UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One):
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the quarterly period ended September 30, 1996
__ Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
Commission File Number: 0-26102
AMERICAN RADIO SYSTEMS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 04-3196245
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
116 Huntington Avenue
Boston, Massachusetts 02116
(Address of principal executive offices)
Telephone Number (617)-375-7500
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days:
Yes X No __
Class of Common Stock Outstanding at October 31, 1996
Class A Common Stock 15,063,740 shares
Class B Common Stock 4,695,378 shares
Class C Common Stock 1,295,518 shares
Total 21,054,636 shares
Page 1 of 33 pages
Exhibit Index on page 32
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Unaudited Condensed Consolidated Financial Statements Page No.
Consolidated Balance Sheets
September 30, 1996 and December 31, 1995.......................................1
Consolidated Statements of Income
Three and Nine months ended September 30, 1996 and 1995........................3
Consolidated Statements of Cash Flows
Nine months ended September 30, 1996 and 1995..................................4
Notes to Consolidated Statements...............................................5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.........................................26
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.................................................31
Item 5. Other Information.................................................31
Item 6. Exhibits and Reports on Form 8-K..................................32
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AMERICAN RADIO SYSTEMS CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, 1996 December 31, 1995
------------------ -----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.............................. $ 14,554,390 $ 3,889,720
Accounts receivable, net............................ 41,971,318 24,388,719
Prepaid expenses and other current assets........... 2,036,938 2,280,544
Note receivable-other............................... 1,150,002 1,108,414
Deferred income taxes............................... 1,161,901 1,161,901
----------------- ----------------
Total current assets.......................... 60,874,549 32,829,298
---------------- ----------------
PROPERTY AND EQUIPMENT-Net................................ 85,823,215 31,786,011
---------------- ----------------
OTHER ASSETS:
Station investment note receivable-related party.... 743,000 500,000
Station investment notes receivable................. 69,376,686 48,597,338
Intangible assets-net:
Goodwill...................................... 226,472,624 66,463,708
FCC licenses.................................. 216,647,721 45,023,219
Other intangible assets....................... 22,427,341 15,863,918
Deposits and other long-term assets................. 25,373,660 7,732,337
Net assets held under exchange agreement - net...... 46,440,479
----------------- ----------------
Total other assets......................... 607,481,511 184,180,520
---------------- ----------------
TOTAL..................................................... $ 754,179,275 $ 248,795,829
=============== ================
</TABLE>
See notes to unaudited condensed consolidated financial statements.
1
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Continued)
<TABLE>
<CAPTION>
September 30, 1996 December 31, 1995
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt........................................ $ 552,742 $ 355,283
Accounts payable and accrued expenses................................... 18,183,515 8,577,068
Accrued compensation........................................................ 2,939,430 1,318,006
Accrued interest............................................................ 2,992,076 513,880
Current redeemable common stock........................................... 19,460 19,460
------------------ ---------------
Total current liabilities............................................. 24,687,223 10,783,697
--------------- ---------------
DEFERRED INCOME TAXES........................................................ 43,015,148 7,899,090
--------------- ---------------
OTHER LONG-TERM LIABILITIES............................................. 2,236,278 1,929,307
---------------- ---------------
LONG-TERM DEBT.................................................................... 284,748,546 152,148,939
-------------- ---------------
MINORITY INTEREST IN SUBSIDIARY..................................... 3,637,710
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred Stock; $.01 par value; 1,000,000 shares authorized Convertible
Exchangeable Preferred Stock; 137,500 shares
issued and outstanding (represented by 2,750,000 depositary
shares); liquidation preference $1,000 per share.. 1,375
Class A Common Stock; $.01 par value; 25,000,000 shares
authorized; 14,820,441 and 6,645,862 shares issued and
outstanding, respectively................................................ 148,204 66,459
Class B Common Stock; $.01 par value; 10,000,000 shares
authorized; 4,957,126 and 5,938,050 shares issued and
4,938,677 and 5,919,601 shares outstanding, respectively.... 49,387 59,196
Class C Common Stock; $.01 par value 6,000,000 shares
authorized; 1,295,518 and 1,795,518 shares issued and
outstanding, respectively................................................ 12,955 17,955
Additional paid-in capital.................................................. 390,487,026 92,637,379
Unearned compensation....................................................... (320,218) (391,206)
Capital deficiency upon combination........................................ (21,709,164)
Retained earnings........................................................... 5,913,814 5,792,350
------------------- ---------------
Total................................................................. 396,292,543 76,472,969
Less:
Treasury stock, at cost, 18,449 shares................................ (438,173) (438,173)
------------------- ---------------
Total stockholders' equity............................................ 395,854,370 76,034,796
------------------ ---------------
TOTAL............................................................................. $ 754,179,275 $ 248,795,829
================= ===============
</TABLE>
See notes to unaudited condensed consolidated financial statements.
2
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET REVENUES............................................. $52,489,891 $25,108,813 $113,582,121 $69,622,269
OPERATING EXPENSES:
Operating expenses excluding depreciation and
amortization and corporate general and
administrative expenses......................... 35,396,584 15,955,767 78,170,506 48,574,227
Net local marketing agreement expenses............... 2,288,697 150,000 4,877,796 150,000
Depreciation and amortization........................... 6,126,619 3,271,338 10,965,599 9,312,955
Corporate general and administrative.................... 1,275,171 1,094,242 3,615,453 2,577,983
-------------- ------------ ------------ -----------
Total Operating Expenses......................... 45,087,071 20,471,347 97,629,354 60,615,165
------------- ------------ ------------ -----------
OPERATING INCOME......................................... 7,402,820 4,637,466 15,952,767 9,007,104
OTHER INCOME (EXPENSE):
Interest income.......................................... 1,101,961 925,625 4,742,328 1,182,646
Interest expense......................................... (6,253,630) (3,086,336) (15,217,146) (8,971,420)
Gain (loss) on sale of assets and other.................. 207,760 (8,162) 171,825 11,550,870
--------------- ------------ ------------ -----------
TOTAL OTHER INCOME (EXPENSE)....................... (4,943,909) (2,168,873) (10,302,993) 3,762,096
-------------- ------------ ------------ -----------
INCOME BEFORE INCOME TAXES......................... 2,458,911 2,468,593 5,649,774 12,769,200
Provision for income taxes............................... 1,525,297 1,033,823 2,961,185 5,452,448
-------------- ------------ ------------ -----------
NET INCOME .............................................. 933,614 1,434,770 2,688,589 7,316,752
Redeemable common and preferred stock
dividends................................................ (2,433,444) (2,567,125) (815,040)
------------- ------------ ------------ -----------
NET INCOME (LOSS) APPLICABLE TO
COMMON SHARES............................................ $(1,499,830) $ 1,434,770 $ 121,464 $ 6,501,712
============ ============ ============ =============
Earnings (loss) per common share......................... $ (.07) $ .09 $ .01 $ .55
=============== ============ ============ =============
Weighted average common share and share
equivalents outstanding.................................. 22,014,520 15,206,956 20,031,031 11,835,618
=============== ============ ============ =============
</TABLE>
See notes to unaudited condensed consolidated financial statements.
3
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
September 30, 1996 September 30, 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income ..................................................... $ 121,464 $ 7,316,752
Adjustments to reconcile net income to cash provided by
operating activities:
Net barter revenue.................................................. (1,019,256) (234,519)
Depreciation and amortization....................................... 10,965,599 9,312,955
Other changes not affecting cash.................................... 35,532,601 2,320,789
Loss (gain) on sale of assets....................................... 171,825 (11,550,870)
Net changes in operating assets and liabilities..................... (27,294,746) (3,073,991)
------------------ -------------------
Cash provided by operating activities............................. 18,477,487 4,091,116
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for purchase of property, equipment and intangible
assets.............................................................. (9,961,471) (4,906,496)
Proceeds from radio station sales................................... 18,000,000 15,283,301
Payments for radio station acquisitions............................. (286,171,039) (31,015,873)
Payments for tower related acquisitions......................... (8,803,265)
Issuance of station investment notes receivable................. (56,522,348) (45,250,000)
Repayment of station investment note receivable................. 3,000,000
Deposits and other long-term assets............................. (39,281,323) (6,428,232)
------------------- -------------------
Cash used for investing activities.................................. (382,739,446) (69,317,300)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under Credit Agreement and other..................... 110,590,000 66,500,000
Repayments under Credit Agreement................................... (151,500,000) (54,000,000)
Net proceeds from equity offerings and options.................... 248,197,794 70,934,447
Net proceeds from debt offering - net of discount................. 168,321,387
Redemption of senior common stock................................... (14,580,173)
Purchase of treasury stock.......................................... (438,173)
Repayments of other obligations..................................... (682,552) (1,197,866)
------------------- -------------------
Cash provided by financing activities............................. 374,926,629 67,218,235
INCREASE IN CASH AND CASH EQUIVALENTS.............. 10,664,670 1,992,051
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD.............................................................. 3,889,720 3,168,298
------------------- -------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD........ $ 14,554,390 $ 5,160,349
=================== ===================
</TABLE>
See notes to unaudited condensed consolidated financial statements.
4
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation - The financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Although certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, the Company believes that the disclosures are adequate to
make the information presented not misleading and reflect all adjustments
(consisting only of normal recurring adjustments) which are necessary for
a fair presentation of results of operations for such periods. Results of
interim periods may not be indicative of results for the full year. These
financial statements should be read in conjunction with the consolidated
financial statements for the year ended December 31, 1995 and the notes
thereto included in the Company's Annual Report on Form 10-K.
2. Significant Accounting Policies - In connection with accounting for the
combination, the accumulated deficits or retained earnings of the
predecessor entities of the Company at November 1, 1993 were carried
forward into the Company in the form of a permanent capital deficiency
account. Effective January 1, 1996 the Company reclassified the balance of
the capital deficiency upon combination against additional paid-in
capital.
Reclassifications - Certain reclassifications have been made to the 1995
financial statements to conform to the 1996 presentation.
3. Per Share Data - Earnings (loss) per common share is based on the number
of common shares outstanding during the period as adjusted for dilutive
stock options and warrants. Fully diluted earnings (loss) per share
amounts are not reported separately as the effects are not dilutive.
4. Offerings - During 1996, the Company has issued shares of its Convertible
Exchangeable Preferred Stock (Convertible Preferred Stock), shares of
Class A Common Stock (the Equity Offering) and sold Senior Subordinated
Notes the (Debt Offering).
Convertible Preferred Stock Offering: In June 1996, the Company
consummated an offering of 2,750,000 Depositary Shares including 250,000
Depositary Shares sold pursuant to the underwriter's overallotment option,
each representing ownership of one-twentieth of a share of 7% Convertible
Exchangeable Preferred Stock, $1,000 liquidation preference to a group of
qualified institutional investors in reliance on Rule 144A and Regulation
S under the Securities Act of 1933, as amended. Shares of Convertible
Preferred Stock are convertible at the option of the holder at any time,
unless previously redeemed or exchanged, into shares of Class A Common
Stock, par value $.01 per share, of the Company at a conversion price of
$42.50 per share of Class A Common Stock (equivalent to a conversion rate
of 1.1765 shares of Class A Common Stock per Depositary Share), subject to
adjustment in certain events.
5
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
4. Offerings - (continued): The Convertible Preferred Stock is redeemable, in
whole or in part, at the option of the Company, for cash at any time after
July 15, 1999, initially at $1,049 per share ($52.45 per Depositary
Share), declining ratably immediately after July 15 of each year
thereafter to a redemption price of $1,000 per share ($50 per Depositary
Share) after July 15, 2006, plus in each case accrued and unpaid
dividends. The Convertible Preferred Stock will be exchangeable, subject
to certain conditions, at the option of the Company, in whole but not in
part, on any dividend payment date commencing June 30, 1997 for the
Company's 7% Convertible Subordinated Debentures due 2011 (the "Exchange
Debentures") at a rate of $1,000 principal amount of Exchange Debentures
for each share of Convertible Preferred Stock ($50 principal amount for
each Depositary Share).
Dividends on the Convertible Preferred Stock are cumulative at an annual
rate of 7% (equivalent to $3.50 per Depositary Share), accruing from the
date of original issuance (June 25, 1996) and are payable quarterly in
arrears on March 31, June 30, September 30, and December 31, commencing
September 30, 1996. The Company's ability to pay dividends is restricted
under the terms of the Subordinated Notes discussed below and is
prohibited during the existence of a default under the Company's 1995
Credit Agreement or the Subordinated Notes. Approximately $2.6 million of
accrued dividends were paid as of September 30, 1996. Proceeds to the
Company, net of underwriters' discount and associated costs, were
approximately $132.8 million. Proceeds from the offering were used to fund
acquisitions.
Equity Offering: In February 1996, the Company consummated an offering
(the Equity Offering) of 5,514,707 shares of Class A Common Stock at an
offering price of $27 per share, consisting of 4,000,000 shares sold by
the Company, 1,013,370 shares sold by selling shareholders and an
additional 501,337 shares sold by the Company pursuant to the exercise of
the underwriters' over-allotment option. Proceeds to the Company, net of
underwriters' discount and associated costs, were approximately $114.5
million.
Debt Offering: Concurrent with the Equity Offering, the Company sold
$175,000,000 of 9% Senior Subordinated Notes due 2006 (the Subordinated
Notes) at a discount of $1,419,250 to yield 9.125% (the Debt Offering).
Proceeds to the Company, net of underwriters' discount and associated
costs, were approximately $167.3 million. As of September 30, 1996, the
Subordinated Notes aggregated $173,641,359 net of an unamortized discount
of $1,358,641. Interest is payable semi-annually on February 1 and August
1 with the face amount of the Subordinated Notes due on February 1, 2006.
The Subordinated Notes are redeemable at the option of the Company, in
whole or in part at any time on or after February 1, 2001 and prior to
maturity, at the following redemption prices (expressed as percentages of
principal amount) plus accrued and unpaid interest, if any, to but
excluding the redemption date, if redeemed during the 12 month period
beginning February 1 of the years indicated: 2001 - 104.5%; 2002 - 103.0%;
2003 - 101.5%; 2004 and thereafter - 100.0%. Notwithstanding the
foregoing, at any time prior to February 1, 1999, the Company may redeem
up to $58.3 million principal amount of the Subordinated Notes from the
net proceeds of a public equity offering (as defined in the Subordinated
Notes) at a redemption price equal to 109.0% of the principal amount
thereof plus accrued and unpaid interest, if any, to the Redemption Date;
provided that at least $116.7 million principal amount of the Subordinated
Notes remain outstanding immediately after the occurrence of any such
redemption. The Subordinated Notes are subordinate in right of payment to
the prior payment in full of all obligations under the 1995 Credit
Agreement. The Subordinated Notes contain certain covenants including, but
not limited to, limitations on sales of assets, dividend payments, future
indebtedness and issuance of preferred stock and require an offer to
purchase in the event of a Change of Control (as defined).
6
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
4. Offerings - (continued): Proceeds from the Debt and Equity Offerings
were used to repay all the outstanding borrowings under the 1995 Credit
Agreement with the balance, approximately $131.0 million, held initially
in short-term interest-bearing securities, and used thereafter to fund
acquisitions.
5. Acquisitions - During the first nine months of 1996, the Company
consummated the following station and tower related acquisitions as
follows:
Fresno, Omaha, Portland and Sacramento: In July 1996, the transactions
contemplated by a Merger Agreement by and between the Company and Henry
Broadcasting Company ("HBC") was consummated. Pursuant thereto, the
Company acquired KUFO-FM and KBBT-AM (formerly KUPL-AM) in Portland,
Oregon, KYMX-FM and KCTC-AM in Sacramento, California, KGOR-FM and KFAB-AM
in Omaha, Nebraska, (See Note 7 for information with respect to the sale
of the Omaha stations) and KSKS-FM, KKDJ- FM, and KMJ-AM in Fresno,
California, for an aggregate purchase price of approximately $110.4
million. The acquisition was financed through a $5.0 million escrow
deposit, the issuance of 1,879,034 shares of Class A Common Stock valued
at approximately $64.0 million, approximately $4.1 million in available
cash, together with the assumption of approximately $37.3 million in long
term debt, which was paid by the Company at closing. As part of a related
transaction with the principal stockholder of HBC, the Company acquired
certain real estate used in the business of HBC for approximately $2.0
million in cash and obtained a five-year option to acquire certain other
real estate for a purchase price of approximately $1.0 million.
Portland and San Jose: In August 1996, the Company acquired the assets of
KUPL-FM and KKJZ-FM in Portland, Oregon and KSJO-FM and KUFX-FM in San
Jose, California for approximately $103.0 million. The acquisition was
financed through a $5.0 million escrow deposit, $18.0 million in
restricted cash (see "Philadelphia and Detroit" transaction discussed
below) and $80.0 million in borrowings under the 1995 Credit Agreement.
Buffalo: In August 1996, the Company acquired the assets of WSJZ-FM in
Buffalo, New York for approximately $12.5 million. The Company had been
programming and marketing the station pursuant to a local marketing
agreement (LMA) since April 1996. The acquisition was financed through
$0.5 million escrow deposit and available cash.
Las Vegas: In September, 1996, the Company acquired the assets of KVEG-AM
for approximately $1.9 million. The Company had been programming and
marketing the station pursuant to an LMA since May 1996. The acquisition
was financed through a $0.09 million escrow deposit and borrowings under
the 1995 Credit Agreement.
In July 1996, the Company acquired the assets of KMXB-FM (formerly
KJMZ-FM), in Las Vegas, Nevada for approximately $8.0 million. The Company
had been programming and marketing the station pursuant to an LMA since
April 1996. The acquisition was financed through a $1.2 million escrow
deposit, $0.3 million in prepaid LMA fees, the forgiveness of a $0.1
million note payable and available cash.
In July 1996, the Company acquired the assets of KLUC-FM and KXNO-AM,
serving Las Vegas, Nevada for approximately $11.0 million. The acquisition
was financed through a $1.0 million escrow deposit and available cash.
Portland: In July 1996, the Company acquired the assets of KBBT-FM
(formerly KDBX-FM), in Portland, Oregon for a purchase price of
approximately $14.0 million. The acquisition was financed through a $0.5
million escrow deposit and available cash. As part of the consideration
for the transaction, the Company also granted the seller the right to
require the Company to exercise its option to acquire the assets of
WBNW-AM which is owned by Back Bay Radio Broadcasters, Inc. (Back Bay), an
unaffiliated party. The option price is based on a formula and the Company
is obligated to sell it for $6.0 million.
7
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
5. Acquisitions - (continued):
Sacramento: In September 1996, the Company acquired the assets of KSSJ-FM,
serving Sacramento, California for approximately $14.0 million. The
Company had been programming and marketing the station pursuant to an LMA
since July 1996. The acquisition was financed through a $0.7 million
escrow deposit and borrowings under the 1995 Credit Agreement.
In July 1996, the Company acquired the assets of KSTE-AM serving Rancho
Cordova, California for approximately $7.25 million. The Company
programmed and managed the station pursuant to an LMA from April 1996 to
July 1996. The acquisition was financed through a $0.35 million escrow
deposit and available cash. See Note 6 - "Other Transactions - West Palm
Beach."
Hartford: In May 1996, the Company consummated the acquisitions of WTIC-AM
and WTIC-FM in Hartford, Connecticut. In August 1995, the Company had
entered into a series of transactions with the owner of those stations and
certain affiliates, pursuant to which, among other things, the Company
agreed to purchase the assets of the stations for approximately $39.0
million, including approximately $1.1 million of working capital, and an
obligation to make payments aggregating approximately $8.5 million
pursuant to consulting and non-competition agreements with an affiliate of
the owner of the stations. The Company also paid $1.0 million for a
one-year option to purchase for $1.00 the New England Weather Service
(which provides weather information to subscribers). In August 1995, the
Company was prevented under the then current Federal Communications
Commission (FCC) regulations from acquiring these stations, and therefore
loaned an aggregate of $35.5 million to the owner of such stations and an
affiliate thereof . The escrow deposit of $2.0 million, $27.0 million of
the aggregate loans and $1.1 million of available cash were used to
finance the acquisition. The remaining $8.5 million loan was used to
satisfy the Company's obligations under the consulting and non-competition
agreement. The Company also paid $3.5 million to purchase the tower of one
of the stations in October 1995.
Philadelphia and Detroit: In May 1996, the Company consummated the
transactions contemplated by a merger agreement with Marlin Broadcasting,
Inc. (Marlin). American acquired WFLN-FM in Philadelphia, Pennsylvania,
WQRS-FM in Detroit, Michigan and WTMI-FM in Miami, Florida for an
aggregate purchase price of approximately $58.5 million, together with the
assumption of approximately $9.0 million of long-term debt which was paid
in full at closing. The acquisition was financed through a $4.0 million
escrow deposit and available cash. The principal stockholder of Marlin
immediately thereafter acquired WTMI-FM from the Company for approximately
$18.0 million in cash. Proceeds from the sale of WTMI-FM were held in an
escrow account pursuant to a like-kind exchange agreement and were
utilized to fund the Portland and San Jose transaction discussed above.
The Company retained certain Philadelphia real estate and tower assets
valued at approximately $1.0 to 2.0 million. In June 1996, the Company
entered into an agreement with an unaffiliated party pursuant to which it
will exchange the assets of the Philadelphia station for two stations in
Sacramento and sell the Detroit station for approximately $20.0 million in
cash. This party began programming the Philadelphia and Detroit stations
under an LMA in June 1996. See Note 6 - "Other Transactions - Sacramento."
The net assets and liabilities of the Detroit and Philadelphia stations
included in this exchange agreement are carried on the consolidated
balance sheet as Net Assets held under exchange agreement.
Tower Subsidiary: In April 1996, American Tower Systems, Inc. ("the Tower
Subsidiary") acquired BDS Communications, Inc. and BRIDAN Communications
Corporation for approximately $9.1 million which consisted of 257,495
shares of the Company's Class A Common Stock valued at approximately $7.4
million and the assumption of approximately $1.7 million of long-term
debt, of which approximately $1.5 million was paid at closing. BDS
Communications owned three towers in Pennsylvania and BRIDAN
Communications managed or had sublease agreements on approximately forty
tower sites located throughout the Mid-Atlantic region.
8
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
5. Acquisitions - (continued):
In February 1996, the Tower Subsidiary acquired Skyline Communications and
Skyline Antenna Management for approximately $3.3 million which consisted
of 26,989 shares of Class A Common Stock valued at approximately $0.8
million, $2.2 million in cash and the assumption of approximately $0.3
million of long-term debt, which was paid in full at closing. Skyline
Communications owned eight towers, six of which are in West Virginia and
the remaining two in northern Virginia. Skyline Antenna Management managed
more than 200 antenna sites, primarily in the northeast region of the
United States.
The above acquisitions have been accounted for by the purchase method of
accounting. The purchase price has been allocated to the assets acquired,
principally intangible and tangible assets, and the liabilities assumed
based on their estimated fair values at the date of acquisition. The excess
of purchase price over the estimated fair value of the net assets acquired
has been recorded as goodwill.
The operating results of these acquisitions have been included in the
Company's consolidated results of operations from the date of acquisition.
The following unaudited pro forma summary presents the consolidated results
of operations as if the acquisitions had occurred as of January 1, 1995 and
1996 after giving effect to certain adjustments, including depreciation and
amortization of assets and interest expense on debt incurred to fund the
acquisitions. These unaudited pro forma results have been prepared for
comparative purposes only and do not purport to be indicative of what would
have occurred had the acquisitions been made as of January 1, 1995 and 1996
or of results which may occur in the future.
In thousands, except per share data:
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
September 30,1996 September 30, 1995
<S> <C> <C>
Net revenues......................................... $ 143,180 $ 110,905
Income before extraordinary items........... 2,046 5,697
Net income........................................... 707 3,427
Net income (loss) applicable to common
stockholders...................................... (1,861) 2,612
Net income (loss) per common share........ $ (.09) $ .19
</TABLE>
9
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
6. Other transactions - During the first nine months of 1996, the Company
agreed to purchase (or is in the process of negotiating agreements to
purchase) additional stations and tower related assets as follows:
Charlotte, Kansas City, Philadelphia, Pittsburgh, New Orleans, Sacramento,
Seattle, and St. Louis: In August 1996, the Company entered into a merger
agreement (as amended in September 1996) with EZ Communications, Inc. (EZ)
pursuant to which EZ will either be merged with and into a subsidiary of
the Company or EZ will be merged directly with and into the Company (the
EZ Merger). Pursuant to the merger agreement, each outstanding share of EZ
Common Stock will be converted into (i) $11.75 in cash and (ii) 0.9 shares
of the Company's Class A Common Stock. Based on the number of shares of EZ
Common Stock outstanding at October 1, 1996, the Company will pay
approximately $106.9 million in cash and issue approximately 8,191,000
shares of the Company's Class A Common Stock (excluding options to
purchase an aggregate of 532,200 shares of the Company's Class A Common
Stock which will be assumed pursuant to the EZ Merger). EZ owns and/or
manages twenty-two radio stations in eight markets as follows: WSOC- FM
and WSSS-FM in Charlotte, North Carolina; KFKF-FM, KBEQ-AM/FM in Kansas
City, Missouri; WIOQ-FM and WUSL-FM in Philadelphia, Pennsylvania; WBZZ
-FM and WZPT-FM in Pittsburgh, Pennsylvania; WRNO-FM, WEZB-FM and WBYU-AM
in New Orleans, Louisiana; KNCI-FM, KRAK-FM and KHTK-AM in Sacramento,
California; KZOK-FM, KMPS-AM/FM and KYCW-FM in Seattle, Washington and
KYKY-FM and KSD-AM/FM in St. Louis, Missouri. EZ is a party to an asset
exchange agreement which is expected to be consummated prior to the EZ
Merger, pursuant to which EZ will exchange the New Orleans stations for
KBKS-FM and KRPM-FM in Seattle. As a result of existing FCC regulations
and the Sacramento stations owned and those under agreement to purchase or
sell, upon consummation of the EZ Merger, the Company will be required to
sell one radio station in Sacramento (in addition to KXOA-FM and KSTE-AM).
See "West Palm Beach" below and Note 7. EZ is also in the process of
negotiating definitive agreements pursuant to which it will exchange its
Philadelphia stations for stations in Charlotte, North Carolina, purchase
or exchange additional Charlotte stations and sell the assets of KMPS-AM
is Seattle, Washington. Consummation of these transactions is expected to
occur subsequent to consummation of the EZ Merger. Subject to the receipt
of stockholder FCC approval and the expiration or earlier termination of
the Hart-Scott-Rodino Antitrust Improvements Act of 1986 (HSR ACT) waiting
period, the Company expects to consummate the EZ Merger in the first
quarter of 1997. In the event that EZ terminates the merger agreement
because of fiduciary duties relating to another offer, the Company has the
right to receive a liquidated damages payment of $15.0 million or, at the
Company's option, $10.0 million and the right to purchase all of the EZ
radio stations in any one market at fair market value. In November 1996,
the Company and EZ mailed a joint proxy statement to the shareholders of
each company and such proxy will be voted upon at separate stockholder
meetings to be held in late December 1996.
Boston, Worcester: In July 1996, the Company entered into an agreement to
purchase the assets of WAAF- FM and WWTM-AM in Worcester, Massachusetts
for approximately $24.8 million in cash. The Company began programming and
marketing the stations pursuant to an LMA in August 1996. The transaction
has been granted early termination of the HSR Act waiting period and FCC
approval has been received. The Company expects to consummate this
acquisition in the first quarter of 1997.
Baltimore: In September 1996, the Company entered into an agreement to
acquire WWMX-FM and WOCT- FM in Baltimore, Maryland for approximately
$90.0 million in cash. The Company began managing the stations pursuant to
an LMA in November 1996. The HSR Act waiting period has expired and,
subject to the receipt of FCC approval, the Company expects to consummate
the acquisition in the first quarter of 1997.
Buffalo: In March 1996, the Company loaned Palm Beach Radio Broadcasters,
Inc. ("PBRB") approximately $8.0 million to finance the acquisition of
WBLK-FM in Buffalo, New York. The Company has an option to acquire, and a
right of first refusal with respect to, the station. The Company began
programming and marketing the station pursuant to an LMA in March 1996.
The Company plans to exercise its option to acquire the station in
November 1996. Subject to the receipt of FCC approval, such acquisition is
expected to be consummated in the first quarter of 1997 using proceeds
from the loan.
10
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
6. Other transactions - (continued):
Dayton: In January 1996, the Company entered into a nonbinding letter of
intent to acquire for approximately $12 million WLQT-FM and WBTT-FM
(formerly WDOL-FM) in Dayton, Ohio. Because of then existing FCC
regulations, the Company assigned its rights under the letter of intent to
PBRB which entered into the definitive purchase and sale agreement with
the owner of the stations. In March 1996, the Company loaned PBRB
approximately $12.0 million to finance the acquisition and has an option
to purchase the stations. The Company began managing the stations pursuant
to an LMA in April 1996. In September 1996, the Company exercised its
option to acquire the stations and will finance the acquisition with
proceeds from the loan. Subject to the receipt of FCC approval, this
acquisition is expected to be consummated in the first quarter of 1997.
In December 1995, the Company loaned approximately $1.1 million to the
buyer to finance the acquisition of WXEG-FM serving Dayton and purchased
from Mr. Steven B. Dodge, Chairman of the Board, President and Chief
Executive Officer of the Company, interim loans of approximately $2.2
million (including accrued interest) which he had made to the seller of
the station and which had been assumed by the new owner of the station.
The Company began programming and marketing the station pursuant to an LMA
in April 1996. The Company intends to exercise its option to acquire the
station, subject to receipt of FCC approval, in a transaction which is
expected to be consummated in the fourth quarter of 1996.
Fresno: In July 1996, the Company entered into an agreement to purchase
the assets of KNAX-FM and KRBT-FM in Fresno, California for approximately
$11.0 million in cash. The Company began managing the stations pursuant to
an LMA in August 1996. Subject to the receipt of FCC approvals, the
Company expects to consummate this acquisition in the fourth quarter of
1996.
In July 1996, the Company entered into an agreement to purchase the assets
of KOQO-AM/FM in Fresno, California for approximately $6.0 million in
cash. The Company began programming and marketing the stations pursuant to
an LMA in August 1996. Subject to the receipt of FCC approvals, the
Company expects to consummate this acquisition in the first quarter of
1997.
Hartford: In August 1996, the Company entered into an agreement to sell
WNEZ-AM serving New Britain, Connecticut for approximately $0.75 million.
FCC approval has been received and the sale is expected to be consummated
in the first quarter of 1997.
11
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
6. Other transactions - (continued):
Rochester: In February 1996, the Company entered into an agreement to
acquire two FM (WVOR-FM and WPXY-FM) and two AM (WHAM-AM and WHTK-AM)
stations serving the Rochester, New York market for a purchase price of
approximately $30.5 million (the "Rochester Acquisition"). The FCC has
approved the transfer of the FCC licenses and, subject to the terms of a
consent decree with the Antitrust Division of the Department of Justice
(the Antitrust Division) (the Rochester Consent Decree) described below,
the Company expects to consummate the Rochester Acquisition in the first
quarter of 1997. On May 17, 1996, American and the seller received second
requests for additional information from the Antitrust Division. Although
the Company continues to believe that the acquisition complies with the
antitrust laws, the Antitrust Division has expressed concerns regarding
its effect on the Rochester market. Under the HSR Act, the Rochester
Acquisition could not be consummated until twenty (20) days after the
Company and the seller substantially complied with such second requests.
The Company and the seller furnished extensive material to the Antitrust
Division in July 1996 and thus substantially complied with the second
request and subsequently entered into an agreement with the Antitrust
Division whereby the Company agreed not to consummate the Rochester
Acquisition unless first providing the Antitrust Division with fifteen
(15) days prior notice. The Company engaged in ongoing negotiations with
the Antitrust Division in an effort to reach a settlement of the matter
and as a result of those negotiations, on October 24, 1996, the Company
and the seller entered into the Rochester Consent Decree with the
Antitrust Division and the Attorney General of the State of New York,
pursuant to which, among other things, the Company may consummate the
Rochester Acquisition. However, it must then divest, within a certain
specified period of time, WHAM(AM) and WVOR(FM). As part of the Rochester
Consent Decree, the Company agreed not to acquire any additional stations
in the Rochester market, other than, with certain specified exceptions,
one Class A FM station. Giving effect to the Rochester Consent Decree,
American will own three FM stations (WCMF-FM, WRMM- FM, and WPXY-FM), one
AM station (WHTK-AM) and may purchase one additional Class A FM station in
Rochester. (See Note 7).
The Rochester Consent Decree also provides that the Company will terminate
a joint sales agreement with WNVE-FM and assign to a third party its
option to purchase this FM station in Rochester. The Rochester Consent
Decree is subject to approval by the United States District Court for the
District of Columbia and a sixty-day public comment period. In the
unlikely event that the District Court does not approve the Rochester
Consent Decree, the Antitrust Division or others could take action under
the antitrust laws to enjoin or otherwise challenge the Rochester
Acquisition. In such event, there can be no assurance that such a
challenge will not be made or, if made, will not be successful.
In July 1996, the Company loaned the owner of the stations to be acquired
approximately $28.5 million (the Rochester Loan). The Rochester Loan is a
nonrecourse loan, collateralized by the assets of the stations, bears
interest at a rate equal to the Company's borrowing rate under the Company
Credit Agreement and matures in June 2001. Under the terms of the
Rochester Acquisition, the Company has the right to assign its right to
acquire those stations which are part of the Rochester Acquisition which
it does not acquire. The Company will use the Rochester Loan (together
with an escrow deposit) to acquire the stations.
In an unrelated transaction, the Company has agreed to contribute the
assets of WCMF-AM to an educational institution in the Rochester, New York
area.
12
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
6. Other transactions - (continued):
Sacramento: In June 1996, the Company entered into an agreement to
exchange the Philadelphia station which it acquired as part of the Marlin
transaction (see Note 5) for KSFM-FM and KMJI-AM serving Sacramento,
California. As part of such transaction (the "Secret Transaction"), the
Company will sell the Detroit station acquired as part of the Marlin
transaction to the owner of the Sacramento stations for approximately
$20.0 million. The Company is currently programming and marketing the
Sacramento stations under an LMA and the prospective acquiror of the
Philadelphia and Detroit stations is programming and marketing those
stations under LMAs. The Company has received the required FCC approval
and, subject to the satisfactory resolution of the matters described in
the following sentence, the Secret Transaction is expected to be
consummated in the fourth quarter of 1996. On October 11, 1996, the
Company and the seller received second requests for additional information
about the acquisition from the Antitrust Division. Under the HSR Act, the
Secret Transaction may not be consummated until twenty (20) days after
American and the seller have substantially complied with such Second
Requests. Although the Company believes the acquisition complies with the
antitrust laws, the Antitrust Division has expressed concerns regarding
its effect on the Sacramento market. The parties to the Secret Transaction
intend to engage in discussions with the Antitrust Division to address
those concerns. The Antitrust Division or others could take action under
the antitrust laws to enjoin or otherwise challenge the Secret
Transaction. There can be no assurance that such a challenge will not be
made or, if made, will not be successful.
In July 1996, the Company entered into an agreement to purchase the assets
of KXOA-AM/FM and KQPT- FM in Sacramento, California for approximately
$50.0 million in cash. The Company began managing the stations pursuant to
an LMA in August 1996. Subject to the receipt of FCC approvals and the
expiration or earlier termination of the HSR Act waiting periods, the
Company expects to consummate the acquisition in the first quarter of
1997. (See Note 7).
San Jose: In August 1996, the Company entered into an agreement to
purchase the assets of KBAY-FM and KKSJ-AM in San Jose, California for
approximately $30.0 in cash. Subject to regulatory compliance, the Company
will program and manage the stations pursuant to an LMA prior to the
consummation of the acquisition. Subject to the receipt of FCC approvals
and the expiration or earlier termination of the HSR Act waiting periods,
the Company expects to consummate the acquisition in the first quarter of
1997.
West Palm Beach: In March 1996, the Company loaned PBRB $7.2 million to
finance the acquisition of WHLG-FM and WSTU-AM. The Company has an option
to acquire, and a right of first refusal with respect to, the stations.
PBRB also owns WPBZ-FM, as a result of an earlier assignment of the right
to acquire such station by the Company. The Company intends to exercise
its option to acquire WHLG-FM and WPBZ-FM (which acquisitions may take the
form of a merger of PBRB into the Company). Subject to FCC approval and
the expiration or earlier termination of the HSR Act waiting periods, such
acquisitions are expected to occur in the first half of 1997 utilizing
proceeds from the WHLG-FM and WPBZ-FM loans in the aggregate principal
amount of approximately $17.0 million and $2.75 million in cash.
In July 1996, the Company entered into an asset exchange agreement to
exchange the assets of KSTE-AM in Sacramento, California plus $33.0
million in cash for the assets of WEAT-FM, WEAT-AM and WOLL-FM in West
Palm Beach, Florida. The party to the exchange agreement began programming
and marketing KSTE-AM pursuant to an LMA and the Company began programming
and marketing the West Palm stations pursuant to an LMA in August 1996.
Subject to the receipt of FCC approvals and the expiration or earlier
termination of the HSR Act waiting periods, the Company expects to
consummate the exchange in the first quarter of 1997. Under current FCC
regulations, the Company is permitted to own five FM stations in West Palm
Beach; accordingly, it will be required to dispose of one station in West
Palm Beach.
13
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
6. Other transactions - (continued):
Tower Subsidiary: In July 1996, the Tower Subsidiary entered into letters
of intent with three entities which are affiliated with one another to
acquire tower sites and a tower site management business in California for
an aggregate purchase price of approximately $32.1 million. Consummation
of the transaction is conditioned on, among other things, negotiation and
execution of definitive purchase and sale agreements and the expiration or
earlier termination of the HSR Act waiting period. Subject to such
expiration or termination, the acquisitions are expected to be consummated
in the first quarter of 1997.
In July 1996, the Tower Subsidiary entered into a partnership agreement
with an unaffiliated party relating to the ownership and operation of a
tower site in Needham, Massachusetts and, advanced approximately $3.7
million to the partnership. The Tower Subsidiary has a 50.1% interest in
the partnership. The accounts of the partnership are included in the
consolidated financial statements, with the other partner's investment
reflected as minority interest in subsidiary on the consolidated balance
sheet.
In August, 1996, the Tower Subsidiary executed a commitment letter with a
bank relating to a $90.0 million eight-year secured revolving credit
facility. Consummation of the revolving credit facility is conditioned,
among other things, on negotiation and execution of a definitive credit
agreement.
Other: In August 1996, the Company advanced an additional $243,000 to Back
Bay for a promissory note, bearing interest at 10% per annum and maturing
2002.
As of September 30, 1996 the Company had deposits totaling approximately
$24.0 million relating to pending acquisitions.
7. Subsequent events -
Subsequent to September 30, 1996, the Company acquired or agreed to
purchase and sell (or is in the process of negotiating agreements to
purchase and sell) additional stations and tower related assets as
follows:
Baltimore: In October 1996, the Company acquired WBGR-AM serving
Baltimore, Maryland for a purchase price of approximately $2.8 million.
The acquisition was financed through a $.2 million escrow deposit and
available cash.
Las Vegas: In October 1996, the Company acquired the assets of KMZQ-FM and
KXTE-FM, (formerly KFBI-FM), in Las Vegas, Nevada for approximately $28.0
million in cash. The Company had been programming and marketing the
stations pursuant to an LMA since May 1996. The acquisition was financed
through a $2.5 million escrow deposit and borrowings under the 1995 Credit
Agreement.
Omaha: In October 1996, the Company entered into an agreement to sell
KGOR-FM and KFAB-AM and Business Music Service in Omaha, Nebraska for
approximately $39.0 million in cash. Subject to the receipt of FCC
approval and the expiration or earlier termination of the HSR waiting
period, the Company expects to consummate the sale in the first quarter of
1997.
Rochester: In October 1996, the Company also entered into a letter of
intent to purchase WAQB(FM), a newly licensed Class A FM radio station in
Rochester, New York which is not yet on-the-air, for approximately $3.5
million in cash.
14
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
7. Subsequent events - (continued):
Sacramento: In October 1996, the Company entered into an agreement to sell
KXOA-FM for approximately $27.5 million in cash. Subject to the receipt of
FCC approvals and the expiration or earlier termination of the HSR waiting
period, the Company expects to consummate the sale in the first half of
1997.
Tower Subsidiary: In November 1996, the Tower Subsidiary acquired the
assets of a tower site in the Hampton, Virginia for approximately $1.3
million. The acquisition was financed with borrowings under the 1995
Credit Agreement.
In November 1996, the Tower Subsidiary acquired the assets of a tower site
located in North Stonington, Connecticut for approximately $0.875 million
in cash.
In October 1996, the Tower Subsidiary entered into an agreement to acquire
a tower site in the Los Angeles, California area for approximately $0.75
million in cash. The Company expects to consummate the acquisition in the
fourth quarter of 1996.
The Company is also pursuing the purchase or exchange of additional radio
stations and tower related businesses, none of which have definitive
purchase agreements.
8. Subsidiary Guarantees:
The Company's payment obligations under the Subordinated Notes are fully
and unconditionally guaranteed on a joint and several basis (collectively,
the "Subsidiary Guarantees"), on a senior subordinated basis by its wholly
owned subsidiary American Radio Systems License Corp. ("ARSLC") and any
future Restricted Subsidiaries (collectively "Restricted Guarantors").
ARSLC has also and unconditionally guaranteed, any future Subsidiaries
will be required to guarantee, on a joint and several basis (collectively,
the "Senior Subsidiary Guarantees"), all obligations of the Company under
the 1995 Credit Agreement. The Tower Subsidiary has not guaranteed
obligations under the 1995 Credit Agreement or the Subordinated Notes.
The Subordinated Notes and the Subsidiary Guarantees are subordinated to
all Senior Debt of the Company including indebtedness under the 1995
Credit Agreement and the Senior Subsidiary Guarantees. The indenture
governing the Subordinated Notes contains limitations on the amount of
indebtedness (including Senior Debt) which the Company may incur.
With the intent that the Subsidiary Guarantees not constitute fraudulent
transfers or conveyances under applicable state or federal law, the
obligation of each guarantor under its Subsidiary Guarantee is also
limited to the maximum amount as will, after giving effect to any rights
to contribution of such guarantor pursuant to any agreement providing for
an equitable contribution among such guarantor and other affiliates of the
Company of payments made by guarantees by such parties, result in the
obligations of such guarantor in respect of such maximum amount not
constituting a fraudulent conveyance.
The following unaudited condensed consolidating financial data illustrates
the composition of the combined guarantors. The Company believes that
separate complete financial statements of the respective guarantors would
not provide additional material information which would be useful in
assessing the financial composition of the guarantors. No single guarantor
has any significant legal restrictions on the ability of investors or
creditors to obtain access to its assets in event of default on the
Subsidiary Guarantee other than its subordination to senior indebtedness
described above.
Investments in subsidiaries are accounted for by the parent on the equity
method for purposes of the supplemental consolidating presentation.
Earnings of subsidiaries are therefore reflected in the parent's
investment accounts and earnings. The principal elimination entries
eliminate investments in subsidiaries and intercompany balances and
transactions.
15
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
8. Subsidiary Guarantees - (continued):
<TABLE>
<CAPTION>
Condensed Consolidating Balance Sheet
September 30, 1996
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiary Subsidiary Eliminations Totals
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 12,980 $ 1,574 $ 14,554
Accounts receivable, net 41,715 256 41,971
Prepaid expenses and other current assets 1,998 39 2,037
Note receivable - other 1,150 1,150
Deferred income taxes 1,162 1,162
---------- ---------- ---------- -----------
Total current assets 59,005 1,869 60,874
PROPERTY AND EQUIPMENT, NET 67,238 18,585 85,823
OTHER ASSETS :
Investment in and advances to Subsidiaries 193,187 $ (193,187) 0
Station investment notes receivable 70,120 70,120
Goodwill - net 216,513 9,960 226,473
FCC licenses - net 49,133 $ 167,515 216,648
Other intangible assets - net 20,391 2,036 22,427
Deposits and other long-term assets 25,296 78 25,374
Net assets held under exchange agreement-net 46,440 46,440
---------- ---------- ---------- ----------- -----------
Total other assets 621,080 167,515 12,074 (193,187) 607,482
---------- ----------- ---------- ------------ -----------
TOTAL ASSETS $ 747,323 $ 167,515 $ 32,528 $ (193,187) $ 754,179
========== ========== ========== ============ ===========
</TABLE>
16
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
8. Subsidiary Guarantees - (continued):
<TABLE>
<CAPTION>
Condensed Consolidating Balance Sheet
September 30, 1996
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiary Subsidiary Eliminations Totals
<S> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 436 $ 117 $ 553
Accounts payable and accrued expenses 23,244 890 24,134
---------- ---------- ---------- ------------ ---------------
Total current liabilities 23,680 1,007 24,687
NON-CURRENT LIABILITIES
Deferred income taxes 42,806 209 43,015
Other long-term liabilities 2,224 12 2,236
Long-term debt 282,759 1,990 284,749
---------- ---------- ---------- ------------- ---------------
Total non-current liabilities 327,789 2,211 330,000
MINORITY INTEREST IN SUBSIDIARY 3,638 3,638
STOCKHOLDERS' EQUITY
Preferred Stock 1 1
Common Stock 210 210
Additional paid-in capital $ 390,487 $ 167,515 $ 25,872 $ (193,387) 390,487
Retained earnings 5,914 (200) 200 5,914
Treasury stock (438) (438)
Unearned compensation (320) (320)
---------- ---------- ---------- ------------- ---------------
Total stockholders' equity 395,854 167,515 25,672 (193,187) 395,854
---------- ---------- ----------- ------------- ---------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 747,323 $ 167,515 $ 32,528 $ (193,187) $ 754,179
========== ========== ========== ============= ===============
</TABLE>
17
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
8. Subsidiary Guarantees - (continued):
<TABLE>
<CAPTION>
Condensed Consolidating Statement of Operations
For the Nine Months Ended September 30, 1996
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiary Subsidiary(a) Eliminations Totals
<S> <C> <C> <C> <C> <C>
Net broadcast revenues $ 111,424 $ 111,424
Tower revenues 601 $ 1,619 $ (62) 2,158
License fees charged to Parent (4,032) $ 4,032 0
---------- -------- ---------- ------------- -----------------
Total net revenues 107,993 4,032 1,619 (62) 113,582
Operating expenses excluding
depreciation and amortization and
corporate general and administrative
expenses 77,052 6 1,175 (62) 78,171
Net local marketing agreement expense 4,878 4,878
Depreciation and amortization 7,664 2,663 638 10,965
Corporate general and administrative 3,615 3,615
---------- -------- ---------- ------------- -----------------
Operating income (loss) 14,784 1,363 (194) 0 15,953
Other income (expense):
Interest income 4,723 19 4,742
Interest expense (15,165) (52) (15,217)
Gain (loss) on sale of assets and other 172 172
Equity in (loss) of subsidiaries, net of
income taxes recorded at the
subsidiary level (227) 227 0
---------- -------- ---------- ------------- -----------------
Income (loss) before income taxes 4,287 1,363 (227) 227 5,650
Provision (benefit) for income taxes 1,598 1,363 2,961
---------- -------- ---------- ------------- -----------------
Net income (loss) 2,689 0 (227) 227 2,689
Preferred stock dividends (2,567) (2,567)
---------- -------- ---------- ------------- -----------------
Net income applicable to common
shares $ 122 $ 0 $ (227) $ 227 $ 122
========= ========= ========== ============= =================
</TABLE>
18
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
8. Subsidiary Guarantees - (continued):
<TABLE>
<CAPTION>
Condensed Consolidating Statement of Operations
For the Three Months Ended September 30, 1996
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiary Subsidiary(a) Eliminations Totals
<S> <C> <C> <C> <C> <C>
Net broadcast revenues $ 51,552 $ 1,552
Tower revenues 202 $ 798 $ (62) 938
License fees charged to Parent (3,050) $ 3,050 0
------------------ ---------------- --------- ---------- -------------
Total net revenues 48,704 3,050 798 (62) 52,490
Operating expenses excluding
depreciation and amortization and
corporate general and administrative
expenses 34,973 2 483 (62) 35,396
Net local marketing agreement expense 2,289 2,289
Depreciation and amortization 4,127 1,685 315 6,127
Corporate general and administrative 1,275 1,275
------------------ ---------------- --------- ---------- -------------
Operating income (loss) 6,040 1,363 0 0 7,403
Other income (expense):
Interest income 1,084 18 1,102
Interest expense (6,214) (40) (6,254)
Gain (loss) on sale of assets and other 208 208
Equity in (loss) of subsidiaries, net of
income taxes recorded at the
subsidiary level (114) 114 0
------------------ ---------------- --------- ---------- -------------
Income (loss) before income taxes 1,004 1,363 (22) 114 2,459
Provision (benefit) for income taxes 70 1,363 92 1,525
------------------ ---------------- --------- ---------- -------------
Net income (loss) 934 0 (114) 114 934
------------------ ---------------- --------- ---------- -------------
Preferred stock dividends (2,434) (2,434)
----------------- ---------------- ---------- --------- -------------
Net applicable to common shares $ (1,500) $ 0 $ (114) $ 114 $ (1,500)
================= ================ ========== ========= =============
</TABLE>
19
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
8. Subsidiary Guarantees - (continued):
<TABLE>
<CAPTION>
Condensed Consolidating Statement of Cash Flows
For the Nine Months Ended September 30, 1996
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiary Subsidiary Eliminations Totals
<S> <C> <C> <C> <C> <C>
Cash flows provided by (used for) operating
activities $ 17,268 $ 1,210 $ 18,478
-------------- ------------ ------------ -------------- --------------
Investing Activities:
Payments for purchase of property and
equipment and intangible assets (5,249) (4,713) (9,962)
Proceeds from radio station sales 18,000 18,000
Payments for radio station acquisitions (286,172) (286,172)
Payments for tower related acquisitions (8,803) (8,803)
Issuance of station investment notes
receivable (56,522) (56,522)
Deposits and other long-term assets (39,217) (64) (39,281)
-------------- ------------ ------------ -------------- --------------
Cash flows used by investing activities (369,160) (13,580) (382,740)
-------------- ------------ ------------ -------------- --------------
Financing Activities:
Borrowings under Credit Agreement and
other 110,590 110,590
Repayment of Credit Agreements (151,500) (151,500)
Net proceeds from debt offering - net of
discount 168,321 168,321
Net proceeds from equity offerings and
options 248,198 248,198
Repayment of other obligations (654) (28) (682)
Investment in and advances to subsidiaries 13,972 (13,972) 0
-------------- ------------ ------------ -------------- --------------
Cash flows from financing activities 374,955 13,944 (13,972) 374,927
Increase in cash and cash equivalents 23,063 1,574 (13,972) 10,665
Cash and cash equivalents at beginning
of period 3,890 0 3,890
-------------- ------------ ------------ -------------- --------------
Cash and cash equivalents at end of period $ 26,953 $ 0 $ 1,574 $ (13,972) $ 14,555
============== ============ ========== ============== ==============
</TABLE>
20
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
8. Subsidiary Guarantees - (continued):
<TABLE>
<CAPTION>
Condensed Consolidating Balance Sheet
December 31, 1995
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiary Subsidiary Eliminations Totals
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,890 $ 3,890
Accounts receivable, net 24,352 $ 37 24,389
Note receivable-other 1,108 1,108
Prepaid expenses and other current assets 2,281 2,281
Deferred income taxes 1,162 1,162
--------------- --------------- ---------------- ------------ ------------
Total current assets 32,793 37 32,830
PROPERTY AND EQUIPMENT 28,040 3,746 31,786
OTHER ASSETS:
Investment in and advances to subsidiaries 48,771 $ (48,771) 0
Station investment notes receivable 49,097 49,097
Goodwill 66,464 66,464
FCC licenses $ 45,023 45,023
Other intangible assets 15,840 24 15,864
Deposits and other long-term assets 7,718 14 7,732
--------------- --------------- ---------------- ------------ ------------
Total other assets 187,890 45,023 38 (48,771) 184,180
--------------- --------------- ---------------- ------------ ------------
TOTAL ASSETS $ 248,723 $ 45,023 $ 3,821 $ (48,771) $ 248,796
=============== =============== ================ ============ ============
</TABLE>
21
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
8. Subsidiary Guarantees - (continued):
<TABLE>
<CAPTION>
Condensed Consolidating Balance Sheet
December 31, 1995
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiary Subsidiary Eliminations Totals
<S> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 355 $ 355
Accounts payable and accrued expenses 10,387 $ 42 10,429
-------------- ------------ ------------- ---------------- -------------
Total current liabilities 10,742 42 10,784
NON-CURRENT LIABILITIES
Deferred income taxes 7,899 7,899
Other long-term liabilities 1,923 6 1,929
Long-term debt 152,149 152,149
-------------- ------------ ------------- ---------------- -------------
Total non-current liabilities 161,971 6 161,977
STOCKHOLDERS' EQUITY
Common Stock 144 144
Additional paid-in capital 70,928 $ 45,023 3,746 $ (48,769) 70,928
Retained earnings 5,792 27 (27) 5,792
Unearned compensation (391) (391)
Treasury stock (438) (438)
-------------- ------------ ------------- ----------------
Total stockholders' equity 76,035 45,023 3,773 (48,796) 76,035
-------------- ------------ ------------- ---------------- -------------
TOTAL LIABILITIES AND
STOCKHOLDERS'
EQUITY $ 248,748 $ 45,023 $ 3,821 $ (48,796) $ 248,796
============== ============ ============= ================ =============
</TABLE>
22
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
8. Subsidiary Guarantees - (continued):
<TABLE>
<CAPTION>
Condensed Consolidating Statement of Operations
For the Nine Months Ended September 30, 1995
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiary Subsidiary (a) Eliminations Totals
<S> <C> <C> <C> <C> <C>
Net broadcast revenues $ 69,622 $ 69,622
License fees $ 1,223 (1,223) 0
------------- ------------ ------------- ------------ ------------
Total net revenues 1,223 68,399 69,622
Operating expenses excluding depreciation and
amortization and corporate general and
administrative expenses 6 48,568 48,574
Net local marketing agreement expenses 150 150
Depreciation and amortization 1,217 8,096 9,313
Corporate general and administrative 2,578 2,578
------------- ------------ ------------- ------------ ------------
Operating income 0 9,007 9,007
Other income (expense):
Interest income 1,183 1,183
Interest expense $ (56) (8,916) (8,972)
Gain on sale of assets and other 11,551 11,551
Equity in (loss) of subsidiaries, net of income
taxes recorded at the subsidiary level 7,373 $ (7,373) 0
------------- ------------ ------------- ------------ ------------
Income before income taxes 7,317 0 12,825 (7,373) 12,769
Provision for income taxes 5,452 5,452
------------- ------------ ------------- ------------- -----------
Net income 7,317 0 7,373 (7,373) 7,317
------------- ------------ ------------- ------------- -----------
Redeemable common and preferred stock
dividends (815) (815)
------------- ------------ ------------- ------------- -----------
Net income applicable to common shares $ 6,502 $ 0 $ 7,373 $ (7,373) 6,502
============= ============ ============= ============= ===========
<FN>
(a) Includes American Radio Systems, Inc. (ARSI), a wholly owned subsidiary of the Company
until December 1995.
</FN>
</TABLE>
23
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
8. Subsidiary Guarantees - (continued):
<TABLE>
<CAPTION>
Condensed Consolidating Statement of Operations
For the Three Months Ended September 30, 1995
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiary Subsidiary (a) Eliminations Totals
<S> <C> <C> <C> <C> <C>
Net broadcast revenues $ 25,109 $ 25,109
License fees $ 476 (476) 0
------------- ------------- ----------- ------------- ------------
Total net revenues 476 24,633 25,109
Operating expenses excluding depreciation and
amortization and corporate general and
administrative expenses 2 15,954 15,956
Net local marketing agreement expenses 150 150
Depreciation and amortization 474 2,797 3,271
Corporate general and administrative 1,094 1,094
------------- ------------- ----------- ------------- ------------
Operating income 0 4,638 4,638
Other income (expense):
Interest income 926 926
Interest expense (3,087) (3,087)
Gain (loss) on sale of assets and other (8) (8)
Equity in (loss) of subsidiaries, net of income
taxes recorded at the subsidiary level $ 1,435 $ (1,435) 0
------------- ------------- ----------- ------------- ------------
Income before income taxes 1,435 0 2,469 (1,435) 2,469
Provision for income taxes 1,034 1,034
------------- ------------- ----------- ------------ -------------
Net income 1,435 0 1,435 (1,435) 1,435
Redeemable common and preferred stock
dividends ------------- ------------- ----------- ------------ -------------
Net income applicable to common shares $ 1,435 $ 0 $ 1,435 $ (1,435) $ 1,435
============= ============= =========== ============ =============
<FN>
(a) Includes American Radio Systems, Inc. (ARSI), a wholly owned subsidiary of the Company
until December 1995.
</FN>
</TABLE>
24
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
8. Subsidiary Guarantees - (continued):
<TABLE>
<CAPTION>
Condensed Consolidating Statement of Cash Flows
For the Nine Months Ended September 30, 1995
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiary Subsidiary (a) Eliminations Totals
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities $ 4,091 $ 4,091
------------ ------------- --------------- -------------- -----------
Investing Activities:
Payments for purchase of property, equipment
and intangible assets (4,906) (4,906)
Proceeds from asset and station sales 15,283 15,283
Payments for purchase of radio stations (31,016) (31,016)
Issuance of station investment notes
receivable (45,250) (45,250)
Proceeds from repayment of station
investment notes receivable 3,000 3,000
Deposits and other long-term assets (6,428) (6,428)
------------ ------------- --------------- -------------- -----------
Cash flows used by investing activities (69,317) (69,317)
------------ ------------- --------------- -------------- -----------
Financing Activities:
Borrowings under credit agreements 66,500 66,500
Repayment of credit agreements (54,000) (54,000)
Net proceeds from offerings and options 70,934 70,934
Redemption of senior common stock (14,580) (14,580)
Purchase of treasury stock (438) (438)
Repayment of other obligations (1,198) (1,198)
------------ ------------- --------------- -------------- -----------
Cash flows from financing activities 67,218 67,218
Increase in cash and cash equivalents 1,992 1,992
Cash and cash equivalents at beginning of 3,168 3,168
period ------------ ------------- --------------- -------------- -----------
Cash and cash equivalents at end of period $ 0 $ 0 $ 5,160 $ 0 $ 5,160
============ ============= =============== ============== ===========
<FN>
(a) Includes American Radio Systems, Inc. (ARSI), a wholly owned subsidiary of the Company
until December 1995.
</FN>
</TABLE>
25
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This Report contains "forward-looking statements" including statements
concerning projections, plans, objects, future events or performance and
underlying assumptions and other statements which are other than statements of
historical fact. The Company wishes to caution readers that certain important
factors may have affected and could in the future affect the Company's actual
results and could cause the Company's actual results for subsequent periods to
differ materially from those expressed in any forward-looking statement made by
or on behalf of the Company. These important factors include among others, the
following: (i) any adverse change in the laws, regulations and policies
governing the operation and ownership of radio stations, including, but not
limited to, those established by Congress, the Federal Communications
Commission, and the Antitrust Division of the U.S. Justice Department; and (ii)
the Company's financial leverage as a result of borrowings under its credit
facility, which bear interest at variable rates, and the issuance of the
Subordinated Notes could make it vulnerable to a rise in interest rates or a
downturn in the operating performance of its radio stations or a downturn in
economic conditions.
As of September 30, 1996, the Company owned and/or operated forty-six FM and
twenty-three AM stations. See Notes 5, 6 and 7 of the unaudited condensed
consolidated financial statements for a description of the 1996 station
transactions. As of September 30, 1995, the Company owned and/or operated
sixteen FM and nine AM stations. The Company acquired WEGQ-FM in Boston in
January 1995 and WKGR-FM in West Palm Beach in July 1995. The Company also
entered into local marketing agreements with KKMJ-FM, KPTY-FM (relaunched as
KAMX-FM) and KJCE-FM in Austin in September 1995, WBLK-FM in Buffalo in March
1996, WSJZ-FM in Buffalo, WLQT-FM, WDOL-AM, WXEG-FM in Dayton, and KSTE-AM in
Sacramento in April 1996, KMXB-FM, KMZQ-FM, KXTE-FM, KVEG-AM in Las Vegas, and
KSFM-FM, KMJI-FM in Sacramento in May 1996. The Company sold KGGO-FM, KHKI-FM
and KDMI-AM in Des Moines in January 1995 and WHWK-FM and WNBF-AM in Binghamton,
New York in March 1995. The Tower Subsidiary also purchased eight tower sites
and more than 200 antenna management agreements in February 1996 and three
additional towers and sublease agreements on approximately forty tower sites
located throughout the Mid-Atlantic region in April 1996. These transactions
have significantly affected operations for the three and nine months ended
September 30, 1996 as compared to the three and nine months ended September 30,
1995.
Nine months ended September 30, 1996 and 1995
Net revenues were $113.6 million for the nine months ended September 30, 1996
compared to $69.6 million for the same nine months in 1995, an increase of $44.0
million or 63.2%. This increase was attributable to revenue growth in some of
the Company's existing markets and the impact of the 1996 station acquisitions.
Station operating expenses excluding net local marketing agreement expenses,
depreciation and amortization and corporate general and administrative expenses
were $78.2 million for the nine months ended September 30, 1996 compared to
$48.6 million for the same period in 1995, an increase of $29.6 million or
60.9%. This increase was due to the impact of increased costs associated with
the Company's revenue growth.
Net local marketing agreement expenses were $4.9 million for the nine months
ended September 30, 1996 compared to $0.2 million for the same nine months in
1995, an increase of $4.7 million based on the agreements discussed above and in
Notes 6 and 7. A local marketing agreement is an agreement whereby separately
owned and licensed stations may agree to function cooperatively in programming,
advertising sales and other matters, subject to compliance with antitrust laws
and FCC policies, including the requirement that the licensee of each station
maintain independent control over the programming and operations of its own
stations. The Company enters into such agreements prior to the consummation of
many of its acquisitions. Local marketing agreement expenses for the nine months
ended September 30, 1996 are presented net of approximately $1.3 million of
revenues earned under such agreements.
Depreciation and amortization was $11.0 million and $9.3 million for the nine
months ended September 30, 1996 and September 30, 1995 respectively, an increase
of $1.7 million or 18.3%. This increase was primarily attributable to the impact
of increased expenses associated with assets acquired in the 1996 station
acquisitions.
26
<PAGE>
Results of Operations - (continued):
Corporate general and administrative expenses increased to $3.6 million for the
nine months ended September 30, 1996 from $2.6 million for the nine months ended
September 30, 1995, an increase of $1.0 million or 38.5%. This increase was
primarily attributable to the higher personnel costs associated with supporting
the Company's growth.
Interest income was $4.7 million for the nine months ended September 30, 1996
compared to $1.2 million for the nine months ended September 30, 1995, an
increase of $3.5 million. The increase is attributable to interest income earned
on certain station investment notes and cash equivalents in 1996.
Interest expense was $15.2 million for the nine months ended September 30, 1996
compared to $9.0 million for the 1995 period, an increase of $6.2 million or
68.9%. The increase is related to higher borrowing levels including the Senior
Subordinated Notes and to a lesser extent borrowings under the 1995 Credit
Agreement in 1996.
The gain (loss) on the sales of assets in 1996 was not material. The gain on
sale of assets for 1995 represents gains on the sale of radio broadcasting
properties in Binghamton, New York ($3.9 million) and Des Moines, Iowa ($7.7
million).
The provision for income taxes for the nine months ended September 30, 1996 was
$3.0 million compared to $5.5 million for nine months ended September 30, 1995.
The effective tax rate for the nine months ended September 30, 1996 was
approximately 52.4% compared to 42.7% in 1995. The higher effective rate in 1996
is due to the effect of permanent differences, principally amortization of
non-deductible goodwill on certain stock acquisitions.
Redeemable common and preferred stock dividends for the nine months ended
September 30, 1996 were $2.6 million as compared to $0.8 million for the nine
months ended September 30, 1995. The 1996 dividends are attributable to the
Convertible Preferred Stock issued in late June 1996. The 1995 dividends were
attributable to the Series C Common Stock which was retired in June 1995 with
proceeds from the Company's initial public offering.
Net income applicable to common stockholders was $.1 million for the nine months
ended September 30, 1996 compared to $6.5 million for the nine months ended
September 30, 1995, a decrease of $6.4 million as a result of the factors
discussed above.
Three months ended September 30, 1996 and 1995
Net revenues were $52.5 million for the three months ended September 30, 1996
compared to $25.1 million for the same three months in 1995, an increase of
$27.4 million or 109.2%. This increase was attributable to revenue growth in
some of the Company's existing markets and the impact of the 1996 station
acquisitions.
Station operating expenses excluding net local marketing agreement expenses,
depreciation and amortization and corporate general and administrative expenses
were $35.4 million for the three months ended September 30, 1996 and $16.0
million for the comparable period in 1995, an increase of $19.4 million or
121.3%. This increase was due to increased costs associated with the Company's
revenue growth.
Net local marketing agreement expenses were $2.3 million for the three months
ended September 30, 1996 compared to $0.2 million for the same three months in
1995 based on the agreements discussed above and in Notes 6 and 7. Local
marketing agreement expenses for the three months ended September 30, 1996 are
presented net of approximately $1.0 million of revenues earned under such
agreements.
Depreciation and amortization was $6.1 million and $3.3 million for the three
months ended September 30, 1996 and September 30, 1995 respectively, an increase
of $2.8 million or 84.8%. This increase was primarily attributable to the impact
of the 1996 station acquisitions.
27
<PAGE>
Results of Operations - (continued):
Corporate general and administrative expenses increased to $1.3 million for the
three months ended September 30, 1996 from $1.1 million for the three months
ended September 30, 1995 an increase of $.2 million or 18.2%. This increase was
primarily attributable to the higher personnel costs associated with supporting
the Company's growth.
Interest income was $1.1 million for the three months ended September 30, 1996
compared to $0.9 for the three months ended September 30, 1995, an increase of
$0.2 million or 22.2%. The increase is primarily attributable to interest income
earned on cash equivalents and to a lesser extent on certain station investment
notes.
Interest expense was $6.3 million for the three months ended September 30, 1996
compared to $3.1 million for the 1995 period, an increase of $3.2 million or
103.2%. The increase is related to higher borrowing levels including the Senior
Subordinated Notes.
Gain (loss) on the sale of assets during each period was not material.
The provision for income taxes for the three months ended September 30, 1996 was
$1.5 million compared to $1.0 million for three months ended September 30, 1995.
The effective tax rate for the three months ended September 30, 1996 was
approximately 62.0% compared to 41.9% in 1995. The higher effective tax rate in
1996 is due to the effect of permanent differences, principally amortization of
non-deductible goodwill on certain stock acquisitions.
Redeemable preferred stock dividends for the three months ended September 30,
1996 were $2.4 million representing dividends on the Convertible Preferred
Stock.
Net loss applicable to common stockholders was $1.5 million for the three months
ended September 30, 1996 compared to net income of $1.4 million for the three
months ended September 30, 1995, a decrease of $2.9 million as a result of the
factors discussed above.
Liquidity and Capital Resources
The Company's liquidity needs arise from its acquisition-related requirements,
debt service, working capital, capital expenditure and dividend payments.
Historically, the Company has met its operational liquidity needs with
internally generated funds and has financed the acquisition of radio
broadcasting properties and tower related properties with a combination of bank
borrowings and proceeds from the sale of the Company's equity and debt
securities. For the nine months ended September 30, 1996 cash flows provided by
operating activities was $18.5 million, as compared to $4.1 million for the nine
months ended September 30, 1995. The change is primarily attributable to working
capital investments related to station acquisition and growth.
Cash flows used for investing activities were $382.8 million for the nine months
ended September 30, 1996 as compared to $69.4 million for the nine months ended
September 30, 1995. The 1996 increase was due to greater station acquisition
activity in 1996 as compared to 1995.
Cash provided by financing activities was $374.9 million for the nine months
ended September 30, 1996 as compared to $67.2 million for the nine months ended
September 30, 1995. The increase in 1996 was due to the equity and debt
offerings described below offset by repayment of borrowings under the 1995
Credit Agreement.
In June 1996, the Company sold pursuant to exemptions under the Securities Act
2,750,000 Depositary Shares, each representing a one-twentieth of a share of its
Convertible Exchangeable Preferred Stock, $1,000 liquidation preference. Net
proceeds to the Company from the offering were approximately $132.8 million.
Approximately $2.6 million of accrued dividends were paid as of September 30,
1996. See Note 4 to the unaudited condensed consolidated financial statements
for a description of the Convertible Preferred Stock.
28
<PAGE>
Liquidity and Capital Resources - (continued):
In February 1996, the Company completed (the Equity Offering and the Debt
Offering. Pursuant to the Equity Offering, the Company sold 5,514,707 shares of
its Class A Common Stock at a price of $27 per share, consisting of 4,000,000
shares sold by the Company 1,013,370 shares sold by selling shareholders and an
additional 501,337 shares sold by the Company pursuant to the exercise of the
underwriters' over-allotment option. Proceeds to the Company, net of
underwriters' discount and associated costs, were approximately $114.5 million.
Pursuant to the Debt Offering, the Company sold $175 million of Subordinated
Notes at a discount of $1.4 million yielding 9.125%. Interest on the
Subordinated Notes is payable semi-annually on February 1 and August 1 with the
face value of the note due on February 1, 2006. The Company, may at its option,
redeem, in whole or in part, the Notes beginning February 1, 2001, initially at
104.5% of principal amount declining annually to 100.0% in 2004 and thereafter.
The Company is also required to redeem the Notes upon the occurrence of certain
events. The Subordinated Notes are subordinate in right of payment to the prior
payment in full of the 1995 Credit Agreement and contain certain convenants
including, but not limited to, limitations on sales of assets, dividend
payments, future indebtedness, issuance of preferred stock and changes in
control. The Subordinated Notes are guaranteed by American Radio Systems License
Corp., a wholly owned subsidiary of the Company. Proceeds to the Company, net of
underwriters' discount and associated costs were approximately $167.3 million.
As of September 30, 1996, the Company had approximately $285.3 million of total
long-term debt (including current portion thereof) outstanding. In December
1995, the Company entered into the 1995 Credit Agreement, which, among other
things, increased American's borrowing limit and provided the Company with a
revolving loan commitment based on the lesser of (a) $300.0 million or (b) an
amount based on a financial test. The terms of the 1995 Credit Agreement are
described in the Company's Annual Report on Form 10-K for the year ended
December 31, 1995. As of September 30, 1996, $108.5 million of borrowings were
outstanding under the 1995 Credit Agreement.
In order to finance acquisitions of radio stations and for general corporate
purposes, the Company has borrowed and expects to continue to borrow under the
1995 Credit Agreement and has issued an aggregate of $175.0 million principal
amount of the Notes discussed above. As part of the EZ Merger, the Company will,
in the case of a direct merger, assume EZ's obligations with respect to $150.0
million principal amount of the EZ Senior Notes and refinance the EZ credit
facility as part of the 1995 Credit Agreement. In the case of a subsidiary
merger, the EZ credit facility and the EZ Senior Notes will become the
obligations of a separate subsidiary. To the extent the holders of the EZ Senior
Notes elect to exercise their right to require the Company (or a separate
subsidiary) to purchase such Notes as a result of the change of control, the
Company will be required to borrow the necessary funds under the Credit
Agreement (or the EZ credit facility). In connection with the consummation of
the EZ Merger, the Company expects to increase the maximum amount which may be
borrowed under the 1995 Credit Agreement (or, in the event of the subsidiary
merger, the credit agreements) to $1.0 billion. A substantial portion of the
Company's cash flow from operations is required for debt service. The Company
believes that cash flow from operations will be sufficient to meet debt service
requirements for interest and scheduled payments of principal under the credit
agreements and the Notes. However, the Company's leverage could make it
vulnerable to a downturn in the operating performance of its radio stations or a
downturn in economic conditions.
The Company believes that its cash flows from operations will be sufficient to
meet any quarterly debt service requirements for interest and scheduled payments
of principal under the Credit Agreement and the Notes. If such cash flow is not
sufficient to meet such debt service requirements, the Company may be required
to sell equity securities, refinance its obligations or dispose of one or more
of its properties in order to make such scheduled payments. There can be no
assurance that the Company would be able to effect any of such transactions on
favorable terms.
29
<PAGE>
Liquidity and Capital Resources - (continued):
The Company's working capital needs fluctuate throughout the year due to
industry-wide seasonality and its broadcast of sporting events at different
times during the year. The Company historically has had sufficient cash from its
operations to meet its working capital needs and believes that it has sufficient
financial resources available to it, including borrowing under the 1995 Credit
Agreement, to finance operations for the foreseeable future.
The Company has entered into numerous station and tower acquisition and related
agreements (see Notes 6 and 7 to the unaudited condensed consolidated financial
statements). The consummation of each of these agreements is subject to, among
other things, FCC approval and in some cases the negotiation of definitive
agreements. Unless otherwise noted, the Company intends to effect all of the
transactions as soon as the necessary approvals are obtained. The Company
intends to finance the acquisitions with available cash, issuance of equity
securities and borrowings under the 1995 Credit Agreement.
The Company expects capital expenditures in 1996 to be approximately $10.0
million, consisting principally of tower construction (approximately $5.0
million), office consolidations and ongoing technical improvements. To the
extent that funds generated from operations, or available cash, are insufficient
to finance nonrecurring capital expenditures, the Company would seek to borrow
the necessary funds under the 1995 Credit Agreement.
Inflation
The impact of inflation on the Company's operations has not been significant to
date. However, there can be no assurance that a high rate of inflation in the
future would not have an adverse effect on the Company's operating results.
30
<PAGE>
PART II. OTHER INFORMATION
Item 1. - Legal Proceedings.
In the normal course of business, the Company is subject to certain suits and
other matters. Management believes that the eventual resolution of any pending
matters, either individually or in the aggregate, will not have a material
effect on financial position, liquidity or results of operations.
Item 5. Other Information
Other Events
On October 18, 1996, the Company entered into an Asset Purchase Agreement with
Entertainment Communications, Inc., a Pennsylvania Corporation, pursuant to
which the Company will sell substantially all the assets of KXOA-FM in
Sacramento, California for approximately $27.5 million in cash. Consummation of
the transaction is subject to, among other things, the approval of the FCC and
the expiration on early termination of the HSR waiting period.
On October 18, 1996, the Company entered into an Asset Purchase Agreement with
Triathalon Broadcasting of Omaha, Inc., a Delaware Corporation, pursuant to
which the Company will sell substantially all of the assets of KFAB-AM and
KGOR-FM and Business Music Service in Omaha, Nebraska for approximately $39.0
million. Consummation of the transaction is subject to, among other things, the
approval of the FCC and the expiration on early termination of the HSR waiting
period.
On October 2, 1996, the Company consummated the Asset Purchase Agreement dated
June 4, 1996 with Mortenson Broadcasting Company Inc., a Delaware corporation,
pursuant to which the Company acquired substantially all of the assets of
WBGR-AM in Baltimore, Maryland, Inc. for approximately $14.0 million. The
acquisition was financed through a $.2 million escrow deposit and available
cash.
On September 10, 1996, the Company entered into an Asset Purchase Agreement with
Palm Beach Radio Broadcasters, Inc. Corporation, a Florida corporation, pursuant
to which the Company will acquire substantially all of the assets of WLQT-FM and
WBTT-FM in Dayton, Ohio. Consummation of the transaction is subject to, among
other things, the approval of the FCC and the expiration on early termination of
the HSR waiting period. The Company expects to finance the acquisitions with the
proceeds from certain station investment notes and approximately $2.75 in cash.
On August 9, 1996, the Company entered into an Asset Purchase Agreement with
Mega Broadcasting Company, a New Jersey corporation, pursuant to which the
Company will sell substantially all the assets of WNEZ-AM in Hartford,
Connecticut for approximately $.75 million. Consummation of the transaction is
expected in the first quarter of 1997.
