claims arising from actions taken during the
Interim Period which arise from any conduct of the ownership or operation of
either or both of the Station during the Interim Period.
4. OPERATION DURING INTERIM PERIOD. Nothing herein shall be construed to
limit in any way the full powers of Buyer on and after the Closing Date to
operate the Station as it sees fit. Buyer shall be entitled to retain all
revenues and profits
-3-
<PAGE> 41
earned during the Interim Period whether or not there is an FCC Reversal or the
Agreement is voided and canceled.
5. TERMINATION. This Unwind Agreement shall terminate on the date the FCC
Consent becomes a Final Order or, in the event of an FCC Reversal, upon
the completion of the actions necessary pursuant to Paragraph 2 of this Unwind
Agreement to unwind the sale of the Station to Buyer.
6. NOTICES. All notices, requests, demands or other communications
relating to this Agreement shall be in writing and shall be given in accordance
with Section 14.9 of the Purchase Agreement.
7. COUNTERPARTS. This Unwind Agreement may be signed in multiple
counterparts, which together shall constitute one and the same agreement.
8. GOVERNING LAW. The construction and performance of this Agreement
shall be governed by the laws of the state of New York without regard to its
principles of conflicts of laws.
<PAGE> 42
IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase
Agreement to be duly executed as of the date first written above.
SELLER:
INFINITY HOLDINGS CORP.
OF ORLANDO
By: /s/ Mel Karmazin
------------------------------
Name: Mel Karmazin
-------------------------
Title: President/CEO
------------------------
BUYER:
SPANISH BROADCASTING SYSTEM, INC.
By:
------------------------------
Name:
-------------------------
Title:
------------------------
<PAGE> 43
IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase
Agreement to be duly executed as of the date first written above.
SELLER:
INFINITY HOLDINGS CORP.
OF ORLANDO
By:
------------------------------
Name:
-------------------------
Title:
------------------------
BUYER:
SPANISH BROADCASTING SYSTEM, INC.
By: /s/ Raul Alarcon
------------------------------
Name: Raul Alarcon
-------------------------
Title: President
------------------------
<PAGE> 44
SCHEDULE 1.2(a)
TO WYSY-FM
ASSET PURCHASE AGREEMENT
FCC LICENCES
WYSY-FM, 107.9 MHz, Aurora, Illinois(1)
<TABLE>
<CAPTION>
Auxiliary Broadcast Licenses:
- - -----------------------------
<S> <C>
KM-9180 RPU
KPF-414 RPU
KPL-511 RPU
WLQ-238 STL
</TABLE>
- - -----------------
(1) An application to assign the license of WYSY-FM from WCKG, Inc. to Infinity
Holdings Corp. of Orlando was filed with the FCC on July 11, 1996 (FCC File
No. BALH-9607116I), was accepted for filing on July 17, 1996, and is
currently pending. An application to transfer control of Infinity
Broadcasting Corp. of Orlando, proposed licensee of WYSY-FM, from the
Stockholders of Infinity Broadcasting Corporation to Westinghouse Electric
Corporation was filed with the FCC on July 22, 1996, was accepted for
filing on July 25, 1996, and is currently pending. An application to renew
the license of WYSY-FM was filed with the FCC on July 25, 1996 (FCC File
No. BRH960725YR), was accepted for filing on August 13, 1996, and is
currently pending.
<PAGE> 45
United States of America
FEDERAL COMMUNICATIONS COMMISSION
[SEAL] FM BROADCAST STATION LICENSE
Authorizing Official:
Official Mailing Address: /s/ Dale E. Bickel
- - ------------------------------------- --------------------------------------
Dale E. Bickel
MIDWEST BROADCASTING OF CHICAGO, INC. Supervisory Engineer, FM Branch
620 EOLA ROAD Audio Services Division
AURORA, IL 60504 Mass Media Bureau
- - ------------------------------------- Grant Date: 3 NOV 1992
Call Sign: WYSY-FM This license expires 3:00 a.m.
local time: December 01, 1996
License File No.: BLH-910827KB
This license covers Permit No.: 870302OO
as modified by Permit No.: 900710IC
as extended by Permit No.: 910708JO
Subject to the provisions of the Communications Act of 1934, subsequent
acts and treaties, and all regulations heretofore or hereafter made by
this Commission, and further subject to the conditions set forth in this
license, the licensee is hereby authorized to use and operate the radio
transmitting apparatus herein described.
This license is issued on the licensee's representation that the
statements contained in licensee's application are true and that the
undertakings therein contained so far as they are consistent herewith,
will be carried out in good faith. The licensee shall, during the term
of this license, render such broadcasting service as will serve the
public interest, convenience, or necessity to the full extent of the
privileges herein conferred.
This license shall not vest in the licensee any right to operate the
station nor any right in the use of the frequency designated in the
license beyond the term hereof, nor in any other manner than authorized
herein. Neither the license nor the right granted hereunder shall be
assigned or otherwise transferred in violation of the Communications Act
of 1934. This license is subject to the right of use or control by the
Government of the United States conferred by Section 606 of the
Communications Act of 1934.
Name of Licensee:
MIDWEST BROADCASTING OF CHICAGO, INC.
FCC Form 351-B October 21, 1985 BE Page 1 of 5
<PAGE> 46
Call sign WYSY-FM License No.: BLH-910827KB
Station Location:
IL-AURORA
Frequency (MHz): 107.9
Channel: 300
Class: 3
Hours of Operation: Unlimited
Main Studio Address:
IL-620 EOLA ROAD, AURORA
Transmitter location (address or description):
23WO33 ARMY TRAIL ROAD, BLOOMINGDALE, DUPAGE COUNTY,
ILLINOIS.
Remote control point address:
IL-620 EOLA ROAD, AURORA
Transmitter: Type accepted. See Sections 73.1660, 73.1665 and 73.1670
of the Commission's Rules.
Transmitter output power (kW): 25.0
Antenna type: (directional or non-directional): Directional
Desc: JAMPRO JHPC-2R RFR DA. 2 SECTIONS, CIRCULARLY POLARIZED AT
MAX ERP, SIDE-MOUNTED NEAR TOP OF GUYED STEEL TOWER
Antenna coordinates: North Latitude: 41 56 1.0
West Longitude: 88 04 23.0
<TABLE>
<CAPTION>
Horizontally Vertically
Polarized Polarized
Antenna Antenna
<S> <C> <C>
Effective radiated power in the
horizontal plane (kW) . . . . . . . . : 21.0 21.0
Height of radiation center above
ground (meters) . . . . . . . . . . . : 223.0 223.0
</TABLE>
FCC Form 351-B October 21, 1985 BE Page 2 of 5
<PAGE> 47
Call sign: WYSY-FM License No.: BLH-910827KB
<TABLE>
<CAPTION>
Horizontally Vertically
Polarized Polarized
Antenna Antenna
<S> <C> <C>
Height of radiation center above
mean sea level (meters) . . . . . . . : 455.0 455.0
Height of radiation center above
average terrain (meters). . . . . . . : 232.0 232.0
Overall height of antenna structure
above ground (including obstruction
lighting, if any) . . . . . . . . . . : 228.0 meters
</TABLE>
Obstruction marking and lighting specifications for antenna structure:
It is to be expressly understood that the issuance of these specifications is
in no way to be considered as precluding additional or modified marking or
lighting as may hereafter be required under the provisions of Section 303(q) of
the Communications Act of 1934, as amended.
Paragraph 1.0, FCC Form 715 (March 1978):
Antenna structures shall be painted throughout their height with
alternate bands of aviation surface orange and white, terminating with
aviation surface orange bands at both top and bottom. The width of the
bands shall be equal and approximately one-seventh the height of the
structure, provided however, that the bands shall not be more than 100
feet nor less than 1 and 1/2 feet in width. All towers shall be cleaned
and repainted as often as necessary to maintain good visibility.
Paragraph 3.0, FCC Form 715 (March 1978):
There shall be installed at the top of the structure one 300 m/m
electric code beacon equipped with two 620- or 700-watt lamps (PS-40,
Code Beacon type), both lamps to burn simultaneously, and equipped with
aviation red color filters. Where a rod or other construction of not
more than 20 feet in height and incapable of supporting this beacon is
mounted on top of the structure and it is determined that this
additional construction does not permit unobstructed visibility of the
code beacon from aircraft at any normal angle of approach, there shall
be installed two such beacons positioned so as to insure unobstructed
visibility of at least one of the beacons from aircraft at any normal
angle of approach. The beacons shall be equipped with a flashing
mechanism producing not more than 40 flashes per minute nor less than 12
flashes per minute with a period of darkness equal to approximately
one-half of the luminous period.
FCC Form 351-B October 21, 1985 BE Page 3 of 5
<PAGE> 48
Call sign: WYSY-FM License No.: BLH-910827KB
Paragraph 6.0, FCC Form 715 (March 1978):
On levels at approximately two-thirds and one-third of the overall
height of the tower one similar flashing 300 m/m electric code beacon
shall be installed in such position within the tower proper that the
structural members will not impair the visibility of this beacon from
aircraft at any normal angle of approach. In the event these beacons
cannot be installed in a manner to insure unobstructed visibility of the
beacons from aircraft at any normal angle of approach, there shall be
installed two such beacons at each level. Each beacon shall be mounted
on the outside of diagonally opposite corners or opposite sides of the
tower at the prescribed height.
Paragraph 15.0, FCC Form 715 (March 1978):
On levels at approximately five-sixths, one-half and one-sixth of the
over-all height of the tower, at least one 116- or 125-watt lamp
(A21/TS) enclosed in an aviation red obstruction light globe shall be
installed on each outside corner of the structure.
Paragraph 21.0, FCC Form 715 (March 1978):
All lighting shall burn continuously or shall be controlled by a light
sensitive device adjusted so that the lights will be turned on at a
north sky light intensity level of about 35 foot candles and turned off
at a north sky light intensity level of about 58 foot candles.
Paragraph 22.0, FCC Form 715 (March 1978):
During construction of an antenna structure, for which obstruction
lighting is required, at least two 116- or 125-watt lamps (A21/TS)
enclosed in aviation red obstruction light globes, shall be installed at
the uppermost point of the structure. In addition, as the height of the
structure exceeds each level at which permanent obstruction lights will
be required, two similar lights shall be displayed nightly from sunset
to sunrise until the permanent obstruction lights have been installed
and placed in operation, and shall be positioned so as to insure
unobstructed visibility of at least one of the lights at any normal
angle of approach. In lieu of the above temporary warning lights, the
permanent obstruction lighting fixtures may be installed and operated at
each required level as each such level is exceeded in height during
construction.
FCC Form 351-B October 21, 1985 BE Page 4 of 5
<PAGE> 49
Call sign: WYSY-FM License No.: BLH-910827KB
Special operating conditions or restrictions:
--
--
THE RELATIVE FIELD STRENGTH OF NEITHER THE MEASURED HORIZONTALLY NOR
VERTICALLY POLARIZED RADIATION COMPONENT SHALL EXCEED AT ANY AZIMUTH THE
VALUE INDICATED ON THE COMPOSITE RADIATION PATTERN AUTHORIZED BY YOUR
CONSTRUCTION PERMIT BMPH-900720IC.
--
A RELATIVE FIELD STRENGTH OF 1.0 ON THE COMPOSITE RADIATION PATTERN
HEREIN AUTHORIZED CORRESPONDS TO THE FOLLOWING EFFECTIVE RADIATED POWER:
--
21.0 KILOWATTS
--
PRINCIPAL MINIMUM OF COMPOSITE RADIATION PATTERN:
--
1.73 KILOWATTS AT 5.0 DEGREES TRUE.
FCC Form 351-B October 21, 1985 BE Page 5 of 5
<PAGE> 50
SCHEDULE 1.29(e)
TO WYSY-FM
ASSET PURCHASE AGREEMENT
MAIN STUDIO AND TRANSMITTER SITE LEASES
Attached.
<PAGE> 51
Station: WYSY
Contract with: Group W Radio Subsidiary, Inc.
Start Date: 11-1-90
End Date: 10-31-95 May renew for two additional five year terms upon 90 day
prior to end of initial term.
Transaction Summary: Tower space lease for WYSY-FM's antenna and related
receivers and electronics. Currently paying $7,000 per month with monthly rent
during any renewal term to be increased by Consumer Price Index.
<PAGE> 52
ANTENNA LEASE AGREEMENT
Agreement made this 28th day of September, 1990 by and between Group W
Radio Subsidiary, Inc., a Delaware corporation, the licensee of WMAQ-AM,
Chicago, Illinois ("Group W") and Midwest Broadcasting of Chicago, Inc., the
licensee of WYSY-FM, Aurora, Illinois ("MBC" or "Lessee").
WHEREAS Group W, Lessor herein, is the owner of certain premises
situated on a 27-acre parcel (the "Site") at Bloomingdale, Illinois, as more
fully described at Attachment A hereto; and
WHEREAS Group W, licensee of WMAQ-AM Radio, has erected on said
premises one tower (the "WMAQ-AM Tower" or "Tower") of approximately 740 feet
above ground capable of supporting a number of radio and similar antennas and
associated equipment and will make available to the Lessee herein (and may make
available to other lessees) space on said Tower for the erection and
maintenance of the Lessee's antenna; and
WHEREAS, Lessee desires to broadcast from antennas located on the
WMAQ-AM Tower and Lessor desires to allow such broadcasting activities; and
NOW THEREFORE, the Parties hereto agree as follows:
1.1 Group W, for and in consideration of the rents, covenants, and
agreements herein contained on the part of the Lessee to be paid, kept and
performed, does hereby demise and let to the Lessee, and the Lessee does hereby
take and hire from the Lessor, that space (hereinafter called the "Demised
Premises") consisting of:
(a) Approximately 40 feet of vertical space on the WMAQ-AM Tower,
starting at 640 feet above ground to 700 feet (subject to approval
by Group W upon receipt of the report referred to in Section 2.5
hereof, and otherwise at the highest feasible level on the Tower) to
be used by Lessee for a 107.9 MHz transmitting antenna for the
transmitting of FM broadcasting as authorized by the Federal
Communications Commission ("F.C.C.") to be used and occupied by the
Lessee solely for FM broadcasting and the use of any subchannels
thereof.
(b) An adjacent microwave tower for the studio transmitter link ("STL")
as authorized by the F.C.C. to be used for the STL and for no other
purposes. In the event that
<PAGE> 53
technical or topographic considerations prevent use of the microwave
tower by lessee for its STL, Group W agrees that lessee may install
its STL and related equipment on the Tower.
(c) The transmitter building located at the Site.
1.2 Group W further agrees to permit the installation and operation by
Lessee of one C-band receive-only satellite dish at the Site, generally subject
to the terms and conditions of this lease as it applies to installations,
operation, maintenance and interference criteria for all other equipment
installed by Lessee. The parties hereto agree that specific terms and
conditions relative to such satellite dish shall be expressed in an Amendment
to this lease.
1.3 The initial term of this Agreement shall be 5 years, commencing on
the earlier of (i) one month after the date Lessee receives a Construction
Permit from the FCC to relocate its antenna to the WMAQ Tower, or (ii) the date
Lessee begins construction at the Site. Upon expiration, Lessee shall have the
option to renew this Agreement for two additional 5 year periods. Lessee shall
provide Group W with not less than ninety (90) days prior written notice of its
intention to exercise each of the renewal options.
1.4 As full consideration for its lease of the Demised Premises during
the initial term, Lessee shall pay and Group W shall accept the sum of $7,000
per month. In the event Lessee exercises its option to renew, the fee payable
to Group W each month during the renewal term shall be an amount equal to the
"Renewal Rental Amount" as defined below.
1.5 The term "Demised Premises" is defined for purposes hereof as the
Lessee's use of the WMAQ-AM Tower, the microwave tower and transmitter building
in common with Group W and other lessees.
1.6 "Renewal Rental Amount" shall mean the rental amount in effect at
the end of the previous term multiplied by the sum of 100% plus the aggregate
percentage change in the Consumer Price Index published by the U.S. Department
of Commerce from the beginning of the previous term.
2.1 All construction and installation activities performed at the Site
by the Lessee or its agents (i) shall be consistent with Lessee's construction
permit, F.C.C. rules and regulations, "Radio Frequency Protection Guides"
published by the American National Standards Institute, and Group W's labor
agreements, (ii) shall be limited to times reasonably acceptable to Group W,
and (iii) shall be preceded by timely notice of such activity to Group W. The
Lessee further agrees, at its own expense, to make all repairs necessary or
required as a result of any use of the Demised Premises by the Lessee.
<PAGE> 54
2.2 The Lessee agrees that it will, at its own expense, arrange (i)
with the local public utilities for electricity, with its own metering and
billing, including all necessary electrical wiring, telephone lines and cables,
and (ii) an alternative source of power. Lessee further agrees that, if
permitted, Lessee will arrange for and bear the expense of trenching a new
electrical feed line from the street to Lessee's electrical distribution center
in the transmitter building. The installation of any and all further power and
telephone lines (in addition to those existing as of the date of this
Agreement) serving the Lessee's premise shall be made by Lessee at its sole
expense.
2.3 Lessee agrees that it will, at its own expense, install all
necessary electrical wiring for the transmission of electricity or radio
frequency signals and all control circuitry from the terminal point to the
Lessee's antennas on the Tower. Lessee may be required to pay all expenses of
necessary repairs to any element of the existing ground system. Lessee shall
also measure the base impedance at the beginning and the conclusion of
installation of the transmission system.
2.4 Lessee, at its own expense, may procure and install a new permanent
antenna installation (i) on the Tower to be used by it for FM transmitting and
(ii) on the microwave tower to be used by it for the STL, and all necessary
transmission lines connecting such installation to Lessee's equipment in the
transmitter building, and will make all connections necessary for the operation
thereof. Lessee shall install at least one and may install two isocoupler
devices mounted at ground level.
If requested to do so by Group W, Lessee shall provide a separate
entrance to the transmitter building and will separate its equipment therein in
a secure location. Group W may require Lessee to install a security system
specific to Lessee's equipment in the transmitter building and independent of
the existing security system. Lessee shall also make all modifications
necessary to the existing fire protection system to expand its coverage to
areas of the transmitter building occupied by Lessees' equipment. Group W makes
no warranty whatsoever as to the adequacy or functioning of Group W's existing
security system or fire protection system in relation to Lessee's equipment.
Lessee shall bear all expenses related to interior modification of the
transmitter building, including installation of the security system and
modification of the existing fire protection system.
The plans and specifications for all construction and equipment
involved in the installation and operation of the antenna and its support
equipment anywhere at the Site and the names of all prime and sub-contractors
and/or personnel proposed for the erection thereof or related construction
anywhere at the Site shall be prepared and/or proposed by Lessee and shall be
subject to the prior written approval of Group W, which approval shall not
unreasonably be withheld, but specifically subject to Section 4 of this lease.
<PAGE> 55
2.5 Prior to any such construction or installation by Lessee,
Lessee shall have obtained, at its own expense, a structural engineering report
on the Tower and the adjacent microwave tower to be performed by Alpha Tower
Design, Inc. or other bonded corporation acceptable to Group W, and the results
of such report must be acceptable to Group W. In the event no report acceptable
to Group W can be obtained, this lease shall be cancelled.
2.6 At the conclusion of such construction and installation, Lessee
shall be required to provide radio frequency proof of performance acceptable to
Group W and to replace or modify WMAQ-AM's tuning network, if deemed necessary
by Group W.
3.1 Group W shall repair and maintain the Tower, and shall notify
Lessee of all significant repair or maintenance work to be undertaken by Group
W, but Group W shall not be responsible to the Lessee for any loss or damage
occasioned by any interruption of the use of the Tower regardless of the cause
of such interruption. Group W agrees that in repairing and maintaining the
Tower it will take all reasonable precautions to avoid any such interruption to
the broadcasting activities of the Lessee and in the event that any such
interruption does occur as a result of actions taken by Group W, Group W shall
promptly notify Lessee and will use its best efforts to correct the same as
soon as possible. If such interruption continues for a period of 15 consecutive
days, Lessee may cancel this Agreement.
3.2 Group W assumes the responsibility of meeting the requirements
of governmental authorities relating to lighting and painting of the Tower.
3.3 If at any time during the term of this lease any change or
alteration in the Tower (but not in the equipment of the Lessee thereon
mounted) is required by the F.C.C. or any federal, state or local authority
having jurisdiction which change shall exceed $150,000 in cost, Group W may
make such change or alteration at its own expense. If Group W fails to make
such change or alteration within a reasonable time after being required to do
so, then the Lessee's rights arising out of such failure shall be limited to
the right to terminate this lease upon thirty (30) days' written notice to
Group W of such termination. If such change shall be a joint responsibility of
Group W and Lessee by reason of F.C.C. action, Lessee shall have the right to
terminate this lease immediately upon notice of Group W that it does not intend
to make such change or alteration.
3.4 The Demised Premises shall be and remain the sole property of
Group W and Lessee shall have only the privilege of use of the part thereof as
herein provided. Group W acknowledges the prior first priority security
interest in all of Lessee's equipment that is held by Lessee's lender, Crestar
Bank or its Assigns.
-4-
<PAGE> 56
3.5 Any antenna to be installed by the Lessee on the Tower for its
use as provided in Section 2.3 and the transmission lines and isocouplers
connecting it to the Lessee's equipment shall be and remain the property of the
Lessee and shall be replaced and maintained by it. Changes in such antenna and
transmission lines and isocouplers (other than normal maintenance and
replacement changes) may be made by the Lessee only with the prior written
approval of Group W and in conformity with Section 4 hereof. Group W shall
arrange for Lessee to have 24 hour access to the Site for routine maintenance
and repairs, provided that, Lessee shall notify Group W of all maintenance or
repairs and obtain its consent for the scheduling of any non-routine or
extensive repair, maintenance or replacement work to be done by Lessee or its
agents on Lessee's equipment which may interfere with Group W's access to or
use of its own equipment at the Site, as more fully set forth at Paragraph 5.1
below.
4.1 Group W shall have the right to broadcast from the Tower and
the right to grant leases to others to broadcast from the Tower. Lessee,
therefore, accepts this lease under and subject to the following conditions:
4.1.1 The absolute right of Group W to cancel this lease at any time
during the term hereof, or any renewal term, on thirty (30) days' advance
notice to the Lessee, and without liability of any kind to the Lessee,
whenever, in the sole discretion of Group W, continued operation by the Lessee
under the terms of this lease creates objectionable interference (as defined in
Section 5) with Group W's broadcasting activities being conducted from the
Tower, which interference, either electrical or mechanical cannot be
immediately eliminated by the Lessee as required by Section 5; and
4.1.2 The right of Group W to require Lessee to move any of its
antennas from the point herein described to a point, selected by Group W, lower
on the Tower if, in the sole opinion of Group W, such move is necessary to
eliminate any objectionable interference (as defined in Section 5) by Lessee
with Group W's broadcasting activity being conducted from or contemplated for
such Tower, which interference cannot in Group W's sole discretion be
reasonably and immediately eliminated by any other action. Lessee agrees to
make such move at its own expense promptly after notice from Group W to do so
and failure of the Lessee to so move shall constitute a default under this
lease.
4.2 Group W will not grant an additional license to broadcast from
the Tower to any other broadcaster unless such broadcaster, to the extent
licensed by Group W, can carry on its broadcasting activities from the Tower
without causing objectionable interference (as hereinafter defined) to the
broadcasting activities being carried on at the time by Group W or other
licensees (inclusive of Lessee) then broadcasting from the Tower in accordance
with the provisions of their licenses, as provided in this Section 4. Wherever
reference is made herein to
-5-
<PAGE> 57
objectionable interference to any broadcasting activity, it shall be deemed to
mean objectionable interference as defined in Section 5.
4.3 No licensee (other than Group W or other licensees broadcasting
from the Tower as of the date of this Agreement in accordance with the
provisions of their licenses, as provided in Section 4), inclusive of Lessee,
will be permitted to initiate any broadcasting activity until there has been
full compliance with Section 4.4 hereof as to such broadcasting activity.
