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 June 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 July 31, 1996
- ----------------------- -----------------------------
Class A Common Stock 14,525,464 shares
Class B Common Stock 5,233,654 shares
Class C Common Stock 1,295,518 shares
- ----------------------- -----------------------------
Total 21,054,636 shares
Page 1 of 35 pages
Exhibit Index on page 32
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Unaudited Financial Statements Page No.
Consolidated Balance Sheets
June 30, 1996 and December 31, 1995...................... 1
Consolidated Statements of Income
Three and six months ended June 30, 1996 and 1995........ 3
Consolidated Statements of Cash Flows
Six months ended June 30, 1996 and 1995.................. 4
Notes to Consolidated Statements........................... 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 23
PART II. OTHER INFORMATION
Item 1. Legal Proceedings......................................... 28
Item 2. Changes in Securities..................................... 28
Item 4. Submission of Matters To a Vote of Security Holders....... 28
Item 5. Other Information......................................... 29
Item 6. Exhibits and Reports on Form 8-K.......................... 32
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
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AMERICAN RADIO SYSTEMS CORPORATION
CONSOLIDATED BALANCE SHEETS
June 30, 1996 December 31, 1995
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<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................................. $149,175,334 $ 3,889,720
Accounts receivable, net ................................................ 32,028,094 24,388,719
Prepaid expenses and other current assets ............................. 3,280,114 2,280,544
Note receivable-other ..................................................... 1,135,540 1,108,414
Deferred income taxes ..................................................... 1,161,901 1,161,901
------------ ------------
Total current assets .................................................. 186,780,983 32,829,298
------------ ------------
PROPERTY AND EQUIPMENT-Net ................................................ 45,739,317 31,786,011
------------ ------------
OTHER ASSETS:
Station investment note receivable-related party ........................ 500,000 500,000
Station investment notes receivable ..................................... 40,876,686 48,597,338
Intangible assets-net:
Goodwill............................................................. 97,441,817 66,463,708
FCC licenses......................................................... 58,230,700 45,023,219
Other intangible assets ............................................. 22,211,917 15,863,918
Deposits and other long-term assets ..................................... 25,437,610 7,732,337
Restricted cash.......................................................... 18,000,000
Net assets held under exchange agreement - net .......................... 46,824,928
------------ ------------
Total other assets................................................ 309,523,658 184,180,520
------------ ------------
TOTAL........................................................................... $542,043,958 $248,795,829
============ ============
</TABLE>
See notes to condensed consolidated unaudited financial statements.
1
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<TABLE>
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AMERICAN RADIO SYSTEMS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Continued)
June 30, 1996 December 31, 1995
----------------- --------------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt .................................... $ 296,850 $ 355,283
Accounts payable and accrued expenses ................................... 12,625,952 8,577,068
Accrued compensation ................................................ 2,447,277 1,318,006
Accrued interest .................................................... 6,318,251 513,880
Current redeemable Common Stock ..................................... 19,460 19,460
------------- -------------
Total current liabilities ........................................... 21,707,790 10,783,697
------------- -------------
DEFERRED INCOME TAXES ....................................................... 10,240,144 7,899,090
------------- -------------
OTHER LONG-TERM LIABILITIES ................................................. 1,843,035 1,929,307
------------- -------------
LONG-TERM DEBT .............................................................. 174,788,771 152,148,939
------------- -------------
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 .................... 1,375
Class A Common Stock; $.01 par value; 25,000,000 shares
authorized; 12,548,130 and 6,645,862 shares issued and
outstanding, respectively ........................................... 125,481 66,459
Class B Common Stock; $.01 par value; 10,000,000 shares
authorized; 5,350,403 and 5,938,050 shares issued and
5,331,954 and 5,919,601 shares outstanding 53,320 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 .............................................. 326,505,816 92,637,379
Unearned compensation ................................................... (343,881) (391,206)
Dividends payable ....................................................... 133,681
Capital deficiency upon combination ..................................... (21,709,164)
Retained earnings ....................................................... 7,413,644 5,792,350
------------- -------------
Total ............................................................... 333,902,391 76,472,969
Less:
Treasury stock, at cost, 18,449 shares .............................. (438,173) (438,173)
------------- -------------
Total stockholders' equity........................................... 333,464,218 76,034,796
------------- -------------
TOTAL ....................................................................... $ 542,043,958 $ 248,795,829
============= =============
</TABLE>
See notes to condensed consolidated unaudited financial statements.
2
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<TABLE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET REVENUES ................................... $ 37,777,313 $ 24,671,729 $ 61,425,564 $ 44,513,456
OPERATING EXPENSES:
Operating expenses excluding depreciation
and amortization and corporate general and
administrative expenses ................... 27,122,102 16,996,264 45,696,355 32,618,460
Depreciation and amortization ................ 2,638,786 3,280,333 4,838,980 6,041,617
Corporate general and administrative ......... 1,259,006 697,644 2,340,282 1,483,741
------------ ------------ ------------ ------------
Total Operating Expenses ..................... 31,019,894 20,974,241 52,875,617 40,143,818
------------ ------------ ------------ ------------
OPERATING INCOME ............................... 6,757,419 3,697,488 8,549,947 4,369,638
OTHER INCOME (EXPENSE):
Interest income .............................. 1,522,914 168,113 3,640,367 257,021
Interest expense ............................. (4,261,296) (2,703,440) (8,963,516) (5,885,084)
Gain (loss) on sale of assets and other ...... (1,301) (35,575) (35,935) 11,559,032
------------ ------------ ------------ ------------
TOTAL OTHER INCOME (EXPENSE) ................... (2,739,683) (2,570,902) (5,359,084) 5,930,969
------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAXES ..................... 4,017,736 1,126,586 3,190,863 10,300,607
Provision for income taxes ................... 1,807,152 451,438 1,435,888 4,418,625
------------ ------------ ------------ ------------
NET INCOME ..................................... 2,210,584 675,148 1,754,975 5,881,982
Redeemable common and preferred stock dividends (133,681) (296,495) (133,681) (815,040)
------------ ------------ ------------ ------------
NET INCOME APPLICABLE TO COMMON SHARES ......... $ 2,076,903 $ 378,653 $ 1,621,294 $ 5,066,942
============ ============ ============ ============
Earnings per common share...................... $ .10 $ .03 $ .09 $ .50
Weighted average common share and share
equivalents outstanding...................... 20,141,921 10,862,862 19,025,668 10,081,065
</TABLE>
See notes to condensed consolidated unaudited financial statements.
3
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<TABLE>
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AMERICAN RADIO SYSTEMS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended Six Months Ended
June 30, 1996 June 30, 1995
---------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income ..................................................................... $ 1,754,975 $ 5,881,982
Adjustments to reconcile net income to cash (used for)
provided by operating activities:
Net barter revenue.......................................................... (421,941) (152,034)
Depreciation and amortization .............................................. 4,838,980 6,041,617
Other changes not affecting cash ........................................... 2,725,240 3,012,980
Loss (gain) on sale of assets .............................................. 35,935 (11,559,032)
Net changes in operating assets and liabilities ............................ (14,456,370) (1,698,995)
------------- -------------
Cash provided by (used for) operating activities ...................... (5,523,181) 1,526,518
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for purchase of property and equipment and intangible assets ....... (7,336,077) (3,016,859)
Proceeds from radio station sales ........................................... 18,000,000 15,283,301
Payments for radio station acquisitions ..................................... (67,777,254) (12,000,000)
Payments for tower related acquisitions .................................... (5,044,765)
Payments for station investment notes receivable ........................... (27,779,348) (9,750,000)
Repayment of station investment note receivable ............................ -- 3,000,000
Deposits and other long-term assets ........................................ (23,705,273) (19,174,939)
------------- -------------
Cash used for investing activities ...................................... (113,642,717) (25,658,497)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under Credit Agreement ........................................... -- 24,500,000
Repayments under Credit Agreement ........................................... (151,500,000) (54,000,000)
Net proceeds from equity offerings and options .............................. 248,197,794 71,371,507
Net proceeds from debt offering - net of discount ........................... 168,321,387
Redemption of senior common stock ........................................... -- (14,850,173)
Repayments of other obligations ............................................. (567,669) (1,120,462)
------------- -------------
Cash provided by financing activities ................................... 264,451,512 25,900,872
INCREASE IN CASH AND CASH EQUIVALENTS .......................................... 145,285,614 1,768,893
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD ................................. 3,889,720 3,168,298
------------- -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD ....................................... $ 149,175,334 $ 4,937,191
============= =============
</TABLE>
See notes to condensed consolidated unaudited financial statements.
4
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO CONDENSED CONSOLIDATED UNAUDITED 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 March 1995, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 121
"Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets
to Be Disposed Of" (FAS 121). FAS 121 addresses the accounting for the
impairment of long-lived assets, certain identifiable intangibles and
goodwill when events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. FAS 121 was adopted effective
January 1, 1996. The impact of FAS 121 did not have a material impact on
the Company's results of operations, liquidity or financial position.
In October 1995, the Financial Accounting Standards Board issued FAS No.
123, "Accounting for Stock-Based Compensation," (FAS 123) which is
effective for the Company beginning January 1, 1996. FAS 123 requires
expanded disclosures of stock-based compensation arrangements with
employees and encourages (but does not require) compensation cost to be
measured based on the fair value of the equity instrument awarded.
Companies are permitted, however, to continue to apply APB Opinion No. 25,
which recognizes compensation cost based on the intrinsic value of the
equity instrument awarded. The Company will continue to apply APB Opinion
No. 25 to its stock based compensation awards to employees and will
disclose the required information regarding the pro forma effect of FAS 123
on net income and earnings per share in the Company's Annual Report on Form
10-K for the year ended December 31,1996.
In connection with accounting for the combination, the Predecessor
Entities' accumulated deficits or retained earnings 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.
3. Per Share data - Earnings 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 per share amounts are not reported
separately as the effects are not dilutive.
4. Offerings - 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 ("Convertible Preferred Stock") 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 CONDENSED CONSOLIDATED UNAUDITED 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 will be 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 will be 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 $0.2 million of dividends are
accrued and unpaid as of June 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.
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. The total shares issued pursuant to the Equity offering
consisted of 4,000,000 shares sold by the Company, 1,013,370 shares 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.
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"). As of June 30, 1996
the Subordinated Notes aggregated $173,618,203 net of an unamortized
discount of $1,381,797. 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). Proceeds to the Company, net of
underwriters' discount and associated costs, were approximately $167.3
million.
6
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AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO CONDENSED CONSOLIDATED UNAUDITED 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 future
acquisitions.
5. Acquisitions - 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 a consulting and non-competition agreement 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 and made a $2.0 million escrow deposit. The escrow deposit, $27.0
million of the aggregate loans and $1.1 million of available cash were
utilized 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.
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 are held as restricted cash in an escrow
account pursuant to an Internal Revenue Code like- kind exchange agreement.
The Company is retaining certain Philadelphia real estate and tower assets
valued at approximately $3.0 to 4.0 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 the Detroit station for approximately $20.0 million in cash.
This party began programming the Philadelphia and Detroit stations under a
local marketing agreement ("LMA") in June 1996. See Note 6 - "Other
Transactions - Sacramento." The net assets and liabilities included in this
exchange agreement are classified as net assets held under exchange
agreement.
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.
7
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AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO CONDENSED CONSOLIDATED UNAUDITED 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 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 are 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:
Six Months Ended Six Months Ended
---------------- ----------------
June 30,1996 June 30, 1995
------------ -------------
Net revenues.............................. $ 65,795 $ 49,206
Income before extraordinary items......... 2,704 11,007
Net income................................ 1,487 6,712
Net income applicable to common
stockholders.......................... 1,353 5,897
Net income per common share............... $ .07 $ .57
6. Other transactions - During the first six months of 1996, the Company
agreed to purchase (or is in the process of negotiating agreements to
purchase) additional stations as follows:
Baltimore: In June 1996, the Company entered into an agreement to purchase
WBGR-AM serving Baltimore, Maryland for a purchase price of approximately
$2.8 million. Subject to the receipt of FCC approval, this acquisition is
expected to be consummated in the third quarter of 1996.
8
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AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
(Continued)
6. Other transactions - (continued)
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 intends to
exercise its option to acquire, subject to FCC approval, the station, using
proceeds from the loan, and such acquisition is expected to be consummated
late in the third quarter of 1996.
Dayton: In January 1996, the Company entered into a nonbinding letter of
intent to acquire for approximately $12 million two FM stations (WLQT-FM
and WDOL-FM) in Dayton, Ohio. Because of then existing FCC regulations,
American 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 intends to exercise its option to acquire the
stations with proceeds from the loan. Subject to the receipt of FCC
approval, this acquisition is expected to be consummated in the third
quarter of 1996.
Sacramento: In June 1996, the Company entered into an agreement to exchange
WFLN-FM in Philadelphia, Pennsylvania and WQRS-FM in Detroit, Michigan
which was acquired as part of the Marlin transaction, for the assets of
KSFM-FM and KMJI-AM in Sacramento, California and approximately $20.0
million in cash, respectively. In May 1996, the Company began managing the
Sacramento stations pursuant to an LMA. In June 1996, the owner of the
Sacramento stations began managing WFLN-FM and WQRS-FM pursuant to an LMA.
Subject to the receipt of FCC approval, the Company expects to consummate
the transaction in the third quarter of 1996. (See Note 7).
In May 1996, the Company entered into an agreement to acquire KSSJ-FM in
Sacramento, California for a purchase price of approximately $13.5 million.
(See Note 7).
In April 1996, the Company entered into agreements to acquire the assets of
KMZQ-FM, KXTE-FM, (formerly KFBI-FM), and KVEG-AM in Las Vegas, Nevada for
approximately $30.0 million in cash. Subject to the receipt of FCC
approval, the Company expects to consummate the acquisition in the third
quarter of 1996.
Rochester: In February 1996, the Company entered into an agreement to
acquire two FM (WVOR-FM and WPXY-FM) stations and two AM (WHAM-AM and
WHTK-AM) stations serving the Rochester, New York market for a purchase
price of approximately $30.5 million. On May 17, 1996, the Company and the
seller received requests for additional information about the acquisition
from the Antitrust Division of the U.S. Division of the U.S. Department of
Justice. Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and
the regulations thereunder, the Rochester acquisition may not be
consummated until 20 days after the Company and the seller have
substantially complied with such additional information requests. Although
the Company believes the acquisition complies with the antitrust laws, the
Department of Justice or others could take action under the antitrust laws
to enjoin or otherwise challenge such acquisition. There can be no
assurance that such a challenge will not be made or, if made, will not be
successful. (See Note 7).
9
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AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
(Continued)
6. Other transactions - (continued)
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. The
Company intends to exercise its option to acquire, subject to FCC approval,
the FM station, with proceeds from the loan, and such acquisition is
expected to occur in the third quarter of 1996.
As of June 30, 1996 the Company had deposits totaling $23.4 million
relating to pending acquisitions.
7. Subsequent events - Subsequent to June 30, 1996, the Company agreed to
purchase (or is in the process of negotiating agreements to purchase)
additional stations as follows:
Charlotte, Kansas City, Philadelphia, Pittsburgh, New Orleans, Sacramento,
Seattle, and St. Louis:
In August 1996, the Company entered into a merger agreement with EZ
Communications, Inc. (EZ) pursuant to which the Company will acquire all of
the outstanding stock of EZ for approximately $665.4 million consisting of
8,659,849 shares of the Company's Class A Common Stock, valued at
approximately $338.8 million, approximately $113.0 million in cash and the
assumption of approximately $213.6 million of long-term debt. EZ owns
and/or manges 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 consumated prior to
the merger, pursuant to which EZ will exchange the New Orleans stations for
KBKS-FM and KRPM-FM in Seattle. Because of existing FCC regulations and the
number of stations the Company has or plans to acquire in the Sacramento,
California market, the Company currently intends to dispose of KSSJ-FM,
KQPT-FM, KMJI-AM, (see Notes 6 and "Sacramento below") although definitive
purchase and/or swap agreements have not yet been consummated. Subject to
the receipt of shareholder and FCC approval, the Company expects to
consummate this merger in the first quarter of 1997. In the event that EZ
terminates the merger agreement within the first 30 days of signing 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. Thereafter, the Company will have the right, in the same
circumstance, to receive liquidated damages 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.
Fresno, Omaha, Portland and Sacramento: In July 1996, the transaction
contemplated by a Merger Agreement by and between the Company and Henry
Broadcasting Company ("HBC") were consummated. Pursuant thereto, the
Company acquired KUFO-FM and KBBT-AM in Portland, Oregon, KYMX-FM and
KCTC-AM in Sacramento, California, KGOR-FM and KFAB-AM in Omaha, Nebraska,
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 $5.4 million in available cash, together with the assumption
of approximately $36.0 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.
10
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
(Continued)
7. Subsequent events - (continued)
Buffalo: In August 1996, the Company acquired the assets of WSJZ-FM in
Buffalo, New York for a purchase price of approximately $12.5 million. The
Company has been managing the station pursuant to an LMA since April 1996.
The acquisition was financed through $0.5 million escrow deposit and
available cash.
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 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 first
quarter of 1997.
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 first quarter of 1997.
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 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 first quarter of 1997.
Las Vegas: In July 1996, the Company acquired the assets of KMBX-FM
(formerly KMJZ-FM), in Las Vegas, Nevada for approximately $8.0 million.
The Company had been managing the station pursuant to a 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 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 milllion. The acquisition was
financed through a $5.0 million escrow deposit, $18.0 million in restricted
cash and $80.0 million in borrowings under the 1995 credit agreement.
Portland: In July 1996, the Company acquired the assets of KDBX-FM, in
Portland 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 assigned its purchase option and right of first refusal with
respect to the sale of assets or stock of Back Bay Radio Broadcasters,
Inc., an unaffiliated party.
Rochester: In July 1996, the Company loaned the owner of WVOR-FM, WPXY-FM,
WHAM-AM and WHTK-AM approximately $28.5 million. The loan is collateralized
by the assets of the stations, bears interest payable quarterly at the rate
of 16% per annum and matures in June 2001. Subject to the receipt of the
necessary approvals, the Company will use proceeds from the loan to finance
the acquisition. (See Note 6).
11
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
(Continued)
7. Subsequent events - (continued)
Sacramento: In July 1996, the Company acquired the assets of KSTE-AM
serving Rancho Cordova, California for approximately $7.25 million. The
acquisition was financed through a $0.35 million escrow deposit and
available cash. The Company managed the station pursuant to a LMA from
April 1996 to July 1996. See West Palm Beach below.
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, the Company
expects to consummate the acquisition of KXOA-AM/FM in the first quarter of
1997.
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. The Company will manage the stations pursuant to an LMA
prior to the consummation of the acquisition. Subject to the receipt of FCC
approvals, the Company expects to consummate the acquisition in the first
quarter of 1997.
West Palm Beach: 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 managing KSTE-AM pursuant to an LMA and the Company began
managing the West Palm stations pursuant to an LMA in August 1996. Subject
to the receipt of FCC approvals, the Company expects to consummate the
exchange in the first quarter of 1997.
The Company is also pursuing the acquisitions of additional radio stations
and tower related businesses, none of which have definitive purchase
agreements.
12
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
(Continued)
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 on a joint and several basis
(collectively, the "Subsidiary Guarantees"), and any future Subsidiaries
will be required to guarantee, 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 Senior Debt of each Subsidiary Guarantor. 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. Separate complete financial
statements of the respective Subsidiary Guarantors would not provide
additional material information which would be useful in assessing the
financial composition of the Subsidiary Guarantors. No single Subsidiary
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.
13
<PAGE>
<TABLE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
(Continued)
8. Subsidiary Guarantees - (continued)
Condensed Consolidating Balance Sheet
June 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 $149,123 $ 52 $149,175
Prepaid expenses and other current assets 3,270 10 3,280
Note receivable - other 1,136 1,136
Deferred income taxes 1,162 1,162
-------- -------- -------- --------- --------
Total current assets 186,520 -- 261 -- 186,781
PROPERTY AND EQUIPMENT, NET 35,195 10,544 45,739
OTHER ASSETS:
Investment in and advances to Subsidiaries 79,810 $(79,810) --
Station investment notes receivable 41,376 41,376
Goodwill - net 87,517 9,925 97,442
FCC licenses - net $ 58,231 58,231
Other intangible assets - net 20,215 1,997 22,212
Deposits and other long-term assets 25,370 68 25,438
Restricted cash 18,000 18,000
Net assets held under exchange agreement-net 46,825 46,825
-------- -------- -------- --------- --------
Total other assets 319,113 58,231 11,990 (79,810) 309,524
-------- -------- -------- --------- --------
TOTAL ASSETS $540,828 $ 58,231 $ 22,795 $(79,810) $542,044
======== ======== ======== ========= ========
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
(Continued)
8. Subsidiary Guarantees - (Continued)
Condensed Consolidating Balance Sheet
June 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 deb $ 282 $ 15 $ 297
Accounts payable and accrued expenses 20,955 455 21,410
-------- -------- -------- --------- --------
Total current liabilities 21,237 470 21,707
NON-CURRENT LIABILITIES
Deferred income taxes 10,031 210 10,241
Other long-term liabilities 1,826 17 1,843
Long-term debt 174,270 519 174,789
-------- -------- -------- --------- --------
Total non-current liabilities 186,127 746 186,873
STOCKHOLDERS' EQUITY
Preferred Stock 1 1
Common Stock 192 192
Additional paid-in capital 326,506 $ 58,231 21,665 $(79,896) 326,506
Retained earnings 7,413 (86) 86 7,413
Treasury stock (438) (438)
Unearned compensation (344) (344)
Dividends payable 134 134
-------- -------- -------- --------- --------
Total stockholders' equity 333,464 58,231 21,579 (79,810) 333,464
-------- -------- -------- --------- --------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $540,828 $ 58,231 $ 22,795 $(79,810) $ 542,044
======== ======== ======== ========= ========
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
(Continued)
8. Subsidiary Guarantees - (Continued)
Condensed Consolidating Statement of Operations
For the Six Months Ended June 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 $ 60,206 $ 60,206
Tower revenues 400 $ 820 1,220
License fees charged to Parent (1,030) 1,030 --
-------- -------- -------- --------- --------
Total net revenues 59,576 1,030 820 61,426
Operating expenses excluding
depreciation and amortization and
corporate general and administrative
expenses 44,999 4 693 45,696
Depreciation and amortization 3,490 1,026 323 4,839
Corporate general and administrative 2,340 2,340
-------- -------- -------- --------- --------
Operating income (loss) 8,747 (196) 8,551
Other income (expense):
Interest income 3,638 2 3,640
Interest expense (8,953) (11) (8,964)
Gain (loss) on sale of assets and other (36) (36)
Equity in (loss) of subsidiaries, net of
income taxes recorded at the
subsidiary level (113) 113 --
-------- -------- -------- --------- --------
Income (loss) before income taxes 3,283 (205) 113 3,191
Provision (benefit) for income taxes 1,528 (92) 1,436
-------- -------- -------- --------- --------
Net income (loss) 1,755 (113) 113 1,755
Preferred stock dividends (134) (134)
-------- -------- -------- --------- --------
Net income applicable to common shares
$ 1,621 $ -- $ (113) $ 113 $ 1,621
======== ======== ========= ========= ========
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
(Continued)
8. Subsidiary Guarantees - (Continued)
Condensed Consolidating Statement of Operations
For the Three Months Ended June 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 $ 37,037 $ 546 $ 37,583
Tower revenues 194 194
License fees charged to Parent (527) 527 --
-------- -------- -------- --------- --------
Total net revenues 36,704 $ 527 546 37,777
Operating expenses excluding
depreciation and amortization and
corporate general and administrative
expenses 26,681 2 439 27,122
Depreciation and amortization 1,902 525 212 2,639
Corporate general and administrative 1,259 1,259
-------- -------- -------- --------- --------
Operating income (loss) 6,862 (105) 6,757
Other income (expense):
Interest income 1,523 1,523
Interest expense (4,252) (9) (4,261)
Gain (loss) on sale of assets and other (1) (1)
Equity in (loss) of subsidiaries, net of
income taxes recorded at the
subsidiary level (63) $ 63 --
-------- -------- -------- --------- --------
Income (loss) before income taxes 4,069 (114) 63 4,018
Provision (benefit) for income taxes 1,858 (51) 1,807
-------- -------- -------- --------- --------
Net income (loss) 2,211 $ (63) 63 2,211
-------- -------- -------- --------- --------
Preferred stock dividends (134) (134)
-------- -------- -------- --------- --------
Net income applicable to common shares $ 2,077 -- -- -- $ 2,077
======== ======== ======== ========= ========
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
(Continued)
8. Subsidiary Guarantees - (Continued)
Condensed Consolidating Statement of Cash Flows
For the Six Months Ended June 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 $ (6,184) $ 661 $ (5,523)
Investing Activities:
Payments for purchase of property and
equipment and intangible assets (4,542) (2,795) (7,337)
Proceeds from radio station sales 18,000 18,000
Payments for radio station acquisitio (67,777) (67,777)
Payments for tower related acquisitions (5,045) (5,045)
Payments for station investment notes
receivable (27,779) (27,779)
Deposits and other long-term assets (23,651) (54) (23,705)
-------- -------- -------- --------- --------
Cash flows used by investing activitie (105,749) (7,894) (113,643)
-------- -------- -------- --------- --------
Financing Activities:
Repayment of Credit Agreements (151,500) (151,500)
Net proceeds from note offering - net of
discount 168,321 168,321
Net proceeds from equity offerings and
options 248,198 248,198
Repayment of other obligations (561) (7) (568)
Investment in and advances to subsidiaries -- 7,292 (7,292) --
-------- -------- -------- --------- --------
Cash flows from financing activities 264,458 7,285 (7,292) 264,451
-------- -------- -------- --------- --------
Increase in cash and cash equivalents 152,525 52 (7,292) 145,285
Cash and cash equivalents at beginning
of period 3,890 -- 3,890
-------- -------- -------- --------- --------
Cash and cash equivalents at end$of period $156,415 -- $ 52 $ (7,292) $149,175
======== ======== ======== ========= ========
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
(Continued)
8. Subsidiary Guarantees - (Continued)
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)
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>
19
<PAGE>
<TABLE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
(Continued)
8. Subsidiary Guarantees - (Continued)
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 $ 45,923 $ 3,821 $ (48,796) $ 248,796
========= ========= ======== ========= ==========
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
(Continued)
8. Subsidiary Guarantees - (Continued)
Condensed Consolidating Statement of Operations
For the Six Months Ended June 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 $ 44,513 $ 44,513
License fees $ 746 (746)
--------- --------- -------- --------- ----------
Total net revenues 746 43,767 44,513
Operating expenses excluding depreciation and
amortization and corporate general and
administrative expenses 3 32,615 32,618
Depreciation and amortization 743 5,299 6,042
Corporate general and administrative 1,484 1,484
--------- --------- -------- --------- ----------
Operating income 4,369 4,369
Other income (expense):
Interest income 257 257
Interest expense $ (56) (5,829) (5,885)
Gain on sale of assets and other 11,559 11,559
Equity in (loss) of subsidiaries, net of
income taxes recorded at the
subsidiary level 5,938 -- $ (5,938) --
--------- --------- -------- --------- ----------
Income before income taxes 5,882 10,356 (5,938) 10,300
Provision for income taxes 4,418 4,418
--------- --------- -------- --------- ----------
Net income 5,882 5,938 (5,938) 5,882
--------- --------- -------- --------- ----------
Redeemable common and preferred
stock dividends (815) (815)
--------- --------- -------- --------- ----------
Net income applicable to common share $ 5,067 $ 0 $ 5,938 $ (5,938) $ 5,067
========= ========= ======== ========= ==========
<FN>
(a) Includes American Radio Systems, Inc. (ARSI), a wholly owned subsidiary of the Company until December 1995.
Excludes American Tower Systems, Inc. which commenced operations in July 1995.
</FN>
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
(Continued)
8. Subsidiary Guarantees - (Continued)
Condensed Consolidating Statement of Operations
For the Three Months Ended June 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 $ 24,672 $ 24,672
License fees $ 386 (386) --
--------- --------- -------- --------- ----------
Total net revenues 386 24,286 24,672
Operating expenses excluding depreciation and
amortization and corporate general and
administrative expenses 3 16,993 16,996
Depreciation and amortization 383 2,897 3,280
Corporate general and administrative 698 698
--------- --------- -------- --------- ----------
Operating income 3,698 3,698
Other income (expense):
Interest income 168 168
Interest expense $ (31) (2,672) (2,703)
Gain (loss) on sale of assets and other (36) (36)
Equity in (loss) of subsidiaries, net of
income taxes recorded at the
subsidiary level 5,963 $ (5,963)
--------- --------- -------- --------- ----------
Income before income taxes 5,932 1,158 (5,963) 1,127
Provision for income taxes 451
--------- --------- -------- --------- ----------
Net income 5,932 707 (5,963) 676
Redeemable common and preferred stock
dividends (297) (297)
--------- --------- -------- --------- ----------
Net income applicable to common shares $ 5,635 $ 0 $ 707 $ (5,963) $ 379
========= ========= ======== ========= ==========
<FN>
(a) Includes American Radio Systems, Inc. (ARSI), a wholly owned subsidiary of the Company
until December 1995. Excludes American Tower Systems, Inc. which commenced operations in
July 1995.
</FN>
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
(Continued)
8. Subsidiary Guarantees - (Continued)
Condensed Consolidating Statement of Cash Flows
For the Six Months Ended June 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 $ 1,527
--------- --------- -------- --------- ----------
Investing Activities:
Capital expenditures (3,017)
Proceeds from asset and station sales 15,283
Payments for purchase of radio stations (12,000)
Payment of stations investment note receivable
3,000
Purchase of note receivable (9,750)
Deposits and other long-term assets (19,175)
--------- --------- -------- --------- ----------
Cash flows used by investing activities (25,659)
--------- --------- -------- --------- ----------
Financing Activities:
Borrowings under credit agreements 24,500
Repayment of credit agreements (54,000)
Net proceeds from offerings and options 71,372
Redemption of senior common stock (14,850)
Repayment of other obligations (1,121)
--------- --------- -------- --------- ----------
Cash flows from financing activities 25,901
Increase in cash and cash equivalents 1,769
Cash and cash equivalents at beginning
of period 3,168
--------- --------- -------- --------- ----------
Cash and cash equivalents at end of period -- -- $ 4,937 -- --
========= ========= ======== ========= ==========
<FN>
(a) Includes American Radio Systems, Inc. (ARSI), a wholly owned subsidiary of the Company
until December 1995. Excludes American Tower Systems, Inc. (ATS) which commenced
operations in July 1995.
</FN>
</TABLE>
23
<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. American wishes to caution readers that certain important
factors may have affected and could in the future affect American's actual
results and could cause American's actual results for subsequent periods to
differ materially from those expressed in any forward-looking statement made by
or on behalf of American. These important factors include those set forth in
American's Annual Report on Form 10-K for year ended December 31, 1995 under the
caption "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and are incorporated by reference herein.
As of June 30, 1996, the Company owned and/or operated thirty-two FM and
eighteen AM stations. As of June 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 six months ended June
30, 1996 as compared to the three and six months ended June 30, 1995.
Six months ended June 30, 1996 and 1995
Net revenues were $61.4 million for the six months ended June 30, 1996 compared
to $44.5 million for the same six months in 1995, an increase of $16.9 million
or 38.0%. This increase was attributable to both acquisitions and revenue growth
at substantially all of the Company's radio stations.
Station operating expenses excluding depreciation and amortization and corporate
general and administrative expenses were $45.7 million for the six months ended
June 30, 1996 and $32.6 million for the comparable period in 1995, an increase
of $13.1million or 40.2%. This increase was due to station acquisitions as well
as increased sales commissions resulting from the Company's revenue growth.
Depreciation and amortization was $4.8 million and $6.0 million for the six
months ended June 30, 1996 and June 30, 1995 respectively, a decrease of $1.2
million or 20.0%. This decrease was primarily attributable to 1994 station
acquisition intangible assets with short-term lives becoming fully amortized
during 1995.
Corporate general and administrative expenses increased to $2.3 million for the
six months ended June 30, 1996 from $1.5 million for the six months ended June
30, 1995, an increase of $0.8 million or 53.3%. This increase was primarily
attributable to the higher costs associated with supporting the Company's
growth.
Interest income was $3.6 million for the six months ended June 30, 1996 compared
to $0.3 million for the six months ended June 30, 1995, an increase of $3.3
million. The increase is attributable to interest income earned on certain
station investment notes and cash equivalents in 1996.
24
<PAGE>
Results of Operations (continued)
Interest expense was $9.0 million for the six months ended June 30, 1996
compared to $5.9 million for the 1995 period, an increase of $3.1 million or
52.5%. The increase is related to increased borrowing costs related to the
Senior Subordinated Notes offset by a reduction in borrowings under the 1995
credit agreement in February 1996.
The losses or gains on the sales of assets in 1996 was not material. Gain on
sale of assets for 1995 represents two gains on the sale of radio broadcasting
properties in Binghamton ($3.9 million) and Des Moines ($7.7 million).
The provision for income taxes for the six months ended June 30, 1996 was $1.4
million compared to $4.4 million for six months ended June 30, 1995. The
effective tax rate for the six months ended June 30, 1996 was approximately
45.0% compared to 42.7% in 1995. The higher effective rate in 1996 is due to the
non-deductibility of amortization on certain intangible assets as a percentage
of the income before taxes compared to 1995.
Redeemable common and preferred stock dividends for the six months ended June
30, 1996 were $0.1 million as compared to $0.8 million for the six months ended
June 30, 1995. The 1996 dividends are attributable to the 7% 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 initial public offering.
Net income applicable to common stockholders was $1.6 million for the six months
ended June 30, 1996 compared to $5.1 million for the six months ended June 30,
1995, a decrease of $3.5 million as a result of the factors discussed above.
Three months ended June 30, 1996 and 1995
Net revenues were $37.8 million for the three months ended June 30, 1996
compared to $24.7 million for the same three months in 1995, an increase of
$13.1 million or 53.0%. This increase was attributable to both acquisitions and
revenue growth at substantially all of the Company's radio stations.
Station operating expenses excluding depreciation and amortization and corporate
general and administrative expenses were $27.1 million for the three months
ended June 30, 1996 and $17.0 million for the comparable period in 1995, an
increase of $10.1 million or 59.4%. This increase was due to station
acquisitions as well as increased sales commissions resulting from the Company's
revenue growth.
Depreciation and amortization was $2.6 million and $3.3 million for the three
months ended June 30, 1996 and June 30, 1995 respectively, a decrease of $0.7
million or 21.2%. This decrease was primarily attributable to 1994 station
acquisition intangible assets with short-term lives becoming fully amortized
during 1995.
Corporate general and administrative expenses increased to $1.3 million for the
three months ended June 30, 1996 from $0.7 million for the three months ended
June 30, 1995 an increase of $0.6 million or 85.7%. This increase was due to the
higher costs associated with supporting the Company's growth.
Interest income was $1.5 million for the three months ended June 30, 1996
compared to $0.2 for the three months ended June 30, 1995, an increase of $1.3
million or 650.0%. The increase is primarily attributable to interest income
earned on certain station investment notes.
Interest expense was $4.3 million for the three months ended June 30, 1996
compared to $2.7 million for the 1995 period, an increase of $1.6 million or
59.3%. The increase is related to increased borrowing costs related to the
Senior Subordinated Notes.
25
<PAGE>
Results of Operations (continued)
The loss on the sale of assets in 1996 and 1995 was not material.
The provision for income taxes for the three months ended June 30, 1996 was $1.8
million compared to $0.5 million for three months ended June 30, 1995. The
effective tax rate for the three months ended June 30, 1996 was approximately
45.0% compared to 40.0% in 1995.
Redeemable common and preferred stock dividends for the three months ended June
30, 1996 were $0.1 million as compared to $0.3 million for the three months
ended June 30, 1995. The 1996 dividends are attributable to the 7% Convertible
Preferred Stock and the 1995 dividends were attributable to Series C Common
Stock.
Net income applicable to common stockholders was $2.1 million for the three
months ended June 30, 1996 compared to $0.4 million for the three months ended
June 30, 1995, a decrease of $1.7 million as a result of the factors discussed
above.
Liquidity and Capital Resources
The Company's liquidity needs arise from its debt service, working capital,
capital expenditure and acquisition-related requirements. Historically, the
Company has met its operational liquidity needs with internally generated funds
and has financed the acquisition of radio broadcasting properties with a
combination of bank borrowings and proceeds from the sale of the Company's
equity and debt securities. For the six months ended June 30, 1996 cash flows
used for operating activities was $5.5 million, as compared to $1.5 million of
cash provided by operating activities for the six months ended June 30, 1995.
The change is primarily attributable to working capital investments related to
station acquisition and growth.
Cash flows used for investing activities were $113.6 million for the six months
ended June 30, 1996 as compared to $25.7 million for the six months ended June
30, 1995. The 1996 increase was due to greater station acquisition activity in
1996 as compared to 1995.
Cash provided by financing activities was $264.5 million for the six months
ended June 30, 1996 as compared to $25.9 million for the six months ended June
30, 1995. The increase in 1996 was due to the equity and debt offerings
described below offset by repayment of borrowings under the Credit Agreement in
February 1996.
In June 1996, the Company offered and sold pursuant to exemptions under the
Securities Act of 1933, as amended, 2,750,000 Depositary Shares each
representing a one-twentieth of a share of its 7% Convertible Exchangeable
Preferred Stock, $1,000 liquidation preference. Net proceeds to the Company from
the offering were approximately $132.8 million. See Note 4 to the condensed
consolidated financial statements for a description of the Convertible Preferred
Stock.
In February 1996, the Company completed two offerings (the "Equity Offering" and
the "Debt Offering" and collectively, the "Offerings"). 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. The total shares issued consisted of 4,000,000 shares
sold by the Company; 1,013,370 shares 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.
26
<PAGE>
Liquidity and Capital Resources - (continued)
Pursuant to the Debt Offering, the Company sold $175 million of 9% Senior
Subordinated Notes due 2006 (the "Notes") at a discount of $1.4 million yielding
9.125%. Interest on the 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 Notes are subordinate in right of payment to the prior
payment in full of the 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 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.
In December 1995, the Company entered into a new credit agreement (the "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
Credit Agreement are described in the company's Annual Report on Form 10-K for
the year ended December 31, 1995. As of June 30, 1996, there were no borrowings
outstanding under the Credit Agreement.
As of June 30, 1996, the Company had approximately $174.8 million of total
long-term debt (including current portion thereof) outstanding.
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 transaction on
favorable terms.
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 its Credit
Agreement, to finance operations for the forseeable future.
The Company has entered into numerous station and tower acquisition and related
agreements (see Notes 6 and 7 to the 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 acquire all of the
acquisitions as soon as the necessary approvals are obtained. The Company
intends to finance these acquisitions with available cash issuance of equity
securities and borrowings under the 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, American would seek to borrow the
necessary funds under the Credit Agreement.
27
<PAGE>
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.
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 2. - Changes in Securities.
As described in Note 4 of the notes to condensed consolidated financial
statements, in June 1996, the Company issued an aggregate of 137,500 shares of
7% Convertible Exchangeable Preferred Stock, $1,000 liquidation value (the
"Convertible Preferred Stock"). The Convertible Preferred Stock ranks senior to
the Common Stock with respect to dividends rights and rights on liquidation,
winding up and dissolution of the Company. No dividends may be paid on the
Common Stock at any time that dividends in full have not been paid or set aside
for payment on the Convertible Preferred Stock. The Convertible Preferred Stock
also provides that classes of securities senior to it cannot be issued without
its approval. The holders of the Convertible Preferred Stock are also entitled
to elect two directors in the event the equivalent of six full quarterly
dividends are in arrears and have certain class voting rights to the extent
provided by Delaware corporation law.
Item 4. - Submission of Matters to a Vote of Security Holders.
The 1996 Annual Meeting of Stockholders was held on Wednesday, May 22, 1996 to
consider and act upon the following matters. The results of the stockholder
voting were as follows:
1. To elect seven Directors, including two "independent" directors to be
elected by the holders of Class A Common Stock, voting separately as a
class, for the ensuing year or until their successors are elected and
qualified;
For Withheld
---------- ---------
Steven B. Dodge 55,252,009 84,620
Thomas H. Stoner 55,252,009 84,620
Joseph L. Winn 55,252,009 84,620
Arnold L. Chavkin 55,252,009 84,620
James H. Duncan, Jr. * 9,990,259 84,620
Charles D. Peebler, Jr. * 9,990,259 84,620
Donald B. Hebb, Jr. 55,252,009 84,620
* In accordance with the Company's Articles of Incorporation, the holders of
Class A Common Stock, exclusive of all other stockholders, are entitled to
elect two of the Company's independent directors. Messrs. Duncan and
Peebler were nominated as the independent directors and elected by the
holders of the Class A Common Stock.
28
<PAGE>
2. To approve an amendment to the Company's Amended and Restated Stock Option
Plan to increase the aggregate number of shares of Class A and Class B Common
Stock authorized for issuance thereunder from 1,600,000 to 2,000,000;
For Against Abstain
53,456,209 1,774,930 105,490
3. To approve an amendment to the Company's Amended and Restated Stock Option
Plan to limit the aggregate number of shares of Class A and Class B Common Stock
for which options may be granted to 250,000 shares per participant per year;
For Against Abstain
55,189,024 36,955 110,650
4. To ratify the selection by the Board of Directors of Deloitte & Touche LLP
as the Company's independent auditors for 1996;
For Against Abstain
55,320,669 12,760 3,200
Item 5. - Other Information.
Acquisition and Disposition of Assets
On August 1, 1996, American Radio Systems Corporation, a Delaware Corporation,
("the Company") consummated the transactions contemplated by the Asset Purchase
Agreement, dated April 25, 1996, with BayCom San Jose, L.P., a Georgia limited
partnership, and BayCom Oregon, L.P., a Georgia Limited Partnership, pursuant to
which the Company acquired substantially all of the assets of KSJO-FM, in San
Jose California, KUFX-FM, in Gilroy, California, KUPL-FM, in Portland, Oregon,
and KKJZ-FM, in Lake Oswego, Oregon. The acquisition was financed through a $5.0
million escrow deposit, $80.0 million of borrowings under the Company's credit
agreement and $ 18.0 million in restricted cash.
(a) Financial Statements
As of this filing it is impracticable for the Company to provide the financial
statements required by Item 7 (a) of Form 8-K. In accordance with Item 7(a)(4)
of Form 8-K such financial statements shall be filed by amendment no later than
60 days after August 16, 1996.
(b) Pro Forma Financial Information
As of the date of this filing, it is impracticable for the Company to provide
the pro forma financial information required by Item 7(b) of Form 8-K. In
accordance with Item 7(b), of Form 8-K, such financial statements will be filed
by amendment to Form 8-K no later than 60 days after August 16, 1996.
29
<PAGE>
Item 5. Other Information - (continued)
Other Events
On August 5, 1996, the Company entered into an Agreement and Plan of Merger with
EZ Communications, Inc., a Virginia corporation ("EZ"), pursuant to which EZ
will be merged into the Company and the stockholders of EZ will receive $11.75
and 0.9 shares of Class A Common Stock of American for each share of EZ Common
Stock outstanding. As part of the transaction, the Company will also assume or
refinance approximately $203 million of long-term debt. EZ has approximately 9.6
million shares of Common Stock outstanding on a fully diluted basis. Giving
effect to existing asset exchange agreements, EZ owns and operates 22 stations
in seven markets. Consummation of the merger is subject to, among other things,
approval of the stockholders of the Company and EZ and to FCC approval. The
Company will be financing its cash requirements through borrowings under its
credit agreement. For additional information see the Company's press release,
dated August 5, 1996, which is attached as Exhibit 99.1 and incorporated by
reference herein.
On August 9, 1996 the Company entered into an Asset Purchase Agreement with
United Broadcasting Company, a California general partnership, pursuant to which
the Company will acquire substantially all the assets of KBAY-FM and KKSJ-AM in
San Jose, California for approximately $31.2 million in cash. Consumation of the
transaction is subject to, among other things, the approval of FCC. The Company
expects to finance the acquisition with proceeds of borrowings under the credit
agreement.
On August 1, 1996, the Company consummated the transactions contemplated by the
Asset Purchase Agreement dated April 4, 1996 with Evergreen Media Corporation of
Buffalo, a Delaware Corporation, pursuant to which the Company acquired
substantially all of the assets of WSJZ-FM in Buffalo, New York for
approximately $12.5 million. The acquisition was financed through a $.5 million
escrow deposit and available cash.
On July 25, 1996, the Company consummated the Asset Purchase Agreement dated
March 28, 1996 with Common Ground Broadcasting, Inc., an Oregon Corporation,
pursuant to which the Company acquired substantially all of the assets of
KDBX-FM in Portland, Oregon for approximately $14.0 million. The acquisition was
financed through a $.5 million escrow deposit and available cash.
On July 31, 1996, the Company entered into an Exchange Agreement with Chancellor
Radio Broadcasting Company, a Delaware corporation, pursuant to which the
Company will exchange substantially all the assets of KSTE-AM in Rancho Cordova,
California plus $33.0 million in cash to acquire substantially all of the assets
of WEAT-AM/FM in West Palm Beach, Florida and WOLL-FM in Riviera Beach, Florida.
Consummation of the transaction is subject to, among other things, the approval
of the FCC. The Company expects to finance the acquisition with the proceeds of
borrowings under its credit agreement.
On July 31, 1996, the Company entered into an Asset Purchase Agreement with
Zapis Communications Corporation, an Ohio corporation, pursuant to which the
Company will acquire substantially all of the assets of WAAF-FM and WWTM-AM in
Worcester, Massachusetts for approximately $24.8 million in cash. Consummation
of the transaction is subject to, among other things, the approval of the FCC.
The Company expects to finance the acquisition with the proceeds of borrowings
under its credit agreement.
30
<PAGE>
Item 5. Other Information - (continued)
On July 31, 1996, the Company entered into a Note Purchase Agreement (the
"Note") with the Lincoln Group, L.P. a New York limited partnership, ("Lincoln")
pursuant to which the Company loaned Lincoln $28.5 million. The Note is
collateralized by the assets of WVOR-FM, WPXY-FM, WHAM-AM and WHTK-AM ("the
stations") in Rochester, New York, bears interest payable quarterly beginning
September 30, 1996 at the rate of 16% per annum and matures on June 30, 2001.
The Company entered into an Asset Purchase Agreement with Lincoln dated as of
February 23, 1996, as amended as of July 31, 1996, to acquire substantially all
of the assets of the stations and in May 1996 the Company and Lincoln received
requests for additional information about the acquisition from the Antitrust
Division of the U.S. Department of Justice. Consummation of the purchase
transaction is subject to, among other things, the completion of the antitrust
review and the approval of the FCC. Upon receipt of the necessary approvals, the
Company intends to finance the acquisition with the proceeds from the Note and a
$2.0 escrow deposit.
On July 24, 1996 the Company entered into an Asset Purchase Agreement with The
Brown Organization, a California corporation, pursuant to which the Company will
acquire substantially all of the assets of KQPT-FM and KXOA-AM/FM in Sacramento,
California for approximately $49.8 million in cash. Consummation of the
transaction is subject to, among other things, the approval of the FCC. The
Company expects to finance the acquisition with the proceeds of borrowings under
its credit agreement.
On July 23, 1996 the Company entered into an Asset Purchase Agreement with D & V
Equinox XX, a California corporation, pursuant to which the Company will acquire
substantially all of the assets of KOQO-AM in Clovis, California and KOQO-FM in
Fresno, California for approximately $6.0 million in cash. Consummation of the
transaction is subject to, among other things, the approval of the FCC. The
Company expects to finance the acquisition with the proceeds of borrowings under
its credit agreement.
On July 19, 1996 the Company entered into an Asset Purchase Agreement with
Osborn Communications Corporation, a Delaware corporation ("Osborn") and
Breadbasket Broadcasting Corporation, a wholly -owned subsidiary of Osborn,
pursuant to which the Company will acquire substantially all of the assets of
KNAX-FM and KRBT-FM in Fresno, California for approximately $11.25 million in
cash. Consummation of the transaction is subject to, among other things, the
approval of the FCC. The Company expects to finance the acquisition with the
proceeds of borrowings under its credit agreement.