31
<PAGE>
Item 6. - Exhibits and Reports on Form 8-K
a. Exhibits
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
Exhibit
No. Description of Document
<S> <C> <C>
2.1 Amended and Restated Merger Agreement, by and among the
Company, American Merger Corporation and EZ
Communications, Inc. dated as of August 5, 1996 and as
amended and restated as of September 27, 1996................. Incorporated herein by
reference to Appendix I of the
Prospectus which is a part of
the Company's Registration
Statement on Form S-4 filed
with the SEC on October 31,
1996 (File No. 333-15231)
4.8 Amendment No. 2 and Consent, dated June 19, 1996, to the
Credit Agreement dated as of December 19, 1995 by and
among the Company, The Bank of New York, as Agent,
the Co-Agents named therein, and the Lenders party
thereto....................................................... Filed.herewith as Exhibit 4.8
4.9 Supplemental Indenture, dated as of October 1, 1996, to
Indenture, dated as of February 1, 1996, by and among the
Company, the Subsidiary Guarantors names therein and
Fleet National Bank relating to $175,000,000 of the
Company's 9% Senior Subordinated Notes due 2006......... Filed herewith as Exhibit 4.9
4.10 Supplemental Indenture, dated as of May 31, 1996, to
Indenture, dated as of February 1, 1996, by and among
American, the Subsidiary Guarantors names therein and
Fleet National Bank relating to $175,000,000 of the
American's 9% Senior Subordinated Notes due 2006......... Filed herewith as Exhibit 4.10
10.83 Asset Purchase Agreement, dated September 10, 1996
between the Company and Palm Beach Radio
Broadcasting, Inc............................................. Filed herewith as Exhibit 10.83
10.84 Asset Purchase Agreement, dated October 10, 1996 by the
Company and CBC of Baltimore, Inc............................. Filed herewith as Exhibit 10.84
10.85 Time Brokerage Agreement, dated October 1, 1996 by the
Company and CBC of Baltimore, Inc............................. Filed herewith as Exhibit 10.85
10.86 Asset Purchase Agreement dated October 10, 1996 between
the Company and WWMX, Inc..................................... Filed herewith as Exhibit 10.86
10.87 Time Brokerage Agreement, dated October 1, 1996 between
the Company and WWMX, Inc.................................... Filed herewith as Exhibit 10.87
10.88 Asset Purchase Agreement, dated October 18, 1996 between
the Company and Triathalon Broadcasting of Omaha, Inc.. Filed herewith as Exhibit 10.88
10.89 Asset Purchase Agreement, dated October 18, 1996 between
the Company and Entertainment Communications, Inc....... Filed herewith as Exhibit 10.89
10.90 Time Brokerage Agreement, dated April 1, 1996 between the
Company and Cresent Communications, L.P. ..................... Filed herewith as Exhibit 10.90
10.91 Asset Purchase Agreement, dated August 7, 1996 between the
Company and United Broadcasting, Inc.......................... Filed herewith as Exhibit 10.91
10.92 Asset Purchase Agreement, dated August 9, 1996, by and
among the Company, American Radio Systems License
Corp. and Mega Broadcasting Corporation....................... Filed herewith as Exhibit 10.92
11 Schedule re computation of earnings per share...................... Filed herewith as Exhibit 11
12 Ratio of earnings to fixed charges................................. Filed herewith as Exhibit 12
27 Financial Data schedule............................................ Filed herewith as Exhibit 27
</TABLE>
Exhibits 2.1 through 10.92 do not contain schedules and exhibits
noted within the agreements. This additional information is
available upon request from the Company.
b. Reports on Form 8-K
1. Form 8-K (Items 2 and 5) on July 16, 1996
2. Form 8-K/A (Items 5 and 7) on August 12, 1996
3. Form 8-K/A (Items 5 and 7) on September 16, 1996.
4. Form 8-K/A (Item 7) on October 2, 1996.
32
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMERICAN RADIO SYSTEMS CORPORATION
Date: November 13, 1996 BY: /s/ Joseph L. Winn
------------------------
Joseph L. Winn
Treasurer & Chief Financial Officer
(Duly Authorized Officer)
Date: November 13, 1996 BY: /s/ Justin D. Benincasa
------------------------------
Justin D. Benincasa
Vice President & Corporate Controller
(Duly Authorized Officer)
33
Exhibit 4.8
AMENDMENT NO. 2 AND CONSENT
UNDER THE
AGREEMENT
AMENDMENT NO. 2 AND CONSENT (this "Amendment"), dated as of June 19,
1996, under the Credit Agreement, dated as of December 19, 1995, by and among
American Radio Systems Corporation, a Delaware corporation (the "Borrower"), The
Bank of New York, as agent (the "Agent"), Bank of Montreal, Banque Paribas,
Chemical Bank, CIBC Inc., Fleet National Bank and Toronto Dominion (Texas),
Inc., as co-agents (collectively, the "Co-Agents"), and each Lender party
thereto (collectively, the "Lenders"), as amended by Amendment No. 1, dated as
of February 1, 1996 (as amended, the "Agreement"). Capitalized terms used herein
which are defined in the Agreement shall have the same meanings as therein
defined unless otherwise defined herein.
RECITALS
The Borrower has requested that the Agreement be amended to
permit the issuance of certain convertible exchangeable preferred Stock of the
Borrower and to modify certain covenants in the Agreement as hereinafter set
forth.
Accordingly, in consideration of the covenants, conditions and
agreements hereinafter set forth, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Section 1.1 of the Agreement is amended to add the
following new definitions:
"1996 Convertible Exchangeable Preferred Stock Issuance": the
issuance of convertible exchangeable preferred Stock of the
Borrower having a total liquidation value (including any such
Stock sold pursuant to the over-allotment option of the
initial purchasers) not exceeding $165,000,000, as described
in the Confidential Preliminary Offering Circular, dated June
7, 1996.
"Exchange Subordinated Indenture": in the event that
the Borrower elects to exchange shares of the preferred
Stock issued in connection with the 1996 Convertible
<PAGE>
Exchangeable Preferred Stock Issuance for Exchange
Subordinated Indenture Notes, the indenture between the
Borrower and the applicable trustee relating thereto, such
indenture to contain subordination terms with respect to the
Loan Documents at least as favorable to the Agent and the
Required Lenders, the Co-Agents and the Lenders as those
contained in the Subordinated Indenture and to be in form and
substance reasonably satisfactory to the Agent, as the same
may be amended, supplemented or otherwise modified from time
to time in accordance with section 8.20.
"Exchange Subordinated Indenture Notes": the subordinated
notes, issued pursuant to the Exchange Subordinated Indenture,
such subordinated notes to be subordinated to the Loan
Documents at least to the same extent as the Subordinated
Indenture Notes and to be in form and substance reasonably
satisfactory to the Agent and the Required Lenders, as the
same may be amended, supplemented or otherwise modified from
time to time in accordance with section 8.20.
"Exchange Guaranty": guaranties, or more Subordinated
Indenture Subsidiary the subordinated guaranty or if any,
executed and delivered by one of the Restricted Subsidiaries
in with the Exchange Subordinated connection Indenture, each
such subordinated guaranty to be subordinated to the Loan
Documents at least to the same extent as the Subordinated
Indenture Subsidiary Guaranty and to be in form and substance
reasonably satisfactory to the Agent and the Required Lenders,
as the same may be amended, supplemented or otherwise modified
from time to time in accordance with section 8.20.
2. The definition of "Consolidated Annual Operating
Cash Flow" as defined in Section 1.1 of the Agreement is amended
to delete the following:
provided that (i) the aggregate amount of WPBZ Cash Flow, WTIC
Cash Flow and Additional Cash Flow (if any) (collectively, the
("Acquired Station Cash Flow") which is added to Consolidated
Annual Operating Cash Flow pursuant to this sentence shall not
exceed an aggregate amount equal to (1) for the period through
June 30, 1996, 100% of the Acquired Station Cash Flow, (2) for
the period from July 1, 1996 through September 30, 1996, 75%
of the Acquired Station Cash Flow, (3) for the period from
October 1, 1996 through December 31, 1996, 50% of the Acquired
Station Cash Flow and (4) thereafter, 0% of the Acquired
Station Cash Flow, (ii)
- 2 -
<PAGE>
the aggregate amount of Acquired Station Cash Flow which is
added to Consolidated Annual Operating Cash Flow pursuant to
this sentence prior to July 1, 1996 shall not exceed 20% of
the aggregate amount of Consolidated Annual Operating Cash
Flow after giving effect to the addition of such Acquired
Station Cash Flow and (iii) each of the Palm Beach (WPBZ)
Documents, the Hartford (WTIC) Documents and the documents
evidencing any arrangement contemplated by paragraph (c) above
shall be in full force and effect and no default shall exist
thereunder
and to replace it with the following:
provided that (i) the aggregate amount of WPBZ Cash Flow, WTIC
Cash Flow and Additional Cash Flow (if any) (collectively, the
"Acquired Station Cash Flow") which is added to Consolidated
Annual Operating Cash Flow pursuant to this sentence shall not
exceed an aggregate amount equal to (1) for the period through
December 31, 1996, 100% of the Acquired Station Cash Flow and
(2) thereafter, 0% of the Acquired Station Cash Flow, (ii) the
aggregate amount of Acquired Station Cash Flow which is added
to Consolidated Annual Operating Cash Flow pursuant to this
sentence prior to January 1, 1997 shall not exceed 20% of the
aggregate amount of Consolidated Annual Operating Cash Flow
after giving effect to the addition of such Acquired Station
Cash Flow and (iii) each of the Palm Beach (WPBZ) Documents,
the Hartford (WTIC) Documents and the documents evidencing any
arrangement contemplated by paragraph (c) above shall be in
full force and effect and no default shall exist thereunder.
3. The definition of "Fixed Charges" as set forth in
section 1.1 of the Agreement is amended to amend and restate
clause (d) to read as follows:
(d) Restricted Payments made in cash pursuant to and in
accordance with sections 8.4(b) and 8.4(e) (excluding
Restricted Payments made with funds received from the Tower
Subsidiary).
4. The definition of "Senior Debt" as set forth in
section 1.1 of the Agreement is amended and restated in its
entirety to read as follows:
"Senior Borrower" the aggregate Indebtedness of the Borrower
and its Restricted Subsidiaries (other than the Indebtedness
evidenced by the Subordinated Indenture Notes, the
Subordinated Indenture Subsidiary Guaranty,
- 3 -
<PAGE>
the Exchange Subordinated Indenture Notes, and the Exchange
Subordinated Indenture Subsidiary Guaranty) on a Consolidated
basis, determined in accordance with GAAP.
5. Section 8.1 of the Agreement is amended to amend and
restate clauses (v) and (vi) thereof in their entirety to read as
follows:
(v) Indebtedness of the Borrower evidenced by (a) the
Subordinated Indenture Notes and (b) the Exchange Subordinated
Indenture Notes, provided that, in the case of this clause
(b), immediately before and after giving effect to the
incurrence thereof no Default or Event of Default shall exist;
(vi) Indebtedness of the Restricted Subsidiaries evidenced by
the Subordinated Indenture Subsidiary Guaranty and the
Exchange Subordinated Indenture Subsidiary Guaranty.
6. The Lenders hereby consent to the nonapplication of the
finality requirement with respect to the FCC order as set forth in clause (iii)
of the second sentence of section 8.3(b) of the Agreement with respect to each
of the following acquisitions, provided that in each case, immediately prior to
the closing of such acquisition, the applicable FCC order consenting to such
acquisition has not been reversed, stayed, enjoined, set aside, annulled or
suspended and no request with respect to such FCC order has been filed for
administrative or judicial review, reconsideration, appeal or stay:
(i) KJMZ(FM), Las Vegas, Nevada, and the related assets
and other property associated therewith,
(ii) KSTE(AM), Rancho Cordova, California, and the
related assets and other property associated therewith,
(iii) WSJZ(FM), Buffalo, New York, and the related
assets and other property associated therewith, and
(iv) KVEG(AM), Las Vegas, Nevada, and the related assets and
other property associated therewith.
7. Section 8.4 of the Agreement is amended to delete the word
"and" immediately before paragraph (d) therein and to add the following
immediately preceding the period at the end of such section:
; and
(e) the Borrower may declare and pay cash dividends on the
preferred Stock issued pursuant to the 1996 Convertible
Exchangeable Preferred Stock Issuance, provided that,
immediately before and after giving
- 4 -
<PAGE>
effect thereto, no Default or Event of Default shall
exist.
8. Section 8.5(g) of the Agreement is amended and
restated in its entirety to read as follows:
(g) Investments by the Borrower in loans, in an aggregate
outstanding principal amount (excluding accrued interest which
has been added to principal) not in excess of $75,000,000, to
entities to finance the acquisition of broadcasting related
businesses which the Borrower is obligated to, or has an
option to, acquire from such entities (similar to the
arrangements entered into by the Borrower with Ten Eighty
Corporation or Palm Beach Broadcasting) (including, without
limitation, Investments by the Borrower in the WPBZ Loan, the
loan evidenced by the Hartford (WTIC) Notes and the Hartford
$8,500,000 Loan), provided that (i) the acquisitions are
permitted pursuant to section 8.3 (subject, if applicable, to
the last paragraph of section 8.3) and (ii) all notes
evidencing such loans, together with all collateral security
and related agreements delivered to the Borrower in connection
therewith (excluding the Hartford $8,500,000 Notes), are
pledged to the Agent under and in accordance with the Borrower
Security Agreement.
9. The Lenders hereby consent that, notwithstanding anything
to the contrary contained in section 8.7 of the Agreement or elsewhere in the
Agreement, the Borrower may transfer all of its rights and obligations to
acquire WVOR(FM), WPXY(FM), WHAM(AM) and WHTK(AM), all serving Rochester, New
York, to Palm Beach Broadcasting.
10. Section 8.8 of the Agreement is amended to delete clause
(2) therein in its entirety and to renumber clauses "(3)" and "(4)" therein as
clauses "(2)" and "(3)", respectively.
11. Section 8.10 of the Agreement is amended to delete the
amount "$4,000,000" set forth in clause (a) therein and to replace it with the
amount "$8,000,000", and to delete the amount "3,000,000" set forth in clause
(a) therein and to replace it with the amount "$5,000,000".
12. Section 8.12 of the Agreement is amended to
amend and restate clause (iii) in its entirety to read as
follows:
(iii) the prepayment of the Subordinated Indenture
Notes and the Exchange Subordinated Indenture
- 5 -
<PAGE>
Notes, in either case to the extent permitted under section
8.20.
13. Section 8.16 of the Agreement is amended to amend
and restate clause (iii) thereof in its entirety to read as
follows:
(iii) executing, delivering and performing its obligations
under the Subsidiary Guaranty, the Subordinated Indenture
Subsidiary Guaranty and the Exchange Subordinated Indenture
Subsidiary Guaranty.
14. Section 8.19 of the Agreement is amended and
restated in its entirety to read as follows:
8.19 Stock Issuance.
Issue any additional shares of Stock, or permit any
of its Restricted Subsidiaries so to do, except (i) the
Borrower may issue shares of its common Stock or Non
Redeemable Preferred Stock, (ii) the Tower Subsidiary may
issue shares of its Stock to the Borrower and (iii) the
Borrower may issue shares of its preferred Stock pursuant to
the 1996 Convertible Exchangeable Preferred Stock Issuance;
provided that in each case immediately before and after giving
effect thereto no Default or Event of Default shall exist, or
if a Default or Event of Default shall exist, the Borrower
shall prepay the Loans in an amount equal to the net proceeds
received by the Borrower in connection with such issuance of
Stock by the Borrower immediately upon its receipt thereof.
15. Section 8.20 of the Agreement is amended and
restated in its entirety to read as follows:
8.20 Subordinated Indebtedness.
Enter into or agree to any amendment, modification or waiver
of any term or condition of the Subordinated Indenture, the
Subordinated Indenture Notes, the Subordinated Indenture
Subsidiary Guaranty, the Exchange Subordinated Indenture, the
Exchange Subordinated Indenture Notes or the Exchange
Subordinated Indenture Subsidiary Guaranty, or purchase,
redeem or make any payment with respect to Indebtedness under
the Subordinated Indenture Notes, the Subordinated Indenture
Subsidiary Guaranty, the Exchange Subordinated Indenture Notes
or the Exchange Subordinated Indenture Subsidiary Guaranty, or
permit any of its Restricted Subsidiaries so to do, except for
required payments to the extent expressly permitted
- 6 -
<PAGE>
pursuant to the subordination terms set forth therein, and
except as permitted under section 8.1(viii).
16. This Amendment shall become effective as of the date
hereof upon receipt by the Agent of this Amendment executed by a duly authorized
officer or officers of the Borrower, the Agent and the Required Lenders.
17. In all other respects the Agreement and the ..
Documents shall remain in full force and effect.
18. In order to induce the Agent to execute this Amendment and
the Co-Agent and the Lenders to consent thereto, the Borrower hereby (a)
certifies that all representations and warranties contained in the Agreement are
true and correct in all respects as of the date hereof, (b) certifies that,
immediately before and after giving effect to this Amendment, no Default or
Event of Default exists under the Agreement, and (c) agrees to pay the
reasonable fees and disbursements of counsel to the Agent incurred in connection
with the preparation, negotiation and closing of this Amendment.
19. The Borrower hereby (a) reaffirms and admits the validity,
enforceability and continuation of all the Loan Documents to which it is a
party, and its obligations thereunder, and (b) agrees and admits that it has no
valid defenses to or offsets against any of its obligations to the Agent, the
Co-Agents or the Lenders under the Loan Documents to which it is a party.
20. This Amendment may be executed in any number of
counterparts, each of which shall be an original and all of which shall
constitute one agreement. It shall not be necessary in making proof of this
Amendment to produce or account for more than one counterpart signed by the
party to be charged.
21. This Amendment is being delivered in and is intended to be
performed in the State of New York and shall be construed and enforceable in
accordance with, and be governed by, the internal laws of the State of New York
without regard to principles of conflict of laws.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the date first above written.
THE BANK OF NEW YORK, individually
and as Agent
By:________________________________
Title:_____________________________
- 7 -
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
By:________________________________
Title:_____________________________
AGREED:
BANK OF MONTREAL
By:______________________________
Name:____________________________
Title:___________________________
BANQUE PARIBAS
By:______________________________
Name:____________________________
Title:___________________________
By:______________________________
Name:____________________________
Title:___________________________
CHEMICAL BANK
By:______________________________
Name:____________________________
Title:___________________________
CIBC INC.
By:______________________________
- 8 -
<PAGE>
Name:____________________________
Title:___________________________
FLEET NATIONAL BANK
By:______________________________
Name:____________________________
Title:___________________________
By:______________________________
Name:____________________________
Title:___________________________
TORONTO DOMINION (TEXAS), INC.
By:______________________________
Name:____________________________
Title:___________________________
UNION BANK
By:______________________________
Name:____________________________
Title:___________________________
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA
By:______________________________
Name:____________________________
Title:___________________________
BANQUE NATIONALE DE PARIS
- 9 -
<PAGE>
By:______________________________
Name:____________________________
Title:___________________________
NATIONSBANK OF TEXAS, N.A.
By:______________________________
Name:____________________________
Title:___________________________
LTCB TRUST COMPANY
By:______________________________
Name:____________________________
Title:___________________________
THE SUMITOMO BANK, LIMITED
By:______________________________
Name:____________________________
Title:___________________________
By:______________________________
Name:____________________________
Title:___________________________
- 10 -
<PAGE>
Exhibit 4.9
- -------------------------------------------------------------------------------
AMERICAN RADIO SYSTEMS CORPORATION
Issuer
THE SUBSIDIARY GUARANTORS NAMED HEREIN
Guarantor
FLEET NATIONAL BANK
Trustee
----------------
Supplemental Indenture
Dated as of October 1, 1996
to
Indenture
Dated as of February 1, 1996
----------------
$175,000,000
9% Senior Subordinated Notes due 2006
------------------------------------------------------------------------------
<PAGE>
SUPPLEMENTAL INDENTURE, dated as of October 1, 1996, among American
Radio Systems Corporation, a corporation duly organized and existing under the
laws of the State of Delaware (herein called the "Company"), American Radio
Systems License Corp., a corporation duly organized and existing under the laws
of the State of Delaware (herein called "License Corp." or a "Restricted
Subsidiary"), ARS Acquisition II, Inc. (formerly known as Marlin Broadcasting,
Inc.), a corporation duly organized and existing under the laws of the State of
Delaware (herein called "Marlin" or a "Restricted Subsidiary"), Radio Systems of
Miami, Inc. (formerly known as Marlin Broadcasting of Miami, Inc.), a
corporation duly organized and existing under the laws of the State of Delaware
(herein called "Marlin Miami" or a "Restricted Subsidiary"), Radio Systems of
Philadelphia, Inc. (formerly known as Franklin Broadcasting Company), a
corporation duly organized and existing under the laws of the Commonwealth of
Pennsylvania (herein called "Franklin" or a "Restricted Subsidiary"), and Fleet
National Bank (formerly known as Fleet National Bank of Connecticut), a national
banking association duly organized and existing under the laws of the United
States of America, as Trustee (herein called the "Trustee") to the Indenture,
dated as of February 1, 1996, among the Company, License Corp, and the Trustee
(herein called the "Indenture").
RECITALS OF THE COMPANY
The Company, License Corp. and the Trustee have heretofore executed and
delivered the Indenture, pursuant to which the Company has duly issued an
aggregate of $175,000,000 principal amount of its 9% Senior Subordinated Notes
due 2006 (herein called the "Securities").
The Company, each of Marlin, Marlin Miami and Franklin and the Trustee
have heretofore executed and delivered a Supplemental Indenture dated as of May
31, 1996, pursuant to which each of Marlin, Marlin Miami and Franklin became
parties to, and Restricted subsidiaries under, the Indenture and guaranteed the
Securities.
The Indenture provides that indentures supplemental to the Indenture
may be entered into without the consent of any Holders in order, among other
things, to cure any ambiguity and to correct any provision thereof which may be
inconsistent with any other provision.
All things necessary to make this Supplemental Indenture a valid
agreement of each of the Company and each Restricted Subsidiary, this
Supplemental Indenture is executed by it, the valid obligations of such parties
in accordance with its terms, have been done.
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and the terms and conditions
of the Indenture, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:
<PAGE>
ARTICLE ONE
Amendments
SECTION 101. Amendments.
(a) Amendment of Section 1011. Section 1011 of the Indenture
is amended to restate paragraph (c) thereof to read in its entirety as
follows:
"(c) Indebtedness represented by (1) the Securities
and the Subsidiary Guarantees and (2) guarantees by Restricted
Subsidiaries of (i) Senior Bank Debt and (ii) any other Senior
Debt permitted to be incurred by the Company under the terms
of this Indenture;"
ARTICLE TWO
Definitions and Other Provisions
of General Application
SECTION 201. Definitions; Incorporation of Provisions.
Terms used herein without definition shall have the meanings prescribed
therefor in the Indenture. The provisions of Sections 107 through 114, both
inclusive, are incorporated herein with the same force and effect as though set
forth hereat in their entirety.
SECTION 202. Indenture Provisions.
Except as specifically amended by this Supplemental Indenture, the
Indenture shall remain in full force and effect.
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
American Radio Systems Corporation
Attest:
By /S/ Joseph L. Winn
------------------------------
Name: Joseph L. Winn
/S/ Michael B. Milsom Title: Chief Financial Officer
American Radio Systems License Corp.
Attest:
By /S/ Joseph L. Winn
------------------------------
Name: Joseph L. Winn
/S/ Michael B. Milsom Title: Chief Financial Officer
ARS Acquisition II, Inc.
Attest:
By /S/ Joseph L. Winn
------------------------------
Name: Joseph L. Winn
/S/ Michael B. Milsom Title: Chief Financial Officer
Radio Systems of Miami, Inc.
Attest:
By /S/ Joseph L. Winn
------------------------------
Name: Joseph L. Winn
/S/ Michael B. Milsom Title: Chief Financial Officer
Radio Systems of Philadelphia, Inc.
Attest:
By /S/ Joseph L. Winn
------------------------------
Name: Joseph L. Winn
/S/ Michael B. Milsom Title: Chief Financial Officer
Fleet National Bank, as Trustee
Attest:
By /S/ Kathy A. Larimore
------------------------------
Name: Kathy A. Larimore
/S/ Title: Assistant Vice President
-3-
<PAGE>
COMMONWEALTH OF MASSACHUSETTS ) ss.:
COUNTY OF SUFFOLK )
On the 8th day of October, 1996, before me personally came Joseph L.
Winn, to me known, who, being by me duly sworn, did depose and say that he is
Chief Financial Officer of American Radio Systems Corporation, one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.
/S/ Kathryn B. Haley
---------------------------
COMMONWEALTH OF MASSACHUSETTS ) ss.:
COUNTY OF SUFFOLK )
On the 8th day of October, 1996, before me personally came Joseph L.
Winn, to me known, who, being by me duly sworn, did depose and say that he is
Chief Financial Officer of ARS Acquisition, Inc., one of the corporations
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
/S/ Kathryn B. Haley
---------------------------
COMMONWEALTH OF MASSACHUSETTS ) ss.:
COUNTY OF SUFFOLK )
On the 8th day of October, 1996, before me personally came Joseph L.
Winn, to me known, who, being by me duly sworn, did depose and say that he is
Chief Financial Officer of Radio Systems of Miami, Inc., one of the corporations
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
/S/ Kathryn B. Haley
---------------------------
COMMONWEALTH OF MASSACHUSETTS ) ss.:
COUNTY OF SUFFOLK )
On the 8th day of October, 1996, before me personally came Joseph L.
Winn, to me known, who, being by me duly sworn, did depose and say that he is
Chief Financial Officer of Radio Systems of Philadelphia, Inc., one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.
/S/ Kathryn B. Haley
---------------------------
-4-
<PAGE>
COMMONWEALTH OF MASSACHUSETTS ) ss.:
COUNTY OF SUFFOLK )
On the 8th day of October, 1996, before me personally came Joseph L.
Winn, to me known, who, being by me duly sworn, did depose and say that he is
Chief Financial Officer of American Radio Systems License Corp., one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.
/S/ Kathryn B. Haley
---------------------------
STATE OF CONNECTICUT ) ss.:
COUNTY OF HARTFORD )
On the 29th day of October, 1996, before me personally came Kathy
Larimore, to me known, who, being by me duly sworn, did depose and say that he
is an Assistant Vice President of Fleet National Bank, one of the corporations
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
/S/ Karen R. Felt
---------------------------
Karen R. Felt
Notary Public
My Commission Expires 02/28/99
-5-
<PAGE>
Exhibit 4.10
- -------------------------------------------------------------------------------
AMERICAN RADIO SYSTEMS CORPORATION
Issuer
THE SUBSIDIARY GUARANTORS NAMED HEREIN
Guarantor
FLEET NATIONAL BANK
Trustee
----------------
Supplemental Indenture
Dated as of May 31, 1996
to
Indenture
Dated as of February 1, 1996
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$175,000,000
9% Senior Subordinated Notes due 2006
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SUPPLEMENTAL INDENTURE, dated as of May 31, 1996, among AMERICAN RADIO
SYSTEMS CORPORATION, a corporation duly organized and existing under the laws of
the State of Delaware (herein called the "Company") and having its principal
office at 116 Huntington Avenue, Boston, Massachusetts 02116, MARLIN
BROADCASTING, INC., a corporation duly organized and existing under the laws of
the State of Delaware and having its principal office at 116 Huntington Avenue,
Boston, Massachusetts 02116 (herein called "Marlin" or a "Restricted
Subsidiary"), MARLIN BROADCASTING OF MIAMI, INC., a corporation duly organized
and existing under the laws of the State of Delaware and having its principal
office at 116 Huntington Avenue, Boston, Massachusetts 02116 (herein called
"Marlin Miami" or a "Restricted Subsidiary"), FRANKLIN BROADCASTING COMPANY, a
corporation duly organized and existing under the laws of the Commonwealth of
Pennsylvania and having its principal office at 116 Huntington Avenue, Boston,
Massachusetts 02116 (herein called "Franklin" or a "Restricted Subsidiary"), and
FLEET NATIONAL BANK (formerly known as Fleet National Bank of Connecticut), a
national banking association duly organized and existing under the laws of the
United States of America, as Trustee (herein called the "Trustee") to the
INDENTURE, dated as of February 1, 1996, among the Company, AMERICAN RADIO
SYSTEMS LICENSE CORP., a corporation duly organized and existing under the laws
of the State of Delaware (herein called "License Corp."), and the Trustee
(herein called the "Indenture").
RECITALS OF THE COMPANY
The Company, American License and the Trustee have heretofore executed
and delivered the Indenture, pursuant to which the Company has duly issued an
aggregate of $175,000,000 principal amount of its 9% Senior Subordinated Notes
due 2006 (herein called the "Securities").
The Company, directly or indirectly, owns beneficially and of record
100% of the Capital Stock of each of Marlin, Marlin Miami and Franklin. Each of
the Restricted Subsidiaries has derived and will derive direct and indirect
economic benefit from the issuance of the Securities; accordingly, each
Restricted Subsidiary has duly authorized the execution and delivery of this
Supplemental Indenture to provide for its guarantee with respect to the
Securities as set forth in the Indenture.
All things necessary to make this Supplemental Indenture a valid
agreement of each Restricted Subsidiary and the Subsidiary Guarantees of each
Restricted Subsidiary, when this Supplemental Indenture is executed by it, the
valid obligations of each Restricted Subsidiary License in accordance with its
terms, have been done.
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and the terms and conditions
of the Indenture, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:
<PAGE>
ARTICLE ONE
Subsidiary Guarantees
SECTION 101. Subsidiary Guarantee.
Each of Marlin, Marlin Miami and Franklin, by the execution of this
supplemental Indenture, hereby covenants and agrees to be and become a
Subsidiary Guarantor and to be bound by all of the terms and conditions of the
Indenture, including without limitation the Subsidiary Guarantee of the
Securities in the form set forth in Section 205 of the Indenture, with the same
force and effect as though each had been a signatory to the Indenture and had
executed and delivered its Subsidiary Guarantee endorsed on the Securities.
ARTICLE TWO
Definitions and Other Provisions
of General Application
SECTION 201. Definitions; Incorporation of Provisions.
Terms used herein without definition shall have the meaning prescribed
therefor in the Indenture. The provisions of Sections 107 through 114, both
inclusive, are incorporated herein with the same force and effect as though set
forth hereat in their entirety.
SECTION 202. Indenture Provisions.
Except as specifically amended by this Supplemental Indenture, the
Indenture shall remain in full force and effect.
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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
AMERICAN RADIO SYSTEMS CORPORATION
By___________________________
Name:
Title:
Attest:
- --------------------------
MARLIN BROADCASTING, INC.
By___________________________
Name:
Title:
Attest:
- --------------------------
MARLIN BROADCASTING OF MIAMI, INC.
By___________________________
Name:
Title:
Attest:
- --------------------------
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FRANKLIN BROADCASTING COMPANY
By___________________________
Name:
Title:
Attest:
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FLEET NATIONAL BANK, as Trustee
By____________________________
Name:
Title:
Attest:
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COMMONWEALTH OF MASSACHUSETTS ) ss.:
COUNTY OF SUFFOLK )
On the 31st day of May, 1996, before me personally came , to me known,
who, being by me duly sworn, did depose and say that he is of AMERICAN RADIO
SYSTEMS CORPORATION, one of the corporations described in and which executed the
foregoing instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
authority of the Board of Directors of said corporation, and that he signed his
name thereto by like authority.
------------------------------
COMMONWEALTH OF MASSACHUSETTS ) ss.:
COUNTY OF SUFFOLK )
On the 31st day of May, 1996, before me personally came , to me known,
who, being by me duly sworn, did depose and say that he is of MARLIN
BROADCASTING, INC., one of the corporations described in and which executed the
foregoing instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
authority of the Board of Directors of said corporation, and that he signed his
name thereto by like authority.
------------------------------
COMMONWEALTH OF MASSACHUSETTS ) ss.:
COUNTY OF SUFFOLK )
On the 31st day of May, 1996, before me personally came , to me known,
who, being by me duly sworn, did depose and say that he is of MARLIN
BROADCASTING OF MIAMI, INC,, one of the corporations described in and which
executed the foregoing instrument; that he knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation, and that he
signed his name thereto by like authority.
------------------------------
COMMONWEALTH OF MASSACHUSETTS ) ss.:
COUNTY OF SUFFOLK )
On the 31st day of May, 1996, before me personally came , to me known,
who, being by me duly sworn, did depose and say that he is of FRANKLIN
BROADCASTING COMPANY, one of the corporations described in and which executed
the foregoing instrument; that he knows the seal of said corporation; that the
seal affixed to said instrument is such corporate seal; that it was so affixed
by authority of the Board of Directors of said corporation, and that he signed
his name thereto by like authority.
------------------------------
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<PAGE>
STATE OF CONNECTICUT ) ss.:
COUNTY OF HARTFORD )
On the 31st day of May, 1996, before me personally came , to me known,
who, being by me duly sworn, did depose and say that he is a Vice President of
Fleet National Bank of Connecticut, one of the corporations described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
------------------------------
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Exhibit 10.83
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated September 10, 1996, by and
between American Radio Systems Corporation, a Delaware corporation ("Buyer"),
and Palm Beach Radio Broadcasting, Inc., a Florida corporation ("Seller").
P R E M I S E S:
A. Seller is the licensee of and operates radio stations WDOL(FM),
Englewood, Ohio and WLQT(FM), Kettering-Dayton, Ohio (each a "Station", and
together, the "Stations") pursuant to licenses issued by the Federal
Communications Commission (the "FCC").
B. Seller desires to sell, and Buyer wishes to buy, substantially all
of Seller's assets used or useful in the operation of the Stations and the
broadcast business made possible thereby for the price and on the terms and
conditions hereafter set forth.
AGREEMENTS:
In consideration of the above premises and the covenants and agreements
contained herein, Buyer and Seller agree as follows:
Section 1
DEFINED TERMS
The following terms shall have the following meanings in this
Agreement:
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1.1 "Assets" means the tangible and intangible assets owned and used or
useful in connection with the conduct of the business or operations of the
Station, which assets are being sold, transferred, or otherwise conveyed to
Buyer hereunder, as specified in detail in Section 2.1.
1.2 "Assumed Contracts" means (i) all Contracts listed in Schedule 3.7,
(ii) any Contracts entered into by Seller in the ordinary course of business
between the date hereof and the Closing Date which would have been listed on
Schedule 3.7 had they been in existence on the date hereof and which Buyer
agrees in writing to assume, (iii) all Contracts, in existence on the Closing
Date which meet the criteria set forth in Section 3.7 (i) - (iii) for exclusion
from Schedule 3.7, and (iv) all Contracts with advertisers for the sale of time
or talent on the Station for cash entered into in the ordinary course of
business.
1.3 "Closing" means the consummation of the transaction contemplated by
this Agreement in accordance with the provisions of Section 8.
1.4 "Closing Date" means the date of the Closing specified in Section
8.1.
1.5 "Consents" means all of the consents, permits or approvals of
government authorities and other third parties necessary to transfer the Assets
to Buyer or otherwise to consummate the transaction contemplated hereby,
including without limitation the consents of the parties to those Contracts
designated in Schedule 3.7 with an asterisk.
1.6 "Contracts" means all agreements and leases, written or oral
(including any amendments and other modifications thereto) to which Seller is a
party or which are binding upon Seller and affect the assets or the business or
operations of the Station, and
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(i) which are in effect on the date hereof, or (ii) which are entered into by
Seller in the ordinary course of business between the date hereto and the
Closing Date.
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1.7 "Excluded Assets" shall mean those assets described or set forth in
Section 2.2 herein and on Schedule 2.2 hereto.
1.8 "FCC Consent" means action by the FCC granting its consent to the
assignment of the FCC Licenses to Buyer as contemplated by this Agreement.
1.9 "FCC Licenses" means all of the licenses, permits and other
authorizations issued by the FCC to Seller in connection with the conduct of the
business or operations of the Station.
1.10 "Licenses" means all of the licenses, permits and other
authorizations, including the FCC Licenses, issued by the FCC, the Federal
Aviation Administration ("FAA"), and any other federal, state or local
governmental authorities to Seller in connection with the conduct of the
business or operations of the Station.
1.11 "Personal Property" means all of the machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, spare
parts, and other tangible personal property which are owned or leased by Seller
and used or useful as of the date hereof in the conduct of the business or
operations of the Station, plus such additions thereto and deletions therefrom
arising in the ordinary course of business between the date hereof and the
Closing Date.
1.12 "Purchase Price" means the purchase price specified in Section
2.3.
1.13 "Real Property" means all of the fee estates and buildings and
other improvements thereon, leasehold interests, easements, licenses, rights to
access, rights-of-way, and other real property interest owned by Seller and
identified on Schedule 3.5
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hereto plus such additions thereto and deletions therefrom arising in the
ordinary course of business between the date hereof and the Closing Date.
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SECTION 2
SALE AND PURCHASE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and conditions set
forth in this Agreement, Seller hereby agrees to transfer and deliver to Buyer
on the Closing Date, and Buyer agrees to purchase, all of the Assets, free and
clear of any claims, liabilities, mortgages, liens, pledges, conditions,
charges, or encumbrances of any nature whatsoever (except for those permitted in
accordance with Section 2.5, 3.5 or 3.6 below), more specifically described as
follows:
(a) The Personal Property;
(b) The Real Property;
(c) The Licenses;
(d) The Assumed Contracts;
(e) All trademarks, trade names, service marks, copyrights and
all other intellectual property and similar intangible assets relating
to the Station, including those listed in Schedule 3.9 hereto;
(f) All of the Seller's proprietary information, that relates
to the Station, including without limitation, technical information and
data, machinery and equipment warranties, maps, computer discs and
tapes, plans, diagrams, blueprints, and schematics, including filings
with the FCC which relate to the Station, if any;
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(g) All choses in action and rights under warranties of Seller
relating to the Station or the Assets, if any;
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(h) All books and records relating exclusively to the business
or operations of the Station, including executed copies of the Assumed
Contracts, and all records required by the FCC to be kept, subject to
the right of Seller to have such books and records made available to
Seller for a reasonable period, not to exceed three (3) years; and
(i) All intangible assets of Seller relating to the Station
not specifically described above.
2.2 Excluded Assets. The Assets shall exclude the following assets, in
addition to those listed on Schedule 2.2:
(a) Seller's cash on hand as of the Closing Date and all other
cash in any of Seller's bank or savings accounts; any and all insurance
policies, letters of credit, or other similar items and any cash
surrender value in regard thereto; and any stocks, bonds, certificates
of deposit and similar investments.
(b) Any Contracts other than the Assumed Contracts;
(c) All books and records of Seller, subject to the right of
Buyer to have access and to copy for a period of three (3) years from
the Closing Date, and Seller's corporate records and other books and
records related to internal corporate matters and financial
relationships with Seller's lenders;
(d) Any claims, rights and interest in and to any refunds of
federal, state or local franchise, income or other taxes or fees of any
nature whatsoever for periods prior to the Closing Date;
(e) Any pension, profit-sharing or employee benefit plans, and
any employment or collective bargaining agreement.
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2.3 Purchase Price. The Purchase Price shall be ______________ Million
Dollars ($___,000,000).
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2.4 Assumption of Liabilities and Obligations. As of the Closing Date,
Buyer shall pay, discharge and perform (i) all of the obligations and
liabilities of Seller under the Licenses and the Assumed Contracts insofar as
they relate to the time period on and after the Closing Date, and arising out of
events occurring on or after the Closing Date, (ii) all obligations and
liabilities arising out of events occurring on or after the Closing Date related
to Buyer's ownership of the Assets or its conduct of the business or operations
of the Station on or after the Closing Date, and (iii) all obligations and
liabilities for which Buyer receives a proration adjustment hereunder. All other
obligations and liabilities of Seller, including (i) any obligations under any
Contract not included in the Assumed Contracts, (ii) any obligations under the
Assumed Contracts relating to the time period prior to the Closing Date, (iii)
any claims or pending litigation or proceedings relating to the operation of the
Station prior to the Closing Date, and (iv) those related to employees as set
forth in Section 6.9 herein shall remain and be the obligations and liabilities
solely of Seller.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Organization, Standing and Authority. Seller is a corporation duly
formed, validly existing and in good standing under the laws of the State of
Florida and is duly qualified to conduct its business in the State of Ohio,
which is the only jurisdiction where the conduct of the business or operations
of the Station requires such qualification.
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Seller has all requisite corporate power and authority (i) to own, lease, and
use the Assets as presently owned, leased, and used, and (ii) to conduct the
business or operations of the Stations as presently conducted. Seller 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 Seller,
hereunder and thereunder.
3.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement by Seller have been duly authorized by all
necessary corporate action on the part of Seller. This Agreement has been duly
executed and delivered by Seller and constitutes the legal, valid, and binding
obligation of Seller, enforceable against Seller in accordance with its terms
except as the enforceability hereof may be affected by bankruptcy, insolvency,
or similar laws affecting creditors' rights generally, or by court-applied
equitable remedies.
3.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents, 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) does not require the consent of any third party; (ii)
will not conflict with any provision of the Certificate of Incorporation or By
Laws of Seller; (iii) will not conflict with, result in a breach of, or
constitute a default under, any law, judgment, order, ordinance, decree, rule,
regulation or ruling of any court or governmental instrumentality, which is
applicable to either Seller; (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
material agreement,
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instrument, license or permit to which either Seller is a party or by which
either may be bound; or (v) will not create any claim, liability, mortgage,
lien, pledge, condition, charge, or encumbrance of any nature whatsoever upon
the Assets.
3.4 Licenses. Schedule 3.4 includes a true and complete list of the
Licenses. Seller has delivered to Buyer true and complete listings of the
Licenses (including any and all amendments and other modifications thereto). As
described in Schedule 3.4, the Licenses were validly issued with the Seller
designated thereon being the authorized legal holder thereof. The Licenses
comprise all of the licenses, permits and other authorizations required from any
governmental or regulatory authority for the lawful conduct of the business or
operations of the Station as presently operated.
3.5 Title to and Condition of Real Property. Schedule 3.5 contains
descriptions of all the Real Property (including the location of all
improvements thereon), which comprises all real property interest necessary to
conduct the business or operations of the Station as now conducted. Seller has
good and marketable fee simple title, insurable at standard rates, to all of the
fee estates (including the improvements thereof), listed in said Schedule free
and clear of all liens, mortgages, pledges, covenants, easements, restrictions,
encroachments, leases, charges, and other claims and encumbrances of any nature
whatsoever, and without reservation or exclusion of any mineral, timber, or
other rights or interests, except for (i) liens for real estate taxes not yet
due and payable, (ii) easements, rights-of-way and restrictions of record, none
of which materially affects the use of such property and all of which are listed
in Schedule 3.5, (iii) liens in favor of Seller's lenders set forth in Schedule
3.5, and (iv) any other claims or encumbrances which are described in Schedule
3.5 and annotated to indicate that such
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claims or encumbrances shall be removed prior to or at Closing. To the best of
Seller's knowledge, all towers, guy anchors, and buildings and other
improvements, included in the owned Assets are located entirely on the Real
Property listed in Schedule 3.5 or easement rights set forth at Schedule 3.5.
Seller has delivered to Buyer true and complete copies of all deeds, leases,
Title Insurance Policies or other material instruments pertaining to the Real
Property (including any and all amendments and other modifications of such
instruments), all of which instruments are valid, binding and enforceable in
accordance with their terms. Seller is not in material breach, nor to Seller's
knowledge is any other party in material breach, of the terms of any of such
deeds, leases, or other instruments.
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3.6 Title to and Condition of Personal Property. Schedule 3.6 contains
descriptions of all material items of the Personal Property, which comprises all
personal property used to conduct the business or operations of the Station as
now conducted. Except as described in Schedule 3.6, Seller owns and has good
title to all Personal Property. None of the Personal Property owned by Seller is
subject to any security interest, mortgage, pledge, conditional sales agreement,
or other lien or encumbrance, except for (i) liens for current taxes not yet due
and payable, and (ii) any other claims or encumbrances which are described in
Schedule 3.6 and annotated to indicate that such claims or encumbrances shall be
removed prior to or at Closing.
3.7 Contracts. Schedule 3.7 contains descriptions of all the Contracts
except for: (i) contracts with advertisers for the sale of time or talent on the
Station for cash, entered into in the ordinary course of business, (ii) those
employment contracts and miscellaneous service contracts which are terminable at
will without penalty, and (iii) other contracts not involving either aggregate
liabilities under all such contacts exceeding Five Thousand Dollars ($5,000) or
any material nonmonetary obligation. Seller has delivered to Buyer true and
complete copies of all written Contracts, and true and complete memoranda of all
oral Contracts (including any and all amendments and other modifications to such
Contracts). All of the Assumed Contracts are in full force and effect, and are
valid, binding and enforceable in accordance with their terms, except as the
enforceability thereof may be affected by bankruptcy, insolvency or similar laws
affecting creditors' rights generally, or by court-applied equitable remedies.
Seller is not in material breach, nor to Seller's knowledge is any other party
in material breach, of the terms of any such Contracts.
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3.8 Consents. Except for the FCC Consent provided for in Section 6.1,
and the other Consents indicated in Schedule 3.7, 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 (i) to consummate
this Agreement and the transaction contemplated hereby, (ii) to permit Seller to
assign or transfer the Assets to Buyer, or (iii) to enable Buyer to conduct the
business or operations of the Station in essentially the same manner as such
business or operations are presently conducted.
3.9 Trademarks, Trade Names and Copyrights. Schedule 3.9 is a true and
complete list of all copyrights, trademarks, trade names, licenses, patents,
permits, jingles, privileges and other similar intangible property rights and
interests (exclusive of those required to be listed in Schedule 3.4) applied
for, issued to or owned by Seller, or under which Seller is licensed or
franchised, and used or useful in the conduct of the business or operations of
the Station,
3.10 Insurance. All of the tangible property included in the Assets is
insured against loss or damage. Seller has heretofore provided to Buyer a true
and complete list of all insurance policies of Seller which insure any part of
the Assets.
3.11 Reports. Except where failure to do so would not have a material
adverse effect on the ownership or operation of the Station: all returns,
reports and statements which the Station is currently required to file with the
FCC or with any other governmental agency have been filed, and all reporting
requirements of the FCC and other governmental authorities having jurisdiction
thereof have been complied with; all of such reports, returns and statements are
substantially complete and correct as filed; and
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the Station's public inspection file is located at the main studio and is in
compliance with the FCC's rules and regulations.
3.12 Labor Relations. Seller is not a party to or subject to any
collective bargaining agreements with respect to the Station except as described
in Schedule 3.7 hereto. Seller has no written or oral contracts of employment
with any employee of the Station, other than those listed in Schedule 3.7.
3.13 Claims, Legal Actions. Except as set forth in Schedule 3.16, and
except for any investigations and rule-making proceedings generally affecting
the broadcasting industry, there is no claim, legal action, counterclaim, suit,
arbitration, governmental investigation or other legal, administrative or tax
proceeding, nor any order, decree or judgment, in progress or pending, or to the
knowledge of Seller threatened, against or relating to Seller, the Assets, or
the business or operations of the Station, nor does Seller know of any basis for
the same.
3.14 Compliance with Laws. To the best knowledge of Seller, Seller has
complied in all material respects with (i) the Licenses, and (ii) all applicable
federal, state and local laws, rules, regulations and ordinances. To the best
knowledge of Seller, neither the ownership or use, nor the conduct of the
business or operations, of the Station conflicts with rights of any other
person, firm or corporation.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller 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,
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and is and shall be, at Closing, qualified to conduct business in the State of
Ohio. 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.
4.2 Authorization and Binding Obligation. The execution, delivery and
performance of this Agreement by Buyer have been duly authorized by all
necessary corporate action 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 hereof may be affected by bankruptcy, insolvency,
or similar laws affecting creditors' rights generally, or by court-applied
equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents, 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) does not require the consent of any third party; (ii)
will not conflict with the Certificate of Incorporation or Bylaws of Buyer;
(iii) will not conflict with, result in a breach of, or constitute a default
under, or accelerate or permit the acceleration of any performance required by
the terms of, any material agreement, instrument, licenses, or permit to which
Buyer is a party or by which Buyer may be bound.
4.4 FCC Qualification. Buyer has no knowledge of any facts which would,
under present law (including the Communications Act of 1934, as amended) and
present rules, regulations and practices of the FCC, disqualify Buyer as an
assignee of the
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licenses, permits and authorizations listed on Schedule 3.4 hereto, or as an
owner and/or operator of the Station's Assets, and Buyer will not take, or
unreasonably fail to take, any action which Buyer knows or has reason to know
would cause such disqualification (it being understood that Buyer has an active
duty to attempt to ascertain what would cause such disqualification). Should
Buyer become aware of any such facts, it will promptly notify Seller in writing
thereof and use its best efforts to prevent any such disqualification. Buyer
further represents and warrants that it is financially qualified to meet all
terms, conditions and undertakings contemplated by this Agreement.
SECTION 5
COVENANTS OF SELLER
5.1 Pre-Closing Covenants. Except as contemplated by this Agreement or
with the prior written consent of Buyer, not to be unreasonably withheld,
between the date hereof and the Closing Date, Seller shall operate the Station
in the ordinary course of business in accordance with its past practices (except
where such would conflict with the following covenants or with Seller's other
obligations hereunder), and abide by the following negative and affirmative
covenants:
A. Negative Covenants. Seller shall not do any of the
following:
(1) Disposition of Assets. Sell, assign, lease, or otherwise
transfer or dispose of any of the Assets, except for assets consumed or
disposed of in the ordinary course of business, where no longer used or
useful in the business or operations of the Station or in connection
with the acquisition of replacement property of equivalent kind and
value;
(2) Encumbrances. Create, assume or permit to exist any claim,
liability, mortgage, lien, pledge, condition, charge, or encumbrance of
any nature
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whatsoever upon the Assets, except for (i) those in existence on the
date of this Agreement, disclosed in Schedules 3.5 and 3.6, or
permitted by Section 2.5, 3.5 or 3.6 and (ii) mechanics' liens and
other similar liens which will be removed prior to the Closing Date;
(3) No Inconsistent Action. Knowingly take any action which is
inconsistent with its obligations hereunder or which could hinder or
delay the consummation of the transaction contemplated by this
Agreement.
B. Affirmative Covenants. Seller shall do the following:
(1) Access to Information. Upon prior notice, allow
Buyer and its authorized representatives reasonable access at mutually
agreeable times at Buyer's expense during normal business hours to the
Assets and to all other properties, equipment, books, records,
Contracts and documents relating to the Station for the purpose of
audit and inspection, and furnish or cause to be furnished to Buyer or
its authorized representatives all information with respect to the
affairs and business of the Station as Buyer may reasonably request, it
being understood that the rights of Buyer hereunder shall not be
exercised in such a manner as to interfere with the operations of the
business of Seller; provided that neither the furnishing of such
information to Buyer or its representatives nor any investigation made
heretofore or hereafter by Buyer shall affect Buyer's rights to rely on
any representation or warranty made by Seller in this Agreement, each
of which shall survive any furnishing of information or any
investigation;
(2) Maintenance of Assets. Maintain all of the Assets
or replacements thereof and improvements thereon in current condition
(ordinary wear and tear excepted), and use, operate and maintain all of
the above assets in a reasonable manner, with inventories or spare
parts and expendable supplies being maintained at levels consistent
with past practices;
(3) Insurance. Maintain the existing insurance
policies on the Station and the Assets;
(4) Consents. Use its reasonable efforts to obtain
the Consents;
(5) Notification. Promptly notify Buyer in writing of
any unusual or material developments with respect to the assets of the
Station, and of any material change in any of the information contained
in Seller's representations and warranties contained in Section 3
hereof or in the schedules hereto, provided that such notification
shall not relieve Seller of any obligations hereunder;
(6) Compliance with Laws. Comply in all material
respects with all rules and regulations of the FCC, and all other laws,
rules and regulations to which Seller, the Station and the Assets are
subject.
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5.2 Post-Closing Covenants. After the Closing, Seller will take such
actions, and execute and deliver to Buyer such further deeds, bills of sale, or
other transfer documents as, in the reasonable opinion of counsel for Buyer and
Seller, may be necessary to ensure, complete and evidence the full and effective
transfer of the Assets to Buyer pursuant to this Agreement.
SECTION 6
SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent. The assignment of the FCC Licenses as contemplated by
this Agreement is subject to the prior consent and approval of the FCC.
A. Within ten (10) days after the execution of this Agreement,
Buyer and Seller shall file with the FCC an appropriate application for FCC
Consent. The parties shall prosecute said application with all reasonable
diligence and otherwise use their best efforts to obtain the grant of such
application as expeditiously as practicable. If the FCC Consent imposes any
condition on any party hereto, such party shall use its best efforts to comply
with such condition unless compliance would be unduly burdensome or would have a
material adverse effect upon it. If reconsideration or judicial review is sought
with respect to the FCC Consent, Buyer and Seller shall oppose such efforts to
obtain reconsideration or judicial review (but nothing herein shall be construed
to limit any party's right to terminate this Agreement pursuant to Section 9 of
this Agreement).
B. The transfer of the Assets hereunder is expressly
conditioned upon (i) the grant of the FCC Consent without any materially adverse
conditions on Buyer, and
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(ii) compliance by the parties hereto with the condition (if any) imposed in the
FCC Consent.
6.2 Control of the Station. Buyer shall not, directly or indirectly,
control, supervise, direct, or attempt to control, supervise or direct, the
operations of the Station; such operations, including complete control and
supervision of all of the Station's programs, employees, and policies, shall be
the sole responsibility of Seller until the completion of the Closing hereunder.
6.3 Taxes, Fees and Expenses. Buyer shall pay all sales, transfer and
similar taxes and fees, if any, arising out of the transfer of the Assets
pursuant to this Agreement. 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 other representatives.
6.4 Brokers. Buyer and Seller each represents and warrants that neither
it 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 transaction
contemplated by this Agreement.
6.5 Confidentiality. Except as necessary for the consummation of the
transaction contemplated hereby, including Buyer's obtaining financing in any
form or means of its choosing related hereto, each party hereto will keep
confidential any information which is obtained from the other party in
connection with the transaction contemplated hereby and which is not readily
available to members of the general public, and will not use such information
for any purpose other than in furtherance of the
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transactions contemplated hereby. In the event this Agreement is terminated and
the purchase and sale contemplated hereby abandoned, each party will return to
the other party originals and all copies of all documents, work papers and other
written material obtained by it in connection with the transaction contemplated
hereby.
6.6 Cooperation. Buyer and Seller 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 Buyer and Seller shall execute such other documents as may be
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 hereunder. Notwithstanding
the foregoing, except as otherwise set forth herein, Buyer shall have no
obligation (i) to expend funds to obtain the Consents, or (ii) to agree to any
adverse change in any License or Assumed Contract to obtain a Consent required
with respect thereto.
6.7 Risk of Loss.
A. The risk of loss, damage or impairment, confiscation or
condemnation of any of the Assets from any cause whatsoever shall be borne by
Seller at all times prior to the completion of the Closing.
B. If any damage or destruction of the Assets or any other
event occurs which prevents signal transmission by the Station in the normal and
usual manner and Seller cannot restore or replace the Assets so that the
conditions are cured and normal and usual transmission is resumed before the
Closing Date, the Closing Date shall
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be postponed, for a period of up to one hundred and twenty (120) 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 the
Station's normal and usual transmission resumed within the one hundred and
twenty (120) day period specified above, Buyer may terminate this Agreement
forthwith without any further obligation hereunder by written notice to Seller.
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 Seller shall deliver to Buyer all insurance
proceeds received in connection with such damage or destruction of the Assets to
the extent not already expended by Seller arising in connection with such
restoration and replacement.
D. Notwithstanding any of the foregoing, Buyer may terminate
this Agreement forthwith without any further obligation hereunder by written
notice to Seller if any event occurs which prevents signal transmission by the
Station in a manner generally equivalent to its current operations for a
consecutive period of five (5) or a cumulative period of fourteen (14) days
after the date hereof.
6.8 Audit Cooperation. Seller agrees to fully cooperate, and use
reasonable efforts to cause their accounting firms to reasonably cooperate with
Buyer and at Buyer's expense, to the extent required for the Buyer to prepare
audited financial statements for the Station for the period of Seller's
ownership thereof.
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SECTION 7
CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
7.1 Conditions of Obligations to Buyer. All obligations of Buyer at the
Closing hereunder are subject to the fulfillment prior to and at the Closing
Date of each of the following conditions:
A. Representations and Warranties. The representations and
warranties of Seller in this Agreement shall be true and complete in all
material respects at and as of the Closing Date, except for changes contemplated
by this Agreement, as though such representations and warranties were made at
and as of such time.
B. Covenants and Conditions. Seller shall have in all material
respects performed and complied with the covenants, agreements, and conditions
required by this Agreement to be performed or complied with by it prior to or on
the Closing Date.
C. Consents. Each of the Consents marked as "material" on
Schedule 3.7 shall have been duly obtained and delivered to Buyer with no
material adverse change to the terms of the License or Assumed Contract with
respect to which such Consent is obtained.
D. Licenses. Seller shall be the holder of the Licenses, and
there shall not have been any modification of any of such Licenses which has an
adverse effect on the Station or the conduct of its business or operations. No
proceeding shall be pending the effect of which would be to revoke, cancel, fail
to renew, suspend or modify adversely any of the Licenses.
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E. Deliveries. Seller shall have made or stand willing and
able to make all the deliveries to Buyer set forth in Section 8.2
7.2 Conditions to Obligations of Seller. The obligations of Seller at
the Closing hereunder are subject to the fulfillment prior to and at the Closing
Date of each of the following conditions:
A. Representations and Warranties. The 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, except for changes
contemplated by this Agreement, as though such representations and warranties
were made at and as of such time.
B. Covenants and Conditions. Buyer shall have in all material
respects performed and complied with the covenants, agreements, and conditions
required by this Agreement to be performed or complied with by it prior to or on
the Closing Date.
C. Deliveries. Buyer shall have made or stand willing and able
to make all the deliveries set forth in Section 8.3
SECTION 8
CLOSING AND CLOSING DELIVERIES
8.1 Closing. The Closing shall take place at 10:00am on a date, to be
set by Buyer, upon five (5) days written notice to Seller, no later than ten
(10) days following the date upon which the FCC Consent has been issued (the
"Closing Date"). Closing
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shall be held at the offices of Buyer in Boston, Massachusetts or such other
place as shall be mutually agreed to by Buyer and Seller.
8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller shall
deliver to Buyer the following, in form and substance reasonably satisfactory to
Buyer and its counsel:
(a) Transfer Documents. Duly executed warranty deeds, 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 or its permitted assignees, free and clear
of any claims, liabilities, mortgages, liens, pledges, conditions,
charges, or encumbrances of any nature whatsoever (except for those
permitted in accordance with Sections 2.5, 3.5 or 3.6 hereof);
(b) Consents. The original of each Consent marked as
"material" with an asterisk on Schedule 3.7;
(c) Officer's Certificate. A certificate, dated as of the
Closing Date, executed by a duly authorized officer of Seller,
certifying: (i) that the representations and warranties of Seller
contained in this Agreement are true and complete in all material
respects as of the Closing Date, except for changes contemplated by
this Agreement, as though made on and as of that date; and (ii) that
Seller has, in all material respects, performed its obligations and
complied with its covenants set forth in this Agreement to be performed
and complied with prior to or on the Closing Date;
(d) Secretary's Certificate. A certificate, dated as of the
Closing Date, executed by Seller's Secretary: (i) certifying that the
resolutions, as attached to such certificate, were duly adopted by such
Seller's Board of Directors, authorizing and approving the execution of
this Agreement by Seller and the consummation of the transaction
contemplated hereby and that such resolutions remain in full force and
effect; and (ii) providing, as attachments thereto, a certificate of
legal existence certified by appropriate state officials; as of a date
not more than fifteen (15) days before the Closing Date and by Seller's
Secretary as of the Closing Date, and a copy of Seller's Certificate of
Incorporation and By Laws as in effect on the date hereof, certified by
Seller's Secretary as of the Closing Date;
(e) Opinions of Counsel. Opinions of Seller's counsel and
communications counsel dated as of the Closing Date, and addressed to
Buyer
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and at Buyer's directions, to Buyer's lenders, substantially in the
form of Schedule 8.2 hereto.
8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer shall
deliver to Seller the following, in form and substance reasonably satisfactory
to Seller and its counsel:
(a) Purchase Price. The Purchase Price as provided in Section
2.3;
(b) Assumption Agreements. Appropriate assumption agreements
pursuant to which Buyer shall assume and undertake to perform Seller's
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 the President or Vice President of Buyer,
certifying (i) that the representations and warranties of Buyer
contained in this Agreement are true and complete in all material
respects as of the Closing Date, except for changes contemplated by
this Agreement, as though made on and as of that date, and (ii) that
Buyer has, in all material respects, performed its obligations and
complied with its covenants set forth in this Agreement to be performed
or complied with on or prior to the Closing Date;
(d) Secretary's Certificate. A certificate, dated as of the
Closing Date, executed by Buyer's Secretary: (i) certifying that the
resolutions, as attached to such certificate, were duly adopted by
Buyer's Board of Directors, authorizing and approving the execution of
this Agreement and the consummation of the transaction contemplated
hereby and that such resolutions remain in full force and effect; and
(ii) a copy of the corporate charter, articles of incorporation and
Bylaws of Buyer as in effect on the Closing date, certified by Buyer's
secretary as of the Closing Date;
(e) Opinion of Counsel. An opinion of Buyer's General Counsel
dated as of the Closing Date, substantially in the form of Schedule 8.3
hereto.
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SECTION 9
RIGHTS OF BUYER AND SELLER
ON TERMINATION OR BREACH
9.1 Termination Rights. This Agreement may be terminated by either
Buyer or Seller if the terminating party is not then in breach of any material
provision of this Agreement, upon written notice to the other party, upon the
occurrence of any of the following:
(a) If on the Closing Date (i) any of the conditions precedent
to the obligations of the terminating party set forth in Section 7 of
this Agreement shall not have been materially satisfied, and (ii)
satisfaction of such condition shall not have been waived by the
terminating party;
(b) If the application for FCC Consent shall be set for
hearing by the FCC for any reason; or
(c) If the Closing shall not have occurred on or before March
1, 1997.
Upon termination: (i) if neither party hereto is in breach of any material
provision of this Agreement, the parties hereto shall not have any further
liability to each other; (ii) if Seller shall be in breach of any material
provision of this Agreement, Buyer shall have only the rights and remedies
provided in Section 9.3 or (iii) if Buyer shall be in breach of any material
provision of this Agreement, Seller shall be entitled only to actual damages
incurred as a result of such breach.
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9.2 Specific Performance. The parties recognize that in the event
Seller should refuse to perform under the provisions of this Agreement, monetary
damages alone will not be adequate. Buyer shall therefore be entitled, to obtain
specific performance of the terms of this Agreement. In the event specific
performance is not available or granted to Buyer, Buyer shall be entitled to
seek, in the alternative, money damages.
9.3 Expenses Upon Default. In the event of any action to enforce this
Agreement, Seller hereby waives the defense that there is an adequate remedy at
law. In the event of a default by a party hereto (the "Defaulting Party") which
results in the filing of a lawsuit for damages, specific performance, or other
remedy the other party (the Nondefaulting Party) shall be entitled to
reimbursement by the Defaulting Party of reasonable legal fees and expenses
incurred by the Nondefaulting Party in the event the Nondefaulting Party
prevails.
SECTION 10
SURVIVAL OF REPRESENTATIONS AND WARRANTS,
AND INDEMNIFICATION
10.1 Representations and Warranties. All representations and warranties
contained in this Agreement shall be deemed continuing representations and
warranties. Any investigations by or on behalf of any party hereto shall not
constitute a waiver as to enforcement of any representation or warranty
contained herein, except that insofar as any party has knowledge of any
misrepresentation or breach of warranty at Closing and
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such knowledge is documented in writing at Closing, such party shall be deemed
to have waived such misrepresentation or breach.
10.2 Indemnification by Seller. Each Seller shall jointly and severally
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
covenants by Seller contained herein or in any certificate, delivered
to Buyer hereunder.
(b) Any and all obligations of Seller not assumed by Buyer
pursuant to the terms hereof;
(c) Any and all losses, liabilities or damages resulting from
Seller's operation or ownership of the Station prior to the Closing
Date, including any and all liabilities arising under the Licenses or
the Assumed Contracts which relate to events occurring prior to the
Closing Date; and
(d) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, and reasonable costs and expenses, incident to
any of the foregoing or incurred in investigating or attempting to
avoid the same or to oppose the imposition thereof.
10.3 Indemnification by Buyer. Buyer shall indemnify and hold Seller
harmless against and with respect to, and shall reimburse Seller for:
(a) Any and all losses, liabilities or damages resulting from
any untrue representation, breach of warranty or nonfulfillment of any
covenants by Buyer contained herein or in any certificate delivered to
Seller hereunder;
(b) Any and all losses, liabilities or damages resulting from
Buyer's operation or ownership of the Station on or after the Closing
Date, including any and all liabilities or obligations arising under
the Licenses or the Assumed Contracts which relate to events occurring
after the Closing Date or otherwise assumed by Buyer under this
Agreement; and
(c) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, and reasonable costs and expenses, including
reasonable
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legal fees and expenses, incident to any of the foregoing or incurred
in investigating or attempting to avoid the same or to oppose the
imposition thereof.
10.4 Procedures for Indemnification. The procedures for indemnification
shall be as follows:
A. The party claiming the indemnification (the "Claimant")
shall promptly give notice to the party from whom indemnification is claimed
(the "Indemnifying Party") of any claim, whether between the parties or brought
by a third party, specifying (i) the factual basis for such claim, and (ii) the
amount of 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
five (5) days after written notice of such action, suit or proceeding was given
to Claimant.
B. Following receipt of notice from the Claimant of a claim,
the Indemnifying Party shall have thirty (30) 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 representative(s) 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 said thirty (30) day
period (or any mutually agreed upon extension thereof) to the validity and
amount of such claim, or if the Indemnifying Party does not respond to such
notice, the Indemnifying Party shall immediately pay to the Claimant the full
amount of the claim. Buyer shall be entitled to apply any or all of the Accounts
Receivable collected on behalf of Seller to a claim as to which Buyer is
entitled to indemnification hereunder. If the Claimant and the Indemnifying
Party do not agree within said period
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(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 Indemnifying Party 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 reasonable 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, the Claimant shall have the right to participate in the
defense of such claim at its own expense.
D. If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make all reasonable efforts
to reach a decision with respect thereto as expeditiously as possible.
E. 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.
F. The indemnification rights provided in Sections 10.2 and
10.3 shall extend to the shareholders, directors, officers, partners employees
and representatives of the 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.
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SECTION 11
MISCELLANEOUS
11.1 Notices. All notices, demands, and requests required or permitted
to be given under the provisions of this Agreement shall be (i) in writing, (ii)
delivered by personal delivery, or sent by commercial delivery service or
registered or certified mail, return receipt requested, or by facsimile
transmission, with receipt confirmation, (iii) 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 (iv) addressed as follows:
If to Seller: Palm Beach Radio Broadcasting, Inc.
3223 Commerce Circle
West Palm Beach, FL
Attn: Ross Elder, Chief Operating Officer
with a copy Howard Braun, Esq.
(which shall not Rosenman & Colin
constitute notice) to:
Washington, DC
If to Buyer: American Radio Systems Corporation
116 Huntington Avenue
Boston, MA 02116
Attention: Steven B. Dodge, President
Fax: (617) 375-7575
with a copy
(which shall not
constitute notice) to: Michael B. Milsom, Vice President & General Counsel
American Radio Systems Corporation
116 Huntington Avenue
Boston, MA 02116
Fax: (617) 375-7575
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or to such other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
11.1.
11.2 Benefit and Binding Effect. Neither party hereto may assign this
Agreement without the prior written consent of the other party hereto, except
that Buyer may assign its rights and obligations under this Agreement to any
affiliated or unaffiliated entity, following which assignment Buyer shall be
released from for all of its obligations hereunder. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
11.3 Governing Law. This Agreement shall be governed, construed, and
enforced in accordance with the laws of the Commonwealth of Massachusetts.
11.4 Headings. The headings herein are included for ease of reference
only and shall not control or affect the meaning or construction of the
provisions of this Agreement.
11.5 Gender and Number. Words used herein, 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 required.
11.6 Entire Agreement. This Agreement, all schedules hereto, and all
documents and certificates to be delivered by the parties pursuant hereto
collectively represent the entire understanding and agreement between Buyer and
Seller with respect to the subject matter hereof. All schedules attached to this
Agreement shall be deemed part of this Agreement and incorporated herein, where
applicable, as if fully set forth
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herein. This Agreement supersedes all prior negotiations between Buyer and
Seller, and all letters of intent and other writings related to such
negotiations, and cannot be amended, supplemented or modified except by an
agreement in writing which makes specific reference to this Agreement or an
agreement delivered pursuant hereto, as the case may be, and which is signed by
the party against which enforcement of any such amendment, supplement or
modification is sought.
11.7 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 this Section 11.7.
11.8 Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable or any extent, the 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 greater extent permitted by law.
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11.9 Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signature on each such counterpart
were upon the same instrument.
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IN WITNESS WHEREOF, this Agreement has been executed by Buyer and
Seller as of the date first above written.
SELLER: PALM BEACH RADIO BROADCASTING, INC.
By: _______________________________
BUYER: AMERICAN RADIO SYSTEMS CORPORATION
By: _______________________________
Title:
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SCHEDULES TO ASSET PURCHASE AGREEMENT
2.2 Excluded Assets
3.4 Licenses
3.5 Real Property
3.6 Personal property
3.7 Assumed Contracts
3.9 Trademarks; trade names; copyrights
3.16 Claims; legal actions
8.2 Opinion of Seller's General and FCC Counsels
8.3 Opinion of Buyer's General Counsel
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Exhbibit 10.84
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated October 10,
1996, by and between
American Radio Systems Corporation, a Delaware corporation ("Buyer"), and CBC of
Baltimore, Inc., a North Carolina corporation ("Seller").
P R E M I S E S:
A. Seller is the licensee of and operates radio station WOCT (FM),
Baltimore, Maryland (the "Station") and pursuant to licenses issued by the
Federal Communications Commission (the "FCC").
B. Seller desires to sell, and Buyer wishes to buy, substantially all
of Seller's assets used or useful in the operation of the Station and the
broadcast business made possible thereby for the price and on the terms and
conditions hereafter set forth.
C. Seller and Buyer have contemporaneously entered into a certain Asset
Purchase Agreement concerning the sale of WWMX (FM), Baltimore, Maryland (the
"WWMX Agreements") and intend to close on WWMX and WOCT at the same time.
AGREEMENTS:
In consideration of the above premises and the covenants and agreements
contained herein, Buyer and Seller agree as follows:
<PAGE>
SECTION 1
DEFINED TERMS
The following terms shall have the following meanings in this
Agreement:
1.1 "Accounts Receivable" means the rights of Seller to payment for
services rendered (including sale of time or talent on the Station for cash) by
Seller prior to the TBA Date as reflected on the billing records of Seller
relating to the Station.
1.2 "Assets" means the tangible and intangible assets owned and used or
useful in connection with the conduct of the business or operations of the
Station, which assets are being sold, transferred, or otherwise conveyed to
Buyer hereunder, as specified in detail in Section 2.1.
1.3 "Assumed Contracts" means (i) all Contracts listed in Schedule 3.7,
(ii) any Contracts entered into by Seller in the ordinary course of business
between the date hereof and the Closing Date which would have been listed on
Schedule 3.7 had they been in existence on the date hereof and which Buyer
agrees in writing to assume, (iii) all Contracts in existence on the Closing
Date which meet the criteria set forth in Section 3.7 (i) - (iii) for exclusion
from Schedule 3.7, and (iv) all Contracts with advertisers for the sale of time
or talent on the Station for cash entered into in the ordinary course of
business.
1.4 "Closing" means the consummation of the transaction contemplated by
this Agreement in accordance with the provisions of Section 8.
1.5 "Closing Date" means the date of the Closing specified in Section
8.1.
1.6 "Consents" means all of the consents, permits or approvals of
government authorities and other third parties necessary to transfer the Assets
to Buyer or otherwise to consummate the transaction contemplated hereby,
including without limitation the consents of the parties to those Contracts
designated in Schedule 3.7 with an asterisk.
1.7 "Contracts" means all agreements and leases, written or oral
(including any amendments and other modifications thereto) to which Seller is a
party or which are binding
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upon Seller and directly affect the assets or the business or operations of the
Station, and (i) which are in effect on the date hereof, or (ii) which are
entered into by Seller in the ordinary course of business between the date
hereto and the Closing Date.
1.8 "Escrow Deposit" shall mean the sum of One Million Five Hundred
Thousand Dollars ($1,500,000) held by First Union National Bank as Escrow Agent
pursuant to an Escrow Agreement of even date, by and among Buyer, Seller, and
Escrow Agent.
1.9 "Excluded Assets" shall mean those assets described or set forth in
Section 2.2 herein and on Schedule 2.2 hereto.
1.10 "FCC Consent" means action by the FCC granting its consent to the
assignment of the FCC Licenses to Buyer as contemplated by this Agreement.
1.11 "FCC Licenses" means all of the licenses, permits and other
authorizations issued by the FCC to Seller in connection with the conduct of the
business or operations of the Station.
1.12 "Final Order" means a written action, order or public notice
issued by the FCC, setting forth the FCC Consent and (a) which has not been
reversed, stayed, enjoined, set aside, annulled or suspended, and (b) with
respect to which (i) no requests have been filed for administrative or judicial
review, reconsideration, appeal or stay, and the time for filing any such
requests and for the FCC to review the action on its own motion has expired, or
(ii) in the event of review, reconsideration or appeal that does not result in
the FCC consent being reversed, stayed, enjoined, set aside, annulled or
suspended, the time for further review, reconsideration or appeal has expired.
1.13 "Licenses" means all of the licenses and other authorizations,
including the FCC Licenses, and "Permits" means all construction permits and
other permits, issued by the FCC, the Federal Aviation Administration ("FAA"),
and any other federal, state or local governmental authorities to Seller in
connection with the conduct of the business or operations of the Station.
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1.14 "Personal Property" means all of the machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, spare
parts, and other tangible personal property which are owned or leased by Seller
and used or useful as of the date hereof in the conduct of the business or
operations of the Station, plus such additions thereto and deletions therefrom
arising in the ordinary course of business between the date hereof and the
Closing Date.
1.15 "Purchase Price" means the purchase price specified in Section
2.3.
1.16 "Real Property" means all of the fee estates and other
improvements thereon, leasehold interests, easements, licenses, rights to
access, right-of-way, and other real property interest owned by Seller and
identified on Schedule 3.5 hereof plus such additions thereto and deletions
therefrom arising in the ordinary course of business between the date hereof and
the Closing Date.
1.17 "TBA Date" means the date of commencement of effectiveness of the
Time Brokerage Agreement.
1.18 "Time Brokerage Agreement" means the Time Brokerage Agreement
entered into by Seller and Buyer in substantially the form set forth in Schedule
6.1 hereto.
SECTION 2
SALE AND PURCHASE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and conditions set
forth in this Agreement, Seller hereby agrees to transfer and deliver to Buyer
on the Closing Date, and Buyer agrees to purchase, all of the Assets, free and
clear of any claims, liabilities, mortgages, liens, pledges, conditions,
charges, or encumbrances of any nature whatsoever (except for those
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permitted in accordance with Section 2.5, 3.5 or 3.6 below), more specifically
described as follows:
(a) The Personal Property;
(b) The Real Property;
(c) The Licenses;
(d) The Assumed Contracts;
(e) All trademarks, trade names, service marks and all other
intellectual property and similar intangible assets relating to the Station,
including those listed in Schedule 3.9 hereto;
(f) All of the Seller's proprietary information, which relate
to the Station, including without limitation, technical information and data,
machinery and equipment warranties, maps, computer discs and tapes, plans,
diagrams, blueprints, and schematics, including filings with the FCC which
relate to the Station, if any;
(g) All choices in action and rights under warranties of
Seller relating to the Station or the Assets, if any;
(h) All books and records relating exclusively to the business
or operations of the Station, including executed copies of the Assumed
Contracts, and all records required by the FCC to be kept, subject to the right
of Seller to have such books and records made available to Seller for a
reasonable period, not to exceed three (3) years; and
(i) All intangible assets of Seller relating to the Station
not specifically described above.
2.2 Excluded Assets. The Assets shall exclude the following assets, in
addition to those listed on Schedule 2.2:
(a) Seller's cash on hand as of the Closing Date and all other
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cash in any of Seller's bank or savings accounts; any and all insurance
policies, letters of credit, or other similar items and any cash surrender value
in regard thereto; and any stocks, bonds, certificates of deposit and similar
investments.
(b) Any Contracts other than the Assumed Contracts;
(c) All books and records of Seller, subject to the right of
Buyer to have access and to copy for a period of three (3) years from the
Closing Date, and Seller's corporate records and other books and records related
to internal corporate matters and financial relationships with Seller's lenders;
(d) Any claims, rights and interest in and to any refunds of
federal, state or local franchise, income or other taxes or fees of any nature
whatsoever for periods prior to the Closing Date;
(e) Any pension, profit-sharing or employee benefit plans, and
any employment or collective bargaining agreement, except to the extent
specifically assumed in Section 2.4, 2.5 or 6.10 of this Agreement.
(f) The Accounts Receivable.
(g) Any other asset of Seller not located at either the
studio/office or transmitter site of Seller, or otherwise herein defined as an
Asset.