4.4 No licensee (other than Group W, inclusive of Lessee, may
initiate any broadcasting activity unless and until the following steps have
been taken:
(a) The structural engineering reports, plans and specific designs
for its installations have been submitted to Group W in
accordance with Section 4.5 hereof.
(b) Tests have been made, if ordered by Group W (but at such
licensee's expense inclusive of Lessee) to determine, so far as
it is practicable to do so by preliminary tests, that the
proposed broadcasting activity can be conducted without causing
objectionable interference to any broadcasting activities then
being conducted by any other licensee. Such tests shall be a
type then recognized as appropriate for such purpose.
4.5 Before any lessee on the Tower (inclusive of Lessee) shall make
any installations on the Tower in preparation for the initiation of a
broadcasting activity, structural engineering reports, plans and specific
designs for such installations shall be submitted to and approved by Group W.
The approval by Group W of such reports, plans and specific designs shall not
limit Group W's right to require full compliance with all the conditions and
provisions applicable to objectionable interference.
4.6 No change in a broadcasting activity which (i) requires the
approval of the F.C.C. for its adoption, (ii) involves a change in transmitter
equipment, or (iii) involves an installation or modification of an installation
of the Tower, and no other change which has or may have an effect upon the
conduct of other broadcasting activities from the Tower, shall be made except
upon the conditions provided in Sections 2 and 3 hereof applicable to initial
operation or installation of the antenna and its support equipment.
4.7 Lessor represents that the condition and use of the equipment
and facilities located in the Demised Premises on the date hereof comply with
all applicable laws, rules and regulations.
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5.1 Objectionable interference to a broadcasting activity shall be
deemed to exist if:
(a) A determination to that effect is made by an authorized
representative of the F.C.C.; or
(b) A condition exists which constitutes interference within
the meaning of the provisions of the Rules and Regulations of
the F.C.C. at the time in effect; or
(c) Lessee's use of the Tower, microwave tower, or
transmitter building is not consistent with all "Radio Frequency
Protection Guides" recommended now or in the future by the
American National Standards Institute; or
(d) A variation of more than 5% in annual base impedance
measurements from agreed initial baseline impedance
measurements; or
(e) There is in the judgment of Group W a material
impairment of the quality of the sound signals or WMAQ-AM, or a
licensee of Group W in any material portion of the protected
service area of such activity as such area is or may be defined
by the F.C.C. at any hour during the period of operation of such
activity, as compared with that which would be obtained if
Lessee were not broadcasting from the Tower in question or had
any equipment on such Tower; or
(f) Group W or a licensee of Group W is prevented from using
or having access to its equipment on a 24-hour per day basis to
an extent which interferes to a material degree with the
operation or maintenance of the Tower or the said equipment.
5.2 If at any time there shall be objectionable interference to any
broadcasting activity described in Section 5.1 above, Lessee shall immediately
discontinue the interfering activity, except during periods when the
broadcasting activity being interfered with is not being conducted, until such
interference can be corrected.
5.3 Whenever Lessee shall, pursuant to the requirements of Section
5.2, discontinue a broadcasting activity, it shall not resume such broadcasting
activity (except during periods when the broadcasting activity with which
interference existed is not being conducted) unless it first complies with the
conditions provided herein for engaging with the initial operation of a
broadcasting activity.
5.4 In addition to the specific obligations imposed by this
Agreement, each party will endeavor in good faith to conduct its broadcasting
activities in accordance with the intent of this
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<PAGE> 59
Agreement and will cooperate with the other licensees so as to anticipate and
prevent any objectionable interference.
5.5 Subject to the terms of Section 4 and this Section 5, Group W
agrees that Lessee's present vertical and horizontal position shall remain the
same during the entire term of this Lease.
6.1 At Group W's option Lessee agrees at the termination of this
lease, or within thirty (30) days thereafter, to remove at its own expense from
the Tower and from the Demised Premises, without damage to the Tower or the
Demised Premises, all antennas, transmission lines and other particular
installations made by Lessee or at Lessee's request which may be attached or
connected to the Tower, and to restore the Demised Premises to their original
condition. All such removal shall be accomplished in such a manner as to avoid
any interference to Group W or any other lessee and the provisions of the
subdivisions of Section 4 hereof shall be specifically applicable to such
removal activities. Any property not so removed within sixty (60) days of the
termination shall be deemed abandoned by the Lessee and may be removed by
Group W at the cost and expense of the Lessee, unless otherwise agreed to by
Group W and Lessee.
6.2 Neither this lease nor the term hereby demised shall be
assigned or transferred by the Lessee, its successors or assigns, nor shall the
Lessee sublease the whole or any part of the Demised Premises, without, in each
case, the prior written consent of Group W being first had and obtained, which
consent shall not be unreasonably withheld. This covenant not to assign or
transfer this lease shall apply also to any involuntary transfer by operation
of law, whether by execution, receivership, bankruptcy or otherwise.
7.1 Group W shall not be liable for any loss or damage to any
operations, property or injury to any person at any time in the Demised
Premises, or in any other part of the Tower, the microwave tower, or transmitter
building by reason by theft or vandalism, any action of the elements or arising
from fire, wind, explosion, water, rain, snow, steam, gases or electricity or
electro-magnetic or radio-frequency radiation, or any casualty, no matter from
what source the same may come, nor shall Group W be liable to the Lessee or to
any other person for loss, damage or injury resulting from any strikes or any
failure or inadequacy of power or equipment installed at any time in the
buildings, Tower or any other portion of the Demised Premises. The Lessee shall
give Group W prompt notice of any accident to or defects in the service
equipment, facilities or other apparatus affecting the Demised Premises. Group W
shall not be liable to the Lessee for any damage by reason of inconvenience,
annoyance or injury to business, arising from the repairing of the Demised
Premises or the Tower, or any equipment thereof. Group W shall not be liable for
consequential damages under any conditions or circumstances.
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<PAGE> 60
7.2 Lessee shall carry such additional insurance (other than
required by Section 9.2) against such risks as it shall deem appropriate. Group
W shall carry such insurance against such risks as it shall deem appropriate.
Nothing herein contained shall be interpreted to impose any obligation of Group
W to repair, replace or rebuild the Tower or any building or appurtenances
which may be damaged or destroyed by any casualty, whether insured against or
not, and all proceeds of all Group W's insurance, if any, shall be the sole
property of Group W. However, Group W shall promptly notify Lessee of its
intentions in the event of such damage.
8.1 If, during the term of this lease, all of the Demised Premises
shall be taken as a result of the exercise of the power of eminent domain or if
any part of the Demised Premises is so taken and the part not so taken is
insufficient for the reasonable operation of the Lessee's business, then, in
either of such events this lease and the term hereby granted shall cease and
expire on the date when possession shall be taken thereunder of the premises or
a part thereof.
8.2 In the event that only a part of the Demised Premises is so
taken and the part not so taken shall be sufficient in the sole opinion of
Group W for the reasonable operation of Lessee's business, this lease shall
remain unaffected.
8.3 In the event of any taking referred to in Section 8.1 or 8.2
hereof, Group W shall be entitled to and shall receive the total award made in
such proceedings, however, nothing herein provided to the contrary
notwithstanding, Lessee shall be entitled to make claim for and obtain any
award for the value of the lease, its personal property including the
transmitting and receiving facilities and its antenna, and moving expenses, to
the extent covered by the award.
8.4 In the event there is any destruction or damage to the Tower or
any building or appurtenances as the result of any casualty, or if there is any
taking of the Demised Premises as the result of the exercise of the power of
eminent domain and, in the sole opinion of Group W, the part not so destroyed,
damaged or taken, is insufficient for the reasonable operation of Group W's
broadcasting activities and/or the broadcasting activities of other Group W
lessees, and Group W elects not to restore the Tower to its previous condition,
then Group W shall have the right to immediately terminate this lease
effective upon notice to Lessee.
9.1 It is hereby expressly understood and agreed between Group W
and the Lessee that all of Lessee's equipment or property which may be on the
Demised Premises during the continuance of this lease is there at the sole risk
and hazard of the Lessee and if damaged in any manner no part of said damage is
to be charged to or borne by Group W in any case whatever regardless of cause.
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<PAGE> 61
9.2 Lessee agrees that during the term of this lease or any renewal
thereof it will, at its expense, provide insurance to pay, on behalf of Group W
and the Lessee, all sums which they or either of them shall become legally
obligated to pay as damages because of bodily injury or death resulting
therefrom, including workmen's compensation, as applicable, and property
damage, sustained by any person or corporation, arising out of the construction
or installation referred to in Section 2 above, or maintenance, operation or
use of the premises by the Lessee, including the use of the Tower, antennas or
other equipment placed thereon, provided, that the Lessee's obligation to
provide insurance against damages for bodily injury and death shall be limited
to two million dollars ($2,000,000) for each person, and to two million dollars
($2,000,000) for each event, and that the Lessee's obligation to provide
insurance against property damage shall be limited to five hundred thousand
dollars ($500,000) for each event. Lessee shall also deliver to Group W from
time to time a certificate or other evidence of the maintenance of the
aforesaid insurance or a copy of the policy, as Group W may request. Said
policy shall contain a clause providing that said insurance shall not be
cancelled except upon the giving of thirty (30) days written notice to Group W.
10.1 The Lessee agrees to indemnify and save harmless Group W against
and from any and all claims by or on behalf of any person or persons, firm or
firms, corporation or corporations, arising from the conduct or management of or
from any work or thing whatsoever done by the Lessee of its employees, agents or
contractors in or about the Demised Premises, and will further indemnify and
save Group W harmless against and from any and all claims arising from any
breach or default on the part of the Lessee to be performed, pursuant to the
terms of this lease, or arising from any act or negligence of the Lessee, or any
of its employees, agents, or contractors or arising from any accident, injury of
damage whatsoever caused to any person, firm or corporation occurring during the
term of this lease in or about the Demised Premises as a result of such failure
on Lessee's part or from its negligence, and from and against all costs, counsel
fees, expenses and liabilities incurred in or about any such claim or action or
proceeding brought thereon; and in case any action or proceeding be brought
against Group W by reason of any such claim, the Lessee upon notice from Group W
covenants to resist or defend at Lessee's expense such action or proceeding by
counsel reasonably satisfactory to Group W.
11.1 The Lessee covenants and agrees to pay, and to indemnify Group
W against all legal costs and charges, including reasonable counsel fees,
lawfully and reasonably incurred in obtaining possession of the Demised
Premises after any default of the Lessee or upon expiration or earlier
termination of the term of this lease or in enforcing any covenant or
agreement of the Lessee herein contained.
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<PAGE> 62
12.1 The Lessee shall pay all assessment and taxes during said term
assessed against or levied upon any property of the Lessee situated in the
Demised Premises which shall be or become a lien upon any of the buildings or
the land upon which it is situated, and if the Lessee shall fail to pay the
same, then Group W may pay the same for the account of the Lessee, and the
Lessee shall pay Group W the amount thereof as additional rent. Should any
equipment or fixtures be installed or affixed to or upon the Demised Premises,
and should the taxes assessed upon or levied against the premises be increased
on account of such equipment or fixtures, then the amount of such increases in
taxes shall be paid by the Lessee to Group W as additional rent.
13.1 This lease is made upon the EXPRESS CONDITION that if the Lessee
shall neglect or fail to perform any of the covenants, agreements or conditions
herein contained on the Lessee's part to be performed or observed, or if the
estate hereby created shall be taken on execution or other process of law, or
if any assignment shall be made of the Lessee's property for the benefit of
creditors, or if a receiver or other similar officer shall be appointed to take
charge of any property of or to wind up the affairs of the Lessee, and if the
proceeding in which said receiver or other similar officer is appointed and is
not dismissed within ninety (90) days after such appointment, or if a petition
in bankruptcy (including with hereby limiting the generality of the foregoing,
a petition for corporate reorganization or other relief under the Bankruptcy
Laws) shall be filed by or against the Lessee, then and in any one of the said
cases and in the event of any breach of a material term or condition of this
lease by the Lessee, Group W lawfully may immediately or at any time
thereafter, as herein specified, enter into and upon the Demised Premises or
any part thereof in the name of the whole and repossess the same as of the
Lessor's former estate, and expel the Lessee and those claiming through or
under the Lessee, and remove the effects of both or either (forcibly if
necessary) without being deemed guilty of any manner of trespass and without
prejudice to any remedies for arrears of rent or for breach of covenant, and
upon entry as aforesaid the Lessee's estate shall end.
14.1 Group W expressly makes no representation or warranty whatsoever
concerning the applicability of the planning or zoning regulations of any
governmental authority to Lessee's installation or operation of an antenna and
its support equipment at the Site. In the event approval of such governmental
authority is required, Lessee shall take all actions and bear all costs
associated with the approval process. Nothing in this lease shall be binding
upon Group W or Lessee which is or becomes contrary to governmental regulation.
If such regulation materially impairs the ability of either party to perform
under this lease, the lease shall immediately terminate; if such regulation does
not materially impair the ability to either party to perform under this lease,
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<PAGE> 63
then this lease shall be modified to be in accord with such regulation and
shall otherwise continue in effect, except that no such modification shall
require either party to expend any sum in excess of $100,000 in order to
comply.
15.1 Any notice or communication given pursuant to this lease shall
be in writing and delivered or mailed certified or registered mail, postage
prepaid (mailed notices shall be deemed given 5 days after mailing). All
notices or communications (other than rent payments) shall be sent as follows:
If to Licensee:
Westinghouse Broadcasting Company, Inc.
888 Seventh Avenue
New York, New York 10106
Attn: Vice President &
General Counsel
With a copy to:
WMAQ-AM
NBC Tower
455 No. Cityfront Plaza
Chicago, IL 60611
Attn: Controller
If to Licensor:
Midwest Broadcasting of Chicago, Inc.
620 Eola Road
Aurora, IL 60504
Attn: General Manager
With a copy to:
Beasley Broadcast Group
3033 Riviera Drive
Naples, FL 33940
Attn: General Counsel
Rent Payments shall be sent as follows:
Westinghouse Broadcasting Company, Inc.
c/o WMAQ-AM
NBC Tower
455 N. Cityfront Plaza
Chicago, IL 60611
Attn: Controller
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<PAGE> 64
16.1 This lease constitutes the entire agreement between the
parties, superseding all previous agreements, negotiations and understandings
whether oral or written. This lease may be amended or modified only by a
writing signed by both parties. This lease was negotiated in New York City and
shall be governed by and construed in accordance with the laws of the State of
New York.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first written above.
WESTINGHOUSE BROADCASTING COMPANY, INC.
("GROUP W")
By: /s/ Illegible Signature
------------------------------------
MIDWEST BROADCASTING OF CHICAGO, INC.
---------------------------------------
("Lessee")
By: /s/ George G. Beasley, President
------------------------------------
0056B
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<PAGE> 65
ATTACHMENT A
The property is legally described:
That part of Sections 22 and 27, Township 40 North, Range 10 East of the
Third Principal Meridian, described by beginning at the northeast corner of
the NE 1/4 of said Section 27; thence South along the East Line of said NE
1/4 Section 27, 1.35 ch. (89.10 feet); thence Westerly along a line
parallel with the North line of said NE 1/4 of Section 27, 799.69 feet;
thence North parallel with the East line and the East line extended South
of the SE 1/4 of said Section 22, 1549.40 ft. to the center line of Army
Trail Road; thence Southeasterly along the center line of said road 809.25
feet to the East Line of said SE 1/4 of Section 22; thence South along said
East line of the SE 1/4 of Section 22, 1303.24 feet to the Place of
Beginning containing 27.0 acres, more or less, in DuPage County Illinois.
<PAGE> 66
OFFICE AND STUDIO LEASE
DATE OF LEASE TERM OF LEASE MONTHLY LEASE
Beginning Ending
December 31, 1993 12/31/93 12/31/94
$2,385.75
Location of Premises: A portion of 620 Eola Road, Aurora, Illinois 60504 (the
"Building"), consisting of approximately 2801 square
feet exclusive use, and 370 square feet common area, and
occasional use of conference room, a more complete
description of which is set forth in the attached
sketches. (Exhibit A)
(Beginning as provided in Paragraph 19, approximately
100 sq. ft. per Exhibit B.)
Purpose: Operation of an FM Radio Broadcasting Station Studio and Offices and
no other purpose.
LESSEE: LESSOR:
WCKG, Inc. BIG Broadcasting Company, Inc.
1400 Lake Hearn Drive, N.E. c/o K. Richard Jakie
Atlanta, Georgia 30319 1400 Douglas Avenue
Elgin, Illinois 60120
In consideration of the mutual covenants and agreements herein stated,
Lessor hereby leases to Lessee and Lessee hereby leases from Lessor solely for
the above purposes the premises designated above (the "Premises"), together
with the appurtenances thereto, for the above Term.
1. RENT: Lessee shall pay Lessor or Lessor's agent as rent for the
Premises the sum stated above, monthly in advance, until termination of this
Lease, at Lessor's address stated above or such other address as Lessor may
designate in writing.
2. HEAT: NON-LIABILITY OF LESSOR: Lessor will, when required by the
season, furnish at its own expense heat and air conditioning for the demised
Premises, except when prevented by accidents and delays beyond Lessor's
reasonable control.
<PAGE> 67
3. HALLS: Lessor will cause the common areas, halls, corridors and other parts
of the Building adjacent to the Premises to be lighted, cleaned and generally
cared for, accidents and delays beyond Lessor's reasonable control excepted.
4. RULES AND REGULATIONS: The rules and regulations at the end of this Lease
constitute a part of this Lease, Lessee shall observe and comply with them, and
also with such further reasonable rules and regulations as may later be
required by Lessor for the necessary, proper and orderly care of the Building
in which the Premises are located.
5. SURRENDER OF PREMISES: Lessee shall quit and surrender the Premises at the
end of the term in as good condition as reasonable use thereof will permit,
with all keys thereto, and shall not make any alterations in the Premises
without the written consent of Lessor, which consent shall not be unreasonably
withheld, and all alterations which may be made by either party thereto upon
the Premises, except movable furniture and fixtures put in at the expense of
Lessee, shall be the property of Lessor, and shall remain upon and be
surrendered with the Premises as a part of thereof at the termination of this
Lease.
6. NO WASTE OR MISUSE: At the termination of this Lease, Lessee shall restore
the Premises to Lessor, with glass of like kind and quality in the several
doors and windows thereof, entire and unbroken, as is now therein, and will not
allow any waste of the water or misuse or neglect the water or light fixtures
on the Premises, and will pay for all damage to the Premises, including damage
to the premises of other tenants of the Building, caused by such waste or
misuse.
7. TERMINATION, ABANDONMENT, RE-ENTRY, RELETTING: Within twenty days after
termination of this Lease, by lapse of time or otherwise, Lessee agrees to
yield up immediate and peaceable possession of the Premises to Lessor, and
failing to do so, to pay as liquidated damages, for the whole time such
possession is withheld, the sum of $200.00 Dollars per day, and it shall be
lawful for the Lessor or his legal representative at any time thereafter,
without notice, to re-enter the Premises or any part thereof, either with or
without process of law, to expel, remove and put out the Lessee or any person
or persons occupying the same, using such force as may be necessary so to do,
and to repossess and enjoy the Premises again as before this Lease, without
prejudice to any remedies which might otherwise be used for arrears of rent or
preceding breach of covenant; or in case the Premises shall be abandoned,
deserted, or vacated, the Lessee hereby authorizes and requests the Lessor as
Lessee's agent to re-enter the Premises and remove all articles found therein,
place them in some regular storage warehouse or other suitable storage place,
at the cost and expense of Lessee, and proceed to re-rent the Premises at the
Lessor's option and discretion and apply all money so received after paying the
expenses of such removal toward the rent accruing under this Lease. This request
shall not in any way be construed as requiring any compliance therewith on the
part of the Lessor.
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<PAGE> 68
8. LESSOR NOT LIABLE: Except as a result of Lessor's intentional acts,
gross negligence or other events covered by Lessor's insurance (a "Permitted
Event"), Lessor shall not be liable for any loss of property or defects in the
Building or in the Premises, or any accidental damages to the person or
property of the Lessee in or about the Building or the Premises, from water,
rain or snow which may leak into, issue or flow from any part of the Building
or the Premises, or from the pipes or plumbing works of the same. Except in
connection with a Permitted Event, the Lessee hereby covenants and agrees to
make no claim for any such loss or damage at any time. The Lessor shall not be
liable for any loss or damage of or to any property placed in any storeroom or
storage place in the Building, such storeroom or storage place being furnished
gratuitously, and no part of the obligations of this Lease.
9. QUIET ENJOYMENT: Lessor agrees and covenants that Lessee, upon paying
the rent and satisfying its other obligations hereunder, shall be permitted to
occupy the Premises for the duration of this Lease without hinderance or
interference by Lessor or any person or entity claiming under Lessor.
10. PLURALS; SUCCESSORS: The words "Lessor" and "Lessee" wherever used in
this Lease shall be construed to mean Lessors or Lessees in all cases where
there is more than one Lessor or Lessee, and to apply to individuals, male or
female, or to firms or corporations, as the same may be described as Lessor or
Lessee herein, and the necessary grammatical changes shall be assumed in each
case as though fully expressed. All covenants, promises, representations and
agreements herein contained shall be binding upon, apply and inure to the
benefit of Lessor and Lessee and their respective heirs, legal representatives,
successors and assigns.
11. Except as provided in this Section 11, neither party may assign its
rights or obligations under this Lease without the prior written consent of the
other party. Lessee hereby agrees that Lessor may assign its rights and
obligations under this Lease to any party that acquires substantially all of
the assets of radio broadcast station WBIG(AM), Aurora, Illinois, from Lessor
without the prior written consent of Lessee. Lessor hereby agrees that Lessee
may assign its rights and obligations under this Lease to any party that
acquires substantially all of the assets of radio broadcast station WYSY-FM,
Aurora, Illinois, from Lessee without the prior written consent of Lessor.
12. This Lease may be terminated by Lessee on not less than 30 days written
notice to Lessor.
13. Lessor will provide gas and electricity, and Lessee will pay 58% of the
monthly amount of these utilities during the term of the Lease, on provision by
the Lessor of the paid bills to the Lessee; provided; however, that Lessee
shall not be responsible for any gas or electricity charges related to the
WBIG(AM) transmission facility.
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<PAGE> 69
14. Lessee will maintain employees on the Premises during usual business hours,
who will be responsible for security to the Premises during the absence of the
Lessor and its agents and employees.
15. Normal capital repairs and improvements and maintenance to the Building and
the Premises will be provided by the Lessor during the term of the Lease.
16. REPRESENTATIONS AND WARRANTIES: Each party represents and warrants to the
other party that:
(a) it has full corporate power and authority to enter into and perform this
Lease and the transactions contemplated hereby;
(b) the execution, delivery and performance of this Lease by such party have
been duly and validly authorized by all necessary corporate action on
its part;
(c) this Lease has been duly executed and delivered by such party and
constitutes its valid and binding obligation enforceable in accordance
with its terms;
(d) such party's execution, delivery and performance of this Lease (i) do
not require the consent of any third party, (ii) will not violate any
provisions of such party's corporate charter or bylaws, (iii) will not
violate any applicable law, judgment, order, injunction, decree, rule,
regulation, or ruling of any governmental authority, and (iv) will not
either alone or with the giving of notice or the passage of time or
both, conflict with, constitute grounds for termination of, or result in
a breach of the terms, conditions or provisions of, or constitute a
default under any agreement, instrument, license or permit to which it
is now subject.
17. Lessee hereby agrees to indemnify and hold Lessor harmless of, from, and
against any and all claims, costs, expenses, damages and liabilities, including
reasonable attorneys' fees, incurred by Lessor and resulting from or incident to
the use, operation or maintenance of the Premises by Lessee or Lessee's agents
during the term of this Lease or the failure by Lessee to satisfy its
obligations hereunder. Lessor hereby agrees to indemnify and hold Lessee
harmless of, from, and against any and all claims, costs, expenses, damages and
liabilities, including reasonable attorneys' fees, incurred by Lessee and
resulting from or incident to the use, operation or maintenance of the Building
by Lessor or Lessor's agents during the term of this Lease or the failure by
Lessor to satisfy its obligations hereunder.