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 Agreement and Plan of Merger, dated as of August 5, 1996
by and between the Company and EZ Communications, Inc....... Filed herewith as Exhibit 2.1
2.2 EZ Communications Inc. Voting Agreement, dated as of
August 5, 1996 by and among certain stockholders of
EZ Communications, Inc. and the Company..................... Filed herewith as Exhibit 2.2
2.3 The Company's Voting Agreement, dated as of August 5, 1996,
by and among certain stockholders of the Company and EZ
Communications, Inc......................................... Filed herewith as Exhibit 2.3
10.56 Amendment to Asset Purchase Agreement, July 31, 1996,
between the Company and The Lincoln Group, L.P.............. Filed herewith as Exhibit 10.56
10.57 Note Purchase Agreement, dated July 31, 1996 between the
Company and The Lincoln Group, L.P.......................... Filed herewith as Exhibit 10.57
10.58 Asset Purchase Agreement, dated July 19, 1996 by and among
the Company, Osborn Communications Corporation and
Breadbasket Broadcasting Corporation, Inc................... Filed herewith as Exhibit 10.58
10.59 Time Brokerage Agreement, dated July 19, 1996 between
the Company and Breadbasket Broadcasting Corporation, Inc... Filed herewith as Exhibit 10.59
10.60 Asset Purchase Agreement, dated July 31, 1996 between
the Company and Zapis Communications Corporation............ Filed herewith as Exhibit 10.60
10.61 Time Brokerage Agreement, dated July 31, 1996 between the
Company and Zapis Communications Corporation................ Filed herewith as Exhibit 10.61
10.62 Exchange Agreement, dated July 31, 1996 between the Company
and Chancellor Radio Broadcasting Company................... Filed herewith as Exhibit 10.62
10.63 Asset Purchase Agreement, dated July 24, 1996 between the
Company and The Brown Organization.......................... Filed herewith as Exhibit 10.63
10.64 Time Brokerage Agreement, dated July 24, 1996 between the
Company and The Brown Organization.......................... Filed herewith as Exhibit 10.64
10.65 Asset Purchase Agreement dated July 23, 1996 between the
Company and D & V Equinox XX................................ Filed herewith as Exhibit 10.65
10.66 Time Brokerage Agreement, dated July 23, 1996 between the
Company and D & V Equinox XX............................... Filed herewith as Exhibit 10.66
10.67 Asset Purchase Agreement, dated June 3, 1996 between the
Company and Mortenson Broadcasting Company.................. Filed herewith as Exhibit 10.67
10.68 Asset Purchase Agreement, dated May 24, 1996 between the
Company and Olympic Broadcasters, Inc....................... Filed herewith as Exhibit 10.68
10.69 Time Brokerage Agreement, dated May 24, 1996 between the
Company and Olympic Broadcasters, Inc....................... Filed herewith as Exhibit 10.69
32
<PAGE>
<CAPTION>
Item 6. - Exhibits and Reports on Form 8-K - (continued)
INDEX TO EXHIBITS
Exhibit
No. Description of Document
------- -----------------------
<S> <C> <C>
10.70 Local Marketing Agreement, dated July 31, 1996, between the
Company and Chancellor Radio Broadcasting Company for
KSTE-AM, Rancho Cordova, California......................... Filed herewith as Exhibit 10.70
10.71 Local Marketing Agreement, dated July 31, 1996, between the
Company and Chancellor Radio Broadcasting Company for
WEAT-AM/FM, West Palm Beach, Florida and WOLL-FM,
Riviera Beach, Florida...................................... Filed herewith as Exhibit 10.71
10.72 Asset Exchange Agreement, dated May 30, 1996 between the
Company and Secret Communications, L.P...................... Filed herewith as Exhibit 10.72
10.73 Time Brokerage Agreement, dated May 1, 1996 between the
Company and Secret Communications, L.P. for KMJI-AM,
Sacramento, California and KSFM-FM, Woodland, California.... Filed herewith as Exhibit 10.73
10.74 Time Brokerage Agreement, dated June 1, 1996 between
American Radio Systems License Corp. and Secret
Communications, L.P. for WQRS-FM, Detroit, Michigan......... Filed herewith as Exhibit 10.74
10.75 Time Brokerage Agreement, dated June 1, 1996 between
American License Corp. and Secret Communications, L.P. for
WFLN-FM, Philadelphia, Pennsylvania......................... Filed herewith as Exhibit 10.75
10.76 Assignment and Assumption Agreement, dated May 1, 1996 by
and among the Company, Crescent Communications, L.P.
and K-G Communications, Inc................................. Filed herewith as Exhibit 10.76
10.77 Asset Purchase Agreement, dated as of February 7, 1996 by
and among K-G Communications, Inc. and Jules Kutner and
Cresent Communications, L.P................................. Filed herewith as Exhibit 10.77
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
99.1 Press release dated August 5, 1996............................ Filed herewith as Exhibit 10.81
</TABLE>
Exhibits 2.1 and 10.56 through 10.77 do not contain schedules and
exhibits noted within the agreements. This additional information is available
upon request from the Company.
33
<PAGE>
b. Reports on Form 8-K
1. Form 8-K (Items 5, 7) on April 23, 1996
2. Form 8-K (Items 5, 7) on May 2, 1996.
3. Form 8-K (Items 5, 7) on May 21, 1996.
4. Form 8-K (Items 2, 5, 7) on June 11, 1996.
5. Form 8-K (Items 2, 5, 7) on July 16, 1996.
34
<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: August 12, 1996 BY: /s/ Joseph L. Winn
Joseph L. Winn
Treasurer & Chief Financial Officer
(Duly Authorized Officer)
Date: August 12, 1996 BY: /s/ Justin D. Benincasa
Justin D. Benincasa
Vice President & Corporate Controller
(Duly Authorized Officer)
35
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
By and Between
AMERICAN RADIO SYSTEMS CORPORATION
and
EZ COMMUNICATIONS, INC.
Dated as of
August 5, 1996
<PAGE>
TABLE OF CONTENTS
ARTICLE 1
DEFINED TERMS...............................................................1
ARTICLE 2
THE MERGER..................................................................2
2.1 The Merger........................................................2
2.2 Closing...........................................................2
2.3 Effective Time....................................................2
2.4 Effect of the Merger..............................................2
2.5 Certificate of Incorporation......................................2
2.6 Bylaws............................................................3
2.7 Directors and Officers............................................3
ARTICLE 3
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES..............................3
3.1 Conversion of Capital Stock.......................................3
3.2 Exchange of Certificates. .......................................5
3.3 Closing of EZ's Transfer Books....................................7
3.4 Dissenting Shares.................................................7
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF EZ........................................8
4.1 Organization and Business; Power and Authority; Effect of
Transaction.....................................................8
4.2 Financial and Other Information. ...............................10
4.3 Changes in Condition.............................................10
4.5 Title to Properties; Leases......................................11
4.6 Compliance with Private Authorizations...........................11
4.7 Compliance with Governmental Authorizations and Applicable Law...12
4.8 Related Transactions.............................................13
4.9 Tax Matters......................................................14
4.10 Employee Retirement Income Security Act of 1974. ...............15
4.11 Inapplicability of Specified Statutes............................17
4.12 Authorized Capital Stock.........................................17
4.13 Employment Arrangements..........................................17
4.14 Material Agreements..............................................18
4.15 Ordinary Course of Business......................................18
<PAGE>
4.16 Broker or Finder.................................................19
4.17 Environmental Matters............................................19
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF AMERICAN.................................20
5.1 Organization and Business; Power and Authority; Effect of
Transaction..................................................20
5.2 Financial and Other Information. ...............................22
5.3 Changes in Condition.............................................23
5.4 Materiality......................................................23
5.5 Title to Properties; Leases......................................23
5.6 Compliance with Private Authorizations...........................23
5.7 Compliance with Governmental Authorizations and Applicable Law...24
5.8 Related Transactions.............................................25
5.10 Employee Retirement Income Security Act of 1974. ...............27
5.11 Inapplicability of Specified Statutes............................29
5.12 Authorized Capital Stock.........................................29
5.13 Employment Arrangements..........................................29
5.14 Material Agreements..............................................30
5.15 Ordinary Course of Business......................................30
5.16 Broker or Finder.................................................30
5.17 Environmental Matters............................................30
5.18 American Financing...............................................31
ARTICLE 6
COVENANTS..................................................................31
6.1 Access to Information; Confidentiality...........................31
6.2 Agreement to Cooperate...........................................32
6.3 Public Announcements.............................................33
6.4 Notification of Certain Matters..................................34
6.5 Stockholder Approval. ..........................................34
6.6 Registration Statement and Proxy Statement. ....................35
6.7 Affiliates of EZ.................................................36
6.8 Nasdaq Listing...................................................36
6.9 Other Offers; No Solicitation....................................36
6.10 Option Plans.....................................................38
6.11 Conduct of Business by American Pending the Merger...............38
6.12 Conduct of Business by EZ Pending the Merger.....................39
6.13 Control of EZ's Operations.......................................41
6.14 Control of American's Operations.................................41
6.15 Directors', Officers' and Employees' Indemnification
and Insurance.................................................41
6.16 Employment Agreements............................................42
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6.17 Irrevocable Proxies..............................................42
6.18 Tax-Free Treatment of Merger.....................................42
ARTICLE 7
CLOSING CONDITIONS.........................................................42
7.1 Conditions to Obligations of Each Party to Effect the Merger.....42
7.2 Conditions to Obligations of American............................43
7.3 Conditions to Obligations of EZ..................................46
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER..........................................48
8.1 Termination......................................................48
8.2 Effect of Termination............................................49
ARTICLE 9
GENERAL PROVISIONS.........................................................50
9.1 Amendment........................................................50
9.2 Waiver...........................................................50
9.3 Fees, Expenses and Other Payments................................50
9.4 Notices..........................................................51
9.5 Specific Performance; Other Rights and Remedies..................52
9.6 Non-Survival of Representations and Warranties...................52
9.7 Severability.....................................................52
9.8 Counterparts.....................................................53
9.9 Section Headings.................................................53
9.10 Governing Law....................................................53
9.11 Further Acts.....................................................53
9.12 Entire Agreement.................................................53
9.13 Assignment.......................................................53
9.14 Parties in Interest..............................................54
9.15 Mutual Drafting..................................................54
APPENDIX A: Definitions
EXHIBITS:
EXHIBIT A: EZ Voting Agreement (Section 6.17)
EXHIBIT B: American Voting Agreement (Section 6.17)
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger, dated as of August 5, 1996, by and
between American Radio Systems Corporation, a Delaware corporation ("American"),
and EZ Communications, Inc., a Virginia corporation ("EZ").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of EZ and American have determined
that the merger (the "Merger") of EZ into American on the terms and conditions
set forth in this Agreement and Plan of Merger (this "Agreement") is consistent
with and in furtherance of the long-term business strategy of each, is
desirable, generally to the welfare and advantage of each, and is fair to, and
in the best interests of, American, EZ and the stockholders of each; and
WHEREAS, this Agreement provides that EZ shall be merged into American,
and American shall be the surviving corporation; and
WHEREAS, American and EZ intend the Merger to qualify as a tax-free
reorganization under the provisions of Section 368 of the Code; and
WHEREAS, the Boards of Directors of EZ and American have approved and
adopted this Agreement and have directed that this Agreement be submitted to the
stockholders of EZ and American, respectively, for their approval;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and other valuable consideration, the receipt and
adequacy whereof are hereby acknowledged, the parties hereto hereby, intending
to be legally bound, represent, warrant, covenant and agree as follows:
ARTICLE 1
DEFINED TERMS
As used herein, unless the context otherwise requires, the terms
defined in Appendix A shall have the respective meanings set forth therein.
Terms defined in the singular shall have a comparable meaning when used in the
plural, and vice versa, and the reference to any gender shall be deemed to
include all genders. Unless otherwise defined or the context otherwise clearly
requires, terms for which meanings are provided in this Agreement shall have
such meanings when used in either Disclosure Schedule and each Collateral
Document executed or required to be executed pursuant hereto or thereto or
otherwise delivered, from time to time, pursuant hereto or thereto.
<PAGE>
ARTICLE 2
THE MERGER
2.1 The Merger. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the Delaware General Corporation Law
(the "DCL") and the Virginia Stock Corporation Act (the "VCA"), at the Effective
Time, EZ shall be merged with and into American. As a result of the Merger, the
separate existence of EZ shall cease and American shall continue as the
surviving corporation of the Merger (sometimes referred to, as such, as the
"Surviving Corporation").
2.2 Closing. Unless this Agreement shall have been terminated pursuant
to Section 8.1 and the Merger shall have been abandoned, and subject to the
satisfaction or, if permissible, waiver of the conditions set forth in Article
7, the closing of the Merger (the "Closing") will take place, on the Closing
Date, at the offices of Sullivan & Worcester LLP, One Post Office Square,
Boston, Massachusetts, on the later of (a) January 8, 1997 and (b) the date that
is the tenth (10th) day after the date on which the last of the conditions set
forth in Article 7 is fulfilled or waived, unless another date, time or place is
agreed to in writing by the parties or provided for herein. The date on which
the Closing occurs is herein referred to as the "Closing Date."
2.3 Effective Time. Subject to the provisions of this Agreement, as
promptly as practicable after the satisfaction or, if permissible, waiver of the
conditions set forth in Article 7, the parties hereto shall cause the Merger to
be consummated by filing a Certificate of Merger and any related filings
required under the DCL with the Secretary of State of the State of Delaware and
Articles of Merger and any related filings required under the VCA with the State
Corporation Commission of the Commonwealth of Virginia. The Merger shall become
effective at such time (but not prior to the Closing Date) as such documents are
duly filed with the Secretary of State of the State of Delaware and the State
Corporation Commission of the Commonwealth of Virginia shall have issued a
Certificate of Merger, or at such later time as is specified in such documents
(the "Effective Time").
2.4 Effect of the Merger. From and after the Effective Time, the
Surviving Corpora tion shall possess all the rights, privileges, powers and
franchises and be subject to all of the restrictions, disabilities and duties of
American and EZ, and the Merger shall otherwise have the effects provided for
under the DCL and the VCA.
2.5 Certificate of Incorporation. The Restated Certificate of
Incorporation of American in effect at the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation unless amended in
accordance with Applicable Law, except that the first paragraph of Article
Fourth of such Restated Certificate of Incorporation shall be amended and
restated to read in its entirety as follows:
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"The aggregate number of shares of all classes of stock which
the Corporation is authorized to issue is 131,000,000 shares of which
10,000,000 shall be shares of Preferred Stock, $.01 par value per share
(the "Preferred Stock"), and 121,000,000 shall be shares of Common
Stock, $.01 par value per share (the "Common Stock"), of which
100,000,000 shall be shares of Class A Common Stock, $.01 par value per
share, 15,000,000 shall be shares of Class B Common Stock, $.01 par
value per share (the "Class B Common Stock"), and 6,000,000 shall be
shares of Class C Common Stock, $.01 par value per share (the "Class C
Common Stock")."
The name of the Surviving Corporation shall be "American Radio Systems
Corporation."
2.6 Bylaws. The bylaws of American in effect at the Effective Time
shall be the bylaws of the Surviving Corporation unless amended in accordance
with Applicable Law.
2.7 Directors and Officers. From and after the Effective Time, until
successors are duly elected or appointed and qualified (or upon their earlier
resignation or removal) in accordance with Applicable Law (a) the directors of
American at the Effective Time shall be the directors of the Surviving
Corporation, together with such persons, if any, as shall have been nominated
pursuant to the provisions of the Stockholder Agreement, and (b) the officers of
American at the Effective Time shall be the officers of the Surviving
Corporation, together with the persons referred to in Section 7.3(k) of the EZ
Disclosure Schedule, who shall be elected to the respective positions set forth
therein.
ARTICLE 3
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES
3.1 Conversion of Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of American or EZ or their
respective stockholders:
(a) Each share of 7% Convertible Exchangeable Preferred Stock,
par value $.01 per share, of American issued and outstanding
immediately prior to the Effective Time shall remain outstanding;
(b) Each share of Common Stock, par value $.01 per share, of
American (the "American Common Stock") issued and outstanding
immediately prior to the Effective Time shall remain outstanding;
(c) Each share of Class A Common Stock, par value $.01 per
share, and each share of Class B Common Stock, par value $.01 per
share, of EZ (collectively, the "EZ Common Stock") issued and
outstanding immediately prior to the Effective Time (other than
Dissenting Shares) shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right
to receive $11.75 (the "Cash Consideration") and nine-tenths (0.9) of a
share (the "Exchange Ratio") of Class A Common Stock, par value $.01
per share, of American (the "American Class A Common Stock") (the
"Common Stock Consideration" and collectively with the Cash
Consideration, the "Merger Consideration");
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(d) Each share of EZ Common Stock owned by American or any of
its Subsidiaries immediately prior to the Effective Time shall
automatically be canceled and extinguished without any conversion
thereof and no payment shall be made with respect thereto;
(e) Subject to and as more fully provided in Section 6.10,
each unexpired option to purchase EZ Common Stock ("EZ Options") that
is outstanding at the Effective Time shall automatically be converted
into an option (the "Exchanged Options") to purchase a number of shares
of American Class A Common Stock equal to the product of the number of
shares of EZ Common Stock which the holder is entitled to purchase
under such EZ Options multiplied by the Exchange Ratio; and
(f) Each option to purchase shares of American Common Stock
issued and outstanding immediately prior to the Effective Time shall
remain outstanding.
If, prior to Closing, American
(i) pays a dividend or makes a distribution on any class of
American Class A Common Stock in shares of any class of American Common
Stock;
(ii) subdivides its outstanding shares of American Class A
Common Stock into a greater number of shares;
(iii) combines its outstanding shares of American Class A
Common Stock into a smaller number of shares;
(iv) pays a dividend or makes a distribution on American Class
A Common Stock in shares of its capital stock other than American
Common Stock; or
(v) issues by reclassification of any American Class A Common
Stock any shares of its capital stock;
then the Common Stock Consideration in effect immediately prior to such action
shall be proportionately adjusted so that the holder of any shares of EZ Common
Stock or any EZ Options thereafter shall receive the aggregate number and kind
of shares of American capital stock which it would have owned immediately
following such action if such shares of EZ Common Stock or such EZ Option had
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<PAGE>
been converted to American Class A Common Stock or Exchanged Options, as the
case may be, immediately prior to such action. The adjustment provided for in
this Section shall become effective immediately after the record date in the
case of a dividend or distribution and immediately after the effective date in
the case of a subdivision, combination or reclassification.
3.2 Exchange of Certificates.
(a) Pursuant to an agreement reasonably satisfactory to American and EZ
(the "Exchange Agent Agreement") to be entered into at or prior to the Closing
Date between American, EZ and the transfer agent for the American Class A Common
Stock (the "Exchange Agent"), at or immediately following the Effective Time,
American shall deposit or cause to be deposited in trust for the benefit of the
EZ stockholders an amount of cash equal to the aggregate Cash Consideration and
shares of American Class A Common Stock representing the aggregate Common Stock
Consideration to which holders of EZ Common Stock shall be entitled at the
Effective Time pursuant to the provisions of this Section. The Exchange Agent
shall invest the cash deposited with it in such manner as American directs;
provided, however, that substantially all of such investments shall be in
obligations of or guaranteed by the United States of America, in commercial
paper obligations receiving the highest rating from either Moody's Investors
Service, Inc. or Standard & Poor's Ratings Group, or in certificates of deposit,
bank repurchase agreements or bankers' acceptances of commercial banks with
capital exceeding One Billion Dollars ($1,000,000,000) (collectively, "Permitted
Investments") or in money market funds which are invested solely in Permitted
Investments; provided further, however, that the maturities of Permitted
Investments shall be such as to permit the Exchange Agent to make prompt payment
of the Cash Consideration at and after the Effective Time. Any net profit from,
or interest or income produced by, Permitted Investments shall be payable to the
Surviving Corporation as and when requested by the Surviving Corporation. The
Surviving Corporation shall be required to replace any Cash Consideration lost
as a result of any Permitted Investment.
(b) Not less than five (5) business days subsequent to the Effective
Time, the Exchange Agent shall mail to each holder of record of a certificate or
certificates that immediately prior to the Effective Time represented
outstanding shares of EZ Common Stock (the "Certificates") (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon actual delivery of the
Certificates to the Exchange Agent) and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for cash and certificates
representing shares of American Class A Common Stock. Upon surrender of
Certificates for cancellation to the Exchange Agent, together with a duly
executed letter of transmittal and such other documents as the Exchange Agent
shall reasonably require, the holder of such Certificates shall be entitled to
receive in exchange therefor cash and a certificate representing that number of
whole shares of American Class A Common Stock into which the shares of EZ Common
Stock, theretofore represented by the Certificates so surrendered, shall have
been converted pursuant to the provisions of Section 3.1(c), and the
Certificates so surrendered shall be canceled. Notwithstanding the foregoing,
neither the Exchange Agent nor either party hereto shall be liable to a holder
of shares of EZ Common Stock for any shares of American Class A Common Stock or
dividends or distributions thereon delivered to a public official pursuant to
applicable abandoned property, escheat or similar Laws.
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(c) Promptly following the date which is six (6) months after the
Closing Date, the Exchange Agent shall deliver to American all cash,
certificates (including any American Class A Common Stock) and other documents
in its possession relating to the transactions described in this Agreement, and
the Exchange Agent's duties shall terminate. Thereafter, each holder of a
Certificate may surrender such Certificate to the Surviving Corporation and
(subject to applicable abandoned property, escheat and similar Laws) receive in
exchange therefor the Merger Consideration to which such holder is entitled,
without any interest thereon. Notwithstanding the foregoing, neither the
Exchange Agent nor either party hereto shall be liable to a holder of EZ Common
Stock for any American Class A Common Stock delivered to a public official
pursuant to applicable abandoned property, escheat or similar Laws.
(d) Notwithstanding any other provision of this Agreement, no
certificates or scrip for fractional shares of American Class A Common Stock
shall be issued in the Merger or pursuant to the exercise of any Exchanged
Options and no American Class A Common Stock dividend, stock split or interest
shall relate to any fractional interest, and such fractional interests shall not
entitle the owner thereof to vote or to any other rights of a security holder.
In lieu of any such fractional shares, each holder of EZ Common Stock who would
otherwise have been entitled to receive a fraction of a share of American Class
A Common Stock upon surrender of Certificates for exchange pursuant to this
Article, or upon the exercise of any Exchanged Option shall be entitled to
receive from the Exchange Agent a cash payment equal to such fraction multiplied
by the closing price per share of American Class A Common Stock on the Nasdaq
National Market ("Nasdaq"), as reported by the Wall Street Journal, on the last
trading day immediately preceding the Effective Time with respect to shares
issued in the Merger and on the last trading day immediately preceding the date
of exercise of any Exchanged Option.
(e) If the Merger Consideration (or any portion thereof) is to be paid
to a Person other than the Person in whose name the Certificate surrendered in
exchange therefor is registered, it shall be a condition to the payment of the
Merger Consideration that the Certificate so surrendered shall be properly
endorsed or accompanied by appropriate stock powers (with signatures guaranteed
in accordance with the transmittal form) and otherwise in proper form for
transfer, that such transfer otherwise be proper and that the Person requesting
such transfer pay to the Exchange Agent any transfer or other Taxes payable by
reason of the foregoing or establish to the satisfaction of the Exchange Agent
that such Taxes have been paid or are not required to be paid.
(f) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and subject to such other
reasonable conditions as the Board of Directors of the Surviving Corporation may
impose, the Surviving Corporation shall issue in exchange for such lost, stolen
or destroyed Certificate the Merger Consideration deliverable in respect thereof
as determined in accordance with this Article. When authorizing such issue of
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the Merger Consideration in exchange therefor, the Board of Directors of the
Surviving Corporation may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
Certificate to give the Surviving Corporation a bond or other surety in such sum
as it may reasonably direct as indemnity against any Claim that may be made
against the Surviving Corporation with respect to the Certificate alleged to
have been lost, stolen or destroyed.
(g) Except as set forth in Section 3.1, no interest or dividends shall
be paid or accrue on any portion of the Merger Consideration.
(h) At and after the Effective Time, the holder of a Certificate or of
Dissenting Shares shall cease to have any rights as a EZ stockholder, except
for, in the case of a holder of a Certificate or a holder of Dissenting Shares
to whom the proviso in Section 3.4(a) applies, the right to surrender
Certificates in the manner prescribed by Section 3.2(b) or (c) in exchange for
payment of the Merger Consideration, or, in the case of a holder of Dissenting
Shares, the right to perfect the right to receive payment for Dissenting Shares
pursuant to Section 13.1-733 of the VCA.
3.3 Closing of EZ's Transfer Books. At and after the Effective Time,
holders of Certificates shall cease to have any rights as stockholders of EZ,
except for, in addition to the rights specified in Section 3.2(h), the right to
receive cash and shares of American Class A Common Stock pursuant to Section 3.2
and the right to receive cash for payment of fractional shares pursuant to
Section 3.2(d). At the Effective Time, the stock transfer books of EZ shall be
closed and no transfer of shares of EZ Common Stock which were outstanding
immediately prior to the Effective Time shall thereafter be made. If, after the
Effective Time, subject to the terms and conditions of this Agreement,
Certificates formerly representing EZ Common Stock are presented to the
Surviving Corporation, they shall be canceled and exchanged for cash and
American Class A Common Stock in accordance with this Article.
3.4 Dissenting Shares.
(a) Notwithstanding any other provision of this Agreement to the
contrary, shares of EZ Common Stock that are outstanding immediately prior to
the Effective Time and which are held by EZ stockholders who shall have not
voted in favor of the Merger or consented thereto in writing and who shall be
entitled to and shall have demanded properly in writing appraisal rights for
such shares of EZ Common Stock in accordance with Section 13.1-733 of the VCA
and who shall not have withdrawn such demand or otherwise have forfeited
appraisal rights (collectively, the "Dissenting Shares"), shall not be converted
into or represent the right to receive the Merger Consideration payable in
respect of each share of EZ Common Stock represented thereby. Such EZ
stockholders shall be entitled to receive payment of the appraised value of such
shares of EZ Common Stock held by them in accordance with the provisions of the
VCA; provided, however, that all Dissenting Shares held by EZ stockholders who
shall have failed to perfect or who effectively shall have withdrawn, forfeited
or lost their appraisal rights with respect to such shares of EZ Common Stock
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under the VCA shall thereupon be deemed to have been converted into and to have
become exchangeable for, as of the Effective Time, the right to receive, without
any interest thereon, the appropriate Merger Consideration upon surrender, in
the manner provided in Section 3.2, of the Certificate or Certificates that
formerly evidenced such shares of EZ Common Stock.
(b) EZ shall give American prompt notice of any demands for appraisal
rights re ceived by it, withdrawals of such demands, and any other instruments
served pursuant to the VCA and received by EZ and relating thereto. EZ and
American shall jointly direct all negoti ations and proceedings with respect to
demands for appraisal rights under the provisions of the VCA. EZ shall not,
except with the prior written consent of American, make any payment with respect
to any demands for appraisal rights, or offer to settle, or settle, any such
demands.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF EZ
Except as set forth in the EZ Disclosure Schedule, EZ hereby
represents, warrants and covenants to, and agrees with, American as follows:
4.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) EZ is a corporation duly incorporated, validly existing and in good
standing under the laws of the Commonwealth of Virginia, has all requisite power
and authority (corporate and other) to own or hold under lease its properties
and to conduct its business as now conducted and as presently proposed to be
conducted, and has in full force and effect all Governmental Authorizations
pertaining to EZ or any of the EZ Stations and Private Authorizations and has
made all Governmental Filings, to the extent required for such ownership and
lease of its property and conduct of its business as currently conducted; EZ is
not required to be qualified or authorized to do business in any jurisdiction
because of the character of the property owned or leased by it or the nature of
its business or operations.
(b) EZ has all requisite power and authority (corporate and other) and
has in full force and effect all Governmental Authorizations pertaining to EZ or
any of the EZ Stations and Private Authorizations, except for (i) those
contemplated by this Agreement that must be obtained prior to the Closing Date,
including without limitation the consents of its lenders under its bank credit
agreement and other debt instruments, and (ii) such, the failure of which to
obtain, would not, individually or in the aggregate, (A) have a Material Adverse
Effect on EZ, or (B) prohibit it from executing and delivering, and performing
its obligations under, this Agreement and each Collateral Document executed or
required to be executed by EZ pursuant hereto or thereto or consummating the
Merger; and the execution, delivery and performance of this Agreement and each
Collateral Document executed or required to be executed pursuant hereto or
thereto have been duly authorized by all requisite corporate or other action on
the part of EZ, other than the approval of the EZ stockholders contemplated by
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this Agreement. This Agreement has been duly executed and delivered by EZ and
constitutes, and each Collateral Document executed or required to be executed
pursuant hereto or thereto or to consummate the Merger when executed and
delivered by EZ, will constitute, legal, valid and binding obligations of EZ,
enforceable in accordance with their respective terms. The provisions of Section
13.1- 728.1 through .9 of the VCA will not apply to this Agreement or the
Merger.
(c) Except for (x) consents as set forth in Section 4.1(c) of the EZ
Disclosure Schedule and (y) such consents, the failure of which to obtain, would
not, individually or in the aggregate, have a Material Adverse Effect on EZ,
neither the execution and delivery by EZ of this Agreement or any Collateral
Document executed or required to be executed by it pursuant hereto or thereto,
nor the consummation by EZ of the Merger, nor compliance with the terms,
conditions and provisions hereof or thereof by EZ:
(i) will conflict with, or result in a breach or violation of,
or constitute a default under, any Organic Document of EZ or any
Applicable Law, or will conflict with, or result in a breach or
violation of, or constitute a default under, or permit the acceleration
of any obligation or liability in, or but for any requirement of the
giving of notice or passage of time or both would constitute such a
conflict with, breach or violation of, or default under, or permit any
such acceleration in, any Contractual Obligation of EZ, except for such
conflicts, breaches, violations or accelerations that would not,
individually or in the aggregate, have a Material Adverse Effect on EZ;
or
(ii) will result in or permit the creation or imposition of
any Lien upon any property now owned or leased by EZ; or
(iii) will require any Governmental Authorization or
Governmental Filing or Private Authorization, except for the FCC
Consents, filings under the Hart-Scott-Rodino Act, and other filing
requirements under Applicable Law in connection with the consummation
of the Merger.
(d) EZ does not have any direct or indirect Subsidiaries other than
those set forth on Section 4.1(d) of the EZ Disclosure Schedule, each of which
is (i) wholly-owned unless noted otherwise in Section 4.1(d) of the EZ
Disclosure Schedule, (ii) a corporation which is duly organized, validly
existing and in good standing under the laws of the respective state of
incorporation set forth opposite its name on Section 4.1(d) of the EZ Disclosure
Schedule, and (iii) duly qualified and in good standing as a foreign corporation
in each other jurisdiction (as shown on Section 4.1(d) of the EZ Disclosure
Schedule) in which the character of the property owned or leased by it or the
nature of its business or operations requires such qualification, with full
power and authority (corporate and other) to carry on the business in which it
is engaged, except for such qualifications the failure of which to obtain,
individually or in the aggregate, would not have a Material Adverse Effect on
EZ. Each Subsidiary has in full force and effect all Governmental Authorizations
pertaining to EZ or any of the EZ Stations and Private Authorizations and has
made all Governmental Filings, to the extent required for such ownership and
lease of its property and conduct of its business, except for such Governmental
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Authorizations, Private Authorizations, and Governmental Filings which, if not
obtained or made, as the case may be, would not, individually or in the
aggregate, have a Material Adverse Effect on EZ. EZ owns, directly or
indirectly, all of the outstanding capital stock and equity interests (as shown
in Section 4.1(d) of the EZ Disclosure Schedule) of each Subsidiary, free and
clear of all Liens (except for Permitted Liens or except as set forth in Section
4.1(d) of the EZ Disclosure Schedule), and all such stock has been duly
authorized and validly issued and is fully paid and nonassessable. There are no
outstanding Option Securities or Convertible Securities, or agreements or
understandings of any nature whatsoever, relating to the authorized and unissued
or outstanding capital stock of any Subsidiary of EZ. Except as the context
otherwise requires, the representations and warranties of EZ set forth in this
Article shall apply to each of such Subsidiaries with the same force and effect
as though each of them were named in each Section hereof.
4.2 Financial and Other Information. EZ has heretofore furnished to
American copies of the audited consolidated financial statements of EZ and its
Subsidiaries set forth in its Report on Form 10-K (the "EZ 10-K") for the fiscal
year ended December 31, 1995 and the unaudited consolidated financial statements
of EZ and its Subsidiaries set forth in its Report on Form 10-Q for the fiscal
quarter ended March 31, 1996 (collectively, the "EZ Financial Statements"). The
EZ Financial Statements, including in each case the notes thereto, have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby, except as otherwise noted therein, are true, accurate
and complete, do not contain any untrue statement of a Material fact or omit to
state a Material fact required by GAAP to be stated therein or necessary in
order to make the statements contained therein not misleading, and fairly
present the results of operations of EZ and its Subsidiaries on the bases
therein stated, as of the respective dates thereof, and for the respective
periods covered thereby subject, in the case of unaudited financial statements,
to normal year-end audit adjustments and accruals. EZ has also furnished to
American its Proxy Statement with respect to the Annual Meeting of Shareholders
of EZ held April 23, 1996, the EZ 1995 Annual Report to Stockholders and the
Prospectus, dated November 25, 1995, with respect to its 9.75% Senior
Subordinated Notes due 2005 and Reports on Form 8-K for the period between March
31, 1996 and July 31, 1996 (collectively, with the EZ 10-K, the "EZ SEC
Documents"). EZ has filed all reports and other documents required to be filed
by it with the SEC under the Exchange Act. Neither the EZ Disclosure Schedule,
the EZ Financial Statements, the EZ SEC Documents or this Agreement, nor any
Collateral Document, data, information or statement furnished or to be furnished
by or on behalf of EZ pursuant to this Agreement (including without limitation
the information to be furnished pursuant to the provisions of Section 6.6), nor
any Collateral Document executed or required to be executed by or on behalf of
EZ pursuant hereto or thereto or to consummate the Merger, contains or will
contain any untrue statement of a Material fact or omits or will omit to state a
Material fact required to be stated herein or therein or necessary in order to
make the statements contained herein or therein not misleading, and all such
Collateral Documents, data, information or statements are and will be true,
accurate and complete in all Material respects.
4.3 Changes in Condition. Except as set forth in Section 4.3 of the EZ
Disclosure Schedule, since March 31, 1996, there has been no Material Adverse
Change in EZ. Except as disclosed in the EZ SEC Documents or otherwise disclosed
herein, there is no Event known to EZ which Materially Adversely Affects EZ.
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4.4 Materiality. The representations and warranties set forth in this
Article would in the aggregate be true and correct even without the materiality
exceptions or qualifications contained therein or set forth in the EZ Disclosure
Schedule, except for such exceptions and qualifications, including without
limitation those set forth in the EZ Disclosure Schedule which, in the aggregate
for all such representations and warranties, are not and could not reasonably be
expected to be Materially Adverse to EZ.
4.5 Title to Properties; Leases.
(a) EZ has good indefeasible and marketable title to all real property
and good indefeasible and merchantable title to all other property and assets,
tangible and intangible, owned by it, in each case free and clear of all Liens,
except (i) Permitted Liens and (ii) Liens set forth in the EZ Financial
Statements. Each Material Lease or other occupancy or other agreement under
which EZ holds real property has been duly authorized, executed and delivered by
EZ and, to EZ's knowledge, information and belief, each of the other parties
thereto, and is a legal, valid and binding obligation of EZ, and, to EZ's
knowledge, information and belief, each of the other parties thereto,
enforceable in accordance with its terms. EZ has a valid leasehold interest in
and enjoys peaceful and undisturbed possession under all Material Leases
pursuant to which it holds any such real property. All of such Leases are valid
and subsisting and in full force and effect; neither EZ nor, to EZ's knowledge,
information and belief, any other party thereto, is in default in any Material
respect in the performance, observance or fulfillment of any obligation,
covenant or condition contained in any such Lease.
(b) Section 4.5(b) of the EZ Disclosure Schedule contains a true,
accurate and complete description of all real property (including communication
towers) owned or leased by EZ and all Leases under which real property is leased
by it.
4.6 Compliance with Private Authorizations. EZ has obtained all Private
Authorizations which are necessary for the ownership and operation by EZ of each
of the EZ Stations and the conduct of business thereof as now conducted or as
presently proposed to be conducted or which, if not obtained and maintained,
could, individually or in the aggregate, Materially Adversely Effect EZ. All
such Private Authorizations are in full force and effect and EZ is not in breach
or violation of, or in default in the performance, observance or fulfillment of,
any such Private Authorization, and no Event exists or has occurred, which
constitutes, or but for any requirement of the giving of notice or passage of
time or both would constitute, such a breach, violation or default, under any
such Private Authorization, except for such defaults, breaches or violations as
do not and will not, individually or in the aggregate, have any Material Adverse
Effect on EZ. No such Private Authorization is the subject of any pending or, to
EZ's knowledge, information or belief, threatened attack, revocation or
termination.
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4.7 Compliance with Governmental Authorizations and Applicable Law.
(a) The EZ SEC Documents or Section 4.7 of the EZ Disclosure Schedule
contain a description of:
(i) all Legal Actions pending or, to EZ's knowledge,
information and belief, threatened against EZ with respect to the
business, operation or ownership of any of the EZ Stations (to its
knowledge, information and belief with respect to the EZ Brokered
Stations);
(ii) all Claims and Legal Actions pending or, to EZ's
knowledge, information and belief, threatened against EZ with respect
to the business, operation or ownership of any of the EZ Stations (to
its knowledge, information and belief with respect to the EZ Brokered
Stations) which, individually or in the aggregate, could, under
sanctions available at the FCC, be reasonably likely to result in the
revocation or termination of any of the FCC Licenses or the imposition
of any restriction of such a nature as would Adversely Affect the
ownership or operations of any of the EZ Stations (to its knowledge,
information and belief with respect to the EZ Brokered Stations); in
particular, but without limiting the generality of the foregoing, there
are no applications, complaints or Legal Actions pending or, to EZ's
knowledge, information and belief, threatened before any Authority
involving charges of illegal discrimination by any of the EZ Stations
(to its knowledge, information and belief with respect to the EZ
Brokered Stations) under any federal or state employment Laws; and
(iii) each Governmental Authorization (including without
limitation all FCC Licenses) required under Applicable Laws to own and
operate each of the EZ Stations (to its knowledge, information and
belief with respect to the EZ Brokered Stations), as currently operated
or proposed to be operated on or prior to the Closing Date, all of
which are in full force and effect.
(b) EZ is the authorized legal holder of the FCC Licenses listed in
Section 4.7(b) of the EZ Disclosure Schedule, none of which is subject to any
restriction or condition which would limit in any Material respect the
operations of any of the EZ Stations (except with respect to the EZ Brokered
Stations) as currently conducted or proposed to be conducted on or prior to the
Closing Date. The FCC Licenses listed in Section 4.7(b) of the EZ Disclosure
Schedule are valid and in good standing, are in full force and effect and are
not impaired in any Material respect by any act or omission of EZ or its
officers, directors, employees or agents, and the operation of each of the EZ
Stations (except with respect to the EZ Brokered Stations) is in accordance in
all Material respects with such FCC Licenses. All Material reports, forms and
statements required to be filed by EZ with the FCC with respect to each of the
EZ Stations have been filed and are true, complete and accurate in all Material
respects. EZ has obtained all Governmental Authorizations in addition to the FCC
Licenses listed in Section 4.7(b) of the EZ Disclosure Schedule which are
necessary for the ownership or operations or the conduct of the business of each
of the EZ Stations (except with respect to the EZ Brokered Stations) as now
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conducted or as presently proposed to be conducted and which, if not obtained
and maintained, would, individually or in the aggregate, have any Material
Adverse Effect on EZ. Except as set forth in Section 4.7(b) of the EZ Disclosure
Schedule, no such Governmental Authorization is the subject of any pending or,
to EZ's knowledge, information and belief, threatened challenge or proceeding to
revoke or terminate any such Governmental Authorization, except as set forth in
Section 4.7(b) of the EZ Disclosure Schedule. EZ has no reason to believe that
any such Governmental Authorization would not be renewed in the name of EZ by
the granting Authority in the ordinary course.
Except as otherwise specifically described in Section 4.7(b) of the EZ
Disclosure Schedule, neither EZ nor any officer or director (in connection with
the ownership, operation or the conduct of the business of any of the EZ
Stations, to its knowledge, information and belief with respect to the EZ
Brokered Stations) is in or is charged by any Authority with or, to EZ's
knowledge, information and belief, at any time since January 1, 1993 has been in
or has been charged by any Authority with, or is threatened or under
investigation by any Authority with respect to, any breach or violation of, or
default in the performance, observance or fulfillment of, any Governmental
Authorization listed in Section 4.7(b) of the EZ Disclosure Schedule or any
Applicable Law relating to the ownership, operation and conduct of the business
of any of the EZ Stations (to its knowledge, information and belief with respect
to the EZ Brokered Stations), and no Event exists or has occurred, which
constitutes, or but for any requirement of the giving of notice or passage of
time or both would constitute, such a breach, violation or default, under
(x) any Governmental Authorization pertaining to EZ or any of
the EZ Stations (to its knowledge, information and belief with respect
to the EZ Brokered Stations) or any Applicable Law, except for such
breaches, violations or defaults as do not and will not, individually
or in the aggregate, have any Material Adverse Effect on EZ, or
(y) any Material requirement of any insurance carrier,
applicable to the business or operations of any of the EZ Stations.
(c) With respect to matters, if any, of a nature referred to in Section
4.7 of the EZ Disclosure Schedule, all such information and matters, with the
exception of the noted challenges to the pending WEZB(FM) and WBZZ(FM) renewal
applications, set forth in the EZ Disclosure Schedule, if Adversely determined
against EZ, will not, individually or in the aggregate, Materially Adversely
Affect EZ.
4.8 Related Transactions. Except as set forth in Section 4.8 to the EZ
Disclosure Schedule, EZ is not a party or subject to any Contractual Obligation
or other transactions (including without limitation any providing for the
furnishing of services to or by, providing for the rental of property, real,
personal or mixed, to or from, or providing for the lending or borrowing of
money to or from or otherwise requiring payments to or from, any officer or
director) between EZ and any of its officer or directors or, to the knowledge,
information and belief of EZ, any Affiliate of any thereof (other than
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reasonable compensation for services as officers or directors), now existing or
which, to EZ's knowledge, information and belief, at any time during the past
three (3) years, existed or occurred, including without limitation, any
providing for the furnishing of services to or by, providing for the rental of
property, real, personal or mixed, to or from, or providing for the lending or
borrowing of money to or from or otherwise requiring payments to or from, any
officer or director, or any Affiliate of any thereof. All such Contractual
Obligations and transactions which are to continue after the Effective Time will
be on terms and conditions no less favorable to American, as the Surviving
Corporation, or any of its Subsidiaries than would be customary for similar
Contractual Obligations and transactions between Persons who are not Affiliates
or upon terms and conditions on which similar Contractual Obligations and
transactions with Persons who are not Affiliates could fairly and reasonably be
expected to be entered into, except as otherwise specifically described in
Section 4.8 of the EZ Disclosure Schedule.
4.9 Tax Matters.
(a) EZ has in accordance with all Applicable Laws filed all Tax Returns
which are required to be filed by it, except with respect to failures to file
which in the aggregate would not have a Material and Adverse Effect on EZ, and
has paid, or made adequate provision for the payment of, all Material Taxes
which have or may become due and payable pursuant to said Tax Returns and all
other governmental charges and assessments received to date other than those
Taxes being contested in good faith for which adequate provision has been made
on the most recent balance sheet forming part of the EZ Financial Statements.
The Tax Returns of EZ have been prepared, in all Material respects, in
accordance with all Applicable Laws and generally accepted principles applicable
to taxation consistently applied. All Material Taxes which EZ is required by law
to withhold and collect have been duly withheld and collected, and have been
paid over, in a timely manner, to the proper Taxing Authorities to the extent
due and payable. EZ has not executed any waiver to extend, or otherwise taken or
failed to take any action that would have the effect of extending, the
applicable statute of limitations in respect of any Tax liabilities of EZ for
the fiscal years prior to and including the most recent fiscal year. To the
extent required by GAAP, adequate provision has been made on the most recent
balance sheet forming part of the EZ Financial Statements for all Taxes of any
kind accrued through the date of such balance sheet, including interest and
penalties in respect thereof, whether disputed or not, and whether past, current
or deferred, accrued or unaccrued, fixed, contingent, absolute or other, and
there are no past transactions or matters which could result in additional Taxes
of a Material nature to EZ for which an adequate reserve has not been provided
on such balance sheet. EZ is not a "consenting corporation" within the meaning
of Section 341(f) of the Code. EZ has at all times been taxable as a Subchapter
C corporation under the Code. EZ has never been a member of any consolidated
group (other than with EZ and its Subsidiaries) for Tax purposes.
(b) From the end of its most recent fiscal year to the date hereof EZ
has not made any payment on account of any Taxes except regular payments
required in the ordinary course of business with respect to current operations
or property presently owned.
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(c) EZ is not a party to any tax sharing agreement or arrangement.
(d) EZ is not, and within five (5) years of the date hereof has not
been, a "United States real property holding corporation" as defined in Section
897 of the Code.
4.10 Employee Retirement Income Security Act of 1974.
(a) EZ (which for purposes of this Section shall include any ERISA
Affiliate) currently sponsors, maintains and contributes to the Plans and
Benefit Arrangements set forth in Section 4.10(a) of the EZ Disclosure Schedule.
Except as set forth in Section 4.10(a) of the EZ Disclosure Schedule, as to all
Plans and Benefit Arrangements listed in Section 4.10(a) of the EZ Disclosure
Schedule:
(i) all such Plans and Benefit Arrangements comply and have
been administered in form and in operation with all Applicable Laws in
all Material respects, and EZ has not received any notice from any
Authority questioning or challenging such compliance;
(ii) all such Plans maintained by EZ that are intended to
comply with Sections 401 and 501 of the Code comply in all Material
respects in form and in operation with all applicable requirements of
such sections, and no event has occurred which will or could give rise
to disqualification of any such Plan under such sections or to a tax
under Section 511 of the Code;
(iii) none of the assets of any such Plan are invested in
employer securities or employer real property;
(iv) there have been no "prohibited transactions" (as defined
in Section 406 of ERISA or Section 4975 of the Code) with respect to
any such Plan and EZ has not otherwise engaged in any prohibited
transaction that would result in any Material liability or Tax;
(v) there have been no acts or omissions by EZ which have
given rise to or may give rise to any Material fines, penalties, taxes
or related charges under Sections 502(c), 502(i) or 4071 of ERISA or
Chapter 43 of the Code for which EZ may be liable;
(vi) there are no Claims (other than routine Claims for
benefits or actions seeking qualified domestic relations orders)
pending or, to EZ's knowledge, information and belief, threatened
involving such Plans or the assets of such Plans, and, to EZ's
knowledge, information and belief, no facts exist which could give rise
to any such Claims (other than routine Claims for benefits or actions
seeking qualified domestic relations orders);
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(vii) no such Plan is subject to Title IV of ERISA, or, if
subject, there have been no "reportable events" (as described in
Section 4043 of ERISA), and no steps have been taken to terminate any
such Plan;
(viii) all group health Plans of EZ have been operated in
compliance in all Material respects with the group health plan
continuation coverage requirements of COBRA;
(ix) actuarially adequate accruals for all obligations under
the Plans are reflected in the most recent balance sheet forming part
of the EZ Financial Statements and such obligations include a pro rata
amount of the contributions which would otherwise have been made in
accordance with past practices for the Plan years which include the
Closing Date;
(x) neither EZ nor any of its directors, officers, employees
or any other fiduciary has committed any breach of fiduciary
responsibility imposed by ERISA or any similar Applicable Law that
would subject EZ or any of its respective directors, officers or
employees to Material liability under ERISA or any similar Applicable
Law;
(xi) no such Plan which is subject to Part 3 of Subtitle B of
Title I of ERISA or Section 412 of the Code had an accumulated funding
deficiency (as defined in Section 302 of ERISA and Section 412 of the
Code), whether or not waived, as of the last day of the most recent
fiscal year of such Plan to which Part 3 of Subtitle B of Title I of
ERISA or Section 412 of the Code applied, nor would have had an
accumulated funding deficiency on such date if such year were the first
year of such Plan to which Part 3 of Subtitle B of Title I of ERISA or
Section 412 of the Code applied;
(xii) no Material liability to the PBGC has been or is
expected by EZ to be in curred by EZ with respect to any Plan, and
there has been no event or condition which presents a material risk of
termination of any Plan by the PBGC;
(xiii) EZ is not and, to EZ's knowledge, information and
belief, never has been a party to any Multiemployer Plan or made
contributions to any such Plan; and
(xiv) except as set forth in the EZ Financial Statements
(which entry, if applicable, shall indicate the present value of
accumulated plan liabilities calculated in a manner consistent with FAS
106 and actual annual expense for such benefits for each of the last
two (2) years) and pursuant to the provisions of COBRA, EZ does not
maintain any Plan that provides benefits described in Section 3(1) of
ERISA, except as the provisions of COBRA may apply to any former
employees or retirees of EZ.