2.3 Purchase Price. The Purchase Price shall be Thirty Million Dollars
($30,000,000). The Purchase Price shall be adjusted to reflect (i) any
adjustments or prorations made and agreed to as of the TBA Date as provided in
Section 2.4 herein, (ii) to the extent the parties agree on a specific
allocation of such amount to the Noncompetition Agreement set forth on Section
6.5 herein, and (iii) the increase, if applicable, provided for in Section 6.12
herein.
2.4 Adjustments and Prorations. All revenues arising from the Station
up until midnight on the day prior to the TBA Date, and all expenses arising
from the Station up until
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midnight on the day prior to the TBA Date, including business and license fees
(including any retroactive adjustments thereof), utility charges, real and
personal property taxes and assessments levied against the Assets, accrued
employee benefits such as vacation time and sick time, property and equipment
rentals, applicable copyright or other fees, sales and service charges, taxes
(except for taxes arising from the transfer of the Assets hereunder), and
similar prepaid and deferred items, shall be prorated between Buyer and Seller
in accordance with the principle that Seller shall receive all revenues, and all
refunds to Seller and deposits of Seller held by third parties, and shall be
responsible for all expenses, costs and liabilities allocable to the conduct of
the business or operations of the Station for the period prior to the TBA Date,
and Buyer shall receive all revenues and shall be responsible for all expenses,
costs and obligations allocable to the conduct of the business or operations of
the Station on the TBA Date and for the period thereafter. Buyer shall receive
credit to the extent of the value (as calculated in Seller's financial
statements consistent with past practice) of any and all advertising time to be
run following the TBA Date for which trade or barter consideration has been
received by the Seller prior to the TBA Date.
Notwithstanding the foregoing, there shall be no adjustment for, and
Seller shall remain solely liable with respect to, any Contracts not included in
the Assumed Contracts, or any other obligation or liability not being assumed by
Buyer in accordance with Section 2.5.
A. Any adjustments or prorations will, insofar as feasible, be
determined and paid on the TBA Date, with final settlement and payment being
made in accordance with the procedures set forth in Section 2.4B.
B. Within sixty (60) days after the TBA Date, Buyer shall
deliver to Seller a certificate (the "Adjustment Certificate"), signed by a
senior officer of Buyer after due inquiry by such officer but without any
personal liability to such officer, providing a compilation of the
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adjustments and prorations to be made pursuant to this Section 2.4, including
any adjustments and prorations made at the TBA Date, together with a copy of any
working papers relating to such Adjustment Certificate and such other supporting
evidence as Seller may reasonably request. If Seller shall conclude that the
Adjustment Certificate does not accurately reflect the adjustments and
prorations to be made pursuant to this Section 2.4, Seller shall, within thirty
(30) days after its receipt of the Adjustment Certificate, provide to Buyer its
written statement of any discrepancies believed to exist. Joseph L. Winn on
behalf of Buyer, and John M. Brennon on behalf of Seller, or their respective
designees, shall attempt jointly to resolve the discrepancies within fifteen
(15) days after receipt of Seller's discrepancy statement, which resolution, if
achieved, shall be binding upon all parties to this Agreement and not subject to
dispute or review. If such representatives cannot resolve the discrepancy to
their mutual satisfaction within such fifteen (15) day period, Buyer and Seller
shall, within the following ten (10) days, jointly designate a nationally known
independent public accounting firm to be retained to review the Adjustment
Certificate together with Seller's discrepancy statement and any other relevant
documents. The cost of retaining such independent public accounting firm shall
be borne equally by Buyer and Seller. Such firm shall report its conclusions as
to adjustments pursuant to this Section 2.4, which report shall be conclusive on
all parties to this Agreement and not subject to dispute or review. If, after
adjustment as appropriate with respect to the amount of the aforesaid
adjustments paid or credited at the TBA Date, Buyer is determined to owe an
amount to Seller, Buyer shall pay such amount to Seller, and if Seller is
determined to owe an amount to Buyer, Seller shall pay such amount thereof to
Buyer, in each case within ten (10) days of such determination.
2.5 Assumption of Liabilities and Obligations. Except to the extent
otherwise provided for in the Time Brokerage Agreement, Buyer shall pay,
discharge and perform as of the
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Closing Date (i) all of the obligations and liabilities of Seller under the
Licenses and the Assumed Contracts insofar as they relate to the time period on
and after the Closing Date, and arising out of events occurring on or after the
Closing Date, (ii) all obligations and liabilities arising out of events
occurring on or after the Closing Date related to Buyer's ownership of the
Assets or its conduct of the business or operations of the Station on or after
the Closing Date, and (iii) all obligations and liabilities for which Buyer
receives a proration adjustment hereunder. All other obligations and liabilities
of Seller, including (i) any obligations under any Contract not included in the
Assumed Contracts, (ii) any obligations under the Assumed Contracts relating to
the time period prior to the Closing Date, (iii) any claims or pending
litigation or proceedings relating to the operation of the Station prior to the
Closing Date, and (iv) those related to employees as set forth in Section 6.9
herein shall remain and be the obligations and liabilities solely of Seller.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Organization, Standing and Authority. Seller is a corporation duly
formed, validly existing and in good standing under the laws of the State of
North Carolina and is duly qualified to conduct its business in the State of
Maryland, which is the only jurisdiction where the conduct of the business or
operations of the Station requires such qualification. Seller has all requisite
corporate power and authority (i) to own, lease, and use the Assets as presently
owned, leased, and used, and (ii) to conduct the business or operations of the
Station as presently conducted. Seller has all requisite corporate power and
authority to execute and deliver this
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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
Seller, hereunder and thereunder. Seller is not a participant in any joint
venture or partnership with any other person or entity with respect to any part
of the Station's operations or the Assets.
3.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement by Seller have been duly authorized by all
necessary corporate action on the part of Seller. This Agreement has been duly
executed and delivered by Seller and constitutes the legal, valid, and binding
obligation of Seller, enforceable against Seller in accordance with its terms
except as the enforceability hereof may be affected by bankruptcy, insolvency,
or similar laws affecting creditors' rights generally, or by court-applied
equitable remedies.
3.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents, 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) does not require the consent of any third party; (ii)
will not conflict with any provision of the Articles of Incorporation and
By-Laws of Seller; (iii) will not conflict with, result in a breach of, or
constitute a default under, any law, judgment, order, ordinance, decree, rule,
regulation or ruling of any court or governmental instrumentality, which is
applicable to Seller; (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
material agreement, instrument, license or permit to which Seller is a party or
by which may be bound; or (v) will not create any claim, liability, mortgage,
lien, pledge, condition, charge, or encumbrance of any nature whatsoever upon
the Assets.
3.4 Licenses and Permits. Schedule 3.4 includes a true and complete
list of the Licenses and Permits. Seller has delivered to Buyer true and
complete copies of the Licenses
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and Permits (including any and all amendments and other modifications thereto).
As described in Schedule 3.4, the Licenses were validly issued with the Seller
designated thereon being the authorized legal holder thereof. The Licenses
comprise all of the licenses, permits and other authorizations required from any
governmental or regulatory authority for the lawful conduct of the business or
operations of the Station as presently operated. Seller has no reason to believe
that the Licenses will not be renewed by the FCC or other granting authority in
the ordinary course.
3.5 Title to and Condition of Real Property. Schedule 3.5 contains
descriptions of all the Real Property (including the location of all
improvements thereon), which comprises all real property interest necessary to
conduct the business or operations of the Station as now conducted. Seller has
good and marketable fee simple title, insurable at standard rates, to all of the
fee estates (including the improvements thereof), listed in said Schedule free
and clear of all liens, mortgages, pledges, covenants, easements, restrictions,
encroachments, leases, charges, and other claims and encumbrances of any nature
whatsoever, and without reservation or exclusion of any mineral, timber, or
other rights of interests, except for (i) liens for real estate taxes not yet
due and payable, (ii) easements, rights-of-way and restrictions of record, none
of which materially affects the use of such property and all of which are listed
in Schedule 3.5, (iii) liens in favor of Seller's lenders set forth in Schedule
3.5, and (iv) any other claims or encumbrances which are described in Schedule
3.5 and annotated to indicate that such claims or encumbrances shall be removed
prior to or at Closing. To the best of Seller's knowledge, all towers, guy
anchors and buildings and other improvements, included in the owned Assets are
located entirely on the Real Property listed in Schedule 3.5 or easement rights
set forth at Schedule 3.5. Seller has delivered to Buyer true and complete
copies of all deeds, leases or other material instruments pertaining to the Real
Property (including any and all amendments and
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other modifications of such instruments), all of which instruments are valid,
binding and enforceable in accordance with their terms. Seller is not in
material breach, nor to Seller's knowledge is any other party in material
breach, of the terms of any of such deeds, leases or other instruments. All Real
Property (including the improvements thereof) (i) is in good condition and
repair consistent with its present use reasonable wear and tear excepted, (ii)
is available for immediate use in the conduct of the business or operations of
the Station, and (iii) to Seller's best knowledge materially complies as
described in Schedule 3.5 with all applicable building, electrical and zoning
codes and all regulations of any governmental authority having jurisdiction.
Seller has full legal and practical access to the Real Property.
3.6 Title to and Condition of Personal Property. Schedule 3.6 contains
descriptions of all material items of the Personal Property, which comprises all
personal property used to conduct the business or operations of the Station as
now conducted. Except as described in Schedule 3.6, Seller owns and has good
title to all Personal Property. None of the Personal Property owned by Seller is
subject to any security interest, mortgage, pledge, conditional sales agreement,
or other lien or encumbrance, except for (i) liens for current taxes not yet due
and payable, and (ii) any other claims or encumbrances which are described in
Schedule 3.6 and annotated to indicate that such claims or encumbrances shall be
removed prior to or at Closing. Except as shown in Schedule 3.6, the Personal
Property taken as a whole is in good operating condition and repair (ordinary
wear and tear excepted), and is available for immediate use in the business or
operations of the Station, and the transmitting and studio equipment included in
the Personal Property (i) has been maintained consistent with FCC rules and
regulations, and (ii) will permit the Station and any unit auxiliaries thereto
to operate in accordance with the terms of the FCC Licenses and the rules and
regulations of the FCC, and with all other applicable federal, state and local
statutes, ordinances, rules and regulations.
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3.7 Contracts. Schedule 3.7 contains descriptions of all the Contracts
except for: (i) contracts with advertisers for the sale of time or talent on the
Station for cash and substantially at rate card and which are not prepaid and
which may be cancelled by the Station without penalty on not more than thirty
(30) days notice, (ii) employment contracts and miscellaneous service contracts
terminable at will without penalty, and (iii) other contracts not involving
either aggregate liabilities under all such contacts exceeding Twenty Thousand
Dollars ($20,000) or any material nonmonetary obligation. Seller has delivered
to Buyer true and complete copies of all written Contracts, and true and
complete memoranda of all oral Contracts (including any and all amendments and
other modifications to such Contracts). Other than the Contracts, the Seller
requires no contract or agreement to enable it to carry on its business as
presently conducted. All of the Assumed Contracts are in full force and effect,
and are valid, binding and enforceable in accordance with their terms, except as
the enforceability thereof may be affected by bankruptcy, insolvency or similar
laws affecting creditors' rights generally, or by court-applied equitable
remedies. Seller is not in material breach, nor to Seller's knowledge is any
other party in material breach, of the terms of any such Contracts. Except as
expressly set forth in Schedule 3.7, the Seller is not aware of any intention by
any party to any Assumed Contract (i) to terminate such contract or amend the
terms thereof, (ii) to refuse to renew the same upon expiration of its term, or
(iii) to renew the same upon expiration only on terms and conditions which are
more onerous than those pertaining to such existing contract. Except for the
Consents, Seller has full legal power and authority to assign its rights under
the Assumed Contracts to Buyer in accordance with this Agreement, and such
assignment will not affect the validity, enforceability and continuation of any
of the Assumed Contracts.
3.8 Consents. Except for the FCC Consent provided for in Section 6.1
and the other Consents indicated in Schedule 3.7 or described in Schedule 3.8,
no consent, approval, permit or
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authorization of, or declaration to or filing with any governmental or
regulatory authority, or any other third party is required (i) to consummate
this Agreement and the transaction contemplated hereby, (ii) to permit Seller to
assign or transfer the Assets to Buyer, or (iii) to enable Buyer to conduct the
business or operations of the Station in essentially the same manner as such
business or operations are presently conducted.
3.9 Trademarks, Trade Names and Copyrights. Schedule 3.9 is a true and
complete list of all copyrights, trademarks, trade names, licenses, patents,
permits, jingles, privileges and other similar intangible property rights and
interests (exclusive of those required to be listed in Schedule 3.4) applied
for, issued to or owned by Seller, or under which Seller is licensed or
franchised, and used or useful in the conduct of the business or operations of
the Station, all of which are valid and in good standing and uncontested. Seller
has delivered to Buyer copies of all documents establishing such rights,
licenses, or other authority. Seller is not aware that it is infringing upon or
otherwise acting adversely to any trademarks, trade names, copyrights, patents,
patent applications, know-how, methods, or processes owned by any other person
or persons, and there is no claim or action pending, or to the knowledge of
Seller threatened, with respect thereto.
3.10 Financial Statements. True and complete copies of unaudited
financial statements of the Station containing balance sheets and statements of
income as at and for Seller's fiscal years ended December 31, 1993, 1994 and
1995 (collectively, the "Financial Statements") have been supplied to Buyer. The
Financial Statements are prepared in accordance with generally accepted
accounting principles consistently applied, except for the absence of footnotes,
are true and correct in all material respects, and present fairly the operating
income and financial condition of the Station as at their respective dates and
the results of operations for the periods then ended.
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3.11 Insurance. All of the tangible property included in the Assets is
insured against loss or damage in amounts generally customary in the broadcast
industry. Schedule 3.11 comprises a true and complete list of all insurance
policies of Seller which insure any part of the Assets. All policies of
insurance listed in Schedule 3.11 are in full force and effect. During the
three-year period ending on the date hereof, no insurance policy of Seller on
the Assets or the Station has been cancelled by the insurer and no application
of Seller for insurance has been rejected by any insurer.
3.12 Reports. Except where failure to do so would not have a material
adverse effect on the ownership or operation of the Station: all returns,
reports and statements which the Station is currently required to file with the
FCC or with any other governmental agency have been filed, and all reporting
requirements of the FCC and other governmental authorities having jurisdiction
thereof have been complied with; all of such reports, returns and statements are
substantially complete and correct as filed; and the Station's public inspection
file is located at the main studio and is in compliance with the FCC's rules and
regulations.
3.13 Employee Benefit Plans. Schedule 3.7 or Schedule 3.13 contains a
true and complete list as of the date of this Agreement of all employee benefit
plans or arrangements applicable to the employees of Seller employed at the
Stations, and all fixed or contingent liabilities or obligations of Seller with
respect to any person now or formerly employed by Seller at the Station,
including pension or thrift plans, individual or supplemental pension or accrued
compensation arrangements, contributions to hospitalization or other health or
life insurance programs, incentive plans, bonus arrangements and vacation, sick
leave, disability and termination arrangements or policies, including workers'
compensation policies. Seller has furnished or made available to Buyer true and
complete copies of all written documents or information with respect to employee
matters and arrangements at the Station, including without
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limitation, all employee handbooks, rules and policies, plan documents, trust
agreements, employment agreements, summary plan descriptions, and descriptions
of any unwritten plans listed in Schedule 3.13. Any employee benefits and
welfare plans or arrangements listed in Schedule 3.13 were established and have
been executed, managed and administered without material exception in accordance
with all applicable requirements of the Internal Revenue Code of 1986, as
amended, of the Employee Retirement Income Security Act of 1974, as amended, and
of other applicable laws. Seller is not aware of the existence of any
governmental audit or examination of any of such plans or arrangements or of any
facts which would lead it to believe that any such audit or examination is
pending or threatened. There exists no action, suit or claim (other than routine
claims for benefits) with respect to any of such plans or arrangements pending
or, to the knowledge of Seller, threatened against any of such plans or
arrangements, and Seller possesses no knowledge of any facts which could give
rise to any such action, suit or claim.
3.14 Labor Relations. Seller is not a party to or subject to any
collective bargaining agreements with respect to the Station except as described
in Schedule 3.7 hereto. Seller has no written or oral contracts of employment
with any employee of the Station, other than those listed in Schedule 3.7.
Seller has provided Buyer with true and complete copies of all such written
contracts of employment and true and complete memoranda of any such oral
contracts. Seller, in the operation of the Station, has complied in all material
respects with all applicable laws, rules and regulations relating to the
employment of labor, including those related to wages, hours, collective
bargaining, occupational safety, discrimination, and the payment of social
security and other payroll related taxes, and it has not received any notice
alleging that it has failed to comply in any material respect with any such
laws, rules or regulations. No controversies, disputes, or proceedings are
pending or, to the best of its knowledge, threatened, between it and employees
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(collectively) of the Station. No labor union or other collective bargaining
unit represents any of the employees of the Station. To the best knowledge of
Seller, 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 of Seller's employees at the Station.
3.15 Taxes. Seller has 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 be filed, and it has paid or caused to be paid all taxes
shown on said returns or on any tax assessment received by it to the extent that
such taxes have become due, or has set aside on its books reserves (segregated
to the extent required by sound accounting practice) deemed by it to be adequate
with respect thereto. No events have occurred which could impose on Buyer any
transferee liability for any taxes, penalties or interest due or to become due
from Seller.
3.16 Claims, Legal Actions. Except as set forth in Schedule 3.16, and
except for any investigations and rule-making proceedings generally affecting
the broadcasting industry, there is no claim, legal action, counterclaim, suit,
arbitration, governmental investigation or other legal, administrative or tax
proceeding, nor any order, decree or judgment, in progress or pending, or to the
knowledge of Seller threatened, against or relating to Seller, the Assets, or
the business or operations of the Station, nor does Seller know of any basis for
the same. In particular, except as set forth in Schedule 3.16, but without
limiting the generality of the foregoing, there are no applications, complaints
or proceedings pending or, to the best of its knowledge, threatened (i) before
the FCC relating to the business or operations of the Station other than
applications, complaints or proceedings which affect the radio industry
generally, (ii) before any federal or state agency involving charges of illegal
discrimination by the Station under any federal or state employment laws or
regulations, or (iii) against Seller or the Station before any federal, state or
local agency involving environmental or zoning laws or regulations.
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3.17 Compliance with Laws. To the best knowledge of Seller, Seller has
complied in all material respects with (i) the Licenses, and (ii) all applicable
federal, state and local laws, rules, regulations and ordinances relating to the
Station. To the best knowledge of Seller, neither the ownership or use, nor the
conduct of the business or operations, of the Station conflicts with rights of
any other person, firm or corporation.
3.18 Environmental Matters.
(a) During Seller's period of ownership and, to the best
knowledge of Seller, during those of its Predecessor, there has been no
production, storage, treatment, recycling, disposal, use, generation, discharge,
release or other handling or disposition of any kind by Seller or any such
predecessor (collectively, "Handling") of any toxic or hazardous wastes,
substances, products, pollutants or materials of any kind, including, without
limitation, petroleum and petroleum products and asbestos, or any other wastes,
substances, products, pollutants or material regulated under any Environmental
Laws (as defined below) (collectively, "Hazardous Materials") at, in, on, from
or under the Real Property or any structure or improvement on the Real Property
which in any event is in material violation of environmental law. The operations
of Seller and, to Seller's best knowledge, those of its Predecessor, are and
have been conducted, as the case may be, in material compliance with all
applicable environmental laws. There are no pending or threatened actions,
suits, claims, demands, legal proceedings, administrative proceedings, requests
for information, or other notices, proceedings or requests (collectively,
Claims") against or upon Seller based on or relating to any Pre-Closing
Environmental Matters (as defined below) and Seller has no knowledge that any
such claims will be asserted. Environmental Laws means any and all Federal,
state or local laws, statutes, rules, regulations, plans, ordinances, codes,
licenses or other restrictions relating to health, safety or the environment,
including without limitation the Comprehensive Environmental Response,
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Compensation and Liability Act, the Clean Air Act, the Safe Drinking Water Act,
the Toxic Substances Control Act and the Occupational Health and Safety Act.
Pre-Closing Environmental Matters means (i) the Handling of Hazardous Materials
on, at, in, from or under the Real Property prior to the Closing Date, including
without limitation, the effects of any Handling of Hazardous Materials within or
outside the boundaries of Real Property, the presence of any Hazardous Materials
in, on or under the Real Property or any improvements or structures thereon
regardless of how such Hazardous Materials came to rest there, (ii) the failure
of Seller to be in compliance with Environmental Law or (iii) any other act,
omission, event or condition which could give rise to liability or potential
liability under any Environmental Law with respect to the Real Property or the
present or prior business of Seller.
(b) Buyer shall be entitled to order and have undertaken on
its behalf prior to closing a Phase I Environmental Assessment of the Real
Property, and shall be granted all cooperation and access by Seller reasonably
necessary to complete such Assessment. If the report of such Assessment
demonstrates or recommends remediation in order to cause the Real Property to
comply with Environmental Laws, Seller shall immediately undertake to arrange,
at its own expense, such remediation prior to Closing. Notwithstanding the
foregoing, in the event such remediation costs or is estimated to cost in excess
of Fifty Thousand Dollars ($50,000), Seller shall not be obligated to expend
such excess, but in such event Buyer may thereafter, at its option, (i) accept
the condition of the Real Property at Closing as so remediated, or (ii)
terminate its obligations to purchase the Station under this Agreement.
3.19 Full Disclosure. No representation or warranty made by Seller
herein nor any certificate, document or other instrument furnished or to be
furnished by Seller pursuant hereto contains or will contain any untrue
statement of a material fact made intentionally or in bad faith,
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or intentionally or in bad faith omits or will omit to state any material fact
known to Seller and required to make the statements herein or therein not
misleading.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller 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, and shall be, at Closing, qualified to conduct business in the State
of Maryland. 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.
4.2 Authorization and Binding Obligation. The execution, delivery and
performance of this Agreement by Buyer have been duly authorized by all
necessary corporate action 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 hereof may be affected by bankruptcy, insolvency,
or similar laws affecting creditors' rights generally, or by court-applied
equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents, 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) does not require the consent of any third party; (ii)
will not conflict with the Certificate of Incorporation or Bylaws of Buyer;
(iii) will not conflict with, result in a breach of, or constitute a default
under, or accelerate or
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permit the acceleration of any performance required by the terms of, any
material agreement, instrument, licenses, or permit to which Buyer is a party or
by which Buyer may be bound.
4.4 FCC Qualification. Buyer has no knowledge of any facts which would,
under present law (including the Communications Act of 1934, as amended) and
present rules, regulations and practices of the FCC, disqualify Buyer as an
assignee of the licenses, permits and authorizations listed on Schedule 3.4
hereto, or as an owner and/or operator of the Station's Assets, and Buyer will
not take, or unreasonably fail to take, any action which Buyer knows or has
reason to know would cause such disqualification (it being understood that Buyer
has an active duty to attempt to ascertain what would cause such
disqualification). Should Buyer become aware of any such facts, it will promptly
notify Seller in writing thereof and use its best efforts to prevent any such
disqualification. Buyer further represents and warrants that it is financially
qualified to meet all terms, conditions and undertakings contemplated by this
Agreement.
SECTION 5
COVENANTS OF SELLER
5.1 Pre-Closing Covenants. Except as contemplated by this Agreement or
with the prior written consent of Buyer, not to be unreasonably withheld,
between the date hereof and the Closing Date, Seller shall, subject to the terms
of the Time Brokerage Agreement, operate the Station in the ordinary course of
business in accordance with its past practices (except where such would conflict
with the following covenants or with Seller's other obligations hereunder), and
abide by the following negative and affirmative covenants:
A. Negative Covenants. Seller shall not do any of the
following:
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(1) Compensation. Increase the compensation, bonuses
or other benefits payable or to be payable to any person employed in connection
with the conduct of the business or operations of the Station, except in
accordance with past practices;
(2) Contracts. Enter into any new Contracts except
with prior notice to Buyer if any one such Contract exceeds Five Thousand
Dollars ($5,000) in value or payments, or if such Contracts in the aggregate
exceed Twenty Thousand Dollars ($20,000) in value or payment;
(3) Disposition of Assets. Sell, assign, lease, or
otherwise transfer or dispose of any of the Assets, except for assets consumed
or disposed of in the ordinary course of business, where no longer used or
useful in the business or operations of the Station or in connection with the
acquisition of replacement property of equivalent kind and value;
(4) Encumbrances. Create, assume or permit to exist
any claim, liability, mortgage, lien, pledge, condition, charge, or encumbrance
of any nature whatsoever upon the Assets, except for (i) those in existence on
the date of this Agreement, disclosed in Schedules 3.5 and 3.6, or permitted by
Section 2.5, 3.5 or 3.6 and (ii) mechanics' liens and other similar liens which
will be removed prior to the Closing Date;
(5) Licenses. Do any act or fail to do any act which
resulted in the expiration, revocation, suspension or modification of any of the
Licenses, or fail to prosecute with due diligence any applications to any
governmental authority in connection with the operation of the Station;
(6) Rights. Waive any material right relating to the
Station or the Assets; or
(7) No Inconsistent Action. Knowingly take any action
which is inconsistent with its obligations hereunder or which could hinder or
delay the consummation of the transaction contemplated by this Agreement.
B. Affirmative Covenants. Seller shall do the following:
(1) Access to Information. Upon prior notice, allow
Buyer and its authorized representatives reasonable access at mutually agreeable
times at Buyer's expense during normal business hours to the Assets and to all
other properties, equipment, books, records, Contracts and documents relating to
the Station for the purpose of audit and inspection, and furnish or cause to be
furnished to Buyer or its authorized representatives all information with
respect to the affairs and business of the Station as Buyer may reasonably
request, it being understood that the rights of Buyer hereunder shall not be
exercised in such a manner as to interfere with the operations of the business
of Seller; provided that neither the furnishing of such information to Buyer or
its representatives nor any investigation made heretofore or hereafter by Buyer
shall affect Buyer's rights to rely on any representation or warranty made by
Seller in this Agreement, each of which shall survive any furnishing of
information or any investigation;
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(2) Maintenance of Assets. Maintain all of the Assets
or replacements thereof and improvements thereon in current condition (ordinary
wear and tear excepted), and use, operate and maintain all of the above assets
in a reasonable manner, with inventories or spare parts and expendable supplies
being maintained at levels consistent with past practices;
(3) Insurance. Maintain the existing insurance
policies on the Station and the Assets;
(4) Consents. Use its reasonable efforts to obtain
the Consents;
(5) Notification. Promptly notify Buyer in writing of
any unusual or material developments with respect to the assets of the Station,
and of any material change in any of the information contained in Seller's
representations and warranties contained in Section 3 hereof or in the schedules
hereto, provided that such notification shall not relieve Seller of any
obligations hereunder;
(6) Contracts. Prior to the Closing Date, deliver to
Buyer a list of all Contracts entered into between the date hereof and the
Closing Date of the type required to be listed in Schedule 3.7, together with
the copies of such Contracts; and
(7) Compliance with Laws. Comply in all material
respects with all rules and regulations of the FCC, and all other laws, rules
and regulations to which Seller, the Station and the Assets are subject.
5.2 Post-Closing Covenants. After the Closing, Seller will take such
actions, and execute and deliver to Buyer such further deeds, bills of sale, or
other transfer documents as, in the reasonable opinion of counsel for Buyer and
Seller, may be necessary to ensure, complete and evidence the full and effective
transfer of the Assets to Buyer pursuant to this Agreement.
SECTION 6
SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent. The assignment of the FCC Licenses as contemplated by
this Agreement is subject to the prior consent and approval of the FCC.
A. Within ten (10) days after the execution of this Agreement,
Buyer and Seller shall file with the FCC an appropriate application for FCC
Consent. The parties shall prosecute said application with all reasonable
diligence and otherwise use their best efforts to
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obtain the grant of such application as expeditiously as practicable. If the FCC
Consent imposes any condition on any party hereto, such party shall use its best
efforts to comply with such condition unless compliance would be unduly
burdensome or would have a material adverse effect upon it. If reconsideration
or judicial review is sought with respect to the FCC Consent, Buyer and Seller
shall oppose such efforts to obtain reconsideration or judicial review (but
nothing herein shall be construed to limit any party's right to terminate this
Agreement pursuant to Section 9 of this Agreement).
B. The transfer of the Assets hereunder is expressly
conditioned upon (i) the grant of the FCC Consent without any materially adverse
conditions on Buyer, (ii) compliance by the parties hereto with the condition
(if any) imposed in the FCC Consent, and (iii) the FCC Consent, through the
passage of time or otherwise, becoming a Final Order, provided, though, that the
condition that the FCC Consent shall have become a Final Order may be waived by
Buyer, in its sole discretion.
6.2 Taxes, Fees and Expenses. Buyer shall pay all sales, transfer and
similar taxes and fees, if any, arising out of the transfer of the Assets
pursuant to this Agreement. All filing fees required by the FCC and the FTC (for
the HSR Filing) shall be paid equally by Seller and Buyer. 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 other representatives.
6.3 Brokers. Buyer and Seller each represents and warrants that neither
it 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 transaction
contemplated by this Agreement.
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6.4 Time Brokerage Agreement. Buyer and Seller have entered into a Time
Brokerage Agreement attached hereto in Schedule 6.4.
6.5 Noncompetition Agreement. Buyer and Seller shall enter into at
Closing a Noncompetition Agreement in the form set forth in Schedule 6.5.
6.6 Confidentiality. Except as necessary for the consummation of the
transaction contemplated hereby, including Buyer's obtaining financing in any
form or means of its choosing related hereto, each party hereto will keep
confidential any information which is obtained from the other party in
connection with the transaction contemplated hereby and which is not readily
available to members of the general public, and will not use such information
for any purpose other than in furtherance of the transactions contemplated
hereby. In the event this Agreement is terminated and the purchase and sale
contemplated hereby abandoned, each party will return to the other party all
documents, work papers and other written material obtained by it in connection
with the transaction contemplated hereby.
6.7 Cooperation. Buyer and Seller 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 Buyer and Seller shall execute such other documents as may be
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 hereunder. Notwithstanding
the foregoing, except as otherwise set forth herein, Buyer shall have no
obligation (i) to expend funds to obtain the Consents, or (ii) to agree to any
adverse change in any License or Assumed Contract to obtain a Consent required
with respect thereto.
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6.8 Risk of Loss.
A. The risk of loss, damage or impairment, confiscation or
condemnation of any of the Assets from any cause whatsoever shall be borne by
Seller at all times prior to the completion of the Closing.
B. If any damage or destruction of the Assets or any other
event occurs which prevents signal transmission by the Station in the normal and
usual manner and Seller cannot restore or replace the Assets so that the
conditions are cured and normal and usual transmission is resumed before the
Closing Date, the Closing Date shall be postponed, for a period of up to one
hundred and twenty (120) 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 the
Station's normal and usual transmission resumed within the one hundred and
twenty (120) day period specified above, Buyer may terminate this Agreement
forthwith without any further obligation hereunder by written notice to Seller.
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 Seller shall deliver to Buyer all insurance
proceeds received in connection with such damage or destruction of the Assets to
the extent not already expended by Seller arising in connection with such
restoration and replacement.
D. Notwithstanding any of the foregoing, Buyer may terminate
this Agreement forthwith without any further obligation hereunder by written
notice to Seller if any event occurs which prevents signal transmission by the
Station in a manner generally equivalent to its current operations for a
consecutive period of five (5) or a cumulative period of fourteen (14) days
after the date hereof.
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6.9 Employee Matters.
A. Prior to or simultaneously with the execution of this
Agreement, Seller shall have provided to Buyer an accurate list of all current
employees of the Station together with a description of the terms and conditions
of their respective employment (including salary, bonus and other benefit
arrangements) and their duties as of the date of this Agreement, as well as the
annual salaries thereof. Seller shall promptly notify Buyer of any changes that
occur prior to Closing with respect to such information.
B. Nothing contained in this Agreement shall confer upon any
employee of Seller any right with respect to continued employment by Buyer, nor
shall anything herein interfere with any right the Buyer may have after the TBA
Date to (i) terminate the employment of any of the employees then of Buyer at
any time, with or without cause, or (ii) establish or modify any of the terms
and conditions of the employment of the Buyer's employees in the exercise of its
independent business judgment.
C. Except as otherwise set forth herein, Buyer will not incur
any liability on account of Seller's employees in connection with the
transaction, including, without limitation, any liability on account of
unemployment insurance contributions, termination payments, retirement, pension,
profit-sharing, bonus, severance pay, disability, health, accrued vacation,
accrued sick lease (unless a pro-rated adjustment is made as to vacation or sick
leave) or other employee benefit plans, practices, agreements, or
understandings.
6.10 Accounts Receivable. At the TBA Date, Seller shall assign to Buyer
for collection purposes only all Accounts Receivable. Seller shall deliver to
Buyer on or as soon as practicable after the TBA Date a complete and detailed
statement showing the name, amount and age of each Account Receivable. Subject
to and limited by the following, collections of the Accounts Receivable will be
for the account of Seller. Buyer shall endeavor in the ordinary
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course of business to collect the Accounts Receivable for a period ending upon
the later of (i) ninety (90) days after the TBA Date or (ii) the Closing Date
(the "Collection Period"). Any payment received by Buyer during the Collection
Period from any customer with an account which is an Account Receivable shall
first be applied in reduction of the Account Receivable. During the Collection
Period, Buyer shall furnish Seller with a list of, and pay over to Seller, the
amounts collected during such calendar month with respect to the Accounts
Receivable on a monthly basis. Buyer shall provide Seller with a final
accounting on or before the fifteenth (15th) day following the end of the
Collection Period. Upon the request of either party at and after such time,
Buyer and Seller shall meet to mutually and in good faith analyze any
uncollected Account Receivable to determine if the same, in their reasonable
business judgment, are deemed to be collectable and if Buyer desires to retain
such Account in the interest of maintaining an advertising relationship. As to
each such Account, Buyer and Seller shall negotiate a good faith value of such
Account, which Buyer shall pay to Seller if Buyer, in its sole discretion,
chooses to retain such Account. Seller shall retain the right to collect any
Account as to which the parties are unable to reach agreement as to a good faith
value, and Buyer agrees to turn over to Seller any payments received against any
such Account. As Seller's agent, Buyer shall not be obligated to use any
extraordinary efforts or expend any sums to collect any of the Accounts
Receivable assigned to it for collection hereunder or to refer any of such
Accounts Receivable to a collection agency or to any attorney for collection,
and Buyer shall not make any such referral or compromise, nor settle or adjust
the amount of any such Account Receivable, except with the approval of Seller.
Buyer shall incur no liability to Seller for any uncollected account unless
Buyer shall have engaged in willful misconduct or gross negligence in the
collection of such account. During and after the Collection Period, without
specific agreement with Buyer to the contrary, neither Seller nor its agents
shall make any direct solicitation of the
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Accounts Receivable for collection purposes except for Accounts retained by
Seller after the Collection Period.
6.11 Audit Cooperation. Seller agrees to fully cooperate, and use
reasonable efforts to cause its accounting firms to reasonably cooperate with
Buyer and at Buyer's expense, to the extent required for the Buyer to prepare
audited financial statements for the Station for the period of Seller's
ownership thereof. Seller further agrees to authorize the disclosure of such
audited financial information is required by applicable law, regulations or
rules of any administrative or governmental agency, stock exchange or
self-regulatory agency.
6.12 HSR Filing. Buyer and Seller agree to fully cooperate in the
timely preparation and filing of all forms, documents and applications required
under the Hart-Scott-Rodino Act in conjunction with the transaction contemplated
hereunder (the "HSR Filing") in order to obtain necessary clearance thereunder.
Buyer and Seller further agree to diligently prosecute such application, and to
promptly respond to all inquiries and requests for further information
associated with such application.
6.13 Sale of WWMX(FM). Buyer and Seller specifically acknowledge their
intent that WOCT(FM) and WWMX(FM) be sold together and the Seller shall have no
obligation to sell either station unless Buyer purchases both. All provisions of
this Agreement and all other agreements shall be construed to effectuate this
intent.
SECTION 7
CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
7.1 Conditions of Obligations of Buyer. All obligations of Buyer at the
Closing hereunder are subject to the fulfillment prior to and at the Closing
Date of each of the following
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conditions any of which may be waived by Buyer in whole or in part in its sole
discretion in writing:
A. Representations and Warranties. The representations and
warranties of Seller in this Agreement shall be true and complete in all
material respects at and as of the Closing Date, except for changes contemplated
by this Agreement or as contemplated by the TBA, as though such representations
and warranties were made at and as of such time.
B. Covenants and Conditions. Seller shall have in all material
respects performed and complied with the covenants, agreements, and conditions
required by this Agreement or as contemplated by the TBA to be performed or
complied with by it prior to or on the Closing Date.
C. Consents. Each of the Consents marked as "material" on
Schedule 3.7 shall have been duly obtained and delivered to Buyer with no
material adverse change to the terms of the License or Assumed Contract with
respect to which such Consent is obtained.
D. Licenses. Seller shall be the holder of the Licenses, and
there shall not have been any modification of any of such Licenses which has an
adverse effect on the Station or the conduct of its business or operations. No
proceeding shall be pending the effect of which would be to revoke, cancel, fail
to renew, suspend or modify adversely any of the Licenses.
E. Deliveries. Seller shall have made or stand willing and
able to make all the deliveries to Buyer set forth in Section 8.2
F. Financial Results. Seller shall have achieved Broadcast
Cash Flow at the Station, when combined with that of WWMX, of no less than Five
Million Dollars ($5,000,000) during the twelve month period ended June 30, 1996.
For this purpose, Broadcast Cash Flow shall mean net income from advertising
time sales excluding non-cash barter or trade transactions, if any, and after
restoring thereto amounts previously deducted for depreciation,
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amortization, interest, management fees, retirement benefits and any other home
office allocations.
7.2 Conditions to Obligations of Seller. The obligations of Seller at
the Closing hereunder are subject to the fulfillment prior to and at the Closing
Date of each of the following conditions any of which may be waived by Seller in
whole or in part in its sole discretion in writing:
A. Representations and Warranties. The 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, except for changes
contemplated by this Agreement, as though such representations and warranties
were made at and as of such time.
B. Covenants and Conditions. Buyer shall have in all material
respects performed and complied with the covenants, agreements, and conditions
required by this Agreement to be performed or complied with by it prior to or on
the Closing Date. Buyer shall have closed upon the purchase of substantially all
of the assets of station WWMX(FM).
C. Deliveries. Buyer shall have made or stand willing and able
to make all the deliveries set forth in Section 8.3
SECTION 8
CLOSING AND CLOSING DELIVERIES
8.1 Closing. The closing shall take place at 10:00am on a date, to be
set by Buyer, upon no less than five (5) and no more than fifteen (15) business
days written notice to Seller, upon the later of (i) the day upon which the FCC
Consent has become a Final Order, and (ii) January 1, 1997 (the "Closing Date"),
provided, though, that Buyer may waive the requirement for a Final Order and
schedule the Closing Date, with five (5) days written notice to Seller, at
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any time after the receipt of FCC Consent. The closing of stations WWMX and WOCT
shall occur simultaneously. Closing shall be held at the offices of Buyer or
such other place as shall be mutually agreed to by Buyer and Seller.
8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller shall
deliver to Buyer the following, in form and substance reasonably satisfactory to
Buyer and its counsel:
(a) Transfer Documents. Duly executed warranty deeds, 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 or its permitted assignees, free and clear of any claims, liabilities,
mortgages, liens, pledges, conditions, charges, or encumbrances of any nature
whatsoever (except for those permitted in accordance with Sections 2.5, 3.5 or
3.6 hereof);
(b) Consents. The original of each Consent marked as
"material" with an asterisk on Schedule 3.7;
(c) Officer's Certificate. A certificate, dated as of the
Closing Date, executed by a duly authorized officer of Seller, certifying: (i)
that the representations and warranties of Seller contained in this Agreement
are true and complete in all material respects as of the Closing Date, except
for changes contemplated by this Agreement or the TBA, as though made on and as
of that date; and (ii) that Seller has, in all material respects, performed its
obligations and complied with its covenants set forth in this Agreement to be
performed and complied with prior to or on the Closing Date;
(d) Secretary's Certificate. A certificate, dated as of the
Closing Date, executed by Seller's Secretary: (i) certifying that the
resolutions, as attached to such certificate, were duly adopted by such Seller's
Board of Directors, authorizing and approving the execution of this Agreement by
Seller and the consummation of the transaction contemplated hereby and that such
resolutions remain in full force and effect; and (ii) providing, as attachments
thereto, a certificate of good standing certified by an appropriate Maryland
state official; as of a date not more than fifteen (15) days before the Closing
Date and by Seller's Secretary as of the Closing Date, and a copy of Seller's
Articles of Incorporation and By Laws as in effect on the date hereof, certified
by Seller's Secretary as of the Closing Date;
(e) Tax, Lien and Judgment Searches. A search for UCC, lien
and judgment filings in the Secretary of State's records of the State of
Maryland, and in the records of those towns or cities where the Assets are
located, such searches having been made no earlier than fifteen (15) days prior
to the Closing Date;
(f) Licenses, Contracts, Business Records, Etc. Copies, if
available, of all licenses, Assumed Contracts, blueprints, schematics, working
drawings, plans, projections,
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statistics, engineering records, and all files and records used by Seller in
connection with its operations of the Station;
(g) Noncompetition Agreement. The Noncompetition Agreement as
set forth in Schedule 6.5; and
(h) Opinions of Counsel. Opinions of Seller's counsel and
communications counsel dated as of the Closing Date, and addressed to Buyer and
at Buyer's directions, to Buyer's lenders, substantially in the form of Schedule
8.2 hereto.
(i) Escrow Instructions. Joint instructions with Buyer to
Escrow Agent with respect to payment of Escrow Deposit to Seller as a portion of
the Purchase Price.
8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer shall
deliver to Seller the following, in form and substance reasonably satisfactory
to Seller and its counsel:
(a) Purchase Price. The Purchase Price as provided in Section
2.3;
(b) Assumption Agreements. Appropriate assumption agreements
pursuant to which Buyer shall assume and undertake to perform Seller's
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 the President or Vice President of Buyer, certifying
(i) that the representations and warranties of Buyer contained in this Agreement
are true and complete in all material respects as of the Closing Date, except
for changes contemplated by this Agreement, as though made on and as of that
date, and (ii) that Buyer has, in all material respects, performed its
obligations and complied with its covenants set forth in this Agreement to be
performed or complied with on or prior to the Closing Date;
(d) Secretary's Certificate. A certificate, dated as of the
Closing Date, executed by Buyer's Secretary: (i) certifying that the
resolutions, as attached to such certificate, were duly adopted by Buyer's Board
of Directors, authorizing and approving the execution of this Agreement and the
consummation of the transaction contemplated hereby and that such resolutions
remain in full force and effect; and (ii) a copy of the corporate charter,
articles of incorporation and Bylaws of Buyer as in effect on the date hereof,
certified by Buyer's secretary as of the Closing Date;
(e) Opinion of Counsel. An opinion of Buyer's General Counsel
dated as of the Closing Date, substantially in the form of Schedule 8.3 hereto.
(f) Noncompetition Agreement. The Noncompetition Agreement as
set forth in Section 6.5.
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(g) Escrow Instructions. Joint instructions with Seller to
Escrow Agent with respect to payment of Escrow Deposit to Seller as a portion of
the Purchase Price.
SECTION 9
RIGHTS OF BUYER AND SELLER
ON TERMINATION OR BREACH
9.1 Termination Rights. This Agreement may be terminated by either
Buyer or Seller if the terminating party is not then in breach of any material
provision of this Agreement, upon written notice to the other party, upon the
occurrence of any of the following:
(a) If on the Closing Date (i) any of the conditions precedent
to the obligations of the terminating party set forth in Section 7 of this
Agreement shall not have been materially satisfied, and (ii) satisfaction of
such condition shall not have been waived by the terminating party;
(b) If the application for FCC Consent shall be set for
hearing by the FCC for any reason; or
(c) If the Closing shall not have occurred on or before
January 1, 1998.
Upon termination: (i) if neither party hereto is in breach of any material
provision of this Agreement, the parties hereto shall not have any further
liability to each other; (ii) if Seller shall be in breach of any material
provision of this Agreement, Buyer shall have only the rights and remedies
provided in Section 9.3 or (iii) if Buyer shall be in breach of any material
provision of this Agreement, Seller shall be entitled only to liquidated damages
as provided in Section 9.2 hereof. If, upon termination, Buyer shall not be in
breach of any material provision of this Agreement, the Escrow Deposit, plus all
interest or other proceeds from the investment thereof, less any compensation
due the Escrow Agent, shall be paid to Buyer.
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9.2 Liquidated Damages. In the event this Agreement is terminated by
Seller due to a material breach by Buyer of its representations, warranties,
covenants and other obligations under this Agreement, then the Escrow Deposit
shall be paid to Seller as liquidated damages, it being agreed that the Escrow
Deposit shall constitute full payment for any and all damages suffered by Seller
by reason of Buyer's failure to close this Agreement. Buyer and Seller agree in
advance that actual damages would be difficult to ascertain and that the amount
of the Escrow Deposit is a fair and equitable amount to reimburse Seller for
damages sustained due to Buyer's failure to consummate this Agreement for the
above-stated reason. All interest or other proceeds from the investment of the
Escrow Deposit, less any compensation due the Escrow Agent, shall be paid to
Seller.
9.3 Specific Performance. The parties recognize that in the event
Seller should refuse to perform under the provisions of this Agreement, monetary
damages alone will not be adequate. Buyer shall therefore be entitled, in
addition to any other remedies which may be available, including money damages,
to obtain specific performance of the terms of this Agreement. In the event of
any action to enforce this Agreement, Seller hereby waives the defense that
there is an adequate remedy at law.
9.4 Expenses Upon Default. In the event of a default by a party hereto
(the "Defaulting Party") which results in the filing of a lawsuit for damages,
specific performance, or other remedy the other party (the Nondefaulting Party)
shall be entitled to reimbursement by the Defaulting Party of reasonable legal
fees and expenses incurred by the Nondefaulting Party in the event the
Nondefaulting Party prevails.
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SECTION 10
SURVIVAL OF REPRESENTATIONS AND WARRANTIES,
AND INDEMNIFICATION
10.1 Representations and Warranties. All representations and warranties
contained in this Agreement shall be deemed continuing representations and
warranties, and shall survive to the Closing Date, together with the covenants
contained herein, for a period of fifteen (15) months (the "Survival Period").
No claim for indemnification may be made under this Section 10 (except for
section 10.3(a) or related claims under Section 10.3(c)) after the expiration of
the Survival Period. Any investigations by or on behalf of any party hereto
shall not constitute a waiver as to enforcement of any representation or
warranty contained herein, except that insofar as any party has knowledge of any
misrepresentation or breach of warranty at Closing and such knowledge is
documented in writing at Closing, such party shall be deemed to have waived such
misrepresentation or breach.
10.2 Indemnification by Seller. Seller and Seller's parent, Capital
Broadcasting Company, Inc. shall jointly and severally 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 covenants
by Seller contained herein or in any certificate, delivered to Buyer hereunder.
(b) Any and all obligations of Seller not assumed by Buyer
pursuant to the terms hereof;
(c) Any and all losses, liabilities or damages resulting from
Seller's operation or ownership of the Station prior to the Closing Date,
including any and all liabilities arising under the Licenses or the Assumed
Contracts which relate to events occurring prior to the Closing Date; and
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(d) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, and reasonable costs and expenses, incident to any of
the foregoing or incurred in investigating or attempting to avoid the same or to
oppose the imposition thereof.
10.3 Indemnification by Buyer. Buyer shall indemnify and hold Seller
harmless against and with respect to, and shall reimburse Seller for:
(a) Any and all losses, liabilities or damages resulting from
any untrue representation, breach of warranty or nonfulfillment of any covenants
by Buyer contained herein or in any certificate delivered to Seller hereunder;
(b) Any and all losses, liabilities or damages resulting from
Buyer's operation or ownership of the Station on or after the Closing Date,
including any and all liabilities or obligations arising under the Licenses or
the Assumed Contracts which relate to events occurring after the Closing Date or
otherwise assumed by Buyer under this Agreement; and
(c) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, and reasonable costs and expenses, including reasonable
legal fees and expenses, incident to any of the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof.
10.4 Procedures for Indemnification. The procedures for indemnification
shall be as follows:
A. The party claiming the indemnification (the "Claimant")
shall promptly give notice to the party from whom indemnification is claimed
(the "Indemnifying Party") of any claim, whether between the parties or brought
by a third party, specifying (i) the factual basis for such claim, and (ii) the
amount of 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
five (5) days after written notice of such action, suit or proceeding was given
to Claimant.
B. Following receipt of notice from the Claimant of a claim,
the Indemnifying Party shall have thirty (30) 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
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representative(s) 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 said thirty (30) day period (or any mutually agreed upon extension
thereof) to the validity and amount of such claim, or if the Indemnifying Party
does not respond to such notice, the Indemnifying Party shall immediately pay to
the Claimant the full amount of the claim. Buyer shall be entitled to apply any
or all of the Accounts Receivable collected on behalf of Seller to a claim as to
which Buyer is entitled to indemnification hereunder. If the Claimant and the
Indemnifying Party do not agree within said 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 Indemnifying Party 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 reasonable 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, the Claimant shall have the right to participate in the
defense of such claim at its own expense.
D. If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make all reasonable efforts
to reach a decision with respect thereto as expeditiously as possible.
E. 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.
F. The indemnification rights provided in Sections 10.2 and
10.3 shall extend to the shareholders, directors, officers, partners employees
and representatives of the Claimant
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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.
SECTION 11
MISCELLANEOUS
11.1 Notices. All notices, demands, and requests required or permitted
to be given under the provisions of this Agreement shall be (i) in writing, (ii)
delivered by personal delivery, or sent by commercial delivery service or
registered or certified mail, return receipt requested, or by facsimile
transmission, with receipt confirmation, (iii) 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 (iv) addressed as follows:
If to Seller: Capitol Broadcasting Company, Inc.
2619 Western Blvd.
Raleigh, NC 27605
Attn: James F. Goodmon, President
Fax: (919) 821-8733
with a copy
(which shall not
constitute notice) to: John M. Brennan, Sr. Vice President
Capitol Broadcasting Company
711 Hillsborough St.
Raleigh, NC 27603
Fax: (919) 890-6095
If to Buyer: American Radio Systems
116 Huntington Avenue
Boston, MA 02116
Attention: Steven B. Dodge, President
Fax: (617) 375-7575
with a copy
(which shall not
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constitute notice) to: Michael B. Milsom, Vice President & General Counsel
American Radio Systems, Inc.
116 Huntington Avenue
Boston, MA 02116
Fax: (617) 375-7575
or to such other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
11.1.
11.2 Benefit and Binding Effect. Neither party hereto may assign this
Agreement without the prior written consent of the other party hereto, except
that Buyer may assign its rights and obligations under this Agreement to any
affiliated or unaffiliated entity, provided, however, that following which
assignment Buyer shall remain liable to Seller for all of Buyer's obligations
hereunder. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
11.3 Governing Law. This Agreement shall be governed, construed, and
enforced in accordance with the laws of the State of Maryland.
11.4 Headings. The headings herein are included for ease of reference
only and shall not control or affect the meaning or construction of the
provisions of this Agreement.
11.5 Gender and Number. Words used herein, 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 required.
11.6 Entire Agreement. This Agreement, all schedules hereto, the Time
Brokerage Agreement, and the WWMX Agreements, and all documents and certificates
to be delivered by the parties pursuant hereto collectively represent the entire
understanding and agreement between Buyer and Seller with respect to the subject
matter hereof. All schedules attached to this Agreement shall be deemed part of
this Agreement and incorporated herein, where applicable, as if fully set forth
herein. This Agreement supersedes all prior negotiations between
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Buyer and Seller, and all letters of intent and other writings related to such
negotiations, and cannot be amended, supplemented or modified except by an
agreement in writing which makes specific reference to this Agreement or an
agreement delivered pursuant hereto, as the case may be, and which is signed by
the party against which enforcement of any such amendment, supplement or
modification is sought.
11.7 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 this Section 11.7.
11.8 Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signature on each such counterpart
were upon the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed by Buyer and
Seller as of the date first above written.
SELLER: CBC OF BALTIMORE, INC.
By:_________________________________
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BUYER: AMERICAN RADIO SYSTEMS CORPORATION
By:_________________________________
Title:
FOR THE PURPOSES OF
SECTION 10 ONLY:
CAPITOL BROADCASTING COMPANY, INC.
By:_____________________________________
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Exhibit 10.85
TIME BROKERAGE AGREEMENT
TIME BROKERAGE AGREEMENT, made as of October 1, 1996 by and between
American Radio Systems Corporation (the "Programmer") and CBC of Baltimore, Inc.
(the "Licensee").
WHEREAS Licensee owns and operates Broadcast Station, WOCT (FM),
Baltimore, Maryland (the "Station") pursuant to licenses issued by the Federal
Communications Commission ("FCC").
WHEREAS Programmer is involved in radio station ownership and
operation.
WHEREAS the Licensee wishes to permit Programmer to provide programming
for the Station that is in conformity with the Stations and FCC policies for
time brokerage arrangements and as set forth herein.
WHEREAS Programmer agrees to use the Station exclusively to broadcast
such programming of its selection that is in conformity with all rules,
regulations and policies of the FCC and subject to Licensee's full authority to
control the operation of the Station.
WHEREAS Programmer and Licensee agree to work in a cooperative fashion
to make their time brokerage agreement work to the benefit of both parties and
as contemplated in this Agreement.
WHEREAS, Programmer intends to enter into a certain Asset Purchase
Agreement with Licensee in a form similar to Attachment II, (the "Asset Purchase
Agreement") under which Licensee shall agree to sell the Station to Programmer,
and pursuant to which Licensee and
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Programmer shall join in and file an application for FCC consent to assign the
Stations licenses from Licensee to Programmer; and
WHEREAS, Licensee's affiliate and Programmer have contemporaneously
entered into a Time Brokerage Agreement concerning Broadcast Station WWMX,
Baltimore, Maryland, and intend to enter into a certain Asset Purchase Agreement
concerning the sale of WWMX (hereinafter collectively referred to as the "WWMX
Agreements").
NOW, THEREFORE, in consideration of the above recitals and the mutual
promises and covenants contained herein, the parties, intending to be bound
legally, agree as follows:
Section 1
Lease of Station Air Time
1.1 Representations. Each of Licensee and Programmer represent that it
is authorized to enter into this Agreement and that this Agreement constitutes
the legal, valid and binding obligation of it, enforceable against it in
accordance with its terms.
1.2 Effective Date. The Effective Date of this Agreement shall be
October ____, 1996, or the date upon which termination of Hart-Scott-Rodino
occurs, whichever is later.
1.3 Scope. During the Term (as defined in Section 6.1), Licensee shall
make available to Programmer time on the Station as set forth in this Agreement.
Programmer shall deliver such programming, at its expense, to the Station's
transmitter facilities or other authorized remote control point as reasonably
designated by Licensee. Subject to Licensee's reasonable approval, as set forth
in this Agreement, Programmer shall provide entertainment programming of its
selection complete with commercial matter, news, public service announcements
and other suitable programming to the Licensee up to one hundred sixty-four
(164) hours per week. The Licensee may use the remaining four hours per
broadcast week for the broadcast of its own regularly scheduled news, public
affairs and other non-entertainment
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programming and shall provide Programmer with advance written notice of such
hours of programming. All time not reserved by or designated for Licensee shall
be available for use by Programmer and no other party.
1.4 Consideration. As consideration for the air time made available
hereunder, Programmer shall (a) pay to Licensee a monthly fee of One Hundred
Thirty-Seven Thousand Five Hundred Dollars ($137,500.00), payable no later than
the fifth (5th) business day of the month to which such fee pertains, (b) pay to
Licensee the cost of Programmer's telephone usage, postal service usage and
electrical usage at the studio for the Stations and Programmer, and (c) shall
reimburse Licensee additional amounts as set forth in Section 1.6 hereof. In the
event the Effective Date begins on a day other than the first day of a month,
the monthly fee shall be adjusted on a pro-rata basis.
1.5 Licensee Operation of the Station. Licensee will have full
authority, power and control over the operations of the Station during the term
of this Agreement. Licensee will bear all responsibility for the Station's
compliance with all applicable provisions of the Communications Act of 1934, as
amended (the "Communications Act"), the rules, regulations and policies of the
FCC and all other applicable laws. Licensee shall not knowingly take any action
or omit to take any action which would have an adverse impact upon the Licensee,
its assets utilized in the operation of the Station, the Station or upon
Licensee's ability to perform this Agreement. All reports, annual regulatory
fees and applications required to be filed with the FCC or any other
governmental body have been, and during the course of the term of this Agreement
or any extension thereof, will be filed by Licensee in a timely and complete
manner.
1.6 Licensee Responsibility. Licensee shall be solely responsible for
and pay in a timely manner the salaries, taxes, insurance and related costs for
all personnel it employs at the Station.
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1.7 Programmer Responsibility. Programmer shall be solely responsible
for any expenses incurred in connection with its sale of advertising time
hereunder (including without limitation sales commissions) in connection with
the programming provided by Programmer hereunder (the "Programming") and in the
origination and/or delivery of the Programming to the integration point at the
studio for the Station and for any publicity or promotional expenses incurred by
Programmer, including without limitation, all ASCAP, BMI, and SESAC music
license fees attributable to the Programming. Programmer shall furnish or cause
to be furnished the artistic personnel and material for the production of the
Programming. Programmer shall employ and be responsible for the salaries, taxes,
insurance and related costs for all personnel used in the production of the
Programming and all sales personnel (including salespeople, traffic personnel,
and programming staff). Programmer shall in addition be responsible for other
non-capital ordinary, and customary operating expenses of the Station.
1.8 (a) Contracts. Programmer will not be required to assume
performance of any of the Licensee's contracts and leases pertaining to the
Station except for the contracts and leases listed on Attachment III hereof.
Programmer will enter into no third-party contracts, leases or agreements which
will bind Licensee in any way except with Licensee's prior written approval.
Licensee will enter into no third-party contracts, leases or agreements which
will bind Programmer in any way except with Programmer's prior written approval.
Programmer shall assume the obligations of Licensee, to provide advertising time
under the terms of existing trade and barter agreements and all Contracts with
advertisers for the sale of time or talent on the Stations for cash as listed on
Attachment III-A and Licensee shall assign all of its rights under those trade
and barter agreements and agreements for cash to Programmer. Upon termination of
this Agreement pursuant to Section 6, Programmer shall assign back to Licensee
all of its rights
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to, and Licensee shall assume all of the liabilities and obligations under, the
contracts and agreements identified in this Section 1.8 (a) (the "Contracts").
(b) Prorations. All expenses and income arising under the
Contracts shall be prorated between Licensee and Programmer as of the Effective
Date in a manner such that the costs and benefits thereunder through the date
immediately preceding the Effective Date shall be for the account of Licensee,
and, thereafter, during the term of this Agreement, for the account of
Programmer. Such proration shall include an adjustment for the value of any and
all advertising to be run for consideration other than cash ("Trade
Agreements").
1.9 (a) Broadcasting Obligations. During the Term, except as provided
in Section 6.2, Licensee will broadcast the Programming in its entirety
(including commercials), on either the main or auxiliary facilities of the
Station, without interruption, deletion or addition of any kind, except as set
forth below:
(i) Licensee shall have the right to delete and not
to broadcast any material contained in the Programming which it regards as being
unsuitable for broadcast or the broadcast of which it believes would be contrary
to the public interest, and Licensee shall have the right to substitute such
programming therefor as it deems appropriate;
(ii) Licensee may temporarily refrain from
broadcasting the Programming between the hours of 12:30 a.m. and 5:30 a.m. (or
at some other hour in the event that weather conditions so require) in order to
perform normal, customary and routine maintenance on the Stations transmitting
facilities; provided that Licensee shall use its best efforts to minimize the
frequency and duration of such interruptions;
(iii) Licensee may temporarily cease broadcasting the
Programming as a result of a natural disaster, act of public enemy or act of
God; provided that in any such case,
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Licensee will act expediently and use its best efforts to resume the broadcast
of the Programming as quickly as the applicable circumstances will allow; and
(iv) Licensee may temporarily refrain from
broadcasting the Programming as a result of, and during the duration of, (i) a
general electrical power outage affecting the area in which the Stations
transmitting equipment is located or (ii) a technical problem with the Station's
transmitting equipment which is outside of Licensee's control and which is not
directly or indirectly the result of any act or omission of Licensee or any of
its employees or agents; provided that in either such case, Licensee will act
expediently and use its best efforts to resume the broadcast of the Programming
as quickly as the applicable circumstances will allow.
Programmer shall not be entitled to any credit or refund of any fees in
the event of any of the events described in (i) - (iv) above.
(b) Hourly Credit. Programmer shall receive from Licensee, as
a refund consisting of a flat rate credit of $190.00 per hour ("Hourly Credit"),
for any part of the weekly one hundred sixty-four (164) hours of programming
time that Licensee uses to broadcast its own programming including periods
during which Licensee is unable, for any reason (except, as provided in Section
1.9(a) and except for Programmer's failure to deliver its programming to
Licensee), to broadcast the Programming. Such refunds to Programmer shall be
paid within ten (10) days of the end of each month.
1.10 Station Operation. Licensee shall notify Programmer in writing at
least five (5) business days prior to (i) making any changes in management
personnel, (ii) entering into any material contractual obligations, (iii)
purchasing equipment, or (iv) making any other material changes in the operation
of the Station. Licensee agrees to purchase such equipment or other material or
services which Programmer may reasonably suggest are necessary for the Station's
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operations provided that Programmer agrees to reimburse the Licensee for all
costs associated with such purchases including, without limitation,
installation, wiring and similar related costs.
1.11 Use of Stations' Studios. Licensee agrees to provide Programmer
with access to the Station's complete facilities including the studios and
broadcast equipment for use by Programmer, if it so desires, in providing the
Programming; provided, however, that Licensee shall maintain, for its sole use,
sufficient space at the Stations studios for its management level employees.
Under the overall supervision of Licensee, Programmer shall and may peacefully
and quietly have the full use of and enjoy the use of the Stations facilities,
studios and equipment free from any hindrance from any person or persons
whomsoever claiming by, through or under Licensee. Programmer shall use the
studios and equipment only for the purpose of producing programming for the
Station or for any other stations owned or time brokered by the Programmer
within the Baltimore, Maryland ADI and shall at all times be subject to the good
faith oversight of Licensee.
Section 2
Station Obligations to the Community of License
2.1 Licensee Authority. Notwithstanding any other provision of this
Agreement, Programmer recognizes that Licensee has certain obligations to
broadcast programming to meet the needs and interests of the community of
license for the Station. On a regular weekly basis the Licensee shall air
specific programming on issues of importance to the local community. Nothing in
this Agreement shall abrogate the unrestricted authority of the Licensee to
discharge its obligations to the public and to comply with the law, rules and
policies of the FCC with respect to meeting the ascertained needs and interests
of the public.
2.2 Additional Licensee and Programmer Obligations. Although both
parties shall cooperate in the broadcast of emergency information over the
Station, Licensee shall also retain
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the right to interrupt Programmer's programming in case of an emergency or for
programming which, in the reasonable good faith judgment of Licensee, is of
overriding public importance. Such interruption shall not entitle Programmer to
any credits on fees. Licensee shall continue to maintain a main studio, as that
term is defined by the FCC, within the Stations principal community contour,
shall maintain its local public inspection file within the community of license
and shall prepare and place in such inspection file its quarterly issues and
program lists on a timely basis. Programmer shall, upon request by Licensee,
provide Licensee on a timely basis with information with respect to certain of
Programmer's programs which should be included in Licensee's quarterly issues
and programs lists. Licensee shall also maintain the station logs, receive and
respond to telephone inquiries, and control and oversee any remote control point
for the Station.
2.3 Responsibility for Employees and Expenses. In accordance with
Section 1.7, Programmer shall employ and be solely responsible for the salaries,
taxes, insurance and related costs for all personnel employed by Programmer
(including, without limitation, salespeople, traffic personnel, board operators
and programming staff). Licensee will provide and be responsible for the Station
personnel employed by Licensee and necessary to fulfill Licensee's obligations
hereunder, and will be responsible for the salaries, taxes, insurance and
related costs for all the personnel it employs. All personnel shall be subject
to the overall supervision of Licensee, consistent with Programmer's right to
the use of the Stations facilities pursuant to Section 1.12 hereof.
Section 3
Station Programming Policies
3.1 Broadcast Station Programming Policy Statement. Licensee agrees to
adopt and enforce the Broadcast Station Programming Policy Statement set forth
hereto as Attachment IV
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(the "Policy Statement"), which may be amended from time to time by Licensee
upon notice to Programmer. Programmer agrees and covenants to comply in all
material respects with the Policy Statement, with all rules and regulations of
the FCC, and with all reasonable changes subsequently made by Licensee or the
FCC. If Licensee reasonably determines that a program supplied by Programmer
does not comply with the Policy Statement it may suspend or cancel such program
and shall provide written notice to Programmer of such decision. All Programming
shall comply with the Policy Statement, the Communications Act and FCC rules and
regulations. All advertising spots and promotional material or announcements
included in the Programming shall comply with applicable federal, state and
local regulations and policies, the Policy Statement, and shall be produced in
accordance with quality standards established by Programmer.
3.2 Licensee Control of Programming. Programmer recognizes that
Licensee has full authority to control the operation of the Station. The parties
agree that Licensee's authority includes but is not limited to the right to
reject or refuse such portions of the Programming which Licensee believes, in
its sole discretion, to be unsatisfactory, unsuitable or contrary to the public
interest. Programmer shall have the right to change the Programming elements
and/or format of the Programming by giving Licensee at least twenty-four (24)
hours notice of such changes.
3.3 Programmer Compliance with Copyright Act. Programmer represents and
warrants to Licensee that Programmer has full authority to broadcast the
Programming on the Station, and that Programmer shall not broadcast any
slanderous material or any material in violation of any law, rule, regulation,
including regulation without limitation the Communications Act, the rules and
regulations of the FCC or the Copyright Act. All music supplied by Programmer
shall be: (i) licensed by ASCAP, SESAC or BMI; (ii) in the public domain; or
(iii) cleared at the source by Programmer. Consistent with Section 1.7 hereof,
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Licensee will maintain ASCAP, BMI and SESAC licenses as necessary. The right to
use the Programming and to authorize its use in any manner shall be and remain
vested in Programmer.
3.4 Sales. Programmer shall retain all revenues from the sale of
advertising time within the Programming. Programmer may sell advertising,
consistent with applicable rules, regulations and the Policy Statement, on the
Station in combination with any other broadcast stations of its choosing.
Programmer shall be responsible for payment of the commissions due to any
national sales representative engaged by it for the purpose of selling national
advertising which is carried during the Programming. Licensee shall retain all
revenues from the sale of Stations advertising during the hours each week in
which the Licensee airs its own non-entertainment programming, with the
exception provided for certain political advertising as set forth in Section 5.2
herein.
3.5 Payola. Programmer agrees that it will not accept any
consideration, compensation, gift or gratuity of any kind whatsoever, regardless
of its value or form, including, but not limited to, a commission, discount,
bonus, material, supplies or other merchandise, services or labor (collectively
"Consideration"), whether or not pursuant to written contracts or agreements
between Programmer and merchants or advertisers, unless the payer is identified
in the program for which Consideration was provided as having paid for or
furnished such Consideration, in accordance with the Communications Act and FCC
requirements. Programmer agrees at the reasonable request of Licensee, to
execute and provide Licensee with a Payola Affidavit, substantially in the form
attached hereto as Attachment V.
3.6 Staffing Requirements. Licensee shall comply with the main studio
staff requirements as specified by the FCC.
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Section 4
Indemnification
4.1 Programmer's Indemnification. Programmer shall indemnify and hold
harmless Licensee, its partners and their respective directors, officers and
stockholders from and against any and all claims, losses, costs, liabilities,
damages, FCC forfeitures and expenses (including reasonable legal fees and other
expenses incidental thereto) of every kind, nature and description, including
but not limited to, those arising out of (a) Licensee's broadcast of the
Programming and (b) liabilities of Programmer to its employees and other third
parties.
4.2 Licensee's Indemnification. Licensee shall indemnify and hold
harmless Programmer from and against any and all claims, losses, costs,
liabilities, damages, and expenses (including reasonable legal fees and other
expenses incidental thereto) of every kind, nature and description, arising out
of Licensee's broadcasts of programming other than the Programming to the extent
permitted by law.
4.3 Limitation. Neither Licensee nor Programmer shall be entitled to
indemnification pursuant to this section unless such claim for indemnification
is asserted in writing delivered to the other party.
4.4 Time Brokerage Challenge. If this Agreement is challenged at the
FCC, whether or not in connection with the Stations license renewal application,
counsel for the Licensee and counsel for the Programmer shall jointly defend the
Agreement and the parties' performance thereunder throughout all FCC proceedings
at the sole expense of the Programmer. If portions of this Agreement do not
receive the approval of the FCC staff, then the parties shall reform the
Agreement or, at Programmer's option and expense, seek reversal of the staff
decision and approval from the full FCC on appeal.
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Section 5
Access to Programmer Materials and Correspondence
5.1 Confidential Review. Prior to the provision of any of the
Programming by Programmer to Licensee under this Agreement, Programmer shall
acquaint the Licensee with the nature and type of the programming to be
provided. Licensee, solely for the purpose of ensuring Programmer's compliance
with the law, FCC rules and the Stations policies, shall be entitled to review
at its discretion from time to time on a confidential basis any programming
material it may reasonably request. Programmer shall promptly provide Licensee
with copies of all correspondence and complaints received from the public
(including any telephone logs of complaints called in), copies of all program
logs and promotional materials. However, nothing in this section shall entitle
Licensee to review the internal corporate or financial records of the
Programmer.
5.2 Political Advertising. Programmer shall cooperate with Licensee to
assist Licensee in complying with all rules of the FCC regarding political
advertising. Programmer shall supply such information promptly to Licensee as
may be necessary to comply with the lowest unit rate, equal opportunities and
reasonable access requirements of federal law. To the extent that Licensee deems
it necessary to assure its performance of its political time obligations,
Programmer shall release advertising availabilities to Licensee; provided,
however, that all revenues received by Licensee as a result of such a release of
advertising time shall promptly be paid to Programmer, net of any direct
out-of-pocket costs incurred by Licensee in selling the political advertising
and administering its broadcast.
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Section 6
Termination and Remedies Upon Default
6.1 Term; Termination. The term of this Agreement (the "Term") shall
commence on the date of this Agreement and shall terminate on the earlier of (i)
the date of any termination of the Asset Purchase Agreement pursuant to the
terms thereof, (ii) the date of any termination of this Agreement pursuant to
this Section 6.1, (iii) the date of any termination of either of the WWMX
Agreements, and (iv) the Closing Date (as defined in the Asset Purchase
Agreement). In addition to other remedies available at law or equity and the
provisions of Section 1.2 hereof, this Agreement may be terminated as set forth
below by either Licensee or Programmer by written notice to the other if the
party seeking to terminate is not then in material default or breach hereof,
upon the occurrence of any of the following:
(a) this Agreement is declared invalid or illegal in whole or
substantial part by an order or decree of an administrative agency or court of
competent jurisdiction and such order or decree has become final and no longer
subject to further administrative or judicial review;
(b) the other party is in material breach of its obligations
hereunder and has failed to cure such breach within thirty (30) days of notice
from the non-breaching party, which notice shall specify the breach and the
action necessary to cure such breach;
(c) the mutual consent of both parties
(d) there has been a material change in FCC rules, policies or
precedent that would cause this Agreement to be in violation thereof and such
change is in effect and not the subject of an appeal or further administrative
review.
Upon any termination of this Agreement, Licensee shall have no further
obligation to provide to Programmer any broadcast time or broadcast transmission
facilities and Programmer shall have no further obligations under Section 1.6(b)
hereof or to make any payments to
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Licensee under Section 1.4 hereof. Programmer shall be responsible for all debts
and obligations of Programmer to third parties based upon the purchase of air
time and use of Licensee's transmission facilities including, without
limitation, accounts payable, barter agreements and unaired advertisements, but
not for Licensee's federal, state and local income and business franchise tax
liabilities or taxes levied upon Licensee's personal property. In the event of
any termination, Programmer shall be entitled to retain all notes and accounts
receivable and other receivables of the Station accrued as of the date of such
termination (the "Termination Date") relating to advertising time sold by
Programmer between the date of this Agreement and the Termination Date
("Programmer Receivables"), and shall be entitled to pursue collection thereof.
Licensee shall pay over to Programmer any sums received by Licensee on account
of the Programmer Receivables. Notwithstanding anything herein to the contrary,
to the extent that any invoice, bill or statement submitted to Licensee after
the Termination Date or any payment made by Programmer prior to the Termination
Date relates to expenses incurred in operating the Station, for periods both
before and after the Termination Date, such expenses shall be prorated between
Licensee and Programmer in accordance with the principle that Programmer shall
be responsible for expenses allocable to the period prior to the Termination
Date and Licensee shall be responsible for expenses allocable to the period on
and after the Termination Date. Each party agrees to reimburse the other party
for expenses paid by the other party to the extent appropriate to implement the
proration of expenses pursuant to the preceding sentence.
6.2 Programmer's Remedies for Operational Deficiencies. Programmer
shall have the following remedies for deficiencies in or events related to
Licensee's transmitting facility:
(a) If Programmer receives during the first sixty (60) days of
this Agreement a report of a consulting engineer, chosen by Programmer, which
concludes that the Station are not operating in all material respects within the
parameters authorized by the FCC or that the
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Station's actual coverage of the market is materially less than such
authorization allows, Licensee shall be obligated, at its expense, to take such
steps as are reasonably necessary to restore the effective coverage or operating
parameters of the relevant Station or demonstrate, by the use of the report of
another consulting engineer, hired at its expense, that the coverage or
operating parameters are not materially deficient. If the Stations effective
coverage or operating parameters continue to be materially deficient within
thirty (30) days of notice of the coverage or operating deficiencies, then
Programmer shall be entitled to a refund, equal to the Hourly Credit amount set
forth in Section 1.9 for each hour of deficiency until such deficiencies are
corrected and such refunds shall be made within ten (10) days of the end of the
month.
(b) If for a period of five (5) consecutive days or more
Licensee reduces its transmitter output power on the Station by fifty percent
(50%) or more, Programmer may elect to require Licensee to pay a refund equal to
one half of the Hourly Credit amount set forth in Section 1.9 for so long each
hour that such power reduction continues to occur if Programmer has, in fact,
been required to make rebates and/or other financial accommodations to its
advertisers as a result of such power reduction. Such refund shall be reflected
in a refund payment by Licensee to Programmer within ten (10) days of the end of
the month in which such power reduction occurs.
(c) If, due to damage to or failure of transmission equipment,
the Station is off the air for five (5) consecutive days or for a total of one
hundred twenty (120) hours during any thirty (30) day period, Programmer shall
be entitled to a full refund, on a daily basis, equal to, the Hourly Credit
amount set forth in Section 1.9 for each hour the Stations are off the air, and
such refund shall be paid within ten (10) days of the end of the month in which
the Stations are off the air.
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6.3 Other Agreements. During the Term, Licensee will not enter into any
other time brokerage, program provision, local management or similar agreement
with any third party with respect to the Station.
Section 7
Miscellaneous
7.1 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, their successors and assigns, including
specifically any purchaser of the Station from Licensee. Neither party may
assign its rights under this Agreement without the prior written consent of the
other party which shall not be unreasonable withheld, provided, however that (a)
Programmer has the absolute right to assign this Agreement and all of its rights
and obligations hereunder, following written notice to the Licensee, to an
entity controlled by American Radio Systems Corporation, provided that such
entity assumes all of Programmer's obligations under this Agreement and that
such assignment shall not release Programmer from any of its obligations under
this Agreement and (b) Licensee has the right to assign its payments hereunder
to its Lenders upon written notification to Programmer.
7.2 Call Letters. Upon request of Programmer and at Programmer's
expense, Licensee shall apply to the FCC for authority to change the call
letters of the Station (with the consent of the FCC) to such call letters that
Programmer shall reasonably designate. Licensee shall cooperate with Programmer
and receive Programmer's consent prior to making any change in the call letters
of the Stations.
7.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which together
will constitute one and the same instrument.
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7.4 FCC Certification (47 C.F.R. ss. 73.3555(a) (2) (ii). Pursuant to
Section 73.3555(a)(2)(ii) of the FCC's rules, Licensee certifies that it
maintains ultimate control over the Stations' facilities, including specifically
control over finances, personnel and programming at the Stations and the
Programmer certifies that this Agreement complies with the provisions of
Sections 73.3555(a)(1) and (e)(1) of the FCC's rules.
7.5 Entire Agreement. This Agreement, the Attachments hereto, the Asset
Purchase Agreement, and the WOCT Agreements embody the entire agreement and
understanding of the parties and supersede any and all prior agreements,
arrangements and understandings relating to matters provided for herein. No
amendment, waiver of compliance with any provision or condition hereof, or
consent pursuant to this Agreement will be effective unless evidenced by an
instrument in writing signed by the parties.