18. This Lease shall be governed by and construed in accordance with the laws of
the State of Illinois.
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<PAGE> 70
19. Commencing upon the termination of this Lease with respect to the
Premises, Lessor shall lease to Lessee, on the terms and conditions specified in
this Lease, except to the extent modified by this Section 19, approximately 100
square feet of space in the Building, which space is more particularly described
on Exhibit B hereto, for the purpose of Lessee's operation of a main studio and
public reference room for its FM station (the "Main Studio Lease"). The term of
the Main Studio Lease shall be ten years (the "Initial Term"); provided,
however, that the term of the Main Studio Lease shall be automatically extended
for an additional five (5) year period if neither Lessor nor Lessee gives
written notice to the other of its intention to terminate the Main Studio Lease
before the date that is ninety (90) days prior to the end of the Initial Term;
and provided further that, the Main Studio Lease shall be automatically extended
for an additional five (5) year period at the end of such five (5) year
extension period if neither Lessor nor Lessee gives written notice to the other
of its intention to terminate the Main Studio Lease before the date that is
ninety (90) days prior to the expiration of such five (5) year extension period.
The annual rent for the Main Studio Lease shall be $2,500.00 payable yearly in
advance. Lessee shall also pay Lessor 10% of the monthly cost of gas and
electricity for the Building on provision by the Lessor of the paid bills to
Lessee. Upon the commencement of the Main Studio Lease, the term "Premises" as
used in this Lease shall be deemed to mean the space described on Exhibit B
hereto for all purposes under this Lease.
20. Counterparts. This agreement may be signed in multiple counterparts, all of
which together shall constitute one agreement binding on the other parties
hereto.
WITNESS the hands and seals of the parties hereto, as of the Date of Lease
stated above.
WCKG, Inc. BIG Broadcasting Company, Inc.
By: /s/ Robert F. (illegible) By:
-------------------------------- --------------------------------
Lessee Lessor
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<PAGE> 71
19. Commencing upon the termination of this Lease with respect to the
Premises, Lessor shall lease to Lessee, on the terms and conditions specified in
this Lease, except to the extent modified by this Section 19, approximately 100
square feet of space in the Building, which space is more particularly described
on Exhibit B hereto, for the purpose of Lessee's operation of a main studio and
public reference room for its FM station (the "Main Studio Lease"). The term of
the Main Studio Lease shall be ten years (the "Initial Term"); provided,
however, that the term of the Main Studio Lease shall be automatically extended
for an additional five (5) year period if neither Lessor nor Lessee gives
written notice to the other of its intention to terminate the Main Studio Lease
before the date that is ninety (90) days prior to the end of the Initial Term;
and provided further that, the Main Studio Lease shall be automatically extended
for an additional five (5) year period at the end of such five (5) year
extension period if neither Lessor nor Lessee gives written notice to the other
of its intention to terminate the Main Studio Lease before the date that is
ninety (90) days prior to the expiration of such five (5) year extension period.
The annual rent for the Main Studio Lease shall be $2,500.00 payable yearly in
advance. Lessee shall also pay Lessor 10% of the monthly cost of gas and
electricity for the Building on provision by the Lessor of the paid bills to
Lessee. Upon the commencement of the Main Studio Lease, the term "Premises" as
used in this Lease shall be deemed to mean the space described on Exhibit B
hereto for all purposes under this Lease.
20. Counterparts. This agreement may be signed in multiple counterparts, all of
which together shall constitute one agreement binding on the other parties
hereto.
WITNESS the hands and seals of the parties hereto, as of the Date of Lease
stated above.
WCKG, Inc. BIG Broadcasting Company, Inc.
By: By: /s/ K. Richard illegible
-------------------------------- --------------------------------
Lessee Lessor
5
<PAGE> 72
RULES AND REGULATIONS
1. No sign, advertisement or notice shall be inscribed, painted or affixed
on any part of the outside or inside of Building, except on the glass of the
doors and windows of the room leased and on the directory board, and then only
of such color, size, style and material as shall be first specified by the
Lessor in writing. No showcase shall be placed in front of Building by Lessee,
without the written consent of Lessor. The Lessor reserves the right to remove
all other signs and showcases without notice to the Lessee, at the expense of
the Lessee. At the expiration of the term Lessee is to remove all of its signs
from such windows, doors and directory board.
2. Lessee shall not put up or operate any steam engine, boiler, machinery
or stove upon the Premises, or carry on any mechanical business on Premises, or
use or store inflammable fluids in the Premises without the written consent of
the Lessor, and all stoves which may be allowed in the Premises shall be placed
and set up according to the city ordinance.
3. No additional locks shall be placed upon any doors of said room without
the written consent of the Lessor; and the Lessee will not permit any duplicate
keys to be made (all necessary keys to be furnished by the Lessor) and upon the
termination of this lease, Lessee will surrender all keys of Premises and
Building.
4. All safes shall be carried up or into Premises at such times and in
such a manner as shall be specified by the Lessor; the Lessor shall in all
cases retain the power to prescribe the proper position of such safes.
5. No person or persons other than the janitor of this Building shall be
employed by Lessee for the purpose of taking charge of the Premises without the
written consent of Lessor. Any person or persons so employed by Lessee (with
the written consent of the Lessor) must be subject to and under the control and
direction of the janitor of the Building in all things relating to the Building
and the Premises. The agent and janitor of the Building shall at all times keep
a pass key and be allowed admittance to the Premises, to cover any emergency of
fire, or required examination that may arise.
6. The Premises leased shall not be used for the purpose of lodging or
sleeping rooms or for any illegal purposes.
7. The rent of an office will include occupancy of office, water to
Lessor's standard fixtures, heat, and air conditioning, except as otherwise
provided herein.
8. If Lessee desires telegraphic or telephonic connections, the Lessor
will direct the electricians as to where and how the wires are to be
introduced, and without such written directions endorsed on this
6
<PAGE> 73
lease no boring or cutting for wires will be permitted.
9. If Lessee desires Venetian or other awnings or shades over and outside
of the windows, to be erected at the Lessee's expense, they must be of such
shape, color, material and make as may be prescribed by the Lessor in writing.
10. The light through the transoms opening into the hall shall not be
obstructed by the Lessee. Birds, dogs, or other animals shall not be allowed in
the Building. All tenants and occupants must observe strict care not to leave
their windows open when it rains or snows, and for any default or carelessness
in these respects, or any of them, shall make good all injuries sustained by
other tenants, and also all damage to the Building resulting from such default
or carelessness.
11. No packages, merchandise or other effects shall be allowed to remain in
the halls at any time.
12. The Lessor reserves the right to make such other and further reasonable
rules and regulations as in its judgment may from time to time be needful for
the safety, care and cleanliness of the Premises and for the preservation of
good order therein.
13. It is understood and agreed between the Lessee and the Lessor that no
assent or consent to change in or waiver of any part of this lease has been or
can be made unless done in writing and signed by the Lessor and Lessee; and in
such case it shall operate only for the time and purpose expressly stated
therein.
7
<PAGE> 74
EXHIBIT A (p.1)
MAIN
FLOOR
PLAN
<PAGE> 75
Exhibit A (p.2)
UPPER LEVEL
<PAGE> 76
EXHIBIT B
UPPER LEVEL
<PAGE> 77
SCHEDULE 1.2(f)
TO WYSY-FM
ASSET PURCHASE AGREEMENT
OFFICE LEASE
Attached.
<PAGE> 78
M & J WILKOW MANAGEMENT CORPORATION
-----------------------------------
LEASE
TENANT: Infinity Broadcasting Corporation of Illinois
a Delaware corporation
PREMISES: Suite 1200
<PAGE> 79
TABLE OF CONTENTS
1. Definitions........................................................... 2
2. Lease of Premises and Term............................................ 3
3. Rent.................................................................. 3
4. Base Rent Adjustment.................................................. 3
5. Service............................................................... 7
6. Use of Premises....................................................... 9
7. Condition of Premises................................................. 10
8. Inability to Deliver Possession....................................... 10
9. Care and Maintenance.................................................. 10
10. Alterations........................................................... 10
11. Access to Premises.................................................... 12
12. Insurance............................................................. 12
12. Waiver of Subrogation................................................. 13
14. Untenantability....................................................... 13
15. Eminent Domain........................................................ 14
16. Waiver of Claims and Indemnity........................................ 14
17. Assignment/Subletting................................................. 15
18. Subordination......................................................... 17
19. Certain Rights Reserved to the Landlord............................... 18
20. Holding Over.......................................................... 19
21. Landlord's Remedies................................................... 19
22. Default Under Other Lease............................................. 22
23. Surrender of Possession............................................... 23
24. Relocation of Tenant.................................................. 23
25. Covenant Against Liens................................................ 23
26. Security Deposit...................................................... 23
27. Rules and Regulations................................................. 24
28. Notices............................................................... 25
29. Nonwaiver............................................................. 25
30. Tenant Authority to Execute Lease..................................... 25
31. Real Estate Brokers................................................... 25
32. Miscellaneous......................................................... 25
33. Landlord.............................................................. 27
34. Quiet Enjoyment....................................................... 28
35. Early Termination..................................................... 28
EXHIBITS:
Exhibit A - Floor Plan
Exhibit B - Guaranty
Exhibit C - Rules and Regulations
Exhibit D - Satellite & Microwave Antenna
License Agreement
- 1 -
<PAGE> 80
THIS LEASE, made and entered into as of this 7th day of July 1992 by and
--- ---- --
between M&J WILKOW MANAGEMENT CORPORATION, as agent for the beneficiary of
------------------------------------
American National Bank and Trust Company of Chicago, as Trustee under Trust
- - -------------------------------------------------------------------------------
No. 32115
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
(hereinafter referred to as "Landlord") and Infinity Broadcasting
- - ------------- ---------------------
Corporation of Illinois, a Delaware corporation d/b/a (hereinafter referred to
- - -----------------------------------------------------
as "Tenant"); radio stations WJJD and WJMK
W I T N E S S E T H:
1. DEFINITIONS.
For the purpose of this Lease, the terms set forth below shall have the
meanings or be assigned the amounts corresponding thereto:
A. Building 180 North Michigan Avenue, Chicago, Illinois
-------------------------------------------------------
B. Premises Suite 1200 as shown outlined on the floor plan attached
----
hereto as Exhibit "A" on the 12th floor of the Building.
----
C. Commencement Date June 1 1992
-------------------------------------------------- --
D. Termination Date May 31 2002
-------------------------------------------------- --
E. Term Ten (10) years
-------------------------------------------------------
F. Tax Base An amount equal to actual Taxes attributable to calendar
-------------------------------------------------------
year 1992
-------------------------------------------------------
G. Expense Base(1) An amount equal to actual Expenses attributable to
-------------------------------------------------------
calendar year 1992
-------------------------------------------------------
H. Base CPI Amount $39,261.51
-------------------------------------------------------
I. Initial CPI
Adjustment Date June 1 1993
--------------------------------------------------- --
J. Base CPI Date June 1 1992
--------------------------------------------------- --
K. Tenant's Proportion 4.28%
-------------------------------------------------------
L. Security Deposit $26,174.00
-------------------------------------------------------
M. Rentable Area of
Premises 9,238 square feet
-------------------------------------------------------
N. Rentable Area of
Building 216,010 square feet
-------------------------------------------------------
O. Cooperating Broker M & J Wilkow Brokerage Services Corporation
-------------------------------------------------------
P. Use radio broadcasting studios, production and transmission
-------------------------------------------------------
facilities and related offices
-------------------------------------------------------
Q. Managing Agent M & J Wilkow Management Corporation
180 North Michigan Avenue
Chicago, Illinois 60601
R. Annual Base Rental $157,046.04(2)
-------------------------------------------------------
S. Monthly Base Rental $13,087.17(2)
-------------------------------------------------------
T. Rent A collective term for Base Rent, Rent Adjustment
Deposits, Rent Adjustments and all other amounts
becoming due from Tenant to Landlord hereunder.
U. Tenant Address The Premises
-------------------------------------------------------
(if not the Premises)
-------------------------------------------------------
- 2 -
See Inserts (1) and (2) on page 2(a) hereof.
<PAGE> 81
Insert (1)
In determining the Expense Base, Landlord shall have the right to
amortize certain Expenses over a period of years and to make equitable
adjustments where an actual line item increment of Expenses in a particular
year is not representative of what is typical for a calendar year.
Insert (2)
Base Rental shall be abated during the period June 1, 1992 through May
31, 1993 ("Abatement Months"). Such Base Rental otherwise due and payable for
the Abatement Months. In addition to all other remedies provided herein, shall
become immediately due and payable to Landlord upon the occurrence of a
material event of default by Tenant under this Lease, which occurrence is prior
to May 31, 1995.
2(a)
<PAGE> 82
2. LEASE OF PREMISES AND TERM.
Landlord hereby leases to Tenant, and Tenant accepts the Premises set
forth in Section 1 and being described in the plan attached hereto as Exhibit
"A" in the Building for the Term set forth in Section 1 hereof, unless sooner
terminated as provided herein, commencing on the Commencement Date and ending on
the Termination Date. The Premises shall be occupied and used by the Tenant for
the Use as defined in Section 1 hereof and no other purpose, subject to the
terms and conditions herein contained. If the Commencement Date falls on a day
other than the first day of the calendar month, the Term shall end on the day
which is ten (10) years from the last day of the calendar month in which the
Commencement Date falls.
3. RENT.
The Tenant shall pay as "Base Rent" to the Managing Agent at the address
set forth in Section 1 hereof or to such other person or at such other place as
Landlord may direct in writing, the Annual Base Rental in equal monthly
installments in the amount of the Monthly Base Rental in advance on or before
the first day of each month of the Term, except that the first payment of
Monthly Base Rental shall be due and payable concurrently with the execution of
this Lease by Tenant and Landlord. All such rent shall be paid without any
notice or demand, and without abatement (except as otherwise provided in this
Lease) set-off or deduction whatsoever. Unpaid rent shall be subject to a late
charge pursuant to Section 32.M and shall also bear interest at the rate set
forth in Section 21.I hereof, from the date due until paid.
4. BASE RENT ADJUSTMENT.
In addition to the Base Rent, the Tenant shall pay as additional rent,
the "Rent Adjustments" (as hereinafter defined) without set-off or deduction to
the Managing Agent in the manner hereinafter set forth. The Rent Adjustments
shall be abated during the period June 1, 1992 through May 31, 1993 ("Abatement
Months"). Such Rent Adjustments otherwise due and payable for the Abatement
Months, in addition to all other remedies provided herein, shall become
immediately due and payable to Landlord upon the occurrence of a material event
of default by Tenant under the Lease, which occurrence is prior to May 31, 1995.
A. For the purposes of this Lease:
(i) The term "Calendar Year" shall mean each calendar year
or a portion thereof during the Term.
(ii) The term "Expenses" shall mean and include all expenses,
costs, fees and disbursements paid or incurred by or on behalf of the
Landlord for owning, managing, operating, maintaining and repairing the
Building and the personal property used in conjunction therewith (said
Building and personal property being herein collectively called the
"Project"), including (without limitation) the cost of electricity,
steam, water, sewer, gas, fuel, heating, lighting, air conditioning,
window cleaning, janitorial services, insurance, including but not
limited to, fire, extended coverage, liability, workmen's compensation,
elevator, or any other insurance carried by the Landlord and applicable
to the Project, painting, uniforms, management fees, supplies, sundries,
sales or use taxes on supplies or services, cost of wages and salaries
of all persons engaged in the operation, administration, maintenance and
repair of the Project, and fringe benefits, including social security
taxes, unemployment insurance taxes, cost for providing coverage for
disability benefits, cost of any pensions, hospitalization, welfare or
retirement plans, or any other similar or like expenses incurred under
the provisions of any collective bargaining agreement, or any other cost
or expense which Landlord pays or incurs to provide benefits for
employees so engaged in the operation, administration, maintenance and
repair of the Project, the charges of any independent contractor who,
under contract with the Landlord or its representatives, does any of the
work of operating, maintaining or repairing of the Project, legal and
accounting expenses, or any other expense or charge, whether or not
hereinbefore mentioned, which in accordance with generally accepted
accounting or management principles would be considered as an expense of
owning, managing, operating, maintaining or repairing the Project.
Expenses shall not include costs or other items included within the
meaning of the term "Taxes" (as hereinafter defined), cost of
alterations, restorations of the premises of tenants of the Building,
costs of capital improvements to the Building, depreciation charges,
interest and principal payments on mortgages (and any fees or charges
imposed for late payment of any such amounts), ground rental payments,
commissions or concessions to tenants, advertising costs to procure
tenants, interest, penalties, or fees paid for the late payment of any
amount otherwise within the definition of Expenses or any Taxes,
compensation paid to any officer, executive or partner of Landlord or
its agents, or their respective affiliates, overhead expenses for
Landlord's personnel not directly or regularly involved in the
management of the Project, any cost (including Taxes) that is reimbursed
to Landlord by tenants or that is separately charged to and payable by
tenants, cost of repairs or other work occasioned by casualty which cost
is reimbursed by insurance, costs relating to maintaining Landlord's
existence as any particular legal entity, expenses directly resulting
from Landlord's gross negligence or willful misconduct or any violation
by Landlord of the terms of any lease for space in the Building,
expenses of enforcing or negotiating the terms of tenant leases
(including legal and experts' fees), and real estate brokerage and
leasing commissions, except as hereinafter otherwise provided.
Notwithstanding anything contained in this clause (ii)
of Section 4.A to the contrary,
(a) The cost of any capital improvements to the
Building made after the date of this Lease which usually reduce Expenses
or which are required under any governmental laws, regulations,
insurance requirements or ordinances which were not applicable to the
Building at the time this Lease was executed, amortized over such
reasonable period as Landlord shall determine, together with interest on
the unamortized cost of any such improvement (at the corporate base
interest rate in effect at the First National Bank of Chicago on the
date the cost of such improvement was incurred) shall be included in
Expenses.
- 3 -
<PAGE> 83
(iii) The term "Rent Adjustments" shall mean all amounts owned
by Tenant as additional rent pursuant to Section 4.B.
(iv) The term "Rent Adjustment Deposit" means an amount equal
to Landlord's estimate of Rent Adjustments due for any Calendar Year.
(v) The term "Taxes" shall mean real estate taxes,
assessments, sewer rents, rates and charges, transit taxes, taxes based
upon the receipt of rent, and any other federal, state or local
governmental charge, general, special, ordinary or extraordinary (but
not including general income or franchise taxes [other than the Illinois
Personal Property Replacement Income Tax] or any other taxes imposed
upon or measured by income or profits, unless the same shall be imposed
in lieu of Taxes as herein defined or unless same shall be specifically
imposed upon income derived from rents), which may now or hereafter be
levied or assessed against the Project or any portion thereof for any
Calendar Year during the Term. In case of special Taxes or assessments
which may be payable in installments, only the amount of each
installment paid during a Calendar Year shall be included in Taxes for
such Calendar Year. Except as provided in the preceding sentence, all
references to Taxes "for" a particular year shall be deemed to refer to
taxes levied, assessed or otherwise imposed for such year without regard
to when such taxes are payable. Taxes shall also include any personal
property taxes (attributable to the year in which paid) imposed upon the
furniture, fixtures, machinery, equipment, apparatus, systems and
appurtenances used in connection with the operation of the Building.
Taxes also include the Landlord's reasonable costs and expenses
(including reasonable attorney's fees) in contesting or attempting to
reduce any Taxes. Notwithstanding anything contained in this clause (v)
of Section 4.A to the contrary, if at any time the method of taxation
then prevailing shall be altered so that any new or additional tax
assessment, levy, imposition or charge or any part thereof shall be
imposed upon Landlord in place or partly in place of any such Taxes, or
contemplated increase therein or in addition to any such Taxes, and
shall be measured by or be based in whole or in part upon the Real
Property or the rents or other income therefrom, then all such new
taxes, assessments, levies, impositions or charges or part thereof, to
the extent that they are so measured or based, shall be included in
Taxes levied, imposed or assessed against the Real Property to the
extent that such items would be payable if the Real Property were the
only property of Landlord subject thereto and the income received by
Landlord from the Real Property were the only income of Landlord.
(vi) "Consumer Price Index" or "CPI" means the Consumer Price
Index for Chicago, Illinois for All Urban Consumers, all Items of the
United States Bureau of Labor Statistics (1982 - 84 = 100). If the
Bureau of Labor Statistics substantially revises the manner in which the
Consumer Price Index is determined, an adjustment shall be made in the
revised index which would produce results equivalent, as nearly as
possible, to those which would be obtained if the Consumer Price Index
had not been so revised. If the 1982 - 84 average shall no longer be
used as an index of 100, such change shall constitute a substantial
revision. If the Consumer Price Index becomes unavailable to the public
because publication is discontinued, or otherwise, Landlord shall
substitute therefor, a comparable index based upon changes in the cost
of living or purchasing power of the consumer dollar published by any
other governmental agency or, if no such index is available, then a
comparable index published by a major bank, other financial institution,
university or recognized financial publication.
(vii) The "Rentable Area of the Building" set forth in Section
1N of this Lease is the sum of the areas on all floors of the Building
computed by measuring the inside face of the exterior glass or finished
column or exterior wall of the Building on each entire floor, plus
mechanical space, common service areas available for use by all tenants
in the Building, reception and lobby areas, vending machine and
commissary areas and loading docks and excluding only public stairs,
elevator shafts, flues, stacks, pipe shafts and vertical ducts measured
from the outside wall surface of such spaces ("vertical penetrations").
No deduction shall be made for columns or projections necessary to the
Building.
- 4 -
<PAGE> 84
(viii) the "Rentable Area of the Premises" set forth in Section 1M
of this Lease is (A) if this Lease is for an entire floor, the area of
the entire floor measured to the inside finished surface of the exterior
glass or finished column or exterior wall of the Building, excluding
vertical penetrations, plus a proportionate share of the Building
mechanical space and common service areas in the Building, or (B) if
this Lease is for less than an entire floor, the area measured from the
inside finished surface of the exterior glass or finished column or
exterior wall of the Building to the center line of all demising
partitions and to the inside finished surface of the office side of
corridor and other permanent walls, plus (a) a proportionate share of
public areas (including corridors, elevator lobbies, toilets, mechanical
spaces and janitor, electrical and telephone closets) on the floor
housing the Premises and (b) a proportionate share of mechanical space
and common service areas in the Building. In making the calculations
pursuant to (A) or (B) above, no deduction shall be made for columns or
projections necessary to the Building.
(ix) the "Tenant's Proportion" set forth in Section 1K of this
Lease is the percentage obtained by dividing the Rentable Area of the
Premises by the Rentable Area of the Building.
B. The amount of Rent Adjustments due and payable under this Lease
shall be calculated as follows:
The Rent Adjustments shall be abated during the period June 1,
1992 through May 31, 1993 ("Abatement Months"). Such Rent
Adjustments otherwise due and payable for the Abatement Months, in
addition to all other remedies provided herein, shall become
immediately due and payable to Landlord upon the occurrence of a
material event of default by Tenant under the Lease, which
occurrence is prior to May 31, 1995.
(i) In the event that the amount of Expenses attributable to any
Calendar Year shall be greater than the Expense Base, then the
Tenant shall pay to the Landlord as additional rent the Tenant's
Proportion of such excess (said amount being the "Expense Rent
Adjustment");
(ii) In the event that the amount of taxes attributable to any
Calendar Year shall be greater than the Tax Base, then the Tenant
shall pay to the Landlord, as additional rent, the Tenant's
Proportion of such excess (said amount being the "Tax Rent
Adjustment"); and
(iii) Commencing on the Initial CPI Adjustment Date and for each
Calendar Year thereafter; an amount equal to the Base CPI Amount
multiplied by the percentage increase, if any, in the Consumer Price
Index for January of each such Calendar Year over the Consumer Price
Index for the Base CPI Date (said amount being called the "CPI Rent
Adjustment"). All Rent Adjustments shall be pro rated to the extent
any part of a Calendar Year is outside the period of the Lease Term.