(b) The execution, delivery and performance by EZ of this Agreement and
the Collateral Documents executed or required to be executed by EZ pursuant
hereto and thereto will not involve any prohibited transaction within the
meaning of ERISA or Section 4975 of the Code.
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4.11 Inapplicability of Specified Statutes. EZ is not a "holding
company," or a "subsidiary company" or an "affiliate" of a "holding company," as
such terms are defined in the Public Utility Holding Company Act of 1935, as
amended, or an "investment company" or a company "controlled" by or acting on
behalf of an "investment company," as defined in the Investment Company Act of
1940, as amended, or a "carrier" or a Person which is in control of a "carrier,"
as defined in section 11301 of Title 49, U.S.C.
4.12 Authorized Capital Stock. The authorized and outstanding capital
stock, Option Securities and Convertible Securities of EZ, as of March 31, 1996,
are set forth in the EZ SEC Documents. Except as set forth in Section 4.12 of
the EZ Disclosure Schedule, since March 31, 1996, EZ has not issued any shares
of capital stock of any class, any Option Securities or any Convertible
Securities, except for the issue of EZ Common Stock pursuant to the exercise of
Option Securities outstanding on March 31, 1996 or as otherwise described or
contemplated by the EZ SEC Documents. All of such outstanding capital stock has
been duly authorized and validly issued, is fully paid and nonassessable and is
not subject to any preemptive or similar rights. EZ is not a party to or bound
by any agreement, put or commitment pursuant to which it is obligated to
purchase, redeem or otherwise acquire any shares of capital stock or any Option
Security or Convertible Security of EZ, except as described in Section 4.12 of
the EZ Disclosure Schedule. To EZ's knowledge, information and belief, no
Person, and no group of Persons acting in concert, owns as much as five percent
(5%) of the EZ Common Stock, and EZ is not controlled by any other Person,
except as set forth in the EZ SEC Documents.
4.13 Employment Arrangements.
(a) Except as described in the EZ SEC Documents, (i) none of the
employees of EZ is now, or, to EZ's knowledge, information and belief, during
the past five (5) years has been, represented by any labor union or other
employee collective bargaining organization, or are now, or, to EZ's knowledge,
information and belief during the past five (5) years have been, parties to any
labor or other collective bargaining agreement, (ii) there are no pending
grievances, disputes or controversies with any union or any other employee or
collective bargaining organization of such employees, or threats of strikes,
work stoppages or slowdowns or any pending demands for collective bargaining by
any union or other such organization, and (iii) neither EZ nor any of its
employees is now, or, to EZ's knowledge, information and belief, during the past
five (5) years has been, subject to or involved in or, to EZ's knowledge,
information and belief, threatened with, any union elections, petitions therefor
or other organizational or recruiting activities. EZ has performed all
obligations required to be performed under all Employment Arrangements and is
not in breach or violation of or in default or arrears under any of the Material
terms, provisions or conditions thereof.
(b) Except as set forth on Section 4.13(b) of the EZ Disclosure
Schedule, no employee shall accrue or receive additional benefits, service or
accelerated rights to payments of benefits under any Employment Arrangement,
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including the right to receive any parachute payment, as defined in Section 280G
of the Code, or become entitled to severance, termination allowance or similar
payments as a result, directly or indirectly, of the transactions contemplated
by this Agreement.
4.14 Material Agreements. Listed on Section 4.14 of the EZ Disclosure
Schedule are all Material Agreements relating to the ownership, operation or
conduct of the business of any of the EZ Stations presently held or used by EZ
or to which EZ is a party or to which it or any of its property is subject or
bound. All of the Material Agreements are valid, binding and legally enforceable
obligations of EZ and, to EZ's knowledge, information and belief, all other
parties thereto, and EZ is validly and lawfully operating its business in all
Material respects and owning its property under each of the Material Agreements.
EZ has duly complied with all of the Material terms and conditions of each
Material Agreement and has not done or performed, or failed to do or perform
(and there is no pending or, to the knowledge, information and belief of EZ,
threatened Claim that EZ has not so complied, done and performed or failed to do
and perform) any act which would invalidate or provide grounds for the other
party thereto to terminate (with or without notice, passage of time or both)
such Material Agreement or impair the rights or benefits, or increase the costs,
of EZ, under any of the Material Agreements. The time brokerage, local marketing
and other similar agreements to which EZ is a party comply in all Material
respects with the FCA. The joint sales and other similar agreements to which EZ
is a party do not create attributable interests under the FCA.
4.15 Ordinary Course of Business. EZ, from the end of its most recent
fiscal quarter to the date hereof, except as may be described in the EZ SEC
Documents or on Section 4.15 of the EZ Disclosure Schedule:
(a) has operated its business in the normal, usual and
customary manner in the ordinary and regular course of business,
consistent with prior practice;
(b) has not sold or otherwise disposed of or contracted to
sell or otherwise dispose of any of its properties or assets having a
value in excess of $500,000, other than in the ordinary course of
business;
(c) except in each case in the ordinary course of business,
consistent with prior practice:
(i) has not incurred any obligations or liabilities (fixed,
contingent or other) having a value in excess of $500,000;
(ii) has not entered into any commitments having a value in
excess of $500,000;
(iii) has not canceled any debts or Claims having a value in
excess of $500,000; and
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(iv) has not made or committed to make any additions to its
property or any purchases of equipment, except for normal maintenance
and replacements;
(d) has not increased the compensation payable or to become
payable to any of its employees other than in the ordinary course of
business or otherwise altered, modified or changed the terms of their
employment;
(e) has not suffered any Material damage, destruction or loss
(whether or not covered by insurance) or any acquisition or taking of
property by any Authority;
(f) has not waived any rights of Material value without fair
and adequate consideration;
(g) has not experienced any work stoppage;
(h) except in the ordinary course of business, has not entered
into, amended or terminated any Lease, Governmental Authorization
applicable to EZ or any of the EZ Stations, Private Authorization,
Material Agreement, Employment Arrangement or Contractual Obligation,
or any transaction, agreement or arrangement with any Affiliate of EZ;
and
(i) has not entered into any trade or barter arrangements with
respect to any of the EZ Stations (i) which are outside the ordinary
course of business, or (ii) otherwise than in accordance with EZ's
prior policies and practices.
4.16 Broker or Finder. No Person assisted in or brought about the
negotiation of this Agreement or the Merger or the subject matter of either
thereof in the capacity of broker, agent or finder or in any similar capacity on
behalf of EZ, other than CS First Boston Corporation.
4.17 Environmental Matters. Except as set forth in the EZ SEC
Documents, EZ:
(a) to the knowledge, information and belief of EZ, has not
been notified that it is potentially liable under, has not received any
request for information or other correspondence concerning its
potential liability with respect to any site or facility under, and is
not a "potentially responsible party" under, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended, the Resource Conservation and Recovery Act, as amended, or any
similar state Law;
(b) has not entered into or received any consent decree,
compliance order or administrative order issued pursuant to any
Environmental Law;
(c) is not a party in interest or in default under any
judgment, order, writ, injunction or decree of any final order issued
pursuant to any Environmental Law;
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(d) is, to the knowledge, information and belief of EZ, in
substantial compliance in all Material respects with all Environmental
Laws, has, to EZ's knowledge, information and belief, obtained all
Environmental Permits required under Environmental Laws, and is not the
subject of or, to EZ's knowledge, information and belief, threatened
with any Legal Action involving a demand for damages or other potential
liability, including any Lien, with respect to Material violations or
Material breaches of any Environmental Law; and
(e) has no knowledge of any past or present Event related to
any of the property and assets of EZ which Events, individually or in
the aggregate, will interfere with or prevent continued Material
compliance with all Environmental Laws, or which, individually or in
the aggregate, will form the basis of any Material Claim for the
release or threatened release into the environment, of any Hazardous
Material.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF AMERICAN
American represents, warrants and covenants to, and agrees with, EZ as
follows:
5.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) American is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware, has all requisite
power and authority (corporate and other) to own or hold under lease its
properties and to conduct its business as now conducted and as presently
proposed to be conducted, and has in full force and effect all Governmental
Authorizations pertaining to American or any of the American Stations and
Private Authorizations and has made all Governmental Filings, to the extent
required for such ownership and lease of its property and conduct of its
business, as currently conducted; American is duly qualified and authorized to
do business and in good standing as a foreign corporation in each jurisdiction
in which the character of the property owned or leased by it or the nature of
its business or operations require such qualification or authorization.
(b) American has all requisite power and authority (corporate and
other) and has in full force and effect all Governmental Authorizations
pertaining to American or any of the American Stations and Private
Authorizations, except for (i) those contemplated by this Agreement which must
be obtained prior to the Closing Date, including without limitation the consents
of its lenders under its bank credit agreement and other debt instruments, and
(ii) such, the failure of which to obtain would not, individually or in the
aggregate, (A) have a Material Adverse Effect on American, or (B) prohibit it
from executing and delivering, and performing its obligations under, this
Agreement and each Collateral Document executed or required to be executed by
American pursuant hereto or thereto or to consummating the Merger; and the
execution, delivery and performance of this Agreement and each Collateral
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Document executed or required to be executed by American pursuant hereto or
thereto have been duly authorized by all requisite corporate or other action on
the part of American, other than the approval of the American stockholders
contemplated by this Agreement. This Agreement has been duly executed and
delivered by American and constitutes, and each Collateral Document executed or
required to be executed pursuant hereto or thereto or to consummate the Merger
when executed and delivered by American will constitute legal, valid and binding
obligations of American, enforceable in accordance with their respective terms.
The provisions of Section 203 of the DCL will not apply to this Agreement or the
Merger.
(c) Except for (x) consents of lenders under its bank credit agreement
and other debt instruments or as otherwise contemplated by this Agreement, and
(y) such consents, the failure of which to obtain would not, individually or in
the aggregate, have a Material Adverse Effect on American, neither the execution
and delivery by American of this Agreement or any Collateral Document executed
or required to be executed by it pursuant hereto or thereto, nor the
consummation by American of the Merger, nor compliance with the terms,
conditions and provisions hereof or thereof by American:
(i) will conflict with, or result in a breach or violation of,
or constitute a default under, any Organic Document of American or any
Applicable Law applicable to American, or will conflict with, or result
in a breach or violation of, or constitute a default under, or permit
the acceleration of any obligation or liability in, or but for any
requirement of the giving of notice or passage of time or both would
constitute such a conflict with, breach or violation of, or default
under, or permit any such acceleration in, any Contractual Obligation
of American, except for such conflicts, breaches, violations or
accelerations that would not, individually or in the aggregate, have a
Material Adverse Effect on American; or
(ii) will result in or permit the creation or imposition of
any Lien upon any property now owned or leased by American; or
(iii) will require any Governmental Authorization or
Governmental Filing or Private Authorization, except for the FCC
Consents, filings under the Hart-Scott-Rodino Act, and other filing
requirements under Applicable Law in connection with the consummation
of the Merger.
(d) Each of American's direct or indirect Subsidiaries is (i)
wholly-owned, (ii) a corporation which is duly organized, validly existing and
in good standing under the laws of the respective state of incorporation, and
(iii) duly qualified and in good standing as a foreign corporation in each other
jurisdiction in which the character of the property owned or leased by it or the
nature of its business or operations requires such qualification, with full
power and authority (corporate and other) to carry on the business in which it
is engaged, except for (i) a non-Material, non-wholly-owned joint venture
partnership which owns a communications tower, and (ii) such qualifications, the
failure of which to obtain, individually or in the aggregate, would not have a
Material Adverse Effect on American. Each Subsidiary has in full force and
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effect all Governmental Authorizations pertaining to American or any of the
American Stations and Private Authorizations and has made all Governmental
Filings, to the extent required for such ownership and lease of its property and
conduct and operations of its business, except for such Governmental
Authorizations, Private Authorizations, and Governmental Filings which, if not
obtained or made, as the case may be, would not, individually or in the
aggregate, have a Material Adverse Effect on American. Except to the extent set
forth in the American Financial Statements and except for such non-Material,
non-wholly-owned joint venture partnership, American owns, directly or
indirectly, all of the outstanding capital stock or equity interests of each
Subsidiary, free and clear of all Liens (except for Permitted Liens or except as
set forth in the American Financial Statements), and all such stock has been
duly authorized and validly issued and is fully paid and nonassessable. There
are no outstanding Option Securities or Convertible Securities, or agreements or
understandings of any nature whatsoever, relating to the authorized and unissued
or outstanding capital stock of any Subsidiary of American. Except as the
context otherwise requires, the representations and warranties of American set
forth in this Article shall apply to each of such Subsidiaries with the same
force and effect as though each of them were named in each Section hereof.
5.2 Financial and Other Information. American has heretofore furnished
to EZ copies of the audited consolidated financial statements of American and
its Subsidiaries set forth in its Report on Form 10-K (the "American 10-K") for
the fiscal year ended December 31, 1995 and the unaudited consolidated financial
statements of American and its Subsidiaries set forth in its Report on Form 10-Q
for the fiscal quarter ended March 31, 1996 (collectively, the "American
Financial Statements"). The American Financial Statements, including in each
case the notes thereto, have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby, except as otherwise
noted therein, are true, accurate and complete, do not contain any untrue
statement of a Material fact or omit to state a Material fact required by GAAP
to be stated therein or necessary in order to make the statements contained
therein not misleading, and fairly present the results of operations of American
and its Subsidiaries on the bases therein stated, as of the respective dates
thereof, and for the respective periods covered thereby subject, in the case of
unaudited financial statements, to normal year-end audit adjustments and
accruals. American has also furnished to EZ its Proxy Statement with respect to
the Annual Meeting of Stockholders of American held May 22, 1996, the American
1995 Annual Report to Stockholders and the Offering Circular, dated June 19,
1996, with respect to its 7% Convertible Exchangeable Preferred Stock and
Reports on Form 8-K for the period between March 31, 1996 and July 31, 1996,
(collectively, with the American 10-K, the "American SEC Documents"). American
has filed all reports and other documents required to be filed by it with the
SEC under the Exchange Act. Neither the American Financial Statements, the
American SEC Documents or this Agreement, nor any Collateral Document, data,
information or statement furnished or to be furnished by or on behalf of
American pursuant to this Agreement (including without limitation the
information to be furnished pursuant to the provisions of Section 6.6), nor any
Collateral Document executed or required to be executed by or on behalf of
American pursuant hereto or thereto or to consummate the Merger, contains or
will contain any untrue statement of a Material fact or omits or will omit to
state a Material fact required to be stated herein or therein or necessary in
order to make the statements contained herein or therein not misleading, and all
such Collateral Documents, data, information or state ments are and will be
true, accurate and complete in all Material respects.
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5.3 Changes in Condition. Since March 31, 1996, there has been no
Material Adverse Change in American. Except as disclosed in the American SEC
Documents or otherwise disclosed herein, there is no Event known to American
which Materially Adversely Affects American.
5.4 Materiality. The representations and warranties set forth in this
Article would in the aggregate be true and correct even without the materiality
exceptions or qualifications contained therein, except for such exceptions and
qualifications which, in the aggregate for all such representations and
warranties, are not and could not reasonably be expected to be Materially
Adverse to American.
5.5 Title to Properties; Leases. American has good indefeasible and
marketable title to all real property and good indefeasible and merchantable to
all other property and assets, tangible and intangible, owned by it in each case
free and clear of all Liens, except (i) Permitted Liens and (ii) Liens set forth
or described in the American Financial Statements. Each Material Lease or other
occupancy or other agreement under which American holds real property has been
duly authorized, executed and delivered by American and, to American's
knowledge, information and belief, each of the other parties thereto, and is a
legal, valid and binding obligation of American, and, to American's knowledge,
information and belief, each of the other parties thereto, enforceable in
accordance with its terms. American has a valid leasehold interest in and enjoys
peaceful and undisturbed possession under all Material Leases pursuant to which
it holds any such real property. All of such Leases are valid and subsisting and
in full force and effect; neither American nor, to American's knowledge,
information and belief, any other party thereto, is in default in any Material
respect in the performance, observance or fulfillment of any obligation,
covenant or condition contained in any such Lease.
5.6 Compliance with Private Authorizations. American has obtained all
Private Authorizations which are necessary for the ownership and operation by
American of each of the American Stations and the conduct of business thereof as
now conducted or as presently proposed to be conducted or which, if not obtained
and maintained, could, individually or in the aggregate, Materially Adversely
Affect American. All such Private Authorizations are in full force and effect
and American is not in breach or violation of, or in default in the performance,
observance or fulfillment of, any such Private Authorization, and no Event
exists or has occurred, which constitutes, or but for any requirement of the
giving of notice or passage of time or both would constitute, such a breach,
violation or default, under any such Private Authorization, except for such
defaults, breaches or violations as do not and will not, individually or in the
aggregate, have any Material Adverse Effect on American. No such Private
Authorization is the subject of any pending or, to American's knowledge,
information or belief, threatened attack, revocation or termination.
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5.7 Compliance with Governmental Authorizations and Applicable Law.
(a) The American SEC Documents contain a description of:
(i) all Material Legal Actions pending or, to American's
knowledge, information and belief, threatened against American with
respect to the business, operation or ownership of any of the American
Stations (except with respect to the American Brokered Stations, as to
which, to American's knowledge, information and belief, there are no
such Legal Actions); and
(ii) all Claims and Legal Actions pending or, to American's
knowledge, information and belief, threatened against American with
respect to the business, operation or ownership of any of the American
Stations (except with respect to the American Brokered Stations, as to
which, to American's knowledge, information and belief, there are no
such Claims or Legal Actions) which, individually or in the aggregate,
could, under sanctions available at the FCC, be reasonably likely to
result in the revocation or termination of any of the FCC Licenses or
the imposition of any restriction of such a nature as would Adversely
Affect the ownership or operations of the American Stations (to its
knowledge, information and belief with respect to the American Brokered
Stations) taken as a whole; in particular, but without limiting the
generality of the foregoing, there are no applications, complaints or
Legal Actions pending or, to American's knowledge, information and
belief, threatened before any Authority involving charges of illegal
discrimination by any of the American Stations (except with respect to
the American Brokered Stations, as to which, to American's knowledge,
information and belief, there are no such Claims or Legal Actions)
under any federal or state employment Laws.
Each Governmental Authorization (including without limitation all FCC
Licenses) required under Applicable Laws to own and operate each of the American
Stations (to the knowledge, information and belief of American with respect to
the American Brokered Stations) as currently operated or proposed to be operated
on or prior to the Closing Date is in full force and effect.
(b) American is the authorized legal holder of its FCC Licenses, none
of which is subject to any restriction or condition which would limit in any
Material respect the operations of any of the American Stations (except with
respect to the American Brokered Stations) as currently conducted or proposed to
be conducted on or prior to the Closing Date. The FCC Licenses of American are
valid and in good standing, are in full force and effect and are not impaired in
any Material respect by any act or omission of American or its officers,
directors, employees or agents, and the operation of each of the American
Stations (except with respect to the American Brokered Stations) is in
accordance in all Material respects with such FCC Licenses. All Material
reports, forms and statements required to be filed by American with the FCC with
respect to each of the American Stations have been filed and are true, complete
and accurate in all Material respects. American has obtained all Governmental
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Authorizations in addition to the FCC Licenses which are necessary for the
ownership or operations or the conduct of the business of each of the American
Stations (except with respect to the American Brokered Stations) as now
conducted or as presently proposed to be conducted and which, if not obtained
and maintained, would, individually or in the aggregate, have any Material
Adverse Effect on American. No such Governmental Authorization is the subject of
any pending or, to American's knowledge, information and belief, threatened
challenge or proceeding to revoke or terminate any such Governmental
Authorization. American has no reason to believe that any such Governmental
Authorization would not be renewed in the name of American by the granting
Authority in the ordinary course.
Except as otherwise specifically described in the American SEC
Documents, neither American nor any officer or director (in connection with the
ownership, operation or the conduct of the business of any of the American
Stations, to its knowledge, information and belief with respect to the American
Brokered Stations) is in or is charged by any Authority with or, to American's
knowledge, information and belief, at any time since November 1, 1993 has been
in or has been charged by any Authority with, or is threatened or under
investigation by any Authority with respect to, any breach or violation of, or
default in the performance, observance or fulfillment of, any Governmental
Authorization or any Applicable Law relating to the ownership, operation and
conduct of the business of any of the American Stations (to its knowledge,
information and belief with respect to the American Brokered Stations), and no
Event exists or has occurred, which constitutes, or but for any requirement of
the giving of notice or passage of time or both would constitute, such a breach,
violation or default, under
(x) any Governmental Authorization pertaining to American or
any of the American Stations (to its knowledge, information and belief
with respect to the American Brokered Stations) or any Applicable Law,
except for such breaches, violations or defaults as do not and will
not, individually or in the aggregate, have any Material Adverse Effect
on American, or
(y) any Material requirement of any insurance carrier,
applicable to the business or operations of any of the American
Stations;
except as otherwise specifically described in the American SEC Documents.
5.8 Related Transactions. Except as set forth in the American SEC
Documents or the Prospectus dated February 1, 1996 relating to a public offering
of American Class A Common Stock, American is not a party or subject to any
Contractual Obligation or other transactions (including without limitation any
providing for the furnishing of services to or by, providing for the rental of
property, real, personal or mixed, to or from, or providing for the lending or
borrowing of money to or from or otherwise requiring payments to or from, any
officer or director) between American and any of its officers or directors or,
to the knowledge, information and belief of American, any Affiliate of any
thereof (other than reasonable compensation for services as officers or
directors), now existing or which, to American's knowledge, information and
belief, at any time since November 1, 1993, existed or occurred, including
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without limitation any providing for the furnishing of services to or by,
providing for the rental of property, real, personal or mixed, to or from, or
providing for the lending or borrowing of money to or from or otherwise
requiring payments to or from, any officer or director, or any Affiliate of any
thereof. All such Contractual Obligations and transactions which are to continue
after the Effective Time will be on terms and conditions no less favorable to
American than would be customary for similar Contractual Obligations and
transactions between Persons who are not Affiliates or upon terms and conditions
on which similar Contractual Obligations and transactions with Persons who are
not Affiliates could fairly and reasonably be expected to be entered into,
except as otherwise set forth in the American SEC Documents or such Prospectus.
5.9 Tax Matters.
(a) American has in accordance with all Applicable Laws filed all Tax
Returns which are required to be filed by it, except with respect to failures to
file which in the aggregate would not have a Material Adverse Effect on
American, and has paid, or made adequate provision for the payment of, all
Material Taxes which have or may become due and payable pursuant to said Tax
Returns and all other governmental charges and assessments received to date
other than those Taxes being contested in good faith for which adequate
provision has been made on the most recent balance sheet forming part of the
American Financial Statements. The Tax Returns of American have been prepared,
in all Material respects, in accordance with all Applicable Laws and generally
accepted principles applicable to taxation consistently applied. All Material
Taxes which American is required by law to withhold and collect have been duly
withheld and collected, and have been paid over, in a timely manner, to the
proper Taxing Authorities to the extent due and payable. American has not
executed any waiver to extend, or otherwise taken or failed to take any action
that would have the effect of extending, the applicable statute of limitations
in respect of any Tax liabilities of American for the fiscal years prior to and
including the most recent fiscal year. To the extent required by GAAP, adequate
provision has been made on the most recent balance sheet forming part of the
American Financial Statements for all Taxes of any kind accrued through the date
of such balance sheet, including interest and penalties in respect thereof,
whether disputed or not, and whether past, current or deferred, accrued or
unaccrued, fixed, contingent, absolute or other, and there are no past
transactions or matters which could result in additional Taxes of a Material
nature to American for which an adequate reserve has not been provided on such
balance sheet. American is not a "consenting corporation" within the meaning of
Section 341(f) of the Code. American has at all times been taxable as a
Subchapter C corporation under the Code. American has never been a member of any
consolidated group (other than with American and its Subsidiaries) for Tax
purposes.
(b) From the end of its most recent fiscal year to the date hereof,
American has not made any payment on account of any Taxes except regular
payments required in the ordinary course of business with respect to current
operations or property presently owned.
(c) American is not a party to any tax sharing agreement or
arrangement.
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(d) American is not, and since its organization has not been, a "United
States real property holding corporation" as defined in Section 897 of the Code.
5.10 Employee Retirement Income Security Act of 1974.
(a) With respect to all Plans and Benefit Arrangements which American
(which for purposes of this Section shall include any ERISA Affiliate) currently
contributes to, sponsors or maintains:
(i) all such Plans and Benefit Arrangements comply and have
been administered in form and in operation with all Applicable Laws in
all Material respects, and American has not received any notice from
any Authority questioning or challenging such compliance;
(ii) all such Plans maintained by American that are intended
to comply with Sections 401 and 501 of the Code comply in all Material
respects in form and in operation with all applicable requirements of
such sections, and no event has occurred which will or could give rise
to disqualification of any such Plan under such sections or to a Tax
under Section 511 of the Code;
(iii) none of the assets of any such Plan are invested in
employer securities or employer real property;
(iv) there have been no "prohibited transactions" (as defined
in Section 506 of ERISA or Section 5975 of the Code) with respect to
any such Plan and American has not otherwise engaged in any prohibited
transaction that would result in any Material liability or Tax;
(v) there have been no acts or omissions by American which
have given rise to or may give rise to any Material fines, penalties,
taxes or related charges under Sections 502(c), 502(i) or 4071 or ERISA
or Chapter 43 of the Code for which American may be liable;
(vi) there are no Claims (other than routine Claims for
benefits or actions seeking qualified domestic relations orders)
pending or, to American's knowledge, information and belief, threatened
involving such Plans or the assets of such Plans, and, to American's
knowledge, information and belief, no facts exist which could give rise
to any such Claims (other than routine Claims for benefits or actions
seeking qualified domestic relations orders);
(vii) no such Plan is subject to Title IV of ERISA, or, if
subject, there have been no "reportable events" (as described in
Section 5043 of ERISA), and no steps have been taken to terminate any
such Plan;
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(viii) all group health Plans of American have been operated
in compliance in all Material respects with the group health plan
continuation coverage requirements of COBRA;
(ix) actuarially adequate accruals for all obligations under
the Plans are reflected in the most recent balance sheet forming part
of the American Financial Statements and such obligations include a pro
rata amount of the contributions which would otherwise have been made
in accordance with past practices for the Plan years which include the
Closing Date;
(x) neither American nor any of its directors, officers,
employees or any other fiduciary has committed any breach of fiduciary
responsibility imposed by ERISA or any similar Applicable Law that
would subject American or any of its respective directors, officers or
employees to Material liability under ERISA or any similar Applicable
Law;
(xi) no such Plan which is subject to Part 3 of Subtitle B of
Title I of ERISA or Section 512 of the Code had an accumulated funding
deficiency (as defined in Section 302 of ERISA and Section 512 of the
Code), whether or not waived, as of the last day of the most recent
fiscal year of such Plan to which Part 3 of Subtitle B of Title I of
ERISA or Section 512 of the Code applied, nor would have had an
accumulated funding deficiency on such date if such year were the first
year of such Plan to which Part 3 of Subtitle B of Title I of ERISA or
Section 512 of the Code applied;
(xii) no Material liability to the PBGC has been or is
expected by American to be incurred by American with respect to any
Plan, and there has been no event or condition which presents a
material risk of termination of any Plan by the PBGC;
(xiii) American is not and, to American's knowledge,
information and belief, never has been a party to any Multiemployer
Plan or made contributions to any such Plan; and
(xiv) except as set forth in the American Financial Statements
(which entry, if applicable, shall indicate the present value of
accumulated plan liabilities calculated in a manner consistent with FAS
106 and actual annual expense for such benefits for each of the last
two (2) years) and pursuant to the provisions of COBRA, American does
not maintain any Plan that provides benefits described in Section 3(1)
of ERISA, except as the provisions of COBRA may apply to any former
employees or retirees of American.
(b) The execution, delivery and performance by American of this
Agreement and the Collateral Documents executed or required to be executed by
American pursuant hereto and thereto will not involve any prohibited transaction
within the meaning of ERISA or Section 5975 of the Code.
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5.11 Inapplicability of Specified Statutes. American is not a "holding
company", or a "subsidiary company" or an "affiliate" of a "holding company", as
such terms are defined in the Public Utility Holding Company Act of 1935, as
amended, or an "investment company" or a company "controlled" by or acting on
behalf of an "investment company", as defined in the Investment Company Act of
1940, as amended, or a "carrier" or a person which is in control of a "carrier",
as defined in section 11301 of Title 49, U.S.C.
5.12 Authorized Capital Stock. The authorized and outstanding capital
stock, Option Securities and Convertible Securities of American, as of March 31,
1996, is as set forth in the American SEC Documents. Since March 31, 1996,
American has not issued any shares of capital stock of any class, any Option
Securities or any Convertible Securities, except for the issue of American
Common Stock pursuant to the exercise of Option Securities outstanding on March
31, 1996 or as otherwise described or contemplated by the American SEC
Documents. All of such outstanding capital stock has been duly authorized and
validly issued, is fully paid and nonassessable and is not subject to any
preemptive or similar rights. American is not a party to or bound by any
agreement, put or commitment pursuant to which it is obligated to purchase,
redeem or otherwise acquire any shares of capital stock or any Option Security
or Convertible Security of American, except as described in the American SEC
Documents. To American's knowledge, information and belief, no Person, and no
group of Persons acting in concert, owns as much as five percent (5%) of the
American Common Stock, and American is not controlled by any other Person,
except as set forth in the American SEC Documents. The shares of American Class
A Common Stock to be issued pursuant to the Merger will have been, when issued,
duly authorized and validly issued, fully paid and nonassessable and will not be
subject to any preemptive or similar rights.
5.13 Employment Arrangements.
(a) Except as described in the American SEC Documents, (i) none of the
employees of American is now, or, to American's knowledge, information and
belief, since November 1, 1993 has been, represented by any labor union or other
employee collective bargaining organization, or are now, or, to American's
knowledge, information and belief since November 1, 1993 have been, parties to
any labor or other collective bargaining agreement, (ii) there are no pending
grievances, disputes or controversies with any union or any other employee or
collective bargaining organization of such employees, or threats of strikes,
work stoppages or slowdowns or any pending demands for collective bargaining by
any union or other such organization, and (iii) neither American nor any of its
employees is now, or, to American's knowledge, information and belief, since
November 1, 1993 has been, subject to or involved in or, to American's
knowledge, information and belief, threatened with, any union elections,
petitions therefor or other organizational or recruiting activities. American
has performed all obligations required to be performed under all Employment
Arrangements and is not in breach or violation of or in default or arrears under
any of the Material terms, provisions or conditions thereof.
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5.14 Material Agreements. All Material Agreements relating to the
ownership, operation or the conduct of the business of any of the American
Stations presently held or used by American or to which American is a party or
to which it or any of its property is subject or bound are valid, binding and
legally enforceable obligations of American and, to American's knowledge,
information and belief, all other parties thereto, and American is validly and
lawfully operating its business in all Material respects and owning its property
under each of the Material Agreements. American has duly complied with all of
the Material terms and conditions of each Material Agreement and has not done or
performed, or failed to do or perform (and there is no pending or, to the
knowledge, information and belief of American, threatened Claim that American
has not so complied, done and performed or failed to do and perform) any act
which would invalidate or provide grounds for the other party thereto to
terminate (with or without notice, passage of time or both) such Material
Agreement or impair the rights or benefits, or increase the costs, of American,
under any of the Material Agreements. The time brokerage, local marketing and
other similar agreements to which American is a party comply in all Material
respects with the FCA. The joint sales and other similar agreements to which
American is a party do not create attributable interests under the FCA.
5.15 Ordinary Course of Business. American, from the end of its most
recent fiscal quarter to the date hereof, except as may be described in or
contemplated by the American SEC Documents, has operated its business in the
normal, usual and customary manner in the ordinary and regular course of
business, consistent with prior practice.
5.16 Broker or Finder. No Person assisted in or brought about the
negotiation of this Agreement or the Merger or the subject matter of either
thereof in the capacity of broker, agent or finder or in any similar capacity on
behalf of American, other than Morgan Stanley & Co.
Incorporated.
5.17 Environmental Matters. Except as set forth in the American SEC
Documents, American:
(a) to the knowledge, information and belief of American, has
not been notified that it is potentially liable under, has not received
any request for information or other correspondence concerning its
potential liability with respect to any site or facility under, and is
not a "potentially responsible party" under, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended, the Resource Conservation and Recovery Act, as amended, or any
similar state Law;
(b) has not entered into or received any consent decree,
compliance order or administrative order issued pursuant to any
Environmental Law;
(c) is not a party in interest or in default under any
judgment, order, writ, injunction or decree of any final order issued
pursuant to any Environmental Law;
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(d) is, to the knowledge, information and belief of American,
in substantial compliance in all Material respects with all
Environmental Laws, has, to American's knowledge, information and
belief, obtained all Environmental Permits required under Environmental
Laws, and is not the subject of or, to American's knowledge,
information and belief, threatened with any Legal Action involving a
demand for damages or other potential liability, including any Lien,
with respect to Material violations or Material breaches of any
Environmental Law; and
(e) has no knowledge of any past or present Event related to
any of the property and assets of American which Events, individually
or in the aggregate, will interfere with or prevent continued Material
compliance with all Environmental Laws, or which, individually or in
the aggregate, will form the basis of any Material Claim for the
release or threatened release into the environment, of any Hazardous
Material.
5.18 American Financing. American has, or on the Closing Date will
have, sufficient funds to consummate the transactions contemplated by this
Agreement and to pay all transaction related fees and expenses.
ARTICLE 6
COVENANTS
6.1 Access to Information; Confidentiality.
(a) Each party shall afford to the other party and its accountants,
counsel, investment bankers, financial advisors and other agents and
representatives (the "Representatives") full access during normal business hours
throughout the period prior to the Closing Date to all of its (and its
Subsidiaries') properties, books, contracts, commitments and records (including
without limitation Tax Returns) and, during such period, shall furnish promptly
upon request (i) a copy of each report, schedule and other document filed or
received by any of them pursuant to the requirements of any Applicable Law
(including without limitation the FCA) or filed by it or any of its Subsidiaries
with any Authority in connection with the Merger or which may have a Material
effect on it or its businesses, operations, properties, prospects, personnel,
condition, (financial or other), or results of operations, and (ii) such other
information concerning any of the foregoing as American or EZ shall reasonably
request. All non-public information furnished pursuant to the provisions of this
Agreement, including without limitation this Section, will be kept confidential
and shall not, without the prior written consent of the party disclosing such
information, be disclosed by the other party in any manner whatsoever, in whole
or in part, and shall not be used for any purposes, other than in connection
with the Merger. In no event shall either party or any of its Representatives
use such information to the detriment of the other party. Each party agrees to
reveal such information only to those of its Representatives or other Persons
who need to know such information for the purpose of evaluating the Merger, who
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are informed of the confidential nature of such information and who shall
undertake in writing (a copy of which, if requested, will be furnished to the
disclosing party) to act in accordance with the terms and conditions of this
Agreement.
(b) Subject to the terms and conditions of Section 6.1(a), each party
may disclose such information as may be necessary in connection with seeking all
Governmental and Private Authorizations or that is required by Applicable Law to
be disclosed. In the event that this Agreement is terminated in accordance with
its terms, each party shall promptly redeliver all non-public written material
provided pursuant to this Section or any other provision of this Agreement or
otherwise in connection with the Merger and shall not retain any copies,
extracts or other reproductions in whole or in part of such written material
other than one copy thereof which shall be delivered to independent counsel for
such party.
(c) No investigation pursuant to this Section or otherwise shall affect
any representation or warranty in this Agreement of either party or any
condition to the obligations of the parties hereto.
6.2 Agreement to Cooperate.
(a) Each of the parties hereto shall use reasonable business efforts
(x) to take, or cause to be taken, all actions and to do, or cause to be done,
all things necessary, proper or advisable under Applicable Law to consummate the
Merger, and (y) to refrain from taking, or cause to be taken, any action and to
refrain from doing or causing to be done, any thing which could impede or impair
the consummation of the Merger, subject to any fiduciary obligations of EZ's or
American's Board of Directors, including, in all cases, without limitation using
its reasonable business efforts (i) to prepare and file with the applicable
Authorities as promptly as practicable after the execution of this Agreement all
requisite applications and amendments thereto, together with related
information, data and exhibits, necessary to request issuance of orders
approving the Merger by all such applicable Authorities, each of which must be
obtained or become final in order to satisfy the condition applicable to it set
forth in Section 7.1(c), (ii) to obtain all necessary or appropriate waivers,
consents and approvals, (iii) to effect all necessary registrations, filings and
submissions (including without limitation filings under the Hart-Scott-Rodino
Act and all filings necessary for American to own and operate the EZ Stations),
(iv) to lift any injunction or other legal bar to the Merger (and, in such case,
to proceed with the Merger as expeditiously as possible), and (v) to obtain the
satisfaction of the conditions specified in Article 7, including without
limitation the truth and correctness as of the Closing Date as if made on and as
of the Closing Date of the representations and warranties of such party and the
performance and satisfaction as of the Closing Date of all agreements and
conditions to be performed or satisfied by such party.
(b) Without limiting the generality of the foregoing, the parties
acknowledge and agree that the assignment of the FCC Licenses as contemplated by
this Agreement is subject to the prior consent and approval of the FCC. Within
thirty (30) business days following the date of this Agreement, EZ and American
shall file with the FCC appropriate applications for FCC Consents, which
applications shall include a request for a temporary waiver of Section
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73,3555(a) of the FCC's rules and regulations with respect to American's
proposed ownership of radio stations in the Sacramento, California market. The
grant of a temporary waiver by the FCC requiring American to file with the FCC,
within no less than six (6) months following the Closing Date, one or more
assignment or transfer applications proposing divestiture of one or more radio
stations in the Sacramento radio market, shall not be deemed a Material Adverse
Effect and American agrees to accept an FCC grant of the FCC Consents including
such a condition. The parties shall prosecute said applications with all
reasonable diligence and otherwise use reasonable business efforts to obtain the
grant of FCC Consents to such applications as expeditiously as practicable. If
the FCC Consents, or any of them, imposes any condition on either party hereto,
such party shall use reasonable business 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
any FCC Consent, EZ and American 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 the provisions
of Section 8.1). The Merger is expressly conditioned upon the grant of the Final
Order as to the FCC Consents for the transfer of the FCC Licenses for the EZ
Stations without any condition Materially Adverse to American.
(c) The parties also undertake and agree to file as soon as practicable
after the date hereof a Notification and Report Form under the Hart-Scott-Rodino
Act with the Federal Trade Commission (the "FTC") and the Antitrust Division of
the Department of Justice (the "Antitrust Division"). Each of the parties shall
(i) use its reasonable business efforts to comply as expeditiously as possible
with all lawful requests of the FTC or the Antitrust Division for additional
information and documents and (ii) not extend any waiting period under the Hart-
Scott-Rodino Act or enter into any agreement with the FTC or the Antitrust
Division not to consummate the transactions contemplated by this Agreement,
except with the prior written consent of the other party hereto.
(d) The parties shall cooperate with one another in the preparation,
execution and filing of all Tax Returns, questionnaires, applications, or other
documents regarding any real property transfer or gains, sales, use, transfer,
value added, stock transfer and stamp Taxes, any transfer, recording,
registration and other fees, and any similar Taxes which become payable in
connection with the Merger that are required or permitted to be filed on or
before the Closing Date.
6.3 Public Announcements. Until the Closing, or in the event of
termination of this Agreement, each party shall consult with the other before
issuing any press release or otherwise making any public statements with respect
to this Agreement or the Merger and shall not issue any such press release or
make any such public statement without the prior consent of the other.
Notwithstanding the foregoing, the parties acknowledge and agree that they may,
without each other's prior consent, issue such press releases or make such
public statements as may be required by Applicable Law, in which case, to the
extent practicable, they will consult with the other regarding the nature,
content and form of such press release or public statement.
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6.4 Notification of Certain Matters. Each party shall give prompt
notice to the other, of the occurrence or non-occurrence of any Event the
occurrence or non-occurrence of which would be likely to cause (i) any
representation or warranty made by it contained in this Agreement to be untrue
or inaccurate in any respect such that one or more of the conditions of Closing
might not be satisfied, or (ii) any covenant, condition or agreement made by it
contained in this Agreement not to be complied with or satisfied, or (iii) any
change to be made in the EZ Disclosure Schedule or the American Disclosure
Schedule, as the case may be, in any respect such that one or more of the
conditions of Closing might not be satisfied, and any failure made by it to
comply with or satisfy, or be able to comply with or satisfy, any covenant,
condition or agreement to be complied with or satisfied by it hereunder (or
thereunder) in any respect such that one or more of the conditions of Closing
might not be satisfied; provided, however, that the delivery of any notice
pursuant to this Section shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
6.5 Stockholder Approval.
(a) EZ shall promptly submit this Agreement and the Merger for the
approval of its stockholders at a special meeting of stockholders and, subject
to the fiduciary duties of the Board of Directors of EZ under Applicable Law,
and to the receipt of a written opinion from CS First Boston Corporation to the
effect that the terms of the Merger are fair to the stockholders of EZ from a
financial point of view (which opinion EZ represents and warrants it has
received as of the date hereof), shall use its reasonable business efforts to
obtain stockholder approval and adoption (the "EZ Stockholder Approval") of this
Agreement and the Merger. Such meeting shall be held as soon as practicable
following the date upon which the Registration Statement becomes effective.
Subject to the fiduciary duties of the Board of Directors of EZ under Applicable
Law and the receipt of the written opinion set forth in the preceding sentence,
EZ shall, through its Board of Directors, recommend to its stockholders approval
of this Agreement and the Merger.
(b) American shall promptly submit this Agreement and the Merger for
the approval of its stockholders at a special meeting of stockholders and,
subject to the fiduciary duties of the Board of Directors of American under
Applicable Law, and to the receipt of a written opinion from Morgan Stanley &
Co. Incorporated to the effect that the terms of the Merger are fair to the
stockholders of American from a financial point of view (which opinion American
represents and warrants it has received as of the date hereof), shall use its
reasonable business efforts to obtain stockholder approval and adoption (the
"American Stockholder Approval") of this Agreement and the Merger. Such meeting
shall be held as soon as practicable following the date upon which the
Registration Statement becomes effective. Subject to the fiduciary duties of the
Board of Directors of American under Applicable Law and the receipt of the
written opinion set forth in the preceding sentence, American shall, through its
Board of Directors, recommend to its stockholders approval of this Agreement and
the Merger.
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6.6 Registration Statement and Proxy Statement.
(a) American and EZ shall prepare and file with the Commission as soon
as is reasonably practicable after the date hereof a joint proxy statement
prospectus (the "Joint Proxy Statement/Prospectus") for use in connection with
the special meetings of stockholders of American and of EZ and shall use all
reasonable business efforts to file a Registration Statement on Form S-4 (the
"Registration Statement") under the Securities Act with the Commission in
connection with the Merger for the purpose of registering the shares of American
Class A Common Stock to be issued in the Merger and to have the Registration
Statement declared effec tive by the Commission as promptly as practicable.
American and EZ shall also take any action required to be taken under Applicable
Law in connection with the consummation of the transac tions contemplated by
this Agreement, including without limitation in the case of American all filings
under applicable state blue sky or securities laws in connection with the
issuance of American Class A Common Stock. American and EZ shall promptly
furnish to each other all information, and take such other actions, as may
reasonably be requested in connection with any action by either of them in
connection with the provisions of this Section.
(b) Prior to the date of approval of the Merger by their respective
stockholders, each of EZ and American shall correct promptly any information
provided by it to be used specifically in the Joint Proxy Statement/Prospectus
and Registration Statement that shall have become false or misleading in any
material respect and shall take all steps necessary to file with the Commission
and have declared effective or cleared by the Commission any amendment or
supplement to the Joint Proxy Statement/Prospectus or the Registration Statement
so as to correct such Joint Proxy Statement/Prospectus or Registration Statement
and cause it to be disseminated to the stockholders of EZ and American, in each
case to the extent required by Applicable Law. Without limiting the generality
of the foregoing, EZ and American shall notify each other promptly of the
receipt of the comments of the Commission and of any request by the Commission
for amendments or supplements to the Joint Proxy Statement/Prospectus and
Registration Statement, or for additional information, and shall supply each
other with copies of all correspondence between them or their respective
representatives, on the one hand, and the Commission or members of its staff, on
the other hand, with respect to the Joint Proxy Statement/Prospectus and
Registration Statement. If at any time prior to the stockholder meetings of EZ
and American any event should occur relating to EZ or American or their
respective officers or directors which should be described in an amendment or
supplement to the Joint Proxy Statement-Prospectus and Registration Statement,
the parties shall promptly inform each other. Whenever any event occurs which
should be described in an amendment or a supplement to the Joint Proxy
Statement/Prospectus and Registration Statement, EZ and American shall, upon
learning of such event, cooperate in promptly preparing, filing and clear ing
with the Commission and mailing to the stockholders of EZ and American such
amendment or supplement; provided, however, that, prior to such mailing, (i) EZ
and American shall consult with each other with respect to such amendment or
supplement, (ii) shall afford each other reasonable opportunity to comment
thereon, and (iii) each such amendment or supplement shall be reasonably
satisfactory to the other.
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6.7 Affiliates of EZ. EZ shall, within thirty (30) days after the date
of this Agreement, use its reasonable business efforts to cause each principal
executive officer, each director and each other person who is an "affiliate," as
that term is used in paragraphs (c) and (d) of Rule 145 under the Securities
Act, of EZ, to deliver to American on or prior to the Effective Time a written
agreement (an "Affiliate Agreement"), reasonably satisfactory in form, scope and
substance to American, to the effect that such Person will not offer to sell,
sell or otherwise dispose of any shares of American Class A Common Stock issued
in the Merger, except, in each case, pursuant to an effective registration
statement or in compliance with Rule 145, or in a transaction which, in the
opinion of legal counsel reasonably satisfactory to American, is exempt from the
registration requirements of the Securities Act.
6.8 Nasdaq Listing. American shall use its reasonable business efforts
to effect, at or before the Effective Time, authorization for listing on Nasdaq
upon official notice of issuance, of the additional shares of the American Class
A Common Stock to be issued pursuant to the Merger.
6.9 Other Offers; No Solicitation.
(a) If, prior to the approval of the Merger by EZ's stockholders, EZ
shall receive a firm, bona fide written proposal or proposals from any Person
relating to any Purchase Proposal (as defined in subsection (e) below), and EZ's
Board of Directors shall determine in good faith, based upon the advice of
independent counsel, and after receiving advice from EZ's financial advisor,
that fiduciary obligations under Applicable Law require EZ's Board of Directors
to terminate this Agreement and accept the Purchase Proposal (a "Fiduciary
Determination"), then EZ may, subject to the provisions of subsection (b) below,
terminate this Agreement; provided, however, that (i) EZ shall give its
termination notice on or before the later of (A) the 30 Day Date and (B) the day
five (5) of the business days after EZ's receipt of the Purchase Proposal, and
(ii) upon EZ's notification to American of such termination, EZ shall comply
with the provisions of subsection (c) below.
(b) If EZ receives a Purchase Proposal in accordance with subsection
(a) above which EZ's Board of Directors wishes to accept: (i) EZ shall promptly
notify American in writing of such Purchase Proposal and of the material terms
and conditions thereof; (ii) American shall be entitled, within five (5) days
after such notification, to revise its offer to consummate the Merger and to
communicate such revised offer in writing to EZ; and (iii) EZ shall consider any
such revised offer in connection with its Fiduciary Determination. The rights of
American under this subsection (b) shall terminate upon any proper termination
of this Agreement under Section 8.1 other than paragraph (f) thereof.
(c) If EZ terminates this Agreement pursuant to Section 6.9(a) or
Section 8.1(g):
(i) on or before the day thirty (30) days after the date
hereof (the "30 Day Date"), or in the event American does not elect to
exercise its rights to purchase assets of EZ pursuant to the provisions
of paragraph (ii) below, then EZ shall promptly pay American the cash
sum of $15,000,000;
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(ii) after the 30 Day Date, then American shall have the right
to purchase the assets of all of the EZ Stations in any one of EZ's
geographic markets (i.e., one of the markets in which EZ owns (and not
subject to a contract for sale ) Stations at the time of such
termination) at a purchase price payable in cash equal to the Station
Fair Market Value (as defined below) of such Stations as of the date EZ
so terminates this Agreement less $10,000,000. The term "Station Fair
Market Value" shall mean the fair market value of the EZ Stations which
American has elected to purchase as determined by mutual agreement of
American and EZ or, in the event they are unable to so agree within
thirty (30) days, by arbitration determined by the agreement of two
investment bankers knowledgeable in radio station valuations selected
one by American and one by EZ. In the event such investment bankers are
unable to agree on the Station Fair Market Value within thirty (30)
days, they shall appoint a third investment banker, so knowledgeable,
or failing agreement on such third investment banker, it shall be
appointed by the President of the New York City Chapter of the American
Arbitration Association. The decision of the third investment banker
however so appointed shall be binding on American and EZ. In the event
American shall elect to exercise its rights to so purchase EZ Stations,
it shall, within ten (10) days after EZ's termination of this
Agreement, notify EZ in writing of such election and identify the EZ
Stations it has elected to purchase. Thereafter, American and EZ shall
negotiate in good faith an asset purchase agreement with respect to
such transaction containing terms and conditions customary in the radio
industry for the purchase and sale of radio stations, including without
limitation, representations and warranties, covenants, closing
conditions and survival of the representations and warranties for a
reasonable period of time.