7.6 Taxes. Licensee and Programmer shall each pay its own ad valorem
taxes, if any, which may be assessed on such party's respective personal
property for the periods that such items are owned by such party. Programmer
shall pay all taxes if any, to which the consideration specified in Section 1.4
herein is subject, provided that Licensee is responsible for payment of its own
income taxes. Each party shall be responsible for any sales tax imposed on
advertising aired during the programming provided by that party.
7.7 Headings. The headings are for convenience only and will not
control or affect the meaning or construction of the provisions of this
Agreement.
7.8 Governing Law. The obligations of Licensee and Programmer are
subject to applicable federal, state and local law, rules and regulations,
including, but not limited to, the Communications Act, and the rules and
regulations of the FCC. The construction and performance of the Agreement will
be governed by the laws of the Commonwealth of Massachusetts.
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7.9 Notices. Any notice, demand or request required or permitted to be
given under the provisions of the Agreement shall be in writing and shall be
deemed to have been duly delivered on the date of personal delivery or on the
date of receipt if mailed by registered or certified mail, postage prepaid and
return receipt requested, and shall be deemed to have been received on the date
of personal delivery or on the date set forth on the return receipt, to the
following addresses, or to such other address as any party may request, in the
case of Licensee, by notifying Programmer, and in the case of Programmer, by
notifying Licensee.
To Licensee: CBC of Baltimore, Inc.
711 Hillsborough Street
Raleigh, NC 27603-1600
Attn: Robert J. Lind
Copies To: Capitol Broadcasting Company, Inc.
2619 Western Blvd.
Raleigh, NC 27605
Attn: James F. Goodmon
Capitol Broadcasting Company, Inc.
711 Hillsborough St.
Raleigh, NC 27603-1600
Attn: John M. Brennan
To Programmer: American Radio Systems Corporation
116 Huntington Avenue
Boston, MA 02116
Attn: Steven B. Dodge, President
Fax: (617) 375-7575
Copies To: American Radio Systems Corporation
116 Huntington Avenue
Boston, MA 02116
Attn: Michael B. Milsom, Esq.
Fax: (617) 375-7575
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Dow, Lohnes and Albertson
1200 New Hampshire Ave., N.W.
Suite 800
Washington, DC 20036
John R. Feore, Jr. Esq.
Fax: (202) 857-2900
7.10 Severability. If any provision of this Agreement or the
application thereof to any person or circumstances shall be invalid or
unenforceable to any extent, the 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.
7.11 Specific Performance. The parties recognize that in the event
Licensee should refuse to perform under the provisions of this Agreement,
monetary damages alone will not be adequate. Programmer shall therefore be
entitled to seek specific performance of all terms of this Agreement. In the
event of any action to enforce this Agreement, Licensee hereby waives the
defense that there is adequate remedy at law.
7.12 Arbitration. Any dispute arising out of or related to this
Agreement that Licensee and Programmer are unable to resolve by themselves shall
be settled by arbitration in Baltimore, Maryland by a panel of three
arbitrators. Licensee and Programmer shall each designate one disinterested
arbitrator and the two arbitrators designated shall select the third arbitrator.
The persons selected as arbitrators need not be professional arbitrators, and
persons such as lawyers, accountants and bankers shall be acceptable. Before
undertaking to resolve a dispute, each arbitrator shall be duly sworn faithfully
and fairly to hear and examine the matters in controversy and to make just award
according to the best of his or her understanding. 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 Licensee and Programmer. The costs and expenses of
the arbitration proceeding
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shall be assessed between Licensee and Programmer 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. No action at law or in equity based upon any claim arising out of or
related to this Agreement shall be instituted in any court by Licensee or
Programmer against the other except: (i) an action to compel arbitration
pursuant to this Section, (ii) an action to enforce the award of the arbitration
panel rendered in accordance with this Section; or (iii) a suit for specific
performance pursuant to Section 7.11.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
LICENSEE:
CBC OF BALTIMORE, INC.
By: _____________________________________
PROGRAMMER:
AMERICAN RADIO SYSTEMS CORPORATION
By: ____________________________________
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Exhibit 10.86
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated October 10, 1996, by and between
American Radio Systems Corporation, a Delaware corporation ("Buyer"), and WWMX,
Inc., a North Carolina corporation ("Seller").
P R E M I S E S:
A. Seller is the licensee of and operates radio station WWMX(FM),
Baltimore, Maryland (the "Station") and pursuant to licenses issued by the
Federal Communications Commission (the "FCC").
B. Seller desires to sell, and Buyer wishes to buy, substantially all
of Seller's assets used or useful in the operation of the Station and the
broadcast business made possible thereby for the price and on the terms and
conditions hereafter set forth.
C. Seller and Buyer have contemporaneously entered into a certain Asset
Purchase Agreement concerning the sale of WOCT, Baltimore, Maryland (the "WOCT
Agreements") and intend to close on WWMX and WOCT at the same time.
AGREEMENTS:
In consideration of the above premises and the covenants and agreements
contained herein, Buyer and Seller agree as follows:
<PAGE>
SECTION 1
DEFINED TERMS
The following terms shall have the following meanings in this
Agreement:
1.1 "Accounts Receivable" means the rights of Seller to payment for
services rendered (including sale of time or talent on the Station for cash) by
Seller prior to the TBA Date as reflected on the billing records of Seller
relating to the Station.
1.2 "Assets" means the tangible and intangible assets owned and used or
useful in connection with the conduct of the business or operations of the
Station, which assets are being sold, transferred, or otherwise conveyed to
Buyer hereunder, as specified in detail in Section 2.1.
1.3 "Assumed Contracts" means (i) all Contracts listed in Schedule 3.7,
(ii) any Contracts entered into by Seller in the ordinary course of business
between the date hereof and the Closing Date which would have been listed on
Schedule 3.7 had they been in existence on the date hereof and which Buyer
agrees in writing to assume, (iii) all Contracts in existence on the Closing
Date which meet the criteria set forth in Section 3.7 (i) - (iii) for exclusion
from Schedule 3.7, and (iv) all Contracts with advertisers for the sale of time
or talent on the Station for cash entered into in the ordinary course of
business.
1.4 "Closing" means the consummation of the transaction contemplated by
this Agreement in accordance with the provisions of Section 8.
1.5 "Closing Date" means the date of the Closing specified in Section
8.1.
1.6 "Consents" means all of the consents, permits or approvals of
government authorities and other third parties necessary to transfer the Assets
to Buyer or otherwise to consummate the transaction contemplated hereby,
including without limitation the consents of the parties to those Contracts
designated in Schedule 3.7 with an asterisk.
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1.7 "Contracts" means all agreements and leases, written or oral
(including any amendments and other modifications thereto) to which Seller is a
party or which are binding upon Seller and directly affect the assets or the
business or operations of the Station, and (i) which are in effect on the date
hereof, or (ii) which are entered into by Seller in the ordinary course of
business between the date hereto and the Closing Date.
1.8 "Escrow Deposit" shall mean the sum of Three Million Dollars
($3,000,000) held by First Union National Bank as Escrow Agent pursuant to an
Escrow Agreement of even date, by and among Buyer, Seller, and Escrow Agent.
1.9 "Excluded Assets" shall mean those assets described or set forth in
Section 2.2 herein and on Schedule 2.2 hereto.
1.10 "FCC Consent" means action by the FCC granting its consent to the
assignment of the FCC Licenses to Buyer as contemplated by this Agreement.
1.11 "FCC Licenses" means all of the licenses, permits and other
authorizations issued by the FCC to Seller in connection with the conduct of the
business or operations of the Station.
1.12 "Final Order" means a written action, order or public notice
issued by the FCC, setting forth the FCC Consent and (a) which has not been
reversed, stayed, enjoined, set aside, annulled or suspended, and (b) with
respect to which (i) no requests have been filed for administrative or judicial
review, reconsideration, appeal or stay, and the time for filing any such
requests and for the FCC to review the action on its own motion has expired, or
(ii) in the event of review, reconsideration or appeal that does not result in
the FCC consent being reversed, stayed, enjoined, set aside, annulled or
suspended, the time for further review, reconsideration or appeal has expired.
1.13 "Licenses" means all of the licenses and other authorizations,
including the FCC Licenses, and "Permits" means all construction permits and
other permits, issued by the FCC, the
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Federal Aviation Administration ("FAA"), and any other federal, state or local
governmental authorities to Seller in connection with the conduct of the
business or operations of the Station.
1.14 "Personal Property" means all of the machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, spare
parts, and other tangible personal property which are owned or leased by Seller
and used or useful as of the date hereof in the conduct of the business or
operations of the Station, plus such additions thereto and deletions therefrom
arising in the ordinary course of business between the date hereof and the
Closing Date.
1.15 "Purchase Price" means the purchase price specified in Section
2.3.
1.16 "Real Property" means all of the leasehold interests, licenses,
rights to access, right-of-way, and other leasehold property interest owned by
Seller and identified on Schedule 3.5 hereof plus such additions thereto and
deletions therefrom arising in the ordinary course of business between the date
hereof and the Closing Date.
1.17 "TBA Date" means the date of commencement of effectiveness of the
Time Brokerage Agreement.
1.18 "Time Brokerage Agreement" means the Time Brokerage Agreement
entered into by Seller and Buyer in substantially the form set forth in Schedule
6.1 hereto.
SECTION 2
SALE AND PURCHASE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and conditions set
forth in this Agreement, Seller hereby agrees to transfer and deliver to Buyer
on the Closing Date, and Buyer agrees to purchase, all of the Assets, free and
clear of any claims, liabilities, mortgages, liens,
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pledges, conditions, charges, or encumbrances of any nature whatsoever (except
for those permitted in accordance with Section 2.5, 3.5 or 3.6 below), more
specifically described as follows:
(a) The Personal Property;
(b) The Real Property;
(c) The Licenses;
(d) The Assumed Contracts;
(e) All trademarks, trade names, service marks and all other
intellectual property and similar intangible assets relating to the Station,
including those listed in Schedule 3.9 hereto;
(f) All of the Seller's proprietary information, which relate
to the Station, including without limitation, technical information and data,
machinery and equipment warranties, maps, computer discs and tapes, plans,
diagrams, blueprints, and schematics, including filings with the FCC which
relate to the Station, if any;
(g) All choices in action and rights under warranties of
Seller relating to the Station or the Assets, if any;
(h) All books and records relating exclusively to the business
or operations of the Station, including executed copies of the Assumed
Contracts, and all records required by the FCC to be kept, subject to the right
of Seller to have such books and records made available to Seller for a
reasonable period, not to exceed three (3) years; and
(i) All intangible assets of Seller relating to the Station
not specifically described above.
2.2 Excluded Assets. The Assets shall exclude the following assets, in
addition to those listed on Schedule 2.2:
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(a) Seller's cash on hand as of the Closing Date and all other
cash in any of Seller's bank or savings accounts; any and all insurance
policies, letters of credit, or other similar items and any cash surrender value
in regard thereto; and any stocks, bonds, certificates of deposit and similar
investments.
(b) Any Contracts other than the Assumed Contracts;
(c) All books and records of Seller, subject to the right of
Buyer to have access and to copy for a period of three (3) years from the
Closing Date, and Seller's corporate records and other books and records related
to internal corporate matters and financial relationships with Seller's lenders;
(d) Any claims, rights and interest in and to any refunds of
federal, state or local franchise, income or other taxes or fees of any nature
whatsoever for periods prior to the Closing Date;
(e) Any pension, profit-sharing or employee benefit plans, and
any employment or collective bargaining agreement, except to the extent
specifically assumed in Section 2.4, 2.5 or 6.10 of this Agreement.
(f) The Accounts Receivable.
(g) Any other asset of Seller not located at either the
studio/office or transmitter site of Seller, or otherwise herein defined as an
Asset.
2.3 Purchase Price. The Purchase Price shall be Sixty Million Dollars
($60,000,000). The Purchase Price shall be adjusted to reflect (i) any
adjustments or prorations made and agreed to as of the TBA Date as provided in
Section 2.4 herein, (ii) to the extent the parties agree on a specific
allocation of such amount to the Noncompetition Agreement set forth on Section
6.5 herein, and (iii) the increase, if applicable, provided for in Section 6.12
herein.
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2.4 Adjustments and Prorations. All revenues arising from the Station
up until midnight on the day prior to the TBA Date, and all expenses arising
from the Station up until midnight on the day prior to the TBA Date, including
business and license fees (including any retroactive adjustments thereof),
utility charges, real and personal property taxes and assessments levied against
the Assets, accrued employee benefits such as vacation time and sick time,
property and equipment rentals, applicable copyright or other fees, sales and
service charges, taxes (except for taxes arising from the transfer of the Assets
hereunder), and similar prepaid and deferred items, shall be prorated between
Buyer and Seller in accordance with the principle that Seller shall receive all
revenues, and all refunds to Seller and deposits of Seller held by third
parties, and shall be responsible for all expenses, costs and liabilities
allocable to the conduct of the business or operations of the Station for the
period prior to the TBA Date, and Buyer shall receive all revenues and shall be
responsible for all expenses, costs and obligations allocable to the conduct of
the business or operations of the Station on the TBA Date and for the period
thereafter. Buyer shall receive credit to the extent of the value (as calculated
in Seller's financial statements consistent with past practice) of any and all
advertising time to be run following the TBA Date for which trade or barter
consideration has been received by the Seller prior to the TBA Date.
Notwithstanding the foregoing, there shall be no adjustment for, and
Seller shall remain solely liable with respect to, any Contracts not included in
the Assumed Contracts, or any other obligation or liability not being assumed by
Buyer in accordance with Section 2.5.
A. Any adjustments or prorations will, insofar as feasible, be
determined and paid on the TBA Date, with final settlement and payment being
made in accordance with the procedures set forth in Section 2.4B.
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B. Within sixty (60) days after the TBA Date, Buyer shall
deliver to Seller a certificate (the "Adjustment Certificate"), signed by a
senior officer of Buyer after due inquiry by such officer but without any
personal liability to such officer, providing a compilation of the adjustments
and prorations to be made pursuant to this Section 2.4, including any
adjustments and prorations made at the TBA Date, together with a copy of any
working papers relating to such Adjustment Certificate and such other supporting
evidence as Seller may reasonably request. If Seller shall conclude that the
Adjustment Certificate does not accurately reflect the adjustments and
prorations to be made pursuant to this Section 2.4, Seller shall, within thirty
(30) days after its receipt of the Adjustment Certificate, provide to Buyer its
written statement of any discrepancies believed to exist. Joseph L. Winn on
behalf of Buyer, and John M. Brennon on behalf of Seller, or their respective
designees, shall attempt jointly to resolve the discrepancies within fifteen
(15) days after receipt of Seller's discrepancy statement, which resolution, if
achieved, shall be binding upon all parties to this Agreement and not subject to
dispute or review. If such representatives cannot resolve the discrepancy to
their mutual satisfaction within such fifteen (15) day period, Buyer and Seller
shall, within the following ten (10) days, jointly designate a nationally known
independent public accounting firm to be retained to review the Adjustment
Certificate together with Seller's discrepancy statement and any other relevant
documents. The cost of retaining such independent public accounting firm shall
be borne equally by Buyer and Seller. Such firm shall report its conclusions as
to adjustments pursuant to this Section 2.4, which report shall be conclusive on
all parties to this Agreement and not subject to dispute or review. If, after
adjustment as appropriate with respect to the amount of the aforesaid
adjustments paid or credited at the TBA Date, Buyer is determined to owe an
amount to Seller, Buyer shall pay such amount to Seller, and if Seller is
determined to owe an amount to
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Buyer, Seller shall pay such amount thereof to Buyer, in each case within ten
(10) days of such determination.
2.5 Assumption of Liabilities and Obligations. Except to the extent
otherwise provided for in the Time Brokerage Agreement, Buyer shall pay,
discharge and perform as of the Closing Date (i) all of the obligations and
liabilities of Seller under the Licenses and the Assumed Contracts insofar as
they relate to the time period on and after the Closing Date, and arising out of
events occurring on or after the Closing Date, (ii) all obligations and
liabilities arising out of events occurring on or after the Closing Date related
to Buyer's ownership of the Assets or its conduct of the business or operations
of the Station on or after the Closing Date, and (iii) all obligations and
liabilities for which Buyer receives a proration adjustment hereunder. All other
obligations and liabilities of Seller, including (i) any obligations under any
Contract not included in the Assumed Contracts, (ii) any obligations under the
Assumed Contracts relating to the time period prior to the Closing Date, (iii)
any claims or pending litigation or proceedings relating to the operation of the
Station prior to the Closing Date, and (iv) those related to employees as set
forth in Section 6.9 herein shall remain and be the obligations and liabilities
solely of Seller.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Organization, Standing and Authority. Seller is a corporation duly
formed, validly existing and in good standing under the laws of the State of
North Carolina and is duly qualified to conduct its business in the State of
Maryland, which is the only jurisdiction where
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the conduct of the business or operations of the Station requires such
qualification. Seller has all requisite corporate power and authority (i) to
own, lease, and use the Assets as presently owned, leased, and used, and (ii) to
conduct the business or operations of the Station as presently conducted. Seller
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
Seller, hereunder and thereunder. Seller is not a participant in any joint
venture or partnership with any other person or entity with respect to any part
of the Station's operations or the Assets.
3.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement by Seller have been duly authorized by all
necessary corporate action on the part of Seller. This Agreement has been duly
executed and delivered by Seller and constitutes the legal, valid, and binding
obligation of Seller, enforceable against Seller in accordance with its terms
except as the enforceability hereof may be affected by bankruptcy, insolvency,
or similar laws affecting creditors' rights generally, or by court-applied
equitable remedies.
3.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents, 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) does not require the consent of any third party; (ii)
will not conflict with any provision of the Articles of Incorporation and
By-Laws of Seller; (iii) will not conflict with, result in a breach of, or
constitute a default under, any law, judgment, order, ordinance, decree, rule,
regulation or ruling of any court or governmental instrumentality, which is
applicable to Seller; (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
material agreement, instrument, license or permit to which Seller is a party or
by which may be bound; or (v) will not
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create any claim, liability, mortgage, lien, pledge, condition, charge, or
encumbrance of any nature whatsoever upon the Assets.
3.4 Licenses and Permits. Schedule 3.4 includes a true and complete
list of the Licenses and Permits. Seller has delivered to Buyer true and
complete copies of the Licenses and Permits (including any and all amendments
and other modifications thereto). As described in Schedule 3.4, the Licenses
were validly issued with the Seller designated thereon being the authorized
legal holder thereof. The Licenses comprise all of the licenses, permits and
other authorizations required from any governmental or regulatory authority for
the lawful conduct of the business or operations of the Station as presently
operated. Seller has no reason to believe that the Licenses will not be renewed
by the FCC or other granting authority in the ordinary course.
3.5 Title to and Condition of Real Property. Schedule 3.5 contains
descriptions of all the Real Property (including the location of all
improvements thereon), which comprises all real property interest necessary to
conduct the business or operations of the Station as now conducted. Seller has
delivered to Buyer true and complete copies of all deeds, leases or other
material instruments pertaining to the Real Property (including any and all
amendments and other modifications of such instruments), all of which
instruments are valid, binding and enforceable in accordance with their terms.
Seller is not in material breach, nor to Seller's knowledge is any other party
in material breach, of the terms of any of such deeds, leases or other
instruments. All Real Property (including the improvements thereof) (i) is in
good condition and repair consistent with its present use reasonable wear and
tear excepted, (ii) is available for immediate use in the conduct of the
business or operations of the Station, and (iii) to Seller's best knowledge
materially complies as described in Schedule 3.5 with all applicable
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building, electrical and zoning codes and all regulations of any governmental
authority having jurisdiction. Seller has full legal and practical access to the
Real Property.
3.6 Title to and Condition of Personal Property. Schedule 3.6 contains
descriptions of all material items of the Personal Property, which comprises all
personal property used to conduct the business or operations of the Station as
now conducted. Except as described in Schedule 3.6, Seller owns and has good
title to all Personal Property. None of the Personal Property owned by Seller is
subject to any security interest, mortgage, pledge, conditional sales agreement,
or other lien or encumbrance, except for (i) liens for current taxes not yet due
and payable, and (ii) any other claims or encumbrances which are described in
Schedule 3.6 and annotated to indicate that such claims or encumbrances shall be
removed prior to or at Closing. Except as shown in Schedule 3.6, the Personal
Property taken as a whole is in good operating condition and repair (ordinary
wear and tear excepted), and is available for immediate use in the business or
operations of the Station, and the transmitting and studio equipment included in
the Personal Property (i) has been maintained consistent with FCC rules and
regulations, and (ii) will permit the Station and any unit auxiliaries thereto
to operate in accordance with the terms of the FCC Licenses and the rules and
regulations of the FCC, and with all other applicable federal, state and local
statutes, ordinances, rules and regulations.
3.7 Contracts. Schedule 3.7 contains descriptions of all the Contracts
except for: (i) contracts with advertisers for the sale of time or talent on the
Station for cash and substantially at rate card and which are not prepaid and
which may be cancelled by the Station without penalty on not more than thirty
(30) days notice, (ii) employment contracts and miscellaneous service contracts
terminable at will without penalty, and (iii) other contracts not involving
either aggregate liabilities under all such contacts exceeding Twenty Thousand
Dollars ($20,000) or any material nonmonetary obligation. Seller has delivered
to Buyer true and complete copies of
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all written Contracts, and true and complete memoranda of all oral Contracts
(including any and all amendments and other modifications to such Contracts).
Other than the Contracts, the Seller requires no contract or agreement to enable
it to carry on its business as presently conducted. All of the Assumed Contracts
are in full force and effect, and are valid, binding and enforceable in
accordance with their terms, except as the enforceability thereof may be
affected by bankruptcy, insolvency or similar laws affecting creditors' rights
generally, or by court-applied equitable remedies. Seller is not in material
breach, nor to Seller's knowledge is any other party in material breach, of the
terms of any such Contracts. Except as expressly set forth in Schedule 3.7, the
Seller is not aware of any intention by any party to any Assumed Contract (i) to
terminate such contract or amend the terms thereof, (ii) to refuse to renew the
same upon expiration of its term, or (iii) to renew the same upon expiration
only on terms and conditions which are more onerous than those pertaining to
such existing contract. Except for the Consents, Seller has full legal power and
authority to assign its rights under the Assumed Contracts to Buyer in
accordance with this Agreement, and such assignment will not affect the
validity, enforceability and continuation of any of the Assumed Contracts.
3.8 Consents. Except for the FCC Consent provided for in Section 6.1
and the other Consents indicated in Schedule 3.7 or described in Schedule 3.8,
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 (i) to consummate this Agreement and the transaction contemplated
hereby, (ii) to permit Seller to assign or transfer the Assets to Buyer, or
(iii) to enable Buyer to conduct the business or operations of the Station in
essentially the same manner as such business or operations are presently
conducted.
3.9 Trademarks, Trade Names and Copyrights. Schedule 3.9 is a true and
complete list of all copyrights, trademarks, trade names, licenses, patents,
permits, jingles, privileges and
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other similar intangible property rights and interests (exclusive of those
required to be listed in Schedule 3.4) applied for, issued to or owned by
Seller, or under which Seller is licensed or franchised, and used or useful in
the conduct of the business or operations of the Station, all of which are valid
and in good standing and uncontested. Seller has delivered to Buyer copies of
all documents establishing such rights, licenses, or other authority. Seller is
not aware that it is infringing upon or otherwise acting adversely to any
trademarks, trade names, copyrights, patents, patent applications, know-how,
methods, or processes owned by any other person or persons, and there is no
claim or action pending, or to the knowledge of Seller threatened, with respect
thereto.
3.10 Financial Statements. True and complete copies of unaudited
financial statements of the Station containing balance sheets and statements of
income as at and for Seller's fiscal years ended December 31, 1993, 1994 and
1995 (collectively, the "Financial Statements") have been supplied to Buyer. The
Financial Statements are prepared in accordance with generally accepted
accounting principles consistently applied, except for the absence of footnotes,
are true and correct in all material respects, and present fairly the operating
income and financial condition of the Station as at their respective dates and
the results of operations for the periods then ended.
3.11 Insurance. All of the tangible property included in the Assets is
insured against loss or damage in amounts generally customary in the broadcast
industry. Schedule 3.11 comprises a true and complete list of all insurance
policies of Seller which insure any part of the Assets. All policies of
insurance listed in Schedule 3.11 are in full force and effect. During the
three-year period ending on the date hereof, no insurance policy of Seller on
the Assets or the Station has been cancelled by the insurer and no application
of Seller for insurance has been rejected by any insurer.
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3.12 Reports. Except where failure to do so would not have a material
adverse effect on the ownership or operation of the Station: all returns,
reports and statements which the Station is currently required to file with the
FCC or with any other governmental agency have been filed, and all reporting
requirements of the FCC and other governmental authorities having jurisdiction
thereof have been complied with; all of such reports, returns and statements are
substantially complete and correct as filed; and the Station's public inspection
file is located at the main studio and is in compliance with the FCC's rules and
regulations.
3.13 Employee Benefit Plans. Schedule 3.7 or Schedule 3.13 contains a
true and complete list as of the date of this Agreement of all employee benefit
plans or arrangements applicable to the employees of Seller employed at the
Stations, and all fixed or contingent liabilities or obligations of Seller with
respect to any person now or formerly employed by Seller at the Station,
including pension or thrift plans, individual or supplemental pension or accrued
compensation arrangements, contributions to hospitalization or other health or
life insurance programs, incentive plans, bonus arrangements and vacation, sick
leave, disability and termination arrangements or policies, including workers'
compensation policies. Seller has furnished or made available to Buyer true and
complete copies of all written documents or information with respect to employee
matters and arrangements at the Station, including without limitation, all
employee handbooks, rules and policies, plan documents, trust agreements,
employment agreements, summary plan descriptions, and descriptions of any
unwritten plans listed in Schedule 3.13. Any employee benefits and welfare plans
or arrangements listed in Schedule 3.13 were established and have been executed,
managed and administered without material exception in accordance with all
applicable requirements of the Internal Revenue Code of 1986, as amended, of the
Employee Retirement Income Security Act of 1974, as amended, and of other
applicable laws. Seller is not aware of the existence of any governmental audit
or
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examination of any of such plans or arrangements or of any facts which would
lead it to believe that any such audit or examination is pending or threatened.
There exists no action, suit or claim (other than routine claims for benefits)
with respect to any of such plans or arrangements pending or, to the knowledge
of Seller, threatened against any of such plans or arrangements, and Seller
possesses no knowledge of any facts which could give rise to any such action,
suit or claim.
3.14 Labor Relations. Seller is not a party to or subject to any
collective bargaining agreements with respect to the Station except as described
in Schedule 3.7 hereto. Seller has no written or oral contracts of employment
with any employee of the Station, other than those listed in Schedule 3.7.
Seller has provided Buyer with true and complete copies of all such written
contracts of employment and true and complete memoranda of any such oral
contracts. Seller, in the operation of the Station, has complied in all material
respects with all applicable laws, rules and regulations relating to the
employment of labor, including those related to wages, hours, collective
bargaining, occupational safety, discrimination, and the payment of social
security and other payroll related taxes, and it has not received any notice
alleging that it has failed to comply in any material respect with any such
laws, rules or regulations. No controversies, disputes, or proceedings are
pending or, to the best of its knowledge, threatened, between it and employees
(collectively) of the Station. No labor union or other collective bargaining
unit represents any of the employees of the Station. To the best knowledge of
Seller, 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 of Seller's employees at the Station.
3.15 Taxes. Seller has 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 be filed, and it has paid or caused to be paid all taxes
shown on said returns or on any tax assessment received by it to the
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extent that such taxes have become due, or has set aside on its books reserves
(segregated to the extent required by sound accounting practice) deemed by it to
be adequate with respect thereto. No events have occurred which could impose on
Buyer any transferee liability for any taxes, penalties or interest due or to
become due from Seller.
3.16 Claims, Legal Actions. Except as set forth in Schedule 3.16, and
except for any investigations and rule-making proceedings generally affecting
the broadcasting industry, there is no claim, legal action, counterclaim, suit,
arbitration, governmental investigation or other legal, administrative or tax
proceeding, nor any order, decree or judgment, in progress or pending, or to the
knowledge of Seller threatened, against or relating to Seller, the Assets, or
the business or operations of the Station, nor does Seller know of any basis for
the same. In particular, except as set forth in Schedule 3.16, but without
limiting the generality of the foregoing, there are no applications, complaints
or proceedings pending or, to the best of its knowledge, threatened (i) before
the FCC relating to the business or operations of the Station other than
applications, complaints or proceedings which affect the radio industry
generally, (ii) before any federal or state agency involving charges of illegal
discrimination by the Station under any federal or state employment laws or
regulations, or (iii) against Seller or the Station before any federal, state or
local agency involving environmental or zoning laws or regulations.
3.17 Compliance with Laws. To the best knowledge of Seller, Seller has
complied in all material respects with (i) the Licenses, and (ii) all applicable
federal, state and local laws, rules, regulations and ordinances relating to the
Station. To the best knowledge of Seller, neither the ownership or use, nor the
conduct of the business or operations, of the Station conflicts with rights of
any other person, firm or corporation.
3.18 Environmental Matters.
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(a) During Seller's period of ownership and, to the best
knowledge of Seller, during those of its Predecessor, there has been no
production, storage, treatment, recycling, disposal, use, generation, discharge,
release or other handling or disposition of any kind by Seller or any such
predecessor (collectively, "Handling") of any toxic or hazardous wastes,
substances, products, pollutants or materials of any kind, including, without
limitation, petroleum and petroleum products and asbestos, or any other wastes,
substances, products, pollutants or material regulated under any Environmental
Laws (as defined below) (collectively, "Hazardous Materials") at, in, on, from
or under the Real Property or any structure or improvement on the Real Property
which in any event is in material violation of environmental law. The operations
of Seller and, to Seller's best knowledge, those of its Predecessor, are and
have been conducted, as the case may be, in material compliance with all
applicable environmental laws. There are no pending or threatened actions,
suits, claims, demands, legal proceedings, administrative proceedings, requests
for information, or other notices, proceedings or requests (collectively,
Claims") against or upon Seller based on or relating to any Pre-Closing
Environmental Matters (as defined below) and Seller has no knowledge that any
such claims will be asserted. Environmental Laws means any and all Federal,
state or local laws, statutes, rules, regulations, plans, ordinances, codes,
licenses or other restrictions relating to health, safety or the environment,
including without limitation the Comprehensive Environmental Response,
Compensation and Liability Act, the Clean Air Act, the Safe Drinking Water Act,
the Toxic Substances Control Act and the Occupational Health and Safety Act.
Pre-Closing Environmental Matters means (i) the Handling of Hazardous Materials
on, at, in, from or under the Real Property prior to the Closing Date, including
without limitation, the effects of any Handling of Hazardous Materials within or
outside the boundaries of Real Property, the presence of any Hazardous Materials
in, on or under the Real Property or any improvements or structures
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thereon regardless of how such Hazardous Materials came to rest there, (ii) the
failure of Seller to be in compliance with Environmental Law or (iii) any other
act, omission, event or condition which could give rise to liability or
potential liability under any Environmental Law with respect to the Real
Property or the present or prior business of Seller.
(b) Buyer shall be entitled to order and have undertaken on
its behalf prior to closing a Phase I Environmental Assessment of the Real
Property, and shall be granted all cooperation and access by Seller reasonably
necessary to complete such Assessment. If the report of such Assessment
demonstrates or recommends remediation in order to cause the Real Property to
comply with Environmental Laws, Seller shall immediately undertake to arrange,
at its own expense, such remediation prior to Closing. Notwithstanding the
foregoing, in the event such remediation costs or is estimated to cost in excess
of Fifty Thousand Dollars ($50,000), Seller shall not be obligated to expend
such excess, but in such event Buyer may thereafter, at its option, (i) accept
the condition of the Real Property at Closing as so remediated, or (ii)
terminate its obligations to purchase the Station under this Agreement.
3.19 Full Disclosure. No representation or warranty made by Seller
herein nor any certificate, document or other instrument furnished or to be
furnished by Seller pursuant hereto contains or will contain any untrue
statement of a material fact made intentionally or in bad faith, or
intentionally or in bad faith omits or will omit to state any material fact
known to Seller and required to make the statements herein or therein not
misleading.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
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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, and shall be, at Closing, qualified to conduct business in the State
of Maryland. 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.
4.2 Authorization and Binding Obligation. The execution, delivery and
performance of this Agreement by Buyer have been duly authorized by all
necessary corporate action 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 hereof may be affected by bankruptcy, insolvency,
or similar laws affecting creditors' rights generally, or by court-applied
equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents, 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) does not require the consent of any third party; (ii)
will not conflict with the Certificate of Incorporation or Bylaws of Buyer;
(iii) will not conflict with, result in a breach of, or constitute a default
under, or accelerate or permit the acceleration of any performance required by
the terms of, any material agreement, instrument, licenses, or permit to which
Buyer is a party or by which Buyer may be bound.
4.4 FCC Qualification. Buyer has no knowledge of any facts which would,
under present law (including the Communications Act of 1934, as amended) and
present rules, regulations and practices of the FCC, disqualify Buyer as an
assignee of the licenses, permits and authorizations listed on Schedule 3.4
hereto, or as an owner and/or operator of the Station's Assets, and Buyer will
not take, or unreasonably fail to take, any action which Buyer knows or
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has reason to know would cause such disqualification (it being understood that
Buyer has an active duty to attempt to ascertain what would cause such
disqualification). Should Buyer become aware of any such facts, it will promptly
notify Seller in writing thereof and use its best efforts to prevent any such
disqualification. Buyer further represents and warrants that it is financially
qualified to meet all terms, conditions and undertakings contemplated by this
Agreement.
SECTION 5
COVENANTS OF SELLER
5.1 Pre-Closing Covenants. Except as contemplated by this Agreement or
with the prior written consent of Buyer, not to be unreasonably withheld,
between the date hereof and the Closing Date, Seller shall, subject to the terms
of the Time Brokerage Agreement, operate the Station in the ordinary course of
business in accordance with its past practices (except where such would conflict
with the following covenants or with Seller's other obligations hereunder), and
abide by the following negative and affirmative covenants:
A. Negative Covenants. Seller shall not do any of the
following:
(1) Compensation. Increase the compensation, bonuses or other
benefits payable or to be payable to any person employed in connection
with the conduct of the business or operations of the Station, except
in accordance with past practices;
(2) Contracts. Enter into any new Contracts except with prior
notice to Buyer if any one such Contract exceeds Five Thousand Dollars
($5,000) in value or payments, or if such Contracts in the aggregate
exceed Twenty Thousand Dollars ($20,000) in value or payment;
(3) Disposition of Assets. Sell, assign, lease, or otherwise
transfer or dispose of any of the Assets, except for assets consumed or
disposed of in the ordinary course of business, where no longer used or
useful in the business or operations of the Station or in connection
with the acquisition of replacement property of equivalent kind and
value;
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(4) Encumbrances. Create, assume or permit to exist any claim,
liability, mortgage, lien, pledge, condition, charge, or encumbrance of
any nature whatsoever upon the Assets, except for (i) those in
existence on the date of this Agreement, disclosed in Schedules 3.5 and
3.6, or permitted by Section 2.5, 3.5 or 3.6 and (ii) mechanics' liens
and other similar liens which will be removed prior to the Closing
Date;
(5) Licenses. Do any act or fail to do any act which resulted
in the expiration, revocation, suspension or modification of any of the
Licenses, or fail to prosecute with due diligence any applications to
any governmental authority in connection with the operation of the
Station;
(6) Rights. Waive any material right relating to the Station
or the Assets; or
(7) No Inconsistent Action. Knowingly take any action which is
inconsistent with its obligations hereunder or which could hinder or
delay the consummation of the transaction contemplated by this
Agreement.
B. Affirmative Covenants. Seller shall do the following:
(1) Access to Information. Upon prior notice, allow Buyer and
its authorized representatives reasonable access at mutually agreeable
times at Buyer's expense during normal business hours to the Assets and
to all other properties, equipment, books, records, Contracts and
documents relating to the Station for the purpose of audit and
inspection, and furnish or cause to be furnished to Buyer or its
authorized representatives all information with respect to the affairs
and business of the Station as Buyer may reasonably request, it being
understood that the rights of Buyer hereunder shall not be exercised in
such a manner as to interfere with the operations of the business of
Seller; provided that neither the furnishing of such information to
Buyer or its representatives nor any investigation made heretofore or
hereafter by Buyer shall affect Buyer's rights to rely on any
representation or warranty made by Seller in this Agreement, each of
which shall survive any furnishing of information or any investigation;
(2) Maintenance of Assets. Maintain all of the Assets or
replacements thereof and improvements thereon in current condition
(ordinary wear and tear excepted), and use, operate and maintain all of
the above assets in a reasonable manner, with inventories or spare
parts and expendable supplies being maintained at levels consistent
with past practices;
(3) Insurance. Maintain the existing insurance policies on the
Station and the Assets;
(4) Consents. Use its reasonable efforts to obtain the
Consents;
(5) Notification. Promptly notify Buyer in writing of any
unusual or material developments with respect to the assets of the
Station, and of any material change in any of the information contained
in Seller's representations and warranties contained in
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Section 3 hereof or in the schedules hereto, provided that such
notification shall not relieve Seller of any obligations hereunder;
(6) Contracts. Prior to the Closing Date, deliver to Buyer a
list of all Contracts entered into between the date hereof and the
Closing Date of the type required to be listed in Schedule 3.7,
together with the copies of such Contracts; and
(7) Compliance with Laws. Comply in all material respects with
all rules and regulations of the FCC, and all other laws, rules and
regulations to which Seller, the Station and the Assets are subject.
5.2 Post-Closing Covenants. After the Closing, Seller will take such
actions, and execute and deliver to Buyer such further deeds, bills of sale, or
other transfer documents as, in the reasonable opinion of counsel for Buyer and
Seller, may be necessary to ensure, complete and evidence the full and effective
transfer of the Assets to Buyer pursuant to this Agreement.
SECTION 6
SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent. The assignment of the FCC Licenses as contemplated by
this Agreement is subject to the prior consent and approval of the FCC.
A. Within ten (10) days after the execution of this Agreement,
Buyer and Seller shall file with the FCC an appropriate application for FCC
Consent. The parties shall prosecute said application with all reasonable
diligence and otherwise use their best efforts to obtain the grant of such
application as expeditiously as practicable. If the FCC Consent imposes any
condition on any party hereto, such party shall use its best efforts to comply
with such condition unless compliance would be unduly burdensome or would have a
material adverse effect upon it. If reconsideration or judicial review is sought
with respect to the FCC Consent, Buyer and Seller shall oppose such efforts to
obtain reconsideration or judicial review (but
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nothing herein shall be construed to limit any party's right to terminate this
Agreement pursuant to Section 9 of this Agreement).
B. The transfer of the Assets hereunder is expressly
conditioned upon (i) the grant of the FCC Consent without any materially adverse
conditions on Buyer, (ii) compliance by the parties hereto with the condition
(if any) imposed in the FCC Consent, and (iii) the FCC Consent, through the
passage of time or otherwise, becoming a Final Order, provided, though, that the
condition that the FCC Consent shall have become a Final Order may be waived by
Buyer, in its sole discretion.
6.2 Taxes, Fees and Expenses. Buyer shall pay all sales, transfer and
similar taxes and fees, if any, arising out of the transfer of the Assets
pursuant to this Agreement. All filing fees required by the FCC and the FTC (for
the HSR Filing) shall be paid equally by Seller and Buyer. 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 other representatives.
6.3 Brokers. Buyer and Seller each represents and warrants that neither
it 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 transaction
contemplated by this Agreement.
6.4 Time Brokerage Agreement. Buyer and Seller have entered into a Time
Brokerage Agreement attached hereto in Schedule 6.4.
6.5 Noncompetition Agreement. Buyer and Seller shall enter into at
Closing a Noncompetition Agreement in the form set forth in Schedule 6.5.
6.6 Confidentiality. Except as necessary for the consummation of the
transaction contemplated hereby, including Buyer's obtaining financing in any
form or means of its choosing
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related hereto, each party hereto will keep confidential any information which
is obtained from the other party in connection with the transaction contemplated
hereby and which is not readily available to members of the general public, and
will not use such information for any purpose other than in furtherance of the
transactions contemplated hereby. In the event this Agreement is terminated and
the purchase and sale contemplated hereby abandoned, each party will return to
the other party all documents, work papers and other written material obtained
by it in connection with the transaction contemplated hereby.
6.7 Cooperation. Buyer and Seller 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 Buyer and Seller shall execute such other documents as may be
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 hereunder. Notwithstanding
the foregoing, except as otherwise set forth herein, Buyer shall have no
obligation (i) to expend funds to obtain the Consents, or (ii) to agree to any
adverse change in any License or Assumed Contract to obtain a Consent required
with respect thereto.
6.8 Risk of Loss.
A. The risk of loss, damage or impairment, confiscation or
condemnation of any of the Assets from any cause whatsoever shall be borne by
Seller at all times prior to the completion of the Closing.
B. If any damage or destruction of the Assets or any other
event occurs which prevents signal transmission by the Station in the normal and
usual manner and Seller cannot restore or replace the Assets so that the
conditions are cured and normal and usual transmission
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is resumed before the Closing Date, the Closing Date shall be postponed, for a
period of up to one hundred and twenty (120) 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 the
Station's normal and usual transmission resumed within the one hundred and
twenty (120) day period specified above, Buyer may terminate this Agreement
forthwith without any further obligation hereunder by written notice to Seller.
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 Seller shall deliver to Buyer all insurance
proceeds received in connection with such damage or destruction of the Assets to
the extent not already expended by Seller arising in connection with such
restoration and replacement.
D. Notwithstanding any of the foregoing, Buyer may terminate
this Agreement forthwith without any further obligation hereunder by written
notice to Seller if any event occurs which prevents signal transmission by the
Station in a manner generally equivalent to its current operations for a
consecutive period of five (5) or a cumulative period of fourteen (14) days
after the date hereof.
6.9 Employee Matters.
A. Prior to or simultaneously with the execution of this
Agreement, Seller shall have provided to Buyer an accurate list of all current
employees of the Station together with a description of the terms and conditions
of their respective employment (including salary, bonus and other benefit
arrangements) and their duties as of the date of this Agreement, as well as the
annual salaries thereof. Seller shall promptly notify Buyer of any changes that
occur prior to Closing with respect to such information.
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B. Nothing contained in this Agreement shall confer upon any
employee of Seller any right with respect to continued employment by Buyer, nor
shall anything herein interfere with any right the Buyer may have after the TBA
Date to (i) terminate the employment of any of the employees then of Buyer at
any time, with or without cause, or (ii) establish or modify any of the terms
and conditions of the employment of the Buyer's employees in the exercise of its
independent business judgment.
C. Except as otherwise set forth herein, Buyer will not incur
any liability on account of Seller's employees in connection with the
transaction, including, without limitation, any liability on account of
unemployment insurance contributions, termination payments, retirement, pension,
profit-sharing, bonus, severance pay, disability, health, accrued vacation,
accrued sick lease (unless a pro-rated adjustment is made as to vacation or sick
leave) or other employee benefit plans, practices, agreements, or
understandings.
6.10 Accounts Receivable. At the TBA Date, Seller shall assign to Buyer
for collection purposes only all Accounts Receivable. Seller shall deliver to
Buyer on or as soon as practicable after the TBA Date a complete and detailed
statement showing the name, amount and age of each Account Receivable. Subject
to and limited by the following, collections of the Accounts Receivable will be
for the account of Seller. Buyer shall endeavor in the ordinary course of
business to collect the Accounts Receivable for a period ending upon the later
of (i) ninety (90) days after the TBA Date or (ii) the Closing Date (the
"Collection Period"). Any payment received by Buyer during the Collection Period
from any customer with an account which is an Account Receivable shall first be
applied in reduction of the Account Receivable. During the Collection Period,
Buyer shall furnish Seller with a list of, and pay over to Seller, the amounts
collected during such calendar month with respect to the Accounts Receivable on
a monthly basis. Buyer shall provide Seller with a final accounting on or before
the fifteenth
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(15th) day following the end of the Collection Period. Upon the request of
either party at and after such time, Buyer and Seller shall meet to mutually and
in good faith analyze any uncollected Account Receivable to determine if the
same, in their reasonable business judgment, are deemed to be collectable and if
Buyer desires to retain such Account in the interest of maintaining an
advertising relationship. As to each such Account, Buyer and Seller shall
negotiate a good faith value of such Account, which Buyer shall pay to Seller if
Buyer, in its sole discretion, chooses to retain such Account. Seller shall
retain the right to collect any Account as to which the parties are unable to
reach agreement as to a good faith value, and Buyer agrees to turn over to
Seller any payments received against any such Account. As Seller's agent, Buyer
shall not be obligated to use any extraordinary efforts or expend any sums to
collect any of the Accounts Receivable assigned to it for collection hereunder
or to refer any of such Accounts Receivable to a collection agency or to any
attorney for collection, and Buyer shall not make any such referral or
compromise, nor settle or adjust the amount of any such Account Receivable,
except with the approval of Seller. Buyer shall incur no liability to Seller for
any uncollected account unless Buyer shall have engaged in willful misconduct or
gross negligence in the collection of such account. During and after the
Collection Period, without specific agreement with Buyer to the contrary,
neither Seller nor its agents shall make any direct solicitation of the Accounts
Receivable for collection purposes except for Accounts retained by Seller after
the Collection Period.
6.11 Audit Cooperation. Seller agrees to fully cooperate, and use
reasonable efforts to cause its accounting firms to reasonably cooperate with
Buyer and at Buyer's expense, to the extent required for the Buyer to prepare
audited financial statements for the Station for the period of Seller's
ownership thereof. Seller further agrees to authorize the disclosure of such
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audited financial information is required by applicable law, regulations or
rules of any administrative or governmental agency, stock exchange or
self-regulatory agency.
6.12 HSR Filing. Buyer and Seller agree to fully cooperate in the
timely preparation and filing of all forms, documents and applications required
under the Hart-Scott-Rodino Act in conjunction with the transaction contemplated
hereunder (the "HSR Filing") in order to obtain necessary clearance thereunder.
Buyer and Seller further agree to diligently prosecute such application, and to
promptly respond to all inquiries and requests for further information
associated with such application.
6.13 Sale of WOCT(FM). Buyer and Seller specifically acknowledge their
intent that WOCT(FM) and WWMX(FM) be sold together and the Seller shall have no
obligation to sell either station unless Buyer purchases both. All provisions of
this Agreement and all other agreements shall be construed to effectuate this
intent.
SECTION 7
CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
7.1 Conditions of Obligations of Buyer. All obligations of Buyer at the
Closing hereunder are subject to the fulfillment prior to and at the Closing
Date of each of the following conditions any of which may be waived by Buyer in
whole or in part in its sole discretion in writing:
A. Representations and Warranties. The representations and
warranties of Seller in this Agreement shall be true and complete in all
material respects at and as of the Closing Date, except for changes contemplated
by this Agreement or as contemplated by the TBA, as though such representations
and warranties were made at and as of such time.
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B. Covenants and Conditions. Seller shall have in all material
respects performed and complied with the covenants, agreements, and conditions
required by this Agreement or as contemplated by the TBA to be performed or
complied with by it prior to or on the Closing Date.
C. Consents. Each of the Consents marked as "material" on
Schedule 3.7 shall have been duly obtained and delivered to Buyer with no
material adverse change to the terms of the License or Assumed Contract with
respect to which such Consent is obtained.
D. Licenses. Seller shall be the holder of the Licenses, and
there shall not have been any modification of any of such Licenses which has an
adverse effect on the Station or the conduct of its business or operations. No
proceeding shall be pending the effect of which would be to revoke, cancel, fail
to renew, suspend or modify adversely any of the Licenses.
E. Deliveries. Seller shall have made or stand willing and
able to make all the deliveries to Buyer set forth in Section 8.2
F. Financial Results. Seller shall have achieved Broadcast
Cash Flow at the Station, when combined with that of WOCT, of no less than Five
Million Dollars ($5,000,000) during the twelve month period ended June 30, 1996.
For this purpose, Broadcast Cash Flow shall mean net income from advertising
time sales excluding non-cash barter or trade transactions, if any, and after
restoring thereto amounts previously deducted for depreciation, amortization,
interest, management fees, retirement benefits and any other home office
allocations.
7.2 Conditions to Obligations of Seller. The obligations of Seller at
the Closing hereunder are subject to the fulfillment prior to and at the Closing
Date of each of the following conditions any of which may be waived by Seller in
whole or in part in its sole discretion in writing:
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A. Representations and Warranties. The 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, except for changes
contemplated by this Agreement, as though such representations and warranties
were made at and as of such time.
B. Covenants and Conditions. Buyer shall have in all material
respects performed and complied with the covenants, agreements, and conditions
required by this Agreement to be performed or complied with by it prior to or on
the Closing Date. Buyer shall have closed upon the purchase of substantially all
of the assets of station WOCT(FM).
C. Deliveries. Buyer shall have made or stand willing and able
to make all the deliveries set forth in Section 8.3
SECTION 8
CLOSING AND CLOSING DELIVERIES
8.1 Closing. The closing shall take place at 10:00am on a date, to be
set by Buyer, upon no less than five (5) and no more than fifteen (15) business
days written notice to Seller, upon the later of (i) the day upon which the FCC
Consent has become a Final Order, and (ii) January 1, 1997 (the "Closing Date"),
provided, though, that Buyer may waive the requirement for a Final Order and
schedule the Closing Date, with five (5) days written notice to Seller, at any
time after the receipt of FCC Consent. The closing of stations WWMX and WOCT
shall occur simultaneously. Closing shall be held at the offices of Buyer or
such other place as shall be mutually agreed to by Buyer and Seller.
8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller shall
deliver to Buyer the following, in form and substance reasonably satisfactory to
Buyer and its counsel:
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(a) Transfer Documents. Duly executed warranty deeds, 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 or its permitted assignees, free and clear of any claims, liabilities,
mortgages, liens, pledges, conditions, charges, or encumbrances of any nature
whatsoever (except for those permitted in accordance with Sections 2.5, 3.5 or
3.6 hereof);
(b) Consents. The original of each Consent marked as
"material" with an asterisk on Schedule 3.7;
(c) Officer's Certificate. A certificate, dated as of the
Closing Date, executed by a duly authorized officer of Seller, certifying: (i)
that the representations and warranties of Seller contained in this Agreement
are true and complete in all material respects as of the Closing Date, except
for changes contemplated by this Agreement or the TBA, as though made on and as
of that date; and (ii) that Seller has, in all material respects, performed its
obligations and complied with its covenants set forth in this Agreement to be
performed and complied with prior to or on the Closing Date;
(d) Secretary's Certificate. A certificate, dated as of the
Closing Date, executed by Seller's Secretary: (i) certifying that the
resolutions, as attached to such certificate, were duly adopted by such Seller's
Board of Directors, authorizing and approving the execution of this Agreement by
Seller and the consummation of the transaction contemplated hereby and that such
resolutions remain in full force and effect; and (ii) providing, as attachments
thereto, a certificate of good standing certified by an appropriate Maryland
state official; as of a date not more than fifteen (15) days before the Closing
Date and by Seller's Secretary as of the Closing Date, and a copy of Seller's
Articles of Incorporation and By Laws as in effect on the date hereof, certified
by Seller's Secretary as of the Closing Date;
(e) Tax, Lien and Judgment Searches. A search for UCC, lien
and judgment filings in the Secretary of State's records of the State of
Maryland, and in the records of those towns or cities where the Assets are
located, such searches having been made no earlier than fifteen (15) days prior
to the Closing Date;
(f) Licenses, Contracts, Business Records, Etc. Copies, if
available, of all licenses, Assumed Contracts, blueprints, schematics, working
drawings, plans, projections, statistics, engineering records, and all files and
records used by Seller in connection with its operations of the Station;
(g) Noncompetition Agreement. The Noncompetition Agreement as
set forth in Schedule 6.5; and
(h) Opinions of Counsel. Opinions of Seller's counsel and
communications counsel dated as of the Closing Date, and addressed to Buyer and
at Buyer's directions, to Buyer's lenders, substantially in the form of Schedule
8.2 hereto.
(i) Escrow Instructions. Joint instructions with Buyer to
Escrow Agent with respect to payment of Escrow Deposit to Seller as a portion of
the Purchase Price.
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8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer shall
deliver to Seller the following, in form and substance reasonably satisfactory
to Seller and its counsel:
(a) Purchase Price. The Purchase Price as provided in Section
2.3;
(b) Assumption Agreements. Appropriate assumption agreements
pursuant to which Buyer shall assume and undertake to perform Seller's
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 the President or Vice President of Buyer, certifying
(i) that the representations and warranties of Buyer contained in this Agreement
are true and complete in all material respects as of the Closing Date, except
for changes contemplated by this Agreement, as though made on and as of that
date, and (ii) that Buyer has, in all material respects, performed its
obligations and complied with its covenants set forth in this Agreement to be
performed or complied with on or prior to the Closing Date;
(d) Secretary's Certificate. A certificate, dated as of the
Closing Date, executed by Buyer's Secretary: (i) certifying that the
resolutions, as attached to such certificate, were duly adopted by Buyer's Board
of Directors, authorizing and approving the execution of this Agreement and the
consummation of the transaction contemplated hereby and that such resolutions
remain in full force and effect; and (ii) a copy of the corporate charter,
articles of incorporation and Bylaws of Buyer as in effect on the date hereof,
certified by Buyer's secretary as of the Closing Date;
(e) Opinion of Counsel. An opinion of Buyer's General Counsel
dated as of the Closing Date, substantially in the form of Schedule 8.3 hereto.
(f) Noncompetition Agreement. The Noncompetition Agreement as
set forth in Section 6.5.
(g) Escrow Instructions. Joint instructions with Seller to
Escrow Agent with respect to payment of Escrow Deposit to Seller as a portion of
the Purchase Price.
SECTION 9
RIGHTS OF BUYER AND SELLER
ON TERMINATION OR BREACH
9.1 Termination Rights. This Agreement may be terminated by either
Buyer or Seller if the terminating party is not then in breach of any material
provision of this Agreement, upon written notice to the other party, upon the
occurrence of any of the following:
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(a) If on the Closing Date (i) any of the conditions precedent
to the obligations of the terminating party set forth in Section 7 of this
Agreement shall not have been materially satisfied, and (ii) satisfaction of
such condition shall not have been waived by the terminating party;
(b) If the application for FCC Consent shall be set for
hearing by the FCC for any reason; or
(c) If the Closing shall not have occurred on or before
January 1, 1998.
Upon termination: (i) if neither party hereto is in breach of any material
provision of this Agreement, the parties hereto shall not have any further
liability to each other; (ii) if Seller shall be in breach of any material
provision of this Agreement, Buyer shall have only the rights and remedies
provided in Section 9.3 or (iii) if Buyer shall be in breach of any material
provision of this Agreement, Seller shall be entitled only to liquidated damages
as provided in Section 9.2 hereof. If, upon termination, Buyer shall not be in
breach of any material provision of this Agreement, the Escrow Deposit, plus all
interest or other proceeds from the investment thereof, less any compensation
due the Escrow Agent, shall be paid to Buyer.
9.2 Liquidated Damages. In the event this Agreement is terminated by
Seller due to a material breach by Buyer of its representations, warranties,
covenants and other obligations under this Agreement, then the Escrow Deposit
shall be paid to Seller as liquidated damages, it being agreed that the Escrow
Deposit shall constitute full payment for any and all damages suffered by Seller
by reason of Buyer's failure to close this Agreement. Buyer and Seller agree in
advance that actual damages would be difficult to ascertain and that the amount
of the Escrow Deposit is a fair and equitable amount to reimburse Seller for
damages sustained due to Buyer's failure to consummate this Agreement for the
above-stated reason. All interest or other proceeds
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from the investment of the Escrow Deposit, less any compensation due the Escrow
Agent, shall be paid to Seller.
9.3 Specific Performance. The parties recognize that in the event
Seller should refuse to perform under the provisions of this Agreement, monetary
damages alone will not be adequate. Buyer shall therefore be entitled, in
addition to any other remedies which may be available, including money damages,
to obtain specific performance of the terms of this Agreement. In the event of
any action to enforce this Agreement, Seller hereby waives the defense that
there is an adequate remedy at law.
9.4 Expenses Upon Default. In the event of a default by a party hereto
(the "Defaulting Party") which results in the filing of a lawsuit for damages,
specific performance, or other remedy the other party (the Nondefaulting Party)
shall be entitled to reimbursement by the Defaulting Party of reasonable legal
fees and expenses incurred by the Nondefaulting Party in the event the
Nondefaulting Party prevails.
SECTION 10
SURVIVAL OF REPRESENTATIONS AND WARRANTIES,
AND INDEMNIFICATION
10.1 Representations and Warranties. All representations and warranties
contained in this Agreement shall be deemed continuing representations and
warranties, and shall survive to the Closing Date, together with the covenants
contained herein, for a period of fifteen (15) months (the "Survival Period").
No claim for indemnification may be made under this Section 10 (except for
section 10.3(a) or related claims under Section 10.3(c)) after the expiration of
the Survival Period. Any investigations by or on behalf of any party hereto
shall not constitute a waiver as to enforcement of any representation or
warranty contained herein, except that insofar
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as any party has knowledge of any misrepresentation or breach of warranty at
Closing and such knowledge is documented in writing at Closing, such party shall
be deemed to have waived such misrepresentation or breach.
10.2 Indemnification by Seller. Seller and Seller's parent, Capital
Broadcasting Company, Inc. shall jointly and severally 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 covenants
by Seller contained herein or in any certificate, delivered to Buyer hereunder.
(b) Any and all obligations of Seller not assumed by Buyer
pursuant to the terms hereof;
(c) Any and all losses, liabilities or damages resulting from
Seller's operation or ownership of the Station prior to the Closing Date,
including any and all liabilities arising under the Licenses or the Assumed
Contracts which relate to events occurring prior to the Closing Date; and
(d) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, and reasonable costs and expenses, incident to any of
the foregoing or incurred in investigating or attempting to avoid the same or to
oppose the imposition thereof.
10.3 Indemnification by Buyer. Buyer shall indemnify and hold
Seller harmless against and with respect to, and shall reimburse Seller for:
(a) Any and all losses, liabilities or damages resulting from
any untrue representation, breach of warranty or nonfulfillment of any covenants
by Buyer contained herein or in any certificate delivered to Seller hereunder;
(b) Any and all losses, liabilities or damages resulting from
Buyer's operation or ownership of the Station on or after the Closing Date,
including any and all liabilities or obligations arising under the Licenses or
the Assumed Contracts which relate to events occurring after the Closing Date or
otherwise assumed by Buyer under this Agreement; and
(c) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, and reasonable costs and expenses, including reasonable
legal fees and expenses, incident to any of the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof.
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10.4 Procedures for Indemnification. The procedures for
indemnification shall be as follows:
A. The party claiming the indemnification (the "Claimant")
shall promptly give notice to the party from whom indemnification is claimed
(the "Indemnifying Party") of any claim, whether between the parties or brought
by a third party, specifying (i) the factual basis for such claim, and (ii) the
amount of 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
five (5) days after written notice of such action, suit or proceeding was given
to Claimant.
B. Following receipt of notice from the Claimant of a claim,
the Indemnifying Party shall have thirty (30) 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 representative(s) 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 said thirty (30) day
period (or any mutually agreed upon extension thereof) to the validity and
amount of such claim, or if the Indemnifying Party does not respond to such
notice, the Indemnifying Party shall immediately pay to the Claimant the full
amount of the claim. Buyer shall be entitled to apply any or all of the Accounts
Receivable collected on behalf of Seller to a claim as to which Buyer is
entitled to indemnification hereunder. If the Claimant and the Indemnifying
Party do not agree within said 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 Indemnifying Party shall
have the right at its own
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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 reasonable 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, the Claimant shall have the right to participate in the defense of such
claim at its own expense.
D. If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make all reasonable efforts
to reach a decision with respect thereto as expeditiously as possible.
E. 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.
F. The indemnification rights provided in Sections 10.2 and
10.3 shall extend to the shareholders, directors, officers, partners employees
and representatives of the 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.
SECTION 11
MISCELLANEOUS
11.1 Notices. All notices, demands, and requests required or permitted
to be given under the provisions of this Agreement shall be (i) in writing, (ii)
delivered by personal delivery, or sent by commercial delivery service or
registered or certified mail, return receipt requested, or by facsimile
transmission, with receipt confirmation, (iii) deemed to have been given on the
date
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of personal delivery or the date set forth in the records of the delivery
service or on the return receipt, and (iv) addressed as follows:
If to Seller: Capitol Broadcasting Company, Inc.
2619 Western Blvd.
Raleigh, NC 27605
Attn: James F. Goodmon, President
Fax: (919) 821-8733
with a copy
(which shall not
constitute notice) to: John M. Brennan, Sr. Vice President
Capitol Broadcasting Company
711 Hillsborough St.
Raleigh, NC 27603
Fax: (919) 890-6095
If to Buyer: American Radio Systems
116 Huntington Avenue
Boston, MA 02116
Attention: Steven B. Dodge, President
Fax: (617) 375-7575
with a copy
(which shall not
constitute notice) to: Michael B. Milsom, Vice President & General Counsel
American Radio Systems, Inc.
116 Huntington Avenue
Boston, MA 02116
Fax: (617) 375-7575
or to such other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
11.1.
11.2 Benefit and Binding Effect. Neither party hereto may assign this
Agreement without the prior written consent of the other party hereto, except
that Buyer may assign its rights and obligations under this Agreement to any
affiliated or unaffiliated entity, provided, however, that following which
assignment Buyer shall remain liable to Seller for all of Buyer's obligations
hereunder. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
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11.3 Governing Law. This Agreement shall be governed, construed, and
enforced in accordance with the laws of the State of Maryland.
11.4 Headings. The headings herein are included for ease of reference
only and shall not control or affect the meaning or construction of the
provisions of this Agreement.
11.5 Gender and Number. Words used herein, 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 required.
11.6 Entire Agreement. This Agreement, all schedules hereto, the Time
Brokerage Agreement, and the WOCT Agreements, and all documents and certificates
to be delivered by the parties pursuant hereto collectively represent the entire
understanding and agreement between Buyer and Seller with respect to the subject
matter hereof. All schedules attached to this Agreement shall be deemed part of
this Agreement and incorporated herein, where applicable, as if fully set forth
herein. This Agreement supersedes all prior negotiations between Buyer and
Seller, and all letters of intent and other writings related to such
negotiations, and cannot be amended, supplemented or modified except by an
agreement in writing which makes specific reference to this Agreement or an
agreement delivered pursuant hereto, as the case may be, and which is signed by
the party against which enforcement of any such amendment, supplement or
modification is sought.
11.7 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,
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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 this Section 11.7.
11.8 Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signature on each such counterpart
were upon the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed by Buyer and
Seller as of the date first above written.
SELLER: WWMX, INC.
By:_________________________________
BUYER: AMERICAN RADIO SYSTEMS CORPORATION
By:_________________________________
Title:
FOR THE PURPOSES OF
SECTION 10 ONLY:
CAPITOL BROADCASTING COMPANY, INC.
By:_____________________________________
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Exhibit 10.87
TIME BROKERAGE AGREEMENT
TIME BROKERAGE AGREEMENT, made as of October 1, 1996 by and between
American Radio Systems Corporation (the "Programmer") and WWMX, Inc. (the
"Licensee").
WHEREAS Licensee owns and operates Broadcast Station, WWMX(FM),
Baltimore, Maryland (the "Station") pursuant to licenses issued by the Federal
Communications Commission ("FCC").
WHEREAS Programmer is involved in radio station ownership and
operation.
WHEREAS the Licensee wishes to permit Programmer to provide programming
for the Station that is in conformity with the Stations and FCC policies for
time brokerage arrangements and as set forth herein.
WHEREAS Programmer agrees to use the Station exclusively to broadcast
such programming of its selection that is in conformity with all rules,
regulations and policies of the FCC and subject to Licensee's full authority to
control the operation of the Station.
WHEREAS Programmer and Licensee agree to work in a cooperative fashion
to make their time brokerage agreement work to the benefit of both parties and
as contemplated in this Agreement.
WHEREAS, Programmer intends to enter into a certain Asset Purchase
Agreement with Licensee in a form similar to Attachment II, (the "Asset Purchase
Agreement") under which Licensee shall agree to sell the Station to Programmer,
and pursuant to which Licensee and Programmer shall join in and file an
application for FCC consent to assign the Stations licenses from Licensee to
Programmer; and
<PAGE>
WHEREAS, Licensee's affiliate and Programmer have contemporaneously
entered into a Time Brokerage Agreement concerning Broadcast Station WOCT,
Baltimore, Maryland, and intend to enter into a certain Asset Purchase Agreement
concerning the sale of WOCT (hereinafter collectively referred to as the "WOCT
Agreements").
NOW, THEREFORE, in consideration of the above recitals and the mutual
promises and covenants contained herein, the parties, intending to be bound
legally, agree as follows:
Section 1
Lease of Station Air Time
1.1 Representations. Each of Licensee and Programmer represent that it
is authorized to enter into this Agreement and that this Agreement constitutes
the legal, valid and binding obligation of it, enforceable against it in
accordance with its terms.
1.2 Effective Date. The Effective Date of this Agreement shall be
October ____, 1996, or the date upon which termination of Hart-Scott-Rodino
occurs, whichever is later.
1.3 Scope. During the Term (as defined in Section 6.1), Licensee shall
make available to Programmer time on the Station as set forth in this Agreement.
Programmer shall deliver such programming, at its expense, to the Station's
transmitter facilities or other authorized remote control point as reasonably
designated by Licensee. Subject to Licensee's reasonable approval, as set forth
in this Agreement, Programmer shall provide entertainment programming of its
selection complete with commercial matter, news, public service announcements
and other suitable programming to the Licensee up to one hundred sixty-four
(164) hours per week. The Licensee may use the remaining four hours per
broadcast week for the broadcast of its own regularly scheduled news, public
affairs and other non-entertainment programming and shall provide Programmer
with advance written notice of such hours of
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programming. All time not reserved by or designated for Licensee shall be
available for use by Programmer and no other party.
1.4 Consideration. As consideration for the air time made available
hereunder, Programmer shall (a) pay to Licensee a monthly fee of Two Hundred
Seventy-Nine Thousand One Hundred Sixty-Six Dollars ($279,166.00), payable no
later than the fifth (5th) business day of the month to which such fee pertains,
(b) pay to Licensee the cost of Programmer's telephone usage, postal service
usage and electrical usage at the studio for the Stations and Programmer, and
(c) shall reimburse Licensee additional amounts as set forth in Section 1.6
hereof. In the event the Effective Date begins on a day other than the first day
of a month, the monthly fee shall be adjusted on a pro-rata basis.
1.5 Licensee Operation of the Station. Licensee will have full
authority, power and control over the operations of the Station during the term
of this Agreement. Licensee will bear all responsibility for the Station's
compliance with all applicable provisions of the Communications Act of 1934, as
amended (the "Communications Act"), the rules, regulations and policies of the
FCC and all other applicable laws. Licensee shall not knowingly take any action
or omit to take any action which would have an adverse impact upon the Licensee,
its assets utilized in the operation of the Station, the Station or upon
Licensee's ability to perform this Agreement. All reports, annual regulatory
fees and applications required to be filed with the FCC or any other
governmental body have been, and during the course of the term of this Agreement
or any extension thereof, will be filed by Licensee in a timely and complete
manner.
1.6 Licensee Responsibility. Licensee shall be solely responsible for
and pay in a timely manner the salaries, taxes, insurance and related costs for
all personnel it employs at the Station.
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1.7 Programmer Responsibility. Programmer shall be solely responsible
for any expenses incurred in connection with its sale of advertising time
hereunder (including without limitation sales commissions) in connection with
the programming provided by Programmer hereunder (the "Programming") and in the
origination and/or delivery of the Programming to the integration point at the
studio for the Station and for any publicity or promotional expenses incurred by
Programmer, including without limitation, all ASCAP, BMI, and SESAC music
license fees attributable to the Programming. Programmer shall furnish or cause
to be furnished the artistic personnel and material for the production of the
Programming. Programmer shall employ and be responsible for the salaries, taxes,
insurance and related costs for all personnel used in the production of the
Programming and all sales personnel (including salespeople, traffic personnel,
and programming staff). Programmer shall in addition be responsible for other
non-capital ordinary, and customary operating expenses of the Station.
1.8 (a) Contracts. Programmer will not be required to assume
performance of any of the Licensee's contracts and leases pertaining to the
Station except for the contracts and leases listed on Attachment III hereof.
Programmer will enter into no third-party contracts, leases or agreements which
will bind Licensee in any way except with Licensee's prior written approval.
Licensee will enter into no third-party contracts, leases or agreements which
will bind Programmer in any way except with Programmer's prior written approval.
Programmer shall assume the obligations of Licensee, to provide advertising time
under the terms of existing trade and barter agreements and all Contracts with
advertisers for the sale of time or talent on the Stations for cash as listed on
Attachment III-A and Licensee shall assign all of its rights under those trade
and barter agreements and agreements for cash to Programmer. Upon termination of
this Agreement pursuant to Section 6, Programmer shall assign back to Licensee
all of its rights
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to, and Licensee shall assume all of the liabilities and obligations under, the
contracts and agreements identified in this Section 1.8 (a) (the "Contracts").
(b) Prorations. All expenses and income arising under the
Contracts shall be prorated between Licensee and Programmer as of the Effective
Date in a manner such that the costs and benefits thereunder through the date
immediately preceding the Effective Date shall be for the account of Licensee,
and, thereafter, during the term of this Agreement, for the account of
Programmer. Such proration shall include an adjustment for the value of any and
all advertising to be run for consideration other than cash ("Trade
Agreements").
1.9 (a) Broadcasting Obligations. During the Term, except as provided
in Section 6.2, Licensee will broadcast the Programming in its entirety
(including commercials), on either the main or auxiliary facilities of the
Station, without interruption, deletion or addition of any kind, except as set
forth below:
(i) Licensee shall have the right to delete and not
to broadcast any material contained in the Programming which it regards as being
unsuitable for broadcast or the broadcast of which it believes would be contrary
to the public interest, and Licensee shall have the right to substitute such
programming therefor as it deems appropriate;
(ii) Licensee may temporarily refrain from
broadcasting the Programming between the hours of 12:30 a.m. and 5:30 a.m. (or
at some other hour in the event that weather conditions so require) in order to
perform normal, customary and routine maintenance on the Stations transmitting
facilities; provided that Licensee shall use its best efforts to minimize the
frequency and duration of such interruptions;
(iii) Licensee may temporarily cease broadcasting the
Programming as a result of a natural disaster, act of public enemy or act of
God; provided that in any such case,
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Licensee will act expediently and use its best efforts to resume the broadcast
of the Programming as quickly as the applicable circumstances will allow; and
(iv) Licensee may temporarily refrain from
broadcasting the Programming as a result of, and during the duration of, (i) a
general electrical power outage affecting the area in which the Stations
transmitting equipment is located or (ii) a technical problem with the Station's
transmitting equipment which is outside of Licensee's control and which is not
directly or indirectly the result of any act or omission of Licensee or any of
its employees or agents; provided that in either such case, Licensee will act
expediently and use its best efforts to resume the broadcast of the Programming
as quickly as the applicable circumstances will allow.
Programmer shall not be entitled to any credit or refund of any fees in
the event of any of the events described in (i) - (iv) above.
(b) Hourly Credit. Programmer shall receive from Licensee, as
a refund consisting of a flat rate credit of $385.00 per hour ("Hourly Credit"),
for any part of the weekly one hundred sixty-four (164) hours of programming
time that Licensee uses to broadcast its own programming including periods
during which Licensee is unable, for any reason (except, as provided in Section
1.9(a) and except for Programmer's failure to deliver its programming to
Licensee), to broadcast the Programming. Such refunds to Programmer shall be
paid within ten (10) days of the end of each month.
1.10 Station Operation. Licensee shall notify Programmer in writing at
least five (5) business days prior to (i) making any changes in management
personnel, (ii) entering into any material contractual obligations, (iii)
purchasing equipment, or (iv) making any other material changes in the operation
of the Station. Licensee agrees to purchase such equipment or other material or
services which Programmer may reasonably suggest are necessary for the Station's
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operations provided that Programmer agrees to reimburse the Licensee for all
costs associated with such purchases including, without limitation,
installation, wiring and similar related costs.
1.11 Use of Stations' Studios. Licensee agrees to provide Programmer
with access to the Station's complete facilities including the studios and
broadcast equipment for use by Programmer, if it so desires, in providing the
Programming; provided, however, that Licensee shall maintain, for its sole use,
sufficient space at the Stations studios for its management level employees.
Under the overall supervision of Licensee, Programmer shall and may peacefully
and quietly have the full use of and enjoy the use of the Stations facilities,
studios and equipment free from any hindrance from any person or persons
whomsoever claiming by, through or under Licensee. Programmer shall use the
studios and equipment only for the purpose of producing programming for the
Station or for any other stations owned or time brokered by the Programmer
within the Baltimore, Maryland ADI and shall at all times be subject to the good
faith oversight of Licensee.
Section 2
Station Obligations to the Community of License
2.1 Licensee Authority. Notwithstanding any other provision of this
Agreement, Programmer recognizes that Licensee has certain obligations to
broadcast programming to meet the needs and interests of the community of
license for the Station. On a regular weekly basis the Licensee shall air
specific programming on issues of importance to the local community. Nothing in
this Agreement shall abrogate the unrestricted authority of the Licensee to
discharge its obligations to the public and to comply with the law, rules and
policies of the FCC with respect to meeting the ascertained needs and interests
of the public.
2.2 Additional Licensee and Programmer Obligations. Although both
parties shall cooperate in the broadcast of emergency information over the
Station, Licensee shall also retain
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the right to interrupt Programmer's programming in case of an emergency or for
programming which, in the reasonable good faith judgment of Licensee, is of
overriding public importance. Such interruption shall not entitle Programmer to
any credits on fees. Licensee shall continue to maintain a main studio, as that
term is defined by the FCC, within the Stations principal community contour,
shall maintain its local public inspection file within the community of license
and shall prepare and place in such inspection file its quarterly issues and
program lists on a timely basis. Programmer shall, upon request by Licensee,
provide Licensee on a timely basis with information with respect to certain of
Programmer's programs which should be included in Licensee's quarterly issues
and programs lists. Licensee shall also maintain the station logs, receive and
respond to telephone inquiries, and control and oversee any remote control point
for the Station.
2.3 Responsibility for Employees and Expenses. In accordance with
Section 1.7, Programmer shall employ and be solely responsible for the salaries,
taxes, insurance and related costs for all personnel employed by Programmer
(including, without limitation, salespeople, traffic personnel, board operators
and programming staff). Licensee will provide and be responsible for the Station
personnel employed by Licensee and necessary to fulfill Licensee's obligations
hereunder, and will be responsible for the salaries, taxes, insurance and
related costs for all the personnel it employs. All personnel shall be subject
to the overall supervision of Licensee, consistent with Programmer's right to
the use of the Stations facilities pursuant to Section 1.12 hereof.
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Section 3
Station Programming Policies
3.1 Broadcast Station Programming Policy Statement. Licensee agrees to
adopt and enforce the Broadcast Station Programming Policy Statement set forth
hereto as Attachment IV (the "Policy Statement"), which may be amended from time
to time by Licensee upon notice to Programmer. Programmer agrees and covenants
to comply in all material respects with the Policy Statement, with all rules and
regulations of the FCC, and with all reasonable changes subsequently made by
Licensee or the FCC. If Licensee reasonably determines that a program supplied
by Programmer does not comply with the Policy Statement it may suspend or cancel
such program and shall provide written notice to Programmer of such decision.
All Programming shall comply with the Policy Statement, the Communications Act
and FCC rules and regulations. All advertising spots and promotional material or
announcements included in the Programming shall comply with applicable federal,
state and local regulations and policies, the Policy Statement, and shall be
produced in accordance with quality standards established by Programmer.
3.2 Licensee Control of Programming. Programmer recognizes that
Licensee has full authority to control the operation of the Station. The parties
agree that Licensee's authority includes but is not limited to the right to
reject or refuse such portions of the Programming which Licensee believes, in
its sole discretion, to be unsatisfactory, unsuitable or contrary to the public
interest. Programmer shall have the right to change the Programming elements
and/or format of the Programming by giving Licensee at least twenty-four (24)
hours notice of such changes.
3.3 Programmer Compliance with Copyright Act. Programmer represents and
warrants to Licensee that Programmer has full authority to broadcast the
Programming on the Station, and that Programmer shall not broadcast any
slanderous material or any material in
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violation of any law, rule, regulation, including regulation without limitation
the Communications Act, the rules and regulations of the FCC or the Copyright
Act. All music supplied by Programmer shall be: (i) licensed by ASCAP, SESAC or
BMI; (ii) in the public domain; or (iii) cleared at the source by Programmer.