C. As soon as reasonably feasible after the expiration of each Calendar
Year and after the Taxes for such Calendar Year are determined, Landlord shall
furnish to Tenant a statement ("Tax Adjustment Statement") showing the
following: (i) Taxes for such Calendar Year, (ii) the Tax Rent Adjustment due
Landlord for such Calendar Year, less credits for Rent Adjustment Deposits for
Taxes, if any, paid for such Calendar Year, and (iii) the Rent Adjustment
Deposit for Taxes due for the current Calendar Year. Within thirty (30) days
after Tenant's receipt of each Tax Adjustment Statement, Tenant shall pay
Landlord: (1) the Tax Rent Adjustments shown on said Statement to be due
Landlord for the Calendar Year last ended, plus (2) the amount, which when added
to the Rent Adjustment Deposits for Taxes theretofore paid in the current
Calendar Year would provide that Landlord has then received such portion of the
Rent Adjustment Deposit for Taxes as would have theretofore been paid to
Landlord had Tenant paid one-twelfth (1/12) of the Rent Adjustment Deposit for
Taxes shown on said Statement, for the current Calendar Year, to Landlord
monthly on the first day of each month of such Calendar Year. Commencing on the
first day of the first month after Tenant's receipt of such Tax Adjustment
Statement, and on the first day of each month thereafter until Tenant receives a
more current Tax Adjustment Statement, Tenant shall pay to Landlord one-twelfth
(1/12) of the Rent Adjustment Deposit for Taxes shown on said Statement. During
the last complete Calendar Year, Landlord may include in the Rent Adjustment
Deposit for Taxes its estimate of the Tax Rent Adjustment which may not be
finally determined until after the expiration of the Term. The Tenant's
obligation to pay the Tax Rent Adjustment shall survive the Term.
D. As soon as reasonably feasible after the expiration of each Calendar
Year, Landlord will furnish Tenant a statement ("Expense Adjustment Statement")
showing the following: (i) Expenses attributable to the Calendar Year last
ended; (ii) the Expense Rent Adjustments due Landlord for the Calendar Year last
ended, less credits for Rent Adjustment Deposits for Expenses paid, if any paid
for such Calendar Year; and (iii) the Rent Adjustment Deposit for Expenses due
for the current Calendar Year. Within thirty (30) days after Tenant's receipt of
each Expense Adjustment Statement, Tenant shall pay to Landlord: (1) the Expense
Rent Adjustments shown on said Statement to be due Landlord for the Calendar
Year last ended; plus (2) the amount, which when added to the Rent Adjustment
Deposit for Expenses theretofore paid in the current Calendar Year would provide
that Landlord has then received such portion of
- 5 -
<PAGE> 85
the Rent Adjustment Deposit for Expenses as would have theretofore been paid to
Landlord had Tenant paid one-twelfth (1/12) of the Rent Adjustment Deposit for
Expenses shown on said Statement for the current Calendar Year, to Landlord
monthly on the first day of each month of such Calendar Year. Commencing on
the first day of the first month after Tenant's receipt of each Expense
Adjustment Statement, and on the first day of each month thereafter until
Tenant receives a more current Expense Adjustment Statement, Tenant shall pay
to Landlord one-twelfth (1/12) of the Rent Adjustment Deposit for Expenses
shown on said Statement. During the last complete Calendar Year, Landlord may
include in the Rent Adjustment Deposit for Expenses its estimate of the Expense
Rent Adjustment which may not be finally determined until after the expiration
of the Term. The Tenant's obligation to pay the Expense Rent Adjustment shall
survive the Term.
E. Tenant shall pay the CPI Rent Adjustment commencing on the
Initial CPI Adjustment Date, as follows:
(i) Tenant shall pay Landlord on or before the first day of each
month of each Calendar Year an amount equal to one-twelfth (1/12) of the
CPI Rent Adjustment. Landlord shall furnish Tenant a notice ("CPI
Notice") showing the Consumer Price Index and the amount of Tenant's CPI
Rent Adjustment for each Calendar Year after Landlord shall have
determined the percentage increase of the Consumer Price Index to be
used in calculating the CPI Rent Adjustment for that Calendar Year.
(ii) Until such time as Landlord furnishes a CPI Notice, Tenant
shall continue to pay to Landlord monthly installments of CPI Rent
Adjustment in an amount equal to the latest monthly installment of CPI
Rent Adjustment. On or before the first day of the next calendar month
following the Landlord's service of a CPI Notice, Tenant shall pay
amounts owned by Tenant if any, for monthly installments of CPI Rent
Adjustment retroactive to the beginning of the period covered by such
CPI Notice. Amounts previously paid by Tenant in excess of the CPI Rent
Adjustment if any, shall be credited against installments of CPI Rent
Adjustment payable after date of the CPI Notice until exhausted.
F. Tenant's payment of the Rent Adjustment Deposits for each Calendar
Year shall be credited against the applicable Rent Adjustments for such Calendar
Year. All Rent Adjustment Deposits need not be kept separate and apart and no
interest shall be paid to Tenant thereon. If the Rent Adjustment Deposit paid by
Tenant for any Calendar Year exceeds the applicable Rent Adjustments for such
Calendar Year, then Landlord shall give a credit to Tenant in an amount equal to
such excess against the applicable Rent Adjustments due for the next succeeding
Calendar Year, except that if any such excess relates to the last Calendar Year
of the Term, then Landlord shall refund such excess to Tenant promptly provided
that all of the following have first occurred:
(i) the Term has expired or otherwise been terminated;
(ii) Tenant has vacated the Premises and removed all of its
property and improvements therefrom in accordance with this Lease;
(iii) Tenant has surrendered the Premises to Landlord in accordance
with this Lease; and
(iv) Tenant has paid all Base Rent and Rent Adjustments due under
this Lease and has fully performed and observed each and every covenant
and condition of this Lease required to be performed or observed by
Tenant.
G. Landlord agrees to keep accurate books and records with respect to
all items relating to the Adjustment Statements, in accordance with sound and
generally accepted accounting principles consistently applied. The Tenant or
its accountant shall have the right to examine the Landlord's books and records
in the office of the Managing Agent with respect to the items in the Adjustment
Statements during normal business hours at any time within sixty (60) days
following the furnishing by the Landlord to the Tenant of such Adjustment
Statement.
-6-
<PAGE> 86
Unless the Tenant shall take written exception to any item within thirty (30)
days after the furnishing of the foregoing statement, such statement shall be
considered as final and accepted by the Tenant. Any amount due to the Landlord
as shown on any such statement whether or not written exception is taken
thereto, shall be paid by the Tenant within thirty (30) days after the Landlord
shall have submitted the statement without prejudice to any such written
exception; provided, that if Tenant, in addition to or instead of examining
Landlord's books and records, requests to have such books and records audited,
such audit shall be permitted, at Tenant's expense by a certified public
account reasonably acceptable to each of Tenant and Landlord; and provided,
further, that if such audit discloses an overpayment by Tenant of more than 4%
in the annual Expenses and Taxes, then the reasonable expenses of such audit
shall be paid by the Landlord, in addition to the reimbursement by Landlord of
the full amount of such overpayment. In no event shall any Rent Adjustment
result in a decrease of the Base Rent payable hereunder. Landlord represents
and warrants that the amount of the Tax and Expense Base reflects the actual
cost and operation of the Building and the payment of actual Expenses and Taxes
subject to footnote (1) on page 2(a).
H. If the Commencement Date is on any other than the first day of
January, or if the Termination Date is on any day other than the last day of
December, any Rent Adjustments due Landlord for the Calendar Year in which such
Commencement Date or Termination Date occurs shall be prorated.
5. SERVICE.
A. The Landlord shall, so long as Tenant is not in default under any
covenant or condition herein contained, furnish:
(i) Heating and air cooling when necessary to provide a
temperature condition for comfortable occupancy (subject to Presidential and
governmental restrictions and regulations on energy use) daily, in season, from
8:00 a.m. to 6:00 p.m. and on Saturdays 8:00 a.m. to 1:00 p.m., Sundays and
holidays excepted.
(ii) Cold water in common with other Tenants from City mains
for drinking, lavatory and toilet purposes drawn through fixtures installed by
Landlord, or by Tenant with Landlord's prior written consent, and warm water
for lavatory purposes from the regular supply of the Building. Tenant shall pay
Landlord at rates fixed by Landlord for water furnished for any other purpose,
and Landlord may install a water meter at Tenant's sole cost to measure such
usage. Tenant shall not waste or permit the waste of water.
(iii) Customary janitor service and cleaning in and about the
Premises Saturdays, Sundays and holidays, excepted. The Tenant shall not
provide any janitor services or cleaning without Landlord's written consent and
then only subject to supervision of Landlord and at Tenant's sole
responsibility and by janitor or cleaning contractor or employees at all times
satisfactory to Landlord.
(iv) Passenger elevator services in common with Landlord and
other tenants, on a daily basis, Sundays and holidays excepted. Landlord shall
provide limited passenger elevator service daily at all times during which such
normal passenger service is not furnished. Operatorless automatic elevator
service shall be deemed "elevator service" within the meaning of this paragraph.
(v) Electricity if and so long as Landlord generates or
distributes electric current for light and power in the Building. So long as
Landlord provides electricity in the Building Tenant shall obtain all current
used in the Premises from Landlord and shall pay Landlord's charges therefor
within ten (10) days after the rendering of each statement of account unless
otherwise specified in the Landlord's statement of account. Tenant's failure to
pay promptly Landlord's charges for electricity shall entitle Landlord, upon
not less than ten (10) days' notice to discontinue furnishing current to
Tenant. Landlord's obligation to provide electricity is subject to the
condition that at all times Tenant's use of electric current shall never exceed
the capacity of existing feeders to the Building or the risers or wiring or
installations of the Building which serve the Premises. Upon not less than
thirty (30) day's notice, Landlord may cease to furnish electricity to Tenant
without responsibility to Tenant except to connect within the thirty (30) day
period, the electric wiring system of the Premises with another source of
supply of electricity and to install separate electric meters for the Premises.
All electricity used during janitorial service, alterations and repairs in the
Premises shall be paid for by Tenant, except for electricity used during
periods when Landlord is making repairs or other alterations pursuant to
Sections 14 or 15.
B. Tenant shall make arrangements directly with the telephone company
servicing the Building for such telephone service in the Premises as may be
desired by Tenant. Any telegraphic, telephonic, burglar alarm, computer
installations or signal service desired by Tenant shall require the prior
written approval of Landlord, if such approval is
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given. Landlord shall promptly direct where and how all connections and wiring
for such service shall be introduced and run. Subject to the foregoing, any
such service shall be installed and maintained by Tenant at Tenant's sole
expense. In the absence of Landlord's prior written consent, Tenant shall make
no borings or cutting or install any wires or cables in or about the Premises.
C. Landlord shall provide such extra or additional services as it is
reasonably possible for Landlord to provide and as Tenant may from time to time
request, within a reasonable period after the time such extra or additional
services are requested, provided, that if extra or additional elevator or
heating and air conditioning services are requested. Landlord shall not be
required to furnish any such services unless Landlord has received advance
notice from Tenant requesting such services at least two (2) working days prior
to the day upon which such services are requested. If Tenant fails to give
Landlord such advance notice, then, whether or not the Premises are inhabitable
during such periods, failure by Landlord to furnish or distribute any such
services during such periods shall not constitute an actual or constructive
eviction, in whole or in part, or entitle Tenant to any abatement or diminution
of rent, or relieve Tenant from any of its obligations under this Lease, or
impose any liability upon Landlord or its agents by reason of inconvenience or
annoyance to Tenant, or injury to or interruption of Tenant's business or
otherwise. Tenant shall pay Landlord additional rent for such services at the
standard rates then fixed by Landlord for the Building or, if no such rates are
then fixed, at reasonable rates. If more than one tenant utilizing the same
system as Tenant requests the same services call for the same periods as
Tenant, the charge to Tenant shall be adjusted pro rata. All charges for such
extra or additional services shall be due and payable at the same time as the
installment of Rent with which they are billed.
D. If Tenant fails to promptly pay Landlord's charges for water or
other services, Landlord upon ten (10) days' notice, may in addition to any
other remedy provided in this Lease, discontinue furnishing such water or
services. No such discontinuance shall be deemed an eviction or disturbance of
Tenant's use of the Premises or render Landlord liable for damages or relieve
Tenant from any obligation under this lease.
E. Landlord reserves the right to temporarily stop the service of the
heating, ventilating and air conditioning system ("HVAC System") or the
elevator, electrical, plumbing or other mechanical systems or facilities in the
Building when necessary, by reason of accident or emergency, or for repairs,
additions, alterations, replacements, improvements in the judgment of Landlord
desirable or necessary to be made until said repairs, alterations, replacements
or improvements shall have been completed. Should any of the equipment or
machinery used to provide any of the foregoing service break down or for any
cause or reason cease to function properly, Landlord shall use reasonable
diligence to repair the same promptly, but Tenant shall have no claim for
abatement or diminution of Rent as a result of any interruptions in service
resulting therefrom or occasioned thereby, unless such interruptions shall be
due to the gross negligence or willful misconduct of Landlord or its agents.
Landlord shall have no responsibility or liability for interruption, curtailment
or failure to supply cooled or outside air, heat, elevator, plumbing,
electricity, or other services to be provided by Landlord when prevented from
doing so by strikes, labor troubles or accidents or by any cause whatsoever
reasonably beyond Landlord's control, or by failure of independent contractors
to perform or by laws, orders, rules or regulations of any federal, state,
country or municipal authority, or by insurance requirements or failure of
suitable fuel supply, or inability by exercise of reasonable diligence to
obtain suitable fuel or by reason of governmental preemption in connection with
a National Emergency or by reason of the conditions of supply and demand which
have been or are affected by war or other emergency. The exercise of such right
or such failure by Landlord shall not constitute an actual or constructive
eviction, in whole or in part, or entitle Tenant to any compensation for
damages or otherwise, or to any abatement or diminution of Rent, or relieve
Tenant from any of its obligations under this Lease, or impose any liability
upon Landlord, its beneficiaries or their partners or agents by reason of
inconvenience or annoyance to Tenant, or injury to or interruption of Tenant's
business, or otherwise. Notwithstanding the foregoing, in the event that an
interruption in utilities or services interferes substantially with or prevents
the normal use of all or a portion of the Premises, and such condition
continues for more than seven (7) consecutive days, then either (i) Rent shall
be abated with respect to such proportion of the Premises commencing on the
eighth (8th) day and continuing until the restoration of such utilities or
services, or (ii) Tenant, at its sole option in recognition of its obligation
under federal law to operate its radio broadcast stations without significant
interruption, and subject to the other terms of this Lease, shall be entitled
to make alternative arrangements to obtain the failed or curtailed utilities or
services in such portion of the Premises, commencing on the eighth (8th) day
and continuing until the restoration of such utilities or services by Landlord,
and shall be entitled to offset 100% of the cost of obtaining such utilities
and services during such period against future Rent.
F. Tenant at all times agrees to cooperate fully with Landlord and to
abide by the regulations and requirements which Landlord may prescribe for the
proper functioning and protection of the HVAC System and all utilities and
services reasonably necessary for the operation of the Premises and the
Building. Landlord, throughout the Term, shall have free access to any and all
mechanical installations of Landlord, including but not limited to air-cooling,
fan, ventilating and machine rooms and electrical closets and Tenant agrees
there shall be no construction of partitions or other obstructions which may
interfere with Landlord's free access thereto, or interfere with the moving of
Landlord's equipment to and from the enclosures containing said installations.
Tenant further agrees that neither Tenant, nor its
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agents, employees or contractors shall at any time enter the said enclosures or
tamper with, adjust or touch or otherwise in any manner affect said mechanical
installations.
G. If Landlord shall from time to time reasonably determine that the
use of any other utility or service in the Premises is disproportionate to the
use of other Tenants, then at Landlord's request, and if possible, Tenant shall
install and maintain at Tenant's expense metering devices for checking the use
of any such utility or service in the Premises. Tenant shall pay Landlord for
the cost of such disproportionate use within ten (10) days after receipt of a
statement therefor, which statement shall reflect only the actual costs of such
utility or service, without the addition of any administrative fee, charge,
surcharge, or other mark-up (except for taxes, if any, charged to or required to
be collected by Landlord).
H. Whenever, in Landlord's opinion, Tenant's use or occupation of the
Premises, including lighting, personnel, heat generating machines or equipment,
individually or cumulatively, causes the design loads for the HVAC System to be
exceeded or to affect the temperature or humidity otherwise maintained by the
HVAC System in the Premises or Building, Landlord may, but shall not be
obligated to, temper such excess loads by installing supplementary heating or
air-conditioning units in the Premises or elsewhere where necessary. In such
event, the cost of such units and the expense of installation including, without
limitation, the cost of preparing working drawings and specifications, shall be
paid by Tenant as additional rent within ten (10) days after Landlord's demand
therefor. Alternatively, Landlord may require Tenant to install such
supplementary heating or air-conditioning unit at Tenant's sole expense.
Landlord may operate and maintain any such supplementary units, but shall have
no continuing obligation to do so or liability in connection therewith. The
expense resulting from the operation and maintenance of any such supplementary
heating or air conditioning units, including rent for space occupied by any
supplementary heating or air conditioning units installed outside the Premises,
shall be paid by Tenant to Landlord as additional rent at rates fixed by
Landlord. Alternatively, Landlord may require Tenant to operate and maintain any
such supplementary units, also at Tenant's sole expense.
6. USE OF PREMISES.
A. Tenant shall occupy and use the Premises during the Term for the
purpose set forth in Section 1 and no other purpose. For purposes of this
Section 6, Tenant shall be deemed to include Tenant's permitted subtenants,
assigns and occupants.
B. Landlord agrees that, in connection with and incidental to Tenant's
use of the Premises for the purposes set forth in Section 1, provided Tenant, at
Tenant's sole cost and expense, obtains any special amendments to the
certificate of occupancy for the Premises and any other permits required by any
governmental authority having jurisdiction thereof, if any, Tenant may use
portions of the Premises for (i) the preparation and service of food and
beverages from a pantry kitchen or lounge all for the exclusive use by officers,
employees and business guests of Tenant (but not for use as a public restaurant
or by other Tenants of the Building), (ii) the operation of vending machines for
the exclusive use of officers, employees and business guests of Tenant, provided
that each vending machine, where necessary shall have a waterproof pan
thereunder and be connected to a drain, and (iii) the installation, maintenance
and operation of electronic data processing equipment, computer processing
facilities and business machines, provided that such equipment is contained
within the Premises and does not cause vibrations, noise, electrical
interference or other disturbance to other tenants of the Building or the
elevators or other equipment in the Building. With respect to any use permitted
under this Section 6, any such use shall not violate any laws of requirements of
public authorities, constitute a public or private nuisance, interfere with or
cause physical discomfort to any of the other tenants or occupants of the
Building, interfere with the operation of the Building or the maintenance of
same as a first-class office building, or violate any of Tenant's other
obligations under this Lease.
C. Tenant will not make or permit to be made any use of the Premises
which, directly or indirectly is forbidden by public law, ordinance or
governmental regulation or which may be dangerous to persons or property, or
which may invalidate or increase the premium cost of any policy of insurance
carried on the Building or covering its operations; provided that if any
additional amounts of insurance premiums are caused by Tenant's occupancy or use
of the Premises. Tenant shall pay to Landlord said additional amounts as
additional rent due hereunder. Tenant shall not do, or permit to be done, any
act or thing upon the Premises which will be in conflict with fire insurance
policies
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covering the Building. Tenant, at its sole expense, shall comply with all rules,
regulations or requirements of governmental and quasi-governmental authorities
applicable to the Premises, and shall not do, or permit anything to be done upon
the Premises, or bring or keep anything thereof in violation of rules,
regulations or requirements of the Fire Department or other governmental or
quasi-governmental authority having jurisdiction.
7. CONDITION OF PREMISES.
The Tenant's taking possession of the Premises or any portion thereof
shall be deemed to be conclusive evidence that the Premises are in good and
satisfactory condition. No promise of the Landlord to alter, remodel, decorate,
clean or improve the Premises or the Building and no representation respecting
the condition of the Premises or the Building have been made by the Landlord to
the Tenant, unless the same is contained herein.
8. INABILITY TO DELIVER POSSESSION.
If the Landlord shall be unable to give possession of the Premises on
the Commencement Date by reason of any of the following: (i) the Building has
not been sufficiently completed to make the Premises ready for occupancy; (ii)
the Landlord has not completed its preparation of the Premises; (iii) the
Landlord is unable to give possession of the Premises by reason of the holding
over or retention of possession of any tenant, tenants or occupants; or (iv) for
any other reason, Landlord shall not be subject to any liability for failure to
give possession on said date. Under such circumstances the Rent reserved and
convenanted to be paid herein shall not commence until the Premises are
available for occupancy by Tenant. No such failure to give possession on the
Commencement Date of the Term hereof shall affect the validity of this Lease or
the obligation of the Tenant hereunder, nor shall the same be construed to
extend the Term or Termination Date. At the option of Landlord to be exercised
within thirty (30) days of the delayed delivery of possession to Tenant, the
Lease shall be amended so that the Term shall be extended by the period of time
possession is delayed. If the Premises are ready for occupancy prior to the
Commencement Date and Tenant occupies the Premises prior to said date, then all
of the provisions of this Lease shall be in full force and effect commencing at
such occupancy, and Tenant shall pay proportionate Base Rent and Rental
Adjustments. The Premises shall not be deemed to be unready for Tenant's
occupancy or incomplete if only minor or insubstantial details of construction,
decoration or mechanical adjustments remain to be done in the Premises or any
part thereof, or if the delay in the availability of the Premises for occupancy
shall be due to special work, changes, alterations or additions required or made
by Tenant in the layout or finish of the Premises or any part thereof or shall
be caused in whole or in part by Tenant through the delay of Tenant in
submitting plans, supplying information, approving plans, specifications or
estimates, giving authorizations or shall be otherwise caused in whole or in
part by delay and/or default on the part of Tenant. In the event of any dispute
as to whether the Premises are ready for Tenant's occupancy, the decision of
Landlord shall be final and binding on the Landlord and Tenant.
9. CARE AND MAINTENANCE.
Subject to the provisions of Section 14, the Tenant shall, at the
Tenant's own expense, keep the Premises in good order, condition and repair and
shall pay for the repair of any damage caused by Tenant, its agents, employees
or invitees. Tenant shall promptly arrange with Landlord, at Tenant's sole
expense, for the repair of all damage to the Premises and the replacement or
repair of all damaged or broken glass (including signs thereon), carpeting,
fixtures, and appurtenances (including hardware, heating, cooling, ventilating,
electrical, plumbing and other mechanical facilities in the Premises), with
materials equal in quality and class to the original materials damaged or
broken, within any reasonable period of time specified by Landlord. All such
repairs and replacements shall be made under the supervision and with the prior
written approval of Landlord, using contractors or persons reasonably acceptable
to Landlord. If Tenant does not promptly make such arrangements, Landlord may,
but need not, make such repairs and replacements and 100% of Landlord's cost for
such repairs and replacements shall be deemed additional rent reserved under
this Lease due and payable forthwith. The Tenant shall pay the Landlord for
overtime and for any other expense incurred in the event repairs, alterations,
decorating or other work in the Premises are not made during ordinary business
hours at the Tenant's request.
10. ALTERATIONS.
The Tenant shall not do any painting or decorating, lay floor tile,
carpeting or other similar floor covering, or
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install any partitions or doors, make any alterations in or additions or
improvements to the Premises or do any nailing, boring or screwing into the
ceilings, walls or floors (collectively "Alterations"), without the Landlord's
prior written consent in each and every instance which consent shall not be
unreasonably, withheld or delayed. Unless otherwise agreed by Landlord and
Tenant in writing, all such work shall be performed either by or under the
direction of Landlord, but at the sole cost of Tenant, including disposal and
clean-up costs. The Landlord's decision to refuse such consent shall be
conclusive. If the Landlord consents to such Alterations, before commencement of
the work or delivery of any materials into the Premises or into the Building,
the Tenant shall furnish the Landlord for approval: (i) plans and
specifications; (ii) names and addresses of contractors; (iii) copies of
contracts; (iv) necessary permits; (v) security for the payment of all
anticipated costs; and (vi) indemnification and insurance in form and amount
satisfactory to Landlord from all contractors performing labor or furnishing
materials, insuring against any and all claims, costs, damages, liabilities and
expenses which may arise in connection with the Alterations.