(d) During the term hereof, EZ shall not, and shall not permit any of
its Subsidiaries, any officer or director of EZ or any of its Subsidiaries, or
any of its Representatives, directly or indirectly, to solicit or initiate
(including by way of furnishing any non-public information concerning EZ's
business, properties or assets) discussions, inquiries or proposals or
participate in any negotiation for the purpose or with the intention of leading
to any proposal concerning any Purchase Proposal for the sale of all or
substantially all of EZ's assets (including without limitation the purchase of
all or substantially all of the common stock of Professional Broadcasting,
Incorporated, a wholly-owned Subsidiary of EZ ("PBI")) or for the purchase of
all or substantially all of EZ's equity securities, except for the transactions
with American contemplated by this Agreement. Notwithstanding the foregoing
restriction on participation (i.e., EZ may not solicit or initiate, as above
provided), EZ may furnish information concerning its business, properties or
assets, and may engage in negotiations, in connection with a possible Purchase
Proposal if the Board of Directors of EZ makes a Fiduciary Determination. In the
event that EZ shall determine to provide any information or negotiate as
described in this subsection, or shall receive any offer of the type referred to
in this subsection, unless the Board of Directors of EZ concludes that such
disclosure is inconsistent with its fiduciary duties under Applicable Law, it
shall (i) immediately provide American a copy of all information provided
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to the third party, (ii) inform American that information is to be provided,
that negotiations are to take place or that an offer has been received, as the
case may be, and (iii) furnish to American the identity of the Person receiving
such information or the proponent of such offer, if applicable, and, if any
offer has been received, a copy of such offer or, if oral, a description of the
material terms thereof.
(e) The term "Purchase Proposal" shall mean any proposal or offer to
acquire all or substantially all of the assets of EZ and its Subsidiaries
(including without limitation all or substantially all of the common stock of
PBI) or all or substantially all of EZ's equity securities, whether by merger,
purchase of assets, tender offer or otherwise, whether for cash, securities or
any other consideration or combination thereof.
6.10 Option Plans. Prior to the Effective Time, American and EZ shall
take such action as may be necessary to cause each unexpired and unexercised EZ
Option to be automatically converted at the Effective Time into an Exchanged
Option to purchase a number of shares of American Class A Common Stock equal to
the product of the number of shares of EZ Common Stock which the holder is
entitled to purchase under the EZ Option multiplied by the Exchange Ratio, at a
price per share equal to the quotient obtained by dividing (a) the per share
option exercise price determined pursuant to the EZ Option less $11.75, by (b)
the Exchange Ratio. The Exchanged Options will otherwise have the same terms and
conditions as the EZ Option, including acceleration and period of exercise. At
the Effective Time, American will execute and deliver to each holder of an
Exchanged Option a document evidencing American's assumptions of EZ's
obligations under the EZ Option and all references in the stock option
agreements to EZ shall be deemed to refer to American. As of the Effective Time,
American shall assume all of EZ's obligations with respect to EZ Options as so
amended and shall, from and after the Effective Time, have reserved for issuance
upon exercise of the EZ Options all shares of American Class A Common Stock
covered thereby and, as of the Effective Time, shall, if required, have filed an
amendment to its or EZ's Registration Statement on Form S-8 to register the
additional shares of American Class A Common Stock subject to Exchanged Options
granted in replacement of EZ Options. No fractional shares of American Class A
Common Stock will be issued upon the exercise of any Exchanged Option, and
instead the exercising holder of such Exchanged Option shall receive cash for
any fractional share amounts, in accordance with the provisions of Section
3.2(d).
6.11 Conduct of Business by American Pending the Merger. Except as
otherwise contemplated by this Agreement, after the date hereof and prior to the
Closing Date or earlier termination of this Agreement, unless EZ shall otherwise
agree in writing, American shall, and shall cause its Subsidiaries, to:
(a) conduct their respective businesses in the ordinary and
usual course of business and consistent with past practice, which
includes the acquisition of other radio broadcasting stations and
communications towers;
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(b) not (i) amend or propose to amend its Organic Documents in
any manner Materially Adverse to the EZ stockholders or (ii) declare,
set aside or pay any dividend or distribution payable in cash, stock,
property or otherwise, on the American Common Stock;
(c) not (i) redeem, purchase, acquire or offer to purchase or
acquire any shares of its capital stock, Convertible Securities or
Option Securities of American, except to the extent required by the
terms thereof, (ii) take or fail to take any action which action or
failure to the knowledge of American would cause American, EZ or any of
their respective stockholders (except to the extent of the Cash
Consideration or the receipt of cash in lieu of fractional shares) to
recognize gain or loss for federal income tax purposes as a result of
the consummation of the Merger, (iii) sell or otherwise dispose of any
assets or businesses other than sales in the ordinary course of
business and other than sales of one or more of the American Stations
(x) pursuant to agreements in effect on the date hereof, (y) pursuant
to agreements hereafter entered into and accounting for less than
twenty percent (20%) of Broadcast Cash Flow of American, or (iv) enter
into any contract, agreement, commitment or arrangement with respect to
any of the foregoing;
(d) use all reasonable business efforts to preserve intact
their respective business organizations and goodwill, keep available
the services of their respective present officers and key employees,
and preserve the goodwill and business relationships with customers and
others having business relationships with them and not engage in any
action, directly or indirectly, with the intent to adversely affect the
transactions contemplated by this Agreement;
(e) confer on a regular and frequent basis with one or more
representatives of EZ to report Material operational matters and the
general status of ongoing operations; and
(f) maintain with financially responsible insurance companies
insurance on their respective tangible assets and their respective
businesses in such amounts and against such risks and losses as are
consistent with past practice.
6.12 Conduct of Business by EZ Pending the Merger. Except as set forth
in Section 6.12 of the EZ Disclosure Schedule or as otherwise contemplated by
this Agreement, after the date hereof and prior to the Closing Date or earlier
termination of this Agreement, unless American shall otherwise agree in writing,
EZ shall, and shall cause its Subsidiaries, to:
(a) conduct their respective businesses in the ordinary and
usual course of business and consistent with past practice;
(b) not (i) amend or propose to amend their respective Organic
Documents, (ii) split, combine or reclassify (whether by stock dividend
or otherwise) their outstanding capital stock, or (iii) declare, set
aside or pay any dividend or distribution payable in cash, stock,
property or otherwise, except for the payment of dividends or
distributions by a direct or indirect wholly-owned Subsidiary of EZ;
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(c) not issue, sell, pledge or dispose of, or agree to issue,
sell, pledge or dispose of, any shares of EZ Common Stock, Convertible
Securities or Option Securities, except that EZ may issue shares upon
(i) conversion of Convertible Securities and (ii) exercise of Option
Securities outstanding on the date hereof;
(d) not (i) incur or become contingently liable with respect
to any indebtedness for borrowed money other than (A) borrowings in the
ordinary course of business or (B) borrowings to refinance existing
indebtedness, (ii) redeem, purchase, acquire or offer to purchase or
acquire any shares of its capital stock, Convertible Securities or
Option Securities, (iii) take or fail to take any action which action
or failure to the knowledge of EZ would cause American, EZ or any of
their respective stockholders (except to the extent of the Cash
Consideration or the receipt of cash in lieu of fractional shares) to
recognize gain or loss for federal income tax purposes as a result of
the consummation of the Merger, (iv) sell, pledge, dispose of or
encumber any assets or businesses other than sales in the ordinary
course of business or (v) enter into any contract, agreement,
commitment or arrangement with respect to any of the foregoing;
(e) use all reasonable efforts to preserve intact their
respective business organizations and goodwill, keep available the
services of their respective present officers and key employees, and
preserve the goodwill and business relationships with customers and
others having business relationships with them and not engage in any
action, directly or indirectly, with the intent to adversely impact the
transactions contemplated by this Agreement;
(f) confer on a regular and frequent basis with one or more
representatives of American to report Material operational matters and
the general status of ongoing operations;
(g) not enter into or amend any employment, severance, special
pay arrangement with respect to termination of employment or other
similar arrangements or agreements with any directors, officers or key
employees, except in the ordinary course and consistent with past
practice or reasonable performance or severance bonuses related to the
transactions contemplated by this Agreement; provided, however, that EZ
and its Subsidiaries shall in no event enter into any written
employment agreement which provides for an annual base salary in excess
of $100,000 and has a term in excess of one year or enter into or amend
any severance or termination arrangement;
(h) not adopt, enter into or amend any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation,
health care, employment or other employee benefit plan, agreement,
trust, fund or arrangement for the benefit or welfare of any employee
or retiree, except as required to comply with changes in Applicable
Law; and
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(i) maintain with financially responsible insurance companies
insurance on their respective tangible assets and their respective
businesses in such amounts and against such risks and losses as are
consistent with past practice.
6.13 Control of EZ's Operations. Nothing contained in this Agreement
shall give to American, directly or indirectly, rights to control or direct EZ's
operations prior to the Effective Time. Prior to the Effective Time, EZ shall
exercise, consistent with the terms and conditions of this Agreement, complete
control and supervision of its operations.
6.14 Control of American's Operations. Nothing contained in this
Agreement shall give to EZ, directly or indirectly, rights to control or direct
American's operations prior to the Effective Time. Prior to the Effective Time,
American shall exercise, consistent with the terms and conditions of this
Agreement, complete control and supervision of its operations.
6.15 Directors', Officers' and Employees' Indemnification and
Insurance.
(a) From and after the Effective Time, American shall indemnify, defend
and hold harmless the present and former officers, directors and employees of EZ
(collectively, the "Indemnified Parties") against all losses, expenses, claims,
damages, liabilities or amounts that are paid in settlement of, or otherwise in
connection with any claim, action, suit, proceeding or investigation (as used in
this Section, a "claim"), based in whole or in part on the fact that such person
is or was a director, officer or employee of EZ and arising out of actions or
omissions occurring at or prior to the Effective Time (including, without
limitation, in connection with this Agreement, the Merger and the transactions
contemplated hereby), in each case to the fullest extent permitted under the DCL
(and shall pay any expenses in advance of the final disposition of any such
action or proceeding to each Indemnified Party to the fullest extent permitted
under the DCL, upon receipt from the Indemnified Party to whom expenses are
advanced of any undertaking to repay such advances required under the DCL).
(b) So long as American shall maintain directors' and officers'
liability insurance for its then current directors and officers, American shall
cause the Surviving Corporation to cause to be maintained in effect for a period
of six (6) years after the Effective Time the current policies of directors' and
officers' liability insurance maintained by EZ (provided that American may
substitute therefor policies which it is then maintaining for its directors and
officers so long as such policies are not materially less advantageous to such
directors and officers) with respect to claims arising from facts or events
which occurred at or before the Effective Time.
(c) In the event American or any of their successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
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person, then and in each such case, proper provisions shall be made so that the
successors and assigns of American shall assume the obligations set forth in
this Section.
(d) This Section is intended to be for the benefit of, and shall be
enforceable by, the Indemnified Parties, their heirs and personal
representatives and shall be binding on American and its successors and assigns.
6.16 Employment Agreements. Prior to Closing, any and all officers of
EZ who are parties to agreements that would provide to them cash compensation
upon a change of control (as defined therein) of EZ shall execute amendments
and/or waivers of the cash compensation provisions applicable upon such a change
of control or upon a voluntary termination of employment by any such employee.
6.17 Irrevocable Proxies. Simultaneous with the execution hereof, each
of the Persons named therein shall execute and deliver to American an agreement
substantially in the form of Exhibit A attached hereto and made a part hereof
(the "EZ Voting Agreement"), and each of the Persons named therein shall execute
and deliver to EZ an agreement substantially in the form of Exhibit B attached
hereto and made a part hereof (the "American Voting Agreement").
6.18 Tax-Free Treatment of Merger. Each of the parties shall use its
reasonable business efforts to cause the Merger to be treated as a tax-free
reorganization for federal income tax purposes.
ARTICLE 7
CLOSING CONDITIONS
7.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to effect the Merger shall, except as
hereinafter provided in this Section, be subject to the satisfaction at or prior
to the Closing Date of the following conditions, any or all of which may be
waived, in whole or in part, to the extent permitted by Applicable Law:
(a) This Agreement and the transactions contemplated hereby
shall have been approved and adopted by the requisite vote of the
stockholders of American and EZ under Applicable Law and applicable
Nasdaq requirements;
(b) No preliminary or permanent injunction or other order or
decree by any federal or state court which prevents the consummation of
the Merger shall have been issued and remain in effect (each party
agreeing to use its reasonable business efforts to have any such
injunction, order or decree lifted);
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(c) All authorizations, consents, waivers, orders or approvals
required to be obtained from all Authorities, and all filings,
submissions, registrations, notices or declarations required to be made
by American and EZ with any Authority, prior to the consummation of the
Merger, shall have been obtained from, and made with, the FCC and all
other required Authorities, except for such authorizations, consents,
waivers, orders, approvals, filings, registrations, notices or
declarations the failure to obtain or make would not, in the reasonable
business judgment of each of the parties, have a Material Adverse
Effect on American. Without limiting the generality of the foregoing,
the FCC shall have issued all necessary consents and approvals in
connection with the transactions contemplated by this Agreement, the
same shall have become Final Orders, and any conditions precedent to
the effectiveness of such Final Orders which are specified therein
shall have been satisfied as provided in Section 6.2(b);
(d) The shares of American Class A Common Stock to be issued
in the Merger shall have been approved for listing on Nasdaq, upon
official notice of issuance;
(e) The waiting period applicable to the consummation of the
Merger under the Hart-Scott-Rodino Act shall have expired or been
terminated;
(f) The Registration Statement shall have become effective in
accordance with the provisions of the Securities Act, and no stop order
suspending such effectiveness shall have been issued and remain in
effect and no proceeding for that purpose shall have been instituted by
the Commission or any state regulatory authorities; and
(g) No action shall have been taken, and no statute, rule or
regulation shall have been enacted, by any Authority in the United
States which would prevent the consummation of the Merger or make the
consummation of the Merger illegal.
7.2 Conditions to Obligations of American. The obligation of American
to effect the Merger shall be subject to the satisfaction of the following
conditions, any or all of which may be waived, in whole or in part, to the
extent permitted by Applicable Law:
(a) All agreements, certificates, opinions and other documents
shall be reasonably satisfactory in form, scope and substance to
American and its counsel, and American and its counsel shall have
received all information and copies of all documents, including records
of corporate proceedings, which they may reasonably request in
connection therewith, such documents where reasonably appropriate to be
certified by proper corporate officers;
(b) EZ shall have furnished American and, at American's
request, any bank or other financial institution providing credit to
American or any Subsidiary, with favorable opinions, dated the Closing
Date of Hunton & Williams, counsel for EZ, and of Koteen & Naftalin,
FCC counsel for EZ, in each case, with respect to such matters incident
to the Merger, as American or its counsel may reasonably request or
which may be reasonably requested by any such bank or financial
institution or their respective counsel;
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(c) The representations, warranties, covenants and agreements
of EZ contained in this Agreement or otherwise made in writing by it or
on its behalf pursuant hereto or otherwise made in connection with the
Merger shall be true and correct in all Material respects at and as of
the Closing Date with the same force and effect as though made on and
as of such date except those which speak as of a certain date which
shall continue to be true and correct in all Material respects as of
such date on the Closing Date (including without limitation giving
effect to any later obtained knowledge, information or belief of EZ or
American); each and all of the agreements and conditions to be
performed or satisfied by EZ hereunder at or prior to the Closing Date
shall have been duly performed or satisfied in all Material respects;
and EZ shall have furnished American with such certificates and other
documents evidencing the truth of such representations, warranties,
covenants and agreements and the performance of such agreements or
conditions as American or its counsel shall have reasonably requested;
(d) All authorizations, consents, waivers, modifications,
orders or approvals required to be obtained from all Persons (other
than Authorities) prior to the consummation of the Merger, including
without limitation all Private Authorizations and consents related to
Material Agreements of EZ and its Subsidiaries and all modifications of
Contractual Obligations reasonably requested by American within ten
(10) business days of the date of this Agreement, shall have been
obtained, other than such authorizations, consents, waivers,
modifications, orders or approvals, the failure of which to obtain
would not, individually or in the aggregate, Materially Adversely
Affect EZ, without the imposition, individually or in the aggregate, of
any condition or requirement which would Materially Adversely Affect
EZ;
(e) Between the date of this Agreement and the Closing Date,
there shall not have occurred and be continuing any Material Adverse
Change in EZ from that reflected in the most recent EZ Financial
Statements, and as of the Closing Date, the FCC Licenses with respect
to each of the EZ Stations shall not have been Materially Adversely
Affected;
(f) American shall have received "comfort" letters in
customary form from Ernst & Young LLP, certified public accountants for
EZ and its Subsidiaries, dated the date of the Joint Proxy
Statement/Prospectus, the effective date of the Registration Statement
and the Closing Date (or such other date reasonably acceptable to
American) with respect to certain financial statements and other
financial information included in the Registration Statement and any
subsequent changes in specified balance sheet and income statement
items, including total assets, working capital, stockholders' equity,
net revenues, Broadcast Cash Flow, net income and net income per share;
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(g) American shall have received from its counsel, Sullivan &
Worcester LLP, a favorable opinion (dated as of the Closing Date) to
the effect that the Merger constitutes a reorganization within the
meaning of Section 368 of the Code and that, as a consequence, American
and its stockholders will not recognize any gain or loss for federal
income tax purposes as a result of consummation of the Merger, and in
connection with such opinion, EZ and each of its stockholders owning
five percent (5%) or more of the EZ Common Stock shall have furnished
to American and such counsel such representations, warranties,
covenants and agreements as such counsel shall have reasonably
requested in order to enable them to render such opinion;
(h) The employment agreements between EZ and each of Arthur
Kellar and Alan Box shall have been amended on terms reasonably
satisfactory to American;
(i) Arthur Kellar and Alan Box shall have executed and
delivered to American a stockholder agreement (the "Stockholder
Agreement"), in form, scope and substance reasonably satisfactory to
American, pursuant to which such persons jointly shall have the right
to nominate two (2) persons to the Board of Directors of American so
long as they collectively continue to hold (i) more than fifty percent
(50%) of the American Class A Common Stock received by them pursuant to
consummation of the Merger and (ii) shares of American Class A Common
Stock representing not less than 4.5% of the number of shares of
American Common Stock outstanding on a pro forma fully diluted basis
(i.e., giving effect to the conversion of all Convertible Securities
and the exercise of all Option Securities at the time outstanding). The
Stockholder Agreement shall also provide that so long as Arthur Kellar
and Alan Box continue to own collectively shares of American Class A
Common Stock satisfying one but not both of the requirements of clauses
(i) and (ii) of the preceding sentence they shall jointly be entitled
to nominate one (1) person to the Board of Directors of American, and
if they cease to own collectively a sufficient number of shares of
American Class A common Stock to satisfy either of such requirements
they shall no longer have any right to nominate a director. The
Stockholder Agreement shall permit Arthur Kellar and Alan Box to
transfer the stock subject to such Agreement to their immediate family
members or a trust for the benefit of such Persons, and the holdings of
such Persons (of such transferred stock) shall be included in the
determination of whether the requirements of clauses (i) and (ii) of
the first sentence of this paragraph are satisfied. The Stockholder
Agreement shall also provide that any nominee other than Arthur Kellar
or Alan Box shall be reasonably acceptable to the Board of Directors of
American;
(j) Each of the persons referred to in Section 6.7 shall have
executed and delivered to American an Affiliate Agreement; and
(k) The FCC shall not have released on or before the Closing
Date any ruling, order or other pronouncement Materially Adverse to the
interests of EZ or American in the comparative renewal proceedings
pending before the FCC in M M Docket No. 93-18 (the "WBZZ Renewal
Proceedings") or, if the WBZZ Renewal Proceedings are still
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pending, arrangements shall have been made, reasonably satisfactory to
American, pursuant to which (i) EZ's renewal expectations with respect
to WBZZ(FM) shall be preserved, (ii) during the period when such
renewal is pending the Entity holding the FCC License with respect to
WBZZ(FM) shall enter into a local marketing agreement with American
with respect to WBZZ(FM), and (iii) American shall have the right to
acquire such FCC License and related assets with respect to WBZZ(FM)
upon such license renewal. American agrees that any such arrangements
must be reasonably satisfactory to the Entity holding such FCC License.
7.3 Conditions to Obligations of EZ. The obligation of EZ to effect the
Merger shall be subject to the satisfaction of the following conditions, any or
all of which may be waived, in whole or in part, to the extent permitted by
Applicable Law:
(a) All agreements, certificates, opinions and other documents
delivered by American shall be reasonably satisfactory in form, scope
and substance to EZ and its counsel, and EZ and its counsel shall have
received all information and copies of all documents, including records
of corporate proceedings, which they may reasonably request in
connection therewith, such documents where reasonably appropriate to be
certified by proper corporate officers;
(b) American shall have furnished EZ and, at EZ's request, any
bank or other financial institution providing credit to EZ or any
Subsidiary, with favorable opinions, dated the Closing Date of Sullivan
& Worcester LLP, counsel for American, and of Dow, Lohnes & Albertson,
FCC counsel for American, in each case, with respect to such matters
incident to the Merger, as EZ or its counsel may reasonably request or
which may be reasonably requested by any such bank or financial
institution or their respective counsel;
(c) The representations, warranties, covenants and agreements
of American contained in this Agreement or otherwise made in writing by
it or on its behalf pursuant hereto or otherwise made in connection
with the Merger shall be true and correct in all Material respects at
and as of the Closing Date with the same force and effect as though
made on and as of such date except those which speak as of a certain
date which shall continue to be true and correct in all Material
respects as of such date on the Closing Date (including without
limitation, giving effect to any later obtained knowledge, information
or belief of American or EZ); each and all of the agreements and
conditions to be performed or satisfied by American hereunder at or
prior to the Closing Date shall have been duly performed or satisfied
in all Material respects; and American shall have furnished EZ with
such certificates and other documents evidencing the truth of such
representations, warranties, covenants and agreements and the
performance of such agreements or conditions as EZ or its counsel shall
have reasonably requested;
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(d) All authorizations, consents, waivers, modifications
orders or approvals required to be obtained from all Persons (other
than Authorities) prior to the consummation of the Merger, including
without limitation all Private Authorizations and consents related to
Material Agreements of American and its Subsidiaries and all
modifications of Contractual Obligations reasonably requested by EZ
within ten (10) business days of the date of this Agreement, shall have
been obtained, other than such authorizations, consents, waivers,
modifications, orders or approvals, the failure of which to obtain
would not, individually or in the aggregate, Materially Adversely
Affect American, without the imposition, individually or in the
aggregate, of any condition or requirement which would Materially
Adversely Affect American;
(e) Between the date of this Agreement and the Closing Date,
there shall not have occurred and be continuing any Material Adverse
Change in American from that reflected in the most recent American
Financial Statements, and as of the Closing Date, the FCC Licenses with
respect to each of the American Stations shall not have been Materially
Adversely Affected;
(f) EZ shall have received "comfort" letters in customary form
from Deloitte & Touche LLP, certified public accountants for American
and its Subsidiaries, dated the date of the Joint Proxy
Statement/Prospectus, the effective date of the Registration Statement
and the Closing Date (or such other date reasonably acceptable to EZ)
with respect to certain financial statements and other financial
information included in the Registration Statement and any subsequent
changes in specified balance sheet and income statement items,
including total assets, working capital, stockholders' equity, net
revenues, Broadcast Cash Flow, net income and net income per share;
(g) American shall have executed and delivered to each of the
Persons executing an Affiliate Agreement, a registration rights
agreement in the form heretofore executed and delivered by American and
certain of its stockholders and permitting each of such Persons to
become a party thereto;
(h) EZ shall have received from its counsel, Hunton &
Williams, a favorable opinion (dated as of the Closing Date) to the
effect that the Merger constitutes a reorganization within the meaning
of Section 368 of the Code and that, as a consequence, EZ and its
stockholders will not recognize any gain or loss for federal income tax
purposes as a result of consummation of the Merger, except that gain
will be recognized to the extent of the Cash Consideration and gain or
loss will be recognized with respect to cash received in lieu of
fractional shares or with respect to Dissenting Shares, and in
connection with such opinion, American and each of its stockholders
owning five percent (5%) or more of the American Common Stock shall
have furnished to EZ and such counsel such representations, warranties,
covenants and agreements as such counsel shall have reasonably
requested in order to enable them to render such opinion;
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(i) American shall have executed and delivered to EZ the
Stockholder Agreement, in form, scope and substance reasonably
satisfactory to EZ, and any individuals nominated as directors of
American pursuant to the provisions thereof shall have been elected,
subject to consummation of the Merger, directors of American;
(j) Each of the individuals listed in Section 7.3(j) of the EZ
Disclosure Schedule shall have been elected, subject to consummation of
the Merger, to the positions as officers of American set forth opposite
his or her name in such Section; and
(k) The employment agreements between EZ and each of Arthur
Kellar and Alan Box shall have been amended on terms reasonably
satisfactory to each of them.
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated at any time prior to
the Closing Date, whether before or after approval by the stockholders of
American and EZ:
(a) by mutual consent of EZ and American; or
(b) by either American or EZ if any permanent injunction,
decree or judgment by any Authority preventing the consummation of the
Merger shall have become final and nonappealable, unless the party
seeking such injunction, decree or judgment was the terminating party
or any Affiliate thereof; or
(c) by either American or EZ if the American Stockholder
Approval or the EZ Stockholder Approval is not obtained, so long as the
terminating party is not in Material breach of this Agreement and none
of its representations and warranties shall have been or become and
continue to be untrue in any Material respect; or
(d) by EZ in the event (i) EZ is not in Material breach of
this Agreement and none of its representations or warranties shall have
been or become and continue to be untrue in any Material respect, and
(ii) either (A) the Merger has not been consummated prior to the
Termination Date and American is in Material breach of this Agreement
or any of its representations or warranties shall have become and
continue to be untrue in any Material respect, or (B) such a breach or
untruth exists and is not capable of being cured by and will prevent or
delay consummation of the Merger by or beyond the Termination Date; or
(e) by American in the event (i) American is not in Material
breach of this Agreement and none of its representations or warranties
shall have been or become and continue to be untrue in any Material
respect, and (ii) either (A) the Merger has not been consummated prior
to the Termination Date and EZ is in Material breach of this Agreement
or any of its representations or warranties shall have become and
continue to be untrue in any Material respect, or (B) such a breach or
untruth exists and is not capable of being cured by and will prevent or
delay consummation of the Merger by or beyond the Termination Date; or
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(f) by EZ pursuant to and in compliance with the provisions of
Section 6.9; or
(g) by EZ, if the opinion letter that EZ received from CS
First Boston Corporation, to the effect that the Merger is fair, from a
financial point of view, to EZ's stockholders, shall have been
withdrawn prior to the receipt of the EZ Stockholder Approval; or
(h) by American, if the opinion letter that American received
from Morgan Stanley & Co. Incorporated, to the effect that the Merger
is fair, from a financial point of view, to American, shall have been
withdrawn prior to the receipt of the American Stockholder Approval.
The term "Termination Date" shall mean September 30, 1997 or such other date as
the parties may, from time to time, mutually agree.
The right of American or EZ to terminate this Agreement pursuant to
this Section shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of either party, any Person controlling
any such party or any of their respective Representatives, whether prior to or
after the execution of this Agreement.
8.2 Effect of Termination.
(a) Except as provided in Sections 6.1, 6.3, 6.9 and 9.3 and this
Section, in the event of the termination of this Agreement pursuant to Section
8.1, or in the event the Merger shall not have become effective prior to the end
of business on the day prior to the Termination Date, this Agreement shall
forthwith become void, there shall be no liability on the part of either party,
or any of their respective stockholders, officers or directors, to the other and
all rights and obligations of each party shall cease; provided, however, that
such termination shall not relieve either party from liability for any
misrepresentation or breach of any of its warranties, covenants or agreements
set forth in this Agreement.
(b) In the event this Agreement is terminated by (i) EZ pursuant to the
provisions of Section 8.1(d), or (ii) American pursuant to the provisions of
Section 8.1(e), then the terminating party shall be entitled to liquidated
damages in the amount of $15,000,000, together with the reasonable fees and
expenses of the terminating party incurred in connection with this Agreement and
the transactions contemplated hereby, including without limitation, fees and
expenses of its investment bankers, counsel, accountants, banks and other
lenders and other consultants and agents, it being agreed that such amount shall
constitute full payment for any and all damages suffered by the terminating
party by reason of other party's failure to consummate the Merger.
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In the event this Agreement is terminated by American pursuant to Section
8.1(h), then EZ shall be entitled to liquidated damages in the amount of
$15,000,000. American and EZ agree in advance that actual damages would be
difficult to ascertain and that $15,000,000, to the extent applicable, together
with such reasonable fees and expenses of the terminating party or EZ, as the
case may be, and rights of American set forth in Section 6.9(c) are a fair and
equitable amount to reimburse EZ or American, as the case may be, for damages
sustained due to American's or EZ's failure to consummate the Merger for the
reasons specified in this Section 8.2(b). In the event this Agreement is
terminated by EZ pursuant to Section 8.1(g), then American shall be entitled to
its rights set forth in Section 6.9(c). Notwithstanding the foregoing, each
party shall have the right to seek specific performance of this Agreement
pursuant to the provisions of Section 9.5, and, if such breach relates to the
provisions of Section 6.9, to the extent applicable, American shall have the
rights set forth in that Section.
(c) In the event this Agreement is terminated (i) by the parties
pursuant to the provisions of Section 8.1(a) or (ii) by EZ or American pursuant
to the provision of Section 8.1 (b) or Section 8.1(c) (other than a termination
under 8.1(c) resulting from a failure of EZ to obtain the EZ Stockholder
Approval, which failure was caused by a withdrawal by CS First Boston of its
opinion letter to EZ referenced in Sections 6.5(a) and 8.1(g)), except as
provided in Sections 8.2(a) and 8.2(b), neither of the parties shall have any
further rights or remedies.
ARTICLE 9
GENERAL PROVISIONS
9.1 Amendment. This Agreement may be amended from time to time by the
parties hereto at any time prior to the Closing Date but only by an instrument
in writing signed by the parties hereto and, after stockholder approval, subject
to Applicable Law.
9.2 Waiver. At any time prior to the Closing Date, except to the extent
not permitted by Applicable Law, American or EZ may extend the time for the
performance of any of the obligations or other acts of the other, subject,
however, to the provisions of Section 8.1, waive any inaccuracies in the
representations and warranties of the other contained herein or in any document
delivered pursuant hereto, and waive compliance by the other with any of the
agreements, covenants or conditions contained herein. Any such extension or
waiver shall be valid only if set forth in an instrument in writing signed by
the party or parties to be bound thereby.
9.3 Fees, Expenses and Other Payments. All costs and expenses incurred
in connection with any filing fees (including without limitation
Hart-Scott-Rodino Act filings and FCC filing fees), transfer Taxes, sales Taxes,
document stamps or other charges levied by any Authority in connection with this
Agreement and the Merger shall be borne equally by American and EZ. All other
costs and expenses incurred in connection with this Agreement, the Merger, and
in compliance with Applicable Law and Contractual Obligations as a consequence
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hereof and thereof, including without limitation, fees and disbursements of
counsel, financial advisors and accountants incurred by the parties hereto,
shall be borne solely and entirely by the party which has incurred such costs
and expenses (with respect to such party, its "Expenses").
9.4 Notices. All notices and other communications which by any
provision of this Agreement are required or permitted to be given shall be given
in writing and shall be (a) mailed by first-class or express mail, postage
prepaid, or by recognized courier service, (b) sent by telex, telegram, telecopy
or other form of rapid transmission, confirmed by mailing (by first class or
express mail, postage prepaid, or by recognized courier service) written
confirmation at substantially the same time as such rapid transmission, or (c)
personally delivered to the receiving party (which if, other than an individual,
shall be an officer or other responsible party of the receiving party). All such
notices and communications shall be mailed, sent or delivered as follows:
(a) If to American:
116 Huntington Avenue
Boston, Massachusetts 02116
Attention: Steven B. Dodge, President and Chief Executive Officer
Telecopier No.: (617) 375-7575
with a copy to:
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attention: Norman A. Bikales, Esq.
Telecopier No.: (617) 338-2880
(b) If to EZ:
10800 Main Street
Fairfax, Virginia 22030
Attention: Alan Box, Chief Executive Officer
Telecopier No.: (703) 934-1200
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with a copy to:
Hunton & Williams
1751 Pinnacle Drive
Suite 1700
McLean, Virginia 22102
Attention: Joseph W. Conroy, Esq.
Telecopier No.: (703) 714-7410
or to such other person(s), telex or facsimile number(s) or address(es) as the
party to receive any such communication or notice may have designated by written
notice to the other party.
9.5 Specific Performance; Other Rights and Remedies. Each party
recognizes and agrees that in the event the other party should refuse to perform
any of its obligations under this Agreement or any Collateral Document,
including without limitation, Section 6.9, the remedy at law would be inadequate
and agrees that for breach of such provisions, each party shall, in addition to
such other remedies as may be available to it at law or in equity or as provided
in Article 8, be entitled to injunctive relief and to enforce its rights by an
action for specific performance to the extent permitted by Applicable Law. Each
party hereby waives any requirement for security or the posting of any bond or
other surety in connection with any temporary or permanent award of injunctive,
mandatory or other equitable relief. Nothing herein contained shall be construed
as prohibiting each party from pursuing any other remedies available to it under
Applicable Law or pursuant to the provisions of, and subject to the limitations
contained in, this Agreement for such breach or threatened breach.
9.6 Non-Survival of Representations and Warranties. None of the
representations and warranties in this Agreement shall survive the Merger, and
after effectiveness of the Merger neither American, EZ or their respective
officers or directors shall have any further obligation with respect thereto.
9.7 Severability. If any term or provision of this Agreement shall be
held or deemed to be, or shall in fact be, invalid, inoperative, illegal or
unenforceable as applied to any particular case in any jurisdiction or
jurisdictions, or in all jurisdictions or in all cases, because of the
conflicting of any provision with any constitution or statute or rule of public
policy or for any other reason, such circumstance shall not have the effect of
rendering the provision or provisions in question invalid, inoperative, illegal
or unenforceable in any other jurisdiction or in any other case or circumstance
or of rendering any other provision or provisions herein contained invalid,
inoperative, illegal or unenforceable to the extent that such other provisions
are not themselves actually in conflict with such constitution, statute or rule
of public policy, but this Agreement shall be reformed and construed in any such
jurisdiction or case as if such invalid, inoperative, illegal or unenforceable
provision had never been contained herein and such provision reformed so that it
would be valid, operative and enforceable to the maximum extent permitted in
such jurisdiction or in such case. Notwithstanding the foregoing, in the event
of any such determination the effect of which is to Affect Materially and
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Adversely either party, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by Applicable Law in an acceptable
manner to the end that the Merger is fulfilled and consummated to the maximum
extent possible.
9.8 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, binding upon all of the
parties. In pleading or proving any provision of this Agreement, it shall not be
necessary to produce more than one of such counterparts.
9.9 Section Headings. The headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
9.10 Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by, and construed in accordance
with, the Applicable Laws of the United States of America and the laws of the
State of New York applicable to contracts made and performed in such State and,
in any event, without giving effect to any choice or conflict of laws provision
or rule that would cause the application of domestic substantive laws of any
other jurisdiction, except to the extent the corporate laws of the State of
Delaware or the Commonwealth of Virginia are applicable. Anything in this
Agreement to the contrary notwithstanding, in the event of any dispute between
the parties which results in a Legal Action, the prevailing party shall be
entitled to receive from the non-prevailing party reimbursement for reasonable
legal fees and expenses incurred by such prevailing party in such Legal Action.
9.11 Further Acts. Each party agrees that at any time, and from time to
time, before and after the consummation of the transactions contemplated by this
Agreement, it will do all such things and execute and deliver all such
Collateral Documents and other assurances, as the other party or its counsel
reasonably deems necessary or desirable in order to carry out the terms and
conditions of this Agreement and the transactions contemplated hereby or to
facilitate the enjoyment of any of the rights created hereby or to be created
hereunder.
9.12 Entire Agreement. This Agreement (together with the Disclosure
Schedules and the other Collateral Documents delivered in connection herewith)
constitutes the entire agreement of the parties and supersedes all prior
agreements and undertakings, both written and oral, between the parties, with
respect to the subject matter hereof.
9.13 Assignment. This Agreement shall not be assignable by either party
and any such assignment shall be null and void, except that it shall inure to
the benefit of and be binding upon any successor to each party by operation of
Law, including by way of merger, consolidation or sale of all or substantially
all of its assets, and each party may assign its rights and remedies hereunder
to any bank or other financial institution which has loaned funds or otherwise
extended credit to it.
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9.14 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any Person any right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement,
except as otherwise provided in Sections 6.15 and 9.13.
9.15 Mutual Drafting. This Agreement is the result of the joint efforts
of American and EZ, and each provision hereof has been subject to the mutual
consultation, negotiation and agreement of the parties and there shall be no
construction against either party based on any presumption of that party's
involvement in the drafting thereof.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, American and EZ have caused this Agreement and Plan
of Merger to be executed, pursuant to the authority and approval of each of
their respective Boards of Directors, as of the date first written above by
their respective officers thereunto duly authorized.
American Radio Systems Corporation
By: /s/ Steven B. Dodge
Name: Steven B. Dodge
Title: Chairman of the Board, President and
Chief Executive Officer
EZ Communications, Inc.
By: /s/ Arthur Kellar
Name: Arthur Kellar
Title: Chairman of the Board
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APPENDIX A
DEFINITIONS
As used in this Agreement, unless the context otherwise requires, the
following terms (or any variant in the form thereof) have the following
respective meanings. Terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa, and the reference to any gender
shall be deemed to include all genders. Unless otherwise defined or the context
otherwise clearly requires, terms for which meanings are provided herein shall
have such meanings when used in either Disclosure Schedule, and each Collateral
Document executed or required to be executed pursuant hereto or thereto or
otherwise delivered, from time to time, pursuant hereto or thereto. References
to "hereof," "herein" or similar terms are intended to refer to the Agreement as
a whole and not a particular section, and references to "this Section" of "this
Article" are intended to refer to the entire section or article and not a
particular subsection thereof.
Adverse, Adversely, when used alone or in conjunction with other terms
(including without limitation "Affect," "Change" and "Effect") shall mean any
Event that is reasonably likely, in the reasonable business judgment of American
or EZ, as the case may be, to be expected to (a) adversely affect the validity
or enforceability of this Agreement or the likelihood of consummation of the
Merger, or (b) adversely affect the business, operations, management, properties
or prospects, or the condition, financial or other, or results of operation of
the EZ Stations or the American Stations (or, in the event that the acquisition
of any radio station is consummated prior to the Effective Time in accordance
with the terms of this Agreement, the Station so acquired pursuant to such
transaction), as the case may be, or (c) impair EZ's or American's, as the case
may be, ability to fulfill its obligations under the terms of this Agreement, or
(d) adversely affect the aggregate rights and remedies of American or EZ, as the
case may be, under this Agreement. Notwithstanding the foregoing, and anything
in this Agreement to the contrary notwithstanding, any Event affecting the radio
broadcasting industry generally shall not be deemed to constitute an Adverse
Change, have an Adverse Effect or to Adversely Affect the Stations, American or
EZ, as applicable.
Affiliate, Affiliated shall mean, with respect to any Person, (a) any
other Person at the time directly or indirectly controlling, controlled by or
under direct or indirect common control with such Person, (b) any other Person
of which such Person at the time owns, or has the right to acquire, directly or
indirectly, twenty percent (20%) or more of any class of the capital stock or
beneficial interest, (c) any other Person which at the time owns, or has the
right to acquire, directly or indirectly, twenty percent (20%) or more of any
class of the capital stock or beneficial interest of such Person, (d) any
executive officer or director of such Person, (e) with respect to any
partnership, joint venture or similar Entity, any general partner thereof, and
(f) when used with respect to an individual, shall include any member of such
individual's immediate family or a family trust.
Affiliate Agreement shall have the meaning given to it in Section 6.7.
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Agreement shall have the meaning given to it in the first "Whereas"
paragraph and shall include any amendments executed and delivered by the parties
pursuant to the provisions of Section 9.1.
American shall have the meaning given to it in the Preamble.
American Brokered Stations shall mean the radio broadcast stations
which American has the right to acquire but which as of the date of this
Agreement it is operating pursuant to time brokerage, local marketing or other
similar Agreements.
American Class A Common Stock shall have the meaning given to it in
Section 3.1(c).
American Common Stock shall have the meaning given to it in Section
3.1(b).
American Disclosure Schedule shall mean the American Disclosure
Schedule, if any, delivered by American to EZ.
American Financial Statements shall have the meaning given to it in
Section 5.2.
American SEC Documents shall have the meaning given to it in Section
5.2.
American Stations means the radio broadcast stations owned by American,
or which it has the right to acquire (and acquires prior to the Closing Date but
only from and after such acquisition) as of the date of this Agreement;
provided, however, that American Stations shall not include any American Station
disposed of by American subsequent to the date of this Agreement not in
violation of the provisions of this Agreement; further, provided, that the term
American Stations shall include American Brokered Stations if the context so
requires.
American Stockholder Approval shall have the meaning given to it in
Section 6.5(b).
American 10-K shall have the meaning given to it in Section 5.2.
American Voting Agreement shall have the meaning given to it in Section
6.17.
American's knowledge (including the term "to the knowledge, information
and belief of American") means the knowledge of any American director or
executive officer, and that such director or executive officer, after reasonable
inquiry of appropriate American executives and reasonable review of appropriate
American records, to the extent customary in connection with transactions such
as the Merger, shall have reason to believe and shall believe that the subject
representation or warranty is true and accurate as stated.
Antitrust Division shall have the meaning given to it in Section
6.2(c).
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Applicable Law shall mean, with respect to any Person, any Law of any
Authority, whether domestic or foreign, including without limitation all federal
and state securities and Environmental Laws, to which such Person is subject or
by which it or any of its business or operations is subject or any of its
property or assets is bound.
Authority shall mean any governmental or quasi-governmental authority,
whether administrative, executive, judicial, legislative or other, or any
combination thereof, including without limitation any federal, state,
territorial, county, municipal or other government or governmental or
quasi-governmental agency, arbitrator, authority, board, body, branch, bureau,
central bank or comparable agency or Entity, commission, corporation, court,
department, instrumentality, master, mediator, panel, referee, system or other
political unit or subdivision or other Entity of any of the foregoing, whether
domestic or foreign.
Benefit Arrangement shall mean, with respect to any Person, any
material benefit arrangement that is not a Plan, including (a) any employment or
consulting agreement, (b) any arrangement providing for insurance coverage or
workers' compensation benefits, (c) any incentive bonus or deferred bonus
arrangement, (d) any arrangement providing termination allowance, severance or
similar benefits, (e) any equity compensation plan, and (f) any deferred
compensation plan, but only to the extent that it covers or relates to any
officer, employee or other Person involved in the ownership, operation or
conduct of the business of any of the Stations of such Person.
Broadcast Cash Flow shall mean, with respect to any Person, the excess,
if any, of the net revenues (exclusive of trade or barter items) over operating
expenses (exclusive of trade or barter items and corporate overhead) of such
Person and its Subsidiaries taken as a whole.
Cash Consideration shall have the meaning given to it in Section
3.1(c).
Certificates shall have the meaning given to it in Section 3.2(b).
Claims shall mean any and all debts, liabilities, obligations, losses,
damages, deficiencies, assessments and penalties, together with all Legal
Actions, pending or threatened, claims and judgments of whatever kind and nature
relating thereto, and all fees, costs, expenses and disbursements (including
without limitation reasonable attorneys' and other legal fees, costs and
expenses) relating to any of the foregoing.
Closing shall have the meaning given to it in Section 2.2.
Closing Date shall have the meaning given to it in Section 2.2.
COBRA shall mean the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended, as set forth in Section 4980B of the Code and Part 6 of
Subtitle B of Title I of ERISA.
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Code shall mean the Internal Revenue Code of 1986, and the rules and
regulations thereunder, all as from time to time in effect, or any successor
law, rules or regulations, and any reference to any statutory or regulatory
provision shall be deemed to be a reference to any successor statutory or
regulatory provision.
Collateral Document shall mean any agreement, certificate, contract,
instrument, notice, opinion or other document delivered pursuant to the
provisions of this Agreement, including without limitation, the registration
rights agreement required to be delivered by American pursuant to the provisions
of Section 7.3(h), the Stockholder Agreement, the EZ Voting Agreement, the
American Voting Agreement and the Affiliate Agreement.
Commission or SEC shall mean the Securities and Exchange Commission and
shall include any successor Authority.
Common Stock Consideration shall have the meaning given to it in
Section 3.1(c).
Contract, Contractual Obligation shall mean, with respect to any
Person, any agreement, arrangement, commitment, contract, covenant, indemnity,
undertaking or other obligation or liability which involves the ownership,
operation or conduct of the business of any of the Stations of such Person.
Control (including the terms "controlled," "controlled by" and "under
common control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the management or
policies of a Person, or the disposition of such Person's assets or properties,
whether through the ownership of stock, equity or other ownership, by contract,
arrangement or understanding, or as trustee or executor, by contract or credit
arrangement or otherwise.
Convertible Securities shall mean any evidences of indebtedness, shares
of capital stock (other than common stock) or other securities directly or
indirectly convertible into or exchangeable for shares of common stock, whether
or not the right to convert or exchange thereunder is immediately exercisable or
is conditioned upon the passage of time, the occurrence or non-occurrence or
existence or non-existence of some other Event, or both.
DCL shall have the meaning given to it in Section 2.1.
Disclosure Schedule shall mean the American Disclosure Schedule, if
any, or the EZ Disclosure Schedule, as the case may be.
Dissenting Shares shall have the meaning given to it in Section 3.4(a).
Effective Time shall have the meaning given to it in Section 2.3.
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Employment Arrangement shall mean, with respect to any Person, any
employment, consulting, retainer, severance or similar contract, agreement,
plan, arrangement or policy (exclusive of any which is terminable within thirty
(30) days without liability, penalty or payment of any kind by such Person or
any Affiliate), providing for severance, termination payments, insurance
coverage (including any self-insured arrangements), workers compensation,
disability benefits, life, health, medical, dental or hospitalization benefits,
supplemental unemployment benefits, vacation or sick leave benefits, pension or
retirement benefits or for deferred compensation, profit-sharing, bonuses, stock
options, stock purchase or appreciation rights or other forms of incentive
compensation or post-retirement insurance, compensation or post-retirement
insurance, compensation or benefits, or any collective bargaining or other labor
agreement, whether or not any of the foregoing is subject to the provisions of
ERISA, but only to the extent that it covers or relates to any officer, employee
or other Person involved in the ownership, operation or conduct of the business
of any of the Stations of such Person; provided, however, that none of the
foregoing shall be deemed to include any Plan, Benefit Arrangement, or Option
Security.
Encumber shall mean to suffer, accept, agree to or permit the
imposition of a Lien.
Entity shall mean any corporation, firm, unincorporated organization,
association, partnership, limited liability company, trust (inter vivos or
testamentary), estate of a deceased, insane or incompetent individual, business
trust, joint stock company, joint venture or other organization, entity or
business, whether acting in an individual, fiduciary or other capacity, or any
Authority.