Consistent with Section 1.7 hereof, Licensee will maintain ASCAP, BMI and SESAC
licenses as necessary. The right to use the Programming and to authorize its use
in any manner shall be and remain vested in Programmer.
3.4 Sales. Programmer shall retain all revenues from the sale of
advertising time within the Programming. Programmer may sell advertising,
consistent with applicable rules, regulations and the Policy Statement, on the
Station in combination with any other broadcast stations of its choosing.
Programmer shall be responsible for payment of the commissions due to any
national sales representative engaged by it for the purpose of selling national
advertising which is carried during the Programming. Licensee shall retain all
revenues from the sale of Stations advertising during the hours each week in
which the Licensee airs its own non-entertainment programming, with the
exception provided for certain political advertising as set forth in Section 5.2
herein.
3.5 Payola. Programmer agrees that it will not accept any
consideration, compensation, gift or gratuity of any kind whatsoever, regardless
of its value or form, including, but not limited to, a commission, discount,
bonus, material, supplies or other merchandise, services or labor (collectively
"Consideration"), whether or not pursuant to written contracts or agreements
between Programmer and merchants or advertisers, unless the payer is identified
in the program for which Consideration was provided as having paid for or
furnished such Consideration, in accordance with the Communications Act and FCC
requirements. Programmer agrees at the reasonable request of Licensee, to
execute and provide Licensee with a Payola Affidavit, substantially in the form
attached hereto as Attachment V.
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3.6 Staffing Requirements. Licensee shall comply with the main studio
staff requirements as specified by the FCC.
Section 4
Indemnification
4.1 Programmer's Indemnification. Programmer shall indemnify and hold
harmless Licensee, its partners and their respective directors, officers and
stockholders from and against any and all claims, losses, costs, liabilities,
damages, FCC forfeitures and expenses (including reasonable legal fees and other
expenses incidental thereto) of every kind, nature and description, including
but not limited to, those arising out of (a) Licensee's broadcast of the
Programming and (b) liabilities of Programmer to its employees and other third
parties.
4.2 Licensee's Indemnification. Licensee shall indemnify and hold
harmless Programmer from and against any and all claims, losses, costs,
liabilities, damages, and expenses (including reasonable legal fees and other
expenses incidental thereto) of every kind, nature and description, arising out
of Licensee's broadcasts of programming other than the Programming to the extent
permitted by law.
4.3 Limitation. Neither Licensee nor Programmer shall be entitled to
indemnification pursuant to this section unless such claim for indemnification
is asserted in writing delivered to the other party.
4.4 Time Brokerage Challenge. If this Agreement is challenged at the
FCC, whether or not in connection with the Stations license renewal application,
counsel for the Licensee and counsel for the Programmer shall jointly defend the
Agreement and the parties' performance thereunder throughout all FCC proceedings
at the sole expense of the Programmer. If portions of this Agreement do not
receive the approval of the FCC staff, then the parties shall reform the
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Agreement or, at Programmer's option and expense, seek reversal of the staff
decision and approval from the full FCC on appeal.
Section 5
Access to Programmer Materials and Correspondence
5.1 Confidential Review. Prior to the provision of any of the
Programming by Programmer to Licensee under this Agreement, Programmer shall
acquaint the Licensee with the nature and type of the programming to be
provided. Licensee, solely for the purpose of ensuring Programmer's compliance
with the law, FCC rules and the Stations policies, shall be entitled to review
at its discretion from time to time on a confidential basis any programming
material it may reasonably request. Programmer shall promptly provide Licensee
with copies of all correspondence and complaints received from the public
(including any telephone logs of complaints called in), copies of all program
logs and promotional materials. However, nothing in this section shall entitle
Licensee to review the internal corporate or financial records of the
Programmer.
5.2 Political Advertising. Programmer shall cooperate with Licensee to
assist Licensee in complying with all rules of the FCC regarding political
advertising. Programmer shall supply such information promptly to Licensee as
may be necessary to comply with the lowest unit rate, equal opportunities and
reasonable access requirements of federal law. To the extent that Licensee deems
it necessary to assure its performance of its political time obligations,
Programmer shall release advertising availabilities to Licensee; provided,
however, that all revenues received by Licensee as a result of such a release of
advertising time shall promptly be paid to Programmer, net of any direct
out-of-pocket costs incurred by Licensee in selling the political advertising
and administering its broadcast.
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Section 6
Termination and Remedies Upon Default
6.1 Term; Termination. The term of this Agreement (the "Term") shall
commence on the date of this Agreement and shall terminate on the earlier of (i)
the date of any termination of the Asset Purchase Agreement pursuant to the
terms thereof, (ii) the date of any termination of this Agreement pursuant to
this Section 6.1, (iii) the date of any termination of either of the WOCT
Agreements, and (iv) the Closing Date (as defined in the Asset Purchase
Agreement). In addition to other remedies available at law or equity and the
provisions of Section 1.2 hereof, this Agreement may be terminated as set forth
below by either Licensee or Programmer by written notice to the other if the
party seeking to terminate is not then in material default or breach hereof,
upon the occurrence of any of the following:
(a) this Agreement is declared invalid or illegal in whole or
substantial part by an order or decree of an administrative agency or court of
competent jurisdiction and such order or decree has become final and no longer
subject to further administrative or judicial review;
(b) the other party is in material breach of its obligations
hereunder and has failed to cure such breach within thirty (30) days of notice
from the non-breaching party, which notice shall specify the breach and the
action necessary to cure such breach;
(c) the mutual consent of both parties
(d) there has been a material change in FCC rules, policies or
precedent that would cause this Agreement to be in violation thereof and such
change is in effect and not the subject of an appeal or further administrative
review.
Upon any termination of this Agreement, Licensee shall have no further
obligation to provide to Programmer any broadcast time or broadcast transmission
facilities and Programmer shall have no further obligations under Section 1.6(b)
hereof or to make any payments to
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Licensee under Section 1.4 hereof. Programmer shall be responsible for all debts
and obligations of Programmer to third parties based upon the purchase of air
time and use of Licensee's transmission facilities including, without
limitation, accounts payable, barter agreements and unaired advertisements, but
not for Licensee's federal, state and local income and business franchise tax
liabilities or taxes levied upon Licensee's personal property. In the event of
any termination, Programmer shall be entitled to retain all notes and accounts
receivable and other receivables of the Station accrued as of the date of such
termination (the "Termination Date") relating to advertising time sold by
Programmer between the date of this Agreement and the Termination Date
("Programmer Receivables"), and shall be entitled to pursue collection thereof.
Licensee shall pay over to Programmer any sums received by Licensee on account
of the Programmer Receivables. Notwithstanding anything herein to the contrary,
to the extent that any invoice, bill or statement submitted to Licensee after
the Termination Date or any payment made by Programmer prior to the Termination
Date relates to expenses incurred in operating the Station, for periods both
before and after the Termination Date, such expenses shall be prorated between
Licensee and Programmer in accordance with the principle that Programmer shall
be responsible for expenses allocable to the period prior to the Termination
Date and Licensee shall be responsible for expenses allocable to the period on
and after the Termination Date. Each party agrees to reimburse the other party
for expenses paid by the other party to the extent appropriate to implement the
proration of expenses pursuant to the preceding sentence.
6.2 Programmer's Remedies for Operational Deficiencies. Programmer
shall have the following remedies for deficiencies in or events related to
Licensee's transmitting facility:
(a) If Programmer receives during the first sixty (60) days of
this Agreement a report of a consulting engineer, chosen by Programmer, which
concludes that the Station are not operating in all material respects within the
parameters authorized by the FCC or that the
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Station's actual coverage of the market is materially less than such
authorization allows, Licensee shall be obligated, at its expense, to take such
steps as are reasonably necessary to restore the effective coverage or operating
parameters of the relevant Station or demonstrate, by the use of the report of
another consulting engineer, hired at its expense, that the coverage or
operating parameters are not materially deficient. If the Stations effective
coverage or operating parameters continue to be materially deficient within
thirty (30) days of notice of the coverage or operating deficiencies, then
Programmer shall be entitled to a refund, equal to the Hourly Credit amount set
forth in Section 1.9 for each hour of deficiency until such deficiencies are
corrected and such refunds shall be made within ten (10) days of the end of the
month.
(b) If for a period of five (5) consecutive days or more
Licensee reduces its transmitter output power on the Station by fifty percent
(50%) or more, Programmer may elect to require Licensee to pay a refund equal to
one half of the Hourly Credit amount set forth in Section 1.9 for so long each
hour that such power reduction continues to occur if Programmer has, in fact,
been required to make rebates and/or other financial accommodations to its
advertisers as a result of such power reduction. Such refund shall be reflected
in a refund payment by Licensee to Programmer within ten (10) days of the end of
the month in which such power reduction occurs.
(c) If, due to damage to or failure of transmission equipment,
the Station is off the air for five (5) consecutive days or for a total of one
hundred twenty (120) hours during any thirty (30) day period, Programmer shall
be entitled to a full refund, on a daily basis, equal to, the Hourly Credit
amount set forth in Section 1.9 for each hour the Stations are off the air, and
such refund shall be paid within ten (10) days of the end of the month in which
the Stations are off the air.
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6.3 Other Agreements. During the Term, Licensee will not enter into any
other time brokerage, program provision, local management or similar agreement
with any third party with respect to the Station.
Section 7
Miscellaneous
7.1 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, their successors and assigns, including
specifically any purchaser of the Station from Licensee. Neither party may
assign its rights under this Agreement without the prior written consent of the
other party which shall not be unreasonable withheld, provided, however that (a)
Programmer has the absolute right to assign this Agreement and all of its rights
and obligations hereunder, following written notice to the Licensee, to an
entity controlled by American Radio Systems Corporation, provided that such
entity assumes all of Programmer's obligations under this Agreement and that
such assignment shall not release Programmer from any of its obligations under
this Agreement and (b) Licensee has the right to assign its payments hereunder
to its Lenders upon written notification to Programmer.
7.2 Call Letters. Upon request of Programmer and at Programmer's
expense, Licensee shall apply to the FCC for authority to change the call
letters of the Station (with the consent of the FCC) to such call letters that
Programmer shall reasonably designate. Licensee shall cooperate with Programmer
and receive Programmer's consent prior to making any change in the call letters
of the Stations.
7.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which together
will constitute one and the same instrument.
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7.4 FCC Certification (47 C.F.R. ss. 73.3555(a) (2) (ii). Pursuant to
Section 73.3555(a)(2)(ii) of the FCC's rules, Licensee certifies that it
maintains ultimate control over the Stations' facilities, including specifically
control over finances, personnel and programming at the Stations and the
Programmer certifies that this Agreement complies with the provisions of
Sections 73.3555(a)(1) and (e)(1) of the FCC's rules.
7.5 Entire Agreement. This Agreement, the Attachments hereto, the Asset
Purchase Agreement, and the WOCT Agreements embody the entire agreement and
understanding of the parties and supersede any and all prior agreements,
arrangements and understandings relating to matters provided for herein. No
amendment, waiver of compliance with any provision or condition hereof, or
consent pursuant to this Agreement will be effective unless evidenced by an
instrument in writing signed by the parties.
7.6 Taxes. Licensee and Programmer shall each pay its own ad valorem
taxes, if any, which may be assessed on such party's respective personal
property for the periods that such items are owned by such party. Programmer
shall pay all taxes if any, to which the consideration specified in Section 1.4
herein is subject, provided that Licensee is responsible for payment of its own
income taxes. Each party shall be responsible for any sales tax imposed on
advertising aired during the programming provided by that party.
7.7 Headings. The headings are for convenience only and will not
control or affect the meaning or construction of the provisions of this
Agreement.
7.8 Governing Law. The obligations of Licensee and Programmer are
subject to applicable federal, state and local law, rules and regulations,
including, but not limited to, the Communications Act, and the rules and
regulations of the FCC. The construction and performance of the Agreement will
be governed by the laws of the Commonwealth of Massachusetts.
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7.9 Notices. Any notice, demand or request required or permitted to be
given under the provisions of the Agreement shall be in writing and shall be
deemed to have been duly delivered on the date of personal delivery or on the
date of receipt if mailed by registered or certified mail, postage prepaid and
return receipt requested, and shall be deemed to have been received on the date
of personal delivery or on the date set forth on the return receipt, to the
following addresses, or to such other address as any party may request, in the
case of Licensee, by notifying Programmer, and in the case of Programmer, by
notifying Licensee.
To Licensee: WWMX, Inc.
711 Hillsborough Street
Raleigh, NC 27603-1600
Attn: Robert J. Lind
Copies To: Capitol Broadcasting Company, Inc.
2619 Western Blvd.
Raleigh, NC 27605
Attn: James F. Goodmon
Capitol Broadcasting Company, Inc.
711 Hillsborough St.
Raleigh, NC 27603-1600
Attn: John M. Brennan
To Programmer: American Radio Systems Corporation
116 Huntington Avenue
Boston, MA 02116
Attn: Steven B. Dodge, President
Fax: (617) 375-7575
Copies To: American Radio Systems Corporation
116 Huntington Avenue
Boston, MA 02116
Attn: Michael B. Milsom, Esq.
Fax: (617) 375-7575
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Dow, Lohnes and Albertson
1200 New Hampshire Ave., N.W.
Suite 800
Washington, DC 20036
John R. Feore, Jr. Esq.
Fax: (202) 857-2900
7.10 Severability. If any provision of this Agreement or the
application thereof to any person or circumstances shall be invalid or
unenforceable to any extent, the 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.
7.11 Specific Performance. The parties recognize that in the event
Licensee should refuse to perform under the provisions of this Agreement,
monetary damages alone
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will not be adequate. Programmer shall therefore be entitled to seek specific
performance of all terms of this Agreement. In the event of any action to
enforce this Agreement, Licensee hereby waives the defense that there is
adequate remedy at law.
7.12 Arbitration. Any dispute arising out of or related to this
Agreement that Licensee and Programmer are unable to resolve by themselves shall
be settled by arbitration in Baltimore, Maryland by a panel of three
arbitrators. Licensee and Programmer shall each designate one disinterested
arbitrator and the two arbitrators designated shall select the third arbitrator.
The persons selected as arbitrators need not be professional arbitrators, and
persons such as lawyers, accountants and bankers shall be acceptable. Before
undertaking to resolve a dispute, each arbitrator shall be duly sworn faithfully
and fairly to hear and examine the matters in controversy and to make just award
according to the best of his or her understanding. 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 Licensee and Programmer. The costs and expenses of
the arbitration proceeding shall be assessed between Licensee and Programmer 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. No action at law or in equity based upon any claim
arising out of or related to this Agreement shall be instituted in any court by
Licensee or Programmer against the other except: (i) an action to compel
arbitration pursuant to this Section, (ii) an action to enforce the award of the
arbitration panel rendered in accordance with this Section; or (iii) a suit for
specific performance pursuant to Section 7.11.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
LICENSEE:
WWMX, INC.
By: _____________________________________
PROGRAMMER:
AMERICAN RADIO SYSTEMS CORPORATION
By: ____________________________________
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Exhibit 10.88
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of the 18th day of October, 1996 by and between AMERICAN RADIO SYSTEMS
CORPORATION, a Delaware corporation ("Seller"), and TRIATHLON BROADCASTING OF
OMAHA, INC., a Delaware corporation ("Buyer"), under the following
circumstances;
WHEREAS, Seller owns and operates radio stations KFAB-AM and KGOR(FM)
licensed to Omaha, Nebraska (collectively, the "Stations"), pursuant to licenses
issued by the Federal Communications Commission (the "FCC"); and
WHEREAS, Seller desires to sell and Buyer desires to purchase certain
assets and assume certain liabilities associated with the ownership and
operation of the Stations, all on the terms and subject to the conditions set
forth herein; and
NOW, THEREFORE, the parties hereby agree as follows:
ARTICLE 1
PURCHASE OF ASSETS
<PAGE>
1.1 Transfer of Assets. On the Closing Date, Seller shall sell, assign,
transfer and convey to Buyer, and Buyer shall purchase and assume from Seller,
all of the assets, properties, interests and rights of Seller of whatsoever kind
and nature, real and personal, tangible and intangible, owned or leased by the
Seller as the case may be, which are used or held for use by or relate directly
to the Stations as the same shall exist on the Closing Date (the "Station
Assets"), including but not limited to the following (but excluding the assets
specified in Section 1.2 hereof):
1.1.1 all of Seller's rights in and to the licenses, permits
and other authorizations issued to Seller by any governmental authority and used
directly in, or relating directly to, the conduct of the business and operations
of the Stations, including those issued by the FCC (the latter hereafter
referred to as the "Station Licenses") and as described more fully in Section
7.4, along with renewals or modifications of such items between the date hereof
and the Closing Date as well as all of Seller's rights in and to the call
letters "KFAB-AM and KGOR (FM)";
1.1.2 all equipment, office furniture and fixtures, office
materials and supplies, inventory, spare parts and other tangible personal
property of every kind and description, owned, leased or held by Seller and used
in the conduct of the business and operations of the Stations, and which are
described more fully in Section 7.7, together with any replacements of equal
quality thereof and additions thereto, made between the date hereof and the
Closing Date, and less any retirements or dispositions thereof made between the
date hereof and the Closing Date in the ordinary course of business and
consistent with past practices of the Seller;
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1.1.3 all of Seller's rights in and under such contracts,
agreements or leases, written or oral, relating directly or exclusively to the
conduct of the Stations ("Contracts"), and which are described more fully in
Sections 7.7, 7.8 and 7.9, together with all Contracts entered into or acquired
by Seller between the date hereof and the Closing Date in the ordinary course of
business and consistent with the terms of this Agreement;
1.1.4 all of Seller's rights in any programs and programming
material of whatever form or nature owned by Seller and used directly and
exclusively in, or relating directly and exclusively to, the Stations;
1.1.5 all of Seller's rights in and to the trademarks, trade
names, service marks, franchises, copyrights, including registrations and
applications for registration of any of them, jingles, logos and slogans or
licenses to use same owned or held by it and used directly and exclusively in,
or relating directly and exclusively to, the conduct of the business and
operations of the Stations, as described more fully in Section 7.12, together
with any associated good will and any additions thereto between the date hereof
and the Closing Date;
1.1.6 all of Seller's rights in and to the files, records, and
books of account of the Stations including, without limitation, programming
information and studies, technical information and engineering data, news and
advertising studies or consulting reports, marketing and demographic data, sales
correspondence, lists of advertisers, promotional materials, credit and sales
reports and filings with the FCC, executed copies of all written Contracts to be
assigned hereunder, logs and commercially available software programs to the
extent the same
<PAGE>
are transferable by Seller; provided, however, that Seller shall for a period of
three (3) years following the Closing Date have access to all of the foregoing
for audit, inspection and duplication by Seller or its designees, at Seller's
expense, upon reasonable prior notice during normal business hours;
1.1.7 all of Seller's rights under manufacturers' and vendors'
warranties relating to items included in the Station Assets and all similar
rights against third parties relating to items included in the Station Assets;
and
The Station Assets shall be transferred to Buyer free and clear of all
debts, security interests, mortgages, trusts, claims, pledges, conditional sales
agreements or other liens, liabilities and encumbrances whatsoever, other than
informational filings made by equipment lessors under the Uniform Commercial
Code.
1.2 Excluded Assets. Notwithstanding anything to the contrary contained
herein, it is expressly understood and agreed that the Station Assets shall not
include the following assets along with all rights, title and interest therein
which shall be referred to as the "Excluded Assets":
1.2.1 all cash, cash equivalents or similar type investments
of Seller, such as certificates of deposit, Treasury bills and other marketable
securities on hand and/or in banks;
<PAGE>
1.2.2 all tangible and intangible personal property disposed
of or consumed in the ordinary course of business between the date of this
Agreement and the Closing Date, or as permitted under the terms hereof;
1.2.3 all Contracts that have terminated or expired prior to
the Closing Date in the ordinary course of business or as permitted hereunder;
1.2.4 Seller's corporate seal, minute books, charter
documents, corporate stock record books and such other books and records as
pertain to the organization, existence or share capitalization of Seller and
duplicate copies of such records as are necessary to enable Seller to file its
tax returns and reports as well as any other records or materials relating to
Seller generally and not involving specific aspects of the Stations's operation;
1.2.5 Contracts of insurance and all insurance proceeds or
claims made by Seller relating to property or equipment repaired, replaced or
restored by Seller prior to the Closing Date;
1.2.6 any and all other claims made by Seller with respect to
transactions prior to the Closing Date and the proceeds thereof to the extent
Seller has expended funds or incurred a loss relating to same;
1.2.7 all pension, profit sharing or cash or deferred (Section
401(k)) plans and trusts and the assets thereof and any other employee benefit
plan or arrangement and the assets thereof, if any, maintained by Seller or its
parent organization; and
<PAGE>
1.2.8 any books and records relating to any of the foregoing.
1.2.9 all accounts receivable or notes receivable of Seller
for services performed or provided by Seller prior to the Closing Date;
ARTICLE 2
ASSUMPTION OF OBLIGATIONS
2.1 Assumption of Obligations. Subject to the provisions of this
Section 2.1, Section 2.2 and Section 3.4, on the Closing Date, Buyer shall only
assume and undertake to pay, satisfy or discharge the liabilities, obligations
and commitments of Seller arising under (i) the Station Licenses and the
Contracts described more fully in Sections 7.7, 7.8 and 7.9; (ii) all other
Contracts of Seller arising in the ordinary course of business and consistent
with past practices between the date hereof and the Closing Date, including, but
not limited to, all contracts for the sale of advertising time for cash arising
in the ordinary course of business of Seller or (to the extent set forth in
Sections 3.4.1 and Sections 3.4.2) for consideration other than cash such as
merchandise, services or promotional consideration ("Trade Agreements") as the
same may exist or arise in the ordinary course of business; and (iii) any other
Contracts entered into between the date hereof and the Closing Date which Buyer
expressly agrees in writing to assume. All of the foregoing liabilities and
obligations shall be referred to herein collectively as the "Assumed
Liabilities".
2.2 Limitation. Except as set forth in Section 2.1 hereof, Buyer
expressly does not, and shall not, assume or be deemed to assume, under this
Agreement or otherwise by reason of the
<PAGE>
transactions contemplated hereby, any liabilities, obligations or commitments of
Seller of any nature whatsoever. Without limiting the generality of the
foregoing, except as set forth in Section 2.1, Buyer shall not assume or be
liable for any liability or obligation of Seller arising out of any contract of
employment, collective bargaining agreement, insurance, pension, retirement,
deferred compensation, incentive bonus or profit sharing or employee benefit
plan or trust, or any judgment, litigation, proceeding or claim by any person or
entity relating to the business or operation of the Stations prior to the
Closing Date, whether or not such judgment, litigation, proceeding or claim is
pending, threatened or asserted before, on or after the Closing Date.
ARTICLE 3
CONSIDERATION
3.1 Purchase Price. The aggregate consideration (the "Purchase Price")
for the transfer of the Station Assets from the Seller to the Buyer shall be
Thirty-Nine Million Dollars ($39,000,000), plus the assumption at Closing of the
Assumed Liabilities.
3.2 Payment. Buyer shall pay to Seller the Purchase Price at Closing by
wire transfer in immediately available funds of the sum of to a bank designated
in writing by Seller.
3.3 Escrow Account. Buyer shall deposit an irrevocable stand-by letter
of credit in the sum of Two Million Dollars ($2,000,000) into an escrow account
(the "Escrow Account") with Media Venture Partners, to be held in escrow in
accordance with the terms of an escrow agreement (the "Escrow Agreement")
between the parties substantially in the form of Exhibit A hereto.
<PAGE>
3.4 Proration of Revenue and Expenses.
3.4.1 Except as otherwise provided herein, all expenses
incurred and all revenue earned arising from the conduct of the business and
operations of the Stations shall be prorated between Buyer and Seller in
accordance with generally accepted accounting principles as of 11:59 p.m., local
time, on the date immediately preceding the Closing Date. Such prorations shall
include, without limitation, all ad valorem, real estate and other property
taxes (but excluding taxes arising by reason of the transfer of the Station
Assets as contemplated hereby, which shall be paid as set forth in Article 13 of
this Agreement), business and license fees, music and other license fees
(including any retroactive adjustments thereof), wages and salaries of
employees, including accruals up to the Closing Date for bonuses, commissions,
vacations and sick pay, and related payroll taxes, utility expenses, time sales
agreements, contracts for the sale of advertising for consideration other than
cash ("Trade Agreements") to the extent provided in Section 3.4.2 hereof, rents
and similar prepaid and deferred items attributable to the ownership and
operation of the Stations. Real estate taxes shall be apportioned on the basis
of taxes assessed for the preceding year, with a reapportionment as soon as the
new tax rate and valuation can be ascertained.
3.4.2 Buyer and Seller agree that Buyer shall only assume and
be liable for performing the Stations' post-closing obligations under Trade
Agreements in an amount equal to the Base Trade Component (as defined below). To
the extent that the aggregate value by which the Stations' post-closing
obligations under Trade Agreements for the sale of advertising time exceeds the
aggregate value of the goods, services or other items to be received by the
Stations
<PAGE>
after the Closing by more than the Base Trade Component (the "Excess Trade
Balance"), the Seller shall remain liable for the amount of the Excess Trade
Balance. For purposes of this Agreement, the "Base Trade Component" shall be
TWENTY THOUSAND DOLLARS ($20,000.00).
3.4.3 The prorations and adjustments contemplated by this
Section, to the extent practicable, shall be made on the Closing Date. As to
those prorations and adjustments not capable of being ascertained on the Closing
Date, an adjustment and proration shall be made within ninety (90) calendar days
of the Closing Date.
3.4.4 In the event of any disputes between the parties as to
such adjustments, the amounts not in dispute shall nonetheless be paid at the
time provided in Section 3.4.3 and such disputes shall be determined by an
independent certified public accountant mutually acceptable to the parties, and
the fees and expenses of such accountant shall be paid one-half by Seller and
one-half by Buyer.
ARTICLE 4
CLOSING
4.1 Closing. Except as otherwise mutually agreed upon by Seller and
Buyer, the consummation of the transactions contemplated herein (the "Closing")
shall occur within ten (10) business days following the date on which the last
of the FCC Consents (as defined in Section 5.1 ) shall have become a Final Order
(as defined below), unless Buyer in its sole discretion shall have waived the
condition that such consent shall have become final (the
<PAGE>
"Closing Date"). For purposes of this Agreement, the FCC Consents shall be
deemed to be a Final Order when (i) they have not been vacated, reversed,
stayed, set aside, annulled or suspended; (ii) they are not the subject of any
pending timely appeal, request for stay or petition for rehearing,
reconsideration or review by any party or by the FCC on its own motion; and
(iii) they are actions by the FCC 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 and the
rules and regulations of the FCC has expired. The Closing shall be held at such
offices as shall be specified by Buyer in New York City.
ARTICLE 5
GOVERNMENTAL CONSENTS
5.1 FCC Consents. It is specifically understood and agreed by Buyer and
Seller that the Closing and the assignment of the Station Licenses and the
transfer of the Station Assets is expressly conditioned on and is subject to the
prior consent and approval of the FCC and any reasonably acceptable conditions
imposed in such approval, which conditions are not deemed, in Buyer's sole
judgement, material or adverse to Buyer's interest in the Station Assets or, in
the Seller's sole judgement, materially adverse to the Seller (the "FCC
Consents").
5.2 FCC Application. Seller and Buyer shall hereafter file with the FCC
the requisite applications for assignment of the Station Licenses ("FCC
Applications") from Seller to Buyer within ten (10) business days following the
date of this Agreement. Buyer shall have the right to make such amendments to
the FCC Applications as shall be necessary to reflect changes that may occur in
the structure of Buyer so long as such amendments do not materially delay the
<PAGE>
processing time of such FCC Applications. Thereafter, Seller and Buyer shall
prosecute the FCC Applications with all reasonable diligence and otherwise use
their best efforts to obtain the grant of the FCC Applications as expeditiously
as practicable (but neither Seller nor Buyer shall have any obligation to
satisfy complainants or the FCC by taking any steps which would have a material
adverse effect upon Seller or Buyer or upon any affiliated entity). If the FCC
Consents impose any condition on either party hereto, such party shall use its
best efforts to comply with such condition; provided, however, that neither
party shall be required hereunder 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 Consents, the party affected
shall vigorously oppose such efforts for reconsideration or judicial review;
provided, however, that nothing herein shall be construed to limit either
party's right to terminate this Agreement pursuant to Article 17 hereof.
5.3 HSR Act. Within seven (7) business days from the date hereof,
Seller and Buyer shall make any filings as may be required under the HSR Act.
Each party shall furnish to the other party such necessary information and
reasonable assistance as such party shall request in connection with its
preparation of any necessary filings under the HSR Act. Each party shall keep
the other party informed of the status of any inquiries made of such party by
the Federal Trade Commission or any other Antitrust Division of the U.S.
Department of Justice or any other governmental agency or authority with respect
to this Agreement or the transactions contemplated hereby. The parties hereby
acknowledge that in making such filings, the parties will be relying on
information provided by the other party without independent investigation. The
Seller and the Buyer agree to request early termination of the waiting periods
under the HSR Act.
<PAGE>
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby makes the following representations and warranties to
Seller, each of which is true and correct on the date hereof, shall remain true
and correct through and including the Closing Date, shall be unaffected by any
notice to Seller other than in the Disclosure Schedule (as defined herein) and
shall survive the Closing to the extent provided in Section 16.4.
6.1 Organization and Standing. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and as of the Closing Date Buyer shall be duly qualified to do business and be
in good standing in the State of Nebraska.
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 to own or lease the Station Assets and to carry on the
business of the Stations as they are now being conducted, and Buyer's execution,
delivery and performance of this Agreement and the transactions contemplated
hereby have been duly and validly authorized by all necessary action on its
part. This Agreement has been duly executed and delivered by Buyer and this
Agreement constitutes, and the other agreements to be executed in connection
herewith will constitute, the valid and binding obligation of Buyer, enforceable
in accordance with their terms, except as limited by laws affecting creditors'
rights or equitable principles generally.
<PAGE>
6.3 Absence of Conflicting Agreements or Required Consents. Except as
set forth in Article 5 hereof with respect to governmental consents, the
execution, delivery and performance of this Agreement by Buyer: (a) does not
require the consent of any third party; (b) will not violate any applicable law,
judgment, order, injunction, decree, rule, regulation or ruling of any
governmental authority to which Buyer is a party; and (c) will not, either alone
or with the giving of notice or the passage of time, or both, conflict with,
constitute grounds for termination of or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any agreement,
instrument, license or permit to which Buyer is now subject.
6.4 Litigation and Compliance with Law. There is no litigation,
administrative, arbitration or other proceeding, or petition, complaint or
investigation before any court or governmental body, pending against Buyer or
any of its principals that would adversely affect Buyer's ability to perform its
obligations pursuant to this Agreement or the agreements to be executed in
connection herewith. There is no violation of any law, regulation or ordinance
or any other requirement of any governmental body or court which would have a
material adverse effect on Buyer or its ability to perform its obligations
pursuant to this Agreement or the agreements to be executed in connection
herewith.
6.5 FCC Qualification. To the best of Buyer's knowledge, Buyer is a
qualified assignee of the Station Licenses under the rules and regulations of
the FCC and the Communications Act of 1934 as amended.
6.6 Full Disclosure. To best of Buyer's knowledge, no representation or
warranty made by Buyer herein nor any certificate, document or other instrument
furnished or to be furnished by
<PAGE>
Buyer pursuant hereto (a) contains or will contain any untrue statement of a
material fact made intentionally or in bad faith, or (b) intentionally or in bad
faith omits or will omit to state any material fact known to Buyer and required
to make the statements herein or therein not misleading.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby makes the following representations and warranties to
Buyer, each of which is true and correct on the date hereof, shall remain true
and correct to and including the Closing Date, shall be unaffected by any notice
to Buyer other than in the Disclosure Schedule (as defined herein) and shall
survive the Closing to the extent provided in Section 16.4. Such representations
and warranties are subject to, and qualified by, any fact or facts disclosed in
the appropriate section of the separate Disclosure Schedule which is hereby made
a part of this Agreement (the "Disclosure Schedule").
7.1 Organization and Standing. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
is duly qualified to do business in the State Nebraska and has the corporate
power and authority to own, lease and operate the Station Assets and to carry on
the business of the Stations as now being conducted and as proposed to be
conducted by Seller between the date hereof and the Closing Date.
7.2 Authorization and Binding Obligation. Seller has the corporate
power and authority to enter into and perform this Agreement and the
transactions contemplated hereby, and Seller's
<PAGE>
execution, delivery and performance of this Agreement, and the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on its part. This Agreement has been duly executed and
delivered by Seller and this Agreement and the agreements to be executed in
connection herewith will constitute the valid and binding obligation of Seller
enforceable in accordance with their terms, except as limited by laws affecting
the enforcement of creditor's rights or equitable principles generally.
7.3 Absence of Conflicting Agreements or Required Consents. Except as
set forth in Article 5 hereof with respect to governmental consents and as set
forth in Sections 7.7, 7.8 or 7.9 of the Disclosure Schedule with respect to
consents required in connection with the assignment of certain Contracts, the
execution, delivery and performance of this Agreement by Seller: (a) does not
require the consent of any third party; (b) will not violate any applicable law,
judgment, order, injunction, decree, rule, regulation or ruling of any
governmental authority to which Seller is a party or by which it or the Station
Assets are bound; (c) will not, either alone or with the giving of notice or the
passage of time, or both, conflict with, constitute grounds for termination of
or result in a breach of the terms, conditions or provisions of, or constitute a
default under, any Contract, agreement, instrument, license or permit to which
Seller or the Station Assets is now subject; and (d) will not result in the
creation of any lien, charge or encumbrance on any of the Station Assets, except
to the extent that any such matter or matters referred to in sub parts (a)
through (d) would not in the aggregate have a material adverse effect on the
Buyer.
7.4 Government Authorizations. Section 7.4 of the Disclosure Schedule
contains a true and complete list of the Station Licenses and other material
licenses, permits or other authorizations from governmental and regulatory
authorities which are required for the lawful conduct of the
<PAGE>
business and operations of the Stations in the manner and to the full extent
they are presently conducted. Seller is the authorized legal holder of the
Station Licenses and other licenses, permits and authorizations listed in said
Section 7.4, none of which is subject to any restrictions or condition which
would limit in any respect the full operation of the Stations as now operated.
Except as set forth in said Section 7.4 of the Disclosure Schedule, there are no
applications, complaints or proceedings pending or, to the best of Seller's
knowledge, threatened as of the date hereof before the FCC relating to the
business or operations of the Stations other than applications, complaints or
proceedings which generally affect the broadcasting industry. Seller has
delivered to Buyer true and complete copies of the Station Licenses, including
any and all amendments and other modifications thereto. The Station Licenses
listed in said Section 7.4 are in good standing, are in full force and effect
and are unimpaired by any act or omission of Seller or its officers, directors
or employees; and the operation of the Stations is materially in accordance with
the Station Licenses and the underlying construction permits. No proceedings are
pending or, to the knowledge of Seller, are threatened with respect to the
Station Licenses which may result in the revocation, modification, non-renewal
or suspension of any of the Station Licenses, the denial of any pending
applications, the issuance of any cease and desist order, the imposition of any
administrative actions by the FCC with respect to the Station Licenses or which
may affect Buyer's ability to continue to operate the Stations as they are
currently operated. Seller has no reason to believe that the Station Licenses
will not be renewed in their ordinary course. All material reports, forms and
statements required to be filed by Seller with the FCC with respect to the
Stations since the grant of the last renewal of the Station Licenses have been
filed and are substantially complete and accurate. To the best knowledge of
Seller, there are no facts which, under the Communications Act of 1934, as
amended, or the existing Rules and Regulations of the FCC, would disqualify
Seller as an assignor of the Station Licenses.
<PAGE>
7.5 Compliance with FCC Regulations. The operation of the Stations and
all of the Station Assets are in compliance in all material respects with (i)
all material applicable engineering standards required to be met under
applicable FCC rules, and (ii) all other applicable rules, regulations,
requirements and policies of the FCC, including, but not limited to, ANSI
Radiation Standards C95.1 - 1982 to the extent required to be met under
applicable FCC rules and regulations; and there are no existing claims known to
Seller to the contrary.
7.6 Taxes. Except as set forth on Section 7.6 of the Disclosure
Schedule, Seller has filed all federal, state, local and foreign income,
franchise, sales, use, property, excise, payroll and other tax returns required
by law and has paid in full all taxes, estimated taxes, interest, assessments,
and penalties due and payable in connection with its operation of the Stations.
All returns and forms which have been filed in connection with Seller's
operation of the Stations have been true and correct in all material respects
and no tax or other payment in a material amount other than as shown on such
returns and forms are required to be paid and have been paid by Seller. There
are no present disputes as to taxes of any nature payable by Seller which in any
event could materially adversely affect any of the Station Assets or the
operation of the Stations.
7.7 Personal Property.
7.7.1 Section 7.7 of the Disclosure Schedule contains a list
of all material tangible personal property and assets owned and leased by the
Seller and used primarily or exclusively in the conduct of the business and
operations of the Stations. Except as may be subject to lease agreements of the
Seller (the "Personal Property Contracts"), Seller owns and has, and will have
on the Closing Date, good and marketable title to all such property (and to all
other tangible personal property and
<PAGE>
assets to be transferred to Buyer hereunder), and none of such property is, or
at the Closing will be, subject to any security interest, mortgage, pledge,
conditional sales agreement or other lien or encumbrance. All of the material
items of the tangible personal property and assets included in the Station
Assets are in all material respects in good operating condition (ordinary wear
and tear excepted) and are available for immediate use in the conduct of the
business and operations of the Stations. All material technical equipment,
constituting a part of the tangible personal property transferred hereunder, has
been maintained in accordance with industry practice and is in good operating
condition and complies in all material respects with all applicable rules and
regulations of the FCC and the terms of the Station Licenses. The properties
listed in said Section 7.7 include all such properties necessary to conduct in
all material respects the business and operations of the Stations as now
conducted.
7.7.2 The Personal Property Contracts listed on such Section
7.7 constitute valid and binding obligations of Seller and, to the best of
Seller's knowledge, of all other persons purported to be parties thereto and are
in full force and effect as of the date hereof and will on the Closing Date
constitute valid and binding obligations of Seller and, to the best of Seller's
knowledge, of all other persons purported to be parties thereto and shall be in
full force and effect. Seller is not in default under any of such Personal
Property Contracts and has not received or given written notice of any default
thereunder from or to any of the other parties thereto. Seller will use
reasonable efforts to obtain valid and binding third-party consents from all
required third parties to the Personal Property Contracts to be conveyed and
assigned to Buyer as part of the Station Assets, so as to insure the Buyer will
enjoy all of the privileges of Seller thereunder. Except as set forth in Section
7.7 of the Disclosure Schedule, Seller has full legal power and authority to
assign its rights under the Personal Property Contracts to Buyer in accordance
with this Agreement on terms and conditions no less
<PAGE>
favorable than those in effect on the date hereof, and such assignment will not
affect the validity, enforceability and continuity of any of the Personal
Property Contracts.
7.8 Real Property.
7.8.1 Section 7.8 to the Disclosure Schedule contains a
complete and accurate list of all real property owned and/or leased by the
Seller and used primarily or exclusively by the Stations and all agreements,
leases and contracts of Seller relating to the tower, transmitter, studio site
and offices of the Stations (collectively the "Real Estate Contracts") and a
summary of the applicable leases.
7.8.2 The Real Estate Contracts listed on such Section 7.8
constitute valid and binding obligations of Seller and, to the best of Seller's
knowledge, of all other persons purported to be parties thereto and are in full
force and effect as of the date hereof and will on the Closing Date constitute
valid and binding obligations of Seller and, to the best of Seller's knowledge,
of all other persons purported to be parties thereto and shall be in full force
and effect. Seller is not in default under any of such Real Estate Contracts and
has not received or given written notice of any default thereunder from or to
any of the other parties thereto. Seller will use reasonable efforts to obtain
valid and binding third-party consents from all required third parties to the
Real Estate Contracts to be conveyed and assigned to Buyer as part of the
Station Assets, so as to insure that Buyer will enjoy all of the privileges of
Seller thereunder. Except as set forth in Section 7.8 of the Disclosure
Schedule, Seller has full legal power and authority to assign its rights under
the Real Estate Contracts to Buyer in accordance with this Agreement on terms
and conditions no less
<PAGE>
favorable than those in effect on the date hereof, and such assignment will not
affect the validity, enforceability and continuity of any of the Real Estate
Contracts.
7.9 Contracts. Section 7.9 of the Disclosure Schedule lists all
Contracts as of the date of this Agreement which shall be assumed by the Buyer
as of the Closing Date, except contracts entered into in the ordinary course of
business (i) of less than three (3) months duration and which impose monetary
obligations of less than Five Thousand Dollars ($5,000) each or Fifty Thousand
Dollars ($50,000) in the aggregate, (ii) for the sale or sponsorship of
broadcast time on the Stations for cash, for which no prepayment has been
received and with not more than twelve (12) months remaining in their terms,
(iii) contracts which are currently scheduled to expire prior to Closing Date
and for which Buyer will assume no obligations or (iv) Trade Agreements subject
to the limitations set forth in Section 3.4.2. Those Contracts requiring the
consent of a third party to assignment which Seller and Buyer agree are critical
to the consummation of the transactions contemplated hereby shall be identified
as "Material Contracts" on the Disclosure Schedules. Notwithstanding the
foregoing, if it is discovered before Closing that Seller failed to list a
contract in said Section 7.9 which was required to be listed, then the Buyer may
elect in its sole discretion to accept or reject such contract.
7.10 Status of Contracts. Except as noted in Section 7.9 of the
Disclosure Schedule, Seller has delivered to Buyer true and complete copies of
all written Contracts, including any and all amendments and other modifications
to such Contracts. All Contracts are valid, binding and enforceable by Seller in
accordance with their respective terms, except as limited by laws affecting
creditors' rights or equitable principles generally. To the best of Seller's
knowledge, Seller has complied in all material respects with all Contracts and
is not in default beyond any
<PAGE>
applicable grace periods under any of the Contracts, and no other contracting
party is in default under any of the Contracts. Except as set forth in Section
7.9 of the Disclosure Schedule, Seller has full legal power and authority to
assign its respective rights under the 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 affect the validity,
enforceability and continuity of any of the Contracts.
7.11 Environmental Matters. Seller has not unlawfully disposed of any
hazardous waste or hazardous substance including Polychlorinated Byphenyls
("PCBs") in a manner which has caused, or could cause, Buyer to incur a material
liability under applicable law in connection therewith; and Seller warrants that
the technical equipment included in the Station Assets does not contain any PCBs
which are required by law to be removed and if any equipment does contain PCBs,
that such equipment is stored and maintained in compliance with applicable law.
To the best of Seller's knowledge, Seller has complied in all material respects
with all federal, state and local environmental laws, rules and regulations
applicable to the Stations and its operations, including but not limited to the
FCC's guidelines regarding RF radiation. No hazardous waste has been disposed of
by Seller, and to the best of Seller's knowledge, no hazardous waste has been
disposed of by any other person, on the real estate occupied by the Stations or
their transmitters. As used herein, the term "hazardous waste" shall mean as
defined in the Resource Conservation and Recovery Act (RCRA) as amended and in
the equivalent state statute under the law of the state in which such real
estate is located. In the event that any of the real property to be transferred
hereunder has a potential material environmental liability, whether fixed or
contingent, and such liability costs less than Three Hundred Thousand Dollars
($300,000) to cure (whether by cleaning the environmental contamination or
moving the Station
<PAGE>
Assets on such property), Seller shall promptly begin remedial action to cure
the condition giving rise to such liability and shall either cure such condition
prior to Closing or reduce the Purchase Price by the amount agreed to by the
parties as being adequate to cure such condition. However, in the event such
remedial action is likely to cost Seller in excess of Three Hundred Thousand
Dollars ($300,000), Buyer or Seller may terminate this Agreement prior to
Closing and neither party shall have any liability to the other as a result of
such termination, other than the release of the Escrow Account to the Buyer,
unless: (a) Seller shall at its sole expense cure the condition giving rise to
such liability prior to Closing; (b) Buyer will accept a reduction in the
Purchase Price by the amount agreed to by the parties as being adequate to cure
such condition in no event less than Three Hundred Thousand Dollars ($300,000);
or (c) as to contingent liabilities, Seller shall provide (i) collateral
acceptable to the Buyer or a security bond in such reasonably adequate amount as
shall be sufficient to cover such liability, which collateral or security bond
shall remain in place for a period of twenty (20) years from and after the
Closing, or (ii) such other resolution mutually agreed to by the Buyer and the
Seller and reasonably acceptable to Buyer's financing sources.
7.12 Copyrights, Trademarks and Similar Rights. Section 7.12 of the
Disclosure Schedule is a true and complete list, in all material respects, of
all copyrights, trademarks, trade names, licenses, patents, permits, jingles and
other similar intangible property rights and interests applied for, issued to or
owned by the Seller or under which Seller is a licensee or franchisee and used
exclusively or primarily in the conduct of the business and operations of the
Stations referred to in Section 1.1.5 hereof
All of such rights and interests are issued to or owned by Seller, or
if licensed or franchised to Seller, to the best of Seller's knowledge, are
valid and in good standing and
<PAGE>
uncontested. Seller has delivered or made available to Buyer copies of all
material documents, if any, establishing such rights, licenses or other
authority. Seller has received no written notice and has no knowledge of any
infringements or unlawful use of such property. The properties listed in Section
7.12 of the Disclosure Schedule include all such properties necessary to conduct
in all material respects the business and operations of the Stations as now
conducted.
7.13 Financial Statements. Seller has delivered to Buyer complete
copies of the operating income statements for the Stations for years ended
December 31, 1994 and 1995, and for the six month period ended June 30, 1996
(the "Financial Statements"). The Financial Statements accurately represent and
present fairly the financial condition and results of operations of the Seller
for the periods indicated. Between June 30, 1996 and the date hereof, there has
been no material adverse change in the business, property, assets or condition
(financial or otherwise) of the Seller and (except for the transaction
contemplated herein) Seller has operated the Stations in all respects only in
the ordinary course of business. The Seller has engaged Miller, Kaplan, Arase &
Co., at the Buyer's expense, to perform an audit of the Stations operations for
the years ended December 31, 1994 and 1995 and to perform a review of the
Stations operations for the six month period ended June 30, 1996 (collectively,
the "Audit and Review"). The Buyer shall have the right to terminate this
Agreement within ten (10) business days of receipt of the Audit and Review if
the information contained in the Audit and Review are materially different from
the Financial Statements.
Except for (a) liabilities as and to the extent reflected or reserved
against in the Financial Statements, (b) liabilities not yet due and payable or
obligations to be performed or satisfied after the date hereof under contracts
and agreements listed in the Disclosure Schedule, or excluded
<PAGE>
from the Disclosure Schedule pursuant to the terms of this Agreement, (c)
liabilities incurred between June 30, 1995 and the date hereof at or by the
Stations in the ordinary and usual course of business (including tax liabilities
resulting solely from the normal operations of the Seller during such period)
and (d) any other liabilities relating to the Stations disclosed in this
Agreement or in the Disclosure Schedule, on the date hereof, Seller has no
material liabilities or obligations relating to the Stations of any nature,
whether accrued, absolute, contingent or otherwise, of a nature customarily
reflected in financial statements reflecting the accrual basis of accounting.
7.14 Personnel Information.
7.14.1 Section 7.14 of the Disclosure Schedule contains a true
and complete list of all persons employed at the Stations, including a
description of material compensation arrangements (other than employee benefit
plans set forth in Section 7.17 of the Disclosure Schedule) and a list of other
terms of any and all agreements affecting such persons. Seller has not received
notification that any of the current key employees of Seller at the Stations
presently plan to terminate their employment, whether by reason of the
transactions contemplated hereby or otherwise and Seller shall immediately
notify Buyer upon receipt of any such notice.
7.14.2 Seller is not a party to any Contract with any labor
organization, nor has Seller agreed to recognize any union or other collective
bargaining unit, nor has any union or other collective bargaining unit been
certified as representing any of Seller's employees at the Stations. Seller has
no knowledge of any organizational effort currently being made or threatened by
or on behalf of any labor union with respect to employees of Seller at the
Stations.
<PAGE>
During the past three (3) years, Seller has not experienced any strikes, work
stoppages, grievance proceedings, claims of unfair labor practices filed or
other significant labor difficulties of any nature relating to the Stations.
Except as disclosed in Section 7.14 of the Disclosure Schedule, Seller,
to the best of its knowledge, has complied in all material respects at the
Stations with all laws relating to the employment of labor, including, without
limitation, the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and those laws relating to wages, hours, collective bargaining,
unemployment insurance, workers' compensation, equal employment opportunity and
payment and withholding of taxes.
7.15 Litigation. Except as set forth in Section 7.15 of the Disclosure
Schedule, Seller is subject to no judgment, award, order, writ, injunction,
arbitration decision or decree materially adversely affecting the conduct of the
business of the Stations or the Station Assets, and there is no litigation or
proceeding or, to the best of Seller's knowledge, investigation pending or, to
the best of Seller's knowledge, threatened against Seller or the Stations in any
federal, state or local court, or before any administrative agency or arbitrator
(including, without limitation, any proceeding which seeks the forfeiture of, or
opposes the renewal of, any of the Station Licenses), or before any other
tribunal duly authorized to resolve disputes, which would reasonably be expected
to have any material adverse effect upon the business, property, assets or
condition (financial or otherwise) of the Stations or which seeks to enjoin or
prohibit, or otherwise questions the validity of, any action taken or to be
taken pursuant to or in connection with this Agreement. In particular, but
without limiting the generality of the foregoing, there are no applications,
complaints or proceedings pending or, to the best of Seller's knowledge,
threatened
<PAGE>
before the FCC or any other governmental organization with respect to the
business or operations of the Stations other than applications, complaints or
proceedings which affect the broadcasting industry generally.
7.16 Compliance With Laws. Except as set forth in Section 7.16 of the
Disclosure Schedule, Seller has not received any notice asserting any material
non-compliance by it in connection with the business or operation of the
Stations with any applicable statute, rule or regulation, federal, state or
local. Seller is not in default with respect to any judgment, order, injunction
or decree of any court, administrative agency or other governmental authority or
any other tribunal duly authorized to resolve disputes in any respect material
to the transactions contemplated hereby. Seller is in compliance in all material
respects with all laws, regulations and governmental orders applicable to the
conduct of the business and operations of the Stations, the failure to comply
with which would have a material adverse effect on the business, operations or
financial condition of the Stations, and its present use of the Station Assets
does not violate any of such laws, regulations or orders, violation of which
would have a material adverse effect on the Station Assets or Stations's
operation.
7.17 Employee Benefit Plans. Section 7.17 of the Disclosure Schedule
contains a true and complete list as of the date of this Agreement of all
employee benefit plans applicable to the employees of Seller employed at the
Stations. Seller maintains no other employee benefit plan as the term is defined
in Section 3 of the Employee Retirement Income Security Act of 1984, as amended,
applicable to the employees of Seller employed at the Stations.
<PAGE>
7.18 Accuracy of Information. No written statements made by Seller
herein and no information provided by Seller herein or in the documents,
instruments or other written communications made or delivered directly by Seller
to Buyer in connection with the negotiations covering the purchase and sale of
the Station Assets contains any untrue statement of a material fact or omits a
material fact necessary to make the statements contained therein or herein not
misleading and there is no fact known to Seller which relates to any information
contained in any such written document, instrument or communications which
Seller has not disclosed to Buyer in writing which materially affects adversely
the Stations or the Station Assets. To the extent that a representation or other
information is made to the Seller's knowledge or is otherwise qualified by its
terms, this representation shall not be interpreted to expand such limitations
or qualifications.
ARTICLE 8
COVENANTS OF BUYER
8.1 Closing. On the Closing Date, Buyer or its assignee shall purchase
the Station Assets from Seller as provided in Article 1 hereof and shall assume
the Assumed Liabilities of Seller as provided in Article 2 hereof.
8.2 Notification. Buyer shall notify Seller of any litigation,
arbitration or administrative proceeding pending or, to its knowledge,
threatened against Buyer which challenges the transactions contemplated hereby.
<PAGE>
8.3 No Inconsistent Action. Buyer shall not take any other action which
is materially inconsistent with its obligations under this Agreement.
8.4 Buyer's Post-Closing Covenant. Buyer, for a period of three (3)
years following the Closing Date, shall make available for audit and inspection
by Seller and its representatives for any reasonable purpose all records, files,
documents and correspondence transferred to it hereunder. Buyer shall at no time
dispose of or destroy any such records, files, documents and correspondence
without giving sixty (60) days prior notice to Seller to permit Seller, at its
expense, to examine, duplicate or take possession of and title to such records,
files, documents and correspondence. All personnel records shall be maintained
as confidential if required by any applicable state or federal law.
ARTICLE 9
COVENANTS OF SELLER
9.1 Seller's Pre-Closing Covenants. Seller covenants and agrees with
respect to the Stations that between the date hereof and the Closing Date,
except as expressly permitted by this Agreement or with the prior written
consent of Buyer, it shall act in accordance with the following:
9.1.1 Seller shall conduct the business and operations of the
Stations in the ordinary and prudent course of business and with the intent of
preserving the ongoing operations and assets of the Stations, including, but not
limited to, maintaining the independent identity of
<PAGE>
the Stations, retaining the current format of the Stations and using its best
efforts to retain the services of key employees.
9.1.2 Seller shall use commercially reasonable efforts to
preserve the operation of the Stations intact and to preserve the business of
Stations' customers, suppliers and others having business relations with the
Stations and continue to conduct financial operations of the Stations, including
its credit and collection policies, in the ordinary course of business with
substantially the same effort, and to substantially the same extent and in the
same manner, as in the prior conduct of the business of the Stations.
9.1.3 Seller shall operate the Stations in all material
respects in accordance with FCC Rules and Regulations and the Station Licenses
and with all other laws, regulations, rules and orders, and shall not cause or
permit by any act, or failure to act, any of the Station Licenses to expire, be
surrendered, adversely modified, or otherwise terminated, or the FCC to
institute any proceedings for the suspension, revocation or adverse modification
of any of the Station Licenses, or fail to prosecute with due diligence any
pending applications to the FCC.
9.1.4 Should any fact relating to Seller which would cause the
FCC to deny its consent to the transactions contemplated by this Agreement come
to Seller's attention, Seller shall promptly notify Buyer thereof and shall use
its reasonable efforts to take such steps as may be necessary to remove any such
impediment to the transactions contemplated by this Agreement.
<PAGE>
9.1.5 Seller shall not other than in the ordinary course of
business or in accordance with prepared budgets attached hereto as Schedule
9.1.5 or after receiving Buyer's prior written approval (i) sell or dispose of
or commit to sell or dispose of any of the Station Assets; (ii) grant or agree
to grant any general increases in the rates of salaries or compensation payable
to employees of the Stations; (iii) grant or agree to grant any specific bonus
or increase to any executive or management employee of the Stations; or (iv)
provide for any new pension, retirement or other employment benefits for
employees of the Stations or any increases in any existing benefits.
9.1.6 Seller shall provide Buyer prompt written notice of any
change in any of the information contained in the representations and warranties
made in Article 7 hereof or any Exhibits or Schedules herein or attached hereto.
9.1.7 Seller may enter into or renew any contract, agreement,
commitment or other understanding or arrangement in the ordinary course of
business, provided, however, that except with respect to contracts for the sale
of time for cash and except for Trade Agreements, the liability under said
contracts to be assumed by Buyer at Closing shall not exceed Five Thousand
Dollars ($5,000) per contract or Fifty Thousand Dollars ($50,000) in the
aggregate, without the written approval of the Buyer.
9.1.8 The Seller shall give the Buyer and the Buyer's counsel,
accountants, engineers and other representatives, full and reasonable access
during normal business hours to all of the Stations' personnel, properties,
books, contracts, reports and records including financial information and tax
returns with supporting work papers relating to the Stations, to all real estate
<PAGE>
buildings and equipment relating to the Stations, and to the Stations' employees
in order that the Buyer may have full opportunity to make such investigation as
it desires of the affairs of the Stations. Seller shall furnish Buyer with
information and copies of all documents and agreements including but not limited
to financial and operating data and other information in its possession
concerning the financial condition, results of operations and business of the
Seller and the Stations, that the Buyer may reasonably request in order to
complete the Buyer's due diligence examination of the Stations. The rights of
the Buyer under this Section shall not be exercised in such a manner as to
materially interfere with the business of the Stations.
9.1.9 Notwithstanding anything in this Agreement to the
contrary, Seller may enter into any contract without the consent of Buyer, but
if any such contract is outside the scope of the restrictions set forth in this
Section 9.1, Buyer shall not be obligated to accept and assume such contract at
Closing.
9.1.10 Seller shall use its reasonable best efforts,
consistent with past practice, to complete all obligations owing by Seller under
Trade Agreements prior to the Closing.
9.1.11 Seller shall spend not less than one hundred percent
(100%) of the cash promotions, advertising and research expenditures Seller
budgeted for the Stations for the period from the date of this Agreement through
the Closing Date, such budget is attached hereto as Disclosure Schedule 9.1.11.
9.1.12 Seller shall use its best efforts to maintain the
employment at the Stations and to renew, in accordance with this Agreement, the
existing employment contracts of the
<PAGE>
employees listed in Section 7.1 4 of the Disclosure Schedule. Between the date
hereof and for a period of three (3) years from the Closing Date, neither the
Seller nor any executive officer of Seller shall, directly or indirectly,
through any agent or otherwise, hire or solicit the employment of any of the
employees listed on Section 7.14 of the Disclosure Schedule who are hired by
Buyer at or after the Closing or who are subject to non-competition agreements
with Buyer (but only to the extent limited by such non-competition agreements),
except as agreed to in writing by Buyer and Seller.
9.1.13 Seller shall provide Buyer with revenue pacing reports
for the Stations on a weekly basis during the term of this Agreement.
Additionally, within twenty-five (25) days of the end of each month, Seller
shall deliver to Buyer an unaudited statement of revenue and expenses of the
Stations for the month then ended. The weekly revenue pacing reports and the
monthly statements of revenue and expenses shall be certified by the Chairman or
Chief Financial Officer of Seller, shall be true and complete to the best of
Seller's knowledge and shall fairly and accurately represent the results of
operation of the Stations for the period covered by such reports and statements.
Seller shall also furnish to Buyer any and all other information at such times
as is customarily prepared by Seller concerning the financial condition of the
Stations as Buyer may reasonably request.
9.1.14 The Seller shall cooperate with the Buyer by providing
the Buyer with such financial and accounting records as Buyer may reasonably
request in connection with the preparation of financial statements of the
Stations.
<PAGE>
9.2 Notification. Seller shall notify Buyer of any material litigation,
arbitration or administrative proceeding pending or, to its knowledge,
threatened against Seller which challenges the transactions contemplated hereby.
9.3 No Inconsistent Action. Seller shall not take any action which is
materially inconsistent with its obligations under this Agreement.
9.4 Closing Covenant. On the Closing Date, Seller shall transfer,
convey, assign and deliver to Buyer the Station Assets and the Assumed
Liabilities as provided in Articles 1 and 2 of this Agreement.
ARTICLE 10
JOINT COVENANTS
Buyer and Seller covenant and agree that between the date hereof and
the Closing Date, they shall act in accordance with the following:
10.1 Conditions. If any event should occur, either within or without
the control of any party hereto, which would prevent fulfillment of the
conditions upon the obligations of any party hereto to consummate the
transactions contemplated by this Agreement, the parties hereto shall use their
best efforts to cure the event as expeditiously as possible.
<PAGE>
10.2 Confidentiality. Buyer and Seller shall each keep confidential all
information obtained by it with respect to the other in connection with this
Agreement and the negotiations preceding this Agreement, and will use such
information solely in connection with the transactions contemplated by this
Agreement, and if the transactions contemplated hereby are not consummated for
any reason, each shall return to the other, without retaining a copy thereof,
any schedules, documents or other written information obtained from the other in
connection with this Agreement and the transactions contemplated hereby.
Notwithstanding the foregoing, neither party shall be required to keep
confidential or return any information which (i) is known or available through
other lawful sources, not bound by a confidentiality agreement with the
disclosing party; (ii) is or becomes publicly known through no fault of the
receiving party or its agents; (iii) is required to be disclosed pursuant to an
order or request of a judicial or governmental authority (provided the
disclosing party is given reasonable prior notice) or pursuant to the
requirements of the Securities Act of 1933 or the Securities Exchange Act of
1934; or (iv) is independently acquired or developed by such party without
violating any of the provision of this Section 10.2.
10.3 Cooperation. Buyer and Seller shall cooperate fully with each
other in taking any actions, including actions to obtain the required consent of
any governmental instrumentality or any third party necessary or helpful to
accomplish the transactions contemplated by this Agreement; provided, however,
that no party shall be required to take any action which would have a material
adverse effect upon it or any affiliated entity.
10.4 Control of Stations. Buyer shall not, directly or indirectly,
control, supervise or direct the operations of the Stations. Such operations,
including complete control and
<PAGE>
supervision of all Stations programs, employees and policies, shall be the sole
responsibility of Seller.
10.5 Consents to Assign. To the extent that any Contract is not capable
of being sold, assigned, transferred, delivered or subleased without the waiver
or consent of any third person (including a government or governmental unit), or
if such sale, assignment, transfer, delivery or sublease or attempted sale,
assignment, transfer, delivery or sublease would constitute a breach thereof or
a violation of any law or regulation, this Agreement and any Assignment executed
pursuant hereto shall not constitute a sale, assignment, transfer, delivery or
sublease or an attempted sale, assignment, transfer, delivery or sublease
thereof In those cases where consents, assignments, releases and/or waivers have
not been obtained at or prior to the Closing Date to the transfer and assignment
to the Buyer of the Contracts, this Agreement and any Assignment executed
pursuant hereto, to the extent permitted by law, shall constitute an equitable
assignment by Seller to the Buyer of all of Seller's rights, benefits, title and
interest in and to the Contracts, and where necessary or appropriate, the Buyer
shall be deemed to be the Seller's agent for the purpose of completing,
fulfilling and discharging all of Seller's rights and liabilities arising after
the Closing Date under such Seller Contracts. Seller shall use its reasonable
efforts to provide the Buyer with the benefits of such Contracts (including,
without limitation, permitting the Buyer to enforce any rights of Seller arising
under such Contracts), and the Buyer shall, to the extent the Buyer is provided
with the benefits of such Contracts, assume, perform and in due course pay and
discharge all debts, obligations and liabilities of Seller under such Contracts.
<PAGE>
[ 10.6 Bulk Sales Laws. The Buyer hereby waives compliance by Seller with
the provisions of the "bulk sales" or similar laws of any state. Seller agrees
to indemnify the Buyer and hold it harmless against any and all claims, losses,
damages, liabilities, costs and expenses incurred by the Buyer or any affiliate
as a result of any failure to comply with any "bulk sales" or similar laws.]
10.7 Employee Matters. Buyer shall have the right, but not the
obligation, to hire substantially all of the employees of the Stations
immediately following the Closing. Seller shall be responsible for all salary
and benefits of the employees of the Stations for the period prior to the
Closing Date. All employees of the Stations shall cease active participation in
all of Seller's employee benefit plans on the Closing Date, in accordance with
the terms of such plans.
ARTICLE 11
CONDITIONS OF CLOSING BY BUYER
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:
11.1 Representations Warranties and Covenants.
11.1.1 All representations and warranties of Seller made in
this Agreement shall be true and complete in all material respects as of the
date hereof and on and as of the Closing Date as if made on and as of that date,
except for changes expressly permitted or contemplated by the terms of this
Agreement.
<PAGE>
11.1.2 All of the terms, covenants and conditions to be
complied with and performed by Seller on or prior to Closing Date shall have
been complied with or performed in all material respects.
11.1.3 Buyer shall have received a certificate, dated as of
the Closing Date, executed by officers of Seller, to the effect that the
representations and warranties of Seller contained in this Agreement are true
and complete in all material respects on and as of the Closing Date as if made
on and as of that date, and that Seller has complied with or performed all
terms, covenants and conditions to be complied with or performed by it in all
material respects on or prior to the Closing Date.
11.2 Governmental Consents. The FCC Consents shall have become a Final
Order, or such condition shall have been waived by Buyer. In addition, all
consents, approvals, authorizations or other requirements prescribed by the HSR
Act shall have been obtained and satisfied.
11.3 Governmental Authorizations. Seller shall be the holder of the
Station Licenses and all other material licenses, permits and other
authorizations listed in Section 7.4 of the Disclosure Schedule, and there shall
not have been any modification of any of such licenses, permits and other
authorizations which has a material adverse effect on the Stations or the
conduct of its business and operations. No proceeding shall be pending which
seeks or the effect of which reasonably could be to revoke, cancel, fail to
renew, suspend or modify materially and adversely the Station Licenses or any
other material licenses, permits or other authorizations.
<PAGE>
11.4 Adverse Proceedings. No suit, action, claim or governmental
proceeding shall be pending against, and no order, decree or judgment of any
court, agency or other governmental authority shall have been rendered against,
any party hereto which would render it unlawful, as of the Closing Date, to
effect the transactions contemplated by this Agreement in accordance with its
terms.
11.5 Legal Opinion. Seller shall have delivered to Buyer a written
opinion of its General Counsel, dated as of the Closing Date, addressed to Buyer
in the form attached hereto as Exhibit B.
11.6 FCC Legal Opinion. Seller shall have furnished Buyer a written
opinion of Seller's FCC counsel, dated the Closing Date, addressed to Buyer in
the form attached hereto as Exhibit C.
11.7 Third-Party Consents. Seller shall have obtained and shall have
delivered to Buyer all third-party consents to the Material Contracts and to all
other Contracts assigned or transferred hereunder, except those the absence of
which will not have a material adverse effect on the operation of the Stations.
11.8 Closing Documents. Seller shall have delivered or caused to be
delivered to Buyer, on the Closing Date, all deeds, bills of sale, endorsements,
assignments and other instruments of conveyance and transfer reasonably
satisfactory in form and substance to Buyer,
<PAGE>
effecting the sale, transfer, assignment and conveyance of the Station Assets to
Buyer, including, without limitation, each of the documents required to be
delivered pursuant to Article 15.
11.9 Financing Statements. Seller shall have delivered to Buyer
releases or shall have delivered commitments from its lenders to deliver
releases immediately subsequent to the Closing, under the Uniform Commercial
Code of any financing statements filed against any Station Assets in the
jurisdiction in which the Station Assets are and have been located since such
Station Assets were acquired by Seller, except for informational filings made by
equipment lessors on lease obligations being specifically assumed by Buyer as
set forth in Section 7.9 of the Disclosure Schedule.
ARTICLE 12
CONDITIONS OF CLOSING BY SELLER
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:
12.1 Representations. Warranties and Covenants.
12.1.1 All representations and warranties of Buyer made in
this Agreement shall be true and complete in all material respects as of the
date hereof and on and as of the Closing
<PAGE>
Date as if made on and as of that date, except for changes expressly permitted
or contemplated by the terms of this Agreement.
12.1.2 All the terms, covenants and conditions to be complied
with and performed by Buyer on or prior to the Closing Date shall have been
complied with or performed in all material respects.
12.1.3 Seller shall have received a certificate, dated as of
the Closing Date, executed by officers of Buyer, to the effect that the
representations and warranties of Buyer contained in this Agreement are true and
complete in all material respects on and as of the Closing Date as if made on
and as of that date, and that Buyer has complied with or performed all terms,
covenants and conditions to be complied with or performed by it in all material
respects on or prior to the Closing Date.
12.2 Governmental Consents. The FCC Consents shall have become a Final
Order, or such condition shall have been waived by Buyer. In addition, all
consents, approvals, authorizations or other requirements prescribed by the HSR
Act shall have been obtained and satisfied.
12.3 Adverse Proceedings. No suit, action, claim or governmental
proceeding shall be pending against, and no other, decree or judgment of any
court, agency or other governmental authority shall have been rendered against
any party hereto which would render it unlawful, as of the Closing Date, to
effect the transactions contemplated by this Agreement in accordance with its
terms.
<PAGE>
12.4 Legal Opinion. Buyer shall have delivered to Seller an opinion of
its counsel, dated as of the Closing Date, addressed to Seller in the form
attached hereto as Exhibit E.
ARTICLE 13
TRANSFER TAXES: FEES AND EXPENSES
13.1 Expenses. Except as set forth in Section 13.2 and 13.3 hereof,
each party hereto shall be solely responsible for all costs and expenses
incurred by it in connection with the negotiation, preparation and performance
of and compliance with the terms of this Agreement.
13.2 Transfer Taxes and Similar Charges. All costs of transferring the
Station Assets in accordance with this Agreement, including recordation,
transfer and documentary taxes and fees, and any excise, sales or use taxes,
shall be borne equally by Buyer and Seller.
13.3 Governmental Filing or Grant Fees. Any filing or grant fees
imposed by any governmental authority the consent of which is required to the
transactions contemplated hereby shall be borne equally by Buyer and Seller.
ARTICLE 14
COMMISSIONS OR FINDER'S FEE
<PAGE>
14.1 Buyer's Representation and Agreement to Indemnify. Buyer
represents and warrants to Seller that neither it 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 except to The Sillerman Companies. Buyer further agrees to
indemnify, defend and hold Seller harmless from and against any and all claims,
losses, liabilities and expenses (including reasonable Adam's fees) arising out
of a claim by The Sillerman Companies or any other person or entity based on any
such arrangement or agreement made or alleged to have been made by Buyer. Buyer
shall be solely responsible for any fees due to The Sillerman Companies.
14.2 Seller's Representation and Agreement to Indemnify. Seller
represents and warrants to Buyer that neither it 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, except to Media Venture Partners. Seller further agrees to indemnify,
defend and hold Buyer harmless from and against any and all claims, losses,
liabilities and expenses (including reasonable attorney's fees) arising out of a
claim by Media Venture Partners. or any other person or entity based on any such
arrangement or agreement made or alleged to have been made by Seller. Buyer
shall be solely responsible for any fees due to Media Venture Partners.
ARTICLE 15
DOCUMENTS TO BE DELIVERED AT CLOSING
<PAGE>
15.1 Seller's Documents. At the Closing, Seller shall deliver or cause
to be delivered to Buyer the following:
15.1.1 Certified resolutions of the Board of Directors of
Seller approving the execution and delivery of this Agreement and each of the
other documents and authorizing the consummation of the transactions
contemplated hereby and thereby;
15.1.2 A certificate, dated the Closing Date, by Seller in the
form described in Section 11.1.3 above;
15.1.3 Governmental Certificates showing that Seller is duly
incorporated and in good standing in the State of Delaware and qualified and in
good standing in the State of Nebraska dated not more than forty-five (45) days
before the Closing Date;
15.1.4 Articles of Incorporation and Bylaws of Seller
certified by Seller's secretary as of the Closing Date;
15.1.5 Bill of Sale, assignments and other good and sufficient
instruments of conveyance, transfer and assignment, all in form and substance
reasonably satisfactory to counsel for Buyer, as shall be effective to vest in
Buyer or its permitted assignees, good and marketable title in and to the
Station Assets transferred pursuant to this Agreement in accordance with the
terms of this Agreement;
<PAGE>
15.1.6 At the time and place of Closing, originals or copies
of all program, operations, transmissions, or maintenance logs and all other
records required to be maintained by the FCC with respect to the Stations,
including the Stations's public file, shall be left at the Stations and thereby
delivered to Buyer;
15.1.7 The Seller's opinion letters referenced in Sections
11.5 and 11.6 above; and 15.1.8 Such additional information and materials as
Buyer shall have reasonably requested.
15.2 Buyer's Documents. At the Closing, Buyer shall deliver or cause to
be delivered to Seller the following:
15.2.1 The Purchase Price in accordance with Section 3.3
hereof;
15.2.2 A certificate, dated the Closing Date, by Buyer in the
form described in Section 12.1.3 above.
15.2.3 The opinion of Buyer's counsel, dated the Closing Date,
to the effect set forth in Section 12.4;
15.2.4 Governmental certificates showing that Buyer is duly
incorporated and in good standing in the State of Delaware and qualified and in
good standing in the of State Nebraska dated not more than forty-five (45) days
before the Closing Date;
<PAGE>
15.2.5 An assignment and assumption agreement or agreements
reasonably satisfactory in form and substance to counsel to Seller effecting the
assumption of the Assumed Liabilities;
15.2.6 Certified resolutions of the Board of Directors of
Buyer approving the execution and delivery of this Agreement and each of the
other documents and agreements referred to herein and authorizing the
consummation of the transactions contemplated hereby and thereby;
15.2.7 Articles of Incorporation and Bylaws of Buyer certified
by Buyer's secretary as of the Closing Date; and
15.2.8 Such additional information and materials as Seller
shall have reasonably requested.
ARTICLE 16
INDEMNIFICATION
16.1 Seller's Indemnities. Seller hereby agrees to indemnify, defend
and hold Buyer harmless with respect to any and all demands, claims, actions,
suits, proceedings, assessments, judgments, costs, losses, damages, liabilities
and expenses (including, without limitation,
<PAGE>
reasonable attorneys' fees) asserted against, resulting from, imposed upon or
incurred by Buyer directly or indirectly relating to or arising out of:
16.1.1 Any and all liabilities, obligations, or commitments of
Seller of any nature, whether absolute, accrued, contingent, or otherwise,
including those relating to all periods prior to the Closing, whether the claim
is asserted prior to or after the Closing, by reason of or resulting from
liabilities or obligations of or claims against Seller in connection with
Seller's ownership or operation of the Stations prior to the Closing, except
liabilities, obligations, or commitments of Seller included in the Assumed
Liabilities;
16.1.2 The breach of any of the representations or warranties
or failure by Seller to perform any covenants, conditions or agreements of
Seller set forth in this Agreement;
16.1.3 Any failure to comply with any "bulk sales" laws
applicable to the transactions contemplated hereby;
16.1.4 The failure of Seller to pay, perform or discharge when
due any of Seller's obligations, liabilities or Contracts not assumed by Buyer
pursuant to this Agreement;
16.1.5 The litigation listed on Section 7.15 of the Disclosure
Schedule; and
16.1.6 Any employee benefit plan maintained by Seller.
<PAGE>
16.2 Buyer's Indemnities. Buyer hereby agrees to indemnify, defend and
hold Seller harmless with respect to any and all demands, claims, actions,
suits, proceedings, assessments, judgments, costs, losses, damages, liabilities
and expenses (including, without limitation, reasonable attorneys' fees)
asserted against, resulting from, imposed upon or incurred by Seller directly or
indirectly relating to or arising out of:
16.2.1 The use or operation of the Station Assets after the
Closing Date;
16.2.2 The breach of any of the representations, warranties,
covenants, conditions or agreements of Buyer set forth in this Agreement; and
16.2.3 The Assumed Liabilities.
16.3 Rights. Buyer and Seller agree that the rights of indemnification
provided in this Article 16 are exclusive of and in addition to any and all
other such rights of Buyer or Seller hereunder.
16.4 Survival of Representations and Warranties. Either party shall
have the right to bring an action with respect to the representations and
warranties contained herein for a period of twelve (12) months following the
Closing Date, and upon the expiration of such period such right shall lapse and
be of no further force or effect.
16.5 Limitation on Indemnity. Notwithstanding anything to the contrary
contained in this Agreement, and subject to the proviso set forth below, neither
party shall have any liability
<PAGE>
or obligation to the other for breach of any representation, warranty, covenant
or agreement of the other in this Agreement except to the extent that the
aggregate of all claims for such breaches exceeds Fifty Thousand Dollars
($50,000) (the "Threshold Amount"), in which event the party so liable shall
then be liable for all claims for any such breaches, including the sums
constituting the Threshold Amount; provided, however, that the foregoing
Threshold Amount limitation shall not apply to Seller's obligation for the
Excess Trade Balance. Neither party shall have any post-closing liability or
obligation to the other for breach of any representation, warranty, covenant or
agreement of the other in this Agreement in excess of Ten Million Dollars
($10,000,000).
16.6 Procedures.
16.6.1 Promptly after the receipt by either party (the
"Indemnified Party") of notice of (A) any claim or (B) the commencement of any
action or proceeding which may entitle such party to indemnification under this
Section, such party shall give the other party (the "Indemnifying Party")
written notice of such claim or the commencement of such action or proceeding
and shall permit the Indemnifying Party to assume the defense of any such claim
or any litigation resulting from such claim. The failure to give the
Indemnifying Party timely notice under this Section 16.6.1 shall not preclude
the Indemnified Party from seeking indemnification from the Indemnifying Party
unless such failure has materially prejudiced the Indemnifying Party's ability
to defend the claim or litigation.