Landlord may withhold approval of any Alteration if the plans or
specifications therefor are not reasonably acceptable to the Landlord or
Landlord's architect or engineer (if any). In connection with any request for
approval of any Alterations by Tenant, Landlord may retain the services of an
outside architect and/or engineer and the reasonable fees of such architect
and/or engineer to Landlord shall be reimbursed to Landlord by Tenant but only
to the nature and extent of such Alterations reasonably require such services.
Landlord's approval of any plans or specifications shall not be construed to be
an agreement or representation on Landlord's part as to the adequacy or
suitability of Tenant's Alterations.
In the event Landlord permits the Alterations to be completed by
Tenant's contractor, Landlord reserves the right to require that Tenant shall
terminate its contract with any such contractor in the event said contractor
shall be engaged in a labor dispute which disrupts said contractor's work.
Landlord shall also have the right to order any contractor of Tenant who
violates any of Landlord's requirements, rules and regulations or standards of
work to cease work and to remove himself, his equipment and his employees from
the Building. Tenant agrees that its contractors shall not conduct their work in
such a manner so as to interfere with or cause any interruption of either (i)
Landlord's construction, (ii) another tenant's occupancy or construction, or
(iii) other phases of Landlord's operation of the Building.
Tenant shall promptly pay to Landlord or to Tenant's contractors, as the
case may be, when due the cost of all such Alterations and all decorating
required by reason thereof.
Tenant hereby agrees to indemnify and hold the Landlord, its partners
and their respective agents and employees harmless from any and all liabilities
of every kind and description which may arise out of or be connected in any way
with any Alterations. Any mechanic's lien filed against the Premises, or the
Project, for work claimed to have been furnished to the Tenant shall be
discharged of record by the Tenant within thirty (30) days thereafter, at the
Tenant's expense. Upon completing any Alterations, the Tenant shall furnish the
Landlord with contractors' affidavits and full and final waivers of lien and
receipted bills covering all labor and materials expended and used in a form
satisfactory to Landlord. All Alterations shall comply with all insurance
requirements and with all ordinances and regulations of any pertinent
governmental authority. All Alterations shall be constructed in a good and
workmanlike manner and only first class grades of materials shall be used.
All additions, decorations, fixtures, hardware, non-trade fixtures and
all improvements, temporary or permanent (other than equipment however
installed) in or upon the Premises, whether placed there by the Tenant or by the
Landlord, shall, unless the Landlord request their removal, become the
Landlord's property and shall remain upon the Premises at the termination of
this Lease, by lapse of time or otherwise, without compensation or allowance or
credit to the Tenant. Landlord may, at its sole option, request Tenant, at
Tenant's sole cost, to remove same and if, upon the Landlord's request, the
Tenant does not remove said additions, decorations, fixtures, hardware,
non-trade fixtures and improvements, the Landlord may remove the same, and the
Tenant shall pay the cost of such removal to the Landlord upon demand as
additional rent. These obligations of Tenant shall survive the expiration or
earlier termination of this Lease.
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11. ACCESS TO PREMISES.
The Tenant shall permit the Landlord, its agents and designees, to
install, use and maintain pipes, ducts, wiring and conduits in and through the
Premises and to have free access to the Premises and any part thereof in the
event of an emergency. The Landlord or Landlord's agents shall have the right
to enter upon the Premises, during usual business hours and upon prior notice
to Tenant, to inspect the same, to perform janitorial and cleaning services and
to make such repairs, improvements or additions to are in the Premises as the
Landlord may deem necessary. The Rent reserved shall in no way abate (except as
provided in Section 14) while repairs, improvements, or additions are being
made, by reason of loss or interruption of business of the Tenant, or
otherwise; provided that except in the case of an emergency, Landlord shall
make reasonable effort to coordinate repairs with Tenant in an effort to
minimize the impact of noise. If the Tenant shall not be personally present to
open and permit an entry into said Premises, at any time when to an emergency an
entry therein shall be necessary or permissible, the Landlord or Landlord's
agents may enter the same by a master key, or may forcibly enter the same,
without rendering the Landlord or such agents liable therefor, and without in
any manner affecting the obligations and covenants of this Lease. Nothing
herein contained, however, shall be deemed or construed to impose upon the
Landlord any separate obligations, responsibility or liability whatsoever, for
the care, supervision or repair of the Building or any part thereof, in the
exercise of any rights herein provided. Provided that reasonable access to the
Building and the Premises shall be maintained and the business of Tenant shall
not be interfered with or disrupted unreasonably Landlord shall also have the
right at any time without the same constituting an actual or constructive
eviction and without incurring any liability to the Tenant therefor, to change
the arrangement and/or location of entrances or passageways, doors and
doorways, and corridors, elevators, stairs, toilets or public parts of the
Building and to close entrances, doors, corridors, elevators or other
facilities. The Landlord shall not be liable to the Tenant for any expense,
injury, loss or damage resulting from work done in or upon, or the use of, any
adjacent or nearby building, land, street or alley, unless resulting from the
gross negligence or willful misconduct of Landlord or its agents.
12. INSURANCE.
Tenant shall carry insurance during the entire Term insuring Tenant and
Landlord (and if Landlord notifies Tenant of their names, Landlord's agents and
any mortgagee or ground lessee referred to in Section 18) with terms, coverages
and in companies satisfactory to Landlord and with such commercially reasonable
increase in limits as Landlord may from time to time request, but initially
Tenant shall maintain the following coverages in the following amounts:
A. Comprehensive public liability insurance, including the broad or
extended liability endorsement during the entire Term hereof covering Tenant as
well as Landlord and its agents as additional insured with terms and in
companies satisfactory to Landlord to afford protection to the limits of not
less than $2,000,000 for combined single limit personal injury and property
damage liability.
B. Insurance on an All-Risk of Physical Damage or Loss basis,
including theft, and the extended coverage perils for the full insurable value
of all additions, improvements and alterations to the Premises and of all
office furniture, trade fixtures, office equipment merchandise and all other
items of Tenant's property on the Premises and business interruption insurance.
C.
D. Insurance against fire, sprinkler leakage, vandalism, and the
extended coverage perils for the full replacement cost of all Tenant
Improvements and all subsequent additions, improvements and alterations owned
or made by Tenant, if any, to the Premises and of all furniture, trade
fixtures, equipment, merchandise and all other items of Tenant's property on
the Premises.
Tenant shall comply with all applicable laws and ordinances, all orders
and decrees of court and all requirements of other governmental authorities,
and shall not directly or indirectly make any use of the Premises which may
thereby be prohibited or be dangerous to person or property or which may
jeopardize any insurance coverage, or may increase the cost of insurance or
require additional insurance coverage.
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Tenant shall, prior to the Commencement Date of the Term, and during the
term, thirty (30) days prior to the expiration of the policies of insurance,
furnish to Landlord certificates evidencing such coverage, which certificates
shall state that such insurance coverage may not be changed or cancelled without
at least thirty (30) days prior written notice to Landlord and Tenant.
13. WAIVER OF SUBROGATION.
Landlord and Tenant agree to have all fire and extended coverage and
material damage insurance which may be carried by either of them endorsed with a
clause providing that any release from liability of or waiver of claim for
recovery from the other party entered into in writing by the insured thereunder
prior to any loss or damage shall not affect the validity of said policy or the
right of the insured to recover thereunder and providing further that the
insured waives all rights of subrogation which such insurer might have against
the other party. Without limiting any release or waiver of liability or recovery
contained in any other Section of this Lease but rather in confirmation and
furtherance thereof, each of the parties hereto waive all claims for recovery
from the other party for any loss or damage to any of its property insured under
valid and collectible insurance policies to the extent of any recovery
collectible under such insurance policies. Notwithstanding the foregoing or
anything contained in this Lease to the contrary, any release or any waiver of
claims shall not be operative, nor shall the foregoing endorsements be required,
in any case where the effect of such release or waiver is to invalidate
insurance coverage or the right of the insured to recover thereunder or increase
the cost thereof (provided that in the case of increased cost the other party
shall have the right, within ten (10) days following written notice, to pay such
increased cost keeping such release or waiver in full force and effect).
14. UNTENANTABILITY.
If the Premises or any part of the Building shall be damaged by fire or
other casualty and if such damage does not render all or a substantial portion
of the Premises or the Building untenantable, then Landlord shall proceed to
repair and restore with reasonable promptness the Building or the Premises
(excluding leasehold improvements paid for by Tenant) at Landlord's expense,
subject to reasonable delays for insurance adjustments and delays caused by
matters beyond Landlord's reasonable control. If any such damage renders all or
a substantial portion of the Premises or the Building untenantable, Landlord
shall, with reasonable promptness after the occurrence of such damage, estimate
the length of time that will be required to substantially complete the repair
and restoration of the Building and shall by notice advise Tenant of such
estimate. If it is so estimated that the amount of time required to
substantially complete such repair and restoration will exceed one hundred
eighty (180) days from the date such damage occurred, then either Landlord or
Tenant (but as to Tenant, only if all or a substantial portion of the Premises
are rendered untenantable) shall have the right to terminate this Lease as of
the date of such damage upon giving notice to the other at any time within
twenty (20) days after Landlord gives Tenant the notice containing said estimate
(it being understood that Landlord may, if it elects to do so, also give such
notice of termination together with the notice containing said estimate). Unless
this Lease is terminated as provided in the preceding sentence, Landlord shall
proceed with reasonable promptness to repair and restore the Building and
Premises, subject to reasonable delays for insurance adjustments and delays
caused by matters beyond Landlord's reasonable control, and also subject to
zoning laws and building codes then in effect. Landlord shall have no liability
to Tenant, and Tenant shall not be entitled to terminate this Lease (except as
hereinafter provided) if such repairs and restoration are not in fact completed
within the time period estimated by Landlord, as aforesaid, or within said one
hundred eighty (180) days so long as Landlord shall proceed with reasonable
diligence to complete such repairs and restoration. If the Building and/or
Premises is not repaired or restored within nine (9) months after the date of
such fire or other casualty, then either party may terminate this Lease,
effective as of the date of such fire or other casualty, by written notice to
the other party not later than thirty (30) days after the expiration of said
nine (9) month period, but prior to substantial completion of repair or
restoration. Notwithstanding anything to the contrary herein set forth, (a)
Landlord shall have no duty pursuant to this Section 14 to repair or restore any
tenant improvements, any portion of the alterations, additions or improvements
owned or made by Tenant in the Premises, or any personal property of Tenant or
to expend for any repair or restoration amounts in excess of insurance proceeds
paid to Landlord and available for repair or restoration, and (b) Tenant shall
not have the right to terminate this Lease pursuant to this Section 14 if the
damage or destruction was caused by the act or neglect of Tenant, its agents or
employees. Landlord shall carry insurance in an amount sufficient to enable it
to fulfill its obligations to repair as provided in this Section 14 and shall
provide Tenant, at If this Lease shall not be terminated pursuant to this
Section, then Tenant shall repair and restore the tenant improvements within a
reasonable period of time after the Premises are made available by Landlord for
such repair and restoration, such repairs or restorations to be made after
taking account of the reasonable wear and tear to the tenant improvements that
had occurred prior to the fire or other casualty and of changes in the radio
broadcasting business that may cause such improvements to be unsuitable or
inappropriate for repair or restoration, it being agreed that Tenant shall not
be obligated to repair or restore improvements that would have substantially
diminished utility or value to Tenant.
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In the event any such fire or casualty damage not caused by the act or
neglect of Tenant, its agents or employees, renders the Premises or any portion
thereof untenantable and if this Lease shall not be terminated pursuant to the
foregoing provisions of this Section 14 by reason of such damage, then Base
Rent and Rent Adjustments shall abate during the period beginning with the date
of such damage and ending with the date when Landlord substantially completes
its repair and restoration work. Such abatement shall be in an amount bearing
the same ratio to the total amount of Base Rent and Rent Adjustments for such
period as the portion of the Premises being repaired and restored by Landlord
and not theretofore delivered to Tenant bears to the entire Premises. In the
event of termination of this Lease pursuant to this Section 14, Base Rent and
Rent Adjustments shall be apportioned on a per diem basis and be paid to the
date of the fire or casualty.
15. EMINENT DOMAIN.
A. If, a substantial part of the Building or a substantial part of the
Premises, shall be lawfully taken or condemned for any public or quasi-public
use or purpose, or conveyed under threat of such condemnation, the terms of
this Lease shall end upon, and not before, the date of the taking of possession
by the condemning authority, and without apportionment of the award. Tenant
hereby assigns to the Landlord, Tenant's interest in such award, if any. Base
Rent and Rent Adjustments shall be apportioned as of the date of such
termination. If any part of the Building shall be so taken or condemned, or if
the grade of any street or alley adjacent to the Building is changed by any
competent authority and such taking or change of grade makes it necessary or
desirable, in Landlord's reasonable opinion, to demolish, substantially
remodel, or restore the Building the Landlord shall have the right to cancel
this Lease upon not less than ninety (90) days prior notice to the date of
cancellation designated in the notice.
B. If less than a substantial part of the Building or less than
substantially all of the Premises shall be lawfully taken or condemned or
conveyed under threat of condemnation so that the Premises can be used by
Tenant for the Use, and this Lease is not terminated by Landlord, Landlord
shall repair the Premises, and the Lease shall be amended to reduce the
Tenant's Proportion and Base Rent and Rent Adjustments in the proportion of the
amount taken. Landlord's obligation to repair shall be limited to the amount of
any award received by Landlord as a result of such condemnation or taking.
C. For purposes of this Section 15, the terms "condemned",
"condemnation", "taken", or "taking" shall include a voluntary conveyance by
Landlord to the condemning authority under threat of condemnation and the term
"award" shall include the consideration paid by the condemning authority for
such deed.
D. No money or other consideration shall be payable by the Landlord to
the Tenant for any right of cancellation or temporary taking, and the Tenant
shall have no right to share in any condemnation award or in any judgment for
damages caused by a change of grade except that Tenant shall be entitled to
claim, prove, and receive in the condemnation proceedings, or in a separate
proceeding, at Tenant's option, such awards as may be allowed for moving
expenses or trade fixtures, or for loss of business good will or depreciation,
but only if such awards shall be made by the condemnation court in addition to
and not in.
16. WAIVER OF CLAIMS AND INDEMNITY.
To the extent permitted by law, the Tenant releases the Landlord, its
respective agents, beneficiaries, employees, mortgagees and partners (all of
said parties are, for the purposes of this Section 16 collectively referred to
as "Indemnitees") from, and waives all claims for, damage to person or property
sustained by the Tenant or any occupant of the Building or Premises resulting
from the Building or Premises or any part of either or any equipment or
appurtenance becoming out of repair, or resulting from any accident in or about
the Building or Premises, or resulting directly or indirectly from any act or
neglect of any tenant or occupant of the Building or of any other person,
including the Indemnitees. This Section 16 shall apply especially, but not
exclusively, to the flooding of basements or other subsurface areas, and to
damage caused by refrigerators, sprinkling devices, air-conditioning apparatus,
water, snow, frost, steam, excessive heat or cold, falling plaster, broken
glass, sewage, gas, odors or noise, or the bursting or leaking of pipes or
plumbing fixtures, and shall apply equally whether any such damage results from
the act or neglect of other tenants, occupants or servants in the Building or
of any other person, and whether such damage be caused or result from anything
or circumstance above mentioned or referred to, or any other thing or
circumstance whether of a like nature or of a wholly different nature, except
if caused by Landlord's gross negligence or willful misconduct. If any such
damage, whether to the Premises or to the Building or any part thereof, or
whether to the Landlord or to other tenants in the Building, results from an
act or neglect of the Tenant, its employees, agents, invitees and customers,
the Tenant shall be liable therefor and the Landlord may, at the Landlord's
option, repair such damage and the Tenant
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shall, upon demand by the Landlord, reimburse the Landlord forthwith for the
total cost of such repairs. The Tenant shall not be liable for any damage
caused by its act or neglect if the Landlord or a Tenant has recovered the
full amount of the damage from insurance and the insurance company has waived
its right of subrogation against the Tenant. All property belongings to the
Tenant or any occupant of the Premises that is in the Building or the Premises
shall be there at the risk of the Tenant or other person only, and the Landlord
shall not be liable for damage thereto or theft or misappropriation thereof
unless caused by Landlord's gross negligence or willful misconduct.
To the extent permitted by law, Tenant agrees to indemnify and save the
Indemnitees harmless against any and all claims, liabilities, demands, costs
and expenses, including reasonable attorney's fees for the defense thereof,
arising from Tenant's occupation of the Premises or from any breach or default
on the part of the Tenant in the performance of any covenant or agreement on
the part of Tenant to be performed pursuant to the terms of this Lease, or from
any act or negligence of Tenant, its agents, servants, employees or invitees,
in or about the Premises. In case of any action or proceeding brought against
any Indemnitee by reason of any such claim, upon notice from Landlord, Tenant
covenants to defend such action or proceeding by counsel reasonably
satisfactory to Tenant and Landlord.
17. ASSIGNMENT/SUBLETTING.
A. Tenant shall not, without Landlord's prior written consent (i)
assign, transfer, hypothecate, mortgage, encumber this Lease or any interest
under it (ii) allow any transfer of, or any lien upon Tenant's interest in this
Lease by operation of law; (iii) sublet the Premises in whole or in part or
(iv) allow the use or occupancy of any portion of the Premises for use other
than the Use or by anyone other than Tenant or Tenant's employees.
B. The following special provisions apply to subletting and assignment:
(i) Prior to making any sublease or assignment, Tenant shall
first notify Landlord in writing of its intent to sublease all or a
portion of the Premises or to assign this Lease or any interest
hereunder, such notice to include a copy of the proposed sublease or
assignment and the name of the sublessee or assignee and sufficient
information to permit Landlord to determine the acceptability of the
financial responsibility and character of the proposed subtenant or
assignee. At any time within forty five (45) days after service of said
notice, Landlord shall notify Tenant that:
(1) It consents to the sublease or assignment; or
(2) It refuses to consent to the sublease or
assignment; or
C. Landlord shall not unreasonably withhold its consent except that
such consent need not be granted if (a) in the reasonable judgment of Landlord
the proposed subtenant or assignee is of a character or engaged in a business
which is not in keeping with the standards of Landlord for the Building; (b) in
the reasonable judgment of Landlord the purpose for which the proposed
subtenant or assignee intends to use the Premises are not in keeping with the
standards of Landlord for the Building, or are in violation of the terms of any
other leases in the Building, it being understood that the purpose for
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which the proposed subtenant or assignee intends to use the Premises may not be
in violation of this Lease; (e) a subletting will result in there being more
than two occupants within the Premises, including Tenant and all subtenants; (d)
the Premises is not regular in shape with appropriate means of ingress and
egress and suitable for normal renting purposes; (e) the proposed subtenant or
assignee is either a government (or subdivision or agency thereof) or an
occupant, of the Building; (f) an assignment is desired and the Premises are
less than the entire Premises or less than the remaining Term is being assigned;
(g) the assignee or sublessee is not, in the judgment of Landlord, sufficiently
financially responsible to perform its obligations under the proposed sublease
or assignment; or (h) Tenant is in default under this Lease. The foregoing are
merely examples of reasons for which Landlord may reasonably withhold its
consent and shall not be deemed exclusive of any permitted reasons for
withholding consent, whether similar or dissimilar to the foregoing examples.
D. Landlord's consent to any sublease or assignment pursuant to this
Section 17 shall be subject to the following terms and conditions:
(a) The terms and conditions of this Lease, including among
other things, Tenant's obligations pursuant to this Lease for the
Premises, shall in no way be deemed modified, abrogated or amended;
(b) Tenant shall pay Landlord a processing fee and the
reasonable attorney's fees and disbursements incurred by Landlord for
each sublease or assignment submitted to Landlord;
(c) The consent shall not be deemed a consent to any further
subletting or assignments by either Tenant, subtenants or assignees;
(d) Tenant shall pay Landlord as additional Base Rent, fifty
percent (50%) of any excess rent (including rent adjustments escalations
and additional rent) and other amounts, payable to Tenant under this
sublease or assignment over the Base Rent and Rent Adjustments payable
to Landlord under this Lease;
(e) The proposed assignee or sublessee shall agree to comply
with and be bound by all the terms, covenants, conditions, provisions
and agreements of this Lease to the extent of the Premises.
E. An assignment of this Lease, whether voluntary, involuntary or by
operation of law, as permitted hereunder, shall in no event or circumstance
release or result in the release of the Tenant making such assignment from
liability for payment or performance of any of Tenant's obligations under this
Lease after the date of such assignment, unless Landlord specifically agrees
otherwise in writing and without limiting the foregoing, no exercise or
non-exercise by Landlord of any of its rights or remedies under this Lease, no
amendments, modifications or changes of any kind to the Lease and no other act
or thing which but for this provision could act as a release of the continuing
liability of Tenant or give Tenant any recourse against Landlord shall, in
fact, do so. If Tenant assigns this Lease or if all or any portion of the
Premises is subleased to, occupied by or used by any person other than Tenant,
whether or not in violation of the provisions of this Section 17, Landlord
after default by Tenant hereunder, may collect rent from the assignee,
subtenant, occupant or user. In either case, Landlord shall apply the net
amount collected to any Rent due hereunder, but neither any such assignment,
sublease, occupancy or use whether with or without Landlord's consent nor any
such collection or application shall be deemed a waiver of any term, covenant
or condition of this Lease as the acceptance by Landlord of such assignee,
subtenant, occupant or user.
F. If Tenant is an entity whose ownership is not publicly held, and if
during the Term, the ownership of the control of Tenant changes, Tenant shall
notify Landlord of such change within five (5) days thereof, and Landlord, at
its option, may at any time thereafter terminate this Lease by giving Tenant
written notice of said termination at lease sixty (60) days prior to the date
of termination stated in the notice. The term "control" as used herein means
the power to directly or indirectly direct or cause the direction of the
management or policies of the Tenant. A change or series of changes in
ownership of stock which would result in direct or indirect change in ownership
by the stockholders or an affiliated group of stockholders of less than 50% of
the outstanding stock shall not be considered a change of control. In no event
shall any change in the ownership of Tenant's immediate or ultimate parent
corporation constitute a change of the ownership of the control of Tenant, for
purposes of this Section 17.
G. Tenant agrees that all advertising by Tenant or on Tenant's behalf
with respect to the assignment or subletting of space must be approved in
writing by Landlord prior to publication.
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H. If Tenant shall assign this Lease as permitted herein, Tenant shall
obtain and furnish to Landlord, not later than fifteen (15) days prior to the
effective date of such assignment a written instrument evidencing such
assignment in form satisfactory to Landlord. If Tenant shall sublease the
Premises as permitted herein, Tenant shall obtain and furnish to Landlord, not
later than fifteen (15) days prior to the effective date of such sublease in
form satisfactory to Landlord, the written agreement of such subtenant to the
effect that the subtenant will attorn to the Landlord, at Landlord's option and
written request, in the event this Lease terminates before the expiration of
the sublease.
18. SUBORDINATION.
Landlord may execute and deliver a mortgage or trust deed in the nature
of a mortgage, (both sometimes hereinafter referred to as "Mortgage") against
the Building, or any interest therein, including a ground lease thereof
("Ground Lease") and sell and lease back the underlying land. This Lease and
the rights of Tenant hereunder shall be and are hereby made expressly subject
and subordinate at all times to any ground lease of the land and/or the
Building now or hereafter existing and all amendments, renewals and
modifications thereto and extensions thereof, and to the lien of any Mortgage
now or hereafter encumbering any portion of the Building and to all advances
made or hereafter to be made upon the security thereof. Tenant agrees to
execute and deliver such instruments subordinating this Lease to any such
Ground Lease or to the lien of any such Mortgage as may be requested in writing
by Landlord from time to time. Tenant hereby appoints Landlord as
attorney-in-fact for Tenant with full power of attorney to execute and deliver
in the name of Tenant any such instrument in the event Tenant fails to so do.