Environmental Law shall mean any Law relating to or otherwise imposing
liability or standards of conduct concerning pollution or protection of the
environment, including without limitation, Laws relating to emissions,
discharges, releases or threatened releases of Hazardous Materials or other
chemicals or industrial pollutants, substances, materials or wastes into the
environment (including, without limitation, ambient air, surface water, ground
water, mining or reclamation of mined land, land surface or subsurface strata)
or otherwise relating to the manufacture, processing, generation, distribution,
use, treatment, storage, disposal, cleanup, transport or handling of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances, materials
or wastes. Environmental Laws shall include without limitation the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. Section 6901
et seq.), the Hazardous Material Transportation Act (49 U.S.C. Section 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et
seq.), the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.),
the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances Control
Act (15 U.S.C. Section 2601 et seq.), the Occupational Safety and Health Act (29
U.S.C. Section 651 et seq.), the Federal Insecticide, Fungicide and Rodenticide
Act (7 U.S.C. Section 136 et seq.), and the Surface Mining Control and
Reclamation Act of 1977 (30 U.S.C. Section 1201 et seq.), and any analogous
federal, state, local or foreign Laws, and the rules and regulations promulgated
thereunder, all as from time to time in effect, and any reference to any such
statutory or regulatory provision shall be deemed to be a reference to any
successor statutory or regulatory provision.
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Environmental Permit shall mean, with respect to any Person, any
Governmental Authorization required by or pursuant to any Environmental Law.
ERISA shall mean the Employee Retirement Income Security Act of 1974,
and the rules and regulations thereunder, all as from time to time in effect, or
any successor law, rules or regulations, and any reference to any such statutory
or regulatory provision shall be deemed to be a reference to any successor
statutory or regulatory provision.
ERISA Affiliate shall mean any Person that is treated as a single
employer with EZ or American, as the case may be, under Sections 414(b), (c),
(m) or (o) of the Code or Section 4001(b)(1) of ERISA.
Event shall mean the existence or occurrence of any act, action,
activity, circumstance, condition, event, fact, failure to act, omission,
incident or practice, or any set or combination of any of the foregoing.
Exchange Act shall mean the Securities Exchange Act of 1934, and the
rules and regulations thereunder, all as from time to time in effect, or any
successor law, rules or regulations, and any reference to any such statutory or
regulatory provision shall be deemed to be a reference to any successor
statutory or regulatory provision.
Exchange Agent shall have the meaning given to it in Section 3.2(a).
Exchange Agent Agreement shall have the meaning given to it in Section
3.2(a).
Exchange Ratio shall have the meaning given to it in Section 3.1(c).
Exchanged Options shall have the meaning given to it in Section 3.1(e).
EZ shall have the meaning given to it in the Preamble.
EZ Brokered Stations shall mean the radio broadcast stations which EZ
has the right to acquire, but which as of the date of this Agreement it is
operating pursuant to time brokerage, local marketing or other similar
Agreements.
EZ Common Stock shall have the meaning given to it in Section 3.1(c).
EZ Disclosure Schedule shall mean the EZ Disclosure Schedule dated as
of the date of this Agreement delivered by EZ to American simultaneously with
the execution and delivery of this Agreement, it being understood that
disclosure of information in any part thereof shall be deemed to apply to each
reference to the EZ Disclosure Schedule, whether or not the particular or
applicable section herein is actually referenced.
EZ Financial Statements shall have the meaning given to it in Section
4.2.
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EZ Options shall have the meaning given to it in Section 3.1(e).
EZ SEC Documents shall have the meaning given to it in Section 4.2.
EZ Stations means the radio broadcast stations owned by EZ, or which it
has the right to acquire (and acquires prior to the Closing Date but only from
and after such acquisition) as of the date of this Agreement; provided, however,
that EZ Stations shall not include any EZ Station disposed of by EZ subsequent
to the date of this Agreement not in violation of the provisions of this
Agreement; further, provided, that EZ Stations shall include EZ Brokered
Stations if the context so requires.
EZ Stockholder Approval shall have the meaning given to it in Section
6.5(a).
EZ 10-K shall have the meaning given to it in Section 4.2.
EZ Voting Agreement shall have the meaning given to it in Section 6.17.
EZ's knowledge (including the term "to the knowledge, information and
belief of EZ") means the knowledge of any EZ officer or director, and that such
Person, after reasonable inquiry of appropriate executives of EZ and reasonable
review of appropriate EZ records, to the extent customary in transactions such
as the Merger, shall have reason to believe and shall believe that the subject
representation or warranty is true and accurate as stated.
FCA shall mean the Communication Act of 1934, and the rules and
regulations thereunder, all as from time to time in effect, or any successor
law, rules or regulations, and any reference to any such statutory or regulatory
provision shall be deemed to be a reference to any successor statutory or
regulatory provision.
FCC shall mean the Federal Communications Commission and shall include
any successor Authority.
FCC Consents shall mean the actions of the FCC granting its consents to
the transfer of the FCC Licenses relating to the EZ Stations to American and to
any possible change in control of American or EZ.
FCC Licenses shall mean all Governmental Authorizations issued by the
FCC to American or its Subsidiaries in connection with the ownership, operation
and conduct of the business of the EZ Stations.
Fiduciary Determinations shall have the meaning given to it in Section
6.9(a).
Final Order shall mean, with respect to any Authority, including
without limitation the FCC, a consent or approval with respect to which no
appeal, no stay, no petition or application for rehearing, reconsideration,
review or stay, whether on motion of the applicable Authority or other Person
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or otherwise, and no other Legal Action contesting such consent or approval, is
in effect or pending and as to which the time or deadline for filing any such
appeal, petition or application or other Legal Action has expired or, if filed,
has been denied, dismissed or withdrawn, and the time or deadline for
instituting any further Legal Action has expired.
FTC shall have the meaning given to it in Section 6.2(c).
GAAP shall mean generally accepted accounting principles as in effect
from time to time in the United States of America.
Governmental Authorizations shall mean all approvals, concessions,
consents, franchises, licenses, permits, plans, registrations and other
authorizations of all Authorities, including the FCC Licenses, issued by the
FCC, the Federal Aviation Administration and any other Authority in connection
with the conduct of business or operations of any of the Stations.
Governmental Filings shall mean all filings, including franchise and
similar Tax filings, and the payment of all fees, assessments, interest and
penalties associated with such filings, with all Authorities.
Hart-Scott-Rodino Act shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, and the rules and regulations thereunder, all as from
time to time in effect, or any successor law, rules or regulations, and any
reference to any such statutory or regulatory provision shall be deemed to be a
reference to any successor statutory or regulatory provision.
Hazardous Materials shall mean and include any substance, material,
waste, constituent, compound, chemical, natural or man-made element or force (in
whatever state of matter): (a) the presence of which requires investigation or
remediation under any Environmental Law; or (b) that is defined as a "hazardous
waste" or "hazardous substance" under any Environmental Law; or (c) that is
toxic, explosive, corrosive, etiologic, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous and is regulated by any
applicable Authority or subject to any Environmental Law; or (d) the presence of
which on the real property owned or leased by a Person causes or threatens to
cause a nuisance upon any such real property or to adjacent properties or poses
or threatens to pose a hazard to the health or safety of persons on or about any
such real property; or (e) the presence of which on adjacent properties could
constitute a trespass by such Person; or (f) that contains gasoline, diesel fuel
or other petroleum hydrocarbons, or any by-products or fractions thereof,
natural gas, polychlorinated biphenyls ("PCBs") and PCB-containing equipment,
radon or other radioactive elements, ionizing radiation, electromagnetic field
radiation and other non-ionizing radiation, sonic forces and other natural
forces, lead, asbestos or asbestos-containing materials ("ACM"), or urea
formaldehyde foam insulation.
Joint Proxy Statement/Prospectus shall have the meaning given to it in
Section 6.6(a).
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Law shall mean any (a) administrative, judicial, legislative or other
action, code, consent decree, constitution, decree, directive, enactment,
finding, guideline, law, injunction, interpretation, judgment, order, ordinance,
policy statement, proclamation, promulgation, regulation, requirement, rule,
rule of law, rule of public policy, settlement agreement, statute, or writ of
any Authority, domestic or foreign; (b) the common law, or other legal or
quasi-legal precedent; or (c) arbitrator's, mediator's or referee's award,
decision, finding or recommendation; including, in each such case or instance,
any interpretation, directive, guideline or request, whether or not having the
force of law, including, in all cases, without limitation any particular
section, part or provision thereof.
Leases shall mean any lease of property, whether real, personal or
mixed and all amendments thereto.
Legal Action shall mean, with respect to any Person, any and all
litigation or legal or other actions, arbitrations, counterclaims,
investigations, proceedings, requests for material information by or pursuant to
the order of any Authority or suits, at law or in arbitration, equity or
admiralty, whether or not purported to be brought on behalf of such Person,
affecting such Person or any of such Person's business, property or assets.
Lien shall mean any of the following: mortgage; lien (statutory or
other), or other security agreement, arrangement or interest; hypothecation,
pledge or other deposit arrangement; assignment; charge; levy; executory
seizure; attachment; garnishment; encumbrance (including any easement,
exception, reservation or limitation, right of way, and the like); conditional
sale, title retention or other similar agreement, arrangement, device or
restriction; preemptive or similar rights; any financing lease involving
substantially the same economic effect as any of the foregoing; the filing of
any financing statement under the Uniform Commercial Code or comparable law of
any jurisdiction; restriction on sale, transfer, assignment, disposition or
other alienation; or any option, equity, claim or right of or obligation to, any
other Person, of whatever kind and character.
Material, Materially or materiality for the purposes of this Agreement,
shall, unless specifically stated to the contrary, be determined without regard
to the fact that various provisions of this Agreement set forth specific dollar
amounts.
Material Agreement shall mean, with respect to any Person, any
Contractual Obligation which (a) was not entered into in the ordinary course of
business, (b) was entered into in the ordinary course of business which (i)
involved the purchase, sale or lease of goods or materials, or purchase of
services, aggregating more than $500,000 during any of the last three fiscal
years of such Person, (ii) extends for more than three (3) months, or (iii) is
not terminable on thirty (30) days or less notice without penalty or other
payment, (c) involves indebtedness for money borrowed, (d) is or otherwise
constitutes a written agency, broker, dealer, license, distributorship, sales
representative or similar written agreement, or (e) accounted for more than
three percent (3%) of the revenues of the American Stations or the EZ Stations,
as the case may be, in any of the last three fiscal years of such Person or is
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likely to account for more than three percent (3%) of revenues of the American
Stations or the EZ Stations, as the case may be, during the current fiscal year
of such Person.
Merger shall have the meaning given to it in the first "Whereas"
paragraph.
Merger Consideration shall have the meaning given to it in Section
3.1(c).
Multiemployer Plan shall mean a Plan which is a "multiemployer plan"
within the meaning of Section 4001(a)(3) of ERISA.
Nasdaq shall have the meaning given to it in Section 3.2(d).
Option Securities shall mean all rights, options, calls, contracts,
agreements, warrants, understandings, restrictions, arrangements or commitments,
including without limitation, any rights plan or other anti-takeover agreement
or arrangement, evidencing the right to subscribe for, purchase or otherwise
acquire shares of capital stock or Convertible Securities, whether or not the
right to subscribe for, purchase or otherwise acquire is immediately exercisable
or is conditioned upon the passage of time, the occurrence or non-occurrence or
the existence or non-existence of some other Event.
Organic Document shall mean, with respect to a Person which is a
corporation, its charter, its by-laws and all stockholder agreements, voting
trusts and similar arrangements applicable to any of its capital stock and, with
respect to a Person which is a partnership, its agreement and certificate of
partnership, any agreements among partners, and any management and similar
agreements between the partnership and any general partners (or any Affiliate
thereof).
PBGC shall mean the Pension Benefit Guaranty Corporation and any Entity
succeeding to any or all of its functions under ERISA.
Permitted Investments shall have the meaning given to it in Section
3.2(a).
Permitted Liens shall mean (a) Liens for current Taxes not yet due and
payable, and (b) such imperfections of title, easements, encumbrances and
mortgages or other Liens, if any, as are not, individually or in the aggregate,
substantial in character, amount or extent and do not Materially detract from
the value, or Materially interfere with the present use, of the property subject
thereto or affected thereby, or otherwise Materially impair the business or
operations of the EZ Stations or the American Stations, as the case may be.
Person shall mean any natural individual or any Entity.
Plan shall mean, with respect to any Person and at a particular time,
any employee benefit plan which is covered by ERISA and in respect of which such
Person or an ERISA Affiliate is (or, if such plan were terminated at such time,
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would under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA, but only to the extent that it covers or relates to any
officer, employee or other Person involved in the ownership and operation of the
assets or the conduct of the business of any of the Stations of such Person.
Private Authorizations shall mean all approvals, concessions, consents,
franchises, licenses, permits, and other authorizations of all Persons (other
than Authorities) including without limitation those with respect to copyrights,
computer software programs, patents, service marks, trademarks, trade names,
technology and know-how.
Purchase Proposal shall have the meaning given to it in Section 6.9(e).
Registration Statement shall have the meaning given to it in Section
6.6(a).
Regulations shall mean the federal income tax regulations promulgated
under the Code, as such Regulations may be amended from time to time. All
references herein to specific sections of the Regulations shall be deemed also
to refer to any corresponding provisions of succeeding Regulations, and all
references to temporary Regulations shall be deemed also to refer to any
corresponding provisions of final Regulations.
Representatives shall have the meaning given to it in Section 6.1(a).
Securities Act shall mean the Securities Act of 1933, and the rules and
regulations of the Commission thereunder, all as from time to time in effect, or
any successor law, rules or regulations, and any reference to any such statutory
or regulatory provision shall be deemed to be a reference to any successor
statutory or regulatory provision.
Station Fair Market Value shall have the meaning given it in Section
6.9(c)(ii).
Stations shall mean, collectively, the EZ Stations and the American
Stations.
Stockholder Agreement shall have the meaning given to it in Section
7.2(i).
Subsidiary shall mean, with respect to a Person, any Entity a majority
of the capital stock ordinarily entitled to vote for the election of directors
of which, or if no such voting stock is outstanding, a majority of the equity
interests of which, is owned directly or indirectly, legally or beneficially, by
such Person or any other Person controlled by such Person.
Surviving Corporation shall have the meaning given to it in Section
2.1.
Tax (and "Taxable," which shall mean subject to Tax), shall mean, with
respect to any Person, (a) all taxes (domestic or foreign), including without
limitation any income (net, gross or other, including recapture of any tax items
such as investment tax credits), alternative or add-on minimum tax, gross
income, gross receipts, gains, sales, use, leasing, lease, user, ad valorem,
transfer, recording, franchise, profits, property (real or personal, tangible or
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intangible), fuel, license, withholding on amounts paid to or by such Person,
payroll, employment, unemployment, social security, excise, severance, stamp,
occupation, premium, environmental or windfall profit tax, custom, duty or other
tax, or other like assessment or charge of any kind whatsoever, together with
any interest, levies, assessments, charges, penalties, additions to tax or
additional amounts imposed by any Taxing Authority, (b) any joint or several
liability of such Person with any other Person for the payment of any amounts of
the type described in (a) of this definition, and (c) any liability of such
Person for the payment of any amounts of the type described in (a) as a result
of any express or implied obligation to indemnify any other Person.
Tax Claim shall mean any Claim which relates to Taxes.
Tax Return or Returns shall mean all returns, consolidated or otherwise
(including without limitation information returns), required to be filed with
any Authority with respect to Taxes.
Taxing Authority shall mean any Authority responsible for the
imposition of any Tax.
Termination Date shall have the meaning given to it in Section 8.1.
30 Day Date shall have the meaning given to it in Section 6.9(c)(i).
VCA shall have the meaning given to it in Section 2.1.
WBZZ Renewal Proceedings shall have the meaning given to it in Section
7.2(k).
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EXHIBIT 2.2
EZ VOTING AGREEMENT
THIS VOTING AGREEMENT, is dated as of August 5, 1996, by and among each
of the undersigned stockholders (individually, a "Stockholder" and collectively,
the "Stockholders") of EZ Communications, Inc., a Virginia corporation ("EZ"),
and American Radio Systems Corporation, a Delaware corporation ("American").
W I T N E S S E T H :
WHEREAS, each of the Stockholders is the beneficial and record owner of
the shares of EZ Common Stock set forth opposite each such Stockholder's name on
Schedule A;
WHEREAS, concurrently with the execution of this Agreement, American
and EZ are entering into an Agreement and Plan of Merger (the "Merger
Agreement") pursuant to which EZ will be merged with and into American (the
"Merger"), with American continuing as the Surviving Corporation; and
WHEREAS, in order to induce American to enter into the Merger
Agreement, the Stockholders wish to make certain representations, warranties,
covenants and agreements in connection with the Merger.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. Terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa, and the reference to any gender
shall be deemed to include all genders. Capitalized terms used herein but not
otherwise defined herein shall have the respective meanings ascribed thereto in
the Merger Agreement and the following terms shall have the following meanings:
"beneficially own" shall have the meaning set forth in Rule
13d-3 under the Exchange Act.
"Permitted Assignee" shall mean with respect to each
Stockholder, (a) a Stockholder, (b) a Stockholder's lineal descendants,
(c) a trust for the benefit of, the estate of, executors, personal
representatives, administrators, guardians or conservators of, any of
the individuals referred to in the foregoing clauses (a) and (b) (but
only in their capacity as such) and (d) charitable trusts and
charitable foundations formed by a Stockholder.
<PAGE>
"Representatives" shall have the meaning set forth in Section 3.4.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS
2.1 Representations and Warranties of the Stockholders. Each
Stockholder represents and warrants, severally but not jointly, to American as
follows:
(a) Ownership of Company Shares. Such Stockholder is the
beneficial owner of the shares of EZ Common Stock set forth opposite
such Stockholder's name on Schedule A, free and clear of all Liens.
There are no rights, agreements, arrangements or commitments of any
character to which such Stockholder is a party relating to the pledge,
disposition or voting of any shares of capital stock of EZ or any of
its Subsidiaries that are owned by such Stockholder, and there are no
voting trusts or voting agreements with respect to such shares. The
shares of EZ Common Stock set forth opposite such Stockholder's name on
Schedule A constitute all of the outstanding shares of capital stock of
EZ owned beneficially or of record by such Stockholder and, except as
disclosed in the EZ Disclosure Schedule, such Stockholder does not have
any Convertible Securities or Option Securities of EZ.
(b) Authority to Execute and Perform Agreements. Such
Stockholder has the full legal right and power and all authority
required to enter into, execute and deliver this Agreement and to
perform fully such Stockholder's obligations hereunder. The execution
and delivery of this Agreement by such Stockholder have been duly
authorized by all requisite organizational action, if any, on the part
of such Stockholder. This Agreement has been duly executed and
delivered and constitutes the legal, valid and binding obligation of
such Stockholder enforceable against such Stockholder in accordance
with its terms, except as the enforceability may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or similar laws now or hereafter in effect generally
affecting creditors' rights or by general principles of equity,
regardless of whether such enforceability is considered in a proceeding
in equity or at law.
(c) No Conflicts; Consents.
(i) The execution and delivery by such Stockholder of
this Agreement do not, and the consummation of the
transactions contemplated hereby will not, conflict with or
result in any violation of or default (with or without
notice or lapse of time, or both) under (A) any contract,
agreement or other binding arrangement to which such
Stockholder is a party or (B) any judgment, order, writ,
injunction or decree of any court, governmental body,
administrative agency or arbitrator applicable to such
Stockholder.
2
<PAGE>
(ii) No consents, approvals or authorizations of, or
notices or filings with, any Governmental Authority or any
Third Party are required to be obtained or made by such
Stockholder in connection with the execution and delivery by
such Stockholder of this Agreement and the consummation of
the transactions contemplated hereby.
(d) Ownership of American Common Stock. As of the date hereof,
(i) such Stockholder does not, and, to its best knowledge, its
Affiliates do not, beneficially own, directly or indirectly, shares of
American Common Stock (or Convertible Securities or Option Securities
of American) and (ii) such Stockholder is not, and, to its best
knowledge, its Affiliates are not, parties to any agreement,
arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of, shares of American Common Stock (or Convertible
Securities or Option Securities of American).
ARTICLE III
COVENANTS
3.1 No Disposition of Shares. Each of the Stockholders agrees that,
except as set forth in Schedule A, such Stockholder shall not sell, transfer,
pledge, hypothecate, encumber or otherwise dispose of (except upon such
Stockholder's death), or enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, pledge, hypothe cation,
encumbrance or other disposition of, any of the shares of the EZ Common Stock
set forth opposite such Stockholder's name on Schedule A; provided, however,
that such Stockholder shall have the right to transfer such shares to a
Permitted Assignee if such Permitted Assignee becomes a party to this Agreement
and agrees to be bound by the terms hereof. Each Stockholder agrees that the
certificates representing the shares of EZ Common Stock owned by such
Stockholder shall bear a legend indicating that such shares are subject to this
Agreement, which legend may be removed upon termination of this Agreement.
Except as specifically set forth herein, each Stockholder agrees not to exchange
or convert any shares of Class B Common Stock of EZ for or into shares of Class
A Common Stock of EZ.
3.2 Voting Arrangements. Each of the Stockholders agrees that, except
pursuant to this Agreement, it shall not grant any proxies, deposit any shares
of EZ Common Stock into a voting trust or enter into any voting agreement with
respect to any shares of EZ Common Stock now or hereafter owned by such
Stockholder, other than proxies to vote such shares at any annual or special
meeting of stockholders of EZ on matters unrelated to the matters set forth in
Section 4.1 hereof.
3.3 Satisfaction of Conditions to the Merger. Each of the Stockholders
agrees that, subject to his fiduciary duty as a director of EZ, such
Stockholder, in its capacity as such, shall assist and cooperate with the
parties to the Merger Agreement in doing all things necessary, proper or
advisable under Applicable Laws as promptly as practicable to consummate and
make effective the Merger and the other transactions contemplated by the Merger
Agreement and the Collateral Documents and such Stockholder shall not take any
action that would or is reasonably likely to result in any of its
representations and warranties set forth in this Agreement being untrue as of
the date made or in any of the conditions set forth in Article 7 of the Merger
Agreement not being satisfied.
3
<PAGE>
3.4 No Solicitation. Each of the Stockholders agrees that such
Stockholder shall not, nor shall it authorize or permit any of its agents,
investment bankers, attorneys, financial advisors or other representatives
(collectively, "Representatives") to, directly or indirectly, solicit, initiate
or encourage (including by way of furnishing information or assistance) or take
other action to facilitate any inquiries or the making of any proposal that
constitutes or may reasonably be expected to lead to, a Purchase Proposal from
any Person other than American, or engage in any discussions or negotiations
relating thereto or in furtherance thereof or accept or enter into any agreement
with respect to any Purchase Proposal; provided, however, that, notwithstanding
any other provision of this Agreement, if such Stockholder or Representative is
a member of the Board of Directors, such Stockholder or Representative may take
any action, including casting a vote or signing a written consent, in such
Person's capacity as a director that the Board of Directors would be permitted
to take in accordance with Section 6.9 of the Merger Agreement. Subject to the
foregoing, such Stockholder shall immediately cease and cause to be terminated
any existing solicitation, initiation, encouragement, activity, discussion or
negotiation with any parties conducted heretofore by such Stockholder or any of
its Representatives with respect to any of the foregoing. Each such Stockholder
shall promptly (but in any event within 24 hours thereafter) notify American
orally and in writing of any Purchase Proposal or any inquiry which could lead
to a Purchase Proposal, within 24 hours of the receipt thereof, including the
identity of the Third Party making any such Purchase Proposal or inquiry and the
material terms and conditions of any Purchase Proposal, and if such inquiry or
proposal is in writing, such Stockholder shall deliver to American a copy of
such inquiry or proposal.
ARTICLE IV
PROXY; CONVERSION;
ELECTIONS; WAIVER OF RIGHTS
4.1 Proxy. Each Stockholder hereby agrees that, during the term of this
Agreement, at any meeting of the stockholders of EZ, however called, and at
every adjournment thereof, and in any action by written consent of the
stockholders of EZ, to (a) vote all of the shares of EZ Common Stock then owned
by such Stockholder in favor of the adoption of the Merger Agreement as in
effect on the date hereof (as such agreement may be amended (i) as contemplated
by Section 9.1 of the Merger Agreement or (ii) with the consent of such
Stockholder) and each of the other transactions contemplated thereby and any
action required in furtherance thereof, (b) vote such shares against any action
or agreement that would result in a breach in any material respect of any
covenant, representation or warranty or any other obligation of EZ under the
Merger Agreement, and (c) vote such shares against any Purchase Proposal or any
other action or agreement that, directly or indirectly, is inconsistent with or
that would, or is reasonably likely to, directly or indirectly, impede,
interfere with or attempt to discourage the Merger or any other transaction
contemplated by the Merger Agreement, including, but not limited to (i) any
extraordinary corporate transaction (other than the Merger on the terms set
forth in the Merger Agreement), such as a merger, consolidation, business
combination, reorganization, recapitalization or liquidation involving EZ or any
of its Subsidiaries, (ii) a sale or transfer of a material amount of assets of
EZ or any of its Subsidiaries, or (iii) any material change in EZ's corporate
structure or business; provided, however, that, if such Stockholder or any
Representative is a member of the Board of Directors of EZ, nothing herein shall
be construed to obligate such Stockholder or Representative to act in such
Stockholder's or Representative's capacity as a director in any manner which may
conflict with such Person's fiduciary duties as a director of EZ.
4
<PAGE>
In furtherance of the foregoing, (a) each Stockholder hereby appoints
American and the proper officers of American, and each of them, with full power
of substitution in the premises, its proxies to vote all such Stockholder's
shares of EZ Common Stock at any meeting, general or special, of the
stockholders of EZ, and to execute one or more written consents or other
instruments from time to time in order to take such action without the necessity
of a meeting of the stockholders of EZ, in accordance with the provisions of the
preceding paragraph and (b) American hereby agrees to vote such shares or
execute written consents or other instruments in accordance with the provisions
of the preceding paragraph.
Notwithstanding the provisions of this Section 4.1, American agrees
that it will not exercise, or permit any of its officers to exercise, the power
granted to it pursuant to such provisions prior to 12:01 a.m. on the day that is
31 days from the date hereof.
The proxy and power of attorney granted herein shall be irrevocable
during the term of this Agreement, shall be deemed to be coupled with an
interest and shall revoke all prior proxies granted by such Stockholder. Such
Stockholder shall not grant any proxy to any person which conflicts with the
proxy granted herein, and any attempt to do so shall be void. The power of
attorney granted herein is a durable power of attorney and shall survive the
disability or incompetence of such Stockholder.
4.2 Waiver of Appraisal Rights. Each Stockholder hereby waives its
rights to appraisal under Section 13.1-730 of the VCA with respect to any shares
of EZ Common Stock owned by it in connection with the transactions contemplated
by the Merger Agreement.
4.3 Waiver of Certain Rights. Each Stockholder hereby waives and agrees
not to assert any claims or rights it may have against any director of EZ in
respect of approval or adoption of the Merger Agreement or the consummation of
the Merger or the other transactions contemplated thereby.
ARTICLE V
MISCELLANEOUS
5.1 Termination. This Agreement shall terminate upon the earlier to
occur of (i) the mutual consent of American and all of the Stockholders, (ii)
the termination of the Merger Agreement prior to the consummation of the Merger
(including, without limitation, a termination by EZ pursuant to Section 6.9
thereof), and (iii) the consummation of the Merger.
5.2 Amendment. This Agreement may be amended only by a written
instrument executed by the parties or their respective successors or assigns.
5.3 Notices. Notices, requests, permissions, waivers and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if signed by the respective persons giving them (in the case of any
corporation the signature shall be by an officer thereof) and delivered by hand,
deposited in the United States mail (registered or certified, return receipt
requested), properly addressed and postage prepaid, or delivered by telecopy:
5
<PAGE>
If to American at the addresses and to the Persons (including the
copies) set forth in the Merger Agreement; and
If to any of the Stockholders, in care of EZ at the addresses and to
the Persons (including the copies) set forth in the Merger Agreement.
5.4 Counterparts. This Agreement may be executed in one or more
counterparts and each counterpart shall be deemed to be an original, but all of
which shall constitute one and the same original.
5.5 Applicable Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Virginia without reference
to choice of law principles, including all matters of construction, validity and
performance.
5.6 Severability; Enforcement. The invalidity of any portion hereof
shall not affect the validity, force or effect of the remaining portions hereof.
If it is ever held that any restriction hereunder is too broad to permit
enforcement of such restriction to its fullest extent, each party agrees that a
court of competent jurisdiction may enforce such restriction to the maximum
extent permitted by law, and each party hereby consents and agrees that such
scope may be judicially modified accordingly in any proceeding brought to
enforce such restriction.
5.7 Further Assurances. Each party hereto shall execute and deliver
such additional documents as may be necessary or desirable to consummate the
transactions contemplated by this Agreement.
5.8 Parties in Interest; Assignment. Neither this Agreement nor any of
the rights, interest or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties.
5.9 Entire Agreement. This Agreement and the Merger Agreement and the
Collateral Documents contain the entire understanding of the parties hereto and
thereto with respect to the subject matter contained herein and therein, and
supersede and cancel all prior agreements, negotiations, correspondence,
undertakings and communications of the parties, oral or written, respecting such
subject matter. There are no restrictions, promises, representations,
warranties, agreements or undertakings of any party hereto or to the Merger
Agreement or any of the Collateral Documents with respect to the transactions
contemplated by this Agreement and the Merger Agreement and the Collateral
Documents other than those set forth herein or therein or made hereunder or
thereunder.
6.10 Specific Performance. The parties hereto agree that the remedy at
law for any breach of this Agreement will be inadequate and that any party by
whom this Agreement is enforceable shall be entitled to specific performance in
addition to any other appropriate relief or remedy. Such party may, in its sole
discretion, apply to a court of competent jurisdiction for specific performance
or injunctive or such other relief as such court may deem just and proper in
order to enforce this Agreement or prevent any violation hereof and, to the
extent permitted by applicable law, each party waives any objection to the
imposition of such relief.
6.11 Headings; References. The section and paragraph headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. All references herein to
"Sections" or "Exhibits" shall be deemed to be references to Articles or
Sections hereof or Exhibits hereto unless otherwise indicated.
[SIGNATURE PAGE FOLLOWS.]
6
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto had caused this
Agreement to be duly executed and delivered as of the day and year first above
written.
American Radio Systems Corporation
By: /s/ Steven B. Dodge
Name: Steven B. Dodge
Title: Chairman of the Board, President
and Chief Executive Officer
/s/ Arthur Kellar
Arthur Kellar
/s/ Alan Box
Alan Box
7
<PAGE>
SCHEDULE A
Number and Designation of Shares
Name and Address of Stockholder of EZ Common Stock Owned
Arthur Kellar 2,439,720 shares of Class B Common Stock
EZ Communications, Inc.
10800 Main Street
Fairfax, Virginia 22030
Alan Box 438,177 shares of Class B Common Stock
EZ Communications, Inc.
10800 Main Street
Fairfax, Virginia 22030
8
EXHIBIT 2.3
AMERICAN VOTING AGREEMENT
THIS VOTING AGREEMENT, is dated as of August 5, 1996, by and among each
of the undersigned stockholders (individually, a "Stockholder" and collectively,
the "Stockholders") of American Radio Systems Corporation, a Delaware
corporation ("American"), and EZ Communications, Inc., a Virginia corporation
("EZ").
W I T N E S S E T H :
WHEREAS, each of the Stockholders is the beneficial and record owner of
the shares of American Common Stock set forth opposite each such Stockholder's
name on Schedule A;
WHEREAS, concurrently with the execution of this Agreement, American
and EZ are entering into an Agreement and Plan of Merger (the "Merger
Agreement") pursuant to which EZ will be merged with and into American (the
"Merger"), with American continuing as the Surviving Corporation; and
WHEREAS, in order to induce EZ to enter into the Merger Agreement, the
Stockholders wish to make certain representations, warranties, covenants and
agreements in connection with the Merger.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. Terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa, and the reference to any gender
shall be deemed to include all genders. Capitalized terms used herein but not
otherwise defined herein shall have the respective meanings ascribed thereto in
the Merger Agreement and the following terms shall have the following meanings:
"beneficially own" shall have the meaning set forth in Rule
13d-3 under the Exchange Act.
"Permitted Assignee" shall mean with respect to each
Stockholder, (a) a Stockholder, (b) a Stockholder's lineal descendants,
(c) a trust for the benefit of, the estate of, executors, personal
representatives, administrators, guardians or conservators of, any of
the individuals referred to in the foregoing clauses (a) and (b) (but
only in their capacity as such) and (d) charitable trusts and
charitable foundations formed by a Stockholder.
<PAGE>
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS
2.1 Representations and Warranties of the Stockholders. Each
Stockholder represents and warrants, severally but not jointly, to EZ as
follows:
(a) Ownership of Company Shares. Such Stockholder is the
beneficial owner of the shares of American Common Stock set forth
opposite such Stockholder's name on Schedule A, free and clear of all
Liens. There are no rights, agreements, arrangements or commitments of
any character to which such Stockholder is a party relating to the
pledge, disposition or voting of any shares of capital stock of
American or any of its Subsidiaries that are owned by such Stockholder,
and there are no voting trusts or voting agreements with respect to
such shares. The shares of American Common Stock set forth opposite
such Stockholder's name on Schedule A constitute all of the outstanding
shares of capital stock of American owned beneficially or of record by
such Stockholder and, except as disclosed in Schedule A, such
Stockholder does not have any Convertible Securities or Option
Securities of American.
(b) Authority to Execute and Perform Agreements. Such
Stockholder has the full legal right and power and all authority
required to enter into, execute and deliver this Agreement and to
perform fully such Stockholder's obligations hereunder. The execution
and delivery of this Agreement by such Stockholder have been duly
authorized by all requisite organizational action, if any, on the part
of such Stockholder. This Agreement has been duly executed and
delivered and constitutes the legal, valid and binding obligation of
such Stockholder enforceable against such Stockholder in accordance
with its terms, except as the enforceability may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or similar laws now or hereafter in effect generally
affecting creditors' rights or by general principles of equity,
regardless of whether such enforceability is considered in a proceeding
in equity or at law.
(c) No Conflicts; Consents.
(i) The execution and delivery by such Stockholder of this
Agreement do not, and the consummation of the transactions
contemplated hereby will not, conflict with or result in any
violation of or default (with or without notice or lapse of time,
or both) under (A) any contract, agreement or other binding
arrangement to which such Stockholder is a party or (B) any
judgment, order, writ, injunction or decree of any court,
governmental body, administrative agency or arbitrator applicable
to such Stockholder.
2
<PAGE>
(ii) No consents, approvals or authorizations of, or notices
or filings with, any Governmental Authority or any Third Party
are required to be obtained or made by such Stockholder in
connection with the execution and delivery by such Stockholder of
this Agreement and the consummation of the transactions
contemplated hereby.
(d) Ownership of American Common Stock. Except as set forth on
Schedule A, as of the date hereof, (i) such Stockholder does not, and,
to its best knowledge, its Affiliates do not, beneficially own,
directly or indirectly, shares of American Common Stock (or Convertible
Securities or Option Securities of American) and (ii) such Stockholder
is not, and, to its best knowledge, its Affiliates are not, parties to
any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of, shares of American Common
Stock (or Convertible Securities or Option Securities of American).
ARTICLE III
COVENANTS
3.1 No Disposition of Shares. Each of the Stockholders agrees that,
except as set forth in Schedule A, such Stockholder shall not sell, transfer,
pledge, hypothecate, encumber or otherwise dispose of (except upon such
Stockholder's death), or enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, pledge, hypothe cation,
encumbrance or other disposition of, any of the shares of Company Capital Stock
set forth opposite such Stockholder's name on Schedule A; provided, however,
that such Stockholder shall have the right to transfer such shares to a
Permitted Assignee if such Permitted Assignee becomes a party to this Agreement
and agrees to be bound by the terms hereof. Each Stockholder agrees that the
certificates representing the shares of American Common Stock owned by such
Stockholder shall bear a legend indicating that such shares are subject to this
Agreement, which legend may be removed upon termination of this Agreement.
Except as specifically set forth herein, each Stockholder agrees not to exchange
or convert any shares of Class B Common Stock of American for or into shares of
Class A Common Stock of American.
3.2 Voting Arrangements. Each of the Stockholders agrees that, except
pursuant to this Agreement, it shall not grant any proxies, deposit any shares
of American Common Stock into a voting trust or enter into any voting agreement
with respect to any shares of American Common Stock now or hereafter owned by
such Stockholder, other than proxies to vote such shares at any annual or
special meeting of stockholders of American on matters unrelated to the matters
set forth in Section 4.1 hereof.
3
<PAGE>
3.3 Satisfaction of Conditions to the Merger. Each of the Stockholders
agrees that, subject to his fiduciary duty as a director of American, such
Stockholder, in its capacity as such, shall assist and cooperate with the
parties to the Merger Agreement in doing all things necessary, proper or
advisable under Applicable Laws as promptly as practicable to consummate and
make effective the Merger and the other transactions contemplated by the Merger
Agreement and the Collateral Documents and such Stockholder shall not take any
action that would or is reasonably likely to result in any of its
representations and warranties set forth in this Agreement being untrue as of
the date made or in any of the conditions set forth in Article 7 of the Merger
Agreement not being satisfied.
ARTICLE IV
PROXY; CONVERSION;
ELECTIONS; WAIVER OF RIGHTS
4.1 Proxy. Each Stockholder hereby agrees that, during the term of this
Agreement, at any meeting of the stockholders of American, however called, and
at every adjournment thereof, and in any action by written consent of the
stockholders of American, to (a) vote all of the shares of American Common Stock
then owned by such Stockholder in favor of the adoption of the Merger Agreement
as in effect on the date hereof (as such agreement may be amended (i) as
contemplated by Section 9.1 of the Merger Agreement or (ii) with the consent of
such Stockholder) and each of the other transactions contemplated thereby and
any action required in furtherance thereof, (b) vote such shares against any
action or agreement that would result in a breach in any material respect of any
covenant, representation or warranty or any other obligation of American under
the Merger Agreement, and (c) vote such shares against any action or agreement
that, directly or indirectly, is inconsistent with or that would, or is
reasonably likely to, directly or indirectly, impede, interfere with or attempt
to discourage the Merger or any other transaction contemplated by the Merger
Agreement, including, but not limited to (i) any extraordinary corporate
transaction (other than the Merger on the terms set forth in the Merger
Agreement), such as a merger, consolidation, business combination,
reorganization, recapitalization or liquidation involving American or any of its
Subsidiaries, (ii) a sale or transfer of a material amount of assets of American
or any of its Subsidiaries, or (iii) any material change in American's corporate
structure or business; provided, however, that, if such Stockholder or any
Representative is a member of the Board of Directors of American, nothing herein
shall be construed to obligate such Stockholder or Representative to act in such
Stockholder's or Representative's capacity as a director in any manner which may
conflict with such Person's fiduciary duties as a director of American.
In furtherance of the foregoing, (a) each Stockholder hereby appoints
American and the proper officers of American, and each of them, with full power
of substitution in the premises, its proxies to vote all such Stockholder's
shares of American Common Stock at any meeting, general or special, of the
stockholders of American, and to execute one or more written consents
or other instruments from time to time in order to take such action without the
necessity of a meeting of the stockholders of American, in accordance with the
provisions of the preceding paragraph and (b) American hereby agrees to vote
such shares or execute written consents or other instruments in accordance with
the provisions of the preceding paragraph.
4
<PAGE>
The proxy and power of attorney granted herein shall be irrevocable
during the term of this Agreement, shall be deemed to be coupled with an
interest and shall revoke all prior proxies granted by such Stockholder. Such
Stockholder shall not grant any proxy to any person which conflicts with the
proxy granted herein, and any attempt to do so shall be void. The power of
attorney granted herein is a durable power of attorney and shall survive the
disability or incompetence of such Stockholder.
4.3 Waiver of Certain Rights. Each Stockholder hereby waives and agrees
not to assert any claims or rights it may have against any director of American
in respect of approval or adoption of the Merger Agreement or the consummation
of the Merger or the other transactions contemplated thereby.
ARTICLE V
MISCELLANEOUS
5.1 Termination. This Agreement shall terminate upon the earlier to
occur of (i) the mutual consent of American and all of the Stockholders, (ii)
the termination of the Merger Agreement prior to the consummation of the Merger,
and (iii) the consummation of the Merger.
5.2 Amendment. This Agreement may be amended only by a written
instrument executed by the parties or their respective successors or assigns.
5.3 Notices. Notices, requests, permissions, waivers and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if signed by the respective persons giving them (in the case of any
corporation the signature shall be by an officer thereof) and delivered by hand,
deposited in the United States mail (registered or certified, return receipt
requested), properly addressed and postage prepaid, or delivered by telecopy:
If to American at the addresses and to the Persons (including the
copies) set forth in the Merger Agreement; and
If to any of the Stockholders, in care of American at the
addresses and to the Persons (including the copies) set forth in
the Merger Agreement.
5.4 Counterparts. This Agreement may be executed in one or more
counterparts and each counterpart shall be deemed to be an original, but all of
which shall constitute one and the same original.
5
<PAGE>
5.5 Applicable Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware without reference to
choice of law principles, including all matters of construction, validity and
performance.
5.6 Severability; Enforcement. The invalidity of any portion hereof
shall not affect the validity, force or effect of the remaining portions hereof.
If it is ever held that any restriction hereunder is too broad to permit
enforcement of such restriction to its fullest extent, each party agrees that a
court of competent jurisdiction may enforce such restriction to the maximum
extent permitted by law, and each party hereby consents and agrees that such
scope may be judicially modified accordingly in any proceeding brought to
enforce such restriction.
5.7 Further Assurances. Each party hereto shall execute and deliver
such additional documents as may be necessary or desirable to consummate the
transactions contemplated by this Agreement.
5.8 Parties in Interest; Assignment. Neither this Agreement nor any of
the rights, interest or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties.
5.9 Entire Agreement. This Agreement and the Merger Agreement and the
Collateral Documents contain the entire understanding of the parties hereto and
thereto with respect to the subject matter contained herein and therein, and
supersede and cancel all prior agreements, negotiations, correspondence,
undertakings and communications of the parties, oral or written, respecting such
subject matter. There are no restrictions, promises, representations,
warranties, agreements or undertakings of any party hereto or to the Merger
Agreement or any of the Collateral Documents with respect to the transactions
contemplated by this Agreement and the Merger Agreement and the Collateral
Documents other than those set forth herein or therein or made hereunder or
thereunder.
6.10 Specific Performance. The parties hereto agree that the remedy at
law for any breach of this Agreement will be inadequate and that any party by
whom this Agreement is enforceable shall be entitled to specific performance in
addition to any other appropriate relief or remedy. Such party may, in its sole
discretion, apply to a court of competent jurisdiction for specific performance
or injunctive or such other relief as such court may deem just and proper in
order to enforce this Agreement or prevent any violation hereof and, to the
extent permitted by applicable law, each party waives any objection to the
imposition of such relief.
6.11 Headings; References. The section and paragraph headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. All references herein to
"Sections" or "Exhibits" shall be deemed to be references to Articles or
Sections hereof or Exhibits hereto unless otherwise indicated.
[SIGNATURE PAGE FOLLOWS.]
6
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto had caused this
Agreement to be duly executed and delivered as of the day and year first above
written.
EZ Communications, Inc.
By: /s/ Arthur Kellar
Name: Arthur Kellar
Title: Chairman of the Board
/s/ Steven B. Dodge
Steven B. Dodge
/s/ Thomas H. Stoner
Thomas H. Stoner
7
<PAGE>
SCHEDULE A
Number and Designation of Shares
Name and Address of Stockholder of American Common Stock Owned
Steven B. Dodge 2,037,114 shares of Class B Common Stock
American Radio Systems Corporation 75,000 shares of Class A Common Stock
116 Huntington Avenue
Boston, Massachusetts 02116
Thomas H. Stoner 636,548 shares of Class B Common Stock
American Radio Systems Corporation
410 Severn Avenue
Annapolis, Maryland 21403
8
EXHIBIT 10.56
AMENDMENT
to
ASSET PURCHASE AGREEMENT
This Amendment is dated as of July 31, 1996 by and between American
Radio Systems Corporation, a Delaware corporation ("Buyer"), and The Lincoln
Group, L.P., a New York limited partnership ("Seller").
WHEREAS, Buyer and Seller are parties to an Asset Purchase Agreement
(the "Original Agreement") dated February 23, 1996; and
WHEREAS, Buyer and Seller desire to amend the Original Agreement on the
terms and subject to the conditions set forth in this Amendment;
NOW, THEREFORE, in consideration of the premises, of the mutual
covenants and agreements herein contained, and other valuable consideration, the
receipt, adequacy and sufficiency whereof are hereby acknowledged, the parties
hereto, intending to be legally bound, do hereby covenant and agree as follows:
Section 1. Definitions. Terms used in this Amendment without definition
which are defined in the Original Agreement shall have the meaning prescribed
therefor in the Original Agreement. Terms defined in the singular shall have a
comparable meaning when used in the plural, and vice versa, and the reference to
any gender shall be deemed to include all genders.
Section 2. Amendment of Section 1. Section 1 of the Original Agreement
is hereby amended as follows:
(a) to add the following terms in the appropriate alphabetical
order:
"Adjusted Net Working Capital" means (a) Net Working
Capital less (b) the excess of (i) the aggregate amount of
Accounts Receivable (net of any reserve with respect thereto)
included in the computation of Net Working Capital over (ii)
the aggregate amount collected with respect to such Accounts
Receivable prior to the Closing Date.
"Amendment Date" means the date of this Amendment.
"Net Working Capital" means the excess, if any, of
the current assets of the Company attributable to the Stations
over the current liabilities of the Company attributable to
the Stations, determined as of midnight on the Amendment Date
in accordance with the provisions of Section 2.4 and otherwise
in accordance with generally accepted accounting principles
applied on a basis consistent with the Financial Statements;
provided, however, that notwithstanding the foregoing, current
<PAGE>
assets shall not include any insurance policies, letters of
credit or other similar items or any cash surrender value in
regard thereto.
; and
(b) to change the word "Closing Date" in Section 1.1 to
"Amendment Date".
Section 3. Amendment of Section 2.1. Section 2.1 of the Original
Agreement is hereby amended to (a) delete the word "and" at the end of paragraph
(h), (b) change the designation of paragraph (i) to (j), and (c) add a new
paragraph (i) reading in its entirety as follows:
(i) All cash or cash equivalents in any of Seller's bank or
savings accounts as of the Closing Date; and any stocks, bonds,
certificates of deposit or similar investments as of the Closing Date
which were included in current assets for the purpose of determining
Net Working Capital; and
Section 4. Amendment of Section 2.2. Section 2.2 of the Original
Agreement is hereby amended as follows:
(a)paragraph (a) is amended to read in its entirety as follows:
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 or
similar investments as of midnight on the Amendment Date other
than those, if any, which were included among current assets
for the purposes of determining Net Working Capital.
(b) paragraph (d) is amended to change the words "Closing
Date" to "Amendment Date"; and
(c) paragraph (e) is amended to change the period at the end
thereof to "; and"; and
(d) paragraph (f) is amended to read in its entirety as
follows:
All Accounts Receivable that have not been collected
prior to the Closing Date.
Section 5. Amendment to Section 2.3. The first sentence of Section 2.3
of the Original Agreement is hereby amended to read in its entirety as follows:
The purchase price (the "Purchase Price") for the Assets shall be an
amount equal to Thirty Million Five Hundred Thousand Dollars ($30,500,000)
subject to adjustment as follows:
(a) The Purchase Price shall be increased (if positive) or
decreased (if negative), as the case may be, by an amount equal to the
Adjusted Net Working Capital;
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<PAGE>
(b) The Purchase Price shall be increased by an amount equal
to the amount of any Capital Expenditure Advances (as defined in the
Note Purchase Agreement, dated as of July 31, 1996, between Buyer and
Seller, as from time to time amended (the "Note Purchase Agreement"));
(c) The Purchase Price shall be decreased by an amount equal
to the excess of (i) the sum of (x) Twenty Eight Million Five Hundred
Thousand Dollars and (y) the amount of any Capital Expenditure Advances
over (ii) the principal amount of the Notes (as defined in the Note
Purchase Agreement) at the time outstanding (or the principal amount of
the Notes which would have been outstanding had any such Notes which
were repaid out of the proceeds of Indebtedness for Money Borrowed (as
defined in the Note Purchase Agreement) which is not being assumed by
Buyer or repaid by any person other than Seller not been so repaid);
and
(d) The Purchase Price shall be increased by an amount equal
to the sum of (i) earnings (including without limitation any interest
or income or gain) of the Escrow Account commencing at midnight on the
Agreement Date and ending at midnight on the day prior to the Closing
and (ii) interest (at the same rate as is earned on the Escrow Deposit)
on the Adjusted Net Working Capital of the Company commencing at
midnight on the Amendment Date and ending at midnight on the day prior
to the Closing Date.