16.6.2 If the Indemnifying Party assumes the defense of any
such claim or litigation resulting therefrom with counsel reasonably acceptable
to Indemnified Party, the
<PAGE>
obligations of the Indemnifying Party as to such claim shall be limited to
taking all steps necessary in the defense or settlement of such claim or
litigation resulting therefrom and to holding the Indemnified Party harmless
from and against any losses, damages and liabilities caused by or arising out of
any settlement approved by the Indemnifying Party or any judgment in connection
with such claim or litigation resulting therefrom; provided, however, that the
Indemnified Party may participate, at its expense, in the defense of such claim
or litigation provided that the Indemnifying Party shall direct and control the
defense of such claim or litigation. The Indemnified Party shall cooperate and
make available all books and records reasonably necessary and useful in
connection with the defense. The Indemnifying Party shall not, in the defense of
such claim or any litigation resulting therefrom, consent to entry of any
judgment, except with the written consent of the Indemnified Party, or enter
into any settlement, except with the written consent of the Indemnified Party,
which does not include as an unconditional term thereof the giving by the
claimant or the plaintiff to the Indemnified Party of a release from all
liability in respect of such claim or litigation.
16.6.3 If the Indemnifying Party shall not assume the defense
of any such claim or litigation resulting therefrom, the Indemnified Party may,
but shall have no obligation to, defend against such claim or litigation in such
manner as it may deem appropriate, and the Indemnified Party may compromise or
settle such claim or litigation without the Indemnifying Party's consent. The
Indemnifying Party shall promptly pay any such settlement of such claim or
litigation and shall also promptly reimburse the Indemnified Party for the
amount of all expenses, legal or otherwise, incurred by the Indemnified Party in
connection with the defense against or settlement of such claim or litigation.
If no settlement of the claim or litigation is made, the Indemnifying Party
shall promptly reimburse the Indemnified Party for the amount of
<PAGE>
any judgment rendered with respect to such claim or in such litigation and of
all expenses, legal or otherwise, incurred by the Indemnified Party in the
defense against such claim or litigation.
ARTICLE 17
TERMINATION RIGHTS
17.1 Termination. 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:
(a) if the other party defaults in any material
respect in the observance or in the due and timely performance of any of its
covenants or agreements herein contained and such material default shall not be
cured within fifteen (15) days of the date of notice of default served by the
party claiming such material default; or
(b) if the FCC denies the FCC Application, or if the
FCC fails to grant the FCC Consents within twelve (12) months following the
filing of the FCC Application, provided that the party seeking termination has
diligently prosecuted the FCC Application in good faith; or
(c) on the first anniversary of this Agreement, if
there shall be in effect any judgment, final decree or order that would prevent
or make unlawful the Closing of this Agreement; or
(d) by the Buyer only, if there is a cessation of
broadcast transmissions by the Stations, for a period of three (3) full
consecutive days or for seven (7) or more days within any
<PAGE>
thirty (30) day period, or normal broadcast transmissions are not resumed by the
date immediately preceding the Closing Date; or
(e) as provided in Sections 7.11 and 18.3 or any
other section of this Agreement which specifically provides for terminations.
17.2 Liability. The termination of this Agreement under Section 17.1
shall not relieve any party of any liability for breach of this Agreement prior
to the date of termination.
ARTICLE 18
OTHER PROVISIONS
18.1 Specific Performance. Seller recognizes that, in the event Seller
refuses to perform the provisions of this Agreement, monetary damages alone will
not be adequate. Buyer shall, therefore, be entitled in such event to seek
specific performance of the terms of this Agreement. In any action to enforce
the provisions of this Agreement, Seller shall waive the defense that there is
an adequate remedy at law or equity and agrees that Buyer shall have the right
to seek specific performance of the terms of this Agreement without being
required to prove actual damages, post bond or furnish other security. If
specific performance cannot be obtained, Buyer shall be entitled to seek actual
monetary damages.
18.2 Liquidated Damages. If the Seller terminates this Agreement
pursuant to Section 17.1 above due to Buyer's breach of any material
representation, warranty, covenant or condition
<PAGE>
hereunder, and Seller is not at that time in breach of any material
representation, warranty, covenant or condition hereunder, then Seller would
suffer direct and substantial damages, which damages cannot be determined within
reasonable certainty. Therefore, because of the expense and delay which would be
incurred in such event by Seller, Buyer shall pay to Seller the amount of Two
Million Dollars ($2,000,000), which amount shall constitute liquidated damages.
It is understood and agreed that such liquidated damage amount represents
Buyer's and Seller's reasonable estimate of actual damages and does not
constitute a penalty. Recovery of liquidated damages from the Escrow Account
shall be the sole and exclusive remedy of Seller against Buyer for failing to
consummate this Agreement on the Closing Date and shall be applicable regardless
of the actual amount of damages sustained. In the event that either of the
parties hereto bring suit to enforce the provisions of this Section 18.2 or
Section 18.1 above, the prevailing party in any such action shall, in addition
to any remedies set forth in this Agreement, be entitled to recover reasonable
attorney's fees from the other party.
18.3 Risk of Loss. The risk of loss or damage to any of the Station
Assets prior to the Closing Date shall be upon Seller. Seller shall repair,
replace and restore any such damaged or lost Stations Asset to its prior
condition as soon as possible and in no event later than the Closing Date.
Except as provided below, if Seller fails to restore or replace a Stations Asset
with a value exceeding Fifty Thousand Dollars ($50,000), Buyer may elect either
to terminate this Agreement pursuant to Article 17 hereof or to consummate the
Closing on the Closing Date. If Seller fails to restore or replace such Stations
Asset and Buyer does not elect to terminate this Agreement, Seller shall assign
to Buyer at Closing Seller's rights under any insurance policy or pay over to
Buyer all proceeds of insurance covering such Stations Asset's damage,
destruction or loss. If the restoration and replacement of any damaged or
destroyed property has not been completed at
<PAGE>
the time the Closing would otherwise be held, then unless Seller and Buyer
otherwise agree, the Closing Date shall be delayed and shall take place within
fifteen (15) days after Seller gives written notice to Buyer of completion of
the restoration or replacement of such Stations Asset. If the delay in the
Closing Date under this Section 18.3 would cause the Closing to fall at anytime
after the period permitted by the FCC Consents, Seller and Buyer shall file an
appropriate request with the FCC for an extension of time within which to
complete the Closing.
18.4 Further Assurances. After the Closing, Seller shall from time to
time, at the request of and without further cost or expense to Buyer, execute
and deliver such other instruments of conveyance and transfer and take such
other actions as may reasonably requested in order to more effectively
consummate the transactions contemplated hereby to vest in Buyer good and
marketable title to the assets being transferred hereunder, and Buyer shall from
time to time, at the request of and without further cost or expense to Seller,
execute and deliver such other instruments and take such other actions as may
reasonably be requested in order to more effectively relieve Seller of any
obligations being assumed by Buyer hereunder.
18.5 Waiver. No delay or failure by any party hereto in exercising any
right, power or privilege under this Agreement, or under any other instrument or
document given in connection with or pursuant to this Agreement, shall impair
any such right, power or privilege or be construed as a waiver of any default or
any acquiescence therein. No single or partial exercise of any such right, power
or privilege shall preclude the further exercise of any right, power of
privilege, or the exercise of any other right, power or privilege.
<PAGE>
18.6 Severability. If any part or any provision of this Agreement shall
be invalid or unenforceable under applicable law, said part or provisions shall
be ineffective to the extent of such invalidity or unenforceability only,
without in any way affecting the remaining provisions of this Agreement which
shall be construed as if such invalid parts or provisions had not been inserted,
and such invalid or unenforceable provisions shall become and be immediately
amended and reformed to include only the portions thereof as are enforceable by
the court or such other body having jurisdiction of this Agreement; and the
parties agree that such portions as so amended and reformed shall be valid and
binding as though any wholly invalid or unenforceable portion had not been
included herein.
18.7 Benefit and Assignment. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns. No party may voluntarily or involuntarily assign its
interest under this Agreement without the prior written consent of the other
party; except that Buyer may assign its interests under this Agreement to any
entity affiliated with Robert F.X. Sillerman.
18.8 Entire Agreement. This Agreement and the Exhibits hereto embody
the entire agreement and understanding of the parties hereto and supersede any
and all prior agreements, arrangements and understandings relating to the
matters provided for herein. 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.
<PAGE>
18.9 Headings. The headings set forth in this Agreement are for
convenience only and will not control or affect the meaning or construction of
the provisions of this Agreement.
18.10 Governing Law. The construction and performance of this Agreement
shall be governed by the laws of the State of New York without giving effect to
the choice of law provisions thereof.
18.11 Notices. Any notice, demand or request required or permitted to
be given under the provisions of this Agreement shall be in writing and shall be
deemed to have been duly delivered and received on the date of personal delivery
or on the date of receipt, if mailed by registered or certified mail, postage
prepaid and return receipt requested, or on the date of a stamped receipt, if
sent by an overnight delivery service, and shall be addressed to the following
addresses, or to such other address as any party may request, in the case of
Seller, by notifying Buyer, and in the case of Buyer, by notifying Seller:
To Seller: American Radio Systems Corporation
116 Huntington Avenue, 11th Floor
Boston, Massachusetts 02116
Attn: Steve Dodge, President
Copy to: American Radio Systems Corporation
116 Huntington Avenue, 11th Floor
Boston, Massachusetts 02116
Attn: Michael Milsom, Esq.
To Buyer: Triathlon Broadcasting of Omaha, Inc.
650 B Street, Suite 1920
San Diego, California
Attn: Norman Feuer
Copy to: Howard Berkower, Esq.
Baker & McKenzie
<PAGE>
805 Third Avenue
New York, NY 10022
18.12 Financial Statements. The financial statements required to be
delivered to Buyer shall be mailed to the following:
Triathlon Broadcasting Company
150 East 58th Street, l9th Floor
New York, New York 10155
Attn: Chief Financial Officer
18.13 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which together
shall constitute one and the same instrument.
18.14 Accounts Receivable. Buyer acknowledges that all accounts
receivable in connection with the operation of the Stations, including but not
limited to accounts receivable for advertising revenues for programs and
announcements performed prior to the Closing Date and other broadcast revenues
for services performed prior to the Closing Date, shall remain the property of
Seller and that Buyer shall not acquire any beneficial right of interest herein
or responsibility therefor, with the following exception: for a period of ninety
(90) days following the Closing Date, Buyer agrees to use reasonable efforts to
collect such accounts receivable in the normal and ordinary course of business
and will apply all such amounts collected to the account debtor's oldest account
receivable first, except that any such accounts collected by Buyer from persons
who are also indebted to Buyer may be applied to Buyer's account where (i) there
is a pre-existing bona fide dispute between Seller and such account debtor with
respect to such account or where the account debtor specifically designates that
payment is to be applied to Buyer's account; (ii) Buyer has notified Seller of
such dispute or specific designation of payment
<PAGE>
by the account debtor; and (iii) thirty (30) days have elapsed since the date
notice was given by Buyer to Seller and such account remains subject to dispute
or such account debtor has not rescinded its specific designation of payment.
Such obligation and authority shall not extend to the institution of litigation,
employment of counsel or a collection agency or any other extraordinary means of
collection unless authorized in writing by Seller. Buyer agrees to cooperate
with Seller as to any litigation or other collection efforts instituted by
Seller to collect delinquent accounts receivable. Within fifteen (15) days
following the end of each of the first three (3) months subsequent to the
Closing Date, Buyer shall deliver to Seller a statement or report showing all
such collections effected since the Closing Date, together with a check or draft
for the amount of such collections, net of commissions. If at any time Buyer
determines that any such accounts are uncollectible, Buyer shall notify Seller
of such determination; and upon Seller's written request, and in any event on
the 90th day following the Closing Date, Buyer shall furnish or make available
to Seller all records, files and data relating to the collection efforts of
Buyer with respect to such accounts.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
SELLER:
AMERICAN RADIO SYSTEMS CORPORATION
By:________________________________
Steve Dodge
President
BUYER:
TRIATHLON BROADCASTING OF OMAHA, INC.
<PAGE>
By:________________________________
Norman Feuer
President
By:
Norman Feuer
President
<PAGE>
Exhibit 10.89
ASSET PURCHASE AGREEMENT
THIS AGREEMENT made and entered into this 18th day of October 18, 1996
by and between AMERICAN RADIO SYSTEMS CORPORATION, a Delaware corporation
(hereinafter "ARS") and ENTERTAINMENT COMMUNICATIONS, INC., a Pennsylvania
corporation (hereinafter "Entercom").
W I T N E S S E T H:
WHEREAS, pursuant to authorizations duly granted and issued by the
Commission ("Commission"), Brown operates radio Station KXOA-FM licensed to
Sacramento, California, (the "Station"); and
WHEREAS, ARS has entered into an asset purchase agreement with Brown
(the "Brown Agreement") dated July 24, 1996 under which ARS will acquire from
Brown all of the assets relating to the Station and has also entered into a time
brokerage agreement with Brown dated July 24, 1996, (the "BrownTBA") under which
ARS has purchased substantially all of the time on the Station until the "Brown
Agreement" occurs.
WHEREAS, Entercom and ARS have agreed, subject to prior approval by the
Commission and certain other conditions, to transfer and assign the licenses and
all other authorizations relating to the Station from ARS to Entercom and for
ARS to transfer and Entercom to receive all of the assets, properties, rights
and privileges used in connection with the Station as hereinafter set forth; and
WHEREAS, Entercom desires to accomplish such transfer as a like kind exchange
under 1031 of the Code.
NOW, THEREFORE, In consideration of the mutual promises herein
contained and of the
<PAGE>
representations and warranties hereinafter set forth and for other good and
valuable consideration, the parties, intending to be legally bound hereby, agree
as follows:
ARTICLE I
DEFINITIONS As used herein, the following terms shall have the following
respective meanings:
"Adjustment Time" shall mean 12:00:01 a.m. current local time in
Sacramento, California on the Closing Date.
"Agreement" shall mean this Asset Exchange Agreement.
"Applications" shall have the meaning set forth in Section 7.1 hereof.
"ARS" shall mean the corporation identified as such in the Preamble to
this Agreement.
"Assets" shall mean the Property and all of the Authorizations and all
applications for Authorizations for the Station pending before the Commission.
"Authorizations" shall mean all of the licenses, permits and
authorities granted by the Commission with respect to the operation of the
Station.
"Brown" shall mean The Brown Organization, a California corporation.
"Closing" shall mean the event of consummation of the transactions
contemplated by this Agreement as more fully described in Article VIII of this
Agreement.
"Closing Date" shall mean the date specified for Closing in Section 8.1
hereof.
"Code" shall mean the Internal Revenue Code of 19~6, as amended.
"Commission" shall mean the Federal Communications Commission.
"Contaminant" shall mean and include any pollutant, contaminant,
hazardous material (as defined in any of the Environmental Laws), toxic
substances (as defined in any of the Environmental Laws), asbestos or asbestos
containing material, urea formaldehyde, polychlorinated biphenyls,
<PAGE>
regulated substances and wastes, radioactive materials, and petroleum or
petroleum by-products, including crude oil or any fraction thereof.
"Contracts" shall mean all agreements, arrangements, commitments and
undertakings, written or oral, express or implied, relating to the Assets or any
of them, or to the present or future operation of the Station and to which ARS
and/or Brown is a party or by which ARS and/or Brown or its assignee may be or
become bound or obligated in any way (including without limitation all
agreements for the sale of advertising time on the Station and all trade or
barter agreements) except for any Leases.
"Environmental Laws" shall mean and include, but not be limited to, any
applicable federal, state or local law, statute, charter, ordinance, rule or
regulation or any governmental agency interpretation, policy or guidance,
including without limitation applicable safety/environmental/health laws such as
but not limited to the Commission's standards relating to radio frequency ("RF")
radiation exposure, the Resource Conservation and Recovery Act of 1976,
Comprehensive Environmental Response Compensation and Liability Act, Federal
Emergency Planning and Community Right-to-Know Law, the Clean Air Act, the Clean
Water Act, the Occupational Safety and Health Act, and the Toxic Substance
Control Act, as any of the foregoing have been amended, and any permit, order,
directive, court ruling or order or consent decree applicable to or affecting
the Property or any other property (real or personal) used by or relating to the
Station promulgated or issued pursuant to any Environmental Laws which pertains
to, governs, or controls the generation, storage, remediation or removal of
Contaminants or otherwise regulates the protection of health and the environment
including, but not limited to, any of the following activities, whether on site
or off site: (a) the emission, discharge, release, spilling or dumping of any
Contaminant into the air, surface water, ground water, soil or substrata; or (b)
the
<PAGE>
use, generation, processing, sale, recycling, treatment, handling, storage,
disposal, transportation, labeling or any other management of any Contaminant.
"Entercom" shall mean the corporation identified as such in the
Preamble to this Agreement and any Qualified Intermediary to which Entercom may
assign its rights and obligations hereunder pursuant to Section 10.11 hereof.
"Final Order" shall mean an action by the Commission upon any
application, including without limitation the Applications, for its consent,
approval or authorization, which action has not been reversed, stayed, enjoined,
set aside, annulled or suspended, and with respect to which action, no protest,
petition to deny, petition for rehearing or reconsideration, appeal or request
for stay is pending, and as to which action the time for filing of any such
protest, petition, appeal or request and any period during which the Commission
may reconsider or review such action on its own authority has expired.
"HSR Act" shall mean the Hart Scott Rodino Antitrust Improvements Act
of 1976, as amended, and all federal implementing regulations relating thereto.
"Leases" shall mean all agreements, arrangements or commitments and
undertakings, written or oral, express or implied, for the use or occupation of
any real or personal property required or used in the operation of the Station.
"Minnesota Assets" shall mean the assets relating to KEGE (AM),
Richfield, Minnesota, which Entercom is transferring to Salem Media of
Minnesota, Inc. pursuant to that certain asset purchase agreement dated July 30,
1996, (the "Minnesota Agreement").
"Permitted Encumbrances" shall mean (i) liens for current taxes not yet
due and payable, (ii) easements or restrictions of record which do not, either
individually or in the aggregate, impede or restrict the present operations of
the Station or impair the marketability of any property, and (iii) statutory
liens of landlords and carriers, materialmen, mechanics, warehousemen,
suppliers, and
<PAGE>
repairmen arising in the ordinary course of business and with respect to amounts
not yet delinquent, provided that such statutory liens do not interfere in any
material respect with the operation of the Station as currently conducted, and
provided that such statutory liens are removed or satisfied on or prior to the
Closing.
"Pittsburgh Assets" shall mean the assets relating to WDSY-FM and
WJJJ-FM, Pittsburgh, Pennsylvania, which are being exchanged by Entercom
pursuant an asset exchange agreement dated May 31, l9g6 among Entercom, Secret
Communications L.P. and Nationwide Communications, Inc., and the assets relating
to WDSY(AM), Pittsburgh, Pennsylvania which are being exchanged by Entercom
pursuant to an asset purchase agreement dated October 10, 1996 between Entercom
and Mortenson Broadcasting Company (collectively the "Pittsburgh Agreements").
"Property" shall mean all of the tangible and intangible property,
whether real or personal or mixed, and all rights and interests which are or
were at any time since August 1, 1996 used, necessary, or associated with the
Station or the present or future operation of the Station, excluding only cash,
cash equivalents, accounts receivable and those assets listed on Schedule
"4.1.3" as "Excluded Assets" and including without limitation (i) the assets and
property listed in Schedule "4.1.3" hereto as "Included Assets" (which schedule
of assets and property has been furnished to Entercom by ARS); (ii) all of ARS
and/or Brown's rights, titles, and interests under the Leases listed on Schedule
"4.1.6" hereto and the Contracts listed on Schedule "4.1.7" hereto; and (iii)
the call letters, copyrights, trademarks and other intellectual property
associated with the Station.
"Qualified Intermediary" shall mean a party described in U.S. Treasury
Regulations Section 1.1031 (k)- 1 (g)(4).
"Station" shall mean the frequency modulation (FM) radio broadcast
station licensed by the Commission to Sacramento, California broadcasting on
107.9 MHz with effective radiated power of 50 kw (h & v) at 404 feet HAAT and
currently assigned the call letters KXOA-FM.
<PAGE>
"Time Brokerage Agreement" shall mean any agreement which may be
entered into between Entercom and ARS relating to the Station under which
Entercom purchases substantially all of the broadcast time on the Station for
the period of time from the commencement of such agreement to the Closing Date.
ARTICLE II
SALE AND PURCHASE
2.1 TRANSFER OF ASSETS. Subject to the terms and conditions set forth in this
Agreement, at the Closing ARS shall transfer, convey, grant, assign and deliver
to Entercom free and clear of all liens and encumbrances and Entercom shall buy,
accept and receive from ARS, all of the Assets. PURCHASE PRICE. The Purchase
Price for the Assets is the sum of Twenty Seven Million Five Hundred Thousand
Dollars ($27,500,000.00).
2.2 PAYMENT. The Purchase Price to be paid by Entercom shall be payable in cash
delivered at the Closing by wire transfer or federal funds or in other
immediately available funds to the account of ARS at such financial institution
as ARS shall specify in writing.
2.3 ESCROW DEPOSIT. Within three (3) business days of the execution and delivery
of this Agreement, ARS, Entercom and Leventhal, Senter & Lerman as Escrow Agent
(the "Escrow Agent"), shall enter into an Escrow Agreement in the form of
Exhibit "A " hereto (the "Escrow Agreement") pursuant to which Entercom shall
deposit the amount of One Million Three Hundred Seventy Five Thousand Dollars
($1,375,000) as a deposit (the "Escrow Deposit") to be held and distributed as
provided in the Escrow Agreement. At the Closing the Escrow Deposit shall be
applied to the Purchase Price to be paid to ARS and the interest accrued thereon
shall be paid to Entercom. In the event this Agreement is terminated solely
because of Entercom's material breach of this Agreement and ARS shall not at
such time be in material breach of this Agreement, the Escrow Deposit shall be
paid to ARS as liquidated damages as provided in
<PAGE>
Section 9.4 and the interest accrued on the Escrow Deposit shall be paid to
Entercom. In the event this Agreement is terminated under any circumstances
other than as described in the preceding sentence, the Escrow Deposit an the
interest accrued thereon shall be paid to Entercom.
ARTICLE III
LIABILITIES
3.1 ASSUMPTION OF LIABILITIES. As partial consideration for the Assets,
Entercom, from and after the Closing Date, except to the extent previously
accomplished under the Time Brokerage Agreement, shall assume and pay, perform
and discharge the following obligations and commitments of ARS and no others:
3.1.1 The liabilities and obligations accruing after the Adjustment
Time with respect to the Leases listed on Schedule "4.1.6" hereto that are
specifically identified on Schedule "4.1.6" as being assumed by Entercom;
3.1.2 The liabilities and obligations accruing after the Adjustment
Time with respect to those Contracts listed on Schedule "4.1.7" hereto that are
specifically identified in such Schedule "4.1.7" as being assumed by Entercom;
3.1.3 All taxes and assessments that accrue on or with respect to the
Assets and the operation of the Station after the Adjustment Time. 3.2
LIABILITIES OF ARS. Except as specifically assumed by Entercom pursuant to
Section 3.1 hereof or pursuant to the terms of the Time Brokerage Agreement, ARS
shall pay or discharge any and all taxes, assessments, accounts payable,
commitments, agreements, undertakings, claims, debts, demands, obligations and
liabilities:
3.2.1 Incurred or made by ARS; or
<PAGE>
3.2.2 Caused by, arising out of or resulting from any act or omission
of ARS, their directors, officers, agents or independent contractors; or
3.2.3 Relating to ARS or the operation of the Station before the
Adjustment Time.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 ARS hereby represents and warrants to Entercom that:
4.1.1 CORPORATE STANDING. ARS is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
qualified to do business in the State of California. ARS has full power and
authority to engage in the business in which it is presently engaged and to make
and perform this Agreement according to its terms. ARS has duly and properly
taken all necessary corporate actions and proceedings required to be taken by
ARS to authorize ARS to execute, deliver and perform this Agreement and to
convey, assign, transfer and deliver to Entercom the Assets hereunder.
4.1.2 AUTHORIZATION. The execution, delivery and performance of this
Agreement and all transactions contemplated hereby by ARS have been duly
authorized by ARS's Board of Directors and shareholders and all necessary
corporate action on ARS's part has been duly taken.
4.1.3 QUALIFICATION AS ASSIGNOR. ARS knows of no facts which, under the
Communications Act of 1934, as amended, or the existing rules and regulations of
the FCC, would disqualify ARS or Brown as an assignor of the Authorizations or
would disqualify ARS as an assignee from Brown of the Authorizations.
4.1.4 ABSENCE OF CONFLICTING ORDERS. ARS, and to ARS's knowledge Brown
is not subject to any judgment, award, order, writ, injunction,, arbitration
decision or
<PAGE>
decree which prohibits or prevents the performance of this Agreement or the
consummation of any transaction contemplated under this Agreement, and there is
not litigation, administrative action, arbitration, proceeding or investigation
pending, or to the knowledge of ARS, threatened, against ARS or Brown or
affecting ARS or Brown in any federal, state or local court, or before any
administrative agency or arbitrator that would adversely affect ARS's ability to
perform its obligations under this Agreement or would hinder the consummation of
the transactions contemplated hereunder.
4.1.5 PROPERTY. The Property to be furnished to Entercom by ARS, listed
under the heading "Included Property" on Schedule "4.1.5" hereto, accurately
lists and includes all of the material tangible and intangible property whether
real, personal or mixed and substantially all of the rights and interests that
are now or were at any time since July 1, 1996 used, necessary, connected or
associated with or related to the Assets or the present or future operation of
the Station except for property replaced in the ordinary course of business with
property listed on Schedule "4.1.5" and except those assets specifically listed
on Schedule "4.1.5" under the heading "Excluded Property."
4.1.6 LEASES. ARS has delivered to Entercom true and correct copies of
all Leases listed on Schedule "4.1.6" hereto. There are no other Leases for any
items of real or personal property related to or associated with the Assets or
the present or future operation of the Station other than those disclosed on
Schedule "4.1.6" hereto.
4.1.7 CONTRACTS. ARS has delivered to Entercom true and correct copies
of all Contracts individually identified on Schedule "4.1.7" hereto. There are
no Contracts now in effect, written or oral, express or implied, which in any
way affect the Property or Assets or the present or future operation of the
Station other than as set forth on Schedule "4.1.7" hereto.
<PAGE>
4.1.8 APPLICATIONS. There are no applications relating to the Station
presently pending before the Commission other than those listed on Schedule
"4.1.1 1 " attached hereto.
4.1.9 TITLE TO PROPERTY. Except as disclosed on Schedule "4.1.9" hereto
at Closing ARS will have good, marketable and indefeasible ownership, right,
title and interest to the Property including the right to transfer same free and
clean of any mortgage, conditional sale agreement, security interest, lease,
lien, hypothecation, pledge, encumbrance, restriction, liability, charge, claim
or imperfection of title applicable to the Property or any of the income or
revenue therefrom whatsoever except for the Permitted Encumbrances.
4.1.10 NO DEFAULTS. ARS and to its best knowledge Brown, has complied
with all of the terms of the Contracts listed on Schedule"4.1.7" hereto and the
Leases listed on Schedule "4.1.6" hereto and such Contracts and Leases at
Closing shall be enforceable by ARS in accordance with their respective terms,
except as such enforcement may be limited by applicable bankruptcy and similar
laws affecting the enforcement of creditors' rights and general equitable
principles affecting the enforcement of equitable remedies (including within
said equitable remedies without limitation the remedy of specific performance).
ARS is not in default thereunder and no event has occurred which with the
passage of time or the giving of notice or both would constitute a default by
ARS thereunder. To ARS's knowledge all other parties to the Contracts and Leases
have complied with the provisions thereof and are not in default thereunder and
no event has occurred which with the passage of time or the giving of notice or
both would constitute a default by any such other party thereunder.
4.1.11 AUTHORIZATIONS. All authorizations necessary to the lawful
operations of the Station have been granted and issued by the Commission to ARS
or Brown and are listed on Schedule "4.1.11" attached hereto and are now in full
force and effect. There are no applications of ARS or Brown relating to the
Station pending with the Commission except as listed on such
<PAGE>
Schedule "4.1.1 1". ARS and to its best knowledge Brown, has performed and
complied with all of the terms and conditions of said authorizations. Except as
listed on Schedule "4.1.11" and "4.1.14" no proceedings are pending, or to the
knowledge of any officer of ARS are threatened, which may result in the
revocation, modification, non-renewal or suspension of any of any of the
Authorizations, the denial of any pending applications, the issuance of a cease
and desist order, or the imposition of any other administrative or judicial
sanction to which the Station or the Assets is or may be subject. All ownership
reports, renewal applications, and other material reports and documents required
to be filed by ARS and to its best knowledge Brown, with the Commission have
been filed, and all such reports, applications and documents are true and
correct. The Station are identified by their present call letters and unless
otherwise validly authorized by the Commission are operated at maximum
authorized power on their assigned frequency at the power and height authorized
by the Commission.
4.1.12 PERMITS AND LICENSES. In addition to the Authorizations at
Closing, ARS shall have obtained and/or holds all other governmental permits and
licenses necessary for the lawful operation of the Station. All such
governmental permits and licenses are also listed on Schedule "4.1.11" hereto.
All terms, restrictions and requirements of such permits and licenses have been
complied with and ARS and to its best knowledge Brown, is not in default of any
of same.
4.1.13 COMPLIANCE WITH LAWS. ARS and to its best knowledge Brown, has
complied with all orders (to which ARS or Brown respectively, is a party or is
subject to), applicable laws, rules, and regulations of all federal, state and
local authorities with respect to the Assets and operation of the Station. ARS
is not, nor to ARS's knowledge has any third party asserted that it or Brown is
in default with respect to or in violation of: (a) any judgment, order,
injunction or decree; or (b) rule or regulation of any court, administrative
agency or other
<PAGE>
governmental authority, in either case in any respect material to this
transaction. All material reports, returns and other documents filed by ARS and
to its best knowledge Brown, with any administrative agency or governmental
authority are true, correct and complete in all material respects.
4.1.14 LITIGATION AND CLAIMS. Except as disclosed in Schedule "4.1.14"
hereto, no litigation, proceeding, or controversy is pending, or to the
knowledge of ARS is threatened, which might affect any of the Assets, ARS's
right or power to transfer the same, the ownership, possession, use or resale of
any of the Assets, or the operation of the Station by the Entercom or by any
assignee of Entercom. No claim has been made or asserted against ARS or to its
best knowledge Brown, material to this transaction; and there is no basis known
to ARS for any such litigation, proceeding, controversy or claim.
4.1.15 LABOR RELATIONS. In all respects material to this transaction,
ARS and to its best knowledge Brown, has complied with all applicable laws,
rules and regulations pertaining to the employment of labor, including those
relating to wages, hours, collective bargaining and the payment of or
withholding of taxes, and ARS and to its best knowledge Brown, has withheld all
amounts required by law or agreement to be withheld from the wages or salaries
of its employees and is not liable for any arrears of wages or any tax or
withholding or any penalties or interest for failure to comply with any of the
foregoing; and there are no collective bargaining agreements relating to the
relationship between any employee of the Station and the Station. ARS has no
knowledge of any union organizing activities involving or targeting any
employees of the Station.
4.1.16 EMPLOYMENT CONTRACTS. Except as disclosed on Schedule "4.1.7"
there are no written contracts for the employment of any personnel relating to
the Station and all
<PAGE>
employees of the Station are employed on an "at will" basis which may be
terminated without cause at any time and with not more than two weeks' notice.
4.1.17 INSURANCE. ARS or Brown or both currently maintains and has in
the past maintained insurance coverage on the Property and with respect to its
employees and operations in amounts and in respect of liabilities and risks
prudently insured against by radio broadcasters. Schedule "4.1.17" attached
hereto contains a true and complete listing of all such policies and binders of
insurance currently held by or on behalf of ARS or Brown respectively, relating
to the Property and the Station's employees and operations. Such policies and
binders are valid and enforceable by ARS or Brown respectively, in accordance
with their respective terms, except as such enforcement may be limited by
applicable bankruptcy and similar laws affecting the enforcement of creditor's
rights and general equitable principles affecting the enforcement of equitable
remedies (including within said equitable remedies without limitation the remedy
of specific performance) and are outstanding and duly in force as of the date
hereof and provide adequate property insurance for the replacement of the
tangible assets of the Station and adequate liability insurance for the
protection of the business and operations of the Station.
4.1.18 EMPLOYEE BENEFIT AND RETIREMENT PLANS. ARS does not now maintain
and has never maintained any "employee pension benefit plan" or any "employee
welfare benefit plan" (as defined respectively in Sections 3(2) and 3(1) of
ERISA on behalf of the Station's employees except as listed on Schedule "4.1.18"
hereto and all retirement plans, bonus arrangements, life insurance or medical
insurance programs or any other fringe benefit arrangements (collectively
"Fringe Benefit Arrangements") for any employees of the Station whether written
or unwritten except as are listed on Schedule "4.1.18" hereto. All "employee
pension benefit plans," "employee welfare benefit plans" and Fringe Benefit
Arrangements listed on Schedule "4.1.18" hereto comply in all respects with all
applicable requirements of law and
<PAGE>
regulation. ARS/Brown does not maintain an employee pension benefit plan which
is subject to Title IV of ERISA and has never sponsored or contributed to any
"multi-employer pension plan" (as defined in Section 3(37) of ERISA).
4.1.19 EMPLOYEES. Schedule "4.1.19" attached hereto contains a listing
of the name, address, salary or compensation, accrued and/or earned vacation,
sick leave and/or other benefits, job description and original employment date
of all current employees of the Station along with, to the best of ARS's
knowledge, the dates and information concerning any previous salary or
compensation change or adjustment and the reasons for any such change or
adjustment for each such current employee. Entercom may, but shall not be
obligated (other than through its own actions independent of any provisions of
this Agreement) to offer employment to any employee of Station who was employed
by ARS or Brown at or before the Closing. With respect to any employees of ARS
that Entercom employs at the time of the commencement of the Time Brokerage
Agreement or Closing, ARS shall be responsible for and pay to such employees all
accrued or earned compensation and benefits of any kind as of the commencement
of the Time Brokerage Agreement or the Adjustment Time, including without
limitation severance or other termination benefits if any, provided that ARS
shall not be responsible for such items to the extent that Entercom agrees to be
responsible for such items and receives a credit therefore pursuant to the
provisions of Section 8.2 hereof or pursuant to the proration provisions of the
Time Brokerage Agreement.
4.1.20 BULK TRANSFER LAWS. Neither this Agreement, the Closing, nor any
other transactions contemplated by this Agreement are subject to any Bulk
Transfer Law or similar law in any jurisdiction applicable to the transactions
contemplated by this Agreement.
4.1.21 BROADCASTING CONTRACTS. Except as disclosed on Schedule
"4.1.21", all Contracts for the sale of broadcast advertising are terminable
without penalty by Station on
<PAGE>
not more than thirty (30) days prior written notice and all Contracts for the
sale of broadcast advertising on a trade or barter basis are subject to
preemption in favor of cash advertising and all trade or barter advertising
under such Contracts are to be broadcast prior to the time of Closing. Schedule
"4.1.21 " also lists the trade and barter contracts for the Station as of the
date of this Agreement, showing the current amount of trade and barter
advertising obligations of the Station now outstanding all trade and barter
receivables owed to the Station. The total amount of all trade and barter
advertising obligations of the Station outstanding at Closing will not exceed
$20,000 and the total of the value of the advertising obligations of the Station
outstanding less the value of the trade and barer receivables owed to the
Station as of the Closing Date shall not exceed $10,000.
4.1.22 PROPERTY PLANT AND EQUIPMENT. All structures, facilities,
machinery, equipment, furniture, fixtures, automobiles, trucks, tools and other
tangible personal property included within the Property are in good operating
condition and reasonable repair and are usable in the ordinary course of the
operation of the Station. Such tangible personal property includes all equipment
and devices reasonably necessary for proper and safe operation of the Station in
accordance with generally accepted engineering and operating practices of a
prudent radio broadcast operator.
4.1.23 ENVIRONMENTAL COMPLIANCE, POLYCHLORINATED
BIPHENYLS ASBESTOS AND OTHER TOXIC OR HAZARDOUS SUBSTANCES.
None of the Property or any real property used by the Station in its operations
or for which the owner of the Property could be held responsible under any
Environmental Laws contains: (i) any asbestos, polychlorinated biphenyls
("PCBs") or any PCB contaminated oil; (ii) any Contaminants; or (iii) any
underground storage tanks. All of the Property and such real property
<PAGE>
are in full compliance with all applicable Environmental Laws and ARS has no
knowledge of any notice, assertion or claim to the contrary.
4.1.24 FINANCIAL AND OTHER INFORMATION. Schedule "4.1.24" attached
hereto contains a list of all of the financial, technical and operating
information provided to Entercom by ARS concerning the operation of the Station.
All such information and any additional information provided to Entercom by ARS
pursuant to this Agreement is true and correct and not misleading, does not fail
to state any material information necessary to make the statements made therein
not misleading, and the financial statements and material to be provided to
Entercom by ARS will fairly present the financial condition of the Station as of
the respective dates thereof and the results of operation of the Station for the
respective periods then ended; and were prepared in accordance with generally
accepted accounting principles consistently applied.
4.1.25 CLOSING. All of the foregoing representations and warranties of
ARS shall be true and accurate as of the Closing Date and said representations
and warranties shall be deemed to have been restated in full by ARS as of the
Closing Date except to the extent they speak as of a particular time other than
the Closing Date. 4.2 Entercom represents and warrants to ARS that:
4.2.1 CORPORATE STANDING. Entercom is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Pennsylvania, and at the Closing Date will have the corporate power and
authority to conduct its business as proposed to be conducted and upon the
acquisition of the Assets will be duly qualified to do business in the State of
California.
4.2.2 AUTHORIZATION OF AGREEMENT: NO BREACH. Entercom has the corporate
power and authority to execute, deliver and perform this Agreement and such
other agreements as are necessary to consummate the transactions contemplated
hereby and this
<PAGE>
Agreement constitutes the valid and binding obligation of Entercom subject to
the receipt of the consents and approvals required elsewhere herein. Assuming
the said consents and approvals are obtained, neither such execution, delivery
and performance nor compliance by Entercom with the terms and provisions hereof
will conflict with or result in a breach of any of the terms, conditions or
provisions of the Certificate of Incorporation or Bylaws of Entercom or any
judgment, order, injunction, decree, regulation or ruling of any court or any
other governmental authority to which Entercom is subject or any material
agreement or contract to which Entercom is a party or to which it is subject, or
constitute a material default thereunder.
4.2.3 QUALIFICATION AS ASSIGNEE. Entercom knows of no facts which,
under the Communications Act of 1934, as amended, or the existing rules and
regulations of the FCC, would disqualify Entercom as an assignee of the
Authorizations.
4.2.4 ABSENCE OF CONFLICTING AGREEMENT AND REQUIRED
CONSENTS. Entercom is not subject to any judgment, award, order, writ,
injunction, arbitration decision or decree which prohibits the performance of
this Agreement or the consummation of any transaction contemplated under this
Agreement, and there is no litigation, administrative action, arbitration,
proceeding or investigating pending, or to the knowledge of Entercom,
threatened, against Entercom or affecting Entercom in any federal, state or
local court, or before any administrative agency or arbitrator that would
adversely affect Entercom's ability to perform its obligations under this
Agreement or would hinder the consummation of the transactions contemplated
hereunder.
4.2.5 All of the foregoing representations and warranties of Entercom
shall be true and accurate as of the Closing date and said representations and
warranties shall be deemed to have been restated in full by Entercom as of the
Closing Date except to the extent they speak as of a particular time other than
the Closing Date.
<PAGE>
ARTICLE V
CONDITIONS
5.1 COMMISSION CONSENT AND APPROVAL. Performance of the obligations of the
parties under this Agreement and the closing of the transaction provided for
herein are and shall be subject to the occurrence and concurrence of the express
condition precedent that the Commission has granted its consent and approval in
writing to the assignment to Entercom of the Authorizations issued by the
Commission for the Station and the waiting period under the HSR Act (as it may
be extended) applicable to the transfer of the Assets to Entercom shall have
expired. 5.2 ENTERCOM'S CONDITIONS. Performance of the obligations of Entercom
under this Agreement and the Closing of the transactions provided for herein are
and shall be subject to the occurrence of the express conditions precedent, any
of which may be waived by Entercom that:
5.2.1 The Commission's consent and approval required by Section 5.1
hereof and the consent and required approval of any other governmental
authority, including that under the HSR Act, has been issued or received without
material adverse conditions and the Commission's consent shall have become a
Final Order; and
5.2.2 Between the date of this Agreement and the date of Closing,
except for periods not to exceed twenty-four (24) hours in any one continuous
period or forty-eight (48) hours in the aggregate, the Station shall have
broadcast continuously from its main antenna.
5.2.3 At or prior to Closing, Entercom shall not have received any
information that the Property and/or any real property used by the Station in
its operations and for which Entercom could be held responsible under any
Environmental Law may contain any asbestos, PCB's, PCB
<PAGE>
contaminated oil, underground storage tanks, or any Contaminant, or that any of
the property or any such real property are not or may not be in full compliance
with all Environmental Laws.
5.2.4 ARS's representations and warranties contained in Section 4.1
hereof shall be true and correct in all material respects at and as of the
Closing Date as if made on and as of such date except to the extent that they
speak as of a particular time other then the Closing Date.
5.2.5 All of the terms, covenants and conditions to be complied with
and performed by ARS on or prior to the Closing Date shall have been complied
with or performed in all material respects.
5.2.6 Closing shall have been consummated on or before November 24,
1997 provided that the failure to consummate Closing shall not be due to a
default by Entercom in its obligations hereunder.
5.3 ARS'S CONDITIONS. Performance of the obligations of the ARS under this
Agreement and the Closing of the transactions provided for herein are and shall
be subject to the occurrence of the express conditions precedent, each of which
may be waived by the ARS that:
5.3.1 Entercom's representations and warranties contained in Section
4.2 hereof shall be true and correct in all material respects at and as of the
Closing Date as if made on and as of such date except to the extent they speak
as of a particular time other then the Closing Date and only if the failure of
any such representation or warranty to be true and correct at Closing prevents
the Entercom from consummating the Closing hereunder.
5.3.2 All of the terms, covenants and conditions to be complied with
and performed by Entercom on or prior to the Closing Date shall have been
complied with or performed in all material respects. 5.4 NONOCCURRENCE OF
CONDITIONS. This Agreement may be terminated in accordance with Article IX
hereof as follows:
<PAGE>
5.4.1 By either party if consent to the assignment of the
Authorizations issued by the Commission for said Station is denied by Final
Order;
5.4.2 By Entercom if Entercom is not then in default hereunder and the
conditions set forth in Section 5.2 of this Agreement shall not either have been
met or waived by Entercom; and
5.4.3 By ARS if ARS is not then in default hereunder and the conditions
set forth in Section 5.3 of this Agreement shall not either have been met or
waived by ARS.
ARTICLE VI
OPERATIONS PENDING CLOSING.
6.1 AFFIRMATIVE COVENANTS OF ARS. During the period from the date of this
Agreement to the Closing Date, except as permitted under or in accord with the
terms of the Time Brokerage Agreement, ARS shall and to the extent practicable
under the Brown Agreement, shall cause Brown to:
6.1.1 Conduct the business and operations of the Station in accordance
with sound and prudent operating practices and all requirements of law and
regulation and, to the extent consistent with the foregoing, in the same manner
in which the same have heretofore been conducted with the intent of preserving
the ongoing operations and business of the Station. In connection therewith ARS
shall and shall cause Brown to use its reasonable efforts to preserve the
operations, organization and reputation of the Station consistent with past
practice, to preserve the good will and business of the Station's advertisers,
suppliers and others having business relations with the Station with no less
effort than as in the prior conduct of the business of the Station.
<PAGE>
6.1.2 Cooperate with Entercom in connection with Entercom's review,
analysis and monitoring of the Assets and the operations of the Station to the
end that an efficient transfer of the Assets may be made at Closing and the
business of Station may continue on an uninterrupted basis. In addition to
providing information required hereunder or reasonably requested by Entercom,
ARS agrees to promptly notify Entercom of any unusual problems or developments
of which ARS becomes aware with respect to the Assets, or the business of the
Station and of any change in any of the information contained in the
representation and warranties made in Article 4 including without limitation,
immediate notification to Entercom of any information ARS receives concerning
offers of employment by third parties to any of the Station's employees and of
any litigation, arbitration or administrative proceeding pending, or to the
knowledge of ARS, threatened which challenges the transactions contemplated
hereby.
6.1.3 Consult with Entercom regarding any proposed material changes to
the operation of the Station to insure the continued operation of the Station as
they are now operated and cooperate with Entercom to insure a smooth transfer of
ownership and continuity of operations at Closing. The foregoing shall not be
construed to require Entercom to consult with ARS or to render any advice to
ARS.
6.1.4 Entercom may obtain a Phase I Environmental Assessment of all of
the property and any real property used by the Station in their operations and
for which Entercom could be held responsible under any Environmental Laws. In
the event such Assessment discloses any potential for conditions contrary to the
representations and warranties contained in Section 4.1.23, ARS will take
whatever additional measures recommended in such Assessment and will take
whatever steps are necessary to insure that such representations and warranties
are true and correct as of the date of Closing.
<PAGE>
6.1.5 Cooperate with Entercom in Entercom's efforts to employ at, the
earlier of the commencement of the Time Brokerage Agreement or Closing any of
the current employees relating to the Station listed on Schedule 4.1.19 that
Entercom chooses, including without limitation: (i) allowing Entercom to meet
privately with any such current employees of the Station; (ii) not interfering
with or attempting to undermine in any way, Entercom's efforts to employ such
employees at the earlier of the commencement of the Time Brokerage Agreement or
Closing; and (iii) not discussing or offering continued employment with any such
employees until Entercom has affirmatively notified ARS that Entercom will not
offer employment to that employee at the earlier of the commencement of the Time
Brokerage Agreement or Closing.
6.1.6 ARS shall make capital expenditures reasonably required to
maintain and repair the Station equipment and to continue the operations of the
Station consistent with past practice. 6.2 NEGATIVE COVENANTS OF ARS. Unless
Entercom has given its consent in writing, which consent shall not be
unreasonably withheld or delayed, or unless permitted under or in accord with
the terms of the Time Brokerage Agreement, ARS shall not and shall not permit
Brown to, directly or indirectly, during the period from the date hereof to the
Closing Date:
6.2.1 Cancel, amend, modify adversely, assign, encumber or in any way
discharge or terminate the Leases.
6.2.2 By any act or omission surrender, modify adversely, forfeit or
fail to renew on regular terms any Authorizations for the Station or take or
omit any action which might result in the Commission instituting any proceedings
for the revocation, suspension or modification of any of the Authorizations.
6.2.3 Except in the usual and ordinary course of business, sell or
dispose of any of the Assets; provided that any Assets so disposed of in the
ordinary course of business are replaced with Assets of like kind, quality and
quantity;
<PAGE>
6.2.4 Suffer or permit the creation of any mortgage, conditional sale
agreement, security interest, lease, lien, hypothecation, pledge, encumbrance,
restriction, liability, charge, claim or imperfection of title on or with
respect to any of the Assets other than Permitted Encumbrances.
6.2.5 Fail to repair, replace or maintain the Station's transmitting
equipment, studio and other technical equipment and furniture, fixtures and
office equipment in good order and condition reasonable wear and tear excepted
and in accordance with the generally accepted standards of maintenance
applicable to the broadcasting industry or fail to maintain at levels consistent
with past practice its equipment, supplies and other tangible property used or
usable in the operation of the Station;
6.2.6 Enter into any agreement for the sale of broadcast time on the
Station which cannot be terminated upon not more than thirty (30) days' written
notice.
6.2.7 Enter into or extend or renew any agreement for the sale of
broadcast time on the Station on a trade or barter basis which would cause the
total obligation for trade broadcast time or the differential between trade
broadcast time due and trade receivables to exceed the limits in Section 4.1.21.
6.2.8 Increase or decrease the number of full time employees currently
employed solely by the Station or increase or decrease the total current weekly
employee payroll expense from that existing in the last payroll period in July
1, 1996 for the Station by more than 10% or materially change any sales
commission formula.
6.2.9 Hire any new or replacement management or supervisory employees,
or talent for major day parts, including without limitation general manager,
sales manager, program director, announcer for any period 6 a.m. to midnight
Monday through Friday, business manager, or promotion director.
<PAGE>
6.2.10 Modify the current format and/or the program selection practices
of the Station or materially modify the music/program rotation policy of the
Station.
6.2.11 Reduce the amount or modify the type of research and external
promotion advertising for the Station from that which has been budgeted by ARS
as reflected in the documents listed on Schedule "4. 1.24" hereto.
6.2.12 Reduce or increase the amount of on-air promotion, contests or
the dollar value of prizes on the Station from that which has been budgeted by
ARS as reflected in the documents listed on Schedule "4.1.24" hereto.
6.2.13 Allow or cause to exist any event of default material to this
transaction under any agreement to which ARS is a party.
6.2.14 Fail to take any reasonable actions necessary to maintain the
Station continuous broadcast operations from its main antenna.
6.2.15 Fail to take any reasonable actions necessary to avoid the
happening of or to cure the existence of any damage to or impairment of any of
the Assets.
6.2.16 Enter into any new material contracts, other than Contracts for
the sale of broadcast time, that will not be fully performed prior to the date
of Closing.
6.2.17 Renew, extend, modify or cancel, or allow or suffer the
automatic renewal, extension or cancellation of any of the Contracts or Leases.
6.2.18 Fail to operate the Station in conformity with all of the
applicable requirements of law and regulation.
6.2.19 Deviate from the Station's current broadcast scheduling
practices of broadcasting not more than 12 commercial announcements nor more
than 10 minutes of commercial announcements in any one hour
<PAGE>
6.2.20 Deviate in any material way with respect to the methodology ARS
and its predecessors have utilized during the one year period prior to the date
of this Agreement for selling commercial air time on the Station and for setting
rates with respect to such commercial air time.
6.3 NO CONTROL BY ENTERCOM. Nothing contained in this Agreement shall give to
Entercom any right to control the operations of the Station prior to the Closing
Date. Any advice, counsel or consent given to ARS by Entercom under this Article
VI will not mitigate, detract from or otherwise affect ARS's representations,
warranties or obligations under this Agreement and the consequences of ARS/Brown
acting on any such advice, counsel or consent will be solely ARS's
responsibility. Any advice, counsel or consent given to Entercom by ARS under
this Article VI will not mitigate, detract from or otherwise affect Entercom's
representations, warranties or obligations under this Agreement.
ARTICLE VII
PREPARATION FOR CLOSING
7.1 APPLICATION TO COMMISSION. The parties hereby bind themselves to use all
reasonable efforts, and to cooperate with each other, in seeking the consent and
approval of the Commission to the assignment of all Authorizations heretofore
granted and issued in connection with the Station, as herein provided;
diligently and promptly to prepare, sign and file with the Commission within ten
(10) days from the date of this Agreement any and all applications requisite or
desirable to procure such consent and approval (the "Applications"); and
diligently and promptly to prepare and submit to the Commission all information,
data, exhibits, amendments, resolutions, statements and other material necessary
or proper in connection with the Applications; and diligently to pursue the
grant of a Final Order approving such Applications by the Commission. With
respect to the foregoing, ARS hereby agrees, commits and binds itself
<PAGE>
to prepare and deliver to Entercom on or before five- (S) days from the date of
this Agreement ARS's portions of all applications and documents necessary for
filing with the Commission to obtain the consent and approval of the Commission
as required to permit the consummation of the transactions contemplated by this
Agreement.
7.2 NOTIFICATION UNDER HSR ACT. As promptly as practicable and not later than
thirty (30) business days after the date of this Agreement, the parties shall
take all steps reasonably necessary to file, and shall participate in the filing
of, all requisite documents and notifications required to be filed under the HSR
Act. All filing fees in connection with such notifications shall be shared
equally by the parties. The parties agree to diligently take, and to fully
cooperate in the taking of, all necessary and proper steps, and to provide any
additional information reasonably requested in order to obtain promptly the
expiration of the waiting period under the HSR Act.
7.3 INSPECTION BY ENTERCOM. During the period from the date of this Agreement to
the Closing Date and subject to the terms of the Brown Agreement, ARS shall
afford engineers, attorneys, accountants and other consultants and/or
representatives of Entercom free access during normal business hours to the
employees, offices, studios, transmitter site, equipment, records and other
documents pertaining to the Station and furnish Entercom with all information
concerning said Station as Entercom may reasonably request, including but not
limited to applications, responses to the Commission inquiries, and other
documents filed by ARS with the Commission. For purposes of the foregoing
records shall include, without limitation, any sales, research, consulting and
ratings reports relating to the Station.
7.4 CONFIDENTIALITY. Entercom hereby covenants and agrees that in the event the
transactions contemplated by this Agreement are not consummated for any reason
whatsoever, Entercom will upon request return to ARS within ten (10) days from
the date of such request, all
<PAGE>
copies of all information designated at the time of delivery as confidential by
ARS regarding ARS, the Assets, the Station and the business and operation of the
Station; and Entercom hereby covenants and agrees to hold all such information
(the "Confidential Information") in confidence and not to disclose, or cause any
representative, agent or employee of Entercom to disclose to any third party any
portion of the Confidential Information and not to use any portion of the
Confidential Information for Entercom's own benefit.
ARTICLE VIII
CLOSING
8.1 CLOSING. Closing shall take place at the time and place agreed to by the
parties hereto. In the absence of agreement thereon and except as modified
elsewhere herein, the Closing shall take place by mail at l0:00 a.m., Eastern
Time on a date selected by Entercom on at least five (5) days prior written
notice but not later than, except as set forth below, five (5) business days
after the later of: (a) the satisfaction or waiver of each condition to closing
contained herein (other than such conditions as can only be satisfied at the
Closing); and (b) the expiration of any period of extension for Closing provided
elsewhere in this Agreement. If such date falls on a Saturday, Sunday or legal
holiday in the State of California, then such Closing shall take place as
provided herein on the next business day.
8.2 ADJUSTMENTS. Except as otherwise provided for in the Time Brokerage
Agreement, operation of the Assets and the income and expense attributable
thereto up to the Adjustment Time shall be for the account of ARS and thereafter
for the account of Entercom. Except to the extent governed by the Time Brokerage
Agreement, proration between ARS and Entercom of the items mentioned in this
section shall be effected as of the Adjustment Time in accordance with the
provisions of this section. If the amount of any such items cannot readily be
ascertained on
<PAGE>
the Closing Date, an estimate of the proper proration of such items shall be
agreed upon by the parties and the actual proration of such item shall be
computed and paid not later than one hundred twenty (120) days from the Closing
Date. Such proration shall include, without limitation, the following:
8.2.1 Except to the extent governed by the Time Brokerage Agreement,
ARS shall be entitled to all income or other consideration to be paid on account
of all Contracts or Leases, to the extent that such income or other
considerations accrue before the Adjustment Time and thereafter Entercom shall
be entitled to same.
8.2.2 All accounts receivable for broadcasts on the Station which occur
prior to the earlier of the commencement of the Time Brokerage-Agreement or the
Adjustment Time (the "Accounts Receivable") shall belong to ARS and for
broadcasts which occur thereafter shall belong to Entercom. Within five (5) days
following the earlier of the commencement of the Time Brokerage Agreement or the
Closing, ARS shall deliver to Entercom a Schedule of Accounts Receivable of the
Station as of the Adjustment Time (the "Schedule of Accounts Receivable").
Entercom agrees to collect for ARS its Accounts Receivable as shown on the
Schedule of Accounts Receivable for a period of one hundred twenty ( 120) days
following the earlier of the commencement of the Time Brokerage Agreement or the
Closing. ARS will at the commencement of the Time Brokerage Agreement or the
Closing provide Entercom a power of attorney or other required authorization for
the limited purpose of allowing Entercom to endorse and deposit cheeks and other
instruments received in payment of such Accounts Receivable. All payments
received by Entercom from any customer whose name appears in the Schedule of
Accounts Receivable and who is also a customer of Entercom shall be credited as
payment of the account or invoice designated by such customer. In the absence of
any such designation by the customer, payments shall be first credited to the
oldest invoice which is not disputed by said
<PAGE>
customer. Entercom shall keep accurate records of the payment received by it on
such Accounts Receivable and ARS shall have access at reasonable times to
Entercom's records to verify such status of the Accounts Receivable. Within
thirty (30) days from the end of each Standard Broadcast Month, Entercom shall
remit to ARS amounts previously collected by Entercom on such Accounts
Receivable, along with a written accounting of same. Any Accounts Receivable
that have not been collected within such one hundred twenty (120) day period
shall be returned to ARS, together with all records in connection therewith,
whereupon ARS may pursue collection thereof in such manner as ARS, in its sole
discretion, may determine. Entercom shall not have the right to compromise,
settle or adjust the amounts of any such Accounts Receivable without ARS's prior
written consent. Except to remit collected Accounts Receivable in accordance
herewith, Entercom shall have no liability or obligation to ARS with respect to
the collection of ARS's accounts and shall not be obligated to take any action
to collect such accounts.
8.2.3 Rental and other obligations under the Leases and Contracts to be
assigned and assumed hereunder including utilities and other cost or expenses
payable thereunder.
8.2.4 General and special state, county, school and municipal taxes and
assessments (exclusive of rebates, penalties or interest) on the Property to be
conveyed hereunder payable during the fiscal year of the taxing authority in
which the Adjustment Time falls and if the amount of any such items may not then
be ascertained, an interim adjustment shall be effected on the basis of the
corresponding items for the preceding year subject to final adjustment at such
time as the relevant information becomes available. The foregoing
notwithstanding, ARS shall be responsible for and shall pay any penalties or
interest which are assessed and be entitled to recover any rebate or refund on
account of any such taxes or amounts which accrue at or before
<PAGE>
the Adjustment Time, provided that any such penalty or interest or portion
thereof which results from any failure by Entercom to perform any of Entercom's
obligation under this Agreement after the Closing shall be Entercom's
responsibility.
8.3 CLOSING DELIVERIES TO ENTERCOM. At or before the Closing, ARS shall deliver
to Entercom the following items and documents in form satisfactory to counsel
for Entercom and properly executed, unless Entercom shall waive in whole or in
part in writing such delivery and then only to the extent of such waiver:
8.3.1 Bills of Sale and assignments and other instruments of transfer
and conveyance, transferring to Entercom the Property to be sold, transferred or
assigned hereunder and the rights and interests under the Leases and Contracts
being assigned to Entercom hereunder and estoppel certifications by the other
parties to such Leases and those Contracts designated as material contracts on
Schedule "4.1.7" that ARS is not then in default under the terms of the Lease or
Contract to which such other party is a party.
8.3.2 An assignment of all right, title and interest of ARS in and to
the Authorizations and all pending applications relating to the Station before
the Commission.
8.3.3 All keys to and actual possession of all of the Property, in the
same condition as the same now is, except for ordinary wear and tear thereof.
8.3.4 A certified copy of resolutions of the Board of Directors of ARS
duly authorizing the execution, delivery and performance of this Agreement and
all documents to be executed and delivered by ARS at the Closing and thereafter.
8.3.5 A certificate signed by an authorized officer of ARS, to the
effect that no act or omission of ARS or state of facts contrary to the
agreements, representations and warranties contained herein has been taken or
has occurred and that said representations and warranties are
<PAGE>
true and correct in all material respects as of the Closing Date with the same
effect as if made as of the time of Closing.
8.3.6 The consents of any public authorities or third persons that may
be required in connection with the performance of this Agreement.
8.3.7 Opinions of Michael B. Milsom, General Counsel for ARS, with
respect to matters other than Commission related matters and of Dow, Lohnes &
Albertson, with respect to Commission related matters, dated as of the date of
Closing and in form and substance satisfactory to Entercom to the effect that:
8.3.7.1 ARS is a corporation duly organized and existing and in good
standing under the laws of the State of Delaware and is duly qualified to do
business in the State of California and any other jurisdiction where such
qualification is required;
8.3.7.2 ARS has the corporate power and authority to execute, deliver
and perform this Agreement and to convey, assign, transfer and deliver the
Assets pursuant to the terms of this Agreement;
8.3.7.3 All corporate proceedings required to be taken by ARS to
authorize ARS to execute, deliver and perform this Agreement and to convey,
assign, transfer and deliver to Entercom the Assets hereunder have been duly and
properly taken;
8.3.7.4 This Agreement and all documents and instruments executed and
delivered hereunder by ARS are the legal, valid and binding obligations of ARS
and have been validly executed on behalf of ARS and are valid and enforceable in
accordance with their terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditor's rights generally and by application of
general equitable principles affecting the enforcement of equitable remedies
<PAGE>
(including within said equitable remedies, without limitation, the remedy of
specific performance).
8.3.7.5 The execution and delivery by ARS of the Agreement and all
documents delivered by ARS pursuant to this Agreement and the sale of the Assets
to Entercom will not: (i) constitute a violation of the Certificate of
Incorporation, as amended, or the Bylaws, as amended, of ARS; (ii) constitute a
violation of any statute, judgment, order, decree or regulation of any court,
governmental authority or arbitrator applicable or relating to ARS or the
Assets; (iii) 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 material agreement known to such
counsel to which ARS is a party or by which ARS may be bound; or (iv) create any
claim, lien, charge or encumbrance on the Station or the Assets pursuant to or
as a consequence of any of the foregoing.
8.3.7.6 All other actions and proceedings required by federal, state
and local laws or this Agreement to be taken by ARS at or prior to the Closing
in connection with this Agreement and the transactions provided for therein have
been duly and validly
8.3.7.7 Such counsel knows of no claim, legal action, court action,
suit, arbitration, governmental investigation or other legal, administrative, or
tax proceeding pending or threatened against ARS or to which ARS is or would be
a party or relating to the Assets or the transactions contemplated by this
Agreement which would have an adverse effect on the Station business or on the
Assets or on the transfer of the Assets to Entercom..
8.3.7.8 ARS is the authorized legal holder of the Authorizations. The
Authorizations are in full force and effect. To such counsel's knowledge after
reasonable investigation: (i) there is not now pending or threatened any action
by or before the FCC to revoke, cancel, rescind, modify or refuse to renew any
of the Authorizations and (ii) there is not then pending or
<PAGE>
threatened, issued or outstanding by or before the FCC, any investigation, Order
to Show Cause, Notice of Violation, Notice of Apparent Liability or Notice of
Forfeiture or complaint concerning the Station or concerning ARS if such matter
could have an adverse effect on the Station or the consummation of the
transactions contemplated by this Agreement.
8.3.7.9 The FCC has granted approval to the assignment of the
Authorizations and, if appropriate, such grant has become a Final Order in
accordance with the rules and regulations of the FCC, subject to timely notice
of consummation of the sale of the Assets and assignment of the Authorizations.
8.3.8 All books, records, public files, contracts, leases, Commission
filings, correspondence, files and other documents relating to and necessary or
appropriate to the operation of the Station, excluding however, accounting
records relating to ARS's period of ownership (provided Entercom is given copies
thereof), minute books and other corporate records of ARS.
8.3.9 A lease, license or other appropriate agreement or instrument
granting Entercom the right to continue after Closing to use the present
broadcast and production studio facilities used by the Station in their current
operations and in essentially the same manner as currently used. Such use by
Entercom shall be without payment of rent or other charges except that Entercom
shall pay for its own supplies and telephone service and shall continue for
sixty (60) days after the Closing Date and shall include a reasonable time
thereafter for the removal for the Station equipment from the ARS studio
facilities.
8.4 CLOSING DELIVERIES TO ARS. At the Closing, Entercom and ARS shall instruct
the Escrow Agent to deliver to ARS the principal of the Escrow Deposit and
Entercom shall pay to ARS balance of the Purchase Price as set forth in Section
2.3.2 and deliver to ARS the following
<PAGE>
items and documents in form satisfactory to counsel for ARS and properly
executed unless ARS shall waive in whole or part in writing such delivery and
then only to the extent of such waiver:
8.4.1 An opinion of John C. Donlevie, Esq., Entercom's General Counsel,
in form and substance satisfactory to ARS to the effect that Entercom is a
corporation duly organized, validly existing and in good standing in the State
of California, is duly authorized and empowered to enter into all of its
undertakings herein provided and is duly qualified to do business in the
Commonwealth of Pennsylvania; that this Agreement and all documents to be
executed or delivered hereunder by Entercom at Closing are valid and binding
upon Entercom in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the enforcement of
creditors' rights generally and by application of general equitable principles
affecting the enforcement of equitable remedies (including within said equitable
remedies without limitation the remedy of specific performance); all corporate
proceedings required to be taken by Entercom to authorize Entercom to execute,
deliver and perform this Agreement have been duly and properly taken; and
Entercom's counsel does not know or have any reasonable grounds to know of any
violation by Entercom of any of its agreements, representations, warranties,
certificates or affidavits contained herein or delivered pursuant hereto which
would prevent Entercom from consummating the Closing hereunder. With respect to
matters of California law such opinion of Entercom's counsel may be based solely
on or may be given by Entercom's California counsel.
8.4.2 One or more Agreements whereby Entercom assumes and agrees to pay
when due any liabilities of ARS specifically assumed by Entercom hereunder,
including without limitation, those liabilities accruing after the Adjustment
Time with respect to those Leases and Contracts being assumed by Entercom
hereunder.
<PAGE>
8.4.3 Certified copies of the resolutions of the Board of Directors of
Entercom approving and ratifying this Agreement and all transactions
contemplated by this Agreement.
8.4.4 A certificate signed by the President or any Vice President of
Entercom to the effect that with respect to any matter which would prevent
Entercom from consummating the Closing, no act or omission of Entercom or state
of facts contrary to the agreements, representations and warranties contained
herein has been taken or has occurred and that said representations are true and
correct as of the Closing Date with the same force and effect as if made as of
the time of Closing.
8.5 COVENANTS OF FURTHER ASSURANCES. At and after the time of Closing, upon
request of Entercom, ARS shall take such action and deliver to Entercom such
further instruments of assignment, conveyance or transfer or other documents of
further assurance as in the opinion of counsel for Entercom may be reasonably
necessary to evidence the full and effective transfer, conveyance and assignment
of the Assets and possession thereof to Entercom, its successors and assigns,
and to assure complete performance of this Agreement by ARS in all respects.
8.6 DAMAGE TO PROPERTY. If, at the time of Closing, the tangible personal
property to be sold hereunder shall have suffered loss or damage to an extent
that affects the value thereof and ARS shall not have repaired, replaced or
restored same with property of like kind, quality and value, Entercom shall have
the right at its election to (i) complete the purchase and Closing, in which
event it shall be entitled to a reduction in the Purchase Price equal to the
greater of the amount necessary to repair, replace or restore such damaged
property with property of like kind, quality and value or the amount of any and
all insurance proceeds available to ARS, if any, collectible by reason of such
loss or damage, (ii) postpone closing until such time as ARS shall have so
repaired, replaced or restored such property, provided that if such postponement
exceeds
<PAGE>
ninety (90) days then Entercom shall have the right to terminate this Agreement
in accordance with Article IX hereof.
8.7 TAXES ON TRANSACTION. All sales, purchase, transfer, use or documentary
taxes, if any, payable by reason of this Agreement or any of the transactions
contemplated hereby or the sale, transfer or delivery of any of the Assets to
Entercom whether or not imposed on ARS, shall be paid and borne by ARS, either
directly or by reimbursement to the Entercom and ARS shall indemnify and hold
Entercom harmless with respect to the above taxes and any expenses incurred by
the Entercom relating to same.
ARTICLE IX
TERMINATION. DEFAULT AND INDEMNIFICATION
9.1 TERMINATION BY REASON OTHER THAN DEFAULT. This Agreement may be
terminated by a party hereto not then in default hereunder upon written notice
to the other party if:
9.1.1 Events occur which give rise to a specific right hereunder to
terminate this Agreement by the party seeking to terminate; or
9.1.2 Any material condition set forth herein to the obligation of the
party seeking to terminate this Agreement to complete the transaction has not
been satisfied or complied with by the Closing Date and has not been waived by
the party seeking to terminate.
9.2 EFFECT OF TERMINATION BY REASON OTHER THAN DEFAULT. If this Agreement is
duly terminated by either party as provided in Section 9.1, then all obligations
of either party to the other shall cease and terminate the Escrow Deposit and
all interest accrued thereon shall be returned to Entercom and both parties
shall be fully and finally released herefrom.
<PAGE>
9.3 DEFAULT. The following shall constitute a default hereunder:
9.3.1 If any of the representations or warranties of a party contained
herein is inaccurate or breached in any material respect; or
9.3.2 If any of the obligations to be performed hereunder by a party
hereto is not performed during the period or at or before the time specified
herein for such performance.
9.4 ARS'S REMEDY. In the event Entercom is obligated to complete Closing
hereunder and defaults in such obligation which default is not waived by ARS,
ARS's sole remedy shall be to receive payment of the principal sum of the Escrow
Deposit as liquidated damages in full and final settlement of all claims under
this Agreement and there shall be no other or further obligations, liabilities
or remedies of the parties hereunder. In the event Closing occurs hereunder,
ARS's remedy for any default by Entercom shall be indemnification pursuant to
Section 9.7 hereof.
9.5 ENTERCOM'S REMEDIES. In the event of a default by ARS hereunder which is not
waived by Entercom, Entercom shall have the following remedies:
9.5.1 Entercom may by written notice to ARS terminate this Agreement in
which event Entercom shall be entitled to return of all deposit monies paid
hereunder and any interest thereon and shall also be entitled to recover from
ARS any damages Entercom sustained as a result of the default by ARS hereunder.
9.5.2 Entercom may seek specific performance by ARS of ARS's
obligations hereunder and shall also be entitled to any other remedy available
at law or in equity, including without limitation the recovery of any damages
incurred by Entercom as a result of the default by ARS hereunder. ARS covenants
that under such circumstances, it shall not assert in defense of an action
seeking specific performance of this Agreement in favor of Entercom that
Entercom has available adequate remedies at Law.
<PAGE>
9.5.3 In the event Closing occurs hereunder, Entercom's remedy for any
default by ARS shall be indemnification pursuant to Section 9.7 hereof.
9.6 LIQUIDATED DAMAGES NOT A PENALTY. With respect to the liquidated damages
provided for in Section 9.4 hereof, ARS and Entercom hereby acknowledge and
agree that the damage that may be suffered by either party in the event of a
default by the other party hereunder is not readily ascertainable and that such
liquidated damages as of the date hereof are a reasonable estimate of such
damages and are intended to compensate ARS for any such damage and are not to be
construed as a penalty.
9.7 INDEMNIFICATION.
9.7.1 By ARS. ARS shall indemnify, defend and hold Entercom and its
officers, directors, employees and affiliates harmless from, against and with
respect to any and all loss, damage, claim, obligation, assessment, cost,
liability, and expense (including, without limitation, reasonable attorney's
fees and costs and expenses incurred in investigating, preparing, defending
against or prosecuting any litigation or claim, action, suit, proceeding or
demand) of any kind or character (a "Loss") incurred, suffered, sustained or
required to be paid by any of them and resulting from, related to or arising out
of:
(a) any breach of any of the representations or warranties
made by ARS in or pursuant to this Agreement, or in any agreement,
document or instrument executed and delivered pursuant hereto or in
connection with the Closing hereunder;
(b) any failure by ARS to perform or observe, or to have
performed or observed, in full, any covenant or agreement to be
performed or observed by it pursuant to this Agreement or in any
agreement, document or instrument executed and delivered by or on
behalf of it in connection with the Closing hereunder;
<PAGE>
(c) any and all obligations of ARS, except for obligations to
be assumed or retained by Entercom under the terms of this Agreement;
or
(d) ARS's operation or ownership of the Assets prior to the
Adjustment Time, including any and all obligations and liabilities
arising under the Authorizations or the Contracts and Leases which
accrue or relate to a period of time prior to the Adjustment Time; or
9.7.2 By Entercom. If Closing does not occur due to a default by
Entercom in its obligation to complete such Closing hereunder, ARS's remedy
shall be liquidated damages pursuant to Section 9.4 hereof. Provided Closing
occurs hereunder, Entercom shall indemnify, defend and hold ARS and its
officers, directors, employees and affiliates harmless from, against and with
respect to any Loss (as defined in Section 9.7.1) incurred, suffered, sustained
or required to be paid by any of them and resulting from, related to or arising
out of:
(a) any breach of any of the representations or warranties
made by Entercom in or pursuant to this Agreement or in any agreement,
document or instrument executed and delivered pursuant hereto or in
connection with the Closing hereunder;
(b) any failure by Entercom to perform or observe, or to have
performed or observed, in full, any covenant or agreement to be
performed or observed by it pursuant to this Agreement or in any
agreement, document or instrument executed and delivered by or on
behalf of it in connection with the Closing hereunder; or
(c) any and all obligations of Entercom except for obligations
to be assumed or retained by ARS under the terms of this Agreement; or
(d) Entercom's operation or ownership of the Assets after the
Adjustment Time, including any and all liabilities arising under the
Authorizations or the Contracts assumed
<PAGE>
by Entercom and Leases assumed by Entercom which accrue after the
Adjustment Time or which relate to or arise out of events occurring
after the Adjustment Time.
9.7.3 Procedures. Any party seeking indemnification under this
Agreement (the "Indemnified Party") shall give the party from who
indemnification is sought (the "Indemnifying Party") written notice of any claim
or the commencement of any action or proceeding from which the Indemnified Party
seek indemnification, and the Indemnified Party shall permit the Indemnifying
Party to assume the defense of any such claim or any litigation resulting from
such claim, unless injunctive relief is sought against the Indemnified Party in
which case the Indemnified Party shall have the right to join in any defense.
The Indemnified Party's failure to five the Indemnifying Party notice under this
clause shall not preclude the Indemnified Party from seeking indemnification
from the Indemnifying Party except to the extent that the Indemnified Party's
failure has materially prejudiced the Indemnifying Party's ability to defend the
claim or litigation. The Indemnifying Party shall not settle any claim for which
the Indemnified Party seeks indemnification or consent to entry of any judgment
in litigation arising from such a claim without obtaining a release of the
Indemnified Party from all liability in respect of such claim or litigation. If
the Indemnifying Party shall not assume the defense of any such claim or
litigation resulting therefrom, or if injunctive relief is sought against the
Indemnified Party, the Indemnified Party may defend against or settle such claim
or litigation in such manner as it may deem appropriate. The Indemnifying Party
shall promptly reimburse the Indemnified Part for the amount of all expenses,
legal or otherwise, incurred by the Indemnified Party in connection with the
defense against or settlement of such claim or litigation If no settlement of
the claim or litigation is made, the Indemnifying Party shall promptly reimburse
the Indemnified Party for the amount of any judgment rendered with respect to
such claim or in such litigation and for all expenses, legal or otherwise,
incurred by the Indemnified Party in the defense against such claim or
litigation.
<PAGE>
ARTICLE X
GENERAL PROVISIONS
10.1 EXPENSES OF THE PARTIES. Except as otherwise provided herein, all expenses
involved in the preparation, authorization and consummation of this Agreement,
including, without limitation, all fees and expenses of agents, representatives,
counsel and accountants in connection therewith and in connection with
applications to the Commission hereunder, shall be borne solely by the party who
shall have incurred the same, and the other party shall have no liability in
respect thereof. The foregoing notwithstanding, the parties agree to pay in
equal shares any filing fees of the Commission relating to the filing of the
Applications and the filing fees under the HSR Act.
10.2 BROKERS. Each party hereto represents and warrants to the other party
hereto that it has not incurred any obligation or liability, contingent or
otherwise, for brokerage or finders' fees or agents commissions or other like
payment in connection with this Agreement or the transactions contemplated
hereby for which the other party will have any liability, and each party hereto
agrees to indemnify and hold the other party hereto harmless against and in
respect to any such obligation or liability based in any way on any agreement,
arrangement or understanding claimed to have been made by such party with any
third party.
10.3 SURVIVAL OF ARS'S COVENANTS REPRESENTATIONS AND WARRANTIES. The provisions
hereof which by their terms are to be performed and observed after the Closing
Date and the several representations, warranties, indemnities and agreements of
the ARS herein contained shall survive the Closing Date hereunder and shall
remain effective and unaltered or unimpaired by any investigation that may have
been or may be made at any time prior to Closing by or on behalf of the
Entercom.
<PAGE>
10.4 AMENDMENT AND WAIVER. This Agreement cannot be changed or terminated
orally. Any amendment of modification hereof must be in writing signed by the
party against whom enforcement is sought. No waiver of compliance with any
provision or condition hereof, and no consent provided for herein, shall be
effective unless evidenced by an instrument in writing duly executed by the
party sought to be charged with such waiver or consent.
10.5 EFFECT OF THIS AGREEMENT. This Agreement sets forth the entire
understanding of the parties and supersedes any and all prior written or oral
agreements, arrangements or understandings relating to the subject matter
hereof. No representation, promise, inducement or statement of intention has
been made by either party which is not embodied in this Agreement, and neither
party shall be bound by, or be liable for, any alleged representation, promise,
inducement or statement of intention not embodied herein unless same shall have
been made subsequent hereto, shall be in writing and shall be signed by the
party to be charged therewith. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and assigns.