Notwithstanding anything to the contrary contained herein, any mortgagee under
a Mortgage may, by notice in writing to the Tenant, subordinate its Mortgage to
this Lease.
In the event of the cancellation or termination of any such Ground Lease
described above in accordance with its terms or by the surrender thereof,
whether voluntary, involuntary or by operation of law, or by summary
proceedings, or the foreclosure of any such Mortgage by voluntary agreement or
otherwise, or the commencement of any judicial action seeking such foreclosure,
Tenant, at the request of the then Landlord shall attorn to and recognize such
Ground Lessor, mortgagee or purchaser in foreclosure as Tenant's Landlord under
this Lease. Tenant agrees to execute and deliver at any time upon request of
such ground lessor, mortgagee, purchaser, or their successors, any instrument to
further evidence such attornment. Nothwithstanding the foregoing, in the event
of a foreclosure, the Lessee's obligation to subordinate shall be contingent
upon the holder of the Ground Lease or mortgage, or other appropriate party,
agreeing not to disturb the Lessee's rights under this Lease, including without
limitation, the Lessee's right to occupy and to use the Premises on the terms
and conditions set forth in this Lease. The Ground Lessor's, mortgagee's, or
other party's obligation to enter into such a nondisturbance agreement shall be
conditioned upon the Lease not being in default under the terms of this Lease
and that no event has occurred which with the giving of notice or passage of
time or both would constitute a default. Furthermore, the Ground Lessor,
mortgagee, or other party, as applicable.
Tenant agrees to give the holder of any Mortgage, by registered or
certified mail, a copy of any notice of default served upon the Landlord by
Tenant, provided that prior to such notice Tenant has received notice (by way
of service on Tenant of a copy of an assignment of rents and leases, or
otherwise) of the address of such mortgagee and containing a request therefor.
Tenant further agrees that if Landlord shall have failed to cure such default
within the time provided for in this Lease, then said mortgagee shall have an
additional thirty (30) days after receipt of notice thereof within which to
cure such default or, if such default cannot be cured within that time, then
such additional time as may be necessary, if, within such thirty (30) days, any
mortgagee has commenced and is diligently pursuing the remedies necessary to
cure such default. Such period of time shall be extended by any period within
which such mortgagee is prevented from commencing or pursuing such foreclosure
proceedings by reason of Landlord's bankruptcy. Until the time allowed as
aforesaid for said mortgagee to cure such defaults has expired without cure,
Tenant shall have no right to, and shall not terminate this Lease on account of
such default.
Should any prospective mortgagee or ground lessor require a
modification or modifications of this Lease, which modification or
modifications will not cause an increased cost or expense to Tenant or in any
other way materially and adversely change the rights and obligations of Tenant
hereunder in the reasonable judgment of Tenant, then and in such event, Tenant
agrees that this Lease may be so modified and agrees to promptly execute
whatever documents are required therefor and deliver the same to Landlord
within ten (10) days following the request therefor. Should any prospective
mortgagee or ground lessor require execution of a short form of Lease for
recording (containing the names of the parties, a description of the Premises,
and the Term of this Lease) or a certification from the Tenant concerning the
lease in such form as may be required by a prospective mortgagee or ground
lessor. Tenant agrees to promptly execute such short form of lease or
certificate and deliver the same to Landlord within ten (10) days following the
request therefor.
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If Tenant fails, within ten (10) days after written demand therefor, to
execute and deliver any instruments as may be necessary or proper to effectuate
any of the covenants of Tenant set forth above in this Section 18, Tenant
hereby makes, constitutes and irrevocably appoints Landlord or its beneficiary
its attorney-in-fact (such power of attorney being coupled with an interest in
the Premises) to execute and deliver any such instruments for and in the name
of Tenant.
19. CERTAIN RIGHTS RESERVED TO THE LANDLORD.
Landlord reserves the following rights, exercisable at its election
without notice and without liability to Tenant for damage or injury to
property, person or business and without effecting an eviction or disturbance
of Tenant's use or possession or giving rise to any claim for setoff or
abatement of rent or affecting any of Tenant's obligations under this Lease:
A. To change the name or street address of the Building;
B. To install and maintain a sign or signs on the interior or exterior
of the Building;
C. To have access for the Landlord and the other tenants of the
Building to any mail boxes located in the Building according to the rules of
the United States Postal Service;
D. To designate all sources furnishing sign painting and lettering,
ice, drinking water, towels, food, beverages, vending machines and toilet
supplies, lamps and bulbs used on the Premises;
E. To decorate, remodel, repair, alter or otherwise prepare the
Premises for reoccupancy if Tenant vacates the Premises prior to the expiration
of the Term;
F. To retain at all times, and use in appropriate instances, pass keys
to the Premises;
G. To grant to anyone the right to conduct any particular business or
service in the Building whether or not it is the same as or similar to the use
expressly permitted hereunder;
H. To exhibit the Premises to others and to display "For Rent" signs
on the Premises; no more than six (6) months prior to the Termination Date;
I. To prescribe the location and style of the suite number and
identification sign or lettering for the Premises;
J. To require all persons entering or leaving the Building during such
hours as Landlord may from time to time reasonably determine to identify
themselves to security by registration or otherwise, and to establish their
right to enter or leave in accordance with the provisions of applicable rules
and regulations adopted by Landlord. Landlord shall not be liable in damages for
any error with respect to admission to or eviction or exclusion from the
Building of any person. In case of fire, invasion, insurrection, mob, riot,
civil disorder, public excitement or other commotion or threat thereof, Landlord
reserves the right to limit or prevent access to the Building during the
continuance of the same, shut down elevator service, activate elevator emergency
controls or otherwise take such action or preventive measures deemed necessary
by Landlord for the safety of the tenants or other occupants of the Building or
the protection of the Building and the property in the Building. Tenant agrees
to cooperate in any reasonable safety program developed by Landlord;
K. Upon reasonable notice to Tenant to enter the Premises at
reasonable hours for reasonable purposes, including inspections and supplying
of janitor services or other services to be provided to Tenant hereunder and at
any time without notice in the event of an emergency;
L. To install at Landlord's sole expense, a fire emergency exit (crash
door) in any demising wall of the Premises if in its sole discretion Landlord
determines that a fire emergency exit (crash door) is required in the interest
of public safety;
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M. To control and prevent access to common areas and other non-general
public areas pursuant to the provisions of applicable rules and regulations
adopted by Landlord;
N. Provided that reasonable access to the Premises shall be maintained
and the business of Tenant shall not be interfered with or disrupted
unreasonably, Landlord reserves the right to relocate, enlarge, reduce or
change lobbies, exits or entrances in or to the Building, and to decorate and
to make, at its own expense, repairs, alterations, additions and improvements,
structural or otherwise, in or to the Building or any part thereof, and any
adjacent building, land, street or alley, including for the purpose of
connection with or entrance into or use of the Building in conjunction with any
adjoining or adjacent building or buildings, now existing or hereafter
constructed and may for such purposes erect scaffolding and other structures
reasonably required by the character of the work to be performed and during
such operations may enter upon the Premises and take into and upon or through
any part of the Building; including the Premises, all materials that may be
required to make such repairs, alterations, improvements, or additions, and in
that connection Landlord may temporarily close public entry ways, other public
spaces, stairways or corridors and interrupt or temporarily suspend any
services or facilities agreed to be furnished by Landlord, all without the same
constituting an eviction of Tenant in whole or in part and without abatement of
Rent by reason of loss or interruption of the business of Tenant or otherwise
and without in any manner rendering Landlord liable for damages or relieving
Tenant from performance of Tenant's obligations under this Lease. Landlord may
at its option make any repairs, alterations, improvements and additions in and
about the Building and the Premises during ordinary business hours and, if
Tenant desires to have such work done during other than business hours, Tenant
shall pay all overtime and additional expenses resulting therefrom;
O. To approve the weight, size and location of safes or other heavy
equipment or articles, which articles may be moved in, about, or out of the
Building or Premises only at such times and in such manner as Landlord shall
direct and in all events, however, at Tenant's sole risk and responsibility; and
P. To take any and all measures, including inspections, repairs,
alterations, decorations, additions and improvements to the Premises or to the
Building and to close or temporarily suspend, as may be necessary or desirable
for the safety, protection or preservation of the Premises or the Building or
the Landlord's interest or the interest of other tenants, or as may be
necessary or desirable in the operation of the Building.
The Landlord may enter upon the Premises and may exercise any or all of
the foregoing rights reserved without being deemed guilty of an eviction or
disturbance of the Tenant's use or possession and without being liable in any
manner to the Tenant and without abatement of rent or affecting any of the
Tenant's obligations hereunder.
20. HOLDING OVER.
If the Tenant retains possession of the Premises or any part thereof
after the termination of the Term or any extension thereof, lapse of time and
otherwise, the Tenant shall pay the Landlord monthly rent at double the rate
payable for the month immediately preceding said holding over (including
increases for Rent Adjustment which Landlord may reasonably estimate), computed
on a per-month basis, for each month or part thereof (without reduction for any
such partial month) that the Tenant thus remains in possession. The provisions
of this Section 20 do not exclude the Landlord's rights of re-entry or any
other right hereunder. Any such extension or renewal shall be subject to all
other terms and conditions herein contained.
21. LANDLORD'S REMEDIES.
A. The occurrence of any one or more of the following matters
constitutes a "Default" by Tenant under this Lease.
(i) Failure by Tenant to pay Rent or any installment thereof,
within five (5) days after the same is due;
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(ii) Failure by Tenant to pay, within five (5) days after the same
is due, any other moneys required to be paid by Tenant under this Lease;
(iii) Failure by Tenant to observe or perform any of the covenants
in respect of assignment and subletting set forth in Section 17; with such
failure continuing for thirty (30) days after written notice from Landlord
(except that such thirty (30) day period shall be extended for such additional
period of time not in any event to exceed one hundred twenty (120) days as may
reasonably be necessary to cure such failure, if such failure, by its nature,
cannot be cured within such thirty (30) day period, provided that Tenant
commences to cure such failure (and so notifies Landlord in writing) within
such thirty (30) day period and is, at all times thereafter, in the process of
diligently curing the same)
(iv) Failure by Tenant to cure forthwith any hazardous condition
which Tenant has created in violation of law or of this Lease;
(v) Failure by Tenant to observe or perform any other covenant,
agreement, condition or provision of this Lease; with such
failure continuing for thirty (30) days after written notice from Landlord
(except that such thirty (30) day period shall be extended for such additional
period of time not in any event to exceed one hundred twenty (120) days as may
reasonably be necessary to cure such failure, if such failure, by its nature,
cannot be cured within such thirty (30) day period, provided that Tenant
commences to cure such failure (and so notifies Landlord in writing) within
such thirty (30) day period and is, at all times thereafter, in the process of
diligently curing the same)
(vi) The levy upon or under execution or the attachment by legal
process of the leasehold interest of Tenant, or the filing or creation of a
lien in respect of such leasehold interest, which lien shall not be released or
discharged within thirty (30) days from the date of such filing; except for any
lien created under the terms of the Amendment and Restatement of Security
Agreement, dated as of September 30, 1991, by and among Tenant's parent
corporation, Tenant, certain of Tenant's sister corporations, and the banks
named therein (the "Security Agreement"), which Security agreement was executed
and delivered as required by the terms of an Amended and Restated Credit
Agreement, dated as of September 30, 1991, as amended, by and among the same
parties (the "Credit Agreement"), as well as all amendments thereto and any
documents that replace, in whole or in part, the Credit Agreement and the
Security Agreement in connection with a total or partial refinancing of the
indebtedness covered by such documents.
(vii) Tenant vacates or abandons the Premises or fails to take
possession of the Premises when available for occupancy (the transfer of a
substantial part of the operations, business and personnel of Tenant to some
other location being deemed, without limiting the meaning of the term "vacates
or abandons", to be a vacation or abandonment within the meaning of this clause
(vii), whether or not Tenant thereafter continues to pay Rent due under this
Lease.
(viii) Tenant becomes insolvent or bankrupt or admits in writing
its inability to pay its debts as they mature, or makes an assignment for the
benefit of creditors, or applies for or consents to the appointment of a
trustee or receiver for Tenant or for the major part of his property;
(ix) A trustee or receiver is appointed for the Tenant or for the
major part of its property and is not discharged within thirty (30) days after
such appointment;
(x) Bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings for relief under any bankruptcy
law, or similar law for the relief of debtors, are instituted by or against
Tenant, and, if instituted against Tenant, are allowed against it or are
consented to by it or are not dismissed within sixty (60) days after such
institution.
B. If a Default occurs which has not been cured or remedied during the
applicable grace period, Landlord shall have the rights and remedies
hereinafter set forth, which shall be distinct, separate and cumulative and
shall not operate to exclude or deprive Landlord of any other right or remedy
allowed it by law:
(i) Landlord may terminate this Lease by giving to Tenant five
(5) days' written notice of the Landlord's election to do so, in which event the
Term of this Lease shall end, and all right, title and interest of the Tenant
hereunder shall expire, on the date stated in such notice;
(ii) Landlord may terminate Tenant's right to possession of the
Premises' without terminating this Lease by giving five (5) days written notice
to Tenant that Tenant's right of possession shall end on the date stated in
such notice whereupon the right of the Tenant to possession of the Premises or
any part thereof shall cease on the date stated in such notice; and
(iii) Landlord may enforce the provisions of this Lease and may
enforce and protect the rights of the Landlord hereunder by a suit or suits in
equity or at law for the specific performance of any covenant or agreement
contained herein, or for the enforcement of any other appropriate legal of
equitable remedy, including recovery of all moneys due or to become due from
the Tenant under any of the provisions of this Lease.
C. If Landlord exercises either the remedies provide din paragraphs
(i) or (ii) of Section 21.B., Tenant shall surrender possession and vacate the
Premises immediately, and deliver possession thereof to Landlord in
"broom-clean'' condition, and Landlord may then and at any time thereafter
re-enter and take complete and peaceful posses-
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sion of the Premises with or without process of law, full and complete lciense
to do so being hereby granted to Landlord, and Landlord may expel or remove
Tenant and any others who may be occupying or within the Premises and remove
any and all property therefrom, using such force as may be necessary, without
being deemed in any manner guilty or trespass, eviction or forcible entry or
detainer, and without relinquishing Landlord's rights to Base Rent. Rent
Adjustments or Rent Adjustment Deposits or any other rights given to Landlord
hereunder or by operation of law.
D. If Landlord, pursuant to the provisions of Section 21.B(ii) hereof,
terminates the right of the Tenant to possession of the Premises without
terminating this Lease, such termination of possession shall not release Tenant
in whole or in part, from Tenant's obligation to pay Rent hereunder for the full
Term, and the amount of the Base Rent and Additional Rent for the period from
the date stated in the notice terminating possession shall at once mature and be
immediately due and payable by the Tenant to Landlord, together with any other
moneys due hereunder, and Landlord shall have the right to immediate recovery
of all amounts then due hereunder. In addition, Landlord shall have the right,
from time to time, to recover from the Tenant, and the Tenant shall remain
liable for, all additional Rent and any other sums thereafter accruing as they
become due under this Lease during the period from the date of such notice of
termination of possession to the stated end of the Term. In any case, the
Landlord may, but shall be under no obligation to, relet the Premises or any
part thereof for the account of the Tenant for such rent, for such time (which
may be for a term extending beyond the Term of this Lease) and upon such terms
as the Landlord in the Landlord's sole discretion shall determine, and the
Landlord shall not be required to accept any tenant offered by the Tenant or to
observe any instructions given by the Tenant relative to such reletting. Also
in any such case the Landlord may make repairs, alternations and additions in
or to the Premises and redecorate the same to the extent deemed by the Landlord
necessary or desirable and, in connection therewith, change the locks to the
Premises, and the Tenant shall upon demand pay the cost thereof together with
the Landlord's expenses of reletting. Landlord may collect the rents from any
such reletting and apply the same first to the payment of the expense or
reentry, redecoration, repair and alterations and the expenses of reletting and
second to the payment of Rent herein provided to be paid by the Tenant, and any
excess or residue shall operate only as an offsetting credit against the amount
of Rent as the same thereafter becomes due and payable hereunder, but the use
of such offsetting credit to reduce the amount of Rent due Landlord, if any,
shall not be deemed to give Tenant any right, title or interest in or to such
excess or residue and any such excess or residue shall belong to Landlord
solely, provided that in no event shall Tenant be entitled to a credit on its
indebtedness to Landlord in excess of the aggregate sum (including Base Rent and
Additional Rent) which would have been paid by Tenant for the period for which
the credit to Tenant is being determined, had no Default occurred. No such
re-entry or repossession, repairs, alternations and additions, or reletting
shall be construed as an eviction or ouster of the Tenant or as an election on
Landlord's part to terminate this Lease unless a written notice of such
intention be given to Tenant or shall operate to release the Tenant in whole or
i part from any of the Tenant's obligations hereunder, and the Landlord may, at
any time and from time to time, sue and recover judgment for any deficiencies
from time to time of the proceeds of any such reletting.
E. In the event of the termination of this Lease by Landlord as
provided in Section 21.B(i), Landlord shall be entitled to recover from Tenant
all the fixed dollar amounts of Rent accrued and unpaid for the period up to
and including such termination date, as well as all other additional sums
payable by the Tenant, or for which Tenant is liable or in respect of which
Tenant has agreed to indemnify Landlord under any of the provisions of this
Lease which may be then owing and unpaid, and all costs and expenses, including
court costs and reasonable attorneys' fees, incurred by Landlord in the
enforcement of its rights, and remedies hereunder, and in addition Landlord
shall be entitled to recover as damages for loss of the bargain and not as a
penalty (x) the unamortized cost to the Landlord, computed and determined in
accordance with generally accepted accounting principles, of the tenant
improvements and alterations, if any, paid for and installed by Landlord
pursuant to this Lease, and (y) the aggregate sum which at the time of such
termination represents the excess, if any, of the present value of the
aggregate Rents at the same annual rate for the remainder of the term as then
in effect pursuant to the applicable provisions of Section 3 and 4 of this
Lease, over the then present value of the then aggregate fair rental value of
the Premises for the balance of the Term, such present worth to be computed in
each case on the basis of a per annum discount at one-half (1/2) of the
corporate base rate of interest then in effect at the First National Bank of
Chicago from the respective dates upon which such rentals would have been
payable hereunder had this Lease not been terminated, and (z) any damages in
addition thereto, including reasonable
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attorneys' fees and court costs, which Landlord shall have sustained by reason
of the breach of any of the covenants of this Lease other than for the payment
of Rent.
F. Landlord and Tenant agree that to the extent permitted by law, each
shall and hereby does waive trial by jury in any action, proceeding or
counterclaim brought by either against the other on any matter whatsoever
arising out of or in any way connected with this Lease, the relationship of
Landlord and Tenant, Tenant's use or occupancy of the Premises or any emergency
or statutory remedy.
G. Any and all property which may be removed from the Premises by
Landlord pursuant to the authority of the Lease or of law, to which Tenant is or
may be entitled, may be handled, removed or stored by Landlord at the risk, cost
and expense of Tenant and Landlord shall in no event be responsible for the
value, preservation or safekeeping thereof. Tenant shall pay to Landlord, upon
demand, any and all expenses incurred in such removal and all storage charges
against such property so long as the same shall be in Landlord's possession or
under Landlord's control. Any such property of Tenant not retaken from storage
by Tenant within thirty (30) days, shall be conclusively presumed to have been
conveyed by Tenant to Landlord under this Lease as a bill of sale without
further payment or credit by Landlord to Tenant.
H. To the extent permitted by and consistent with the terms of the
Credit Agreement and the Security Agreement, and subject in all events to the
provisions thereof, Tenant hereby grants Landlord a second lien upon the
interest of Tenant under this Lease to secure the payment of moneys due under
this Lease, which lien may be enforced in equity and Landlord shall be entitled
as a matter of right to have a receiver appointed to take possession of the
Premises and relet the same under order of court.
I. All amounts owed by Tenant to Landlord under this Lease shall be
deemed additional Rent and (unless otherwise provided, and other than the Base
Rent, Rent Adjustment Deposits and Rent Adjustments, which shall be due as
provided) be paid within ten (10) days from the date Landlord renders a
statement of account. All such amounts (including Base Rent, Rent Adjustment
Deposits and Rent Adjustments) shall bear interest from the date due until the
date paid at the annual rate of eighteen percent (18%) or at the maximum legal
rate of interest, whichever is lower. Tenant shall pay upon demand all
Landlord's costs, charges and expenses, including the fees of counsel, agents
and others retained by Landlord, incurred in enforcing Tenant's obligations
hereunder or incurred by Landlord in any litigation, negotiation or transaction
in which Tenant causes Landlord, without Landlord's fault, to become involved or
concerned.
J. If Tenant shall file for protection under any Chapter of the
Bankruptcy Code not or hereinafter in effect, Landlord and Tenant agree, to the
extent permitted by law, to request that the debtor-in-possession or
trustee-in-bankruptcy, if one is appointed, assume or reject this Lease within
sixty (60) days thereafter.
22. DEFAULT UNDER OTHER LEASE
If the term of any Lease, other than this Lease, made by the Tenant for
any space in the Building shall be terminated or terminable after the making of
this Lease because of any default by the Tenant under such other lease, such
fact shall empower the Landlord, at the Landlord's sole opinion, to terminate
this Lease by notice to the Tenant.
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<PAGE> 102
23. SURRENDER OF POSSESSION.
A. At the termination date or other termination of the term or Tenant's
right to possession hereunder Tenant shall surrender all keys of the Premises
to Landlord and make known to Landlord the combination of all locks and vaults
remaining on the Premises and shall (subject to the provision of Sections 23.B
and 23.C) return to Landlord the Premises and all equipment and fixtures of
Landlord broom clean in as good a condition and state of repair as when Tenant
originally took possession, ordinary wear and loss or damage by fire, or other
casualty excepted, failing which Landlord may restore the Premises, equipment
and fixtures to such condition and state or repair and Tenant shall, upon
demand, pay to Landlord the cost thereof.
B. All installations, additions, decorations, hardware, non-trade
fixtures and improvements temporary or permanent, except movable furniture and
all equipment belonging to Tenant, in or upon the Premises, whether placed
there by Tenant or Landlord, shall be Landlord's property and shall remain upon
the Premises, all without compensation, allowance or credit to Tenant provided,
however, that if prior to such termination or within twenty (20) days
thereafter Landlord so directs by notice, Tenant shall promptly remove the
installations, additions, hardware, non-trade fixtures and improvements placed
in or upon the Premises by Tenant and designated in the notice, failing which
Landlord may remove the same and Tenant shall upon demand, pay to Landlord the
cost of such removal and of any necessary restoration of the Premises. All
fixtures, installations, and personal property belonging to Tenant not removed
from the Premises upon termination of this lease and not required by Landlord
to have been removed as provided herein shall be conclusively presumed to have
been abandoned by Tenant and title thereto shall pass to Landlord under this
Lease as by a bill of sale.
C. At the sole option of Landlord, Tenant shall leave in place any
floor covering without compensation to Tenant or Tenant shall remove any floor
covering and all fastenings paper, glue, bases and other vestiges thereof and
restore the floor surface to its previous condition.
D. All obligations of Tenant hereunder shall survive the expiration of
the Term or sooner termination of this Lease.
24. RELOCATION OF TENANT.
Landlord shall have the right, upon thirty (30) days written notice, to
relocate Tenant to another location in the Building on the condition that the
new premises designated by Landlord shall be substantially similar to the
Premises with respect to area and configuration in the Building and shall not be
smaller in area than the Premises; provided, that such relocation shall occur
only if, and on the condition that it shall not cause any interruption
whatsoever in, or any deterioration of, the transmission to the public by Tenant
of radio broadcasting signals and programming. In the event of such a
relocation, Landlord shall pay the actual and reasonable costs of physically
moving the Tenant its property and equipment, to the new premises.