The Purchase Price shall be payable as follows:
(a) By delivery to Seller of Notes (valued for these purposes
at the principal amount of such Notes at the time outstanding);
(b) To the extent the Purchase Price exceeds the aggregate
amount paid pursuant to the provisions of paragraphs (a) above, funds
shall be transferred out of the Escrow Account to Seller; and
(c) To the extent the Purchase Price exceeds the aggregate
amount paid pursuant to the provisions of paragraphs (a) and (b) above,
by wire transfer to Seller of immediately available funds to such
accounts as are designated by Seller in written instructions to Buyer.
Section 6. Amendment to Section 2.4. Section 2.4 of the Original
Agreement is hereby amended as follows:
(a) the words "day prior to the Closing Date" on the second
and third lines are changed to "Amendment Date";
(b) the words "prior to the Closing Date" on line 12 are
changed to "up until midnight on the Amendment Date";
(c) the words "on the Closing Date and for the periods
thereafter" on line 14 are changed to "from and after midnight on the
Amendment Date";
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<PAGE>
(d) a new sentence shall be added to the first paragraph of
Section 2.4 reading in its entirety as follows:
Without limiting the generality of the foregoing, the
foregoing adjustments and pro rations shall be reflected in
the determination of Net Working Capital.
(e) a new paragraph shall be added, immediately preceding
paragraph A, reading in its entirety as follows:
Anything in this Agreement or the Escrow Agreement
referred to in Section 1.8 to the contrary notwithstanding, in
the event the transactions contemplated by this Agreement are
consummated, the Purchase Price shall be increased by an
amount equal to the sum of (a) interest actually earned on the
Escrow Deposit commencing at midnight on the Amendment Date
and ending at midnight on the day prior to the Closing Date
and (b) interest (at the same rate as is earned on the Escrow
Deposit) on the Adjusted Net Working Capital of the Company
commencing at midnight on the Amendment Date and ending at
midnight on the day prior to the Closing Date.
(f) paragraph B is amended to (a) change the words "Closing
Date" on line 1 to "Amendment Date", (b) insert after the words
"Section 2.4" on line 4 the words "including without limitation the
determination of Net Working Capital", (c) change the words "at
Closing" on line 5 to "as of midnight on the Amendment Date", and (d)
add a new sentence at the end thereof reading in its entirety as
follows:
Notwithstanding the foregoing, in the event that the
Closing does not take place prior to the date on which the
Closing Certificate is to be delivered, it shall be prepared
and delivered by Seller and Buyer shall have the right to
object thereto in accordance with the provisions set forth
above in this paragraph.
Section 7. Amendment of Section 2.5. Section 2.5 of the Original
Agreement is amended to read in its entirety as follows:
As of the Closing Date, Buyer shall assume and,
thereafter, in accordance with their terms, pay, discharge and
perform (i) all of the obligations and liabilities of Seller
under the Licenses and the Assumed Contracts insofar as they
related to the time period after midnight on the Amendment
Date, and arising out of events occurring after midnight on
the Amendment Date, (ii) all obligations and liabilities
arising out of events occurring from and after midnight on the
Amendment Date related to the assets or to the operations of
the Stations from and after such Date, other than those
arising out of or attributable to the breach by Seller of any
of its covenants under this Agreement or the Note Purchase
Agreement, dated as of July 31, 1996, between Buyer and Seller
(the "Note Purchase Agreement") or the Note or Security
Agreement executed pursuant thereto(the "Security Agreement"),
(iii) all obligations and liabilities for which Buyer receives
a proration adjustment hereunder, and (iv) all accounts
payable which were included in the computation of Net
-4-
<PAGE>
Working Capital and which were not paid or otherwise satisfied
as of the Closing Date. All other obligations and liabilities
of Seller, including (i) any obligation under any Contract not
included in the Assumed Contracts, (ii) any obligations under
the Assumed Contracts relating to the time period prior to
midnight on the Amendment Date (except to the extent provided
in clause (iv) of the preceding sentence), (iii) any claims or
pending litigation or proceedings relating to the operation of
the Stations prior to midnight on the Amendment 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 8. Amendment of Section 3.6. Section 3.6 is amended to change
the third line thereof to read in its entirety as follows:
property used to conduct the business of the Stations or for
the operations of the Stations as now conducted
Section 9. Amendment of Section 6.3. A new third sentence shall be
added to Section 6.3 reading in its entirety as follows:
Anything herein to the contrary notwithstanding, Buyer shall
reimburse Seller for its reasonable out-of-pocket legal fees and
expenses incurred subsequent to the initial filing by Seller in
connection with obtaining the HSR Consent.
Section 10. Amendment of Section 6.8. Section 6.8 of the Original
Agreement is amended to read in its entirety as follows:
A. The risk of loss, damage or impairment, confiscation or
condemnation of any of the Assets at all times prior to the completion
of the Closing shall be borne as follows:
(i) if occurring at or prior to midnight on the
Amendment Date, any such loss, damage or impairment,
confiscation or condemnation from any cause whatsoever shall
be borne by Seller, and
(ii) if occurring after midnight on the Amendment
Date, any such loss, damage or impairment, confiscation or
condemnation within the reasonable control of Seller shall be
borne by Seller. If, notwithstanding Seller's compliance with
all of the terms and provisions of this Agreement, including
without limitation Section 5, the Assets shall be adversely
affected after midnight on the Amendment Date by reason of any
loss, damage or impairment, confiscation or condemnation and
the same was not within the reasonable control of Seller,
Buyer shall be obligated to proceed with the Closing, subject
to satisfaction of all of the other conditions thereto.
B. If any damage or destruction of the Assets or any other
event occurs which prevent signal transmission by any 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:
-5-
<PAGE>
(i) In the event such damage or destruction or other
event occurred (x) at or prior to midnight on the Amendment
Date or (y) thereafter and was within the reasonable control
of Seller, 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 destruction, at no
expense to Buyer; and
(ii) In the event such damage or destruction or other
event occurred after midnight on the Amendment Date and was
not within the reasonable control of Seller, the Closing Date
shall not be postponed, but, assuming all of the other
conditions of Closing are satisfied, the Closing shall take
place as scheduled.
C. In the event of any damage or destruction of the Assets
described above, if (i) such damage, destruction or other event (x)
occurred at or prior to midnight on the Amendment Date or (y) occurs
thereafter and it was within the reasonable control of Seller to
prevent such event from occurring and (ii) 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 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 (i) occurred at or prior to
midnight on the Amendment Date or (ii) occurs thereafter and it was
within the reasonable control of Seller to prevent such event from
occurring and which, in either case, prevents signal transmission by
any Station in the normal and usual manner for a consecutive period of
five (5) or a cumulative period of fourteen (14) days after the date
hereof.
Section 11. Amendment of Section 6.10,. Section 6.10 of the Original
Agreement is amended as follows:
(a) The first sentence is amended to read in its entirety as
follows:
In the event the Closing shall occur prior to
November 1, 1996, at the Closing, Seller shall assign to Buyer
for collection purposes only all Accounts Receivable then
remaining uncollected.
(b) The fourth sentence is amended to read in its entirety as
follows:
Buyer shall endeavor in the ordinary course of
business to collect the Accounts Receivable so assigned to it
during the period commencing with the
-6-
<PAGE>
Closing Date and ending at the close of business on October
31, 1996 (the "Collection Period").
(c) A new paragraph shall be added at the end of Section 6.10
reading in its entirety as follows:
Anything in this Section or elsewhere in this
Agreement to the contrary notwithstanding, in the event the
Closing Date shall be on or after November 1, 1996, Buyer may,
but shall not be obligated, to accept any assignment of any
Accounts Receivable then remaining uncollected. In the event
Buyer elects to accept any such assignment, in whole or in
part, Buyer and Seller shall negotiate in good faith with
respect to the Collection Period, and the remaining provisions
of the preceding paragraph, including without limitation the
last sentence thereof, shall be operative and of full force
and effect. In the event Buyer elects not to accept any such
assignment, the provisions of the last sentence of the
preceding paragraph shall be operative and in full force and
effect.
Section 12. New Section 6.13. A new Section 6.13 shall be added reading
in its entirety as follows:
Extraordinary Circumstances. Notwithstanding any provision
under this Agreement to the contrary, including without limitation any
provision under Sections 3, 5, 7.1, 8.2 or 10.2:
(a) Seller shall not be liable in any respect to the
extent (i) any of its representations and warranties contained
in Section 3 ("Seller's Representations and Warranties") are
not true and correct in any material respect or (ii) any of
its covenants set forth in Section 5 are breach in any
material respect, in either case prior to or on and as of the
Closing Date due solely to circumstances that arise after the
execution of this Amendment and that are beyond the Seller's
reasonable control ("Extraordinary Circumstances");
(b) Seller shall be relieved from fulfilling any
condition set forth in Section 7.1 and none of Buyer's
obligations at the Closing shall be subject to the fulfillment
prior to and at the Closing Date of any such condition, if
such condition cannot be fulfilled due to Extraordinary
Circumstances;
(c) The certificate to be delivered to Buyer under
Section 8.2(c) and the opinion to be delivered to Buyer under
Section 8.2(h) shall not be required to address any of
Seller's Representations and Warranties that are not true and
correct in any material respect on and as of the Closing Date
due to Extraordinary Circumstances; and
(d) The indemnification by Seller of Buyer pursuant
to the provisions of Section 10.2 shall not apply in any
respect to the extent any of Seller's
-7-
<PAGE>
Representations and Warranties are not true and correct in any
material respect on and as of the Closing Date due solely to
Extraordinary Circumstances.
Seller agrees to give Buyer prompt written notice of the
occurrence of all such Extraordinary Circumstances, specifying in
reasonable detail the nature thereof and what steps, if any, Seller
took to avoid the occurrence thereof and is taking or proposes to take
to alleviate, correct or remedy the situation.
Section 13. Amendment of Section 8.1. Section 8.1 of the Original
Agreement shall be amended by (a) inserting after the words "Final Order" the
words "and the HSR Consent has been obtained on terms and conditions
satisfactory to Buyer", (b) inserting in the blank the words "Sullivan &
Worcester LLP, One Post Office Square, Boston, MA 02109", and (c) adding the
following sentence at the end of such section:
Notwithstanding the foregoing, Seller shall have the right, if
the Closing Date would pursuant to the foregoing provisions have
occurred subsequent to August 15, 1996 and prior to January 2, 1997, to
postpone the Closing to January 31, 1997 or such other date in January
1997 as shall be agreed to by Buyer.
Section 14. Amendment of Section 9.1. Section 9.1 of the Original
Agreement is amended by changing the date in paragraph (c) from September 1,
1996 to December 31, 1998.
Section 15. New Section 9.4. A new Section 9.4 shall be added reading
in its entirety as follows:
Foreclosure by Buyer under the Security Agreement. Anything in
this Agreement to the contrary notwithstanding, in the event that Buyer
shall foreclose on the Collateral (as defined in the Security
Agreement) and acquire the Assets, Seller shall be entitled to receive
from Buyer an amount equal to the excess of (a) the Purchase Price
(computed in accordance with the provisions of Section 2.3, except that
the Closing Date for these purposes shall be deemed to be the date on
which Buyer shall have acquired the Assets) over (b) the sum of (i) the
amount paid by Buyer (including without limitation through the delivery
of Notes (valued for these purposes in accordance with the provisions
of Section 2.3) for the Assets and (ii) the amount of all obligations
and liabilities to which the Assets are subject or which Buyer has
assumed or paid and discharged in connection with the acquisition of
the Assets other than those which Buyer would have been obligated to
assume in accordance with the provisions of Section 2.5.
Section 16. Amendment of Section 10.2. Section 10.2 of the Original
Agreement is amended as follows:
(a) Paragraph (a) is amended to read in its entirety as
follows:
Any and all losses, liabilities or damages resulting
from any untrue representation, breach of warranty or
nonfulfillment of any covenants by Seller
-8-
<PAGE>
contained herein or in any certificate delivered to Buyer
hereunder, except to the extent that any such loss, liability
or damage is due to Extraordinary Circumstances.
(b) Paragraph (c) is amended to read in its entirety as
follows:
Any and all losses, liabilities or damages resulting
from Seller's operation or ownership of the Stations (i) at or
prior to midnight on the Amendment Date or (ii) after such
time and prior to the Closing Date and the cause of any such
loss, liability or damage was within the reasonable control of
Seller, including any and all losses, liabilities and damages
arising under the Licenses or the Assumed Contracts which
relate to events occurring (i) at or prior to midnight on the
Amendment Date or (ii) after such time and prior to the
Closing Date and the cause of any such loss, liability or
damage was within the reasonable control of Seller.
Section 17. Miscellaneous Provisions. Except as otherwise herein
specifically amended, the Original Agreement shall remain in full force and
effect. The provisions of Section 11 of the Original Agreement are incorporated
herein by reference with the same force and effect as though set forth herein in
their entirety.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
all pursuant to authority heretofore granted, to the extent applicable, by their
respective Boards of Directors, as of the date and year first above written.
The Lincoln Group, L.P.
By: The Lincoln Group, Ltd, General Partner
By:________________________________
Name:
Title:
American Radio Systems Corporation
By:________________________________
Name:
Title:
-9-
EXHIBIT 10.57
NOTE PURCHASE AGREEMENT
SECURED NOTES DUE 2001
of
THE LINCOLN GROUP, L.P.
July 31, 1996
<PAGE>
TABLE OF CONTENTS
Page
1. Issue and Sale of Securities............................................1
1.1 Description of Securities.........................................1
1.2 Purchase and Sale.................................................2
1.3 Closing...........................................................2
2. Representations and Warranties of Company...............................2
2.1 Organization and Business; Power and Authority....................2
2.2 Business; Financial Information...................................3
2.3 Changes in Condition..............................................4
2.4 Title to Properties; Leases.......................................4
2.5 Compliance with Governmental Authorizations and Applicable Law....5
2.6 Related Transactions..............................................5
2.7 Tax Matters.......................................................6
2.8 Employment Arrangements...........................................6
2.9 Ordinary Course of Business.......................................6
2.10 Private Sale.....................................................9
2.11 Disclosure.......................................................9
2.12 Use of Proceeds..................................................9
2.13 Intellectual Property............................................9
2.14 Material Agreements and Private Authorizations..................10
2.15 Employee Retirement Income Security Act of 1974.................10
2.16 Authorized and Outstanding Partnership Interests................12
2.17 Inapplicability of Specified Statutes...........................12
3. Representations, Warranties and Covenants of American..................12
3.1 Organization and Business; Power and Authority...................12
3.2 Investment Representation........................................13
3.3 Covenant Regarding Transfer......................................14
4. Conditions of Closing..................................................14
4.1 Company's Officer's Certificate. ...............................14
4.2 Company's Secretary's Certificate. ...........................14
4.3 Opinion of Company Counsel. ....................................14
4.4 Legality; Governmental and Other Authorizations. ...............15
4.5 Execution and Consummation of Certain Documents. ...............15
5. Payment and Exchange of Notes; Lost Notes..............................15
5.1 Payments.........................................................15
5.2 Exchange.........................................................16
5.3 Replacement of Notes.............................................16
<PAGE>
Page
5.4 Transfer Office and Record of Holders of Notes...................17
5.5 Transfer of Notes................................................17
5.6 Registered Owners of Notes.......................................17
6. Payment Provisions.....................................................17
6.1 Required Payments................................................17
6.2 Optional Payments................................................18
6.3 Pro Rata Allocation..............................................18
6.4 Notice of Payment and Offers to Repurchase.......................18
6.5 Effect of Certain Transactions...................................18
6.6 Maturity; No Reissue.............................................18
6.7 Purchase of Notes................................................19
7. Special Covenants of Company...........................................19
7.1 Payments.........................................................19
7.2 Prompt Payment of Taxes and Indebtedness.........................19
7.3 Conduct of Business..............................................20
7.4 Maintenance of Property and Leases...............................20
7.5 Maintenance of Insurance.........................................20
7.6 Maintenance of Accounts and Records..............................20
7.7 Compliance With Laws.............................................21
7.8 Miscellaneous Information........................................21
7.9 Information and Reports to Be Furnished by Company...............21
7.10 Liens...........................................................23
7.11 Distributions...................................................23
7.12 Consolidation, Merger and Acquisition...........................23
7.13 Prohibited Transactions.........................................24
7.14 Compliance with ERISA...........................................24
7.15 Indebtedness....................................................25
7.16 Investments.....................................................25
7.17 Operation of the Business.......................................26
7.18 Issue of Equity Securities......................................27
7.19 Avoidance of Impairment of Asset Value or Security
of Noteholder.................................................27
8. Defaults. ............................................................28
8.1 Events of Default................................................28
8.2 Notice to the Holders............................................29
8.3 Annulment of Defaults............................................29
8.4 Waiver by Company; Severability of Remedies......................30
8.5 No Waiver of Rights..............................................30
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Page
8.6 Costs and Expenses of Collection.................................30
8.7 Remedies Cumulative..............................................31
9. Definitions............................................................31
10. Miscellaneous Provisions..............................................43
10.1 Stamp and Other Taxes..........................................43
10.2 Expenses.......................................................43
10.3 Survival of Covenants; Successors and Assigns..................44
10.4 Notices and Communications.....................................44
10.5 Amendments and Waivers.........................................45
10.6 Governing Law..................................................45
10.7 Entire Agreement...............................................45
10.8 Saturdays, Sundays, Holidays, etc..............................45
10.9 Brokers, etc...................................................46
10.10 Headings; Counterparts........................................46
10.11 Severability..................................................46
10.12 Further Assurances............................................46
10.13 Specific Performance; Other Rights............................46
SCHEDULES:
DISCLOSURE SCHEDULE
EXHIBITS
Exhibit A: Form of Note
Exhibit B: Form of Security Agreement
-iii-
<PAGE>
THIS NOTE PURCHASE AGREEMENT (this "Agreement"), made as of July 31,
1996, by and between The Lincoln Group, L.P., a New York limited partnership
(the "Company"), and American Radio Systems Corporation, a Delaware corporation
("American" or the "Purchaser").
W I T N E S S E T H:
WHEREAS, American and the Company are parties to an asset purchase
agreement, dated as of February 23, 1996, as amended as of the date hereof (the
"Acquisition Agreement"), relating to the acquisition (the "Acquisition") of
substantially all of the business and assets of radio stations WVOR(FM),
WPXY(FM), WHAM(AM) and WHTK(AM) in Rochester, New York (individually, a
"Station" and collectively, the "Stations" and sometimes referred to as the
"Lincoln Business");
WHEREAS, American and the Company have received approvals from the
Federal Communications Commission (the "FCC") under the rules and regulations
promulgated under the Communications Act of 1934, as amended (the
"Communications Act") relating to the transfer of the FCC licenses which are a
part of the Lincoln Business, but American and the Company are not presently
able to consummate the transactions contemplated by the Acquisition Agreement
because of the provisions of the Hart-Scott Rodino Antitrust Improvements Act of
1976 and the rules and regulations promulgated thereunder; and
WHEREAS, the Company proposes to issue and sell on the date hereof a
Secured Note due 2001 in the principal amount of $28,500,000 (the "Initial
Note") and American is willing to purchase the Initial Note in order to provide
funds to the Company for corporate purposes;
NOW, THEREFORE, for and in consideration of the premises, the mutual
covenants and agreements herein contained, and other valuable consideration, the
receipt and adequacy whereof are hereby acknowledged, the parties hereto,
intending to be legally bound, do hereby covenant and agree as follows:
1. Issue and Sale of Securities.
1.1 Description of Securities. The Company has duly authorized the
issue and sale, on the terms hereinafter provided, of the Initial Note. As used
herein, the term "Notes" shall mean the Initial Note together with any notes
issued and delivered to evidence Capital Expenditure Advances in accordance with
the provisions of Section 7.17(c) and any notes issued and delivered in exchange
or substitution therefor or for any other Notes or on transfer of the Initial
Note or any other Notes as herein provided and the term "Note" shall mean any of
the Notes. The Notes shall be in or substantially in the form set forth in
Exhibit A hereto. Each Note shall be dated the date of its issue, shall mature
on June 30, 2001, shall bear interest from the date of its issue, at an annual
rate equal to the American Rate, on the unpaid principal balance thereof,
compounded on the last day of each calendar quarter, commencing September 30,
1996, while such Note is outstanding, and payable at maturity, including by way
of prepayment, acceleration or otherwise, and interest at the rate of 16% per
annum on any overdue principal and, to the extent legally enforceable, any
overdue interest. Interest on the Notes shall be computed on the basis of a
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360-day year. Subject to Section 8.1, the outstanding principal amount of the
Notes shall be paid in accordance with the provisions of Section 6.1. The term
"American Rate" shall mean the rate, from time to time, incurred by American
with respect to borrowings under its bank credit agreement as in effect from
time to time or, in the event no borrowings are outstanding thereunder, the rate
it would then be required to pay if borrowings equal to the principal amount of
the Notes were then outstanding. Each change in the American Rate shall effect a
simultaneous change in the rate of interest payable on the Notes.
1.2 Purchase and Sale. On the basis of the representations and
warranties and on the terms and subject to the conditions set forth in this
Agreement, the Company agrees to issue and deliver to American, and American
agrees to acquire from the Company, the Initial Note at a purchase price (the
"Purchase Price") equal to 100% of the principal amount of the Initial Note.
1.3 Closing. The Closing (the "Closing") shall be held at the offices
of Sullivan & Worcester, One Post Office Square, Boston, Massachusetts, at 10:00
a.m., local time, on the date hereof or such other place, time and date not
later than July 31, 1996 as the Company and American shall agree (the date on
which the Closing occurs being herein called the "Closing Date"). At the
Closing, the Company will deliver to American the Initial Note in the principal
amount of $28,500,000 in exchange for payment of the Purchase Price by American
in the form of bank wire transfers, evidenced by an advice of bank credit issued
by a member of the Federal Reserve System, in the amount of $28,500,000. Such
wire transfers shall be made to such account or accounts as the Company shall
have designated by notice to American at least one (1) business day in advance
of the Closing.
2. Representations and Warranties of Company. The Company represents
and warrants that:
2.1 Organization and Business; Power and Authority.
(a) The Company (i) is a limited partnership duly organized,
validly existing and in good standing under the laws of its
jurisdiction of organization, and (ii) has all requisite power and
authority (partnership and other) to own or hold under lease its
properties and to conduct its business as now conducted and as
presently proposed to be conducted.
(b) The Company has adequate power and authority (partnership
and other) and all necessary franchises, permits, licenses and other
rights and privileges to allow it to execute and deliver, and to
perform its obligations under, this Agreement, the Notes and each other
Related Agreement to which it is a party, and to issue and sell the
Initial Note. The execu tion, delivery and performance of this
Agreement, the Notes and each of the other Related Agreements to which
the Company is a party have been duly authorized by all requisite
partnership action, including that, if required, of the Company's
limited partners. This Agreement constitutes, and the Notes and each
other Related Agreement to which it is a party when executed and
delivered by the Company will constitute, valid and binding obligations
of the Company, enforceable in accordance with their respective terms,
except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors'
rights generally and (ii) the availability of equitable
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remedies may be limited by equitable principles of general
applicability. The holders from time to time of the Notes will be
entitled to the rights and benefits set forth in the Notes, this
Agreement and the Security Agreement.
(c) The Company does not own any voting shares or other
equitable interest in any Person, however organized and however such
interest may be denominated or evidenced, which owns or has any
interest in the assets and property or business of any of the Stations
or the Lincoln Business.
(d) The Company has adequate power and authority (partnership
and other) under the laws of its jurisdiction of organization and all
necessary franchises, permits, licenses and other rights and privileges
to allow it to execute and deliver, and to perform its obligations,
under, the Acquisition Agreement and the execution, delivery and
performance of the Acquisition Agreement has been duly authorized by
all requisite partnership action on the part of the Company including
that of its limited partners. The Acquisition Agreement constitutes the
valid and binding obligation of the Company, enforceable in accordance
with its terms, except as (i) the enforceability thereof may be limited
by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and (ii) the avail ability of equitable
remedies may be limited by equitable principles of general
applicability.
(e) Neither the execution and delivery of this Agreement, the
Notes or any of the other Related Agreements to which it is a party,
nor the offer, issue, sale or delivery of any or all of the Notes, nor
the consummation of the transactions herein or therein contemplated,
nor compliance with the terms, conditions and provisions hereof or
thereof by the Company:
(i) will conflict with, or result in a breach or
violation of or constitute a default in the performance,
observance or fulfillment of any obligation, covenant or
condition contained in, or constitute, or but for any
requirement of giving of notice or passage of time or both
would constitute, a default or an event of default by the
Company under, any Applicable Law, Private Authorization,
Governmental Authorization or Material Contractual Obligation,
(ii) will result in the creation or imposition of any
Lien upon any of the properties of the Company, except
pursuant to the provisions of the Security Agreement, or
(iii) will require any approval or action of, or
filing with, any Authority, except as set forth in the
Disclosure Schedule.
2.2 Business; Financial Information. The Company has heretofore
furnished to American copies of the financial statements of the Company relating
to the Stations and the Lincoln Business listed in the Disclosure Schedule (the
"Financial Statements"). The Financial Statements have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby, except as otherwise noted in the Disclosure Schedule, are true,
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complete and correct in all material respects, do not contain any untrue
statement of a material fact or omit to state a material fact required by GAAP
to be stated therein or necessary in order to make the statements contained
therein not misleading, and fairly present the financial condition of the
Company and results of operations of the Stations and the Lincoln Business, on
the bases therein stated, as of the respective dates thereof, and for the
respective periods covered thereby subject, in the case of unaudited financial
statements, to normal year-end audit adjustments and accruals. As of the Closing
Date, after giving effect to all of the transactions contemplated hereby,
including without limitation the making of the Permitted Distributions, the
Company will be Solvent.
2.3 Changes in Condition. Since the date of the most recent balance
sheet constituting a part of the Financial Statements (the "Most Recent Balance
Sheet"), except as contemplated by this Agreement and the Acquisition Agreement
or as otherwise specifically set forth in the Disclosure Schedule, (i) there has
been no Material Adverse Change of the Company. There is, as of the date hereof,
no fact known to the Company which, in the reasonable judgment of the Company,
Materially Adversely Affects, or might, in the reasonable judgment of the
Company (so far as the Company can now foresee), Materially Adversely Affect,
the Company.
2.4 Title to Properties; Leases. The Company has good and marketable
title in fee simple to all real property owned or used by the Company in the
Lincoln Business and has good and merchantable title to all other assets,
tangible and intangible, owned or used by the Company in the Lincoln Business,
in all cases free and clear of all Liens, except such as are set forth in the
Disclosure Schedule. Except for the financing statements evidencing Liens
referred to in the preceding sentence (a true, correct and complete list and
description of which is set forth in the Disclosure Schedule), no financing
statements under the Uniform Commercial Code and no other filing which names the
Company as debtor or which covers or purports to cover any of the property of
the Company owned or used by the Company in the Lincoln Business is on file in
any state or other jurisdiction, and the Company has not signed or agreed to
sign any such financing statement or filing or any security agreement
authorizing any secured party thereunder to file any such financing statement or
filing. Each Lease or other occupancy or other agreement under which the Company
holds real or personal property used in the Lincoln Business has been duly
authorized, executed and delivered by the Company and is a legal, valid and
binding obligation of the Company, enforceable in accordance with its terms. The
Company has a valid leasehold interest in and enjoys peaceful and undisturbed
possession under all such Leases. All of such Leases are, to the Company's
knowledge, valid and subsisting and in full force and effect; and the Company is
not in default in the performance, observance or fulfillment in any material
respect of any obligation, covenant or condition contained in any such Lease.
The Disclosure Schedule contains a true, correct and complete in all material
respects description of all real property owned or leased by the Company and
used in the Lincoln Business and all Leases relating to property, real or
personal, used in the Lincoln Business. None of the tangible personal property
used in the Lincoln Business is subject to contracts of sale, is or will be held
by the Company as lessee or as conditional sales vendee under any Lease or
conditional sales contract, or is subject to any title retention agreement,
except as set forth in the Disclosure Schedule.
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2.5 Compliance with Governmental Authorizations and Applicable Law. As
of the date hereof, there are no judgments, decrees or orders issued by any
Authority presently outstanding and unsatisfied against the Company. The
Disclosure Schedule contains a brief description of
(a) all Legal Actions which are pending or in which the
Company or its business, operations or properties, or, to the Company's
knowledge, any of its partners, general or limited or any of their
partners, officers, directors or stockholders in connection therewith,
is engaged, or which involves the business, operations or properties of
the Company or, to the Company's knowledge, which are threatened or
contemplated against, the Company or its business, operations or
properties, or any of such partners, officers, directors or
stockholders, in connection therewith, in all cases which individually
or in the aggregate could, if adversely determined, have a Materially
Adverse Effect on the Company; and
(b) each Governmental Authorization which, if not obtained and
maintained, could singly or in the aggregate, have any Material Adverse
Effect on the Company (a "Material Governmental Authorization").
No Material Governmental Authorization is the subject of any pending
or, to the Company's knowledge, threatened attack, revocation or termination.
Neither the Company nor, to the Company's knowledge, any of its partners,
general or limited, or any of their partners, officers, directors or
stockholders in connection with the business, operations and properties of the
Company, is
(i) in breach or violation or, or in default in the
performance of, or
(ii) charged with any such breach or violation of, or
default under, or
(iii) to the Company's knowledge, threatened with or under
investigation with respect to any such breach or
violation of, or default under,
any such other Material Governmental Authorization or the Communications Law or
any other Material Applicable Law, and no Event exists or has occurred, which
constitutes, or but for any requirement of giving of notice or passage of time
or both would constitute, such a breach or violation of or default under any
such other Material Governmental Authorization or any Applicable Law, except for
such defaults, breaches or violations as do not and will not have in the
aggregate any Material Adverse Effect on the Company, except as otherwise
described in the Disclosure Schedule.
2.6 Related Transactions. The Disclosure Schedule sets forth a fair,
complete and accurate in all material respects description of any Contractual
Obligation or transaction relating to any of the Stations or the Lincoln
Business between the Company and any of its partners, general or limited, or any
of their partners, officers, directors or stockholders, or any Affiliate of any
thereof (other than for services as, or loans and advances in the ordinary
course of business to, any thereof), now existing, including without limitation
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any providing for the furnishing of services to or by, providing for rental of
property, real, personal or mixed, to or from, or providing for the lending or
borrowing of money to or from or otherwise requiring payments to or from, any
such partner, officer, director or stockholder or Affiliate.
2.7 Tax Matters. The Company has, at all times during its existence,
been and is taxable as a partnership for federal and state income Tax purposes.
All Tax Returns which in accordance with Applicable Law are required to be filed
by or on behalf of the Company have been filed and all Taxes which have become
due and payable pursuant to said returns and all estimated Taxes due and payable
and all other governmental charges and assessments due and payable by or on
behalf of the Company have been paid. To the best knowledge of the Company, such
returns have been prepared in accordance with all Applicable Laws. All Taxes
which the Company is required by law to withhold and collect have been duly
withheld and collected, and have been paid over, in a timely manner, to the
proper Authorities to the extent due and payable. Except as set forth on the
Disclosure Schedule, no action has been taken by or on behalf of the Company to
extend, and the Company has not otherwise taken or failed to take any action
that would have the effect of extending, the applicable statute of limitations
in respect of any Tax liabilities of the Company for any year with respect to
which said statute of limitations would have otherwise expired.
2.8 Employment Arrangements. The Company has no obligation or
liability, contingent or other, under any Employment Arrangement relating to any
of the Stations or the Lincoln Business, other than those listed or described in
the Disclosure Schedule. The Company is not now and during the past five years
has not been subject to or involved in or, to the Company's knowledge,
threatened with any union elections, petitions therefor or other organizational
activities, relating to any of the Stations or the Lincoln Business, except as
described in the Disclosure Schedule. Except as described in the Disclosure
Schedule, none of the employees of the Company involved in any of the Stations
or the Lincoln Business is represented by any labor union or other employee
collective bargaining organization or is a party to any labor or other
collective bargaining agreement, and there are no pending grievances, disputes
or controversies with any union or any other organization of such employees, or
threats of strikes, work stoppages or any pending demands for collective
bargaining by any union or organization, or, to the Company's knowledge, any
active organizing or recruiting of such employees with respect to becoming
members of any union or other employee or collective bargaining organization.
The Company has performed in all material respects all obligations required to
be performed under all such Employment Arrangements and is not in any material
respect in breach or violation of or in default or arrears under any of the
terms, provisions or conditions thereof. The Disclosure Schedule sets forth the
basis of funding, and the current status of, any past service liability with
respect to each such Employment Arrangement to which the same is applicable. The
Company considers its relationships with such employees to be satisfactory, and
the Company has not at any time during the past five years experienced a work
slowdown or stoppage due to labor problems relating to any of the Stations or
the Lincoln Business, except as set forth in the Disclosure Schedule.
2.9 Ordinary Course of Business. With respect to each of the Stations
and the Lincoln Business, the Company from the end of its Most Recent Fiscal
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Year to the date hereof, and until the Closing Date, except as may be described
on the Disclosure Schedule or as may be required by the terms of this Agreement
or the Acquisition Agreement:
(a) has operated, and will continue to operate, the Lincoln
Business in the normal, usual and customary manner in the ordinary and
regular course of business;
(b) has not sold or otherwise disposed of, and will not sell
or otherwise dispose of or contract to sell or otherwise dispose of,
any of the properties or assets of any of the Stations or the Lincoln
Business, other than inventory in the ordinary course of its business
and nonmaterial amounts of machinery and equipment sold or otherwise
disposed of in the ordinary course of business and no longer needed in
the operation or business or replaced with assets of like kind or
better kind and quality;
(c) except in each case in the ordinary course of business of
each of the Stations and the Lincoln Business,
(i) has not incurred and will not incur any
obligations or liabilities (fixed, contingent or other);
(ii) has not entered and will not enter into any
commitments; and
(iii) has not sold or transferred, and will not sell
or transfer, any tangible asset or canceled or cancel any
debts or claims;
(d) has not made and will not make any additions to property
or any purchases of machinery or equipment, except for normal
maintenance and replacements;
(e) has not discharged or satisfied, and will not discharge or
satisfy, any Lien or paid or pay any obligation or liability (absolute
or contingent) other than current liabilities or obligations under
contracts then existing or thereafter entered into in the ordinary
course of business, and commitments under Leases existing on that date
or incurred since that date in the ordinary course of business;
(f) has not placed and will not place, or permitted to be
placed or permit to be placed, any Lien on any of the tangible property
or Intangible Assets of any of the Stations or the Lincoln Business,
and has not Transferred, and will not Transfer, any Intangible Assets
of any of the Stations or the Lincoln Business;
(g) has not committed or suffered to exist, and will not
commit or suffer to exist, any Act of Bankruptcy;
(h) has not increased and will not increase the compensation
payable or to become payable to any of its officers, employees,
advisers, consultants, salesmen or agents involved in any of the
Stations or the Lincoln Business, has not and will not otherwise alter,
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modify or change in any material respect the terms of their employment
or engagement, and has not entered and will not enter into new
employment arrangements with any of the foregoing, other than in the
ordinary course of business of each of the Stations and the Lincoln
Business and on terms and conditions consistent with prior practices;
(i) has not suffered any material damage, destruction or loss
(whether or not covered by insurance) or any acquisition or taking of
property by any Authority;
(j) has not waived, and will not waive, any rights of
substantial value without fair and adequate consideration;
(k) has not experienced any work stoppage;
(l) has not amended, and will not amend, in any material
respect, has not terminated or entered into, and will not terminate or
enter into, or become (or permit any of its property to be) bound by or
subject to any Lease, Governmental Authorization, Private
Authorization, Material Agreement, Employment Arrangement or Plan or
any Contractual Obligation or transaction with any Affiliate;
(m) has not amended or terminated and will not amend or
terminate (unless replaced), and will keep in full force and effect
including without limitation renewing to the extent the same would
otherwise expire or terminate, insurance policies and coverage meeting
the standards of Section 7.5;
(n) has not done any act or failed to do any act, and will not
do any act or fail to do any act, if such act or failure to act might
result in the expiration, revocation, suspension or modification of any
of its Governmental Authorizations or Material Private Authorizations;
(o) has not issued, sold or purchased or agreed to issue, sell
or purchase and will not issue, sell or purchase or agree to issue,
sell or purchase, any partnership interests or any Convertible
Securities or Option Securities;
(p) has not declared, made or paid or agreed to declare, make
or pay, and will not have declared, made or paid or agreed to declare,
make or pay, any Distribution other than the Permitted Distributions;
and
(q) has not entered into, and will not enter into, any other
transaction or series of related transactions which individually or in
the aggregate is Material to any of the Stations or the Lincoln
Business.
The Company will notify American of any and all Events which would
require any material change to be made in the Disclosure Schedule insofar as it
relates to it or which could cause or result in any material breach or
inaccuracy of the Company's representations and warranties including
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without limitation those set forth in this Section or which could materially
impair the likelihood that all of the conditions specified in Section 4 will be
satisfied on or prior to the Closing Date.
2.10 Private Sale. The Company has not, directly or indirectly or
through anyone acting on its behalf, offered any of the Notes or any similar
securities for sale to, or solicited any offers to buy any thereof from, or
otherwise approached or negotiated in respect thereof with, any Person or
Persons other than American, and the Company agrees that neither it nor any
agent on its behalf will offer to sell any of the foregoing securities, or
solicit any offers to buy any thereof, or otherwise approach or negotiate with
any Person in respect thereto, or take any other action, so as to bring the
issuance and sale of any of the Notes under the registration provisions of the
Securities Act.
2.11 Disclosure. Neither the Disclosure Schedule nor any other
document, certificate or statement furnished to American by or behalf of the
company in connection with the transactions contemplated hereby contains any
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not misleading.
2.12 Use of Proceeds. The Company shall use the proceeds of the sale of
the Initial Note to American hereunder to repay all Indebtedness for Money
Borrowed and to remove any Liens other than Permitted Liens and to make the
Permitted Distributions as set forth in the Disclosure Schedule. The balance, if
any, of such proceeds will be used for working capital, to finance capital
expenditures and for other general partnership purposes.
2.13 Intellectual Property. The Company is the sole and exclusive owner
of the trademarks, trade names, service marks and copyrights constituting a part
of the Intellectual Property and used in the business of any of the Stations or
the Lincoln Business, the holder of the full record title to the trademark
registrations and the sole owner of the inventions covered by the patents and
patent applications constituting a part of such Intellectual Property, all as
set forth in the Disclosure Schedule; the Company has the sole and exclusive
right, to the extent listed in the Disclosure Schedule, to use such trademarks,
trade names, service marks, patents and copyrights and, except as set forth in
the Disclosure Schedule, all the aforesaid are free and clear of all Liens. As
of the date hereof, there are no Claims pending or, to the Company's knowledge,
threatened of any Person pertaining to the aforesaid, no proceedings have been
instituted, are pending or, to the Company's knowledge, threatened which
challenge the Company's rights in respect to any of such Intellectual Property
and none of such Intellectual Property, to the Company's knowledge, infringes
upon or otherwise violates the rights of any other Person or is being infringed
or violated by any other Person. As of the date hereof, no licenses, sublicenses
or agreements pertaining to any of such Intellectual Property are in effect
except as set forth in the Disclosure Schedule. As of the date hereof, with
respect to such Intellectual Property, the Company is not charged and has not,
at any time during the past five years, been charged in any material respect
with infringement of any adversely held copyright, trademark, service mark,
trade name or patent, or other Intellectual Property, except as set forth in the
Disclosure Schedule. The present and planned future conduct of business by the
Company is not materially dependent upon any one or more, or all, of such
Intellectual Property or rights with respect to any of the foregoing, except as
specifically described in the Disclosure Schedule (with a particular reference
to this Section).
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2.14 Material Agreements and Private Authorizations. Listed on the
Disclosure Schedule are all Material Agreements and Private Authorizations held
or used by the Company which relate to the ownership or operation of the
business or assets and property of any of the Stations or the Lincoln Business
or to which the Company is a party or to which it or any of the property and
assets of any of the Stations or the Lincoln Business is subject or bound. True,
correct and complete copies of each of such Material Agreements and Private
Authorizations have been furnished or made available by the Company to American
(or true, correct and complete descriptions thereof have been set forth in the
Disclosure Schedule, if any such Material Agreements or Private Authorizations
are oral). As of the date hereof, all of such Material Agreements are valid,
binding and legally enforceable obligations of the Company and, to the knowledge
of the Company, the other party thereto, and the Company is validly and lawfully
operating the business of the Stations and the Lincoln Business and owning or
using the related property under each of such Material Agreements. The Company
has obtained all Private Authorizations which are necessary for the ownership by
it of the properties and assets of each of the Stations and the conduct of the
Lincoln Business as now conducted or as presently proposed to be conducted or
which, if not obtained and maintained, could, singly or in the aggregate, have a
Material Adverse Effect on the Company. No such Private Authorization is the
subject of any pending or, to the Company's knowledge, threatened attack,
revocation or termination. As of the date hereof, the Company has duly complied
in all material respects with all of the terms and conditions of each such
Material Agreement and each such Private Authorization and has not done or
performed, or failed to do or perform (and there is no pending, or, to the
Company's knowledge, threatened, Claim that the Company has not so complied,
done and performed or fail to do and perform) any act which would invalidate or
provide grounds for the other party thereto to terminate (with or without
notice, passage of time or both) or materially impair its rights or benefits of,
or materially increase the costs to, the Company, under any of such Material
Agreements or Private Authorizations.
2.15 Employee Retirement Income Security Act of 1974. The Company has
not at any time during the past five years made and is not making any
contribution to any Plans and is not bound by any Plan relating to any of its
employees involved in the ownership and operations of any of the Stations or the
Lincoln Business, except as set forth in the Disclosure Schedule. As to all such
Plans and except as listed in the Disclosure Schedule:
(a) All such Plans comply and have been administered in form
and in operation in all material respects with all Applicable Laws, and
the Company has not received any notice from any Authority questioning
or challenging such compliance, and all returns or reports required by
any Applicable Law with respect to each such Plan or arrangement and
with respect to which failure to file would result in a material
liability to the Company have been timely filed.
(b) All such Plans maintained or previously maintained by the
Company that are or were intended to comply with Sections 401 and 501
of the Code comply and complied in form, subject to the exceptions
described in the Disclosure Schedule, and in operation in all material
respects with all applicable requirements of such sections, and no
event has occurred which will or could give rise to disqualification of
any such Plan under such sections or to a tax under Section 511 of the
Code which would result in a material liability to the Plan or the
Company.
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(c) None of the assets of any such Plan is invested in
employer securities or employer real property, except to the extent, if
any, set forth on the Disclosure Schedule.
(d) There have been no "prohibited transactions" (as described
in Section 406 of ERISA or Section 4975 of the Code) with respect to
any such Plan which would result in a material liability to such Plan
or the Company and the Company has not otherwise engaged in any
prohibited transaction, except to the extent, if any, set forth on the
Disclosure Schedule which would result in a material liability to such
Plan or the Company.
(e) There have been no acts or omissions by the Company which
have given rise to or may give rise to fines, penalties, taxes or
related charges in a material amount under Sections 502(c), 502(i) or
4071 or ERISA or Chapter 43 of the Code for which the Company may be
liable.
(f) There are no Claims (other than routine claims for
benefits) pending or, to the Company's knowledge, threatened involving
such Plans or the assets of such Plans, and no facts exist which could
give rise to any such Claims in a material amount (other than routine
claims for benefits).
(g) Except as set forth in the Disclosure Schedule, as to any
such Plan which is subject to Title IV of ERISA, there have been no
"reportable events" (as described in Section 4043 of ERISA), and no
steps have been taken to terminate any such Plan.
(h) All such group health Plans have been operated in
compliance in all material respects with the group health plan
continuation coverage requirements of Section 4980B of the Code and
Section 601 of ERISA to the extent such requirements are applicable.
(i) Actuarially adequate accruals for all obligations under
any such Plan subject to Title IV of ERISA are reflected in the most
recent balance sheet forming part of the Financial Statements and such
obligations include a pro rata amount of the contributions which would
otherwise have been made in accordance with past practices for the Plan
years which include the Closing Date.
(j) Neither the Company nor any of its directors, officers,
employees or any other fiduciary has committed any breach of fiduciary
responsibility imposed by ERISA or any other Applicable Law that would
subject the Company or any of its directors, officers or employees to
liability in a material amount under ERISA or any Applicable Law.
(k) No such Plan which is subject to Part 3 of Subtitle B of
Title I of ERISA or Section 412 of the Code had an accumulated funding
deficiency (as defined in Section 302 of ERISA and Section 412 of the
Code), which could involve a material liability to the
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Company whether or not waived, as of the last day of the most recent
fiscal year of such Plan to which Part 3 of Subtitle B of Title I of
ERISA or Section 412 of the Code applied, nor would have had an
accumulated funding deficiency on such date if such year were the first
year of such Plan to which Part 3 of Subtitle B of Title I of ERISA or
Section 412 of the Code applied.
(l) No material liability to the PBGC has been or is expected
by the Company to be incurred by the Company with respect to any such
Plan, and there has been no event or condition which presents a
material risk of termination of any such Plan by the PBGC.
(m) The Company is not and never has been a party to any
Multiemployer Plan or made contributions to any such Plan.
The execution, delivery and performance of this Agreement, the Notes
and each of the other Related Agreements to which the Company is a party will
not involve any prohibited transaction within the meaning of ERISA or Section
4975 of the Code.
2.16 Authorized and Outstanding Partnership Interests. The authorized
and outstanding partnership interests, general and limited, of the Company are
as set forth in the Disclosure Schedule. All of such outstanding partnership
interests have been duly authorized and validly issued, are fully paid and
nonassessable and are not subject to any preemptive or similar rights. Except as
set forth in the Disclosure Schedule, (i) there is neither outstanding nor has
the Company agreed to grant or issue any partnership interest, general or
limited, or any Option Security or Convertible Security and (ii) the Company is
not a party to or is not bound by any agreement, put or commitment pursuant to
which it is obligated to purchase, redeem or otherwise acquire any partnership
interest, general or limited, or any Option Security or Convertible Security.
2.17 Inapplicability of Specified Statutes. The Company is not a
"holding company", or a "subsidiary company" or an "affiliate" of a "holding
company", as such terms are defined in the Public Utility Holding Company Act of
1935, as amended, or an "investment company" or a company "controlled" by or
acting on behalf of an "investment company", as defined in the Investment
Company Act of 1940, as amended, or a "carrier" or a person which is in control
of a "carrier", as defined in sections 10102 or 11301 of Title 49, U.S.C. The
Company is not engaged in the business of extending credit for the purpose of
purchasing or carrying any margin stock within the meaning of Regulations G and
U of the Board of Governors of the Federal Reserve System.
3. Representations, Warranties and Covenants of American. American
represents and warrants that:
3.1 Organization and Business; Power and Authority.
(a) American (i) is a corporation duly organized, validly existing and
in good standing under the laws of the state of Delaware, and (ii) has all
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requisite power and authority (corporate and other) to own or hold under lease
its properties and to conduct its business as now conducted and as presently
proposed to be conducted.
(b) American has adequate power and authority (corporate and other) and
all necessary franchises, permits, licenses and other rights and privileges to
allow it to execute and deliver, and to perform its obligations under, this
Agreement and each other Related Agreement to which it is a party; and the
execution, delivery and performance of this Agreement and each other Related
Agreement to which it is a party have been duly authorized by all requisite
corporate action. This Agreement constitutes, and each other Related Agreement
to which it is a party, when executed and delivered by American will constitute,
valid and binding obligations of American, enforceable in accordance with their
respective terms, except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally and (ii) the availability of equitable remedies may be limited
by equitable principles of general ap plicability.
(c) Neither the execution and delivery of this Agreement or any of the
other Related Agreement to which it is a party, nor the consummation of the
transactions herein or therein contemplated, nor compliance with the terms,
conditions and provisions hereof or thereof by American:
(i) will conflict with, or result in a breach or violation of
or constitute a default in the performance, observance or fulfillment
of any obligation, covenant or condition contained in, or constitute,
or but for any requirement of giving of notice or passage of time or
both would constitute, a default or an event of default by American
under, any Applicable Law, Private Authorization, Governmental
Authorization or Contractual Obligation, or
(ii) will require any approval or action of, or filing with,
any Authority, except as United States and state securities, antitrust
and communications laws may apply.
3.2 Investment Representation.
(a) American is an "accredited investor" within the meaning of Rule 501
promulgated under the Securities Act and has been furnished with and had access
to all information, financial and other, and has the opportunity to ask
questions of the management of the Company with respect to the Company and
American's proposed investment therein.
(b) American is acquiring the Notes to be purchased by it for its own
account for investment with no present intention of distributing or reselling
the same, subject, nevertheless, to its right to dispose of the Notes or any
part thereof, if at some future time, in its sole discretion, it deems it
advisable to do so; provided, however, that notwithstanding the foregoing,
American may pledge any or all of the Notes to any bona fide lender to American.