10.6 HEADINGS. The article or section headings of this Agreement are for
convenience of reference only and do not form a part of and do not in any way
modify, interpret or construe the intention of the parties.
10.7 COUNTERPARTS. This Agreement may be executed in one or more counterparts
and all such counterparts shall be construed as one and the same instrument.
10.8 GOVERNING LAW. The construction and performance of this Agreement shall be
governed by the laws of the State of California.
10.9 NOTICES. Any notice, report, demand, waiver or consent required or
permitted hereunder shall be in writing and shall be given by hand delivery, by
prepaid registered or certified mail, with
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return receipt requested, by an established national overnight courier providing
proof of delivery for next business day delivery or by telecopy addressed as
follows:
If to ARS: Steven B. Dodge, President & CEO
American Radio Systems Corporation
116 Huntington Avenue
Boston, MA 02116-5749
Telecopy Number: (617) 375-7575
with a copy to: Michael B. Milsom, Esq.
American Radio Systems Corporation
116 Huntington Avenue
Boston, MA 02116-5749
Telecopy Number: (617) 375-7575
If to Entercom: Joseph M. Field, President
Entertainment Communications, Inc.
401 City Avenue, Suite 409
Bala Cynwyd, PA 19004
Telecopy Number 610-660-5620
with a copy to: John C. Donlevie, Esq.
Entertainment Communications, Inc.
401 City Avenue, Suite 409
Bala Cynwyd, PA 19004
Telecopy Number 610-660-5641
The date of any such notice and service thereof shall be deemed to be: (i) the
day of delivery if hand delivered or delivered by overnight courier; (ii) the
day of delivery as indicated on the return receipt if dispatched by mail, or
(iii) the date of telecopy transmission as indicated on the telecopier
transmission report provided that any telecopy transmission shall not be
effective unless a paper copy is sent by overnight courier on the date of the
telecopy transmission. Either par~ may change its address for the purpose of
notice by giving notice of such change in accordance with the provisions of this
section.
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10.10 STATION EMPLOYEES. ARS agrees that for a period of one year after the
Closing neither it nor any successor or assignee will employ, offer employment
to or counsel others to offer employment to any current employee of the Station
that Entercom employs after the Closing.
10.11 SECTION 1031 ASSET EXCHANGE. It is the intent of the parties that the
exchange of assets contemplated by this Agreement will to the maximum extent
possible qualify as like-kind exchanges pursuant to Section 103 l of the Code
with Entercom exchanging portions of the Pittsburgh Assets and Minneapolis
Assets for the Assets. In keeping with that intention it is expressly
acknowledged that Entercom may, at or prior to Closing, assign its rights under
this Agreement to a Qualified Intermediary subject to all of such party's rights
and obligations hereunder and shall promptly provide written notice of such
assignment to ARS hereto. All parties shall cooperate with all reasonable
requests of the Qualified Intermediary in arranging and effecting this exchange
and any additional exchange as one which qualified under Section 103 l of the
Code. Without limiting the generality of the foregoing, if Entercom has given
notice of its intention to effect an exchange using a Qualified Intermediary,
ARS shall (i) promptly provide Entercom with written acknowledgment of such
notice and (ii) at Closing, if requested, deliver the Assets and all other
deliveries required at Closing to the Qualified Intermediary rather than to
Entercom (which delivery shall discharge the obligation of ARS to make delivery
for the Assets hereunder). An assignment to a Qualified Intermediary will not
relieve Entercom of any of its duties or obligations hereunder. In addition, in
order to accomplish such exchange, Entercom may delay the Closing beyond the
date Closing would occur under Section "8.1" of this Agreement to a date which
is not more than five (5) business days after the consummation of the closings
under the Pittsburgh Agreements, but no later than June 2, l 997, in order to
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coordinate the timing of the Closing with the timing of the closings for the
divestiture of the Pittsburgh Assets and the Minneapolis Assets.
10.12 CALL SIGN. ARS agrees that the call sign KXOA and any intellectual
property rights relating thereto are part of the Assets to be transferred to
Entercom hereunder. At Closing ARS will assign all of its rights to such call
sign and related intellectual property rights and ARS will obtain other call
sign for KXOA(AM) at the time of Closing or as soon as practical thereafter.
Thereafter ARS will not use the KXOA call sign and related intellectual property
in connection with such AM station.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their duly authorized corporate officers and their respective
corporate seals thereunto affixed on this the day and date first written above.
ARS:
AMERICAN RADIO SYSTEMS CORPORATION
By:_______________________________
Title:____________________________
ENTERCOM:
ENTERTAINMENT COMMUNICATIONS, INC.
By:_______________________________
Title:____________________________
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Exhibit 10.90
TIME BROKERAGE AGREEMENT
TIME BROKERAGE AGREEMENT, made as of April 1, 1996 by and between
American Radio Systems Corporation (the "Programmer") and Crescent
Communications L.P. (the "Licensee").
WHEREAS Licensee owns and operates Broadcast Station, KMZQ(FM),
Henderson, Nevada, and KFBI(FM), Palrump, Nevada, (each a "Station", and
together the "Stations") pursuant to licenses issued by the Federal
Communications Commission ("FCC").
WHEREAS Programmer is involved in radio station ownership and
operation.
WHEREAS the Licensee wishes to permit Programmer to provide programming
for the Stations that is in conformity with the Stations' and FCC policies for
time brokerage arrangements and as set forth herein.
WHEREAS Programmer agrees to use the Stations exclusively to broadcast
such programming of its selection that is in conformity with all rules,
regulations and policies of the FCC and subject to Licensee's full authority to
control the operation of the Stations.
WHEREAS Programmer and Licensee agree to work in a cooperative fashion
to make their time brokerage agreement work to the benefit of both parties and
as contemplated in this Agreement.
WHEREAS, Programmer and Licensee have entered into an Asset Purchase
Agreement dated as of the date of this Agreement (the "Asset Purchase
Agreement") under which Licensee agreed to sell the Stations to Programmer, as
filed with an application for FCC consent to assign the Stations' licenses from
Licensee to Programmer.
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NOW, THEREFORE, in consideration of the above recitals and the mutual
promises and covenants contained herein, the parties, intending to be bound
legally, agree as follows:
Section 1
Lease of Station Air Time
1.1 Representations. Each of Licensee and Programmer represent that it
is authorized to enter into this Agreement and that this Agreement constitutes
the legal, valid and binding obligation of it, enforceable against it in
accordance with its terms.
1.2 Effective Date. The Effective Date of this Agreement shall be the
date of execution of this Agreement by all parties.
1.3 Scope. During the Term (as defined in Section 6.1), Licensee shall
make available to Programmer time on the Stations as set forth in this
Agreement. Programmer shall deliver such programming, at its expense, to the
Station's transmitter facilities or other authorized remote control point as
reasonably designated by Licensee. Subject to Licensee's reasonable approval, as
set forth in this Agreement, Programmer shall provide entertainment programming
of its selection complete with commercial matter, news, public service
announcements and other suitable programming to the Licensee up to one hundred
sixty-four (164) hours per week. The Licensee may use the remaining four hours
per broadcast week for the broadcast of its own regularly scheduled news, public
affairs and other non-entertainment programming and shall provide Programmer
with advance written notice of such hours of programming. All time not reserved
by or designated for Licensee shall be available for use by Programmer and no
other party.
1.4 Consideration. As consideration for the air time made available
hereunder, Programmer shall (a) pay to Licensee a monthly fee of One Hundred and
Sixty-Five Thousand Dollars ($165,000), payable no later than the fifth (5th)
business day of the month to which such
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fee pertains, (b) pay to Licensee the cost of Programmer's telephone usage,
postal service usage and electrical usage at the studio for the Stations and
Programmer shall reimburse to Licensee additional amounts as set forth in
Section 1.6 hereof.
1.5 Licensee Operation of the Station. Licensee will have full
authority, power and control over the operations of the Station during the term
of this Agreement. Licensee will bear all responsibility for the Stations'
compliance with all applicable provisions of the Communications Act of 1934, as
amended (the "Communications Act"), the rules, regulations and policies of the
FCC and all other applicable laws. Licensee shall be solely responsible for and
pay in a timely manner all non-capital, ordinary and customary operating
expenses of the Stations, including but not limited to maintenance of the studio
and transmitting facility and costs of electricity except that Licensee shall be
entitled to reimbursement from Programmer pursuant to Sections 1.4 and 1.6(b)
and Programmer shall be responsible for the costs of its programming and
personnel as provided in Sections 1.7 and 2.3 hereof. Licensee shall employ at
its expense employees consisting of, at a minimum, those required by FCC rules
and regulations who will report to and be accountable to the Licensee. Licensee
shall be responsible for the salaries, taxes, insurance and related costs for
all personnel it employs at the Stations and shall maintain insurance at its
present levels covering the Stations' transmission facilities. During the term
of this Agreement, Programmer shall perform, without charge, routine monitoring
of Licensee's transmitter performance and tower lighting if and when requested
by Licensee.
1.6 (a) Licensee Representations and Warranties.
Licensee represents and warrants as follows:
Licensee shall not knowingly take any action or omit to take any action
which would have an adverse impact upon the Licensee, its assets utilized in the
operation of the Station, the
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Station or upon Licensee's ability to perform this Agreement. All reports,
annual regulatory fees and applications required to be filed with the FCC or any
other governmental body have been, and during the course of the term of this
Agreement or any extension thereof, will be filed in a timely and complete
manner. The facilities of the Station are and will continue to comply in all
material respects with the engineering requirements set forth in the FCC
licenses of the Station.
(b) Contractual Fees. Licensee shall make timely payments to
third parties under the contracts listed on Attachment 2 hereto. Licensee shall
be reimbursed by Programmer for such payments within five (5) business days
following presentation to Programmer of reasonable verification of such payment.
1.7 Programmer Responsibility. Programmer shall be solely responsible
for any expenses incurred in connection with its sale of advertising time
hereunder (including without limitation sales commissions) in connection with
the programming provided by Programmer hereunder (the "Programming") and in the
origination and/or delivery of the Programming to the integration point at the
studio for the Stations and for any publicity or promotional expenses incurred
by Programmer, including without limitation, all ASCAP, BMI, and SESAC music
license fees attributable to the Programming. Programmer shall furnish or cause
to be furnished the artistic personnel and material for the production of the
Programming. Programmer shall employ and be responsible for the salaries, taxes,
insurance and related costs for all personnel used in the production of the
Programming and all sales personnel (including salespeople, traffic personnel,
and programming staff).
1.8 Contracts. Programmer will not be required to assume performance of
any of the Licensee's contracts and leases pertaining to the Stations except for
the contracts and leases listed on Attachment III hereof. Programmer will enter
into no third-party contracts, leases or agreements which will bind Licensee in
any way except with Licensee's prior written approval.
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Licensee will enter into no third-party contracts, leases or agreements which
will bind Programmer in any way except with Programmer's prior written approval.
Programmer shall assume the obligations of Licensee, up to a maximum net
obligation of ________________ Dollars ($__________), to provide advertising
time under the terms of existing trade and barter agreements as listed on
Attachment III-A and Licensee shall assign all of its rights under those trade
and barter agreements to Programmer.
1.9 (a) Broadcasting Obligations. During the Term, except as provided
in Section 6.2, Licensee will broadcast the Programming in its entirety
(including commercials), on either the main or auxiliary facilities of the
Stations, without interruption, deletion or addition of any kind, except as set
forth below:
(i) Licensee shall have the right to delete and not
to broadcast any material contained in the Programming which it regards as being
unsuitable for broadcast or the broadcast of which it believes would be contrary
to the public interest, and Licensee shall have the right to substitute such
programming therefor as it deems appropriate;
(ii) Licensee may temporarily refrain from
broadcasting the Programming between the hours of 12:30 a.m. and 5:30 a.m. (or
at some other hour in the event that weather conditions so require) in order to
perform normal, customary and routine maintenance on the Stations' transmitting
facilities; provided that Licensee shall use its best efforts to minimize the
frequency and duration of such interruptions;
(iii) Licensee may temporarily cease broadcasting the
Programming as a result of a natural disaster, act of public enemy or act of
God; provided that in any such case, Licensee will act expediently and use its
best efforts to resume the broadcast of the Programming as quickly as the
applicable circumstances will allow; and
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(iv) Licensee may temporarily refrain from
broadcasting the Programming as a result of, and during the duration of, (i) a
general electrical power outage affecting the area in which the Stations'
transmitting equipment is located or (ii) a technical problem with the Station's
transmitting equipment which is outside of Licensee's control and which is not
directly or indirectly the result of any act or omission of Licensee or any of
its employees or agents; provided that in either such case, Licensee will act
expediently and use its best efforts to resume the broadcast of the Programming
as quickly as the applicable circumstances will allow.
Programmer shall not be entitled to any credit or refund of any fees in
the event of any of the events described in (i) - (iv) above.
(b) Hourly Credit. Programmer shall receive from Licensee, as
a refund consisting of a flat rate credit of $235 per hour ("Hourly Credit"),
for any part of the weekly one hundred sixty-four (164) hours of programming
time that Licensee uses to broadcast its own programming including periods
during which Licensee is unable, for any reason (except, as provided in Section
1.9(a) and except for Programmer's failure to deliver its programming to
Licensee), to broadcast the Programming. Such refunds to Programmer shall be
paid within ten (10) days of the end of each month.
1.10 Station Operation. Licensee shall notify Programmer in writing at
least five (5) business days prior to (i) making any changes in management
personnel, (ii) entering into any material contractual obligations, (iii)
purchasing equipment, or (iv) making any other material changes in the operation
of the Station. Licensee agrees to purchase such equipment or other material or
services which Programmer may reasonably suggest are necessary for the Station's
operations provided that Programmer agrees to reimburse the Licensee for all
costs associated with such purchases including, without limitation,
installation, wiring and similar related costs.
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1.11 Use of Stations' Studios. Licensee agrees to provide Programmer
with access to the Stations' complete facilities including the studios and
broadcast equipment for use by Programmer, if it so desires, in providing the
Programming; provided, however, that Licensee shall maintain, for its sole use,
sufficient space at the Stations' studios for its management level employees.
Under the overall supervision of Licensee, Programmer shall and may peacefully
and quietly have the full use of and enjoy the use of the Stations' facilities,
studios and equipment free from any hindrance from any person or persons
whomsoever claiming by, through or under Licensee. Programmer shall use the
studios and equipment only for the purpose of producing programming for the
Station or for any other stations owned or time brokered by the Programmer
within the Las Vegas, Nevada ADI and shall at all times be subject to the good
faith oversight of Licensee.
Section 2
Station Obligations to the Community of License
2.1 Licensee Authority. Notwithstanding any other provision of this
Agreement, Programmer recognizes that Licensee has certain obligations to
broadcast programming to meet the needs and interests of the community of
license for the Stations. On a regular weekly basis the Licensee shall air
specific programming on issues of importance to the local community. Nothing in
this Agreement shall abrogate the unrestricted authority of the Licensee to
discharge its obligations to the public and to comply with the law, rules and
policies of the FCC with respect to meeting the ascertained needs and interests
of the public.
2.2 Additional Licensee and Programmer Obligations. Although both
parties shall cooperate in the broadcast of emergency information over the
Stations, Licensee shall also retain the right to interrupt Programmer's
programming in case of an emergency or for programming which, in the reasonable
good faith judgment of Licensee, is of overriding public importance.
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Such interruption shall not entitle Programmer to any credits on fees. Licensee
shall continue to maintain a main studio, as that term is defined by the FCC,
within the Stations' principal community contour, shall maintain its local
public inspection file within the community of license and shall prepare and
place in such inspection file its quarterly issues and program lists on a timely
basis. Programmer shall, upon request by Licensee, provide Licensee on a timely
basis with information with respect to certain of Programmer's programs which
should be included in Licensee's quarterly issues and programs lists. Licensee
shall also maintain the station logs, receive and respond to telephone
inquiries, and control and oversee any remote control point for the Stations.
2.3 Responsibility for Employees and Expenses. In accordance with
Section 1.7, Programmer shall employ and be solely responsible for the salaries,
taxes, insurance and related costs for all personnel employed by Programmer
(including, without limitation, salespeople, traffic personnel, board operators
and programming staff). Licensee will provide and be responsible for the
Stations' personnel employed by Licensee and necessary to fulfill Licensee's
obligations hereunder, and will be responsible for the salaries, taxes,
insurance and related costs for all the personnel it employs. All personnel
shall be subject to the overall supervision of Licensee, consistent with
Programmer's right to the use of the Stations' facilities pursuant to Section
1.12 hereof.
Section 3
Station Programming Policies
3.1 Broadcast Station Programming Policy Statement. Licensee has
adopted and will enforce a Broadcast Station Programming Policy Statement (the
"Policy Statement"), a copy of which appears as Attachment IV hereto and which
may be amended from time to time by Licensee upon notice to Programmer.
Programmer agrees and covenants to comply in all
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material respects with the Policy Statement, with all rules and regulations of
the FCC, and with all reasonable changes subsequently made by Licensee or the
FCC. If Licensee reasonably determines that a program supplied by Programmer
does not comply with the Policy Statement it may suspend or cancel such program
and shall provide written notice to Programmer of such decision. All Programming
shall comply with the Policy Statement, the Communications Act and FCC rules and
regulations. All advertising spots and promotional material or announcements
included in the Programming shall comply with applicable federal, state and
local regulations and policies, the Policy Statement, and shall be produced in
accordance with quality standards established by Programmer.
3.2 Licensee Control of Programming. Programmer recognizes that
Licensee has full authority to control the operation of the Stations. The
parties agree that Licensee's authority includes but is not limited to the right
to reject or refuse such portions of the Programming which Licensee believes, in
its sole discretion, to be unsatisfactory, unsuitable or contrary to the public
interest. Programmer shall have the right to change the Programming elements
and/or format of the Programming by giving Licensee at least twenty-four (24)
hours notice of such changes.
3.3 Programmer Compliance with Copyright Act. Programmer represents and
warrants to Licensee that Programmer has full authority to broadcast the
Programming on the Stations, and that Programmer shall not broadcast any
slanderous material or any material in violation of any law, rule, regulation,
including regulation without limitation the Communications Act, the rules and
regulations of the FCC or the Copyright Act. All music supplied by Programmer
shall be: (i) licensed by ASCAP, SESAC or BMI; (ii) in the public domain; or
(iii) cleared at the source by Programmer. Consistent with Section 1.7 hereof,
Licensee will maintain ASCAP, BMI and SESAC licenses as necessary. The right to
use the Programming and to authorize its use in any manner shall be and remain
vested in Programmer.
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3.4 Sales. Programmer shall retain all revenues from the sale of
advertising time within the Programming. Programmer may sell advertising,
consistent with applicable rules, regulations and the Policy Statement, on the
Stations in combination with any other broadcast stations of its choosing.
Programmer shall be responsible for payment of the commissions due to any
national sales representative engaged by it for the purpose of selling national
advertising which is carried during the Programming. Licensee shall retain all
revenues from the sale of Stations' advertising during the hours each week in
which the Licensee airs its own non-entertainment programming, with the
exception provided for certain political advertising as set forth in Section 5.2
herein.
3.5 Payola. Programmer agrees that it will not accept any
consideration, compensation, gift or gratuity of any kind whatsoever, regardless
of its value or form, including, but not limited to, a commission, discount,
bonus, material, supplies or other merchandise, services or labor (collectively
"Consideration"), whether or not pursuant to written contracts or agreements
between Programmer and merchants or advertisers, unless the payer is identified
in the program for which Consideration was provided as having paid for or
furnished such Consideration, in accordance with the Communications Act and FCC
requirements. Programmer agrees at the reasonable request of Licensee, to
execute and provide Licensee with a Payola Affidavit, substantially in the form
attached hereto as Attachment V.
3.6 Staffing Requirements. Licensee shall comply with the main studio
staff requirements as specified by the FCC.
Section 4
Indemnification
4.1 Programmer's Indemnification. Programmer shall indemnify and hold
harmless Licensee, its partners and their respective directors, officers and
stockholders from and against
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any and all claims, losses, costs, liabilities, damages, FCC forfeitures and
expenses (including reasonable legal fees and other expenses incidental thereto)
of every kind, nature and description, including but not limited to, those
arising out of (a) Licensee's broadcast of the Programming and (b) liabilities
of Programmer to its employees and other third parties.
4.2 Licensee's Indemnification. Licensee shall indemnify and hold
harmless Programmer from and against any and all claims, losses, costs,
liabilities, damages, and expenses (including reasonable legal fees and other
expenses incidental thereto) of every kind, nature and description, arising out
of Licensee's broadcasts of programming other than the Programming to the extent
permitted by law.
4.3 Limitation. Neither Licensee nor Programmer shall be entitled to
indemnification pursuant to this section unless such claim for indemnification
is asserted in writing delivered to the other party.
4.4 Time Brokerage Challenge. If this Agreement is challenged at the
FCC, whether or not in connection with the Stations' license renewal
application, counsel for the Licensee and counsel for the Programmer shall
jointly defend the Agreement and the parties' performance thereunder throughout
all FCC proceedings at the sole expense of the Programmer. If portions of this
Agreement do not receive the approval of the FCC staff, then the parties shall
reform the Agreement or, at Programmer's option and expense, seek reversal of
the staff decision and approval from the full FCC on appeal.
Section 5
Access to Programmer Materials and Correspondence
5.1 Confidential Review. Prior to the provision of any of the
Programming by Programmer to Licensee under this Agreement, Programmer shall
acquaint the Licensee with the
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nature and type of the programming to be provided. Licensee, solely for the
purpose of ensuring Programmer's compliance with the law, FCC rules and the
Stations' policies, shall be entitled to review at its discretion from time to
time on a confidential basis any programming material it may reasonably request.
Programmer shall promptly provide Licensee with copies of all correspondence and
complaints received from the public (including any telephone logs of complaints
called in), copies of all program logs and promotional materials. However,
nothing in this section shall entitle Licensee to review the internal corporate
or financial records of the Programmer.
5.2 Political Advertising. Programmer shall cooperate with Licensee to
assist Licensee in complying with all rules of the FCC regarding political
advertising. Programmer shall supply such information promptly to Licensee as
may be necessary to comply with the lowest unit rate, equal opportunities and
reasonable access requirements of federal law. To the extent that Licensee deems
it necessary to assure its performance of its political time obligations,
Programmer shall release advertising availabilities to Licensee; provided,
however, that all revenues received by Licensee as a result of such a release of
advertising time shall promptly be paid to Programmer, net of any direct
out-of-pocket costs incurred by Licensee in selling the political advertising
and administering its broadcast.
Section 6
Termination and Remedies Upon Default
6.1 Term; Termination. The term of this Agreement (the "Term") shall
commence on the date of this Agreement and shall terminate on the earlier of (i)
the date of any termination of the Asset Purchase Agreement pursuant to the
terms thereof, (ii) the date of any termination of this Agreement pursuant to
this Section 6.1 and (iii) the Closing Date (as defined in the Asset Purchase
Agreement). In addition to other remedies available at law or equity and the
provisions
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of Section 1.2 hereof, this Agreement may be terminated as set forth below by
either Licensee or Programmer by written notice to the other if the party
seeking to terminate is not then in material default or breach hereof, upon the
occurrence of any of the following:
(a) this Agreement is declared invalid or illegal in whole or
substantial part by an order or decree of an administrative agency or court of
competent jurisdiction and such order or decree has become final and no longer
subject to further administrative or judicial review;
(b) the other party is in material breach of its obligations
hereunder and has failed to cure such breach within thirty (30) days of notice
from the non-breaching party, which notice shall specify the breach and the
action necessary to cure such breach;
(c) the mutual consent of both parties
(d) there has been a material change in FCC rules, policies or
precedent that would cause this Agreement to be in violation thereof and such
change is in effect and not the subject of an appeal or further administrative
review.
Upon any termination of this Agreement, Licensee shall have no further
obligation to provide to Programmer any broadcast time or broadcast transmission
facilities and Programmer shall have no further obligations under Section 1.6(b)
hereof or to make any payments to Licensee under Section 1.4 hereof. Programmer
shall be responsible for all debts and obligations of Programmer to third
parties based upon the purchase of air time and use of Licensee's transmission
facilities including, without limitation, accounts payable, barter agreements
and unaired advertisements, but not for Licensee's federal, state and local
income and business franchise tax liabilities or taxes levied upon Licensee's
personal property. In the event of any termination, Programmer shall be entitled
to retain all notes and accounts receivable and other receivables of the
Stations accrued as of the date of such termination (the "Termination Date")
relating to advertising time sold by Programmer between the date of this
Agreement and the
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Termination Date ("Programmer Receivables"), and shall be entitled to pursue
collection thereof. Licensee shall pay over to Programmer any sums received by
Licensee on account of the Programmer Receivables. Notwithstanding anything
herein to the contrary, to the extent that any invoice, bill or statement
submitted to Licensee after the Termination Date or any payment made by
Programmer prior to the Termination Date relates to expenses incurred in
operating the Stations, for periods both before and after the Termination Date,
such expenses shall be prorated between Licensee and Programmer in accordance
with the principle that Programmer shall be responsible for expenses allocable
to the period prior to the Termination Date and Licensee shall be responsible
for expenses allocable to the period on and after the Termination Date. Each
party agrees to reimburse the other party for expenses paid by the other party
to the extent appropriate to implement the proration of expenses pursuant to the
preceding sentence.
6.2 Programmer's Remedies for Operational Deficiencies. Programmer
shall have the following remedies for deficiencies in or events related to
Licensee's transmitting facility:
(a) If Programmer receives during the first sixty (60) days of
this Agreement a report of a consulting engineer, chosen by Programmer, which
concludes that the Stations are not operating in all material respects within
the parameters authorized by the FCC or that the Stations' actual coverage of
the market is materially less than such authorization allows, Licensee shall be
obligated, at its expense, to take such steps as are reasonably necessary to
restore the effective coverage or operating parameters of the relevant Station
or demonstrate, by the use of the report of another consulting engineer, hired
at its expense, that the coverage or operating parameters are not materially
deficient. If the Stations' effective coverage or operating parameters continue
to be materially deficient within thirty (30) days of notice of the coverage or
operating deficiencies, then Programmer shall be entitled to a refund, of equal
to the Hourly
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Credit amount set forth in Section 1.9 for each hour of deficiency until such
deficiencies are corrected and such refunds shall be made within ten (10) days
of the end of the month.
(b) If for a period of five (5) consecutive days or more
Licensee reduces its transmitter output power on the Stations by fifty percent
(50%) or more, Programmer may elect to require Licensee to pay a refund equal to
one half of the Hourly Credit amount set forth in Section 1.9 for so long each
hour that such power reduction continues to occur if Programmer has, in fact,
been required to make rebates and/or other financial accommodations to its
advertisers as a result of such power reduction. Such refund shall be reflected
in a refund payment by Licensee to Programmers a result of such power reduction.
Such refund shall be reflected in a refund payment by Licensee to Programmer
within ten (10) days of the end of the month in which such power reduction
occurs.
(c) If, due to damage to or failure of transmission equipment,
the Stations are off the air for five (5) consecutive days or for a total of one
hundred twenty (120) hours during any thirty (30) day period, Programmer shall
be entitled to a full refund, on a daily basis, equal to, the Hourly Credit
amount set forth in Section 1.9 for each hour the Stations are off the air, and
such refund shall be paid within ten (10) days of the end of the month in which
the Stations are off the air.
6.3 Other Agreements. During the Term, Licensee will not enter into any
other time brokerage, program provision, local management or similar agreement
with any third party with respect to the Stations.
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Section 7
Miscellaneous
7.1 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, their successors and assigns, including
specifically any purchaser of the Stations from Licensee. Neither party may
assign its rights under this Agreement without the prior written consent of the
other party which shall not be unreasonable withheld, provided, however that (a)
Programmer has the absolute right to assign this Agreement and all of its rights
and obligations hereunder, following written notice to the Licensee, to an
entity controlled by American Radio Systems Corporation, provided that such
entity assumes all of Programmer's obligations under this Agreement and that
such assignment shall not release Programmer from any of its obligations under
this Agreement and (b) Licensee has the right to assign its payments hereunder
to its Lenders upon written notification to Programmer.
7.2 Call Letters. Upon request of Programmer and at Programmer's
expense, Licensee shall apply to the FCC for authority to change the call
letters of the Stations (with the consent of the FCC) to such call letters that
Programmer shall reasonably designate. Licensee shall cooperate with Programmer
and receive Programmer's consent prior to making any change in the call letters
of the Stations.
7.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which together
will constitute one and the same instrument.
7.4 FCC Certification (47 C.F.R. ss. 73.3555(a) (2) (ii). Pursuant to
Section 73.3555(a)(2)(ii) of the FCC's rules, Licensee certifies that it
maintains ultimate control over the Stations' facilities, including specifically
control over finances, personnel and programming at
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the Stations and the Programmer certifies that this Agreement complies with the
provisions of Sections 73.3555(a)(1) and (e)(1) of the FCC's rules.
7.5 Payment of Legal Fees. Except as otherwise provided, Programmer
shall pay Licensee's reasonable legal fees and related expenses incurred in
connection with Licensee's consideration and negotiation of this Agreement.
7.6 Entire Agreement. This Agreement, the Attachments hereto and the
Asset Purchase Agreement embody the entire agreement and understanding of the
parties and supersede any and all prior agreements, arrangements and
understandings relating to matters provided for herein. No amendment, waiver of
compliance with any provision or condition hereof, or consent pursuant to this
Agreement will be effective unless evidenced by an instrument in writing signed
by the parties.
7.7 Taxes. Licensee and Programmer shall each pay its own ad valorem
taxes, if any, which may be assessed on such party's respective personal
property for the periods that such items are owned by such party. Programmer
shall pay all taxes if any, to which the consideration specified in Section 1.4
herein is subject, provided that Licensee is responsible for payment of its own
income taxes. Each party shall be responsible for any sales tax imposed on
advertising aired during the programming provided by that party.
7.8 Headings. The headings are for convenience only and will not
control or affect the meaning or construction of the provisions of this
Agreement.
7.9 Governing Law. The obligations of Licensee and Programmer are
subject to applicable federal, state and local law, rules and regulations,
including, but not limited to, the Communications Act, and the rules and
regulations of the FCC. The construction and performance of the Agreement will
be governed by the laws of the Commonwealth of Massachusetts.
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7.10 Notices. Any notice, demand or request required or permitted to be
given under the provisions of the Agreement shall be in writing and shall be
deemed to have been duly delivered on the date of personal delivery or on the
date of receipt if mailed by registered or certified mail, postage prepaid and
return receipt requested, and shall be deemed to have been received on the date
of personal delivery or on the date set forth on the return receipt, to the
following addresses, or to such other address as any party may request, in the
case of Licensee, by notifying Programmer, and in the case of Programmer, by
notifying Licensee.
To Licensee: Crescent Communications, L.P.
4407 Providence, Suite F
Winston-Salem, NC 27106
Attn: Allen B. Shaw
Fax: (910) 759-7666
Copies To: Goodwin, Procter & Hoar, LLP
Exchange Place
53 State Street
Boston, MA 02109
Attn: David F. Dietz, P.C.
Fax: (617) 523-1231
To Programmer: American Radio Systems Corporation
116 Huntington Avenue
Boston, MA 02116
Attn: Steven B. Dodge, President
Fax: (617) 375-7575
Copies To: American Radio Systems Corporation
116 Huntington Avenue
Boston, MA 02116
Attn: Michael B. Milsom, Esq.
Fax: (617) 375-7575
Dow, Lohnes and Albertson
1200 New Hampshire Ave., N.W.
Suite 800
Washington, DC 20036
John R. Feore, Jr. Esq.
Fax: (202) 857-2900
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7.11 Severability. If any provision of this Agreement or the
application thereof to any person or circumstances shall be invalid or
unenforceable to any extent, the 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.
7.12 Specific Performance. The parties recognize that in the event
Licensee should refuse to perform under the provisions of this Agreement,
monetary damages alone will not be adequate. Programmer shall therefore be
entitled to seek specific performance of all terms of this Agreement. In the
event of any action to enforce this Agreement, Licensee hereby waives the
defense that there is adequate remedy at law.
7.13 Arbitration. Any dispute arising out of or related to this
Agreement that Licensee and Programmer are unable to resolve by themselves shall
be settled by arbitration in Boston, Massachusetts by a panel of three
arbitrators. Licensee and Programmer shall each designate one disinterested
arbitrator and the two arbitrators designated shall select the third arbitrator.
The persons selected as arbitrators need not be professional arbitrators, and
persons such as lawyers, accountants and bankers shall be acceptable. Before
undertaking to resolve a dispute, each arbitrator shall be duly sworn faithfully
and fairly to hear and examine the matters in controversy and to make just award
according to the best of his or her understanding. 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 Licensee and Programmer. The costs and expenses of
the arbitration proceeding shall be assessed between Licensee and Programmer 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. No action at law or in equity based upon any claim
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arising out of or related to this Agreement shall be instituted in any court by
Licensee or Programmer against the other except: (i) an action to compel
arbitration pursuant to this Section, (ii) an action to enforce the award of the
arbitration panel rendered in accordance with this Section; or (iii) a suit for
specific performance pursuant to Section 7.12.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
LICENSEE:
CRESCENT COMMUNICATIONS L.P.
By: CRESCENT COMMUNICATIONS GP, INC.,
Its General Partner
By: _____________________________________
PROGRAMMER:
AMERICAN RADIO SYSTEMS CORPORATION
By: ____________________________________
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Exhibit 10.91
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated August 7, 1996, by and between
American Radio Systems Corporation, a Delaware corporation ("Buyer"), and United
Broadcasting Company, a California general partnership ("Seller").
P R E M I S E S:
A. Seller is the licensee of and operates radio stations KBAY(FM) and
KKSJ(AM), San Jose, California, (each a "Station", and together, the "Stations")
pursuant to licenses issued by the Federal Communications Commission (the
"FCC").
B. Seller desires to sell, and Buyer wishes to buy, substantially all
of Seller's assets used or useful in the operation of the Stations and the
broadcast business made possible thereby for the price and on the terms and
conditions hereafter set forth.
AGREEMENTS:
In consideration of the above premises and the covenants and agreements
contained herein, Buyer and Seller agree as follows:
SECTION 1
DEFINED TERMS
The following terms shall have the following meanings in this Agreement:
1.1 "Accounts Receivable" means the rights of Seller to payment for
services rendered (including sale of time or talent on Stations for cash) by
Seller prior to the Closing Date as reflected on the billing records of Seller
relating to such Stations.
1.2 "Assets" means the tangible and intangible assets owned and used or
useful in connection with the conduct of the business or operations of the
Stations, which assets are being sold, transferred, or otherwise conveyed to
Buyer hereunder, as specified in detail in Section 2.1.
1.3 "Assumed Contracts" means (i) all Contracts listed in Schedule 3.7,
(ii) any Contracts entered into by Seller in the ordinary course of business
between the date hereof and the Closing Date which would have been listed on
Schedule 3.7 had they been in existence on the date hereof and which Buyer
agrees in writing to assume, (iii) all Contracts in existence on the Closing
Date which meet the criteria set forth in Section 3.7 (i) - (iii) for exclusion
from Schedule 3.7, and (iv) all Contracts with advertisers for the sale of time
or talent on the Stations for cash entered into in the ordinary course of
business.
<PAGE>
1.4 "Closing" means the consummation of the transaction contemplated by
this Agreement in accordance with the provisions of Section 8.
1.5 "Closing Date" means the date of the Closing specified in Section
8.1.
1.6 "Consents" means all of the consents, permits or approvals of
government authorities and other third parties necessary to transfer the Assets
to Buyer or otherwise to consummate the transaction contemplated hereby,
including without limitation the consents of the parties to those Contracts
designated in Schedule 3.7 with an asterisk.
1.7 "Contracts" means all agreements and leases, written or oral
(including any amendments and other modifications thereto) to which Seller is a
party or which are binding upon Seller and affect the assets or the business or
operations of the Stations, and (i) which are in effect on the date hereof, or
(ii) which are entered into by Seller in the ordinary course of business between
the date hereto and the Closing Date.
1.8 "Escrow Deposit" shall mean the sum of Two Million Five Hundred
Thousand Dollars ($2,500,000) held by Media Venture Partners (the "Escrow
Agent") pursuant to an Escrow Agreement of even date, by and among Buyer,
Seller, and Escrow Agent.
1.9 "Excluded Assets" shall mean those assets described or set forth in
Section 2.2 herein and on Schedule 2.2 hereto.
1.10 "FCC Consent" means action by the FCC granting its consent to the
assignment of the FCC Licenses to Buyer as contemplated by this Agreement.
1.11 "FCC Licenses" means all of the licenses, permits and other
authorizations issued by the FCC to Seller in connection with the conduct of the
business or operations of the Stations.
1.12 "Final Order" means a written action, order or public notice
issued by the FCC, setting forth the FCC Consent and (a) which has not been
reversed, stayed, enjoined, set aside, annulled or suspended, and (b) with
respect to which (i) no requests have been filed for administrative or judicial
review, reconsideration, appeal or stay, and the time for filing any such
requests and for the FCC to review the action on its own motion has expired, or
(ii) in the event of review, reconsideration or appeal that does not result in
the FCC consent being reversed, stayed, enjoined, set aside, annulled or
suspended, the time for further review, reconsideration or appeal has expired.
1.13 "Licenses" means all of the licenses, permits and other
authorizations, including the FCC Licenses, issued by the FCC, the Federal
Aviation Administration ("FAA"), and any other federal, state or local
governmental authorities to Seller in connection with the conduct of the
business or operations of the Stations.
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1.14 "Personal Property" means all of the machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, spare
parts, and other tangible personal property which are owned or leased by Seller
and used or useful as of the date hereof in the conduct of the business or
operations of the Stations, plus such additions thereto and deletions therefrom
arising in the ordinary course of business between the date hereof and the
Closing Date.
1.15 "Purchase Price" means the purchase price specified in Section
2.3.
1.16 "Real Property" means all of the fee estates and buildings and
other improvements thereon, leasehold interests, easements, licenses, rights to
access, rights-of-way, and other real property interest owned by Seller and
identified on Schedule 3.5 hereto plus such additions thereto and deletions
therefrom arising in the ordinary course of business between the date hereof and
the Closing Date.
1.17 "TBA Date" means the effective date of the Time Brokerage
Agreement.
1.18 "Time Brokerage Agreement" means the Time Brokerage Agreement
entered into by the Seller and Buyer in substantially the form set forth in
Schedule 6.13 hereto.
SECTION 2
SALE AND PURCHASE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and conditions set
forth in this Agreement, Seller hereby agrees to transfer and deliver to Buyer
on the Closing Date, and Buyer agrees to purchase, all of the Assets, free and
clear of any claims, liabilities, mortgages, liens, pledges, conditions,
charges, or encumbrances of any nature whatsoever (except for those permitted in
accordance with Section 2.5, 3.5 or 3.6 below), more specifically described as
follows:
(a) The Personal Property;
(b) The Real Property;
(c) The Licenses;
(d) The Assumed Contracts;
(e) All trademarks, trade names, service marks, copyrights and
all other intellectual property and similar intangible assets relating
to the Stations, including those listed in Schedule 3.9 hereto;
(f) All of the Seller's proprietary information, that relates
to the Stations, including without limitation, technical information
and data, machinery and equipment warranties, maps,
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computer discs and tapes, plans, diagrams, blueprints, and schematics,
including filings with the FCC which relate to the Stations, if any;
(g) All choses in action and rights under warranties of Seller
relating to the Stations or the Assets, if any;
(h) All books and records relating exclusively to the business
or operations of the Stations, including executed copies of the Assumed
Contracts, and all records required by the FCC to be kept, subject to
the right of Seller to have such books and records made available to
Seller for a reasonable period, not to exceed three (3) years; and
(i) All intangible assets of Seller relating to the Stations
not specifically described above.
2.2 Excluded Assets. The Assets shall exclude the following assets, in
addition to those listed on Schedule 2.2:
(a) Seller's cash on hand as of the Closing Date and all other
cash in any of Seller's bank or savings accounts; any and all insurance
policies, letters of credit, or other similar items and any cash
surrender value in regard thereto, and any stocks, bonds, certificates
of deposit and similar investments.
(b) Any Contracts other than the Assumed Contracts;
(c) All books and records of Seller, subject to the right of
Buyer to have access and to copy for a period of three (3) years from
the Closing Date such books and records as directly related to the
Seller's operations of the Stations, and Seller's partnership records
and other books and records related to internal partnership matters and
financial relationships with Seller's lenders;
(d) Any claims, rights and interest in and to any refunds of
federal, state or local franchise, income or other taxes or fees of any
nature whatsoever for periods prior to the Closing Date;
(e) Any pension, profit-sharing or employee benefit plans, and
any employment or collective bargaining agreement, except to the extent
specifically assumed in Section 2.4, 2.5 or 6.10 of this Agreement.
(f) The Accounts Receivable.
2.3 Purchase Price. The Purchase Price shall be Thirty-One Million Two
Hundred and Twelve Thousand Dollars ($31,212,000). The Purchase Price shall be
adjusted to reflect any adjustments or prorations made and agreed to as of the
TBA Date as provided in Section 2.4 hereof, or as may be provided in the Time
Brokerage Agreement. The Purchase Price shall be reduced by the sum of One
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hundred and One Thousand Dollars ($101,000) for each calendar month (or a
prorated portion of such sum for any partial calendar month) that the Closing
occurs before August 15, 1997. The Purchase Price shall be allocated between the
Stations and their respective tangible and intangible assets, including goodwill
and license value, in accordance with the results of an independent appraisal
undertaken by Buyer which results Seller may but shall be under no obligation
to, adopt.
2.4 Adjustments and Prorations. All revenues arising from the Stations
up until midnight on the day prior to the TBA Date, and all expenses arising
from the Stations up until midnight on the day prior to the TBA Date, including
business and license fees (including any retroactive adjustments thereof),
utility charges, real and personal property taxes and assessments levied against
the Assets, accrued employee benefits such as vacation time and sick time,
property and equipment rentals, applicable copyright or other fees, sales and
service charges, taxes (except for taxes arising from the transfer of the Assets
hereunder), and similar prepaid and deferred items, shall be prorated between
Buyer and Seller in accordance with the principle that Seller shall receive all
revenues, and all refunds to Seller and deposits of Seller held by third
parties, and shall be responsible for all expenses, costs and liabilities
allocable to the conduct of the business or operations of the Stations for the
period prior to the TBA Date, and Buyer shall receive all revenues and shall be
responsible for all expenses, costs and obligations allocable to the conduct of
the business or operations of the Stations on the TBA Date and for the period
thereafter. Buyer shall receive credit if the Stations' aggregate net trade
balance is negative (i.e., trade and barter accounts payables exceed
receivables). Notwithstanding the foregoing, there shall be no adjustment for,
and Seller shall remain solely liable with respect to, any Contracts not
included in the Assumed Contracts, or any other obligation or liability not
being assumed by Buyer in accordance with Section 2.5.
A. Any adjustments or prorations will, insofar as feasible, be
determined and paid on the Closing Date, with final settlement and payment being
made in accordance with the procedures set forth in Section 2.4B.
B. Within sixty (60) days after the Closing Date, Buyer shall deliver
to Seller a certificate (the "Adjustment Certificate"), signed by a senior
officer of Buyer after due inquiry by such officer but without any personal
liability to such officer, providing a compilation of the adjustments and
prorations to be made pursuant to this Section 2.4, including any adjustments
and prorations made as of the TBA Date, together with a copy of any working
papers relating to such Adjustment Certificate and such other supporting
evidence as Seller may reasonably request. If Seller shall conclude that the
Adjustment Certificate does not accurately reflect the adjustments and
prorations to be made pursuant to this Section 2.4, Seller shall, within thirty
(30) days after its receipt of the Adjustment Certificate, provide to Buyer its
written statement of any discrepancies believed to exist. Joseph L. Winn on
behalf of Buyer, and Stephen Snell on behalf of Seller, or their respective
designees, shall attempt jointly to resolve the discrepancies within fifteen
(15) days after receipt of Seller's discrepancy statement, which resolution, if
achieved, shall be binding upon all parties to this Agreement and not subject to
dispute or review. If such representatives cannot resolve the discrepancy to
their mutual satisfaction within such fifteen (15) day period, Buyer and Seller
shall, within the following ten (10) days, jointly designate a nationally known
independent public accounting firm to be retained to review the Adjustment
Certificate together with Seller's discrepancy statement and any other relevant
documents. The cost of retaining such independent public accounting
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firm shall be borne equally by Buyer and Seller. Such firm shall report its
conclusions as to adjustments pursuant to this Section 2.4, which report shall
be conclusive on all parties to this Agreement and not subject to dispute or
review. If, after adjustment as appropriate with respect to the amount of the
aforesaid adjustments paid or credited as of the TBA Date, Buyer is determine to
owe an amount to Seller, Buyer shall pay such amount to Seller, and if Seller is
determined to owe an amount to Buyer, Seller shall pay such amount thereof to
Buyer, in each case within ten (10) days of such determination.
2.5 Assumption of Liabilities and Obligations. Except to the extent
provided otherwise by the Time Brokerage Agreement, as of the Closing Date,
Buyer shall pay, discharge and perform (i) all of the obligations and
liabilities of Seller under the Licenses and the Assumed Contracts insofar as
they relate to the time period on and after the Closing Date, and arising out of
events occurring on or after the Closing Date, (ii) all obligations and
liabilities arising out of events occurring on or after the Closing Date related
to Buyer's ownership of the Assets or its conduct of the business or operations
of the Stations on or after the Closing Date, and (iii) all obligations and
liabilities for which Buyer receives a proration adjustment hereunder. All other
obligations and liabilities of Seller, including (i) any obligations under any
Contract not included in the Assumed Contracts, (ii) any obligations under the
Assumed Contracts relating to the time period prior to the Closing Date, (iii)
any claims or pending litigation or proceedings relating to the operation of the
Stations prior to the Closing Date, and (iv) those related to employees as set
forth in Section 6.9 herein shall remain and be the obligations and liabilities
solely of Seller.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Organization, Standing and Authority. Seller is a general
partnership duly formed, validly existing and in good standing under the laws of
the State of California and is duly qualified to conduct its business in such
state, which is the only jurisdiction where the conduct of the business or
operations of the Stations requires such qualification. Seller has all requisite
partnership power and authority (i) to own, lease, and use the Assets as
presently owned, leased, and used, and (ii) to conduct the business or
operations of the Stations as presently conducted. Seller has all requisite
partnership 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 Seller, hereunder
and thereunder. Seller is not a participant in any joint venture or partnership
with any other person or entity with respect to any part of the Stations'
operations or the Assets.
3.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement by Seller have been duly authorized by all
necessary partnership action on the part of Seller. This Agreement has been duly
executed and delivered by Seller and constitutes the legal, valid, and binding
obligation of Seller, enforceable against Seller in accordance with its terms
except as the enforceability hereof may be affected by bankruptcy, insolvency,
or similar laws affecting creditors' fights generally, or by court-applied
equitable remedies.
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3.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents, 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) does not require the consent of any third party; (ii)
will not conflict with any provision of the Partnership Agreement of Seller;
(iii) will not conflict with, result in a breach of, or constitute a default
under, any law, judgment, order, ordinance, decree, rule, regulation or ruling
of any court or governmental instrumentality, which is applicable to either
Seller; (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 material
agreement, instrument, license or permit to which either Seller is a party or by
which either may be bound; or (v) will not create any claim, liability,
mortgage, lien, pledge, condition, charge, or encumbrance of any nature
whatsoever upon the Assets.
3.4 Licenses. Schedule 3.4 includes a true and complete list of the
Licenses. Seller has delivered to Buyer true and complete listings of the
Licenses (including any and all amendments and other modifications thereto). As
described in Schedule 3.4, the Licenses were validly issued with the Seller
designated thereon being the authorized legal holder thereof. The Licenses
comprise all of the licenses, permits and other authorizations required from any
governmental or regulatory authority for the lawful conduct of the business or
operations of the Stations as presently operated. Seller has no reason to
believe that the Licenses will not be renewed by the FCC or other granting
authority in the ordinary course.
3.5 Title to and Condition of Real Property. Schedule 3.5 contains
descriptions of all the Real Property (including the location of all
improvements thereon), which comprises all real property interest necessary to
conduct the business or operations of the Stations as now conducted. Seller has
good and marketable fee simple title to all of the fee estates (including the
improvements thereof), listed in said Schedule free and clear of all liens,
mortgages, pledges, covenants, easements, restrictions, encroachments, leases,
charges, and other claims and encumbrances of any nature whatsoever, and without
reservation or exclusion of any mineral, timber, or other rights or interests,
except for (i) liens for real estate taxes not yet due and payable, (ii)
easements, rights-of-way and restrictions of record, none of which materially
affects the use of such property and all of which are listed in Schedule 3.5,
(iii) liens in favor of Seller's lenders set forth in Schedule 3.5, and (iv) any
other claims or encumbrances which are described in Schedule 3.5 and annotated
to indicate that such claims or encumbrances shall be removed prior to or at
Closing. To the best of Seller's knowledge, all towers, guy anchors, and
buildings and other improvements, included in the owned Assets are located
entirely on the Real Property listed in Schedule 3.5 or easement rights set
forth at Schedule 3.5. Seller has delivered to Buyer true and complete copies of
all deeds, leases, Title Insurance Policies or other material instruments
pertaining to the Real Property (including any and all amendments and other
modifications of such instruments), all of which instruments are to the best of
Seller's knowledge, valid, binding and enforceable in accordance with their
terms. Seller is not in material breach, nor to Seller's knowledge is any other
party in material breach, of the terms of any of such deeds, leases, or other
instruments. All Real Property (including the improvements thereof) (i) is in
good condition and repair consistent with is age and present use, reasonable
wear and tear excepted, (ii) is available for immediate use in the conduct of
the business or operations of the Stations, and (iii) to Seller's best knowledge
materially complies as described in Schedule 3.5 with all applicable
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building, electrical and zoning codes and all regulations of any governmental
authority having jurisdiction. Seller has full legal and practical access to the
Real Property.
3.6 Title to and Condition of Personal Property. Schedule 3.6 contains
descriptions of all material items of the Personal Property, which comprises all
personal property used to conduct the business or operations of the Stations as
now conducted. Except as described in Schedule 3.6, Seller owns and has good
title to all Personal Property. None of the Personal Property owned by Seller is
subject to any security interest, mortgage, pledge, conditional sales agreement,
or other lien or encumbrance, except for (i) liens for current taxes not yet due
and payable, and (ii) any other claims or encumbrances which are described in
Schedule 3.6 and annotated to indicate that such claims or encumbrances shall be
removed prior to or at Closing. Except as shown in Schedule 3.6, the Personal
Property taken as a whole is in good operating condition and repair consistent
with its age and present use (ordinary wear and tear excepted), and is available
for immediate use in the business or operations of the Stations. Except as set
forth in Schedule 3.6, the transmitting and studio equipment included in the
Personal Property (i) has been maintained consistent with FCC rules and
regulations, and (ii) will permit the Stations and any unit auxiliaries thereto
to operate in accordance with the terms of the FCC Licenses and the rules and
regulations of the FCC, and with all other applicable federal, state and local
statutes, ordinances, rules and regulations.
3.7 Contracts. Schedule 3.7 contains descriptions of all the Contracts
except for: (i) contracts with advertisers for the sale of time or talent on the
Stations for cash, entered into in the ordinary course of business, (ii) those
employment contracts and miscellaneous service contracts which are terminable at
will, in Seller's good faith opinion, without penalty, and (iii) other contracts
not involving either aggregate liabilities under all such contacts exceeding
Five Thousand Dollars ($5,000) or any material nonmonetary obligation. Seller
has delivered to Buyer true and complete copies of all written Contracts, and
true and complete memoranda of all oral Contracts which are acknowledged by
Seller (including any and all amendments and other modifications to such
Contracts). Other than the Contracts, the Seller knows of no other contract or
agreement to enable it to carry on its business as presently conducted. All of
the Assumed Contracts are in full force and effect, and are to the best of
Seller's knowledge, valid, binding and enforceable in accordance with their
terms, except as the enforceability thereof may be affected by bankruptcy,
insolvency or similar laws affecting creditors' rights generally, or by court
applied equitable remedies. Seller is not in material breach, nor to Seller's
knowledge is any other party in material breach, of the terms of any such
Contracts. Except as expressly set forth in Schedule 3.7, the Seller is not
aware of any intention by any party to any Assumed Contract (i) to terminate
such contract or amend the terms thereof, (ii) to refuse to renew the same upon
expiration of its term. Except for the Consents, Seller has full legal power and
authority to assign its rights under the Assumed Contracts to Buyer in
accordance with this Agreement, and such assignment will not affect the
validity, enforceability and continuation of any of the Assumed Contracts.
3.8 Consents. Except for the FCC Consent provided for in Section 6.1,
the HSR Consent provided for in Section 6.12, and the other Consents indicated
in Schedule 3.7 or described in Schedule 3.8, 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 (i) to consummate
this Agreement and the
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transaction contemplated hereby, (ii) to permit Seller to assign or transfer the
Assets to Buyer, or (iii) to enable Buyer to conduct the business or operations
of the Stations in essentially the same manner as such business or operations
are presently conducted.
3.9 Trademarks, Trade Names and Copyrights. Schedule 3.9 is a true and
complete list of all copyrights, trademarks, trade names, licenses, patents,
permits, jingles, privileges and other similar intangible property rights and
interests (exclusive of those required to be listed in Schedule 3.4) applied
for, issued to or owned by Seller, or under which Seller is licensed or
franchised, and used or useful in the conduct of the business or operations of
the Stations, all of which are valid and in good standing and, to the best of
Seller's knowledge, uncontested. Seller has delivered to Buyer copies of all
documents establishing such rights, licenses, or other authority. Seller is not
aware that it is infringing upon or otherwise acting adversely to any
trademarks, trade names, copyrights, patents, patent applications, know-how,
methods, or processes owned by any other person or persons, and there is no
claim or action pending, or to the knowledge of Seller threatened, with respect
thereto.
3.10 Financial Statements. True and complete copies of unaudited
financial statements of Seller containing balance sheets and statements of
income as at and for Seller's fiscal years ended December 31, 1993, 1994 and
1995 (collectively, the "Financial Statements") have been supplied to Buyer. The
Financial Statements are prepared in accordance with generally accepted
accounting principles consistently applied, are true and correct in all material
respects to the best of Seller's knowledge, and present fairly the operating
income and financial condition of the Stations as at their respective dates and
the results of operations for the periods then ended.
3.11 Insurance. All of the tangible property included in the Assets is
insured at prudent levels against loss or damage. Schedule 3.11 comprises a true
and complete list of all insurance policies of Seller which insure any part of
the Assets. All policies of insurance listed in Schedule 3.11 are in full force
and effect. During the three-year period ending on the date hereof, no insurance
policy of Seller on the Assets or the Stations has been canceled by the insurer
and no application of Seller for insurance has been rejected by any insurer.
3.12 Reports. Except where failure to do so would not have a material
adverse effect on the ownership or operation of the Stations: all returns,
reports and statements which the Stations is currently required to file with the
FCC or with any other governmental agency have been filed, and all reporting
requirements of the FCC and other governmental authorities having jurisdiction
thereof have been complied with; all of such reports, returns and statements are
substantially complete and correct as filed- and the Stations' public inspection
file is located at the main studio and is in compliance with the FCC's rules and
regulations.
3.13 Employee Benefit Plans. Schedule 3.7 or Schedule 3.13 contains a
true and complete list as of the date of this Agreement of all employee benefit
plans or arrangements applicable to the employees of Seller employed at the
Stations, and all fixed or contingent liabilities or obligations of Seller with
respect to any person now or formerly employed by Seller at the Stations,
including pension or thrift plans, individual or supplemental pension or accrued
compensation arrangements, contributions to
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hospitalization or other health or life insurance programs, incentive plans,
bonus arrangements and vacation, sick leave, disability and termination
arrangements or policies, including workers' compensation policies. Seller has
furnished or made available to Buyer true and complete copies of all written
documents or information with respect to employee matters and arrangements at
the Stations, including without limitation, all employee handbooks, rules and
policies, plan documents, trust agreements, employment agreements, summary plan
descriptions, and descriptions of any unwritten plans listed in Schedule 3.13.
To the best of Seller's knowledge, any employee benefits and welfare plans or
arrangements listed in Schedule 3.13 were established and have been executed,
managed and administered without material exception in accordance with all
applicable requirements of the Internal Revenue Code of 1986, as amended, of the
Employee Retirement Income Security Act of 1974, as amended, and of other
applicable laws. Seller is not aware of the existence of any governmental audit
or examination of any of such plans or arrangements or of any facts which would
lead it to believe that any such audit or examination is pending or threatened.
There exists no action, suit or claim (other than routine claims for benefits)
with respect to any of such plans or arrangements pending or, to the knowledge
of Seller, threatened against any of such plans or arrangements, and Seller
possesses no knowledge of any facts which could give rise to any such action,
suit or claim.
3.14 Labor Relations. Seller is not a party to or subject to any
collective bargaining agreements with respect to the Stations except as
described in Schedule 3.7 hereto. Seller has no written or oral contracts of
employment which are acknowledged by Seller with any employee of the Stations,
other than those listed in Schedule 3.7. Seller has provided Buyer with true and
complete copies of all such written contracts of employment and true and
complete memoranda of any such oral contracts. Seller, in the operation of the
Stations, has complied in all material respects with all applicable laws, rules
and regulations relating to the employment of labor, including those related to
wages, hours, collective bargaining, occupational safety, discrimination, and
the payment of social security and other payroll related taxes, and it has not
received any notice alleging that it has failed to comply in any material
respect with any such laws, rules or regulations. No controversies, disputes, or
proceedings are pending or, to the best of its knowledge, threatened, between it
and employees (collectively) of the Stations. No labor union or other collective
bargaining unit represents any of the employees of the Stations. To the best
knowledge of Seller, 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 of Seller's employees at the
Stations.
3.15 Taxes. Seller has 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 be filed, and it has paid or caused to be paid all taxes
shown on said returns or on any tax assessment received by it to the extent that
such taxes have become due, or has set aside on its books reserves (segregated
to the extent required by sound accounting practice) deemed by it to be adequate
with respect thereto. No events have occurred which could impose on Buyer any
transferee liability for any taxes, penalties or interest due or to become due
from Seller.
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3.16 Claims, Legal Actions. Except as set forth in Schedule 3.16, and
except for any investigations and rule-making proceedings generally affecting
the broadcasting industry, there is no claim, legal action, counterclaim, suit,
arbitration, governmental investigation or other legal, administrative or tax
proceeding, nor any order, decree or judgment, in progress or pending, or to the
knowledge of Seller threatened, against or relating to Seller, the Assets, or
the business or operations of the Stations, nor does Seller know of any basis
for the same. In particular, except as set forth in Schedule 3.16, but without
limiting the generality of the foregoing, there are no applications, complaints
or proceedings pending or, to the best of its knowledge, threatened (i) before
the FCC relating to the business or operations of the Stations other than
applications, complaints or proceedings which affect the radio industry
generally, (ii) before any federal or state agency involving charges of illegal
discrimination by the Stations under any federal or state employment laws or
regulations, or (iii) against Seller or the Stations before any federal, state
or local agency involving environmental or zoning laws or regulations.
3.17 Compliance with Laws. To the best knowledge of Seller, Seller has
complied in all material respects with (i) the Licenses, and (ii) all applicable
federal, state and local laws, rules, regulations and ordinances. To the best
knowledge of Seller, neither the ownership or use, nor the conduct of the
business or operations, of the Stations conflicts with rights of any other
person, firm or corporation.
3.18 Environmental Matters.
(a) During Seller's period of ownership and, to the best
knowledge of Seller, during those of its predecessor, there has been no
production, storage, treatment, recycling, disposal, use, generation,
discharge, release or other handling or disposition of any kind by
Seller or any such predecessor (collectively, "Handling") of any toxic
or hazardous wastes, substances, products, pollutants or materials of
any kind, including, without limitation, petroleum and petroleum
products and asbestos, or any other wastes, substances, products,
pollutants or material regulated under any Environmental Laws (as
defined below) (collectively, "Hazardous Materials") at, in, on, from
or under the real property or any structure or improvement on the real
property owned by Seller which in any event is in material violation of
Environmental Law. To Seller's best knowledge, its operations have been
conducted in material compliance with all applicable Environmental
Laws. There are no pending or threatened actions, suits, claims,
demands, legal proceedings, administrative proceedings, requests for
information, or other notices, proceedings or requests (collectively,
"Claims") against or upon Seller based on or relating to any
Pre-Closing Environmental Matters (as defined below), and Seller has no
knowledge that any such Claims will be asserted. Environmental Laws
means any and all Federal, state or local laws, statutes, rules,
regulations, plans, ordinances, codes, licenses or other restrictions
relating to health, safety or the environment, including without
limitation the Comprehensive Environmental Response, Compensation and
Liability Act, the Clean Air Act the Safe Drinking Water Act, the Toxic
Substances Control Act and the Occupational Health and Safety Act.
Pre-Closing Environmental Matters means (i) the Handling of any
Hazardous Materials on, at, in, from or under the Real Property prior
to the Closing Date, including without limitation, the effects of any
Handling of Hazardous Materials within or outside the boundaries of
Real Property, (ii) the failure of Seller to be in compliance with any
Environmental Law or (iii) any other act, omission, event or
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condition which could give rise to liability or potential liability
under any Environmental Law with respect to the Real Property or the
present or prior business of Seller.
(b) Buyer shall be entitled to order and have undertaken on
its behalf prior to closing a Phase I Environmental Assessment of the
Real Property, and shall be granted all cooperation and access by
Seller reasonably necessary to complete such Assessment. If the report
of such Assessment demonstrates or recommends remediation in order to
cause the Real Property to comply with Environmental Laws, Seller shall
permit Buyer to immediately undertake to arrange, at its own expense,
such remediation prior to Closing. Cost incurred by Buyer in such
remediation shall be paid by Seller as a direct reimbursement to Buyer
at Closing. Notwithstanding the foregoing, in the event such
remediation costs, or is estimated to cost, in excess of Fifty Thousand
Dollars ($50,000), Seller shall not be obligated to reimburse such
excess, but in such event Buyer may thereafter, at its option, (i)
accept the condition of the Real Property at Closing, with credit
against the Purchase Price for the estimated costs of remediation, not
to exceed Fifty Thousand Dollars ($50,000) or (ii) terminate its
obligations to purchase the Stations under this Agreement.
3.19 Conduct of Business in Ordinary Course. Since January 1, 1996,
Seller has conducted the business and operations of the Stations only in the
ordinary course and has not:
(a) Suffered any material adverse change in the assets,
operation, business or properties of Seller or of the Stations,
including, without limitation, any material decrease in audience
ratings or operation cash flow for the Stations;
(b) Made any sale, assignment, lease or other transfer of any
of Seller's properties other than in the normal and usual course of
business with suitable replacements being obtained therefor;
(c) Made any material increase in compensation payable or to
become payable to any of the employees of Seller, or any bonus payment
made or promised to any employee of Seller, or any material change in
personnel policies, employee benefits or other compensation
arrangements affecting the employees of Seller; or
3.20 Full Disclosure. No representation or warranty made by Seller
herein nor any certificate, document or other instrument furnished or to be
furnished by Seller pursuant hereto contains or will contain any untrue
statement of a material fact made intentionally or in bad faith, or
intentionally or in bad faith omits or will omit to state any material fact
known to Seller and required to make the statements herein or therein not
misleading.
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SECTION 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller 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
California, and is and shall be, at Closing, qualified to conduct business in
the States of California and Oregon. 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.
4.2 Authorization and Binding Obligation. The execution, delivery and
performance of this Agreement by Buyer have been duly authorized by all
necessary corporate action 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 hereof may be affected by bankruptcy, insolvency,
or similar laws affecting creditors' rights generally, or by court-applied
equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents, 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) does not require the consent of any third party; (ii)
will not conflict with the Articles of Incorporation or Bylaws of Buyer; (iii)
will not conflict with, result in a breach of, or constitute a default under, or
accelerate or permit the acceleration of any performance required by the terms
of, any material agreement, instrument, licenses, or permit to which Buyer is a
party or by which Buyer may be bound.
4.4 FCC Qualification. Buyer has no knowledge of any facts which would,
under present law (including the Communications Act of 1934, as amended) and
present rules, regulations and practices of the FCC, disqualify Buyer as an
assignee of the licenses, permits and authorizations listed on Schedule 3.4
hereto, or as an owner and/or operator of the Stations' Assets. Buyer further
represents and warrants that it is financially qualified to meet all terms,
conditions and undertakings contemplated by this Agreement.
SECTION 5
COVENANTS OF SELLER
5.1 Pre-Closing Covenants. Except as contemplated by this Agreement or
with the prior written consent of Buyer, not to be unreasonably withheld,
between the date hereof and the Closing Date, Seller shall operate the Stations
in the ordinary course of business in accordance with its past
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practices (except where such would conflict with the following covenants or with
Seller's other obligations hereunder), and abide by the following negative and
affirmative covenants:
A. Negative Covenants. Seller shall not do any of the following:
(1) Compensation. Increase the compensation, bonuses or other
benefits payable or to be payable to any person employed in connection
with the conduct of the business or operations of the Stations, except
in accordance with past practices;
(2) Contracts. Except in the ordinary course of business
modify or amend any of the Assumed Contracts, enter into any new
Contracts except in the ordinary course of business, provided that all
new Contracts (other than Contracts for the sale of broadcast time)
shall not involve either aggregate liabilities exceeding Twenty
Thousand Dollars ($20,000) (unless expended in compliance with Section
5.1.B. (5) herein), or any material nonmonetary obligation;
(3) Disposition of Assets. Sell, assign, lease, or otherwise
transfer or dispose of any of the Assets, except for assets consumed or
disposed of in the ordinary course of business, where no longer used or
useful in the business or operations of the Stations or in connection
with the acquisition of replacement property of equivalent kind and
value;
(4) Encumbrances. Create, assume or permit to exist any claim,
liability, mortgage, lien, pledge, condition, charge, or encumbrance of
any nature whatsoever upon the Assets, except for (i) those in
existence on the date of this Agreement, disclosed in Schedules 3.5 and
3.6, or permitted by Section 2.5, 3.5 or 3.6 and (ii) mechanics' liens
and other similar liens which will be removed prior to the Closing
Date;
(5) Programming. Make any material changes in the broadcast
hours or in the percentages of types of programming broadcast by the
Stations, or make any other material changes in the Stations'
programming policies, except such changes as in the good faith judgment
of the Seller are required;
(6) Licenses. Do any act or fail to do any act which might
result in the expiration, revocation, suspension or modification of any
of the Licenses, or fail to prosecute with due diligence any
applications to any governmental authority in connection with the
operation of the Stations;
(7) Rights. Waive any material right relating to the Stations
or the Assets; or
(8) No Inconsistent Action. Knowingly take any action which is
inconsistent with its obligations hereunder or which could hinder or
delay the consummation of the transaction contemplated by this
Agreement.
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B. Affirmative Covenants. Seller shall do the following:
(1) Access to Information. Upon prior notice, allow Buyer and
its authorized representatives reasonable access at mutually agreeable
times at Buyer's expense during normal business hours to the Assets and
to all other properties, equipment, books, records, Contracts and
documents relating to the Stations for the purpose of audit and
inspection, and furnish or cause to be furnished to Buyer or its
authorized representatives all information with respect to the affairs
and business of the Stations as Buyer may reasonably request, it being
understood that the rights of Buyer hereunder shall not be exercised in
such a manner as to interfere with the operations of the business of
Seller; provided that neither the furnishing of such information to
Buyer or its representatives nor any investigation made heretofore or
hereafter by Buyer shall affect Buyer's fights to rely on any
representation or warranty made by Seller in this Agreement, each of
which shall survive any furnishing of information or any investigation;
(2) Maintenance of Assets. Maintain all of the Assets or
replacements thereof and improvements thereon in current condition
(ordinary wear and tear excepted), and use, operate and maintain all of
the above assets in a reasonable manner, with inventories or spare
parts and expendable supplies being maintained at levels consistent
with past practices;
(3) Insurance. Maintain the existing insurance policies on the
Stations and the Assets;
(4) Consents. Use its reasonable efforts to obtain the
Consents;
(5) Preservation of Business. Use its reasonable efforts
consistent with past practices to preserve the business and audience of
the Stations, and its present relationships with their employees,
suppliers, customers and others having business relations with it and
maintain levels of marketing and promotions efforts and expenditures
during the period prior to the Closing Date equal to or greater to such
levels in the year immediately prior to the Closing Date;
(6) Books and Records. Maintain its books and records in
accordance with past practices;
(7) Notification. Promptly notify Buyer in writing of any
unusual or material developments with respect to the assets of the
Stations, and of any material change in any of the information
contained in Seller's representations and warranties contained in
Section 3 hereof or in the schedules hereto, provided that such
notification shall not relieve Seller of any obligations hereunder;
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(8) Trade and Barter Agreements. Provide prior to the Closing
Date the advertising time due under any trade and barter agreements
listed in Schedule 3.7 in accordance with past practice;
(9) Financial Information. Furnish to Buyer within thirty (30)
days after the end of each month ending between the date hereof and the
Closing Date a statement of income and expense for the month just ended
and such other financial information (including information on payables
and receivables) as Buyer may reasonably request and which is prepared
in the ordinary course of business.
(10) Contracts. Prior to the Closing Date, deliver to Buyer a
list of all Contracts entered into between the date hereof and the
Closing Date of the type required to be listed in Schedule 3.7,
together with the copies of such Contracts; and
(11) Compliance with Laws. Comply in all material respects
with all rules and regulations of the FCC, and all other laws, rules
and regulations to which Seller, the Stations and the Assets are
subject.
5.2 Post-Closing Covenants. After the Closing, Seller will take such
actions, and execute and deliver to Buyer such further deeds, bills of sale, or
other transfer documents as, in the reasonable opinion of counsel for Buyer and
Seller, may be necessary to ensure, complete and evidence the full and effective
transfer of the Assets to Buyer pursuant to this Agreement.
SECTION 6
SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent. The assignment of the FCC Licenses as contemplated by
this Agreement is subject to the prior consent and approval of the FCC.
A. Within five (5) days after the execution of this Agreement,
Buyer and Seller shall file with the FCC an appropriate application for FCC
Consent. The parties shall prosecute said application with all reasonable
diligence and otherwise use their best efforts to obtain the grant of such
application as expeditiously as practicable. If the FCC Consent imposes any
condition on any party hereto, such party shall use its best efforts to comply
with such condition unless compliance would be unduly burdensome or would have a
material adverse effect upon it. If reconsideration or judicial review is sought
with respect to the FCC Consent, Buyer and Seller shall oppose such efforts to
obtain reconsideration or judicial review (but nothing herein shall be construed
to limit any party's right to terminate this Agreement pursuant to Section 9 of
this Agreement).
B. The transfer of the Assets hereunder is expressly
conditioned upon (i) the grant of the FCC Consent without any materially adverse
conditions on Buyer, (ii) compliance by the parties hereto with the condition
(if any) imposed in the FCC Consent, and (iii) the FCC Consent, through the
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passage of time or otherwise, becoming a Final Order, provided, though, that the
condition that the FCC Consent shall have become a Final Order may be waived by
Buyer, in its sole discretion.
6.2 Control of the Stations. 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 Seller until the completion of the Closing hereunder.
6.3 Taxes, Fees and Expenses. Buyer shall pay all sales, transfer and
similar taxes and fees, if any, arising out of the transfer of the Assets
pursuant to this Agreement. All filing fees required by the FCC shall be paid
equally by Seller and Buyer. Buyer shall be solely responsible for any FTC fees
incurred in obtaining approval under the Hart-Scott-Rodino Act ("the HSR
Consent"). 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 other representatives.
6.4 Brokers. Buyer and Seller each represents and warrants that neither
it 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 transaction
contemplated by this Agreement, except for Media Venture Partners, the payment
of whose fee (which shall be equal to 1.68% of the Purchase Price) shall be
shared and paid equally by Buyer and Seller.
6.5 Noncompetition Agreement. Buyer and Seller shall enter into at
Closing a Noncompetition Agreement in the form set forth in Schedule 6.5.
6.6 Confidentiality. Except as necessary for the consummation of the
transaction contemplated hereby, including Buyer's obtaining financing in any
form or means of its choosing related hereto, each party hereto will keep
confidential any information which is obtained from the other party in
connection with the transaction contemplated hereby and which is not readily
available to members of the general public, and will not use such information
for any purpose other than in furtherance of the transactions contemplated
hereby. In the event this Agreement is terminated and the purchase and sale
contemplated hereby abandoned, each party will return to the other party
originals and all copies of all documents, work papers and other written
material obtained by it in connection with the transaction contemplated hereby.
6.7 Cooperation. Buyer and Seller 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 Buyer and Seller shall execute such other documents as may be
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 hereunder. Notwithstanding
the foregoing, except as otherwise set forth herein, Buyer shall have no
obligation (i) to expend funds to obtain the Consents, or (ii) to agree to any
adverse change in any License or Assumed Contract to obtain a Consent required
with respect thereto.
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6.8 Risk of Loss.
A. The risk of loss, damage or impairment, confiscation or
condemnation of any of the Assets from any cause whatsoever shall be borne, to
the extent of Seller's insurance proceeds received therefor, by Seller at all
times prior to the completion of the Closing.
B. If any damage or destruction of the Assets or any other
event occurs which prevents signal transmission by the Stations in the normal
and usual manner and Seller cannot restore or replace the Assets so that the
conditions are cured and normal and usual transmission is resumed before the
Closing Date, the Closing Date shall be postponed, for a period of up to one
hundred and twenty (120) 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 the
Stations' normal and usual transmission resumed within the one hundred and
twenty (120) day period specified above, Buyer may terminate this Agreement
forthwith without any further obligation hereunder by written notice to Seller.
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 Seller shall deliver to Buyer all insurance
proceeds received in connection with such damage or destruction of the Assets to
the extent not already expended by Seller arising in connection with such
restoration and replacement.
D. Notwithstanding any of the foregoing, Buyer may terminate
this Agreement forthwith without any further obligation hereunder by written
notice to Seller if any event occurs which prevents signal transmission by the
Stations in a manner generally equivalent to its current operations for a
consecutive period of five (5) or a cumulative period of fourteen (14) days
after the date hereof.
6.9 Employee Matters.
A. Seller has furnished to Buyer an accurate list of all
current employees of the Stations together with a description of the terms and
conditions of their respective employment (including salary, bonus and other
benefit arrangements) and their duties as of the date of this Agreement, as well
as the annual salaries thereof. Seller shall promptly, notify Buyer of any
changes that occur prior to Closing with respect to such information.
B. Nothing contained in this Agreement shall confer upon any
employee of Seller any right with respect to continued employment by Buyer, nor
shall anything herein interfere with any fight the Buyer may have after the
Closing Date to (i) terminate the employment of any of the employees at any
time, with or without cause, or (ii) establish or modify any of the terms and
conditions of the employment of the employees in the exercise of its independent
business judgment.
C. Except as otherwise set forth herein, Buyer will not incur
any liability on account of Seller's employees in connection with the
transaction, including, without limitation, any
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liability on account of unemployment insurance contributions, termination
payments, retirement, pension, profit-sharing, bonus, severance pay, disability,
health, accrued vacation, accrued sick leave (unless a pro-rated adjustment is
made as to vacation or sick leave) or other employee benefit plans, practices,
agreements, or understandings.
6.10 Accounts Receivable. At the TBA Date, Seller shall assign to Buyer
for collection purposes only all Accounts Receivable. Seller shall deliver to
Buyer on or as soon as practicable after the TBA Date a complete and detailed
statement showing the name, amount and age of each Account Receivable. Subject
to and limited by the following, collections of the Accounts Receivable will be
for the account of Seller. Buyer shall endeavor in the ordinary course of
business to collect the Accounts Receivable for a period of ninety (90) days
after the TBA Date (the "Collection Period"). Any payment received by Buyer
during the Collection Period from any customer with an account which is an
Account Receivable shall first be applied in reduction of the Account
Receivable, unless the customer otherwise directs in writing. During the
Collection Period, Buyer shall furnish Seller with a list of, and pay over to
Seller, without set-off or deduction, the amounts collected during such calendar
month with respect to the Accounts Receivable on a monthly basis; no later than
the 15th day of each month. Buyer shall provide Seller with a final accounting
on or before the fifteenth (15th) day following the end of the Collection
Period. Upon the request of either party at and after such time, Buyer and
Seller shall meet to mutually and in good faith analyze any uncollected Account
Receivable to determine if the same, in their reasonable business judgment, are
deemed to be collectable and if Buyer desires to retain such Account in the
interest of maintaining an advertising relationship. As to each such Account,
Buyer and Seller shall negotiate a good faith value of such Account, which Buyer
shall pay to Seller if Buyer, in its sole discretion, chooses to retain such
Account. Seller shall retain the right to collect any Account as to which the
parties are unable to reach agreement as to a good faith value, and Buyer agrees
to turn over to Seller any payments received against any such Account. As
Seller's agent, Buyer shall not be obligated to use any extraordinary efforts or
expend any sums to collect any of the Accounts Receivable assigned to it for
collection hereunder or to refer any of such Accounts Receivable to a collection
agency or to any attorney for collection, and Buyer shall not make any such
referral or compromise, nor settle or adjust the amount of any such Account
Receivable, except with the approval of Seller. Buyer shall incur no liability
to Seller for any uncollected account unless Buyer shall have engaged in willful
misconduct or gross negligence in the collection of such account. During and
after the Collection Period, without specific agreement with Buyer to the
contrary, neither Seller nor its agents shall make any direct solicitation of
the Accounts Receivable for collection purposes except for Accounts retained by
Seller after the Collection Period.