25. COVENANT AGAINST LIENS.
Landlord's title is and always shall be paramount to the title of
Tenant. Nothing herein contained shall empower Tenant to do any act which can,
shall or may encumber the title of Landlord. Tenant has no authority or power
to cause or permit any lien or encumbrance of any kind whatsoever, whether
created by act of Tenant, operation of law or otherwise, to attach to or be
placed upon Landlord's title or interest in the Real Property, the Building or
the Premises. Any and all liens and encumbrances created by Tenant shall attach
to Tenant's interest in the Premises only. Tenant covenants and agrees not to
suffer or permit any lien of mechanics or materialmen or others to be placed
against the Building or the Premises with respect to work or services claimed
to have been performed for or materials claimed to have been furnished to
Tenant or the Premises, and in case of any such lien attaching, Tenant covenants
and agrees immediately to cause it to be released and removed of record. If any
such liens so attach and Tenant fails to pay and remove same within ten (10)
days, Landlord, at its election, may pay and satisfy the same and in such event
the sums so paid by Landlord, with interest from the date of payment at the
rate set forth in Section 21.1 shall be deemed to be additional Rent due and
payable by Tenant at once without notice or demand.
26. SECURITY DEPOSIT.
Tenant agrees to deposit with Landlord, upon execution of this Lease,
the Security Deposit stipulated in the
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Schedule ("Security") as security for the full and faithful performance by
Tenant of each and every term, provision, covenant, and condition of this Lease.
If Tenant defaults in respect to any of the terms, provisions, covenants and
conditions of this Lease including, but not limited to, payment of the Base
Rent, Rent Adjustment, Deposits, Rent Adjustments or other amounts due Landlord
hereunder, Landlord may use, apply, or retain the whole or any part of the
Security for the payment of any such Base Rent, Rent Adjustment Deposits or Rent
Adjustments in default, or for any other sum which Landlord may expend or be
required to expend by reason of Tenant's default including without limitation,
any damages or deficiency in the reletting of the Premises, whether such damages
or deficiency shall have accrued before or after any re-entry by Landlord. If
the Security shall be so used, applied or retained by Landlord, Tenant shall
promptly, in each such instance, on written demand therefor by Landlord, pay to
Landlord such additional sum as may be necessary to restore the Security to the
stated amount. If Tenant shall fully and faithfully comply with all the terms,
provisions, covenants, and conditions of this Lease, the Security, or any
balance thereof, shall be returned to Tenant after the later of (a) thirty (30)
days after the Expiration Date; (b) the removal of Tenant from the Premises; (c)
the surrender of the Premises by Tenant to Landlord in accordance with this
Lease; and (d) the Rent Adjustments owed by Tenant have been computed by
Landlord and paid by Tenant. In the absence of written evidence satisfactory to
Landlord of any assignment of the right to receive the Security or the remaining
balance thereof, Landlord shall return the Security to Tenant, regardless of one
or more assignments of this Lease. Upon the transfer of Landlord's interest
under this Lease, Landlord's obligation to Tenant with respect to the Security
shall terminate upon assumption of such obligation by the transferee.
If any portion of the Security is to be used or applied, Tenant shall
within five (5) days after written demand therefor deposit cash with Landlord or
its beneficiary in an amount sufficient to restore the Security to its original
amount and Tenant's failure to do so shall be a material breach of this Lease.
Landlord or its beneficiary shall not be required to keep this Security separate
from its general funds and Tenant shall not be entitled to interest on such
deposit.
Tenant hereby agrees not to look to any mortgagee as mortgagee,
mortgagee in possession, or successor in title to the Building for
accountability for any Security required by the Landlord hereunder, unless said
sums have actually been received by said mortgagee as security for the Tenant's
performance of this Lease. The Landlord may deliver the funds deposited
hereunder by Tenant to the purchaser of Landlord's interest in the Building, in
the event that such interest is sold, and thereupon Landlord and its beneficiary
shall be discharged from any further liability with respect to such Security.
27. RULES AND REGULATIONS.
A. Tenant agrees to observe the reservations to Landlord contained in
Section 19 hereof and agrees, for itself, its employees, agents, clients,
customers, invitees and guests, to comply with the rules and regulations set
forth in Exhibit C attached to this Lease and such other reasonable rules and
regulations as shall be adopted by Landlord pursuant to Section 27.B. Any
violation by Tenant of any of the rules and regulations contained in Exhibit C
or other Sections of this Lease, or as may hereafter be adopted by Landlord
pursuant to Section 27.B. may be restrained; but whether or not so restrained,
Tenant acknowledges and agrees that it shall be and remain liable for all
damages, loss, costs and expense resulting from any violation by the Tenant of
any of said reasonable rules and regulations. Nothing in this Lease shall be
construed to impose upon Landlord any duty or obligation to enforce said rules
and regulations, or the terms, covenants and conditions of any other leases
against any other tenant or any other persons, and Landlord, its partners and
employees, agents, invitees, or by any other person; provided that Landlord
shall uniformly apply such rules and regulations and shall not discriminate
against Tenant in the enforcement of any such rules and regulations.
B. Landlord reserves the right to make and adopt from time to time,
such other reasonable rules and regulations and to amend, modify or rescind
any then existing rules and regulations for the protection and welfare of the
Building and its tenants and occupants, as Landlord may determine, and the
Tenant agrees to abide by all such rules and regulations.
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28. NOTICES.
In every instance where it shall be necessary or desirable for Landlord
to serve any notice or demand upon Tenant, it shall be sufficient to send a
written or printed copy of such notice by demand by United States registered or
certified mail, postage prepaid, addressed to tenant at the address set forth in
the Schedule, in which event the notice or demand shall be deemed to have been
served at the time the same was posted plus two (2) business days, or to serve
any such notice or demand personally. Any such notice or demand to be given by
tenant to Landlord shall, until further notice, be deemed to have been served at
the time the same were posted plus two (2) business days. Notwithstanding the
foregoing, notices served with respect to emergency matters may be served
personally or by telephone communication. Tenant is advised and acknowledges
that until further notice to Tenant, the Managing Agent stipulated in the
Schedule has authority to execute and deliver notice hereunder to Tenant on
behalf of Landlord and Landlord's beneficiary.
29. NONWAIVER.
No waiver of any condition expressed in this Lease shall be implied by
any neglect of Landlord to enforce any remedy on account of the violation of
such condition whether or not such violation be continued or repeated
subsequently, and no express waiver shall affect any condition other than the
one specified in such waiver, and that one only for the time and in the manner
specifically stated. Without limiting the provisions of Section 21, it is agreed
that no receipt of moneys by Landlord from Tenant after the termination in any
way of the Term or of Tenant's right of possession hereunder or after the giving
of any notice shall reinstate, continue or extend the Term or affect any notice
given to Tenant prior to the receipt of such moneys. It is also agreed that
after the service of notice or the commencement of a suit or after final
judgment for possession of the Premises, Landlord may receive and collect any
moneys due, and the payment of said moneys shall not waive or affect said
notice, suit or judgment.
30. TENANT AUTHORITY TO EXECUTE LEASE.
If Tenant is a corporation, Tenant represents and warrants that this
Lease has been duly authorized, executed and delivered by and on behalf of the
Tenant and constitutes the valid and binding agreement of the tenant in
accordance with the terms hereof and if Landlord so requests, Tenant shall
deliver to Landlord or its agent, concurrently with the delivery of this Lease
executed by Tenant, certified resolutions of the Board of Directors of Tenant
authorizing Tenant's execution and delivery of this Lease and the performance of
Tenant's obligations hereunder. If Tenant is a partnership, Tenant represents
and warrants that all of the persons who are general or managing partners in
said partnership have executed this Lease on behalf of Tenant, or that this
Lease has been executed and delivered pursuant to and in conformity with a valid
and effective authorization therefor by all of the general or managing partners
of such partnership, and is and constitutes the valid and binding agreement of
the partnership and each and every partner therein in accordance with its terms.
It is agreed that each and every present and future partner in Tenant shall be
and remain at all times jointly and severally liable hereunder and that the
death, resignation or withdrawal of any partner shall not release the liability
of such partner under the terms of this Lease unless and until the Landlord
shall have consented in writing to such release.
31. REAL ESTATE BROKERS.
Tenant represents that Tenant has directly dealt with and only with the
real estate broker or brokers disclosed in the Schedule (whose commission, if
any, shall be paid by Landlord pursuant to separate agreement), as broker in
connection with this Lease and agrees to indemnify and hold Landlord harmless
from all damages, liability and expense (including reasonable attorneys' fees)
arising from any claims or demands of any other broker or brokers or finders for
any commission alleged to be due such broker or brokers or finders in connection
with this Lease.
32. MISCELLANEOUS.
A. This Lease does not grant to tenant any rights to light or air over
the Building.
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B. The words "Landlord" and "Tenant" wherever used in this Lease shall
be construed to mean plural where necessary, and the necessary grammatical
changes required to make the provisions hereof apply either to corporations or
individuals, men or women, shall in all cases be assumed as though in each case
fully expressed. In the event that the Tenant shall consist of more than one
party, all of such parties shall be jointly and severally liable for the
obligations and liabilities of the Tenant hereunder.
C. Each provision hereof shall extend to and shall, as the case may
require, bind and insure to the benefit of the Landlord and the Tenant and
their respective heirs, legal representatives, successors and assigns in the
event this Lease has been assigned with the express written consent of the
Landlord; provided, however, this provision shall not be construed to permit
any assignment or subletting by Tenant.
D. Neither the submission of this Lease to Tenant, nor the execution
of this Lease by Tenant and delivery of same to Landlord or the Managing Agent
shall constitute a reservation of or option for the Premises or an agreement to
enter into a lease. This Lease shall become effective only if and when Landlord
executes and delivers same to Tenant, provided, however, the execution and
delivery of Tenant of this Lease to Landlord or the Managing Agency shall
constitute an irrevocable offer by Tenant to lease the Premises on the terms and
conditions herein contained, which offer may not be withdrawn or revoked for
thirty (30) days after such execution and delivery. If Tenant is a corporation,
partnership, association or any other entity, it shall deliver to Landlord,
concurrently with the delivery to Landlord of an executed lease, certified
resolutions of Tenant's directors or other governing person or body authorizing
execution and delivery of this Lease and the performance by Tenant of its
obligations hereunder and the authority of the party executing the Lease as
having been duly authorized to do so.
E. All riders and exhibits attached to this Lease and initialed by the
Landlord and the Tenant are hereby made a part of this Lease as though inserted
in this Lease.
F. The Tenant agrees that from time to time upon not less than ten
(10) days prior request by the Landlord, the Tenant will deliver to the
Landlord, or to such other party as Landlord may direct, a statement in writing
certifying (i) that Tenant has accepted and is occupying the Premises and has
commenced payment of Rent (or, if Tenant has not taken occupancy of commenced
payment of Rent the Tenant shall certify as to the date on which it intends to
take occupancy and when its obligation to pay Rent commences); (ii) the
Commencement Date (or anticipated Commencement Date if the same has not then
occurred) and the date of Termination of the Lease; (iii) that the Lease has
not been changed, modified or amended, and is in full force and effect and free
from any default by any party known to the Tenant (or, if the Lease has been
changed, modified or amended, or if a default has been committed, the Tenant
shall certify as to the date and nature of said change, modification or
amendment, and the nature of any default known to the Tenant by either Landlord
or Tenant); (iv) that the Tenant has no claims or rights against the Landlord
by way of set-off or deduction against the amounts required to be paid by Tenant
under the Lease; (v) that the Tenant has not paid Rent for more than the
current month during which certification is made; (vi) that the tenant has not
been granted any option or right of first refusal to purchase all or any
portion of the Building; (vii) the dates to which the Rent and other charges
have been paid, and (viii) such other information as Landlord shall reasonably
request.
G. If any term, covenant or condition of this Lease or application
thereof to any person or circumstances shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the application of such term,
covenant or condition to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby and each
term, covenant or condition of this Lease shall be valid and be enforced to the
fullest extent permitted by law.
H. This Lease sets forth all the covenants, promises, agreements,
conditions and understandings between Landlord and Tenant, concerning the
Premises and there are no covenants, promises, agreements, conditions or
understandings, either oral or written, between them other than herein set
forth, except as herein otherwise provided, no subsequent alteration,
amendment, change or addition to this Lease shall be binding upon Landlord or
Tenant unless reduced to writing and signed by them.
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I. Wherever there is provided in this Lease a time limitation for
performance by the Landlord of any construction, repair, maintenance or service,
the time provided shall be extended for as long as to the extent that delay in
compliance with such limitation is due to an act of God, strikes, governmental
control or other factors beyond the reasonable control of the Landlord. Subject
to the preceding sentence, time is of the essence under this Lease and of each
and all provisions thereof.
J. The law of the State of Illinois shall govern the validity,
performance, construction and enforcement of this Lease. The headings or
sections are for convenience only and do not define, limit or construe the
contents of such sections or subsections. References made in this Lease to
numbered section and subsections shall refer to numbered sections or subsections
of this Lease unless otherwise indicated.
K. Nothing contained in this Lease shall be deemed or construed by the
parties hereto or by any third party to create the relationship of principal and
agent, partnership, joint venture or any association between Landlord and
Tenant, it being expressly understood and agreed that neither the method of
computation of Rent nor any other provisions contained in this Lease nor any act
of the parties hereto shall be deemed to create any relationship between
Landlord and Tenant other than the relationship of landlord and tenant.
L. All covenants and agreements to be performed by tenant under any
provisions of this Lease shall be performed by Tenant, at Tenant's sole cost and
expense, and without any abatement of Rent. Tenant acknowledges that the late
payment by Tenant to Landlord of any sums due under this Lease will cause
Landlord to incur costs not contemplated by this Lease, the exact amount of such
cost being extremely difficult and impractical to fix. Such costs include,
without limitation, processing and accounting charges, and late charges that may
be imposed on Landlord by the terms of the encumbrance and note secured by any
encumbrance covering the Premises or the Building of which the Premises are a
part. Therefore, if any monthly installment of the Annual Base Rental is not
received by Landlord by the date when due, or if Tenant fails to pay any other
sum of money due hereunder and such failure continues for five (5) days after
notice thereof by Landlord, Tenant shall pay to Landlord, as additional Rent,
the sum of five percent (5%) of the overdue amount as a late charge. Such amount
if not received within said five (5) days shall also bear interest as provided
in Section 21.1. Landlord's acceptance of any late charge or interest shall not
constitute a waiver of Tenant's default with respect to the overdue amount or
prevent Landlord from exercising any of the other rights and remedies available
to Landlord under this Lease or any law now or hereafter in effect. Further, in
the event such late charge is imposed by Landlord for any two (2) months during
the Term hereof for whatever reason, Landlord shall have the option to require
that, beginning with the first payment of Rent due following the imposition of
the second late charge, Rent shall no longer be paid in monthly installments one
month in advance but shall be payable three (3) months in advance on the first
day of each calendar month of the Term.
33. LANDLORD.
The term "Landlord" as used in this Lease means only the owner or owners
at the time being of the Building so that in the event of any assignment,
conveyance or sale, once or successively of the Building, for any assignment of
this Lease by Landlord, said Landlord named herein shall be and hereby is
entirely free and relieved of all covenants and obligations of Landlord
hereunder accruing after such sale or assignment, and Tenant agrees to look
solely to such purchaser, grantee or assignee with respect thereto. This Lease
shall not be affected by any such assignment, conveyance or sale and Tenant
agrees to attorn to the purchaser, grantee or assignee.
The Landlord or any successor in interest that may be an individual,
joint venture, tenancy in common, firm or
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partnership, general or limited, shall not be subject to personal liability on
such individual or on the members of such joint venture, tenancy in common,
firm or partnership in respect to any of the covenants or conditions of this
Lease. The Tenant shall look solely to the equity of the Landlord in the
Building and the rents, issues and profits derived therefrom for the
satisfaction of the remedies of the Tenant in the event of a breach by the
Landlord. It is mutually agreed that this clause is and shall be considered an
integral part of the Lease. Such exculpation of personal liability is absolute
and without any exception whatsoever.
34. QUIET ENJOYMENT.
Subject to the provisions of this Lease, Landlord covenants that
Tenant, on paying the Rent and performing the covenants of this Lease on its
part to be performed, shall and may peaceably have, hold and enjoy the
Premises for the Term.
35. EARLY TERMINATION.
Landlord may terminate this Lease on the last day of any month in any
year (a) if Landlord proposes or is required, for any reason, to remove or
demolish the Building or any substantial portion of it. Such termination shall
become effective and conclusive by Landlord's written notice to Tenant not less
than two hundred forty (240) days prior to the termination date fixed in the
notice. No money or other consideration shall be payable by Landlord to Tenant
for this right. The right hereby reserved by Landlord shall inure to all
purchasers, assignees, lessees, transferees and ground or underlying lessee, as
the case may be, and is in addition to all other rights of Landlord.
IN WITNESS WHEREOF, this instrument has been duly executed by the
parties hereto, as of the date first above written.
LANDLORD TENANT
M & J WILKOW MANAGEMENT CORPORATION, INFINITY BROADCASTING CORPORATION OF
as Agent as aforesaid ILLINOIS a Delaware corporation
d/b/a radio stations WJJD and WJMK
By: [signature illegible] By: [signature illegible]
--------------------------------- -------------------------------------
Marc R. Wilkow Its
Executive Vice President ----------------------------------
Attest:
---------------------------------
Its
---------------------------------
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<PAGE> 108
C E R T I F I C A T I O N
-------------------------
(If Tenant is a Corporation)
I, Farid Suleman (Asst.) Secretary of Infinity Broadcasting Corporation
------------- ----------------------------------
of Illinois a Delaware corporation ("Tenant")
-------------------------- --------------------------
hereby certify that the officers executing the foregoing Lease on behalf of the
Tenant, were duly authorized to act in their capacities as
--------------------
and and their actions are the action of the Tenant.
----------------------------
/s/ FARID SULEMAN
(CORPORATE SEAL) --------------------------------
Assistant Secretary
<PAGE> 109
R I D E R
---------
This Rider dated the 7th day of July, 1992 is to the Lease of even date
herewith by and between M & J WILKOW MANAGEMENT CORPORATION, as agent for the
beneficiary of American National Bank and Trust Company of Chicago, not
personally but solely as Trustee under Trust No. 32115, and INFINITY
BROADCASTING CORPORATION OF ILLINOIS, a Delaware corporation d/b/a radio
stations WJJD and WJMK.
R-1. Tenant Improvement Allowance.
----------------------------
Landlord shall provide to Tenant a tenant improvement allowance
("Tenant Improvement Allowance") of up to one hundred thirty-eight thousand
five hundred seventy and 00/100 ($138,570.00) to be used by Tenant for the
purpose of making alterations, additions and improvements to the Premises,
including equipment consistent with the Use being made of the Premises by
Tenant ("Work"). Included within the cost of Work shall be only those items
that generally enhance the value of the Premises to Tenant or to Landlord, in
light of the Use Being made of the Premises as studios, offices, and related
space for radio broadcasting facilities. The Tenant Improvement Allowance is
due and payable to Tenant within thirty (30) days of presentation to Landlord
by Tenant of appropriate invoices or other evidence of payment and lien waivers
from those parties performing the Work on behalf of Tenant.
IN WITNESS WHEREOF, the parties hereto have caused this Rider to be
executed as of the day and year first above written.
LANDLORD: TENANT:
M & J WILLOW MANAGEMENT CORPORATION INFINITY BROADCASTING CORPORATION
as Agent as aforesaid OF ILLINOIS
d/b/a radio stations WJJD and WJMK
By: /s/ MARC R. WILKOW By: /s/ FARID SULEMAN
-------------------------------- -----------------------------
Marc R. Wilkow Name: Farid Suleman
Executive Vice President Title: VP Finance/CEO
<PAGE> 110
EXHIBIT "A"
<PAGE> 111
EXHIBIT "B"
GUARANTY
FOR VALUE RECEIVED, and in consideration of, and as an inducement for
the execution and delivery of that certain Lease dated_______________, 1992,
between M & J Wilkow Management Corporation, as agent for the beneficiary of
American National Bank and Trust Company of Chicago, not personally but solely
as Trustee under Trust No. 32115 ("Landlord") and Infinity Broadcasting
Corporation of Illinois, a Delaware corporation d/b/a radio stations WJJD and
WJMK ("Tenant") covering Suite 1200 in the building situated at 180 North
Michigan Avenue, Chicago, Illinois 60601; the undersigned Infinity Broadcasting
Corporation; a Delaware corporation ("Guarantor") hereby guarantees to the
Landlord, its successors and assigns, the full and timely performance and
observance of all the covenants, terms, conditions and agreements therein
provided to be performed and observed by the Tenant, its successors and
assigns, and the Guarantor hereby covenants and agrees to and with the
Landlord, its successors and assigns, that if default shall at any time be made
by the Tenant its successors and assigns, in the performance and observance of
any of the covenants, terms, conditions or agreements contained in said Lease,
and Landlord after notice and legal process either terminates Tenant's right to
possession of the Premises or terminates the Lease, the Guarantor will
forthwith pay to the Landlord, its successors and assigns Landlord's
unamortized leasing costs (as described below) plus any and all reasonable
attorneys' fees and disbursements incurred by the Landlord relating to the
enforcement of this Guaranty in full satisfaction of the obligations of
Guarantor created hereunder. The Guarantor understands that the Landlord
intends to amortize the aggregate gross rent abatements provided to Tenant
under the Lease together with the aggregate of the tenant improvement allowance
provided to Tenant under the Lease over the 120 month lease term. To the extent
that the Tenant's right to possession of the Premises is terminated or the
Lease is terminated as provided above prior in the expiration of such lease
term then Guarantor shall reimburse Landlord for the unamortized portion of
such leasing costs for the period from the date of such termination to the date
of expiration of the 120 month period and shall also pay to Landlord interest
thereon at rate of eight percent (8%) per annum which interest shall be
presumed to have accrued thereon from the commencement date of the Lease
through the date of reimbursement of the unamortized leasing costs to Landlord
by Guarantor.
This Guaranty is an absolute and unconditional guaranty of payment and
of performance, but Guarantor's liability hereunder shall be limited to those
costs and expenses described herein above. It shall be enforceable against the
Guarantor without the necessity of any suit or proceedings on the Landlord's
part of any kind or nature whatsoever against the Tenant (except as otherwise
required or contemplated by the foregoing paragraph of this Guaranty), its
successors and assigns, and without the necessity of any notice of nonpayment,
nonperformance or nonobservance of any notice of acceptance of this Guaranty or
of any other notice or demand to which the Guarantor might otherwise be
entitled, all of which the Guarantor hereby expressly waives; and the Guarantor
hereby expressly agrees that the validity of this Guaranty and the obligations
of the Guarantor hereunder shall in nowise be terminated, affected, diminished
or impaired by reason of the assertion or the failure to assert by the Landlord
against the Tenant, or against the Tenant's successors and assigns, of any of
the rights or remedies reserved to the Landlord pursuant to the provisions of
the said Lease or by relief of Tenant from any of Tenant's obligations under
the Lease or otherwise by (a) the release or discharge of the Tenant in any
creditors' proceedings, receivership, bankruptcy or other proceedings, (b) the
impairment, limitation, release or modification of the liability of the Tenant
or the estate of the Tenant in bankruptcy, or of any remedy for the enforcement
of the Tenant's said liability under the Lease, resulting from the operation of
any present or future provision of the National Bankruptcy Act or other statute
or from the decision in any court; (c) the rejection or disaffirmance of the
Lease in any such proceedings.
This Guaranty shall be a continuing guaranty and the liability of the
Guarantor shall in no way be affected, modified or diminished by reason of any
assignment, amendment, renewal, supplement, modification or extension of the
Lease or by reason of any modification or waiver of or change in any of the
terms, covenants, conditions or provisions of said Lease, or by reason of any
extension of time that may be granted by the Landlord to the Tenant, its
successors or assigns or a changed or different use of the Leased Premises
consented to in writing by Landlord or by reason of any dealings or
transactions or matters or things occurring between the Landlord and the
Tenant, its successors or assigns, whether or not notice thereof is given to
the Guarantor or by the holding over of Tenant, its successors or assigns.