American understands that the Company is not and will not be required to file a
registration statement under the Securities Act in connection with any sale,
transfer or other disposition of the Notes.
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3.3 Covenant Regarding Transfer. American covenants and agrees that it
will not sell, assign, transfer or otherwise dispose of any of the Notes in
violation of the Securities Act.
4. Conditions of Closing. American's obligation to purchase the Notes
shall be subject to compliance by the Company with its agreements herein
contained, to the truth and accuracy in all material respects of the
certificates to be furnished to it pursuant to this Section, the truth and
accuracy in all material respects of the representations and warranties made by
the Company herein, and to the condition that all instruments and corporate and
legal matters incident to the transactions contemplated by this Agreement shall
be reasonably satisfactory in form, scope and substance to American and its
counsel, and American and its counsel shall have received all information and
copies of all documents, including records of corporate proceedings, which it or
its counsel may reasonably request in connection therewith, such documents where
requested or appropriate to be certified by proper corporate or governmental
authorities, and to the satisfaction on the Closing Date of the following
further conditions:
4.1 Company's Officer's Certificate. The representations and warranties
contained in Section 2 shall be true and correct in all material respects on and
as of the Closing Date; no Material Adverse Change affecting the Company shall
be pending or, to the Company's knowledge, threatened; no event which if the
Notes had been outstanding immediately prior to the Closing Date would
constitute an Event of Default or a Potential Default shall have occurred and be
continuing on the Closing Date; and American shall have received on the Closing
Date a certificate dated the Closing Date to such effect, and to the effect that
each of the conditions set forth in this Section has been satisfied in all
material respects, signed by an authorized officer of the Company.
4.2 Company's Secretary's Certificate. A certificate, dated as of the
Closing Date, executed by the Company's general partner: (i) certifying that the
resolutions, as attached to such certificate, were duly adopted by the Board of
Directors of the Company's general partner, authorizing and approving the
execution of this Agreement by the Company 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 New York state official as of a date not
more than fifteen (15) days before the Closing Date and by the Company's general
partner as of the Closing Date, and a copy of the Company's Agreement of Limited
Partnership and the Company's general partner's Articles of Incorporation and
By-Laws as in effect on the date thereof, certified by the Company's general
partner as of the Closing Date.
4.3 Opinion of Company Counsel. American shall have received favorable
opinions, dated the Closing Date and reasonably satisfactory in scope, form and
substance to it and its counsel, from counsel for the Company, (i) to the
effects stated in Sections 2.1(a), 2.1(b), 2.1(d), 2.1(e), 2.6, 2.17 and 2.18,
(ii) as to the perfection of the security interests granted under the Security
Agreement, and (iii) to the effect that the offer, issue, sale and delivery of
the Notes under the circumstances contemplated by this Agreement constitute
transactions exempt from the registration provisions of the Securities Act, and
neither the registration thereunder of the Notes nor the qualification of this
Agreement under the Trust Indenture Act of 1939, as amended to date, is
required.
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4.4 Legality; Governmental and Other Authorizations. The purchase of
and payment for the Notes shall not be prohibited by any law or governmental
order or regulation applicable to American, and shall not subject American to
any penalty, tax, liability or other onerous condition. All necessary consents,
approvals, licenses, permits, orders and authorizations of, or registration,
declaration or filing with, any Authority or any other Person, with respect to
the transactions contemplated hereby shall have been obtained or made and shall
be in full force and effect.
4.5 Execution and Consummation of Certain Documents. The Company shall
have executed and delivered to American a Security Agreement (together with the
other documents and instruments referred to therein, including without
limitation appropriate UCC-1 Financing Statements) substantially in the form of
Exhibit B (the "Security Agreement"). All of such other documents and
instruments shall be reasonably satisfactory in form, scope and substance to
American and its counsel.
5. Payment and Exchange of Notes; Lost Notes.
5.1 Payments. Any other provision of this Agreement or of the Notes
notwithstanding,
(a) interest, principal and any premium to be paid in respect
of any Note held by American or its nominee shall be paid by wire
transfer of immediately available funds to such accounts as may from
time to time be designated in writing by American, or in such other
reasonable manner, or at such other address, as may from time to time
be designated in writing by American by notice given in accordance with
the provisions of this Agreement;
(b) interest, principal and any premium to be paid to any
subsequent Holder of Record that is an Institutional Investor shall be
paid by wire transfer (or such other reasonable manner as requested in
writing by such Holder of Record) of immediately available funds to
such Holder of Record at such address in the United States of America
as may from time to time be designated in writing to the Company by
such Holder of Record by notice given in accordance with the provisions
of this Agreement; and
(c) interest, principal and any premium to be paid to any
other Holder of Record shall be paid by mailing a certified or bank
cashier's check to such Holder of Record, at the address of such Holder
shown on the register maintained pursuant to the provisions of this
Agreement, or such other address in the United States of America as may
from time to time be designated in writing to the Company by such
Holder of Record by notice given in ac cordance with the provisions of
this Agreement.
Interest, principal and any premium to be paid in respect of any Note
shall be paid without any presentment or notation of payment, and the amount of
principal so paid on any Note shall be regarded as having been retired and
canceled at the time of payment. Each Holder of Record of any Note shall,
however, at any time during its regular business hours on any day when a payment
of principal is due, permit the Company at the office of the Holder of Record of
such Note to make appropriate notation on such Note of the amount of principal
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which has been paid thereon, if the Company at least fifteen (15) days in
advance shall have requested in writing permission to make such notation. Before
the transfer of any Note, the Holder of Record thereof shall make a notation
thereon of the date to which interest has been paid and of all principal
payments theretofore made thereon, and shall in writing notify the Company of
the name and address of the transferee, but notwithstanding the giving of such
notice, such transferee shall not be considered a Holder of Record of such Note
until it shall have complied with the provisions of Section 5.4. Any Note with
respect to which interest, principal and any premium has been fully paid shall
be marked paid in full and surrendered to the Company and shall be retired and
canceled.
5.2 Exchange. The Holder of Record of any of the Notes may, prior to
maturity or prepayment thereof, surrender any Note held by it for exchange at
the principal office of the Company. Within a reasonable time thereafter and
without expense to such Holder of Record, the Company shall issue in exchange
therefor another Note or Notes of the same issue for the same aggregate
principal amount as the unpaid principal amount of the Note so surrendered,
having the same maturity and rate of interest, containing the same provisions
and subject to the same terms and conditions as the Note so surrendered, in such
denomination or denominations as the Holder of Record making such exchange shall
request; provided, however, that if the issue of more than one such new Note is
requested, such new Notes shall be issued only in denominations of $100,000, or
larger amounts which are integral multiples of $10,000, except that one Note so
issued shall be for the amount by which the unpaid principal amount of the Note
or Notes so surrendered exceeded an integral multiple of $10,000. Each such new
Note shall be payable to such Person or Persons, or order, as the Holder of
Record of such surrendered Note or Notes may designate in writing, and such
exchange or transfer shall be made in such a manner that no gain or loss of
principal or interest shall result therefrom. Any Note issued and delivered in
accordance with the provisions of this Section shall be dated as of the date to
which interest has been paid on the Note exchanged therefor. The Company agrees
that it will pay shipping and insurance charges from and to the main office of
any Institutional Investor involved in any exchange or transfer of a Note or
Notes held by it. Notwithstanding the foregoing provisions of this Section, the
Company shall not be required to issue and deliver any new Notes pursuant to
this Section unless it is indemnified against and held harmless from any United
States and state documentary stamp or similar excise taxes and any transfer
taxes.
5.3 Replacement of Notes. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of any Note,
and (in case of loss, theft or destruction) of indemnity satisfactory to it, and
upon reimbursement to the Company of all reasonable expenses incidental thereto,
and upon surrender and cancellation of any Note, if mutilated, the Company will
make and deliver a new Note of like tenor in lieu of such Note in a principal
amount equal to the sum of the then unpaid principal amount of, together with
accrued and unpaid interest on, such lost, stolen, destroyed or mutilated Note.
Any Note made and delivered in accordance with the provisions of this Section
shall be dated as of the date to which interest has been paid on the Note lost,
stolen, destroyed or mutilated and shall indicate that it is being issued in
substitution for, but not in payment of, the lost, stolen, destroyed or
mutilated Note. The term "outstanding" when used in this Agreement with
reference to the Notes as of any particular time shall not include any Note in
lieu of which a new Note has been made and delivered by the Company in
accordance with the provisions of this Section or any Note held by the Company.
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Notwithstanding any provision to the contrary herein or in the Notes, if any
Note of which any Institutional Investor is the holder is lost, stolen or
destroyed, then the affidavit of the principal financial officer of such
Institutional Investor, setting forth the circumstances with respect to such
loss, theft or destruction, shall be accepted as satisfactory evidence thereof,
and no indemnity shall be required as a condition to the execution and delivery
of a new Note or Notes for a like aggregate principal amount, other than a
written agreement by such Institutional Investor, in form reasonably
satisfactory to the Company, to indemnify the Company against loss on account of
the making of any payment in respect of any such lost or stolen Note to any
Person legally entitled to such payment.
5.4 Transfer Office and Record of Holders of Notes. The Company will at
all times keep or cause to be kept, at the principal office of the Company,
appropriate records for the registration and transfer of the Notes, identifying
the Holders of Record, from time to time, of the Notes, and shall cause to be
recorded therein the names and addresses of the Holders of Record of the Notes
from time to time, and any and all transfers thereof; provided, however, that
the Company shall be required to record the transfer of a Note only if and when
a subsequent holder shall have (a) presented such Note to the Company for
inspection, properly endorsed or assigned and in order for transfer, (b)
delivered to the Company a written notice of its acquisition of such Note, and
(c) designated in writing an address to which payments on and notices in respect
of such Notes shall be transmitted.
5.5 Transfer of Notes. Subject to the provisions of this Agreement, any
Note may be transferred at the principal office of the Company by surrender
thereof for cancellation, endorsed or accompanied by a written instrument of
transfer, in form reasonably satisfactory to the Company, duly executed by or on
behalf of the Holder of Record, and thereupon the Company will issue and
deliver, in the name of the transferee or transferees, a new Note, for a like
aggregate principal amount, dated as of the date to which interest has been paid
on the Note so transferred.
5.6 Registered Owners of Notes. Except as provided in Section 5.1 (with
respect to places of payment designated by American or a Holder of Record) and
Section 10.4 (with respect to notices to nominees designated as such), the
Company and all other Persons may treat the registered holder, as shown on the
records maintained pursuant to Section 5.4, of any Note, for the time being, as
the owner thereof for the purposes of receiving payment of the principal of and
premium, if any, and interest on such Note and for all other purposes, and the
Company shall not be affected by any notice or knowledge to the contrary,
whether payments on the Notes shall be overdue or not; and the Company, and
every successive registered holder and assignee of a Note by accepting or
holding the same, shall be deemed to have consented to and agreed with the
provisions of this Section.
6. Payment Provisions.
6.1 Required Payments.
(a) On or before the forty-fifth (45th) day in each calendar quarter
commencing with the calendar quarter beginning October 1, 1996, the Company
shall make a mandatory payment with respect to the Notes equal to 100% of Excess
Cash Flow determined as of the end of the preceding quarter (except that, in the
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case of the quarter ending September 30, 1996, the period to which this
provision shall apply is the period from August 1, 1996 through September 30,
1996). Any such payment shall be applied first to accrued and unpaid interest on
the Notes and the balance, if any, to the payment of the principal amount of the
Notes, without premium.
(b) Simultaneously with the consummation of the Acquisition, the Notes
shall be paid in their entirety, without premium.
6.2 Optional Payments. The Company may at its option, at any time, pay
all of the Notes, or from time to time a part of the Notes in the principal
amount of $100,000 or any integral multiple thereof. Any such optional payment
shall be made at the principal amount of the Notes paid, without premium but
together with accrued and unpaid interest thereon to the date of payment.
6.3 Pro Rata Allocation. Except as hereinafter provided, the Company
shall allocate (in units of $1,000 and integral multiples thereof) each partial
payment of Notes under Sections 6.1 and 6.2 among the Notes then outstanding in
proportion, as nearly as practicable, to the respective unpaid principal amount
of Notes held by each Holder of Record, with adjustments, to the extent
practicable, to compensate for any prior payments not made exactly in such
proportions.
6.4 Notice of Payment and Offers to Repurchase. Notice of each required
or optional payment of Notes pursuant to Section 6.1 or 6.2 and each optional
offer to repurchase pursuant to Section 6.7 shall be given not less than thirty
(30) nor more than sixty (60) days before the date of payment or proposed
repurchase date, and all such notices shall be given by mailing by registered or
certified mail to each Holder of Record of Notes to be paid or repurchased a
notice of intention, or offer, to pay or repurchase, which notice shall include
statements specifying (a) the date of the intended payment or the proposed
repurchase date, (b) the provision of this Agreement pursuant to which such
payment or offer is being made, (c) the aggregate principal amount of the Notes
to be paid, or to which such offer to repurchase relates, (d) the principal
amount of the Notes registered in the name of such Holder to be paid, or to
which such offer to repurchase relates, and (e) the premium, if any, and accrued
interest to be paid in respect of the principal amount so to be paid, or to
which such offer to repurchase relates.
6.5 Effect of Certain Transactions. If and whenever the Company shall
pay pursuant to any provision of Section 6.2, or the Company or a Subsidiary
shall purchase, pursuant to the provisions of Section 6.7, some but less than
all of the Notes then outstanding, then and in each such event, the principal
amount of the required payments thereafter becoming due pursuant to Section
6.1(a) shall be reduced to the extent such payment or purchase was made out of
funds constituting Excess Cash Flow.
6.6 Maturity; No Reissue. Notes or portions thereof to be paid pursuant
to any provision of this Agreement shall become due and payable on the payment
date, together with accrued interest and premium, if any, and from and after
such date (unless the Company shall default in paying the amounts then due)
interest thereon shall cease to accrue. Any Note paid in full shall be
surrendered to the Company and canceled and shall not be reissued, and no Note
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shall be issued in respect of any paid principal amount of any Note, and no such
paid Note or paid portion of a Note shall be considered to be "outstanding" for
any purpose hereof.
6.7 Purchase of Notes. The Company will not, and will not permit any
Subsidiary to, purchase or otherwise acquire any Note except (a) by way of
payment in accordance with the provisions of the Notes and this Agreement, or
(b) pursuant to a repurchase offer made by the Company pro rata and on the same
terms to each Holder of Record of Notes to be repurchased at the time
outstanding, pursuant to a notice given in accordance with Section 6.4 which
notice shall state whether such offer may be accepted in part or only in full,
and shall provide that any such ac ceptance may be given by written notice to
the Company in accordance with the provisions of this Agreement at any time
prior to such date, not less than thirty-five (35) days from the date of the
notice of the Company's offer under this Section as shall be specified therein.
Any Notes repurchased pursuant to this Section shall be canceled by the Company,
and shall not be reissued or deemed to be "outstanding" for any purpose of this
Agreement.
7. Special Covenants of Company. Without limiting any other covenant or
provision hereof, the Company covenants and agrees that so long as any of the
Notes are outstanding, it shall comply with, perform and observe the following
covenants and provisions and shall cause each Subsidiary, if any, to comply
with, perform and observe said covenants and provisions as are applicable
thereto (it being understood, in any event, that to the extent any of the
covenants of this Section refer to consolidated financial information they shall
apply to the Company only in the event that the Company has no Subsidiaries).
7.1 Payments. The Company will duly and punctually pay the principal of
and premium, if any, and interest on the Notes in accordance with the terms of
this Agreement and the Notes.
7.2 Prompt Payment of Taxes and Indebtedness. The Company will, and
will cause each of its Subsidiaries to, pay promptly, or cause to be paid
promptly, all taxes, assessments and other governmental charges or levies of
whatever nature imposed on it, or upon it or its income or profits, or upon any
of its property, real, personal or mixed; provided, however, that unless and
until foreclosure, distraint sale or other similar proceedings shall have been
commenced, nothing herein shall require the Company or any Subsidiary to pay any
such tax, assessment, charge or levy so long as the validity thereof shall be
currently contested in good faith by appropriate proceedings and if the Company
or such Subsidiary shall have set aside on its books reserves deemed adequate by
the Company's Independent Accountants with respect thereto in accordance with
GAAP, consistently with the Financial Statements delivered to American
hereunder. The Company will, and will cause each of its Subsidiaries to, (a) pay
or cause to be paid when due all payments of principal of and premium and
interest on Indebtedness for Money Borrowed and will not permit or suffer any
such Indebtedness for Money Borrowed to become or remain in default, (b) pay or
cause to be paid when due all lawful claims for labor and rents, and (c) pay or
cause to be paid in a manner consistent with prudent business practice all trade
payables and pay or cause to be paid when due all other Indebtedness upon which
it is or becomes obligated, except, in each case, other than that referred to in
clause (a), to the extent payment is being contested in good faith by
appropriate proceedings and if the Company or such Subsidiary shall have set
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aside on its books reserves deemed adequate by the Company's Independent
Accountants with respect thereto in accordance with GAAP, consistently with the
Financial Statements delivered to American hereunder, unless and until
foreclosure, distraint sale or other similar proceedings shall have been
commenced.
7.3 Conduct of Business. The Company (a) will, and will cause each of
its Subsidiaries to, continue to engage in the business of owning and operating
the Stations and the Lincoln Business and (b) will do or cause to be done all
things reasonably necessary to preserve, renew and keep in full force and effect
and in good standing its limited partnership existence and its rights and
franchises necessary to conduct such business. Notwithstanding clause (b) of the
preceding sentence, the Company may merge or cause any Subsidiary to be merged
with or into the Company or another Subsidiary, or may cause any Wholly-Owned
Subsidiary which is a Wholly-Owned Subsidiary of another Subsidiary to liquidate
and distribute its assets and liabilities to such latter Subsidiary.
7.4 Maintenance of Property and Leases. The Company will, and will
cause each of its Subsidiaries to, keep its assets and property relating to each
of the Stations and the Lincoln Business in good repair, working order and
condition, and from time to time will make all repairs, renewals, replacements,
additions and improvements thereto so that its business may be properly and
advantageously conducted at all times. The Company will, and will cause each of
the Subsidiaries to, comply in all material respects with the provisions of all
leases of real or personal property relating to each of the Stations and the
Lincoln Business to which it is a party or under which it oc cupies or uses
property so as to prevent any loss or forfeiture thereof or thereunder;
provided, however, that the Company or any Subsidiary may cancel, surrender or
modify any such lease if such action is deemed to be advantageous to the
Company's or such Subsidiary's business.
7.5 Maintenance of Insurance. The Company will, and will cause each
Subsidiary to, keep its assets and property relating to each of the Stations and
the Lincoln Business which are of an insurable character and which are
customarily insured by companies of established reputation engaged in the same
or similar business similarly situated insured by financially sound and
reputable insurers against loss or damage by fire, explosion and hazards insured
against by extended coverage in amounts sufficient to prevent the Company or any
Subsidiary from becoming a co-insurer. The Company will, and will cause each
Subsidiary to, maintain with financially sound and reputable insurers insurance
against other hazards and risks and liability to persons and property, to the
extent and in the manner customary for companies of established reputation
engaged in the same or similar businesses similarly situated. The Company will
cause all such insurance policies relating to the assets or property or business
of any of the Stations or the Lincoln Business to be endorsed in the name
American (or any other holders of the Notes) as "loss payees". For purposes of
this Section, the Company's current insurers shall be deemed to be financially
sound and reputable insurers and the present coverage deemed adequate to satisfy
this Section 7.5.
7.6 Maintenance of Accounts and Records. The Company will, and will
cause each of its Subsidiaries to, keep true records and books of account in
which full, true and correct entries will be made of dealings and transactions
in relation to the business and assets and property of the Stations and the
Lincoln Business, in accordance with GAAP consistently applied, except as
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otherwise set forth in the Disclosure Schedule, and shall prepare the financial
statements required to be furnished pursuant to Section 7.9. The Company will,
and will cause each Subsidiary to, apply accounting principles in the
preparation of the financial statements of the Company and its Subsidiaries,
which, in the judgment of the Company and the opinion of the Independent
Accountants, are in accordance with GAAP consistently applied, except that no
notes shall be required with respect thereto and except as otherwise set forth
in the Disclosure Schedule. In the event of a change in any method of accounting
used by the Company or any Subsidiary that is permitted by this Agreement, such
change shall not be deemed to result in an Event of Default if, at the time of
such change, an Event of Default had not occurred and was not then continuing,
based upon the former methods of accounting used by the Company; provided,
however, that, if, after any such change in accounting methods, either the
Company or American (or the holders of the Notes) determine in good faith that
any requirements of this Agreement are substantially altered as a result of such
change, the Company and American agree to negotiate in good faith with respect
to a change in such requirements.
7.7 Compliance With Laws. The Company will, and will cause each of its
Subsidiaries to, comply with all Applicable Laws in respect of the conduct of
the Lincoln Business and the ownership of the assets and property of each of the
Stations and the Lincoln Business, except such as are being contested in good
faith and except for such noncompliances as will not in the aggregate have a
Material Adverse Effect on the Company.
7.8 Miscellaneous Information. From time to time upon request, the
Company will furnish to each Holder of any of the Notes such information
regarding the business, properties, financial condition and results of operation
of the Company and its Subsidiaries in such detail as may reason ably be
requested; and the Company covenants and agrees that any authorized
representative of any such Holder shall have the right, reasonably exercisable,
to visit and inspect any of the properties of the Company or any of its
Subsidiaries, to examine and to discuss their affairs, finances and accounts
(including without limitation any letters of comment with respect to audits,
letters to management or confidential reports relating to financial matters
submitted to the Company or its Subsidiaries by independent public accountants)
with, and be advised as to the same by, their officers, all at such reasonable
times and intervals as such Holder may reasonably request.
7.9 Information and Reports to Be Furnished by Company. The Company
will furnish to each Holder of any of the Notes:
(a) Financial Statements. The following financial statements
relating to each of the Stations and the Lincoln Business,
substantially in the form customarily prepared by the Company:
(i) Quarterly Reports. In duplicate as soon as
available and, in any event, within forty-five (45) days after
the end of each quarter (including the last) of the Company's
fiscal year, a consolidated (of the Lincoln Business) and
consolidating (of each of the Stations) balance sheet, and
related consolidated and consolidating statements of income
and retained earnings and cash flow for such period (including
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year to date), together with comparative figures as at such
date or for the same periods of the preceding year and for the
Company's budget for such fiscal year, all in reasonable
detail, accompanied by supporting statements and schedules,
normally prepared by the Company in connection therewith, and
accompanied by a certificate of the principal financial or
accounting officer of the Company (A) stating that such
statements have been properly prepared in accordance with GAAP
consistently applied (except that no notes shall be required
with respect thereto and except as otherwise set forth in the
Disclosure Schedule) and are true, correct and complete in all
material respects and fairly present the consolidated and
consolidating financial condition of the Stations and the
Lincoln Business at and as of the dates thereof and the
results of its and their operations for the periods covered
thereby subject only to normal non-material year-end
accounting adjustments, and (B) stating that he has reviewed
this Agreement and has no knowledge of any Event which
constitutes an Event of Default or a Potential Default, or, if
he has such knowledge, specifying such default or event and
the nature thereof and the period of existence thereof and
what action the Company has taken, is taking or proposes to
take with respect thereto.
(ii) Monthly Reports. In duplicate as soon as
available and, in any event, within thirty (30) days after the
end of each month (including the last) of the Company's fiscal
year, a consolidated (of the Lincoln Business) and
consolidating (of the Stations) balance sheet, and related
consolidated and consolidating statements of income and
retained earnings and cash flow for such period (including
year to date), together with comparative figures as at such
date or for the same periods of the preceding year and for the
Company's budget for such fiscal year, all in the form
customarily prepared for management.
(iii) Annual Statements. In duplicate as soon as
available and, in any event, within ninety (90) days after the
end of each fiscal year of the Company, a consolidated (of the
Lincoln Business) and consolidating (of the Stations) balance
sheet, and related consolidated and consolidating statements
of income and retained earnings and cash flow for such year,
together with comparative figures as at the end of and for the
immediately preceding fiscal year and for the Company's budget
for such fiscal year, all in reasonable detail, accompanied by
supporting statements and schedules, normally prepared by the
Company in connection therewith, and accompanied by (A) a
report (in form, scope and substance reasonably satisfactory
to American) of the Independent Accountants and accompanied by
the statement of such accountants that, in making the audit
necessary to such report or certification, they obtained no
knowledge of any Event which constitutes an Event of Default
or a Potential Default, or, if they have such knowledge,
specifying such default or event and the nature thereof, and
(B) a certificate of the principal financial or accounting
officer of the Company with respect to the matters set forth
in clause (B) of paragraph (i) of this subdivision.
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(iv) Annual Budget. in duplicate as soon as available
and, in any event, on or prior to December 1 of each year,
commencing in 1996, an annual budget with respect to the
Stations and the Lincoln Business containing, in reasonable
detail, information with respect to the balance sheet,
statements of income and retain earnings, cash flow and
Capital Expenditures for the following calendar year, all in a
form substantially similar to those of the financial
statements required to be delivered pursuant to the provisions
of this Section 7.9(a).
(v) Reports to Partners or Others. In duplicate
promptly upon the sending, making available or filing of the
same, copies of all proxy statements, registration statements,
prospectuses, reports and financial statements that the
Company shall send or make available to its partners, general
or limited, or file with the Securities and Exchange
Commission or any stock exchange upon which its partnership
interests may be listed.
(b) Notice of Litigation, Event of Default, Potential Default,
etc. The Company will promptly give notice of any litigation or any
administrative proceeding to which it or any Subsidiary may hereafter
become a party which involves a potential liability to the Company or
any Subsidiary of at least $100,000, or which may have any Material
Adverse Effect on the Company. Forthwith upon any executive officer of
the Company's general partner obtaining knowledge of any of the
following, the Company shall give to American prompt written notice of
any Change in Control or proposed Change in Control, any Act of
Bankruptcy and any Event or Default or Potential Default, specifying
the nature and period of existence of any such Event of Default or
Potential Default and what action the Company has taken, is taking or
proposes to take with respect thereto.
7.10 Liens. The Company will not, and will not permit any Subsidiary
to, create or incur, directly or indirectly, or suffer to be created or incurred
or to exist (except in favor of the Company or a Wholly-Owned Subsidiary), any
Lien upon any of the assets or property of any of the Stations or the Lincoln
Business other than the Permitted Liens.
7.11 Distributions. The Company will not, and will not permit any
Subsidiary to, declare, order, pay or make, directly or indirectly, any
Distribution (other than dividends paid by a Subsidiary to a Wholly-Owned
Subsidiary or the Company) or set apart any sum or property therefor, or agree
to do so, other than any Distribution constituting a Permitted Distribution.
7.12 Consolidation, Merger and Acquisition. The Company will not,
directly or indirectly:
(a) voluntarily liquidate, dissolve or otherwise wind up its
business; or
(b) permit any Subsidiary to merge or consolidate with any
Person (other than the Company or a Wholly-Owned Subsidiary) unless (i)
the surviving or resulting Person is a Subsidiary which is organized
under the laws of a state of the United States of America or the
District of Columbia, and (ii) no condition or event shall exist prior
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to, as a result of or immediately after giving effect to such merger or
consolidation which constitutes an Event of Default or a Potential
Default, including without limitation the provisions of paragraph (c)
of this Section; or
(c) consolidate with or merge into another Person (other than
a Wholly-Owned Subsidiary) or permit another Person to consolidate or
merge into it, or acquire (x) all or any substantial part of the
assets, property or business of, or (y) any assets that constitute a
division or operating unit of the business of, any other Person, unless
such assets, property or business are or is, as the case may be,
consolidated with the Company for financial reporting purposes and
unless
(i) the Person surviving such consolidation or
merger, is either (A) the Company, or (B) an Entity which (I)
is organized under the laws of a state of the United States of
America, or the District of Columbia, and (II) shall expressly
assume the obligations of the Company under this Agreement and
under the Notes to the same extent and with the same effect as
though such surviving Person were a party hereto and thereto
and were named and defined as the "Company" herein and
therein;
(ii) no condition or event shall exist, either as a
result of, or immediately after giving effect to, such
consolidation, merger or acquisition which constitutes an
Event of Default or a Potential Default;
(iii) none of the rights, privileges or preferences
of any holder of the Notes would be adversely affected by such
consolidation, merger or acquisition; and
(iv) in the case of any such acquisition, all of the
assets, property and business to be acquired, to the extent
they relate to any of the Stations or the Lincoln Business,
shall have been made subject to the Lien of the Security
Agreement on terms and conditions satisfactory to the holders
of the Notes.
7.13 Prohibited Transactions. Except for such agreements or
arrangements that constitute Permitted Distributions or except as set forth on
the Disclosure Schedule and marked "Permitted Affiliated Transactions" or as
otherwise agreed upon by the holders of the Notes, the Company will not, and
will not permit any Subsidiary to, permit to exist or enter into any agreement
or arrangement relating to any of the Stations or the Lincoln Business whereby
it engages in a transaction of any kind with any Subsidiary (other than a
Wholly-Owned Subsidiary), or with any other Affiliate of the Company or any
Subsidiary.
7.14 Compliance with ERISA. The Company will, and will cause each if
its Subsidiaries to, fulfill the obligations under the minimum funding standards
of ERISA and the Code with respect to each Plan relating to any of the Stations
or the Lincoln Business, to the extent such minimum funding standards are
applicable, and comply in all material respects with the presently applicable
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provisions of ERISA and the Code, and will not, and will not permit any
Subsidiary to, incur any material liability to the PBGC or any such Plan under
Title IV of ERISA.
7.15 Indebtedness. The Company will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Indebtedness,
except:
(a) Indebtedness pursuant to this Agreement;
(b) Indebtedness (other than Indebtedness for Money Borrowed)
arising in connection with the Permitted Liens;
(c) Indebtedness incurred in the ordinary course of business
which does not represent Indebtedness for Money Borrowed;
(d) Other Indebtedness for Money Borrowed (so long as it does
not create amy Lien on the Collateral (as defined in the Security
Agreement) in a principal amount not in excess of $5,000,000; and
(e) Indebtedness arising in connection with the payment, in
full, of the Notes, including accrued and unpaid interest thereon, so
long as after giving effect thereto the Company is Solvent.
7.16 Operation of the Business.
(a) Ordinary Course of Business. The Company and each of its
Subsidiaries will operate each of the Stations and the Lincoln Business
in the normal, usual and customary manner in the ordinary and regular
course of business. Without limiting the generality of the foregoing,
the Company will not, and will not permit any Subsidiary to, take any
of the following actions with respect to each of the Stations and the
Lincoln Business:
(i) Transfer or agree to Transfer any of the
properties or assets relating to each of the Stations and the
Lincoln Business, other than inventory in the ordinary course
of its business and nonmaterial amounts of machinery and
equipment sold or otherwise disposed of in the ordinary course
of business and no longer needed in the operation or business
or replaced with assets of like kind or better kind and
quality;
(ii) except in the ordinary course of business and on
terms and conditions consistent with prior practices, (A)
incur any material obligations or liabilities (fixed,
contingent or other); (B) make any additions to its property
or any purchases of machinery or equipment, except for normal
maintenance and replacements; (C) or agents, and will not
otherwise alter, modify or change in any material respect the
terms of their employment or engagement, and has not entered
and will not enter into new employment arrangements; (D)
waive, any rights of substantial value without fair and
adequate consideration; (E) amend in any material respect,
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terminate or enter into or become (or permit any of its
property to be) bound by or subject to any Lease, Governmental
Authorization, Private Authorization, Employment Arrangement
or Plan or any Contractual Obligation which could have a
Material Adverse Effect on the Company; (F) do any act or fail
to do any act, if such act or failure to act might result in
the expiration, revocation, suspension or modification of any
of its Material Governmental Authorizations or Material
Private Authorizations; and (G) enter into, any other
transaction or series of related transactions which
individually or in the aggregate is Material to the Company;
and
(iii) waive any condition set forth therein to
consummation of, or otherwise amend, modify or terminate, any
Material Agreement, or enter into any agreement or other
arrangement which would constitute a Material Agreement,
except for such waivers, amendments or modifications, or such
other agreements or arrangements as do not and will not have
in the aggregate any Material Adverse Effect on the Company.
(b) Budget and Management. The Company shall adopt an annual
budget specifying, without limitation, any Capital Expenditures.
American shall have a reasonable opportunity to review and consult with
the Company with respect to the annual budget, including, without
limitation, the Capital Expenditures reflected therein, required to be
furnished to it pursuant to the provisions of Section 7.9(a)(iv); and,
until such consultation shall have occurred, the Company shall continue
to operate on its then existing annual budget. The Company shall adhere
to its annual budget and shall notify American of the occurrence of any
Event that could reasonably be expected to cause the Company to exceed
its annual budget by more than ten percent (10%). The Company shall
notify American prior to any proposed changes material to the
management, policies or personnel of any of the Stations or the Lincoln
Business, and American shall have a reasonable opportunity to consult
with the Company with respect to any such changes, and such changes
shall not be implemented prior to such review and consultation. The
opportunities for prior review and consultation under this Section
7.17(b) shall not be deemed to give American any right of veto of such
matters or require the prior approval of American, and the granting of
such opportunities for review or consultation shall not be deemed to
constitute any waiver or estoppel with respect to any other right of
American under this Agreement.
(c) Capital Expenditures. To the extent that Cash Flow is not
sufficient to fund Capital Expenditures in an approved annual budget,
American shall have the right, but not the obligation, to advance, from
time to time, the funds necessary to make such Capital Expenditures
(the "Capital Expenditure Advances") in which event the Company shall
issue additional Notes in a principal amount equal to the Capital
Expenditure Advances. To the extent American elects not to make any
such Capital Expenditure Advance, the Company shall not be deemed to be
in default hereunder or under any of the Related Agreements for the
consequences of such failure.
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7.17 Issue of Equity Securities. The Company will not issue, or agree
to issue, any partnership interests, general or limited, or consent to the
issuance of any shares of capital stock of its general partner, or issue or
consent to the issue of any Convertible Securities or Option Securities, if such
issuance would result in a change of control of the Company such that approval
of the FCC is required.
7.18 Avoidance of Impairment of Asset Value or Security of Noteholder.
In preparing, adopting and implementing the annual budget, the Company shall
take no action that would materially impair the value of the Company or its
assets as a going concern or the security of the Noteholders. The Company shall
use reasonable business efforts to preserve the management, policies and
personnel of each of the Stations and the Lincoln Business, and shall not alter
management, policies, or personnel in any manner that would materially impair
the value of any of the Stations or the Lincoln Business as a going concern or
the security of the Noteholders.
8. Defaults.
8.1 Events of Default. If one or more of the following events (herein
termed "Events of Default") shall have occurred, that is to say:
(a) if the Company shall fail to make payment of the principal
of or premium, if any, or, for a period of five (5) business days,
interest on any of the Notes when and as the same shall become due and
payable, whether at their stated maturity, on a date fixed for payment,
by a notice of payment or offer to pay, by declaration or otherwise; or
(b) if any representation or warranty of the Company contained
in this Agreement, or any statement or certificate furnished by the
Company in connection with the issue or sale of any of the Notes or
pursuant to any provision of this Agreement, shall have been false,
incorrect or misleading in any material respect when made or so
certified to; or
(c) if the Company or any Subsidiary shall fail to observe or
perform any of the covenants, agreements or provisions contained in
Sections 7.10 through 7.13, inclusive, 7.15, 7.16 and 7.18; or
(d) if the Company or any Subsidiary shall fail duly to
observe or perform any other covenant, agreement or provision contained
in this Agreement, the Notes or any other Related Agreement, other than
those referred to in subdivisions (a), (b) or (c) above, and such
failure shall have continued for a period of thirty (30) days after
written notice to the Company from the holders of a majority in
interest of the Notes; or
(e) if the Company or any Subsidiary shall default, as
principal or as guarantor or other surety, (i) in any payment of
principal of or premium, if any, or interest on any Indebtedness for
Money Borrowed (other than the Notes), or any purchase money
Indebtedness in excess of $100,000, or (ii) with respect to any of the
terms of any evidence of such Indebtedness or of any mortgage, security
agreement, indenture or other agreement relating thereto, and such
default shall continue for more than the period of grace, if any,
specified therein; or
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(f) if a final judgment for the payment of money in excess of
$100,000 shall be rendered against the Company or any Subsidiary, and
such judgment shall not be discharged or its discharge shall not have
been provided for in accordance with its terms, or a stay of execution
thereof shall not have been procured within thirty (30) days from the
date of the entry thereof, or within said period of thirty (30) day
period (or such longer period during which execution on such judgment
shall have been stayed), the Company or such Subsidiary shall not have
filed an appeal therefrom (or from the order, decree or process upon
which or pursuant to which said judgment shall have been granted,
passed or entered) and caused the execution thereof to be stayed during
such appeal; or
(g) if the Company or any of its Subsidiaries shall, as a
debtor, be involved in or commit an Act of Bankruptcy; or
(h) if the Acquisition Agreement shall have been terminated by
American because of the breach or violation thereof by or the default
thereunder of the Company or by the Company other than a termination
because of the breach or violation thereof by or the default thereunder
of American; or
(i) if a Change in Control with respect to the Company shall
be pending or shall have occurred,
then, except as set forth below in this Section, (I) in the case of any event
specified in subdivision (g) of this Section, there shall automatically become
forthwith due and payable the unpaid balance of all of the Notes, and (II) in
each and every other case specified in this Section, the holders of a majority
in principal amount of the Notes at the time outstanding may by notice in
writing to the Company declare to be forthwith due and payable the unpaid
balance of all of the Notes, together in any such case with interest accrued
thereon, and thereupon such balance shall become so due and payable without
presentation, protest or further demand or notice of any kind, all of which are
hereby expressly waived by the Company; the Holders of a majority in principal
amount of the Notes of the time outstanding may, without being required to give
any notice (except as may be required by law), exercise their rights under the
Security Agreement whether or not they elect to accelerate payment as provided
herein; and/or in addition thereto each Holder may proceed to protect and
enforce its rights by suit in equity, action at law and/or other appropriate
proceeding, either for specific performance of any covenant or provision
contained in the Notes or herein or in aid of the exercise of any power granted
in the Notes or herein or in lieu thereof. Notwithstanding any provision to the
contrary in this Agreement, no events other than those described in this Section
8.1 shall constitute an Event of Default giving rise to the consequences set
forth in clause (I) or (II) of the preceding sentence.
8.2 Notice to the Holders. If and whenever the Company shall become
aware of the existence of any Event which constitutes, or which after giving of
notice or passage of time or both would constitute, an Event of Default, the
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Company shall forthwith give notice to each Holder of such condition or event
and what action the Company has taken, is taking or proposes to take with
respect thereto. If any creditor of the Company shall take any action, of which
the Company shall have actual knowledge, in respect of any Event which
constitutes, or which after giving notice or passage of time or both would
constitute, an Event of Default, then and in any such event, and whether or not
the Company shall have given a notice under the first sentence of this Section
with respect to the condition or event to which such demand or action shall
relate, the Company shall forthwith give to each Holder written notice,
specifying such action and the nature of such alleged default or Event of
Default and what actions the Company has taken, is taking or proposes to take
with respect thereto.
8.3 Annulment of Defaults. This Section is subject to the condition
that, if at any time after the principal of any or all of the Notes shall have
been declared and become due and payable, and before any judgment or decree for
the payment of the moneys so due, or any part thereof, shall be entered, all
arrears of interest upon all the Notes and all other sums payable upon the Notes
(except the principal of and interest on such Notes which by such declaration
shall have become payable) shall have been duly paid, and every other Potential
Default and Event of Default shall have been made good or cured, then and in
every such case the Holders of a majority in principal amount of the Notes at
the time outstanding may, by written instrument or instruments filed with the
Company, rescind and annul such declaration and its consequences. No rescission
or annulment under this Sec tion shall extend to or affect any subsequent
Potential Default or Event of Default or impair any right consequent thereon.
8.4 Waiver by Company; Severability of Remedies. To the fullest extent
permitted by applicable law, the Company hereby agrees to waive, and does hereby
absolutely and irrevocably waive and relinquish, (a) the benefit and advantage
of any valuation, stay, appraisal, extension or redemption laws now existing or
which may hereafter exist, which, but for this provision, might be applicable to
any sale made under the judgment, order or decree of any court, or otherwise,
based on the Notes or any claim for interest on the Notes; (b) all presentments,
demands for performance and notices of nonperformance (except to the extent
required by the provisions hereof); (c) any requirements of diligence or
promptness on the part of any Holder, as a holder of Notes, in the enforcement
of its rights under the provisions of this Agreement or the Notes; and (d) any
and all notices of every kind and description which may be required to be given
by any statute or rule of law and any defense of any kind which it may now or
hereafter have with respect to its liability under this Agreement or the Notes.
In the event any remedy or other provision of this Section is not enforceable
for any reason, no other remedy or provision shall be affected thereby, and all
such other remedies and provisions shall be given full force and effect in
accordance with their terms.
8.5 No Waiver of Rights. No course of dealing between the Company or
any Subsidiary and any Holder, as a holder of Notes, and no delay or omission on
the part of any Holder in exercising any rights under the Notes or this
Agreement, shall operate as a waiver of the rights of such Holder, as a holder
of Notes. No failure to insist upon the strict provisions of any covenant, term,
condition or other provision of this Agreement or any of the Notes or to
exercise any right or remedy thereunder shall constitute a waiver by any Holder,
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as a holder of Notes, of any such covenant, term, condition or other provision
or of any Potential Default or Event of Default in connection therewith. The
waiver of any covenant, term, condition or other provision hereof or of the
Notes or Potential Default or Event of Default hereunder on one occasion shall
not be construed as a bar to or a waiver of any right or remedy on any future
occasion and shall not affect or alter this Agreement or the Notes except to the
extent specifically provided in the instruments setting forth such waiver
delivered under Section 10.5, and every covenant, term, condition and other
provision of this Agreement and the Notes shall, in such event, continue in full
force and effect.
8.6 Costs and Expenses of Collection. The Company covenants and agrees
that if default be made in any payment of principal of or interest on the Notes,
it will, to the extent permitted under applicable law, pay to each Holder, as a
holder of Notes, such further amount as shall be sufficient to cover the costs
and expenses of collection, including reasonable compensation to the attorneys
of each Holder for all services rendered in that connection.
8.7 Remedies Cumulative. No remedy herein conferred upon each Holder,
as a holder of Notes or otherwise, is intended to be exclusive of any other
remedy, and each and every remedy shall be cumulative and shall be in addition
to every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or otherwise.
8.8 Non-Recourse Obligation. The obligations of the Company represented
by the Notes are nonrecourse, and, notwithstanding any provision to the contrary
in this Agreement, the Note, the Security Agreement or any of the other Related
Agreements, American agrees for itself, and its successors and assigns that (a)
neither the Company nor its successors and assigns shall be personally liable on
the Notes, and (b) in the event that one or more Events of Defaults has occurred
or any other default whatsoever has occurred under this Agreement, the Notes or
the Security Agreement, American, or any of its successors and assigns, shall
look solely to the Collateral (as defined in the Security Agreement) and any
other Assets (as defined in the Acquisition Agreement) of the Company including
without limitation all Broadcast Licenses (as defined in the Security Agreement
and only to the extent not constituting a part of the Collateral) for payment of
the indebtedness represented by the Notes and will not make any claim or
institute any action or proceeding against the Company, or any of its successors
and assigns, or the Excluded Assets (as defined in the Acquisition Agreement),
for payment of such indebtedness (or for any deficiency remaining after the
application of the Collateral or any such other Assets) other than out of the
Collateral or any such other Assets.
9. Definitions. As used herein, unless the context otherwise requires,
the following terms have the following respective meanings. Terms defined in the
singular shall have a comparable meaning when used in the plural, and vice
versa, and the reference to any gender shall be deemed to include all genders.
Unless otherwise defined or the context otherwise clearly requires, terms for
which meanings are provided in this Agreement shall have such meanings when used
in the Disclosure Schedule and in each instrument, notice, certificate,
communication, opinion or other document executed or required to be executed
pursuant hereto or thereto or otherwise delivered, from time to time, pursuant
hereto or thereto. If the Company has any Subsidiaries all financial terms shall
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be deemed to apply to the Company and its Consolidated Subsidiaries, determined
in accordance with GAAP consistently applied with the Financial Statements
delivered to American hereunder.
The term "Acquisition" is defined in the first whereas paragraph,
preceding Section 1.
The term "Acquisition Agreement" is defined in the first whereas
paragraph, preceding Section 1, and shall include all amendments, modifications
and supplements thereto.
The term "Act of Bankruptcy" shall mean, when used with reference to
any Person, any of the following events or occurrences:
(a) its admitting in writing its inability, or being unable
under Applicable Law, or its failing generally, to pay its debts
generally as they become due, or
(b) its filing a petition, answer or consent seeking relief as
a debtor or otherwise commencing a voluntary case under the Bankruptcy
Code as from time to time in effect, or its authorizing, by appropriate
proceedings of its board of directors or other governing body, any such
petition, answer, consent or commencement of such a voluntary case; or
(c) the filing against it or all or any substantial part of
its property of a petition com mencing an involuntary case under the
Bankruptcy Code which shall remain undismissed for a period of more
than thirty (30) days or which is consented to by such Person or any
order or decree approving relief adverse to such Person thereunder
shall remain unstayed and in effect for more than forty five (45) days;
or
(d) its commencement of proceedings or filing a petition,
answer or consent seeking relief as a debtor under any Applicable Law,
other than the Bankruptcy Code, of any jurisdiction relating to the
liquidation or reorganization of debtors or to the modification or
alteration of the rights of creditors, or its consenting to or
acquiescing in such relief or its admitting or acquiescing in or
failing promptly and in any event within thirty (30) days of the filing
thereof, in an appropriate manner, to deny the material allegations of
any petition seeking such relief, any such involuntary petition
remaining undismissed for more than thirty (30) days or an order in any
involuntary proceeding adverse to such Person remaining unstayed and in
effect for more than forty-five (45) days; or
(e) the entry of an order or decree (whether or not final) by
a court of competent jurisdiction (i) finding it to be bankrupt or
insolvent, (ii) ordering or approving its liquidation, dissolution or
winding up, or reorganization or any modification or alteration of the
rights of its creditors, or any composition or readjustment of debts,
(iii) assuming custody of, or appointing a receiver, trustee,
sequestrator, conservator, assignee, custodian, liquidator, fiscal
agent or similar official for, such Person or all or a substantial part
of its property and any such order or decree shall continue unstayed
and in effect for a period of forty-five (45) days; or
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(f) its convening a meeting of creditors for the purpose of
consummating an out-of-court arrangement, or making an assignment for
the benefit of, or entering into a composition, extension or similar
arrangement with, its creditors in respect of all or a substantial
portion of its debt; or
(g) its seeking or consenting to or acquiescing in the
appointment of a receiver, trustee, sequestrator, conservator,
liquidator, fiscal agent or other custodian of itself or of all or any
substantial part of its property; or
(h) its winding-up, liquidation or dissolution; or
(i) its authorization, by appropriate action of its board of
directors or other governing body, of any of the foregoing.
The term "Affiliate", when used with respect to any Person, shall mean
(i) any other Person at the time directly or indirectly controlling, controlled
by or under direct or indirect common control with such Person, (ii) any other
Person of which such Person at the time owns, or has the right to acquire,
directly or indirectly twenty percent (20%) or more on a consolidated basis of
the equity or beneficial interest, (iii) any other Person which at the time
owns, or has the right to acquire, directly or indirectly twenty percent (20%)
or more of the equity or beneficial interest of such Person, (iv) any executive
officer or director of such Person, or any Person of which such Person or any
executive officer or director of such Person at the time owns, or has the right
to acquire, directly or indirectly, twenty percent (20%) of more of the equity
or beneficial interest, and (v) when used with respect to an individual, shall
include a spouse, any ancestor or descendant, or any other relative (by blood,
adoption or marriage), within the third degree of such individual. A Person
shall be deemed to be "controlled by" any other Person if such other Person
possesses, directly or indirectly, power to direct or cause the direction of the
management or policies of such Person or the disposition of its assets or
property, whether by stock, equity or other ownership, contract, arrangement or
understanding, or otherwise.
The term "American" is defined in the preamble of this Agreement.
The term "American Rate" is defined in Section 1.1.
The term "Applicable Law" shall mean any Law of any Authority, whether
domestic or foreign, including without limitation all federal and state
securities Laws, to which the Person in question is subject or by which it or
any of its property is bound.