6.11 Audit Cooperation. Seller agrees to fully cooperate, and use
reasonable efforts to cause their accounting firms to reasonably cooperate with
Buyer and at Buyer's expense, to the extent required for the Buyer to prepare
audited financial statements for the Stations for the period of Seller's
ownership thereof. Seller further agrees to authorize the disclosure of such
audited financial information as required by applicable laws, regulations or
rules of any administrative or governmental agency, stock exchange or
self-regulatory agency.
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6.12 HSR Consent. Buyer and Seller agree to fully cooperate in the
timely preparation and filing of all forms, documents and applications required
under the Hart-Scott-Rodino Act in conjunction with the transaction contemplated
hereunder in order to obtain the HSR Consent. Buyer and Seller further agree to
diligently prosecute such application, and to promptly respond to all inquiries
and requests for further information associated with such application.
6.13 Time Brokerage Agreement. Buyer and Seller shall enter into a Time
Brokerage in substantially the form set forth in Schedule 6.13.
SECTION 7
CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
7.1 Conditions to Obligations to Buyer. All obligations of Buyer at the
Closing hereunder are subject to the fulfillment prior to and at the Closing
Date of each of the following conditions any of which may be waived in writing
by Buyer:
A. Representations and Warranties. The representations and
warranties of Seller in this Agreement shall be true and complete in all
material respects at and as of the Closing Date, except for changes contemplated
by this Agreement, as though such representations and warranties were made at
and as of such time.
B. Covenants and Conditions. Seller shall have in all material
respects performed and complied with the covenants, agreements, and conditions
required by this Agreement to be performed or complied with by it prior to or on
the Closing Date.
C. Consents. Each of the Consents marked as "material" on
Schedule 3.7 shall have been duly obtained and delivered to Buyer with no
material adverse change to the terms of the License or Assumed Contract with
respect to which such Consent is obtained.
D. Licenses. Seller shall be the holder of the Licenses, and
there shall not have been any modification of any of such Licenses which has an
adverse effect on the Stations or the conduct of its business or operations. No
proceeding shall be pending the effect of which would be to revoke, cancel, fail
to renew, suspend or modify adversely any of the Licenses.
E. Deliveries. Seller shall have made or stand willing and
able to make all the deliveries to Buyer set forth in Section 8.2
F. Adverse Change. Between the date of this Agreement and the
TBA Date, there shall have been no material adverse change in the Assets, or the
business or operations of the Stations, including, without limitation, Seller's
having achieved at the Stations during the twelve month period ending December
31, 1995, Gross Revenues of no less than Four Million Seven Hundred Thousand
Dollars ($4,700,000) and Cash Flow of no less than One Million Four Hundred and
Seventy-Five
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Thousand Dollars ($1,475,000). For purposes of this Section, Gross Revenues will
be defined as gross income from advertising time sales excluding noncash barter
or trade transactions, if any, and Cash Flow will be defined as net income
excluding noncash barter or trade transactions, if any, and after restoring
thereto amounts previously deducted for depreciation; amortization; interest;
management fees and any other home office allocations.
7.2 Conditions to Obligations of Seller. The obligations of Seller at
the Closing hereunder are subject to the fulfillment prior to and at the Closing
Date of each of the following conditions:
A. Representations and Warranties. The 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, except for changes
contemplated by this Agreement, as though such representations and warranties
were made at and as of such time.
B. Covenants and Conditions. Buyer shall have in all material
respects performed and complied with the covenants, agreements, and conditions
required by this Agreement to be performed or complied with by it prior to or on
the Closing Date.
C. Deliveries. Buyer shall have made or stand willing and able
to make all the deliveries set forth in Section 8.3
SECTION 8
CLOSING AND CLOSING DELIVERIES
8.1 Closing. The Closing shall take place at 10:00 a.m. on a date, to
be set by Buyer, upon five (5) days written notice to Seller, no later than ten
(10) days following the date upon which the FCC Consent has become a Final Order
(the "Closing Date"), provided, though, that Buyer may waive the requirement for
a Final Order and schedule the Closing Date, with five (5) days written notice
to Seller, at any time after the receipt of FCC Consent. Closing shall be held
at the offices of Seller's counsel or such other place as shall be mutually
agreed to by Buyer and Seller.
8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller shall
deliver to Buyer the following, in form and substance reasonably satisfactory to
Buyer and its counsel:
(a) Transfer Documents. Duly executed warranty deeds, 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 or its permitted assignees, free and clear
of any claims, liabilities, mortgages, liens, pledges, conditions,
charges, or encumbrances of any nature whatsoever (except for those
permitted in accordance with Sections 2.5, 3.5 or 3.6 hereof);
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(b) Consents. The original of each Consent marked as
"material" with an asterisk on Schedule 3.7;
(c) General Partner's Certificate. A certificate, dated as of
the Closing Date, executed by at least one of Seller's General
Partners, certifying: (i) that the representations and warranties of
Seller contained in this Agreement are true and complete in all
material respects as of the Closing Date, except for changes
contemplated by this Agreement, as though made on and as of that date;
(ii) that Seller has, in all material respects, performed its
obligations and complied with its covenants set forth in this Agreement
to be performed and complied with prior to or on the Closing Date;
(iii) certifying that the resolutions, as attached to such certificate,
were duly adopted by Seller's authorizing and approving the execution
of this Agreement by Seller and the consummation of the transaction
contemplated hereby and that such resolutions remain in full force and
effect; and (iv) a copy of Seller's Partnership Agreement as in effect
on the date hereof.
(d) Licenses, Contracts, Business Records, Etc. Copies, if
available, of all licenses, Assumed Contracts, blueprints, schematics,
working drawings, plans, projections, statistics, engineering records,
and all files and records used by Seller in connection with its
operations of the Stations;
(e) Noncompetition Agreement. The Noncompetition Agreement as
set forth in Schedule 6.5; and
(f) Opinions of Counsel. Opinions of Seller's counsel and
communications counsel dated as of the Closing Date, and addressed to
Buyer and at Buyer's directions, to Buyer's lenders, substantially in
the form of Schedule 8.2 hereto.
8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer shall
deliver to Seller the following, in form and substance reasonably satisfactory
to Seller and its counsel:
(a) Purchase Price. The Purchase Price as provided in Section
2.3;
(b) Assumption Agreements. Appropriate assumption agreements
pursuant to which Buyer shall assume and undertake to perform Seller's
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 the President or Vice President of Buyer,
certifying (i) that the representations and warranties of Buyer
contained in this Agreement are true and complete in all material
respects as of the Closing Date, except for changes contemplated by
this Agreement, as though made on and as of that date, and (ii) that
Buyer has, in all material respects, performed its obligations and
complied with its covenants set forth in this Agreement to be performed
or complied with on or prior to the Closing Date;
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(d) Secretary's Certificate. A certificate, dated as of the
Closing Date, executed by Buyer's Secretary: (i) certifying that the
resolutions, as attached to such certificate, were duly adopted by
Buyer's Board of Directors, authorizing and approving the execution of
this Agreement and the consummation of the transaction contemplated
hereby and that such resolutions remain in full force and effect; (ii)
a copy of the corporate charter, articles of incorporation and Bylaws
of Buyer as in effect on the Closing date, certified by Buyer's
secretary as of the Closing Date; and (iii) good standing certificates
from the Secretary of the States of Delaware and California,
respectively, each dated no more than five (5) days prior to the
Closing Date.
(e) Opinion of Counsel. An opinion of Buyer's General Counsel
dated as of the Closing Date, substantially in the form of Schedule 8.3
hereto.
(f) Noncompetition Agreement. The Noncompetition Agreement as
set forth in Section 6.5.
SECTION 9
RIGHTS OF BUYER AND SELLER
ON TERMINATION OR BREACH
9.1 Termination Rights. This Agreement may be terminated by either
Buyer or Seller if the terminating party is not then in breach of any material
provision of this Agreement, upon written notice to the other party, upon the
occurrence of any of the following:
(a) If on the Closing Date (i) any of the conditions precedent
to the obligations of the terminating party set forth in Section 7 of
this Agreement shall not have been materially satisfied, and (ii)
satisfaction of such condition shall not have been waived by the
terminating party;
(b) If the application for FCC Consent shall be set for
hearing by the FCC for any reason; or
(c) If the Closing shall not have occurred on or before
February 28, 1997.
Upon termination: (i) if neither party hereto is in breach of any material
provision of this Agreement, the parties hereto shall not have any further
liability to each other; (ii) if Seller shall be in breach of any material
provision of this Agreement, Buyer shall have only the rights and remedies
provided in Section 9.3 or (iii) if Buyer shall be in breach of any material
provision of this Agreement, Seller shall be entitled only to liquidated damages
as provided in Section 9.2 hereof. If, upon termination, Buyer shall not be in
breach of any material provision of this Agreement, the Escrow Deposit, plus all
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interest or other proceeds from the investment thereof, less any compensation
due the Escrow Agent, shall be paid to Buyer.
9.2 Liquidated Damages. In the event this Agreement is terminated by
Seller due to a material breach by Buyer of its representations, warranties,
covenants and other obligations under this Agreement, then the Escrow Deposit
shall be paid to Seller as liquidated damages, it being agreed that the Escrow
Deposit shall constitute full payment for any and all damages suffered by Seller
by reason of Buyer's failure to close this Agreement. Buyer and Seller agree in
advance that actual damages would be difficult to ascertain and that the amount
of the Escrow Deposit is a fair and equitable amount to reimburse Seller for
damages sustained due to Buyer's failure to consummate this Agreement for the
above-stated reason. All interest or other proceeds from the investment of the
Escrow Deposit, less any compensation due the Escrow Agent, shall be paid to
Seller.
9.3 Specific Performance. The parties recognize that in the event
Seller should refuse to perform under the provisions of this Agreement, monetary
damages alone will not be adequate. Buyer shall therefore be entitled to obtain
specific performance of the terms of this Agreement. Only in the event specific
performance is not available or granted to Buyer shall Buyer be entitled to seek
money damages from Seller. In no event shall Buyer be entitled to recovery of
any consequential or punitive damages. In the event of any action to enforce
this Agreement, Seller hereby waives the defense that there is an adequate
remedy at law. In the event of a default by a party hereto (the "Defaulting
Party") which results in the filing of a lawsuit for damages, specific
performance, or other remedy the other party (the Nondefaulting Party) shall be
entitled to reimbursement by the Defaulting Party of reasonable legal fees and
expenses incurred by the Nondefaulting Party in the event the Nondefaulting
Party prevails.
SECTION 10
SURVIVAL OF REPRESENTATIONS AND WARRANTS,
AND INDEMNIFICATION
10.1 Representations and Warranties. All representations and warranties
contained in this Agreement shall be deemed continuing representations and
warranties, and shall survive the Closing Date for a period of eighteen (18)
months (the "Survival Period"). No claim for indemnification may be made under
this Section 10 (except for section 10.3(a) or related claims under Section
10.3(c)) after the expiration of the Survival Period. Any investigations by or
on behalf of any party hereto shall not constitute a waiver as to enforcement of
any representation or warranty contained herein, except that insofar as any
party has knowledge of any misrepresentation or breach of warranty at Closing
and such knowledge is documented in writing at Closing, such party shall be
deemed to have waived such misrepresentation or breach.
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10.2 Indemnification by Seller. Seller shall 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, material breach of warranty or
nonfulfillment of any covenants by Seller contained herein or in any
certificate, delivered to Buyer hereunder.
(b) Any and all obligations of Seller not assumed by Buyer
pursuant to the terms hereof,
(c) Any and all losses, liabilities or damages resulting from
Seller's operation or ownership of the Stations prior to the Closing
Date, including any and all liabilities arising under the Licenses or
the Assumed Contracts which relate to events occurring prior to the
Closing Date; and
(d) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, and reasonable costs and expenses, incident to
any of the foregoing or incurred in investigating or attempting to
avoid the same or to oppose the imposition thereof.
10.3 Indemnification by Buyer. Buyer shall indemnify and hold
Seller harmless against and with respect to, and shall reimburse Seller
for:
(a) Any and all losses, liabilities or damages resulting from
any untrue representation, material breach of warranty or
nonfulfillment of any covenants by Buyer contained herein or in any
certificate delivered to Seller hereunder;
(b) Any and all losses, liabilities or damages resulting from
Buyer's operation or ownership of the Stations on or after the Closing
Date, including any and all liabilities or obligations arising under
the Licenses or the Assumed Contracts which relate to events occurring
after the Closing Date or otherwise assumed by Buyer under this
Agreement; and
(c) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, and reasonable costs and expenses, including
reasonable legal fees and expenses, incident to any of the foregoing or
incurred in investigating or attempting to avoid the same or to oppose
the imposition thereof.
10.4 Procedures for Indemnification. The procedures for indemnification
shall be as follows:
A. The party claiming the indemnification (the "Claimant")
shall promptly give notice to the party from whom indemnification is claimed
(the "Indemnifying Party") of any claim, whether between the parties or brought
by a third party, specifying (i) the factual basis for such claim, and (ii) the
amount of the claim. If the claim relates to an action, suit or proceeding filed
by a third
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party against Claimant, such notice shall be given by Claimant within five (5)
days after written notice of such action, suit or proceeding was given to
Claimant.
B. Following receipt of notice from the Claimant of a claim,
the Indemnifying Party shall have thirty (30) 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 representative(s) 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 said thirty (30) day
period (or any mutually agreed upon extension thereof) to the validity and
amount of such claim, or if the Indemnifying Party does not respond to such
notice, the Indemnifying Party shall immediately pay to the Claimant the full
amount of the claim. If the Claimant and the Indemnifying Party do not agree
within said 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 Indemnifying Party 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 reasonable 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, the Claimant shall have the right to participate in the
defense of such claim at its own expense.
D. If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make all reasonable efforts
to reach a decision with respect thereto as expeditiously as possible.
E. 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.
F. The indemnification rights provided in Sections 10.2 and
10.3 shall extend to the shareholders, directors, officers, partners employees
and representatives of the 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.
SECTION 11
MISCELLANEOUS
11.1 Notices. All notices, demands, and requests required or permitted
to be given under the provisions of this Agreement shall be (i) in writing, (ii)
delivered by personal delivery, or sent by commercial delivery service or
registered or certified mail, return receipt requested, or by facsimile
transmission, with receipt confirmation, (iii) deemed to have been given on the
date of personal
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delivery or the date set forth in the records of the delivery service or on the
return receipt, and (iv) addressed as follows:
If to Seller: United Broadcasting Company
P.O. Box 6616
San Jose, CA 95150
Attn: Steven Snell, Managing Partner
with a copy
(which shall not
constitute notice) to: Terence L. Bruiniers, Esq.
Farrand, Cooper & Bruiniers
235 Montgomery Street, Suite 1035
San Francisco, CA 94104
Fax: (415) 677-2950
If to Buyer: American Radio Systems Corporation
116 Huntington Avenue
Boston, MA 02116
Attention: Steven B. Dodge, President
Fax: (617) 375-7575
with a copy
(which shall not
constitute notice) to: Michael B. Milsom, Vice President & General Counsel
American Radio Systems Corporation
116 Huntington Avenue
Boston, MA 02116
Fax: (617) 375-7575
or to such other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
11.1.
11.2 Benefit and Binding Effect. Neither party hereto may assign this
Agreement without the prior written consent of the other party hereto, except
that Buyer may assign its rights and obligations under this Agreement to any
affiliated or unaffiliated entity, following which assignment Buyer shall remain
liable for all of its obligations hereunder. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
11.3 Governing Law. This Agreement shall be governed, construed, and
enforced in accordance with the laws of the State of California.
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11.4 Headings. The headings herein are included for ease of reference
only and shall not control or affect the meaning or construction of the
provisions of this Agreement.
11.5 Gender and Number. Words used herein, 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 required.
11.6 Entire Agreement. This Agreement, all schedules hereto, and all
documents and certificates to be delivered by the parties pursuant hereto
collectively represent the entire understanding and agreement between Buyer and
Seller with respect to the subject matter hereof. All schedules attached to this
Agreement shall be deemed part of this Agreement and incorporated herein, where
applicable, as if fully set forth herein. This Agreement supersedes all prior
negotiations between Buyer and Seller, and all letters of intent and other
writings related to such negotiations, and cannot be amended, supplemented or
modified except by an agreement in writing which makes specific reference to
this Agreement or an agreement delivered pursuant hereto, as the case may be,
and which is signed by the party against which enforcement of any such
amendment, supplement or modification is sought.
11.7 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 this Section 11.7.
11.8 Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable or any extent, the 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 greater extent permitted by law.
11.9 Arbitration. Any dispute arising out of or in any way relating to
this Agreement shall be resolved at San Jose, California, by arbitration through
the Judicial Arbitration and Mediation Service ("JAMS") or other alternative
dispute resolution agency mutually acceptable to the parties, before a retired
judge or justice of the California courts. Without limiting any other powers of
the arbitrator, such arbitrator shall have the authority of a judge pro tem of
the California Superior Court, with the authority to issue any injunctive
orders, including any ex parte orders, deemed necessary or appropriate under the
circumstances. Arbitration shall be conducted as a trial by the court applying
the substantive law of the State of California (without regard to its conflict
of law rules) with a written statement of decision, as provided under Section
632 of the Code of Civil Procedure. Judgment upon the arbitrator's award may be
entered in any court of competent jurisdiction. Both parties expressly
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submit and agree to the jurisdiction and venue as provided herein. The parties
shall share equally the arbitrators fees, however the arbitrator may direct
recovery of such fees as costs by the prevailing party. In any such arbitration,
and in any legal action in enforcement or appeal thereof, the prevailing party
shall in the arbitrator's discretion be entitled to an award of reasonable
attorneys' fees in addition to any other relief granted.
11.10 Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signature on each such counterpart
were upon the same instrument. Facsimile transmitted signatures shall be
accepted as originals.
IN WITNESS WHEREOF, this Agreement has been executed by Buyer and
Seller as of the date first above written.
SELLER: UNITED BROADCASTING COMPANY
By: ___________________________________________
Stephen P. Snell, Management Committee Member
By: ___________________________________________
Christopher Snell, Management Committee Member
By: ___________________________________________
Patricia Elek, Management Committee Member
By: ___________________________________________
James Farr, Management Committee Member
By: ___________________________________________
Anita Mardikian, Management Committee Member
By: ___________________________________________
Haig Mardikian, Management Committee Member
BUYER: AMERICAN RADIO SYSTEMS CORPORATION
By: ______________________________
Title: _____________________________
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SCHEDULES TO ASSET PURCHASE AGREEMENT
1.8 Escrow Agreement
2.2 Excluded Assets
3.4 Licenses
3.5 Real Property
3.6 Personal property
3.7 Assumed Contracts
3.8 Consents required
3.9 Trademarks; trade names; copyrights
3.11 Insurance policies
3.13 Employee benefits; health insurance; vacation policy
3.14 Employment contracts
3.16 Claims; legal actions
6.5 Noncompetition Agreement
8.2 Opinion of Seller's General and FCC Counsels
8.3 Opinion of Buyer's General Counsel
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EXHIBIT 10.92
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into as of
August 9, 1996 (this "Agreement"), by and among and AMERICAN RADIO SYSTEMS
LICENSE CORP., a Delaware corporation ("License Corp."), AMERICAN RADIO SYSTEMS
CORPORATION, a Delaware corporation ("ARS") (License Corp. and ARS shall be
referred to collectively herein as "Seller"), and MEGA BROADCASTING CORPORATION,
A New Jersey corporation, or its assignee ("Buyer"):
WITNESSETH:
WHEREAS, License Corp. is the licensee of and operates radio
station WNEZ(AM), New Britain, Connecticut (the "Station") pursuant to licenses
issued by the Federal Communications Commission (the "FCC") and ARS owns all the
assets used and useful in connection with the Station; and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to
purchase from Seller, substantially all of the assets used and useful in
connection with the operation of the Station, all on the terms and subject to
the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants and agreements hereinafter set forth, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE 1
PURCHASE OF ASSETS
1.1 Transfer of Assets. On the Closing Date (as hereinafter defined),
subject to the conditions contained herein, Seller shall sell, assign, transfer
and convey to Buyer, and Buyer shall purchase from Seller, all of the assets,
properties, interests and rights of Seller of whatsoever kind and nature, real
and personal, tangible and intangible, which are used and useful in connection
with the operation of the Station (collectively, the "Station Assets"),
including, but not limited to, the following (but excluding the Excluded Assets
specified in Section 1.2 hereof:
(a) All licenses, permits and other authorizations relating to
the Station issued to License Corp. by the FCC or any other governmental
authority on or prior to the Closing Date, together with renewals or
modifications thereof, including, without limitation, the licenses, permits and
authorizations listed on Schedule l.l(a) attached hereto (the licenses, permits
and authorizations
<PAGE>
issued by the FCC collectively are referred to herein as the "FCC Licenses"; the
FCC Licenses and the licenses, permits and other authorizations issued by any
other governmental authority collectively are referred to herein as the "Station
Licenses");
(b) All equipment, office furniture and fixtures, office
materials and supplies, inventory and other tangible personal property, of every
kind and description, owned or used by Seller with respect to the Station on the
date hereof, together with any additions thereto made between the date hereof
and the Closing Date, and less any retirements or dispositions thereof made in
the ordinary course of business between the date hereof and the Closing Date,
including, without limitation, the property listed on Schedule 1.1 (b) attached
hereto, (collectively, the "Tangible Personal Property");
(c) All of Seller's right, title and interest in and to each
contract, agreement and lease, written or oral, relating to the operation of the
Station listed in Schedule 1.1 (c) hereto, together with all contracts,
agreements and leases entered into or acquired by Seller between the date hereof
and the Closing Date which Buyer agrees in writing to assume (as hereinafter
defined) (collectively, the "Contracts");
(d) All of Seller's right, title and interest in and to the
call letters "WNEZ" and all trademarks, trade names, service marks, franchises,
copyrights, including registrations and applications for registration of any of
them, jingles, logos and slogans used in the conduct of the business and
operation of the Station and either owned by Seller or licensed to Seller on the
date hereof, together with any associated goodwill and any additions thereto
between the date hereof and the Closing Date, including but not limited to those
described on Schedule 1.1 (d) attached hereto (collectively, the "Intellectual
Property"), to the extent Seller has assignable rights therein;
(e) All of the real property, including transmission towers,
owned by Seller and used in connection with the Station on the date hereof and
Seller's right, title and interest in and to any buildings, fixtures,
improvements, transmission towers and other real property owned or leased by
Seller in connection with the Station, together with any additions thereto
between the date hereof and the Closing Date, including but not limited to those
described on Schedule l.l(e) attached hereto (collectively, the "Real
Property");
(f) All files, records, and books of account relating to, or
which are located at the premises of, the Station, including, without
limitation, programming information and studies, technical information and
engineering data, news and advertising studies or consulting reports, marketing
and demographic data, sales correspondence, lists of advertisers, promotional
materials, credit and sales reports and filings with the FCC, copies of all
written contracts to be assigned hereunder, logs, the public inspection file and
all software programs used in connection with the operation of the Station.
The Station Assets shall be transferred to Buyer free and
clear of all liens, encumbrances, debts, security interests, mortgages, trusts,
claims, pledges, conditional sales agreements, charges, covenants, conditions or
restrictions of any kind (collectively, "Liens"), except for (i) rights of
lessors, co-lessees or sublessees which are reflected in the leases listed in
Schedule 1.1 (e), (ii) current taxes or governmental assessments, charges, or
claims, the payment of which are not yet due and payable, (iii) statutory liens
of landlord and liens of carriers, warehousemen,
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materialmen and other similar persons and other similar persons and other
imposed by applicable law, rule or regulation incurred in the ordinary course of
business for sums not yet delinquent; (iv) liens relating to deposits made in
the ordinary course of business in connection with worker's compensation or
employment insurance and other types of social security; and (v) liens incurred
in the ordinary course of business (e.g., equipment lease encumbrances and
installment sale contract liens) ("Permitted Liens"), all of which are listed in
Schedule 1.1.
1.2 Excluded Assets. Notwithstanding anything to the contrary contained
herein, it is expressly understood and agreed that the Station Assets shall not
include the following assets along with all right, title and interest therein
(collectively, the "Excluded Assets"):
(a) All cash, cash equivalents or similar type investments of
Seller, such as certificates of deposit, Treasury bills and other marketable
securities on hand and/or in banks;
(b) All contracts or agreements to which Seller is a party
that (i) have been terminated in accordance herewith, (ii) have expired prior to
the Closing Date, or (iii) Buyer has not assumed pursuant to the terms of
Section 2.1 hereof;
(c) Seller's corporate seal, minute books, charter documents,
corporate stock record books and such other books and records as pertain to the
organization, existence or share capitalization of Seller and duplicate copies
of such records as are necessary to enable Seller to file its tax returns and
reports as well as any other records or materials relating to Seller generally
and not involving the Station's operations;
(d) All pension, profit sharing or cash or deferred (Section
401 (k)) plans and trusts and the assets thereof and any other employee benefit
plan or arrangement and the assets thereof, if any maintained by Seller;
(e) Contracts of insurance and all insurance proceeds or
claims made by Seller relating to property or equipment repaired, replaced or
restored by Seller prior to the Closing Date;
(f) Any and all claims made by Seller with respect to
transactions prior to the Closing Date and the proceeds thereof, except claims
with respect to obligations to be assumed by Buyer pursuant to Section 2.1
hereof;
(g) All trade or barter agreements, but only to the extent
they have a negative trade or barter balance in excess of $1,000 in the
aggregate;
(h) All accounts receivable relating to or arising out of the
operation of the Station prior to the Closing Date;
(i) All other rights, interests or intangible assets of Seller
which are not used in the operation of the Station; and
(j) Any books and records relating to any of the foregoing,
except to the extent that Buyer wishes to make, at its expense, a duplicate copy
of such materials in order to facilitate its operation of the Station and
conduct of its business.
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ARTICLE 2
ASSUMPTION OF OBLIGATIONS
2.1 Assumption of Obligations. Subject to the provisions of this
Section 2.1, Section 2.2 and Section 3.5, on the Closing Date, Buyer shall
assume and undertake to pay, satisfy or discharge the liabilities, obligations
and commitments of Seller arising or to be performed on or after the Closing
Date under the Contracts, except obligations which arise or result from a breach
by Seller of, or a default by Seller under, any Contract prior to the Closing
Date. All of the foregoing assumed liabilities and obligations shall be referred
to herein collectively as the "Assumed Liabilities."
2.2 Retained Liabilities. Except as set forth in Section 2.1 hereof,
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 liability, obligation, commitment, undertaking, expense or agreement of
Seller of any nature whatsoever, whether known or unknown or absolute or
contingent. All of such liabilities and obligations shall be referred to herein
collectively as the "Retained Liabilities." Without limiting the generality of
the foregoing, it is understood and agreed that Buyer is not agreeing to assume,
and shall not assume, any liability or obligation of Seller to Seller's
employees, including without limitation any such liability or obligation in
respect of wages, salaries, bonuses, accrued vacation or sick pay.
ARTICLE 3
CONSIDERATION
3.1 Purchase Price
In consideration for the transfer of the Station Assets, Buyer
shall pay the sum of SEVEN HUNDRED AND FIFTY THOUSAND DOLLARS ($750,000) (the
"Purchase Price") to Seller, plus or minus any adjustment to be made pursuant to
Section 3.5 hereof, and assume the Assumed Liabilities.
3.2 Deposit.
(a) Buyer has deposited with First Liberty Bank located in
Washington, D.C. ("Escrow Agent"), pursuant to a mutually agreeable escrow
agreement, the sum of SEVENTY FIVE THOUSAND DOLLARS ($75,000), in immediately
available funds, as a credit against the Purchase Price (the "Deposit").
(b) If this Agreement is terminated pursuant to Section 13 .1
(d), and Seller is not then in default of this Agreement, Seller shall be
entitled to the Deposit, and all interest accrued thereon, as liquidated
damages. It is understood and agreed that such liquidated damage amount
represents the parties' reasonable estimate of actual damages and does not
constitute a penalty. Recovery of liquidated damages shall be the sole and
exclusive remedy of Seller if Buyer fails to
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perform or breaches any of its obligations, representations, warranties or
duties under this Agreement and shall be applicable regardless of the actual
amount of damages sustained.
(c) In the event this Agreement is terminated for any reason
other than as set forth in Section 13.1 (d), Escrow Agent shall immediately
return the Deposit, plus all interest earned thereon, to Buyer.
(d) In the event Buyer consummates the transactions
contemplated hereby, the Deposit shall be applied to the Purchase Price at
Closing and all interest earned thereon shall be released to Buyer.
3.3 Payment of Purchase Price. At Closing, Buyer shall pay the Purchase
Price as follows:
(a) Buyer shall instruct the Escrow Agent to release the
Deposit to Seller, less all interest earned thereon which shall be returned to
Buyer.
(b) Buyer shall pay to Seller Six Hundred and Seventy Five
Thousand Dollars ($675,000), by wire transfer of immediately available funds,
plus or minus any adjustment to be made pursuant to Section 3.5 hereof
3.4 Allocation of Purchase Price. The Purchase Price shall be allocated
as mutually agreed upon by Buyer and Seller as depicted on Schedule 3.4 hereof
3.5 Proration of Income and Expenses/Trade Agreements.
(a) Except as otherwise provided herein, all income and
expenses arising from the conduct of the business and operation of the Station
shall be prorated between Buyer and Seller in accordance with generally accepted
accounting principles as of 11:59 p.m., Connecticut time, on the date
immediately preceding the Closing Date. Such prorations shall include, without
limitation, all ad valorem, real estate and other property taxes (but excluding
taxes arising by reason of the transfer of the Station Assets as contemplated
hereby, which, shall be paid as set forth in Article 11 of this Agreement),
business and license fees, music and other license fees, utility expenses, rents
and similar prepaid and deferred items attributable to the ownership and
operation of the Station. Revenues, expenses, taxes, costs and liabilities
earned or incurred in connection with particular programs and announcements
shall be allocated to the time of performance of such programs and announcements
without regard to the date of payment therefor. Salaries, wages, sales
commissions, fringe benefit accruals and termination or severance pay for
Seller's employees shall not be pro-rated but shall be the sole responsibility
of Seller.
(b) The prorations and adjustments contemplated by this
Section, to the extent practicable, shall be made on the Closing Date. As to
those prorations and adjustments not capable of being ascertained on the Closing
Date, an adjustment and proration shall be made within sixty (60) days of the
Closing Date. In the event of any disputes between the parties as to such
adjustments, the amounts not in dispute shall nonetheless be paid at such time
and such disputes shall be resolved by an independent certified public
accountant mutually acceptable to the parties, and the fees and expenses of such
accountant shall be paid one-half by Seller and one-half by Buyer.
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The decision of such accountant shall be conclusive and binding on the parties.
All prorations and adjustments made on the Closing Date shall be paid in the
form of an increase or decrease of the amount payable by Buyer at the Closing.
All prorations and adjustments made after the Closing shall be paid within five
(5) business days of receipt of notice of the determination thereof.
(c) If on the Closing Date Seller has any obligation to air
announcements or pre-paid programming on the Station after the Closing under
trade or other agreements executed by Seller prior to the Closing, the Purchase
Price shall be reduced by an amount equal to the remaining face amount of said
agreements but only to the extent such amount exceeds $1,000 in the aggregate.
ARTICLE 4
GOVERNMENTAL CONSENTS
4.1 FCC Consent. It is specifically understood and agreed by Buyer and
Seller that consummation of the transactions contemplated hereby is expressly
conditioned on and is subject to the prior consent and approval of the FCC ("FCC
Consent") without the imposition of any conditions on the transfer of the FCC
Licenses which would require Buyer to sell any radio station or which otherwise
reasonably is expected to have a material adverse effect on the results of
operations of Buyer.
4.2 FCC Application. Within five (5) business days after execution of
this Agreement, the parties shall file with the FCC an application for
assignment of the FCC Licenses ("FCC Application") from License Corp. to Buyer.
The parties shall thereafter prosecute the FCC Application with all reasonable
diligence and otherwise use commercially reasonable efforts to obtain the grant
of the FCC Application as expeditiously as practicable (but no party shall have
any obligation to satisfy complainants or the FCC by taking any steps which
would have a material adverse effect on the results of operations of a party or
any affiliated entity). If the FCC Consent imposes any condition on a party
hereto, such party shall use commercially reasonable efforts to comply with such
condition; provided, however, that no party shall be required hereunder to
comply with any condition that would have a material adverse effect on the
results of operations of such party or any affiliated entity. If reconsideration
or judicial review is sought with respect to the FCC Consent, the party affected
shall use commercially reasonable efforts to oppose such efforts for
reconsideration or judicial review; provided, however, such party shall not be
required to take any action which would have a material adverse effect on the
results of operations of such party or any affiliated entity. Nothing in this
Section 4.2 shall be construed to limit a party's right to terminate this
Agreement pursuant to Article 13 hereof.
ARTICLE 5
CLOSING
5.1 Closing Date. Except as otherwise mutually agreed upon by Seller
and Buyer, the consummation of the transactions contemplated herein (the
"Closing") shall occur within ten (10) business days after the FCC Consent shall
have become a Final Order (as hereinafter defined) (the "Closing Date"). As used
herein, the term "Final Order" means a written action or order issued by
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the FCC setting forth the FCC Consent and (a) which has not been reversed,
stayed, enjoined, set aside, annulled or suspended, and (b) with respect to
which (i) no requests have been filed for administrative or judicial review,
reconsideration, appeal or stay, and the time for filing any such requests and
for the FCC to set aside the action on its own motion (whether upon
reconsideration or otherwise) has expired, or (ii) in the event of review,
reconsideration or appeal, the time for further review, reconsideration or
appeal has expired. Notwithstanding the foregoing, Buyer may elect to proceed
with the Closing upon public notice of the grant of FCC Consent but prior to the
date on which the FCC Consent shall have become a Final Order upon ten ( 10)
days written notice to Seller. All actions taken at the Closing will be
considered as having been taken simultaneously and no such actions will be
considered to be completed until all such actions have been completed.
5.2 Closing Place. The Closing shall be held at such place as the
parties hereto may agree.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF SELLER
License Corp. and ARS, jointly and severally, represent and warrant to
Buyer as follows:
6.1 Organization and Qualifications. Both License Corp. and ARS are
corporations duly organized, validly existing and in good standing under the
laws of the State of Delaware and have the requisite corporate power to carry on
their business as it is now being conducted.
6.2 Authority.
(a) License Corp. and ARS have full corporate power and
authority to execute and deliver this Agreement and all other agreements,
documents, certificates and instruments delivered or to be delivered hereunder
by Seller (this Agreement and such other agreements, documents, certificates and
instruments are referred to herein collectively as the "Seller Documents"), to
perform its obligations thereunder, and to consummate the transactions
contemplated thereby. The execution and delivery of the Seller Documents by
Seller and the consummation by Seller of the transactions contemplated thereby
have been, or will be prior to the Closing, as the case may be, duly authorized
by all necessary corporate action on the part of each Seller. Each of the Seller
Documents has been, or at or prior to the Closing will be, as the case may be,
duly executed and delivered by each Seller and constitute, or will constitute at
the Closing, as the case may be, a valid and binding obligation of Seller,
enforceable against Seller in accordance with its respective terms.
(b) The execution and delivery by Seller of the Seller
Documents does not or will not, and the consummation of the transactions
contemplated thereby will not, (i) conflict with, or result in a violation of,
any provision of the Articles of Incorporation or Bylaws of either Seller, (ii)
constitute or result in a breach of or default (or an event which with notice or
lapse of time, or both, would constitute a default) under, or result in the
termination or suspension of, or accelerate the performance required by, or
result in a right of termination, cancellation or acceleration of any Contract,
(iii) create any Lien upon any of the Station Assets, or (iv) constitute, or
result in, a
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violation of any judgment, ruling, order, writ, injunction, decree, statute,
law, rule or regulation applicable to Seller or any of their properties or
assets.
(c) No consent, approval, order or authorization of, notice
to, or registration, declaration of filing with, any governmental entity is
necessary in connection with the execution and delivery of the Seller Documents
by Seller or the consummation of the transactions contemplated thereby by
Seller, except for filing required documents with the FCC.
6.3 [INTENTIONALLY LEFT BLANK]
6.4 Station Licenses. Schedule l.l (a) hereto contains a true and
complete list of the Station Licenses. License Corp. is the authorized legal
holder of the Station Licenses. The Station Licenses are in good standing and in
full force and effect. The Station Licenses are all of the licenses, permits or
other authorizations from governmental and regulatory authorities necessary to
operate the Station. License Corp. is operating the Station and its facilities
in material accordance with the Station Licenses, the FCC's rules and policies
and good engineering practices. No proceedings are pending or threatened, nor do
any facts exist which may result in the revocation, modification, non-renewal or
suspension of any of the Station Licenses, the denial of any of License Corp.'s
pending applications, the issuance of any cease and desist order, the imposition
of any administrative actions by the FCC with respect to the FCC Licenses or
which may affect Buyer's ability to operate the Station in accordance with the
Station Licenses and the FCC's rules and regulations. The Station's tower and
transmitting facilities are in good repair and structurally sound, and possess
all necessary lighting and markings to comply with applicable rules of the FCC.
6.5 Tangible Personal Property. Schedule l.l(b) hereto contains a true
and complete list of the Tangible Personal Property. The Tangible Personal
Property which is leased is identified as such on Schedule 1.1 (b). The Tangible
Personal Property is all of the tangible personal property necessary to operate
the Station in the manner in which it is presently operated. Seller (a) is the
lawful owner of all of the Tangible Personal Property it purports to own, (b)
has valid leasehold interests in the Tangible Personal Property it purports to
lease, and (iii) has valid license rights (whether as a licensor or licensee) in
the Tangible Personal Property it purports to license, in all cases free and
clear of any Liens, except for Permitted Liens and Liens disclosed in Schedule
6.5 attached hereto. Seller has delivered to Buyer a true, accurate and complete
copy of each lease, license or sublicense regarding any Tangible Personal
Property leased, licensed or sublicensed by Seller. The transmitting and tower
facilities of the Station included in the Tangible Personal Property are
currently maintained and shall be maintained in accordance with good engineering
practice and in material compliance with applicable FCC rules and regulations.
The Station currently complies with and shall continue to comply with all
material engineering requirements as set forth in its FCC authorizations, and
Seller shall take all material steps necessary to insure continued compliance
therewith.
6.6 Contracts. Schedule 1.l(c) hereto contains a true and complete list
of all of the Contracts. Seller is not in violation or breach of, nor has Seller
received in writing any claim or threat that it has breached any of the terms
and conditions of, any Contract. Neither Seller nor, to their knowledge, any
other party to any Contract is in default thereunder or in breach of a material
provision thereof. Seller has delivered to Buyer a true, accurate and complete
copy of each Contract, including all amendments, supplements or modifications
thereto or waivers thereunder. Except as
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set forth on Schedule 6.6 attached hereto, neither the execution and delivery by
Seller of this Agreement nor the consummation by Seller of the transactions
contemplated under this Agreement requires the consent of any party to a
Contract.
6.7 Intellectual Property. Schedule I.I(d) hereto contains a true and
complete list of all Intellectual Property (excluding intellectual property
included in the Excluded Assets and referred to in Section 1.2). None of the
Intellectual Property was granted to Seller pursuant to any licensing or
sublicensing agreement under which Seller is the licensee or the sublicensee.
Except for the fact that the Station is operated together with stations WACH and
WZMX, which are not being assigned to Buyer, the Intellectual Property is all of
the intellectual property necessary to operate the Station in the manner it
currently is operated. No person has a right to receive a royalty or similar
payment in respect of any Intellectual Property pursuant to any contractual
arrangements entered into by Seller. Seller has not granted to any other person
any right to use the Intellectual Property pursuant to any licensing or
sublicensing agreement. Seller's use of the Intellectual Property does not
infringe upon or otherwise violate the rights of any third party in or to such
Intellectual Property or the asserted proprietary rights of others, and no
notices have been received by Seller that Seller's use of the Intellectual
Property infringes upon or otherwise violates any rights of a third party in or
to the Intellectual Property or the proprietary rights of others. The
Intellectual Property owned by Seller is free and clear of any Liens, except for
Permitted Liens and the Liens described in Schedule 6.5 attached hereto.
6.8 Employee and Labor Relations.
(a) Insofar as the Station is concerned, Seller is not a party
to any contract with any labor organization, nor has Seller agreed to recognize
any union or other collective bargaining unit, nor has any union or other
collective bargaining unit been certified as representing any of Seller's
employees. There are no organizational efforts currently being made or
threatened by or on behalf of any labor union with respect to employees of
Seller at the Station. There are no present or threatened work stoppages or
labor difficulties relating to the employees of Seller at the Station.
(b) Seller has not promised to any employee of either Seller
that Buyer will be hiring any such employee or otherwise made any offer of
employment to any employee of the either Seller on behalf of Buyer.
(c) Seller hereby covenants that all employees of the Seller
at the Station shall be terminable, without liability to Buyer, on and as of the
Closing Date, and that Buyer will have no liability to any present or past
employee of the Station for retirement, pension, bonus, termination, vacation,
or other pay, or for hospitalization, major medical, life or other insurance or
other employee benefits.
6.9 Compliance With Law. The Station Assets and the operation of the
Station are in material compliance with all applicable statutes, laws,
ordinances, regulations, rules or orders of any foreign, federal, state or local
government, governmental department or agency, including, without limitation,
all foreign, federal, state and local energy, public utility, zoning, building
code, health, employee safety, and OSHA requirements.
6.10 Brokers. Seller has not retained any broker in connection with
this transaction.
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6.11 No Litigation. There is no litigation, proceeding or investigation
pending or, to Seller's knowledge, threatened against it in any federal, state
or local court or before any administrative agency or arbitrator, or before any
other tribunal duly authorized to resolve disputes, or which seeks to enjoin any
action taken or to be taken pursuant in connection with this Agreement.
6.12 Real Properties.
(a) Schedule 1.1 (e) attached hereto is a true and complete
list of all Real Property. Seller has delivered to Buyer a true and complete
copy of the leases for the leased Real Property.
(b) Seller has good and marketable title in fee simple
absolute to the Real Property it purports to own and valid leasehold interests
in the Real Property it purports to lease, free and clear of all Liens, except
for Permitted Liens and liens described in Schedule 6.5 attached hereto.
(c) No Real Property lies in an area which is, or, to the
knowledge of Seller, will be, subject to zoning, use, or building code
restrictions which would prohibit the continued effective leasing or use of such
Real Property in the radio broadcasting business. Seller enjoys peaceful and
material undisturbed possession under all leases of leased Real Property and all
of such leases are valid and in full force and effect. To Seller's knowledge, no
other party to any lease for the Real Property is in default thereunder or
breach thereof.
(d) To the best of Seller's knowledge, there are no pending or
threatened condemnation proceedings relating to any Real Property.
6.13 Termination of Business Relationships. No supplier of Seller and
no person presently a customer, agent, independent contractor, licensor or
licensee of Seller, has notified Seller of any intention to cancel or otherwise
terminate its business relationship with Seller relating to the Station.
6.14 Environmental Matters.
(a) The term "Hazardous Materials" shall mean any substance,
material, liquid or gas defined or designated as hazardous or toxic (or by any
similar term) under any Environmental Law, including, without limitation,
petroleum products and friable materials containing more than one percent (1.0%)
asbestos by weight.
(b) "Environmental Law" shall mean any federal, state, or
local law, ordinance, order, rule, or regulation relating to pollution,
protection of the environment, or actual or threatened releases, discharges, or
emissions into the environment.
(c) The term "Environmental Condition" shall refer to any
contamination or damage to the environment caused by or relating to the use,
handling, storage, treatment, recycling, generation, transportation, release,
spilling, leaking, pumping, pouring, emptying, discharging, injection, escaping,
leaching, disposal, dumping or threatened release of Hazardous Materials by
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Seller or its predecessors in interest. With respect to claims by employees,
Environmental Condition also includes the exposure of persons to Hazardous
Materials at a work place of Seller.
(d) The term "Environmental Noncompliance" shall mean any
violation of any Environmental Law.
(e) To the best of Seller's knowledge, there are no
investigations, inquiries, administrative proceedings, actions, suits, claims,
legal proceedings or any other proceedings pending or threatened against Seller
relating to the Station or the Real Property that involves, or relates to,
Environmental Conditions, Environmental Noncompliance or the release, use or
disposal of any Hazardous Materials on any Real Property.
(f) There are no Hazardous Materials being stored or otherwise
held on, under or about the Real Property and the Real Property has been
maintained by Seller in substantial compliance with all Environmental Laws.
Notwithstanding this or any other provision of this Agreement, transformers or
other equipment which contain dielectric fluid containing levels of
polychlorinated biphenyl ("PCBs") in excess of Federal or Connecticut safety
guidelines, whichever are more stringent, are expressly excluded from all
references to (a) Hazardous Material and (b) violations of or compliance with
Environmental Laws or laws, ordinances, rules, regulations, restrictions and
resolutions related thereto. However, to Seller's knowledge, no such PCBs exist.
6.15 Taxes. Seller has 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 be filed, and it has paid or caused to be paid all taxes
shown on those returns or on any tax assessment received by it to the extent
that such taxes have become due, or has set aside on its books adequate reserves
(segregated to the extent required by generally accepted accounting principles)
with respect thereto. To Seller's knowledge, there are no governmental
investigations or other legal, administrative, or tax proceedings pursuant to
which 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 Station, and no event has occurred that could impose on
Buyer any transferee liability for any taxes, penalties or interest due or to
become due from Seller.
6.16 Insurance. All of the Station Assets which are of any insurable
character are insured by reputable insurance companies against loss or damage by
fire and other risks to the full extent and in the manner customary for
properties and assets of that nature.
6.17 No Other Agreements to Sell the Station. Seller has no legal
obligation, absolute or contingent, to any other person or firm to sell the
Station Assets (whether through a merger, reorganization, time brokerage
agreement, or sale of stock or otherwise) or to enter into any agreement with
respect thereto.
6.18 Disclosure. The representations and warranties of Seller herein or
in any document, exhibit, statement, certificate or schedule furnished by or on
behalf of Seller to Buyer as required by this Agreement do not contain nor will
contain any untrue statement of a material fact or omits or will omit to state
any material fact necessary in order to make the statements herein or therein,
in light of the circumstances under which they were made, not misleading.
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ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
7.1 Organization. Standing and Power. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New Jersey and has the requisite corporate power to carry on its business as it
is now being conducted, and will on the Closing Date, be authorized to do
business in the State of Connecticut.
7.2 Authority. Buyer has full corporate power and authority to execute
and deliver this Agreement and all other agreements, documents, certificates and
instruments delivered or to be delivered hereunder by Buyer (the "Buyer
Documents"), to perform its obligations thereunder and to consummate the
transactions contemplated thereby. The execution and delivery of the Buyer
Documents by Buyer and the consummation by Buyer of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of Buyer. Each of the Buyer Documents has been, or will be at the Closing,
as the case may be, duly executed and delivered by Buyer and constitutes, or
will constitute at the Closing, as the case may be, a valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its respective
terms.
7.3 Qualification. To its knowledge, there are no facts which, under
the Communications Act of 1934, as amended, or the existing rules and
regulations of the FCC, would disqualify Buyer as an assignee of the FCC
Licenses.
7.4 Brokers. Buyer has not retained any broker in connection with this
transaction.
7.5 No Litigation. There is no litigation, proceeding or investigation
pending or, to Buyer's knowledge, threatened against it in any federal, state or
local court or before any administrative agency or arbitrator, or before any
other tribunal duly authorized to resolved disputes, which seeks to enjoin or to
prohibit or otherwise to question the validity of any action taken or to be
taken pursuant to or in connection with this Agreement.
7.6 FCC Qualifications. Buyer is legally, financially and otherwise
duly qualified to become licensee of the Station under the Communications Act of
1934, as amended, the rules and regulations of the FCC and Section 5301 of the
Anti-Drug Abuse Act of 1988, as amended.
7.7 Disclosure. The representations and warranties of Buyer herein or
in any document, exhibit, statement, certificate or schedule furnished by or on
behalf of Buyer to Seller as required by this Agreement do not contain, nor will
contain any untrue statement of a material fact or omits or will omit to state
any material fact necessary in order to make the statements herein or therein,
in light of the circumstances under which they were made, not misleading.
ARTICLE 8 COVENANTS
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8.1 Covenants of Seller. Between the date of this Agreement and the
Closing Date:
8.1.1 Operation of Business. Seller shall:
(a) preserve and protect all of the Station Assets in
good repair and condition, normal wear and tear excepted;
(b) maintain the Station's books of account and
records in the usual and ordinary manner, and in conformity with past practices;
(c) maintain its present insurance in full force and
effect, with policy limits and scope of coverage not less than is now provided
by its present insurance;
(d) maintain and preserve License Corp.'s rights
under the Station Licenses;
(e) operate the Station in material accordance with
the FCC rules and regulations and the Station Licenses;
(f) maintain the Station towers in good repair and in
material accordance with FCC rules and good engineering. By way of amplification
and not limitation, prior to Closing, Seller shall paint the Station's towers to
the reasonable satisfaction of Buyer or, alternatively, the Purchase Price for
the Station shall be reduced by the reasonable cost to Buyer of having the
Station's towers painted after Closing;
(g) conduct the Station's business in the ordinary
course consistent with past practices or as required by this Agreement. By way
of amplification and not limitation, without the prior written consent of Buyer,
which shall not be unreasonably withheld or delayed, Seller shall not:
(i) enter into any agreement, contract,
lease or commitment in excess of $1,500 each, or $5,000 in the aggregate, other
than agreements cancelable without penalty prior to the Closing Date;
(ii) place or allow to be placed on any of
the assets or properties relating to the Station any Lien, other than Permitted
Liens without notifying Buyer, which Liens will be released prior to Closing;
(iii) sell or otherwise dispose of any of
the Station's Assets, except for dispositions in the ordinary course of business
in accordance with Section 1.1;
(iv) commit any act or omit to do any act
which will cause a material breach of any Contract;
(v) violate any law, statute, rule,
governmental regulation or order of any court or governmental or regulatory
authority (whether Federal, State or local) which would have a material adverse
effect on the Station or the Assets;
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<PAGE>
(vi) cause or permit by any act, or
intentional failure to act, any of the Station Licenses to expire, be
surrendered, adversely modified, or otherwise terminated, or the FCC to
institute any proceedings for the suspension, revocation or adverse modification
of any of the Station Licenses, or fail to prosecute with due diligence any
pending applications to the FCC;
(vii) terminate any Contract, except as such
Contract may expire by its own terms; or
(viii) increase the salary, benefits or
other compensation payable to any Station employee, except to the extent
consistent with existing practice. Seller shall immediately notify Buyer upon
taking any such action.
8.1.2 No Other Bids. Seller shall not, and shall not authorize
or permit any officer, director or employee of either Seller, or any investment
banker, attorney, accountant or other advisor or representative retained by
Seller to, solicit, initiate, encourage (including by way of furnishing
information), endorse or enter into any agreement with respect to, or take any
other action to facilitate, any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any proposal to purchase,
directly or indirectly, or time broker the Station. Upon a violation of this
Section, in addition to any other remedies available hereunder or at law, Buyer
shall be entitled to injunctive relief, both pendente lite and permanently,
without the need to post a bond or other security or prove actual damages.
8.1.3 Access to Information.
(a) Seller shall afford, and shall cause its
respective officers, directors, employees and agents to afford, to Buyer and the
officers, employees and agents of Buyer access at all reasonable times to
Seller's officers, employees, independent contractors, agents, properties,
books, records and contracts, and shall furnish Buyer all financial,
operating and other data and information relating to the Station as Buyer,
through its respective officers, employees or agents, may reasonably request,
provided however, that no rights granted to Buyer herein shall be exercised in
such a manner so as to interfere with the operation of the business of the
Seller.
(b) No investigation pursuant to Section 8.1.3(a)
shall affect any representations or warranties of the parties herein or the
conditions to the obligations of the parties hereto.
8.1.4 Confidentiality.
(a) Each party shall hold, and shall cause its
officers, employees and agents and representatives, including, without
limitation, attorneys, accountants, consultants and financial advisors ~its
"Agents") who obtain such information to hold, in confidence, and not use for
any purpose other than evaluating the transactions contemplated by this
Agreement, any Confidential Information of another party. Confidential
Information shall include all information (written or oral) which heretofore has
been or hereafter is disclosed by a party or its Agents in
- 14 -
<PAGE>
connection with the transactions contemplated hereunder and which is not in the
public domain, but shall not include any information which (i) is or becomes
generally available to the public other than as a result of disclosure by the
party which alleges the information is confidential or its affiliates, (ii)
becomes available to a party on a nonconfidential basis from a source, other
than the party which alleges the information is confidential or its affiliates,
which has represented that such source is entitled to disclose it, or (iii) was
known to a party on a nonconfidential basis prior to its disclosure to such
party hereunder. If this Agreement is terminated, each party shall deliver, and
cause its Agents who obtain Confidential Information of another party hereunder
to deliver to such other party all such Confidential Information that is written
(including copies or extracts thereof), whether such confidential information
was obtained before or after the execution hereof.
(b) If a party or a person to whom a party transmits
confidential information of another party is requested or becomes legally
compelled (by oral questions, interrogatories, requests for information or
documents, subpoena, criminal or civil investigative demand or similar process)
to disclose any of such confidential information, such party or person will
provide the other applicable party with prompt written notice so that such party
may seek a protective order or other appropriate remedy or waive compliance with
Section 8.1 .4(a). If such protective order or other remedy is not obtained, or
if the applicable party waives compliance with Section 8.1.4(a), the party
subject to the request will furnish only that portion of such confidential
information which is legally required and will exercise its best efforts to
obtain reliable assurance that confidential treatment will be accorded such
confidential information.
8.1.5 Notification of Certain Matters.
(a) Seller shall give prompt notice to Buyer, and
Buyer shall give prompt notice to either Seller, of (i) any material inaccuracy
in any representation or warranty made by it or them, as the case may be,
herein, or (ii) any material failure of Buyer or Seller to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it or them, as the case may be, under this Agreement; provided, however, that no
such notification shall affect the representations or warranties or covenants or
agreements of the parties or the conditions to the obligations of the parties
hereunder.
(b) Seller shall give prompt notice to Buyer of any
change or event having, or which could reasonably be expected to have, a
material adverse effect on the operations or financial condition of the Station.
8.1.6 Consents and Approvals. Seller shall use commercially
reasonable efforts to obtain any and all consents, transfers, authorizations, or
approvals required for the consummation of the transactions contemplated by this
Agreement.
8.1.7 Control of Station. Buyer shall not, directly or
indirectly, control, supervise or direct the operation of the Station. Such
operation, including complete control and supervision of all Station programs,
employees and policies, shall be the responsibility of License Corp.
8.1.8 News Releases. Any news releases pertaining to the
transactions contemplated hereby shall be reviewed and approved by Buyer and
Seller, or their respective representatives, and shall be acceptable to them
prior to the dissemination thereof
- 15 -
<PAGE>
8.2 Covenants of Buyer. Buyer covenants and agrees that between the
date of this Agreement and the Closing Date, Buyer shall:
8.2.1 Actions Necessary For Transactions. Use commercially
reasonable efforts to obtain any and all consents, transfers, authorizations, or
approvals required for the consummation of the transactions contemplated by this
Agreement.
8.2.2 FCC Qualifications. Refrain from knowingly doing any act
which would disqualify Buyer from being the licensee of the Station.
ARTICLE 9
CONDITIONS
9.1 Conditions Precedent to Obligations of Buyer. The obligations of
Buyer to consummate the transactions contemplated by this Agreement are subject
to the fulfillment, prior to or at the Closing, of each of the following
conditions, except to the extent Buyer shall have waived in writing satisfaction
of such condition:
(a) The representations and warranties made by each Seller in
this Agreement shall be true and correct in all material respects as of the date
of this Agreement and on the Closing Date as though such representations and
warranties were made on such date.
(b) Seller shall have performed and complied in all material
respects with all covenants, agreements, representations, warranties and
undertakings required by this Agreement to be performed or complied with by
Seller prior to the Closing.
(c) No action, suit or proceeding before any court or any
governmental or regulatory authority shall have been commenced, no investigation
by any governmental or regulatory authority shall have been commenced, and no
action, suit or proceeding by any governmental or regulatory authority shall
have been threatened against any party hereto, seeking to restrain, enjoin,
rescind, prevent or change the transactions contemplated hereby or questioning
the validity or legality of any of such transactions or seeking damages in
connection with any of such transactions.
(d) Seller shall have delivered to Buyer all of the documents
required by Section 10.1 hereof.
(e) The FCC Consent shall have become a Final Order.
(f) Seller shall have obtained and shall have delivered to
Buyer all third-party consents to the assignment of the Contracts which consents
shall not have as a condition thereof any modifications to the terms thereof or
any payment by-Buyer to consummate the assignment.
(g) There shall have been no material adverse change since the
date of this Agreement in the Station Assets or the operations of the Station.
- 16 -
<PAGE>
9.2 Conditions Precedent to Obligations of Seller. The obligations of
Seller to consummate the transactions contemplated by this Agreement are subject
to the fulfillment, prior to or at the Closing, of each of the following
conditions, except to the extent Seller shall have waived in writing
satisfaction of such condition:
(a) The representations and warranties made by Buyer in this
Agreement shall be true and correct in all material respects as of the date of
this Agreement and on the Closing Date as though such representations and
warranties were made on such date.
(b) Buyer shall have performed and complied in all material
respects with all covenants, agreements, representations, warranties and
undertakings required by this Agreement to be performed or complied with by it
prior to the Closing.
(c) No action, suit or proceeding before any court or any
governmental or regulatory authority shall have been commenced, no investigation
by any governmental or regulatory authority shall have been commenced, and no
action, suit or proceeding by any governmental or regulatory authority shall
have been threatened against any party hereto, seeking to restrain, enjoin,
rescind, prevent or change the transactions contemplated hereby or questioning
the validity or legality of any such transactions or seeking damages in
connection with any of such transactions.
(d) Buyer shall have delivered to Seller all of the documents
required by Section
10.2 hereof.
ARTICLE 10
CLOSING DELIVERIES
10.1 Seller's Deliveries. At the Closing, Seller shall deliver or cause
to be delivered to Buyer the following:
(a) Bills of Sale, assignments and other good and sufficient
instruments of conveyance, transfer and assignment, all in form and substance
reasonably satisfactory to counsel for Buyer, as shall be effective to vest in
Buyer or its permitted assignee, good and marketable title in and to the Station
Assets.
(b) A certificate, executed by officers of each Seller in such
detail as Buyer shall reasonably request, certifying that all the
representations and warranties of Seller stated herein are true and correct as
of the Closing Date and to the fulfillment or satisfaction of the conditions set
forth in this Agreement. The delivery of such certificate shall constitute a
representation and warranty of Seller as to the statements set forth therein.
(c) Resolutions of the Board of Directors of each Seller
authorizing the execution, delivery and performance of the Seller Documents by
Seller, certified by the secretaries of each Seller.
- 17 -
<PAGE>
(d) Updated Schedules reflecting any changes necessary to
render the information contained therein true and accurate on the Closing Date.
(e) Originals or copies of all program, operations,
transmissions, or maintenance logs and all other records required to be
maintained by the FCC with respect to the Station, including the Station's
public file, shall be left at the Station and thereby delivered to Buyer.
(f) A signed agreement in form mutually agreeable to Buyer and
Seller granting to Buyer the right to air certain sporting events on the
Station, including games of the Hartford Whalers and the Boston Celtics.
10.2 Buyer's Deliveries.
(a) At the Closing, Buyer shall deliver or cause to be
delivered to Seller the following:
(i) The payments required under Section 3.3 hereof.
(ii) An Assignment and Assumption Agreement
reasonably satisfactory in form and substance to counsel to Seller effecting the
assumption of the Assumed Liabilities on the terms and conditions hereof.
(iii) A certificate, executed by an officer of Buyer,
in such detail as Seller shall reasonably request, certifying to the fulfillment
or satisfaction by Buyer of the conditions set forth in this Agreement. The
delivery of such certificate shall constitute a representation and warranty of
Buyer as to the statements set forth therein.
(iv) Resolutions of the Board of Directors of Buyer
authorizing the execution, delivery and performance of the Buyer's Documents by
Buyer, certified by the secretary of Buyer.
(v) A signed agreement in form mutually agreeable to
Buyer and Seller granting to Buyer the right to air certain sporting events on
the Station, including games of the Hartford Whalers and the Boston Celtics.
ARTICLE 11
TRANSFER TAXES, FEES AND EXPENSES
11.1 Expenses. Except as set forth in Sections 11.2 and 11.3 hereof,
each party hereto shall be solely responsible for all costs and expense incurred
by it in connection with the negotiation and preparation of the Agreement and
the transactions contemplated thereby.
11.2 Transfer Taxes and Similar Charges. Seller and Buyer each shall be
responsible for one-half of all recordation, transfer and documentary taxes and
fees, and any excise, sales or use taxes imposed by reason of the transfer of
the Station Assets in accordance with this Agreement.
- 18 -
<PAGE>
11.3 Governmental Filing or Grant Fees. Any filing or grant fees
imposed by any governmental authority the consent of which is required to the
transactions contemplated hereby shall be borne equally by Buyer and Seller.
ARTICLE 12
INDEMNIFICATION
12.1 Survival of Representations and Warranties. All representations
and warranties made in this Agreement shall survive the Closing for a period of
twelve ( 12) months from the Closing Date; provided, however, the
representations and warranties regarding tax matters shall survive the Closing
Date until the expiration of all applicable statutes of limitations. The right
of any party to recover Damages (as defined in Section 12.2 hereof) on any claim
shall not be affected by the termination of any representations and warranties
as set forth above provided that notice of the existence of such claim has been
given by the Indemnified Party (as hereinafter defined) to the Indemnifying
Party (as hereinafter defined) prior to such termination.
12.2 Indemnification of Buyer by Seller. License Corp. and ARS, jointly
and severally, shall indemnify and hold Buyer and its attorneys, affiliates,
representatives, agents, partners, successors or assigns harmless from and
against any liability, loss, cost, expense, judgment, order, settlement,
obligation, deficiency, claim, suit, proceeding (whether formal or informal),
investigation, Lien or other damage, including, without limitation, attorney's
fees and expenses, (all of the foregoing items for purposes of this Agreement
are referred to as "Damages"), resulting from, arising out of or incurred with
respect to:
(a) A breach of any representation, warranty, covenant or
agreement of Seller contained herein, subject to notice of a claim being given
before the expiration of the applicable period specified in Section 12.1 hereof
with respect to the representations or warranties by Seller contained herein;
(b) The Retained Liabilities; or
(c) Any and all claims, liabilities or obligations of any
nature, absolute or contingent, relating to the business and operation of the
Station prior to the Closing Date.
The term "Damages" as used in this Agreement is not limited to matters asserted
by third-parties against a party, but includes Damages incurred or sustained by
a party in the absence of third party claims.
12.3 Indemnification of Seller by Buyer. Buyer shall indemnify and hold
Seller and its respective attorneys, affiliates, representatives, agents,
officers, directors, successors or assigns, harmless from and against any
Damages resulting from, arising out of, or incurred with respect to:
(a) A breach of any representation, warranty, covenant or
agreement by Buyer contained herein, subject to notice of a claim being given
before the expiration of the applicable period specified in Section 12.1 hereof
with respect to the representations and warranties made by Buyer herein;
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<PAGE>
(b) The Assumed Liabilities; or
(c) Any and all claims, liabilities or obligations of any
nature, absolute or contingent, relating to the business and operation of the
Station as conducted by Buyer on and after the Closing Date.
12.4 Procedures.
(a) Promptly after the receipt by any party (the "Indemnified
Party") of notice of (a) any claim or (b) the commencement of any action or
proceeding which may entitle such party to indemnification under this Section,
such party shall give the other party (the "Indemnifying Party") written notice
of such claim or the commencement of such action or proceeding and shall permit
the Indemnifying Party to assume the defense of any such claim or any litigation
resulting from such claim. The failure to give the Indemnifying Party timely
notice under this subsection shall not preclude the Indemnified Party from
seeking indemnification from the Indemnifying Party unless, and then only to the
extent, such failure has materially prejudiced the Indemnifying Party's ability
to defend the claim or litigation. If such claim does not arise from the claim
of a third party, the Indemnifying Party shall have 30 days after such notice to
cure the conditions giving rise to such claim to the Indemnified Party's
satisfaction. Failure by the Indemnifying Party to notify an Indemnified Party
of its election to defend any such claim or action by a third party within 30
days after notice thereof shall have been given to the Indemnifying Party shall
be deemed a waiver by the Indemnifying Party of its rights to defend such claim
or action.
(b) If the Indemnifying Party assumes the defense of any such
claim or litigation resulting therefrom with counsel reasonably acceptable to
the Indemnified Party, the Indemnifying Party shall take all steps necessary in
the defense or settlement of such claim or litigation resulting therefrom and
hold the Indemnified Party harmless from and against any Damages caused by or
arising out of any settlement approved by the Indemnifying Party or any judgment
in connection with such claim or litigation resulting therefrom; however, the
Indemnified Party may participate, at its expense, in the defense of such claim
or litigation provided that the Indemnifying Party shall direct and control the
defense of such claim or litigation. The Indemnified Party shall cooperate and
make available all books and records reasonably necessary and useful in
connection with the defense. Except with the prior written consent of the
Indemnified Party, the Indemnifying Party shall not, in the defense of such
claim or any litigation resulting therefrom, consent to the entry of any
judgment (other than a judgment of dismissal on the merits without cost) or
enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or the plaintiff to the Indemnified Party of
a release from all Damages in respect of such claim or litigation.
(c) If the Indemnifying Party shall not assume the defense of
any such claim or litigation resulting therefrom, the Indemnified Party may, but
shall have no obligation to, defend against such claim or litigation in such
manner as it may deem appropriate, and the Indemnified Party may compromise or
settle such claim or litigation without the Indemnifying Party's consent. Within
30 days of written request, the Indemnifying Party shall promptly reimburse the
Indemnified Party for the amount of all Damages incurred by the Indemnified
Party in connection with the defense against or settlement of such claim or
litigation. If no settlement of the claim or litigation is made, the
Indemnifying Party shall promptly reimburse the Indemnified Party for the amount
of any judgment rendered with respect to such claim or in such litigation.
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<PAGE>
12.5 Indemnity Payments. The parties agree that any payments made
pursuant to this Article 12 will be treated by the parties on all applicable tax
returns as an adjustment to the Purchase Price.
ARTICLE 13
TERMINATION RIGHTS
13.1 Termination. This Agreement may be terminated, by written notice
given by any party (provided such party is not in breach of any of its material
obligations, representations, warranties or duties hereunder) to the other party
hereto, at any time prior to the Closing Date as follows, and in no other
manner.
(a) By mutual written consent of the parties;
(b) By either Buyer, on the one hand, or either Seller, on the
other hand, if a court of competent jurisdiction or governmental, regulatory or
administrative agency or commission shall have issued an order, decree or ruling
or taken any other action, in each case permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement and such
order, decree, ruling or other action shall have become final and nonappealable;
(c) By Buyer, if either Seller fails to perform or breaches
any of its material obligations, representations, warranties or duties under
this Agreement, and Seller has not cured such failure to perform or breach
within 15 days after delivery of written notice from Buyer;
(d) By either Seller, if Buyer fails to perform or breaches
any of its material obligations, representations, warranties or duties under
this Agreement, and Buyer has not cured such failure to perform or breach within
thirty (30) days after delivery of written notice from Seller;
(e) By any party, if the FCC denies the FCC Application;
(f) By any party, if the FCC Consent has not been obtained
within one (1) year of the date hereof.
13.2 Liability. Upon termination, (i) if neither party is in breach of
a material provision of this Agreement, the parties hereto shall have no further
obligations to each other, except as provided in Section 8.1.4.
(Confidentiality) hereof; (ii) if Buyer is in breach of a material provision of
this Agreement, Seller, provided they are not then in default of this Agreement,
shall be entitled only to liquidated damages as provided in Section 3.2(b)
hereof; or (iii) if either Seller is in breach of a material provision of this
Agreement, Buyer, provided it is not then in default of this Agreement, shall be
entitled to the return of the Deposit, together with all earnings accrued
thereon, plus any other remedies that are available to the Buyer.
ARTICLE 14
MISCELLANEOUS PROVISIONS
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<PAGE>
14.1 Specific Performance. Seller and Buyer each recognize and
acknowledge that, in the event that Seller shall fail to perform its obligations
to consummate the transaction contemplated hereby, money damages alone will not
be adequate to compensate Buyer for its injury. Seller and Buyer therefore each
agree and acknowledge that, in the event of either Seller's failure to perform
its obligation to consummate the transaction contemplated hereby, Buyer shall be
entitled to specific performance of the terms of this Agreement and of Seller's
obligation to consummate the transaction contemplated hereby, provided Buyer is
not in material default hereunder.
14.2 Risk of Loss. The risk of loss or damage to any of the Station
Assets prior to the Closing Date, by whatever cause, shall be upon Seller. In
the event of such loss or damage, Seller shall notify Buyer of the same within
five (5) days and shall promptly restore, repair or replace such loss or damage
with items of equivalent quality and value. Buyer may renegotiate the purchase
price or terminate this Agreement if the loss or damage results in a material
reduction in the value of the Station. Alteratively, at the election of the
Buyer, Buyer may reduce the price to be paid by Buyer by the amount it would
cost to fully restore, replace or repair such loss or damage or Buyer may elect
to pay the Purchase Price and accept an assignment of Seller's insurance
proceeds from the loss.
14.3 Benefit and Assignment. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns. No party may voluntarily or involuntarily assign its
interest under this Agreement without the prior written consent of the other
parties, which consent shall not be unreasonably withheld or delayed.
14.4 Headings. The headings set forth in this Agreement are for
convenience only and will not control or affect the meaning or construction of
the provisions of this Agreement.
14.5 Governing Law. This Agreement and the rights of the parties hereto
shall be governed, construed and interpreted in accordance with the laws of the
State of Connecticut without giving effect to the choice of law principles
thereof.
14.6 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
14.7 Severability. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
14.8 Attorneys' Fees. Should any party hereto institute any action or
proceeding at law or in equity to enforce any provision of this Agreement,
including an action for declaratory relief, or for damages by reason of an
alleged breach of any provision of this Agreement, or otherwise in connection
with this Agreement, or any provision hereof, the prevailing party shall be
entitled to recover from the losing party or parties reasonable attorneys' fees
and costs for services rendered to the prevailing party in such action or
proceeding.
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<PAGE>
14.9 Multiple Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument.
14.10 Notices. Unless applicable law requires a different method of
giving notice, any and all notices, demands or other communications required or
desired to be given hereunder by any party shall be in writing. Assuming that
the contents of a notice meet the requirements of the specific Section of this
Agreement which mandates the giving of that notice, a notice shall be validly
given or made to another party if served either personally or if deposited in
the United States mail, certified or registered, postage prepaid, or if sent by
overnight courier service, and if addressed to the applicable party as set forth
below. If such notice, demand or other communication is served personally,
service shall be conclusively deemed given at the time of such personal service.
If such notice, demand or other communication is given by mail, service shall be
conclusively deemed given seventy-two (72) hours after the deposit thereof in
the United States mail. If such notice, demand or other communication is given
by overnight courier, service shall be conclusively deemed given at the time of
confirmation of delivery. The addresses for the parties are as follows:
If to Buyer:
Alfredo Alonso
Mega Broadcasting Corporation
333 Sylvan Avenue
Suite 304
Englewood Cliffs, NJ 07632
With a copy to:
Francisco R. Montero, Esq.
Fisher Wayland Cooper Leader & Zaragoza, L.L.P.
2001 Pennsylvania Avenue, N.W., Suite 400
Washington, D.C. 20006
and
If to Seller:
Michael B. Milson, Esq.
Vice President/Secretary
American Radio Systems Corporation
116 Huntington Ave.
Boston, Massachusetts 02116
With a copy to:
Howard J. Braun, Esq.
Rosenrnan & Colin
1300 l9th Street, N.W.
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<PAGE>
Washington, D.C. 20036
Any party hereto may change its or his address for the purpose of receiving
notices, demands and other communications as herein provided, by a written
notice given in the aforesaid manner to the other parties hereto.
14.11 Incorporation by Reference. All Exhibits and Schedules attached
hereto or to be delivered in connection herewith are incorporated herein by this
reference.
14.12 Choice of Forum. No claim, demand, action, proceeding,
litigation, hearing, motion or lawsuit arising here from or with respect hereto
shall be commenced or prosecuted in any jurisdiction other than the State of
Connecticut, and each party hereby irrevocably consents to the jurisdiction of
the state and federal courts in the State of Connecticut seated in Hartford
County.
14.13 Waivers. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar), nor shall such waiver constitute a continuing waiver.
No waiver shall be binding unless executed in writing by the party making the
waiver.
14.14 No Third Party Beneficiaries. Nothing herein expressed or implied
is intended or shall be construed to confer upon or give to any person or entity
other than the parties hereto and their successors or permitted assigns, any
rights or remedies under or by reason of this Agreement.
14.15 Entire Agreement. This Agreement, the Schedules and Exhibits
attached hereto and the ancillary documents provided for herein, constitute the
entire agreement and understanding of the parties hereto relating to the matters
provided for herein and supersede any and all prior agreements, arrangements,
negotiations, discussions and understandings relating to the matters provided
for herein.
[THE REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date and year first above written.
MEGA BROADCASTING CORPORATION
By:_____________________________
Alfredo Alonso, President
AMERICAN RADIO SYSTEMS LICENSE
CORP.
By:______________________________
Its:_____________________________
AMERICAN RADIO SYSTEMS
CORPORATION
By:______________________________
Its:_____________________________
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first above written.
MEGA BROADCASTING CORPORATION
By:_____________________________
Alfredo Alonso, President
AMERICAN RADIO SYSTEMS LICENSE
CORP.
By:_____________________________
Its:____________________________
AMERICAN RADIO SYSTEMS
CORPORATION
By:_____________________________
Its:____________________________
- 26 -
<PAGE>
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
American Radio Systems Corporation
EXHIBIT 11
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Weighted average shares of common stock............. 20,993,366 14,368,802 19,055,077 11,034,305
Add:
Common stock equivalents in the form of
stock options and warrants............... 1,021,153 838,154 975,954 801,313
------------ ------------ ------------ -------------
Weighted average common stock and
common stock equivalents.................... 22,014,520 15,206,956 20,031,031 11,835,618
Net Income (loss):
Net income (loss) applicable to common
stockholders............................. $(1,499,830) $1,434,770 $121,464 $6,501,712
Primary and fully diluted per common share
amounts:........................................
Net income (loss) applicable to common
stockholders............................. $ ( .07) $ .09 $ .01 $ .55
</TABLE>
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
American Radio Systems Corporation
EXHIBIT 12
(In thousands, except ratio data)
<TABLE>
<CAPTION>
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
1996 1995 1996 1995
---- ---- ----- -----
<S> <C> <C> <C> <C>
Computation of Earnings:
Income from continuing operations before
income taxes......................................... 2,459 2,469 $5,650 $12,769
Add:
Interest expense (1)..................................... 6,254 3,086 15,217 8,971
Rent expense (2)......................................... 1,239 1,027 2,668 1,268
----------- ----------- ------------ ----------
Earnings as adjusted..................................... 9,952 6,582 23,535 23,008
Computation of Fixed Charges:
Interest expense (1)..................................... 6,254 3,086 15,217 8,971
Rent expense (2)......................................... 1,239 1,027 2,668 1,268
Preferred dividends...................................... 2,433 2,567 815
----------- ----------- ------------ ----------
Fixed charges............................................ 9,926 4,113 20,452 11,054
Ratio of earnings to combined fixed charges.......... 1.00 1.60 1.15 2.08
<FN>
- ----------------------------------------
(1) Interest expense includes amortization of deferred financing costs.
(2) Rent expense fixed charge is assumed to be 30% of gross operating rent charges.
</FN>
</TABLE>
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0
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