The Landlord's consent to any assignment or assignments, and successive
assignments by the Tenant and Tenant's assigns of the Lease, made either with
or without notice to the Guarantor, shall in no manner whatsoever release the
Guarantor from any liability as Guarantor.
<PAGE> 112
The assignment by Landlord of the Lease and/or the avails and proceeds
thereof made either with or without notice to the Guarantor shall in no manner
whatsoever release the Guarantor from any liability as Guarantor.
All duties and obligations of the undersigned pursuant to this Guaranty
shall be binding upon the heirs, legal representatives, successors and assigns
of the undersigned. If the undersigned consists of more than one person, then
each person shall be jointly and severally liable for the obligations of the
undersigned under this Guaranty. The liability of Guarantor is coextensive with
that of Tenant and an action may be brought against Guarantor and carried to
final judgment with or without making Tenant a party thereto.
All of the Landlord's rights and remedies under the said Lease or under
this Guaranty are intended to be distinct, separate and cumulative, and no such
right and remedy therein mentioned is intended to be in exclusion of a waiver of
any of the others. The obligation of the Guarantor hereunder shall not be
released by Landlord's receipt, application of release of security given for the
performance and observance of covenants and conditions required to be performed
and observed by Tenant under said Lease, nor shall the Guarantor be released by
the maintenance of or execution upon any lien which Landlord may have or assert
against Tenant and/or Tenant's assets.
Guarantor waives any and all rights of subrogation against the Tenant
by reason of any payments or acts of performance by the Guarantor, in compliance
with the obligations of the Guarantor hereunder and waives any right to enforce
any remedy which the Guarantor now or hereafter shall have against the Tenant by
reason of any one or more payment or acts of performance in compliance with the
obligations of the Guarantor hereunder. In addition, until all the covenants and
conditions in said Lease on the Tenant's part to be performed and observed are
fully performed and observed, the Guarantor subordinates any liability or
indebtedness of the Tenant now or hereafter held by the Guarantor to the
obligations of the Tenant to the Landlord under said Lease. Notwithstanding the
foregoing, nothing in this Guaranty shall be construed to effect or require any
subrogation, waiver, or subordination that is prohibited by the terms of the
Amended and Restated Credit Agreement, dated as of September 30, 1991, as
amended, by and among the Guarantor, Tenant, certain of Tenant's sister
corporations, and the banks named therein (the "Credit Agreement"), together
with all documents and instruments delivered thereunder, as well as all
amendments thereto and any documents that replace, in whole or in part, the
Credit Agreement and/or any such other documents or instruments in connection
with a total or partial refinancing of the indebtedness covered by the Credit
Agreement.
Guarantor hereby submits itself to the jurisdiction of the courts of the
state in which the Leased Premises are located, and hereby irrevocably appoints
the Tenant, or if Tenant is more than one person then any one of them, the
manager, assistant manager and any acting manager of the facility being operated
at any time during the term of the Lease at the Leased Premises and (if Tenant
is a corporation, trustee or partnership) all persons of the Tenant upon whom
service of process may be served for service upon Tenant as its agents for the
service of process in any action against Guarantor arising out of this Guaranty.
Pursuant to such service, suit may be brought against Guarantor in the country
and state in which the Leased Premises are located. This provision does not
affect any right to serve process upon Guarantor in any other manner permitted
by law.
GUARANTOR:
INFINITY BROADCASTING CORPORATION
By: /s/ FARID SULEMAN
---------------------------------
Name: Farid Suleman
Title: Vice President Finance/CFO
Date: July 6, 1992
--------------------------------
Address: 600 Madison Avenue
-----------------------------
New York, NY 10022
-----------------------------
10/91
<PAGE> 113
EXHIBIT C
Rules and Regulations
1. The sidewalks, entrances, passages, concourses, ramps, courts,
elevators, vestibules, stairways, corridors, or halls shall not be obstructed or
used by Tenant or the employees, agents, servants, visitors or business of
Tenant for any purpose other than ingress and egress to and from the Premises
and for delivery of merchandise and equipment in prompt and efficient manner,
using elevators, and passageways designated for such delivery by Landlord.
2. No awnings, air-conditioning units, fans or other projections shall
be attached to the Building. No curtains, blinds, shades, or screens shall be
attached to or hung in, or used in connection with, any window or door of the
Premises or Building, without the prior written consent of Landlord. All
curtains, blinds, shades, screens or other fixtures must be of a quality type,
design and color, and attached in the manner approved by Landlord. All
electrical fixtures hung in offices or spaces along the perimeter of the
Premises must be fluorescent, of a quality type, design and bulb color approved
by Landlord unless the prior consent of Landlord has been obtained for other
lamping.
3. No sign, advertisement, notice or other lettering shall be
exhibited, inscribed, painted, or affixed by any tenant on any part of the
outside of the Premises or Building or on the inside of the Premises if the same
can be seen from the outside of the Premises without the prior written consent
of Landlord. In the event of the violation of the foregoing by Tenant, Landlord
may remove same without any liability, and may charge the expense incurred by
such removal to the Tenant or Tenants violating this rule. Interior signs on
doors and the directory shall be inscribed, painted or affixed for each Tenant
by Landlord at the expense of such Tenant, and shall be of a standard size,
color and style acceptable to Landlord.
4. The exterior windows and doors that reflect or admit light and air
into the Premises or the halls, passageways or other public places in the
Building shall not be covered or obstructed by any Tenant, nor shall any
articles be placed on the windowsills. No showcases or other articles shall be
put in front or affixed to any part of the exterior of the Building, nor placed
in the halls, corridors or vestibules, nor shall any article obstruct any HVAC
supply or exhaust without the prior written consent of Landlord.
5. The electrical and mechanical closets, water and wash closets,
drinking fountains and other plumbing, electrical and mechanical fixtures shall
not be used for any purposes other than those for which they were constructed,
and no sweepings, rubbish, rags, coffee grounds, acids or other substances shall
be deposited therein. All damages resulting from any misuse of the fixtures
shall be borne by the Tenant who, or whose servants, employees, agents, visitors
or licensees, shall have caused the same. No person shall waste water by
interfering or tampering with the faucets or otherwise.
6. No portion of the Premises or the building shall be used or occupied
at any time for manufacturing, for the storage of merchandise, for the sale of
merchandise, goods or property of any kind at auction or otherwise or as
sleeping or lodging quarters.
7. Tenant, any Tenant's servants, employees, agents, visitors or
licensees, shall not at any time bring or keep upon the Premises any
inflammable, combustible, caustic, poisonous or explosive fluid, chemical or
substance.
8. No bicycles, vehicles or animals of any kind (other than a seeing
eye dog for a blind person), shall be brought into or kept by any Tenant in or
about the Premises or the Building.
9. Tenant shall not use or occupy or permit any portion of the Premises
to be used or occupied as an office for a public stenographer or typist, offset
printing or for the possession, storage, manufacture, sale of liquor, narcotics,
dope, tobacco in any form or as a barber or manicure shop, an employment bureau,
a labor office, a doctor's or dentist's office, a dance or music studio, any
type of school, or for any use other than those specifically granted in
- C-1 -
<PAGE> 114
the lease. Tenant shall not engage or pay any employees on the premises, except
those actually working for such Tenant on said Premises, and Tenant shall not
advertise for labor giving an address at said Premises.
10. Landlord shall have the right to prohibit any advertising by
any Tenant which in Landlord's opinion, tends to impair the reputation of the
Building or its desirability as a building for offices and upon written notice
from Landlord, Tenant shall refrain from or discontinue such advertising. In no
event shall Tenant without the prior written consent of Landlord, use the name
of the Building or use pictures or illustrations of the Building.
11. Any person in the Building will be subject to identification by
employees and agents of Landlord. All persons in or entering Building shall be
required to comply with the security policies of the Building. Tenant shall
keep doors to unattended areas locked and shall otherwise exercise reasonable
precautions to protect property from theft, loss, or damage. Landlord shall not
be responsible for the theft, loss or damage of any property.
12. No additional locks or bolts of any kind shall be placed on any
door in the Building or the Premises and no lock on any door therein shall be
changed or altered in any respect without the consent of Landlord. Landlord
shall furnish two keys for each lock on exterior doors to the Premises and
shall, on Tenant's request and at Tenant's expense, provide additional
duplicate keys. All keys, including keys to storerooms and bathrooms, shall be
returned to Landlord upon termination of this Lease. Landlord may at all times
keep a pass key to the Premises. All entrance doors to the Premises shall be
left closed at all times, and left locked when the Premises are not in use.
13. Tenant shall give immediate notice to Landlord in case of theft,
unauthorized solicitation, or accident in the Premises or in the Building or of
defects therein or in any fixtures or equipment or of any known emergency in
the Building.
14. Tenant shall not use the Premises or permit the Premises to be
used for photographic, multilith or multigraph reproductions, except in
connection with its own business and not as a service for others, without
Landlord's prior permission.
15. No freight, furniture or bulky matter of any description will be
received into the Building or carried into the elevators except in such a
manner, during such hours and using such elevators and passageways as may be
approved by Landlord, and then only upon having been scheduled at least two
(2) working days prior to the date on which such service is required. Any hand
trucks, carryalls, or similar appliances used for the delivery or receipt of
merchandise or equipment shall be equipped with rubber tires, side guards and
such other safeguards as Landlord shall require.
16. Tenants, or the employees, agents, servants, visitors or
licensees of Tenant shall not at any time place, leave or discard any rubbish,
paper, articles, or objects of any kinds whatsoever outside the doors of the
Premises or in the corridors or passageways of the Building.
17. Tenant shall not make excessive noises, cause disturbances or
vibrations or use or operate any electrical or mechanical devices that emit
excessive sound or other waves or disturbances or create obnoxious odors, any
of which may be offensive to the other tenants and occupants of the Building or
that would interfere with the operation of any device, equipment, radio,
television broadcasting or reception from or within the Building or elsewhere
and shall not place or install any projections, antennas, aerials or similar
devices inside or outside of the Premises or on the Building without Landlord's
prior written approval.
18. Tenant shall comply with all applicable federal, state and
municipal laws, ordinances and regulations, insurance requirements and building
rules and regulations and shall not directly or indirectly make any use of the
Premises which may be prohibited by any of the foregoing or which may be
dangerous to persons or property or may increase the cost of insurance or
require additional insurance coverage.
-C2-
<PAGE> 115
19. Tenant shall not serve, nor permit the serving of alcoholic
beverages in the Premises unless Tenant shall have procured Host Liquor
Liability Insurance, issued by companies and in amounts reasonably satisfactory
to Landlord, naming Landlord as an additional party insured.
20. The requirements of Tenant will be attended to only upon written
application at the Office of the Building. Employees shall not perform any work
or do anything outside of the regular duties unless under special instructions
from the Office of the Building.
21. Canvassing, soliciting and peddling in the Building is prohibited
and Tenant shall cooperate to prevent the same.
22. Except as otherwise explicitly permitted in its Lease, Tenant shall
not do any cooking, conduct any restaurant, luncheonette or cafeteria for the
sale or service of food or beverages to its employees or to others, install or
permit the installation or use of any food, beverage, cigarette, cigar or stamp
dispensing machine or permit the delivery of any food or beverage to the
Premises, except by such persons delivering the same as shall be approved by
Landlord.
23. Tenant shall at all times keep the Premises neat and orderly.
- C-3 -
<PAGE> 116
Exhibit "D"
LICENSE AGREEMENT
This Agreement, made and entered into this ____ day of __________, 1992,
by and between M & J WILKOW MANAGEMENT CORPORATION (the "Licensor") as agent
for the beneficiary of American National Bank and Trust Company of Chicago, not
personally but solely as Trustee under Trust No. 32115 (the "Landlord"), and
INFINITY BROADCASTING CORPORATION OF ILLINOIS, a Delaware corporation (the
"Licensee").
1. PURPOSE: Licensor hereby grants to Licensee, and Licensee hereby
accepts, a license to (a) install, maintain and operate for the term hereof, a
satellite dish and microwave antenna system, consisting of (x) an approximately
three (3) foot in diameter satellite dish mounted on wall of penthouse
approximately four (4) feet from roof level; (y) four (4) satellite dishes,
three (3) feet in diameter not attached, but weighted with cement blocks; and
(z) an approximately nine (9) foot in diameter satellite dish welded on the
column (collectively "Antenna") at the locations described on Appendix "A"
attached hereto, on the roof of the Building known as 180 North Michigan Avenue,
Chicago, Illinois, subject to all regulations, including but not limited to
local zoning ordinances, in accordance with the following terms, covenants and
conditions. Licensee shall remit, in advance to Licensor on or before the first
day of each month a licensing fee of $300.00 per month in consideration of the
grant of this license.
2. TERM: The term of this License shall expire simultaneously with the
expiration of the lease agreement (the "Lease") dated July 7, 1992 for premises
known as Suite 1200 located at 180 North Michigan Avenue, Chicago, Illinois (the
"Premises") between Licensee and Landlord, unless sooner terminated as provided
herein.
3. PERMITS AND LICENSES: Licensee, at its sole effort and expense, will
install, maintain and operate the Antenna in compliance with all laws,
ordinances or regulations, federal, state or local, applicable thereto, and
secure all licenses or permits which are necessary in connection with this
License or the Antenna. Licensee will give Licensor timely notice of any
requirements, whether governmental or otherwise, with which Licensor must comply
pertaining to the Antenna, and Licensee will bear any cost attendant to such
compliance. Licensee will have the ongoing duty to assure that the operation of
the Antenna continues to be legal and that all required permits and licenses are
maintained and kept current. Should the necessary governmental or other
approvals, licenses or permits not be granted or after granted be withdrawn,
cancelled or terminated, then this License will immediately terminate, and both
parties will be relieved of any further obligation to the other (with the
exception of Licensee's obligations under paragraphs 7 and 9 hereof).
4. TAXES: Licensor hereby acknowledges that the Antenna, irrespective
of the fact that the same may be affixed or attached to the premises and
otherwise by operation of law would become or could be deemed to become a part
of the premises, shall not be nor be deemed to be a part of the premises and
shall at all times remain the sole and exclusive personal property of the
Licensee. Licensee will pay all personal property, excise or other taxes,
assessments and license fees relating to the operation of the Antenna.
5. INSTALLATION: The parties anticipate that the installation of the
Antenna at the location agreed upon may require alterations or additions and
utility connections (the "Installation"). Licensee will install the Antenna in a
good and workmanlike manner under the supervision of Licensor and pursuant to
plans and specifications approved in advance by Licensor in writing. Licensee
shall not make any alterations or additions to the Antenna without the prior
written consent of Licensee.
6. MAINTENANCE: Licensee will provide complete maintenance and repair
services for the Antenna, pertaining to appearance, cleaning, parts and labor
(whether or not the defects are covered by manufacturer's warranties), with the
objective of keeping the Antenna in good operating order, condition and repair
(the "Maintenance") all of which will be performed under the supervision of
Licensor. Licensor shall have the right at all times, and from time to time, to
inspect the Antenna and its location for any purpose whatsoever. If Licensee
ceases to perform its Maintenance obligations in accordance herewith, Licensor
may upon reasonable notice terminate this License, and Licensee shall thereafter
remove the Antenna and perform its Removal and Restoration obligations outlined
in paragraph 7 hereof, immediately after such event.
<PAGE> 117
7. REMOVAL: Upon termination of the License, Licensee shall remove
the Antenna and all improvements from the premises (the "Removal") and restore
the location to its appearance and condition existing immediately before the
original installation of the Antenna (the "Restoration"). The Removal and
Restoration must be performed under the supervision of Licensor and fully
completed within thirty (30) days after termination of the license.
8. SUBCONTRACTING AND RELATIONSHIP BETWEEN THE PARTIES: Licensee may
subcontract all or any part of the Installation, Maintenance, Removal, or
Restoration of the Antenna. Should any part of the Licensee's responsibilities
hereunder be subcontracted, such subcontractor shall be Licensee's sole
responsibility and shall comply with all of the terms, covenants and conditions
herein as if said subcontractor were included in the term "Licensee". Licensee
and its subcontractors shall at all times be independent contractors, and it is
not the intent of Licensee or Licensor to create any type of lease,
employment, agency, partnership or joint venture relationship.
9. INDEMNIFICATION AND INSURANCE: The Installation, Maintenance,
operation, use, Removal and Restoration of the Antenna shall be at Licensee's
sole risk, cost and expense. Licensee hereby indemnifies and holds harmless
and, at the option to Licensor, agrees to defend (with counsel reasonably
acceptable to Landlord) Licensor, and Landlord, and their respective officers,
directors, shareholders, partners, beneficiaries, contractors, employees,
agents and affiliates, from any and all losses, claims, demands, judgments,
damages, suits, liabilities or expenses of any kind or nature including
reasonable attorney's fees for the defense thereof ("Claims"), arising directly
or indirectly from: (i) Licensee's or its employee's, agent's, customer's or
contractor's use of the premises; (ii) the Installation, Maintenance, Removal,
Restoration or operation of the Antenna; (iii) any breach or default on the
part for Licensee in the performance of any covenant or agreement on the part
of Licensee to be performed pursuant to the terms of this License; or (iv) any
act or negligence of Licensee, its employees, agents, customers, or
contractors, in or about the premises. If Licensor exercises its option to
have Licensee's counsel defend Licensor, Licensee's counsel shall not enter
into a settlement of any matter without the prior express written consent of
Licensor. In addition, Licensee hereby releases Licensor and Landlord and their
respective officers, directors, shareholders, partners, beneficiaries,
contractors, employees, agents and affiliates from and waives all claims for
damages of any kind or nature sustained by Licensee or its employees,
agents, customers or contractors arising directly or indirectly from the use
of or actions on the premises inclusive of the Installation, Maintenance,
Removal, Restoration or operation of the Antenna. The covenants and agreements
contained in this paragraph 9 shall survive the expiration or earlier
termination of this License.
Licensee shall purchase and maintain such insurance throughout the term
hereof as will protect Licensee and the "Additional Insureds" as described below
from the Claims or losses Landlord may suffer which may arise out of, in
connection with, or result from this License. Such insurance shall include: (i)
commercial general liability insurance, including contractual liability
coverage, covering property damage and liability for personal injuries,
including death, with a limit of not less than One Million and 00/100 Dollars
($1,000,000.00) for each occurrence; (ii) workmans compensation insurance, with
Illinois statutory limits, covering employer's liability, and (iii) an umbrella
liability policy in a limit of not less than Two Million and 00/100 Dollars
($2,000,000.00) which policy shall insure over the underlying commercial general
liability policy noted above. Such policies shall be secured from an insurance
company with a Best rating or not less than an A10 which company must be
licensed to do business in the State of Illinois. Such policies shall include
Licensor and Landlord (inclusive of the land trust in which legal title to the
premises is held and the beneficiary of said land trust) as additional named
insureds. The policies shall be endorsed to provide that they may not be
cancelled or altered, unless thirty (30) day prior written notice is given to
Licensor.
10. TERMINATION:
(a) Notwithstanding any other provision of this License to the
contrary, in the event of a fire or other casualty or other loss and, as a
result thereof Licensee's Antenna is in a state of disrepair or is inoperable,
then and in such event Licensee shall either install a new Antenna or repair
the existing Antenna within thirty (30) days of such event, or the license
shall immediately terminate.
2
<PAGE> 118
(b) If Licensee fails in any respect to perform any agreements,
covenant or obligation in the license, then and in such event, the Licensor,
after the continuance of any such failure or default for thirty (30) days after
giving notice thereof to the Licensee, may terminate this License or may (but
this shall not be deemed to impose an obligation on the Licensor so to do) cure
such failure or default, on behalf of and at the expense of the Licensee. A
default under this license shall be "ipso facto" a default under the Lease.
(c) If the Licensee's Lease is terminated for any reason whatsoever,
or if Licensee ceases to operate the Antenna, or if the operation of the Antenna
at the location is determined in a judicial or administrative proceeding to be
in violation of any law, rule or regulation, then and in such event, the license
shall be terminated upon reasonable advance notice to the Licensee.
11. NOTICE: Notice hereunder shall be in writing and effected either by
personal delivery, overnight courier service or by depositing the same in an
official U.S. mail receptacle as certified mail, return receipt requested,
postage prepaid, addressed, if to Licensor, to 180 N. Michigan Avenue, Suite
2000, Chicago, Illinois 60601 Attn: Marc R. Wilkow, and if to Licensee, at the
Premises, or such other address as either party may from time to time designate.
Any notice given under this Agreement shall be in writing and deemed received
when delivered if personally served or sent via overnight courier service or if
mailed, five (5) days after placing same in an official U.S. mail receptacle.
12. WAIVER: The rights and remedies of the parties hereunder and those
provided by law shall be construed as cumulative and no one of them is
exclusive of any other right or remedy hereunder or allowed by law, and shall
be continuing rights, none of which shall be exhausted by being exercised on
one or more occasions. A waiver by either party of any default, breach or
failure of the other shall not be construed as a continuing waiver, or as a
waiver of any subsequent or different default, breach or failure. In case of a
breach by either party of any covenant, agreement or undertaking, the other
party may accept from the party in breach any payment or payments hereunder
without waiving any rights provided for herein with respect to any such breach.
13. ASSIGNMENT: Licensee may not assign or transfer this License
without the prior written consent of the Licensor. Any attempted assignment or
transfer in violation of this paragraph shall be void and confer no rights upon
any third person.
14. LIABILITY OF LANDLORD: The Landlord and its managing agent or any
successor in interest shall not be subject to recourse or personal liability in
respect to any of the terms, covenants or conditions of this license. The
Licensee shall look solely to the equity of Landlord or any successor in
interest in the building and the rents, issues, and profits derived therefrom
for the satisfaction of the remedies of Licensee hereunder. It is mutually
agreed that this clause is and shall be considered an integral part of this
license. Such exculpation of personal liability is absolute and without any
exception whatsoever.
15. LIENS: Licensee covenants not to suffer or permit any lien of
mechanics or materialmen or others to be placed against the building in
connection with the Antenna. In case of any lien so attaching, Licensee shall
immediately cause it to be released and removed of record or shall secure a bond
sufficient to cause Chicago Title Insurance Company to endorse over such lien.
16. MISCELLANEOUS;
(a) This License constitutes the entire understanding of the parties
and supersedes any prior written or oral negotiations or understandings.
(b) It is the intention of the parties hereto that this license shall
be construed and enforced in accordance with the laws of the State of Illinois.
- 3 -
<PAGE> 119
(c) If any provision of this license is held invalid or unenforceable,
the remainder of this license shall not be affected thereby, and each other
provision of this license shall be valid and enforceable to the fullest extent
permitted by law.
LICENSOR:
M & J WILKOW MANAGEMENT CORPORATION,
as agent aforesaid
By: /s/ MARC R. WILKOW
--------------------------------
Marc R. Wilkow
Executive Vice President
LICENSEE:
INFINITY BROADCASTING CORPORATION
OF ILLINOIS
By: /s/ FARID SULEMAN
-----------------------------
Name: Farid Suleman
------------------------
Title: VP Finance/CFO
-----------------------
- 4 -
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<ARTICLE> 5
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-29-1996
<PERIOD-START> SEP-26-1995
<PERIOD-END> SEP-29-1996
<EXCHANGE-RATE> 1
<CASH> 5,468,079
<SECURITIES> 0
<RECEIVABLES> 12,104,500
<ALLOWANCES> 4,510,763
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<CURRENT-ASSETS> 17,413,437
<PP&E> 19,221,654
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<TOTAL-ASSETS> 176,860,159
<CURRENT-LIABILITIES> 8,241,656
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0
35,938,659
<COMMON> 5,581
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<TOTAL-LIABILITY-AND-EQUITY> 176,860,159
<SALES> 0
<TOTAL-REVENUES> 55,337,720
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<INTEREST-EXPENSE> (16,533,278)
<INCOME-PRETAX> 0
<INCOME-TAX> (1,165,800)
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<NET-INCOME> (4,486,482)
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