The term "Authority" shall mean any governmental or quasi-governmental
authority, whether executive, legislative, judicial, administrative or other, or
any combination thereof, including without limitation any federal, state,
territorial, county, municipal or other government or governmental or
quasi-governmental agency, arbitrator, board, body, branch, bureau, central bank
or comparable agency or entity, commission, corporation, court, department,
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instrumentality, master, mediator, panel, referee, system or other political
unit or subdivision or other entity of any of the foregoing, whether domestic or
foreign.
The term "Bankruptcy Code" shall mean 11 U.S.C. ss. 101 et seq., as
from time to time in effect, and any successor law, and any reference to any
statutory provision shall be deemed to be a reference to any successor statutory
provision.
The term "Capital Expenditures" shall mean, with respect to the
Company, for any period during which the amount thereof is to be determined,
without duplication, the amount of all expenses or liabilities (including
without limitation Capital Lease Obligations) incurred or accrued or
expenditures made by the Company directly or indirectly with respect to any of
the Stations or the Lincoln Business which, in accordance with GAAP, would be
treated as a capital expenditure, but shall not include interest or
amortization, depreciation or the like with respect to any previous Capital
Expenditure.
The term "Capital Expenditure Advances" is defined in Section 7.17(c).
The term "Capitalized Lease Obligation" shall mean the principal
portion of any lease obligation on which in accordance with GAAP would be
characterized as a capital lease.
The term "Cash Flow" shall mean, with respect to the Company, for any
period in respect of which the amount thereof shall be determined: (a) broadcast
revenues (exclusive of reciprocal and barter revenues) of the Stations and the
Lincoln Business, determined in accordance with GAAP, for such period, less (b)
station operating expenses (inclusive of real estate and personal property taxes
paid but exclusive of income taxes, interest, amortization and reciprocal and
barter expenses included therein) of the Stations and the Lincoln Business, plus
(c) non-cash or non-recurring expense items relating to legal, accounting and
similar fees incurred in connection with the consummation of the transactions
contemplated by this Agreement. Cash Flow shall be adjusted on a consistent
basis to reflect the acquisition, sale, exchange and disposition of property
(other than tangible personal property disposed of in the ordinary course of
business). Cash Flow shall exclude extraordinary gains and losses and all gains
and losses from acquisitions, sales, exchanges and dispositions of assets (other
than tangible personal property disposed of in the ordinary course of business).
The term "Change in Control" shall mean, with respect to the Company
any of the following:
(a) the acquisition in a transaction or series of transactions,
including without limitation by merger, consolidation or other
reorganization, by any Person (such term to include anyone
deemed a person under Section 13(d)(3) under the Securities
Exchange Act) of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Securities Exchange Act) of a
majority or more of the equity interests or voting interests
of the Company or the general partner of the Company, other
than by (i) the Company or any of its Subsidiaries, (ii) any
employee benefit plan or related trust of the Company or any
of its Subsidiaries, (iii) any existing general partner of the
Company or any of his Affiliates or (iv) American or any of
its Affiliates (an "Acquiring Person"); or
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(b) the sale or other disposition of all or substantially all the
assets of the Company or any of the Stations or the Lincoln
Business, in one transaction or series of related
transactions, including by way of merger, consolidation or
other reorganization, other than with or to American or a
Permitted Assignee.
The term "Claims" shall mean, with respect to any Person, any and all
debts, liabilities, obligations, losses, damages, deficiencies, assessments and
penalties of or against such Person, together with all Legal Actions, pending or
threatened, claims and judgments of whatever kind and nature relating thereto,
and all fees, costs, expenses and disbursements (including without limitation
reasonable attorneys' and other legal fees, costs and expenses) relating to any
of the foregoing.
The terms "Closing" and "Closing Date" are defined in Section 1.3.
The term "Code" shall mean the United States Internal Revenue Code of
1986, and the rules and regulations thereunder, all as from time to time in
effect, or any successor law, rules or regulations, and any reference to any
statutory or regulatory provision shall be deemed to be a reference to any
successor statutory or regulatory provision.
The term "Communications Act" is defined in the second whereas
paragraph, preceding Section 1 and shall include the rules, regulations, orders
and policies of the FCC thereunder, all as from time to time in effect, or any
successor law, rule, regulation, order and policy and any reference to any
statutory, regulatory or other provision shall be deemed to be a reference to
any successor statutory, regulatory or other provision.
The term "Company" is defined in the preamble of this Agreement.
The term "Consolidated", when used with reference to any financial term
shall mean the sum of the respective amounts thereof of the Company and its
Consolidated Subsidiaries as consolidated in accordance with GAAP, after the
elimination of intercompany items, and to the extent applicable after
appropriate deduction for any minority interests in Consolidated Subsidiaries.
The term "Consolidated Subsidiary" shall mean any Subsidiary of the
Company the assets and liabilities of which are required to be consolidated with
those of the Company in its consolidated financial statements in accordance with
GAAP.
The term "Contractual Obligation" shall mean, with respect to any
Person, any term, condition, provision, representation, warranty, agreement,
covenant, undertaking, commitment, indemnity or other obligation set forth in
the organizational agreements and other documents of such Person or which is
outstanding or existing under any agreement, contract, arrangement, instrument
or understanding to which such Person is a party or by which it or any of its
business is subject or properties is bound and which, in the case of the
Company, relates to any of the Stations or the Lincoln Business.
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The term "Convertible Securities" shall mean, with respect to any
Person, any evidences of indebtedness, shares of capital stock (other than
common stock) or other securities (including without limitation, in the case of
the Company, partnership interests, general or limited) directly or indirectly
convertible into or exchangeable for shares of common stock, whether or not the
right to convert or exchange thereunder is immediately exercisable or is
conditioned upon the passage of time, the occurrence or non-occurrence or
existence or non-existence of some other Event, or both.
The term "Disclosure Schedule" shall mean the Disclosure Schedule,
dated as of the date hereof, heretofore delivered by the Company to American
pursuant to the provisions of this Agreement.
The term "Distribution", when used in reference to partnership
interests shall mean: (i) the declaration or payment of any distribution
dividend (except distributions payable in limited partnership interests of the
Company) on or in respect of any class of partnership interest of the Company,
(ii) the purchase, redemption or other retirement of any shares of any class of
partnership interests of the Company or any shares of capital stock of any
Subsidiary owned by a Person other than the Company or a Subsidiary, and (iii)
any other distribution on or in respect of any class of partnership interests of
the Company or any shares of capital stock of any Subsidiary owned by a Person
other than the Company or a Subsidiary.
The term "Employment Arrangement" shall mean, with respect to the
Company, any employment, consulting, retainer, severance or similar contract,
agreement, plan, arrangement or policy (exclusive of any which is terminable
within ninety (90) days without liability, penalty or payment of any kind of the
Company or any of its Affiliates), or providing for severance, termination
payments, insurance coverage (including any self-insured arrangements), workers
compensation, disability benefits, life, health, medical, dental or
hospitalization benefits, supplemental unemployment benefits, vacation or sick
leave benefits, pension or retirement benefits or for deferred compensation,
profit-sharing, bonuses, stock options, stock appreciation rights or other forms
of incentive compensation or post-retirement insurance, compensation or
post-retirement insurance, compensation or benefits, or any collective
bargaining or other labor agreement, whether or not any of the foregoing is
subject to the provisions of ERISA, to the extent, in each case, it relates to,
covers or is for the benefit of any employee involved in the business or
operations of any of the Stations or the Lincoln Business.
The term "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as from time to time in effect, and any successor law, and any
reference to any statutory provision shall be deemed to be a reference to any
successor provision.
The term "Event" shall mean the occurrence or existence of any act,
action, activity, circumstance, condition, event, fact, failure to act, incident
or practice, or any set or combination of any of the foregoing.
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The term "Event of Default" is defined in Section 8.1.
The term "Excess Cash Flow" as determined with respect to the Company,
at the end of each calendar quarter, shall mean the amount, if any, by which the
Cash Flow during the period commencing August 1, 1996 and ending on a cumulative
basis on the last day of such calendar quarter exceeds the sum of (a) $100,000,
(b) without duplication, Capital Expenditures (other than Capital Expenditures
funded through Capital Expenditure Advances) since July 31, 1996, and (c) the
aggregate amount of all cash payments of principal of and interest on the Notes.
The term "FCC" is defined in the second whereas paragraph, preceding
Section 1, and shall include any successor Authority.
The term "GAAP" means, except to the extent that a deviation therefrom
is expressly required by this Agreement, such principles applied on a consistent
basis, (i) as set forth in Opinions of the Accounting Principles Board of the
American Institute of Certified Public Accountants ("AICPA") and/or in
statements of the Financial Accounting Standards Board that are applicable in
the circumstances as of the date in question, (ii) when not inconsistent with
such opinions and statements, as set forth in other AICPA publications and
guidelines and/or (iii) that otherwise arise by custom for the particular
industry. The requirement that such principles be consistently applied means
that the accounting principles in a current period are comparable in all
material respect to those applied in preceding period. All accounting and
financial terms used in this Agreement and the compliance with each covenant
contained in this Agreement that relates to financial matters shall be
determined in accordance with generally accepted accounting principles as
defined in this paragraph. In the event of a change in any method of accounting
used by the Company or any of its Subsidiaries that is permitted by this
Agreement, such change shall not be deemed to result in an Event of Default if,
at the time of such change, an Event of Default had not occurred and was not
then continuing, based upon the former methods of accounting used by the
Company; provided, however, that, if, after any such change in accounting
methods, either the Company or American determine in good faith that any
requirements of this Agreement are substantially altered as a result of such
change, the Company and American agree to negotiate in good faith with respect
to a change in such requirements.
The term "Governmental Authorizations" shall mean all approvals,
concessions, consents, franchises, licenses, permits, plans, registrations and
other authorizations of all Authorities relating, in the case of the Company, to
any of the Stations or the Lincoln Business.
The terms "Guaranty" or "Guaranteed" shall mean and include all
liabilities and obligations under or by reason of any guarantee or other
contingent liability (other than endorsements of negotiable instruments for
collection or deposit in the ordinary course of business), direct or indirect,
with respect to any Indebtedness, obligation or other liability (collectively,
an "obligation") of another Person, through an agreement or otherwise.
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The terms "Holder" and "Holders" shall mean the holders, from time to
time, of any of the Notes. The terms "Holder of Record" and "Holders of Record"
shall mean Holders, from time to time as shown on the records of the Company
maintained for such purpose.
The term "Indebtedness" shall mean, with respect, to any Person, (a)
all items, except items of capital stock, partnership interests, surplus or
general contingency or deferred tax reserves or any minority interest in any
Subsidiary to the extent such interest is treated as a liability with
indeterminate term on the consolidated balance sheet of such Person, which in
accordance with GAAP would be included in determining total liabilities as shown
on the liability side of a balance sheet of such Person, (b) all obligations
secured by any Lien to which any property or asset owned or held by such Person
is subject, whether or not the obligation secured thereby shall have been
assumed, and (c) to the extent not otherwise included, all Capitalized Lease
Obligations of such Person and all obligations of such Person with respect to
leases constituting part of a sale and lease back arrangement.
The term "Indebtedness for Money Borrowed" shall mean, with respect to
any Person, (a) money borrowed, (b) Indebtedness represented by notes payable
and drafts accepted representing extensions of credit, all obligations evidenced
by bonds, debentures, notes or other similar instruments, the maximum amount
currently or at any time thereafter available to be drawn under all outstanding
letters of credit issued for the account of such Person, (c) Indebtedness upon
which interest charges are customarily paid by such Person, (d) Indebtedness
(including Capitalized Lease Obligations) issued or assumed as full or partial
payment for property or services, whether or not any such notes, drafts,
obligations or Indebtedness represent Indebtedness for money borrowed, and (e)
Guarantees of any of the Indebtedness described in items (a) through (d), but
shall not include (i) trade payables, (ii) expenses accrued in the ordinary
course of business or (iii) customer advance payments and customer deposits
received in the ordinary course of business.
The term "Independent Accountants" shall mean a firm of independent
certified public accountants of national reputation selected by the Company and
reasonably satisfactory to the holders of a majority in interest of the Notes.
The term "Initial Note" is defined in the third whereas paragraph,
preceding Section 1.
The term "Institutional Investor" shall mean any bank, savings bank,
trust company, insurance company, investment company registered as such under
the Investment Company Act of 1940, as amended, federal savings and loan
association, private or public pension fund, Authority, or other recognized
institutional lender or investor, or American or any other corporation, directly
or indirectly, engaged in the business of owning and operating radio stations,
whether any of the foregoing is acting in its individual or a fiduciary
capacity.
The term "Intellectual Property" shall mean, with respect to any
Person, any and all research, information, inventions, designs, procedures,
developments, discoveries, improvements, patents and applications therefor,
trademarks and applications therefor, service marks, trade names copyrights and
applications therefor, trade secrets, drawing, plans, systems, methods,
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specifications, computer software programs, tapes, discs and related data
processing software (including without limitation object and source codes) owned
by such Person or in which it has an ownership interest and all other
manufacturing, engineering, technical, research and development data and
know-how made, conceived, developed and/or acquired by such Person, which relate
to the manufacture, production or processing of any products developed or sold
by such Person or which are within the scope of or usable in connection with
such Person's business as it may, from time to time, hereafter be conducted or
proposed to be conducted.
The term "Investment" shall mean, with respect to any Person, all
loans, advances, exten sions of credit (except for accounts and notes receivable
for merchandise sold or services furnished in the ordinary course of business,
travel, moving and expense advances to employees in the ordinary course of
business, and amounts paid in advance on account of the purchase price of
merchandise to be delivered to or services to be performed for the payor within
one year of the date of the advance), or purchase of stock, notes, bonds or
other securities or evidences of indebtedness or capital contribution to any
other Person, whether in cash or other property. The amount of an Investment
shall be its cost (the amount of cash or the fair market value of other property
given in exchange therefor), whether or not written or charged off or sold or
otherwise disposed of, except to the extent such cost shall have been paid to
such Person by a Person which is not an Affiliate of such Person or in which
such Person had no present or prospective financial interest at the time of such
payment.
The term "Law" shall mean any action, code, consent decree,
constitution, decree, directive, enactment, finding, guideline, law, injunction,
interpretation, judgment, order, ordinance, policy statement, proclamation,
promulgation, regulation, requirement, rule, rule of law, rule of public policy,
settlement agreement, statute, or writ, or the common law, or any particular
section, part or provision thereof, or any interpretation, directive, guideline
or request (whether or not having the force of law), of any Authority, including
without limitation (a) the judicial systems thereof, or any particular section,
part or provision thereof, and (b) any of the foregoing relating to antitrust or
prohibiting other anticompetitive business practices, those relating to
employment practices (such as discrimination, health and safety), and those
relating to minority business enterprises.
The term "Legal Action" shall mean, with respect to any Person, any
litigation or legal or other actions, arbitrations, counterclaims,
investigations, proceedings, requests for material information or suits, at law
or in arbitration, equity or admiralty (whether or not purported to be brought
on behalf of such Person) affecting such Person or any of its business or
property or assets.
The term "Lien" shall mean any mortgage, lien (statutory or other),
preference, priority or other security agreement, arrangement or interest,
hypothecation, pledge or other deposit arrange ment, assignment, charge, levy,
executory seizure, attachment, garnishment, encumbrance (including any easement,
exception, variance, reservation or limitation, right of way, zoning
restriction, building or use restriction, and the like), conditional sale, title
retention or other similar arrangement, device, agreement or restriction,
preemptive or similar right, any financing lease involving substantially the
same economic effect as any of the foregoing and the filing of any financing
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statement under the Uniform Commercial Code or comparable law of any
jurisdiction, or any option, equity, claim or right of or obligation to, any
other Person, of whatever kind and character.
The term "Lincoln Business" is defined in the first whereas paragraph,
preceding Section 1.
The terms "Material" or "Materiality" for the purposes of the
Agreement, shall, unless specifically stated to the contrary, be determined
without regard to the fact that various provisions of the Agreement set forth
specific dollar amounts.
The term "Material Adverse" when used alone or in conjunction with
other terms (including without limitation "Affect," "Change" and "Effect") shall
mean, with respect to the Company, any Event or set of Events which could be
expected to (a) have any material adverse effect upon or result in any material
adverse change in the validity or enforceability of the Agreement or any other
agreement, instrument or other document executed or required to be executed by
such Person pursuant hereto or thereto, (b) materially and adversely affect the
business, operations, management, properties or prospects, or the condition,
financial or other, or results of operation of such Person or such Person and
its Subsidiaries taken as a whole, which, in the case of the Company, shall mean
each of the Stations or the Lincoln Business, (c) materially impair such
Person's ability to fulfill its obligations under the terms of any agreement,
instrument or other document executed or required to be executed by such Person,
(d) materially and adversely affect the aggregate rights and remedies of any
party (other than such Person) under the Agreement or any agreement, instrument
or other document executed or required to be executed pursuant hereto or
thereto, or (e) or, in the case of the Company, adversely affects its ability to
perform this Agreement, the Notes or any of the other Related Agreements or to
pay when due, in accordance with the terms of this Agreement and the Notes, the
principal of and interest and premium, if any, on the Notes.
The term "Material Agreement" shall mean, with respect to the Company,
any agreement, contract, arrangement, undertaking, commitment, license or
obligation relating to the business or assets and property of any of the
Stations or the Lincoln Business which (a) was not entered into in the ordinary
course of business, (b) was entered into in the ordinary course of business
which (i) involves the purchase, sale or lease of goods or materials or
performance of services aggregating more than Fifty Thousand Dollars ($50,000),
(ii) extends for more than twelve (12) months, or (iii) is not terminable on
thirty (30) days' or less notice without penalty or other payment, (c) involves
Indebtedness for Money Borrowed in excess of Fifty Thousand Dollars ($50,000),
or (d) would account for more than five percent (5%) of revenues or expenses of
the Lincoln Business projected to be received or incurred by the Company during
the current fiscal year. Without limiting the generality of the foregoing, the
term "Material Agreement" shall include the Acquisition Agreement.
The term "Most Recent Balance Sheet" is defined in Section 2.3.
The term "Notes" is defined in Section 1.1.
The term "Option Securities" shall mean all rights, options and
warrants, and calls or commitments evidencing the right, to subscribe for,
purchase or otherwise acquire shares of capital stock or other securities
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(including without limitation, in the case of the Company, partnership
interests, general or limited) or Convertible Securities, whether or not the
right to subscribe for, purchase or otherwise acquire is immediately exercisable
or is conditioned upon the passage of time, the occurrence or non-occurrence or
the existence or non-existence of some other Event.
The term "PBGC" shall mean the Pension Benefit Guaranty Corporation and
any Person succeeding to any or all of its functions under ERISA.
The term "Permitted Assignee" shall mean any Person to whom American is
allowed to transfer its right under the Acquisition Agreement.
The term "Permitted Distribution" shall mean a loan, investment,
distribution, fee, payment or other transfer made by the Company, as lender,
investor, distributor, payor or other transferor, to any Person, as borrower,
distributee, payee or other transferee, including without limitation one or more
of the partners, general or limited, of the Company, of all or any portion of
the proceeds from the sale of any Notes (other than Notes representing Capital
Expenditure Advances) to American hereunder, or from any revenue, income or gain
attributable thereto; provided, however, that notwithstanding the foregoing, no
such loan, investment, distribution, fee, payment or other transfer shall be
permitted or shall constitute a Permitted Distribution unless, after giving
effect thereto, the Company is Solvent.
The term "Permitted Liens" shall mean:
(a) the security interest created under the Security Agreement
in favor of the holders of the Notes;
(b) Liens for taxes if payment shall not at the time be
required to be made in accordance with the provisions of Section 7.2;
(c) Liens of carriers, warehousemen, mechanics, laborers,
materialmen and landlords incurred in the ordinary course of business
for sums not yet due or being contested in good faith, if payment shall
not be required to be made in accordance with the provisions of Section
7.2;
(d) Liens arising out of judgments or awards, and appeal and
similar bonds incident to the conduct of legal actions, against such
Person with respect to which such Person shall then be prosecuting
appeal or other proceedings for review (and as to which any foreclosure
or other enforcement proceedings shall not have begun or shall have
been fully bonded or otherwise effectively stayed);
(e) Liens incurred in the ordinary course of business in
connection with worker's compensation and unemployment insurance Laws,
but only so long as no foreclosure, distraint, sale or similar
proceedings have been commenced with respect thereto; and
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(f) Liens set forth in the Disclosure Schedule.
The term "Person" shall mean any natural individual, corporation, firm,
unincorporated organization, association, partnership, limited liability
company, business trust, joint stock company, joint venture, trust or other
organization, entity or business, or any governmental authority, whether acting
in an individual, fiduciary or other capacity.
The term "Plan" shall mean, with respect to any Person and at a
particular time, any employee benefit plan which is covered by ERISA and in
respect of which such Person or an ERISA Affiliate (as defined in ERISA) is (or,
if such plan were terminated at such time, would under Sec tion 4069 of ERISA be
deemed to be) an "employer" as defined in Section 3(5) of ERISA.
The term "Potential Default" shall mean any event or circumstance which
after notice, passage of time, or both, would become an Event of Default.
The term "Private Authorizations" shall mean all approvals,
concessions, consents, franchises, licenses, permits, and other authorizations
of all Persons (other than Authorities) other than those of a nature included
within the definition of Intellectual Property which, in the case of the
Company, relates to the business or assets and property of any of the Stations
or the Lincoln Business.
The term "Purchase Price" is defined in Section 1.2.
The term "Related Agreement" shall mean this Agreement, the Notes, the
Security Agreement, the Acquisition Agreement, and each other agreement,
instrument and other document executed or required to be executed by the Company
on the Closing Date or at any time thereafter, in connection with the
transactions contemplated by this Agreement or any of the other Related
Agreements, in each case, as amended, modified or supplemented from time to
time.
The term "Rental Obligations," with respect to any lease for any
period, shall mean the minimum amount of rental payments required to be made in
such period by the lessee under such Lease, including without limitation any
amounts required to be paid by such lessee, whether or not designated as rental
or additional rental: (a) on account of maintenance and repairs, insurance,
taxes, assessments, water and sewer rates and similar charges, and (b) which are
payable on the basis of profits, revenues or sales to be derived from the leased
property or any other index of performance.
The term "Securities Act" shall mean the Securities Act of 1933, and
the rules and regulations promulgated thereunder, all as from time to time in
effect, or any successor law, rules or regulations, and any reference to any
statutory or regulatory provision shall be deemed to be a reference to any
successor statutory or regulatory provision.
The term "Securities Exchange Act" shall mean the Securities Exchange
Act of 1934, and the rules and regulations promulgated thereunder, all as from
time to time in effect, or any successor law, rules or regulations, and any
reference to any statutory or regulatory provision shall be deemed to be a
reference to any successor statutory or regulatory provision.
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The term "Security Agreement" is defined in Section 4.5, and shall
include all amendments, modifications and supplements thereto.
The term "Solvent" shall mean, with respect to any Person on a
particular date, that on such date (i) the fair value of the assets of such
Person (both at fair valuation and at present fair saleable value) is, on the
date of determination, greater than the total amount of liabilities, including,
without limitation, contingent and unliquidated liabilities, of such Person,
(ii) such Person is able to pay all liabilities of such Person as they mature,
and (iii) such Person does not have unreasonably small capital with which to
carry on its business. In computing the amount of contingent or unliquidated
liabilities at any time, such liabilities will be computed at the amount which,
in light of all the facts and circumstances existing at such time, represents
the amount that can reasonably be expected to become an actual or matured
liability. For purposes of this definition, "indebtedness" shall mean any
liability on a claim, and "claim" shall mean (a) right to payment, whether or
not such right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal equitable, secured
or unsecured, or (b) right to an equitable remedy for breach of performance if
such breach gives rise to a payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured.
The term "Station" is defined in the first whereas paragraph, preceding
Section 1.
The term "Subsidiary" with respect to any corporation (the "parent")
shall mean any Person of which such parent, at the time in respect of which such
term is used, (a) owns directly or indirectly more than fifty percent (50%) of
the equity or beneficial interest, on a consolidated basis, and (b) owns
directly or controls with power to vote, indirectly through one or more
Subsidiaries, shares of capital stock or beneficial interest having the power to
cast at least a majority of the votes entitled to be cast for the election of
the directors, trustees, managers or other officials having powers analogous to
those of directors of a corporation. Unless otherwise specifically indicated,
when used herein the term Subsidiary shall refer to a direct or indirect
Subsidiary of the Company.
The term "Tax" (and with correlative meanings, "Taxes" and "Taxable"),
shall mean, with respect to any Person, (a) any net income, alternative or
add-on minimum tax, gross income, gross receipts, gains, sales, use, ad valorem,
transfer, franchise, profits, license, withholding on amounts paid to or by such
Person or any of its Subsidiaries, payroll, employment, excise, severance,
stamp, occupation, premium, property, environmental or windfall profit tax,
custom, duty or other tax, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest or any penalty, addition to
tax or additional amount imposed by any Authority (a "Taxing Authority")
responsible for the imposition of any such tax (domestic or foreign), (b) joint
or several liability of such Person or any of its Subsidiaries with any other
Person for the payment of any amounts of the type described in (a) and (c)
liability of such Person or any of its Subsidiaries for the payment of any
amounts of the type described in (a) as a result of any express or implied
obligation to indemnify any other Person.
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The term "Tax Returns" shall mean all returns, consolidated or
otherwise (including without limitation information returns), required to be
filed in any jurisdiction with respect to Taxes.
The term "Transfer" shall mean any sale, assignment, conveyance,
transfer or other disposition, mortgage, pledge or other Lien, lease, exchange,
abandonment, parting with control of, gift, granting of an option or proxy or
other act of alienation.
The term "Wholly-Owned Subsidiary" shall mean a Subsidiary of the
Company, all of the outstanding shares of every class of stock (other than
directors' qualifying shares, if required by statute, the certificates for
which, duly endorsed in blank or accompanied by a stock power duly endorsed in
blank, shall be held by such Subsidiary) and all other securities of which are
at the time owned, directly or indirectly, by the Company or another
Wholly-Owned Subsidiary.
10. Miscellaneous Provisions.
10.1 Stamp and Other Taxes. The Company covenants and agrees that it
will pay all United States and state documentary stamp or similar excise taxes,
including any interest or penalties thereon, which may be legally payable in
connection with or arising out of the issue or exchange of any of the Notes
(other than any such tax on the transfer thereof), and will indemnify each
holder of any thereof against, and save it harmless from, any liability, cost or
expense in respect of any such stamp taxes or other taxes and any interest or
penalties thereon. The Company's agreement in this connection shall survive
termination of this Agreement and the payment of the Notes.
10.2 Expenses. Whether or not the transactions contemplated hereby
shall be consummated, the Company will pay all of the following expenses in
connection with such transactions and in con nection with any amendments or
waivers (whether or not the same become effective) under or in respect of this
Agreement, the Notes and the other Related Agreements to which it is a party:
(a) the cost and expenses of its counsel, including the furnishing of all
opinions by such counsel and all certificates on behalf of the Company, and of
the Company's performance of and compliance with all agreements and conditions
contained herein on its part to be performed or complied with; (b) the taxes
specified in Section 10.1; (c) the costs and expenses specified in Sections 8.6
and 10.9; and (d) the out-of-pocket expenses incurred by each holder of any
Notes in connection with any amendments or waivers or in connection with or
arising out of any litigation, investigation or proceeding instituted by any
Authority or any other Person with respect to this Agreement, the Notes or the
other Related Agreements to which it is a party or the transactions contemplated
hereby and requiring such holder's participation or involvement, except as
otherwise provided in the Acquisition Agreement.
10.3 Survival of Covenants; Successors and Assigns. All covenants,
agreements and representations made herein and in certificates delivered in
connection herewith shall be deemed material and relied on by American
notwithstanding any investigation made by it or in its behalf, and shall
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<PAGE>
survive the execution and delivery of the Notes, to it and its payment therefor,
and shall bind and, subject to compliance with the provisions of this Agreement
including without limitation Section 7.12, inure to the benefit of the Company's
successors and assigns, whether so expressed or not, and all such covenants,
agreements and representations shall inure to the benefit of the successors and
assigns of American, whether so expressed or not.
10.4 Notices and Communications. All notices and other communications
which by any provision of this Agreement are required or permitted to be given
shall be given in writing and shall be (i) mailed by first-class, express mail
or other overnight mail service, postage prepaid, or Federal Express or other
overnight mail courier service, (ii) sent by telex, telegram, telecopy or other
similar form of rapid transmission, confirmed by mailing (by first class or
express mail, postage prepaid, or Federal Express or other overnight mail
courier service) written confirmation at substantially the same time as such
rapid transmission, or (iii) personally delivered to an officer of the receiving
party. All such communications shall be mailed, set or delivered:
(a) if to the Company, at 351 South Warren Street, Suite 600,
Syracuse, NY 13202- 2030, attention: Albert L. Wertheimer, President
(with copies to Kaye, Scholer, Fierman, Hays & Handler LLP, 901
Fifteenth Street, NW, Suite 1100, Washington, DC 20005, attention Jason
Shrinsky, Esq., and to O'Hara & O'Connell, P.C., 200 Salina Meadows
Parkway, Syracuse, NY 13212-4505, attention: Dennis G. O'Hara, Esq.);
(b) if to American, at 116 Huntington Avenue, Boston, MA
02116, attention: Steven B. Dodge, Chairman of the Board (with a copy
to Sullivan & Worcester LLP, One Post Office Square, Boston,
Massachusetts 02109, attention: Norman A. Bikales, Esq.); and
(c) if to any other Holders of Notes to the address set forth
in the Company's records;
or at such other addresses (including copies) as any party may designate in
writing to the other parties to this Agreement.
A notice delivered in person shall be effective when received or upon
refusal to accept receipt; a notice sent by mail shall not become effective
until received by the Person to whom it is given, unless it is mailed by
registered or certified mail, in which case it shall be deemed effective on the
date of receipt or refusal to accept receipt as indicated by postal records; a
notice sent by rapid transmission shall be deemed to be given when receipt of
such transmission is acknowledged.
10.5 Amendments and Waivers. Any provision of this Agreement to the
contrary notwithstanding, changes in or additions to this Agreement and the
Notes may be made, or compli ance with any term, covenant, agreement, condition
or provision set forth herein, in the Notes may be omitted or waived (either
generally or in a particular instance and either retroactively or prospectively)
with, but only with, the consent in writing of the holders of a majority in
principal amount of the Notes at the time outstanding and the Company, except
that no such change, addition, omission, waiver or consent may be made with
respect to the Notes, without the consent of all of the holders of the Notes,
except as otherwise provided in Section 8.3, if it involves any change,
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<PAGE>
addition, omission, waiver or consent with respect to the provisions regarding
the amount, timing or form of payment of premium, if any, or interest on or
principal of the Notes, the maturity date thereof or which changes or amends the
provisions of this Section with respect to the requirement of unanimous consent
of the Noteholders; and each such change, addition or waiver shall be binding
upon each future holder of the Notes and, in the case of the Company, its
successors and permitted assigns. Any consent may be given subject to
satisfaction of conditions stated therein. The failure to insist upon the strict
provisions of any covenant, term, condition or other provision of this Agreement
or the Notes or to exercise any right or remedy hereunder or thereunder shall
not constitute a waiver of any such covenant, term, condition or other provision
thereof or Potential Default or Event of Default in connection therewith. The
waiver of any covenant, term, condition or other provision hereof or thereof or
Potential Default or Event of Default hereunder shall not affect or alter this
Agreement or the Notes in any other respect, and each and every covenant, term,
condition or other provision of this Agreement and the Notes shall, in such
event, continue in full force and effect, except as so waived, and shall be
operative with respect to any other then existing or subsequent Potential
Default or Event of Default in connection therewith.
10.6 Governing Law. This Agreement is and shall be deemed to be a
contract made under, and the validity, interpretation, construction and
performance of this Agreement shall be governed by, the applicable laws of the
United States of America and the domestic substantive laws of the State of New
York without giving effect to any choice or conflict of laws provision or rule
that would cause the application of domestic substantive laws of any other
jurisdiction.
10.7 Entire Agreement. This Agreement (which term, unless the context
otherwise specifically requires, includes all Exhibits and Schedules hereto)
constitutes the entire agreement between American and the Company with respect
to the subject matter hereof and supersedes all prior agreements, arrangements,
covenants, promises, conditions, understandings, inducements, representations
and negotiations, expressed or implied, oral or written, between them as to such
subject matter.
10.8 Saturdays, Sundays, Holidays, etc. If the last or appointed day
for taking of any action required or permitted hereby or by the Notes (other
than the payment of principal of or interest or premium, if any, on the Notes)
shall be a Saturday, Sunday or legal holiday in New York, New York or Boston,
Massachusetts, or a day on which banking institutions in New York, New York or
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<PAGE>
Boston, Massachusetts are authorized by law or executive order to close, then
such action may be taken on the next succeeding business day for banking
institutions in such cities.
10.9 Brokers, etc. No broker, finder or other person performing a
similar function has been retained by the Company in connection with the issue
and sale of the Notes or the Acquisition. The Company will pay, and will
indemnify and hold harmless American and its officers, directors, partners,
employees, trustees and agents from, the fees, commissions and expenses of any
Person purporting to have acted on the Company's behalf in such connection or in
connection with the Acquisition. American will pay, and will indemnify and hold
harmless the Company and its offic ers, directors, partners, employees, trustees
and agents from, the fees, commissions and expenses of any Person purporting to
have acted on American's behalf in such connection or in connection with the
Acquisition, including without limitation Blackburn & Company, Inc.
10.10 Headings; Counterparts. The headings contained in this Agreement
are for reference purposes only and shall not limit or otherwise affect the
meaning of any provision of this Agreement. This Agreement may be executed in
any number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument, binding upon all of the parties
hereto. In pleading or proving any provision of this Agreement, it shall not be
necessary to produce more than one of such counterparts.
10.11 Severability. If any provision of this Agreement shall be held or
deemed to be, or shall in fact be, invalid, inoperative, illegal or
unenforceable as applied to any particular case in any jurisdiction or
jurisdictions, or in all jurisdictions or in all cases, because of the conflict
of any provision with any constitution or statute or rule of public policy or
for any other reason, such circumstance shall not have the effect of rendering
the provision or provisions in question invalid, inoperative, illegal or
unenforceable in any other jurisdiction or in any other case or circumstance or
of rendering any other provision or provisions herein contained invalid,
inoperative, illegal or unenforceable to the extent that such other provisions
are not themselves actually in conflict with such constitution, statute or rule
of public policy, but this Agreement shall be reformed and construed in any such
jurisdiction or case as if such invalid, inoperative, illegal or unenforceable
provision had never been contained herein and such provision reformed so that it
would be valid, operative and enforceable to the maximum extent permitted in
such jurisdiction or in such case.
10.12 Further Assurances Each of the parties hereto agrees to execute
and deliver those writings and documents reasonably required to more fully carry
out the acts contemplated hereby, and each party hereby agrees, at the written
request of any other party, to advise any Person of the status of this
Agreement, the Notes or any of the other Related Agreements and to the effect
that any of the same is or is not in default.
10.13 Specific Performance; Other Rights. The parties recognize that
various of the rights of the parties under this Agreement are unique and,
accordingly, the parties shall, in addition to such other remedies as may be
available to it at law or in equity, have the right to enforce its rights
hereunder by actions for injunctive relief and specific performance to the
extent permitted by Law. Nothing herein contained shall be construed as
prohibiting either party from pursuing any other remedies available to it for
such breach or threatened breach, including without limitation the recovery of
damages.
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<PAGE>
IN WITNESS WHEREOF the parties hereto have executed this Agreement, all
pursuant to authority heretofore granted, to the extent applicable, by their
respective Boards of Directors, as of the date and year first above written.
The Lincoln Group, L.P.
By: The Lincoln Group, Ltd, General Partner
By:________________________________
Name:
Title:
American Radio Systems Corporation
By:________________________________
Name:
Title:
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EXHIBIT 10.58
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated _______________, 1996, by and
between American Radio Systems Corporation, a Delaware corporation ("Buyer"),
and Breadbasket Broadcasting Corporation, a Delaware corporation ("Seller") and
Osborn Communications Corporation, a Delawarecorporation and Seller's sole
shareholder ("OCC").
P R E M I S E S:
A. Seller is the licensee of and operates radio stations KNAX(FM) and
KRBT(FM), Fresno, California (each a "Station" and together, the "Stations") 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 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 the Stations for cash) by
Seller prior to the Closing Date as reflected on the billing records of Seller
relating to the 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 or in exchange for goods or services entered
into in the ordinary course of business.
1.4 "Closing" means the consummation of the transactions 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 transactions 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 (except for any Real
Property Contracts as set forth herein), 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
hereof and the Closing Date.
<PAGE>
1.8 "Escrow Deposit" shall mean the sum of One Million Dollars
($1,000,000) held by Media Venture Partners 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 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.
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 Estate Assets" means all of Seller's interest in the real
property owned by Seller and listed on Schedule 3.5(b) and all of the buildings,
structures and other improvements located thereon (collectively, the "Owned Real
Property"). The Owned Real Property and the Leased Real Property are
collectively referred to herein as the Real Property.
1.17 "Real Estate Contracts" means all of the leasehold interests and
easement interests in real property leased by Seller and used by the Station,
including all agreements, leases, grants of easements and contracts of Seller
relating to the tower, transmitter, studio site, and offices of the Station (the
"Real Estate Contracts"), all as described in Schedule 3.5(a) (the land,
buildings and other improvements covered by the Real Property Contracts being
herein called the "Leased Real Property".) The Buyer shall assume, pay and
perform all obligations under such Real Estate Contracts accruing after 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
6.11 hereto.
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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 and all
other information and similar intangible assets
relating to the Stations, including those listed in
Schedule 3.9 hereto;
(f) All of the Seller's proprietary information, which
relate to the Stations, 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
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.
(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 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) The Accounts Receivable;
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<PAGE>
(f) 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; and
(g) The assets, if any, listed on Schedule 2.2 hereto.
2.3 Purchase Price. The Purchase Price shall be Eleven Million Two
Hundred and Fifty Thousand Dollars ($11,250,000), of which One Hundred and Fifty
Thousand ($150,000) shall be paid at the time of execution of this Agreement as
a non-refundable advance of the Purchase Price. 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. 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 at its expense.
2.4 Adjustments and Prorations. All revenues arising from the Stations
up until midnight on the day prior to the TBA Date (the "Revenues"), 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 (the "Expenses"),
shall be prorated between Buyer and Seller in accordance with the principle that
Seller shall receive all Revenues, and Seller shall be responsible for all
Expenses, 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, 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 and which in
the aggregate exceeds One Hundred and Fifty Thousand Dollars ($150,000).
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 "Closing 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 Closing, 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 AdjustmentCertificate, provide to Buyer its written statement
of any discrepancies believed to exist. Joseph L. Winn on behalf of Buyer, and
Michael F. Mangan 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.
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<PAGE>
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 the
parties otherwise agree to pursuant to 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 and the
Real Estate 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, including the Real
Property 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 corporation duly
formed, validly existing and in good standing under the laws of the State of
Delaware and is duly qualified to conduct its business in California, which is
the only jurisdiction where the conduct of the business or operations of the
Stations 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 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. 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 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 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
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
Seller 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.
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3.4 Licenses. Schedule 3.4 includes a true and complete list of the
Licenses. Seller has delivered to Buyer true and complete copies of the Licenses
(including any and all amendments and other modifications thereto). The Licenses
have been validly issued with the Seller designated thereon being the authorized
legal holder thereof. The Licenses comprise all of the material 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.
3.5 Title to and Condition of Real Property.
(a) Schedules 3.5 (a) and (b) contains descriptions of all the Real
Property , which comprises all real property interest necessary to conduct the
business or operations of the Stations as now conducted. Seller does not hold
fee title to any real property as described on Schedule 3.5(b), in connection
with the operation of the Stations.
(b) Schedule 3.5(b) contains a complete list and summary of all the
Real Estate Contracts. Seller holds the leasehold interest and or the grantee
interest, as applicable, under each Real Property Contract free and clear of all
liens, encumbrances and other claims except for any Real Estate Permitted
Exceptions as set forth on Schedule 3.5(c). The Real Estate Contracts 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 Buyer and, to the best of Seller's knowledge, of all
other perons purported to be parties thereto. 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(a).
(c) Seller has delivered to Buyer true and complete copies of all
leases or other material instruments pertaining to the Real Property (including
any and all amendments and other modifications of such instruments). As of the
date hereof, 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 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 Stations, and (iii) to Seller's knowledge
materially complies with all applicable building, electrical and zoning codes
and all regulations of any governmental authority having jurisdiction. To the
best of Seller's knowledge, 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 comprise 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. 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 Stations, 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 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.
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3.7 Contracts. Schedule 3.7 contains descriptions of all the Contracts
necessary to conduct the business or operations of the Stations as now conducted
except for: (i) contracts with advertisers for the sale of time or talent on the
Stations for cash or in exchange for goods or services and substantially at rate
card and which are not prepaid and which may be cancelled by the Stations
without penalty on not more than thirty (30) days notice, (ii) miscellaneous
service contracts terminable at will without penalty, and (iii) other contracts,
the aggregate liabilities of which do not exceedFive 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 Assumed 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 Assumed 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 Assumed 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, 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 transactions 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 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 or
patents, 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. Based solely on the representation and
warranties of EBE Communications Limited Partnership and EBE Broadcasting, L.P.
(the "Former Sellers") contained in two Asset Purchase Agreements, each dated
December 31, 1995 between Seller and the Former Sellers, 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 and present fairly in all material respects, 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 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.
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 material
returns, reports and statements which the Stations are 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 in all material respects; all of
such reports, returns and statements are in all material respects substantially
complete and correct as filed; and each Stations' public inspection file is
located at the main studio and is in material compliance with the FCC's rules
and regulations.
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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 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. 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 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 material 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, except, in each case, for such claims, legal actions,
counterclaims, suits, arbitrations, governmental investigations, other
proceedings, orders, decrees or judgments as would not reasonably be expected to
have a material adverse effect upon the business, property, assets or condition
(financial or otherwise) of the Assets. 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, except in each case for such applications, complaints or
proceedings as would not reasonably be expected to have a material adverse
effect upon the business, property, assets or condition (financial or otherwise)
of the Assets.
3.17 Compliance with Laws. To the best knowledge of Seller, Seller is
in compliance 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. 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 its
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 property subject to the Real Property Contracts or any structure or
improvement on the property subject to the Real Property Contracts 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, except, in each case, for such actions, suits, claims,
demands, legal or administrative proceedings, requests for information, or other
notices, proceedings or requests as would not reasonably be expected to have a
material adverse effect upon the business, property, assets or condition
(financial or otherwise) of the Assets. Environmental Laws means any and all
Federal, state or local laws, statutes, rules, regulations, plans, ordinances,
codes, licenses or other restrictions relating to employee health and 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 Safety and
Health Act. Pre-Closing Environmental Matters means (i) the Handling of any
Hazardous Materials on, at, in, from or under the property subject to the Real
Property Contracts 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 any 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.
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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 physical
facilities of the Station;
(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.
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.
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 is and shall be, at Closing, qualified to conduct business in the
State of California. 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.
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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.
4.5 Financing. Buyer further represents and warrants that it possesses
adequate financial resources 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
by the Time Brokerage 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 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 the ordinary course of business consistent with past practices since
January 1, 1996;
(2) Contracts. Enter into any trade or barter contracts;
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 Five Thousand
Dollars ($5,000), 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;
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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(c)
and 3.6 and 3.7, 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's
programming policies, except such changes as in the good faith judgment
of the Seller are required in the public interest;
(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.
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 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 since January 1, 1996;
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(3) Insurance. Maintain the existing insurance policies on the
Stations and the Assets or otherwise replace such policies with
comparable policies;
(4) Consents. Use its reasonable efforts to obtain the
Consents;
(5) Books and Records. Maintain its books and records in
accordance with past practices since January 1, 1996;
(6) 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;
(7) Trade and Barter Agreements. Provide prior to the TBA Date
the advertising time due under any trade and barter agreements listed
in Schedule 3.7;
(8) 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
(9) 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 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).
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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 (ii) compliance by the parties hereto with the condition (if any)
imposed in the FCC Consent.
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, real estate,
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 or any
other governmental entity 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.
6.4 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, whose fee
shall be solely the responsibility of Buyer.
6.5 Noncompetition Agreement. Buyer and Seller shall enter into at
Closing a Noncompetition Agreement substantially 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 for the implementation and consummation of this
Agreement, and otherwise use their reasonable best efforts to consummate the
transactions 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.
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B. If the cost of repairing, replacing or restoring any damaged or
destroyed Assets is $50,000 or less, Seller shall pay to Buyer the amount
necessary to repair, replace or restore such damaged or destroyed Assets to its
former condition. If the cost of such repair, replacement or restoration exceeds
$50,000 and Seller has not repaired, replaced or restored such damaged or
destroyed Assets prior to the Closing Date, Buyer may, at its option: (i)
postpone the Closing Date with the prior consent of the Commission if necessary,
for a period of up to one hundred and twenty (120) days, to permit the repair or
replacement of the damage or loss; or (ii) 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; provided, however that if such Assets have not been
restored or replaced and the Stations's normal and usual transmission resumed
within the one hundred and twenty (120) day period pursuant to (i) above, Buyer
may terminate this Agreement forthwith without any further obligation hereunder
by written notice to Seller.
C. 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 either
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. Within five (5) business days after execution of this Agreement,
Seller shall provide 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 right 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 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.
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6.10 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 information as required by applicable law, regulations or rules of any
governmental or administrative agency, stock exchange or self-regulatory agency.
6.11 Time Brokerage Agreement. Buyer and Seller shall enter into a Time
Brokerage Agreement in the form set forth in Schedule 6.11 hereto, to be
effective as of the date of this Agreement or as of such other date as the
parties mutually agree.
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
writing in whole or in part in its sole discretion:
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.
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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 Closing
Date, there shall have been no material adverse change in the physical
facilities of the Stations (as set forth in Section 3.19 (a)).
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 writing, in whole or in part, in its sole discretion:
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 five
(5) business days following the date upon which the FCC Consent has become a
Final Order (the "Closing Date"), provided, however, 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 receipt of the FCC Consent. In no
event, however, shall the Closing Date occur prior to January 1, 1997. Closing
shall be held at the offices of Buyer or such other place as shall be mutually
agreed to by Buyer and Seller.
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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 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 and as set forth in
Schedule 3.5(c));
(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 an appropriate Delaware 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
Certificate of Incorporation and Bylaws as in effect on the date
hereof, certified by Seller's Secretary as of the Closing Date;
(e) 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;
(f) Noncompetition Agreement. The Noncompetition Agreement as
set forth in Schedule 6.5; and
(g) 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.
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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.
SECTION 9
RIGHTS OF BUYER AND SELLER
ON TERMINATION OR BREACH
9.1 Termination Rights. This Agreement may be terminated by the mutual
written consent of the parties, or 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 March
1, 1997 for any reason other than that the condition that the FCC
Consent shall not have been issued for reasons not due to the fault of
either Buyer or Seller.
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 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 seek 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 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 twelve (12)
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 OCC 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 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, 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
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(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 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.
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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 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: Breadbasket Broadcasting Corporation
c/o Osborn Communications Corporation
130 Mason Street
Greenwich, CT 06830
Attn: Frank Osborn, President
Fax: (203) 629-1749
with a copy (which
shall not constitute
notice) to: Kofi Asante, Esq.
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of Americas
New York, NY 10019-0604
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
11.2.
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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 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 New York.
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.
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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 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: BREADBASKET BROADCASTING
CORPORATION
By: ______________________________________
BUYER: AMERICAN RADIO SYSTEMS CORPORATION
By: ______________________________________
Title:
For the Purposes of Section 10 Only:
OSBORN COMMUNICATIONS 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
3.8 Consents required
3.9 Trademarks; trade names; copyrights
3.11 Insurance policies
3.13 Employee benefits; health insurance; vacation policy
3.16 Claims; legal actions
6.5 Non-Competition Agreement
6.11 Time Brokerage Agreement
8.2 Opinion of Seller's General and FCC Counsels
8.3 Opinion of Buyer's General Counsel
26
EXHIBIT 10.59
TIME BROKERAGE AGREEMENT
TIME BROKERAGE AGREEMENT, made as of this _____ day of __________, 1996
by and between American Radio Systems Corporation, a Delaware corporation (the
"Programmer") and Breadbasket Broadcasting Corporation, a Delaware corporation
(the "Licensee").
WHEREAS Licensee owns and operates Broadcast Stations KNAX(FM) and
KRBT(FM), Fresno, California (collectively referred to herein as the "Station")
pursuant to a license issued by the Federal Communications Commission ("FCC").
WHEREAS Programmer is involved in radio station ownership and
operation.
WHEREAS the Licensee wishes to retain Programmer to provide programming
for the Station that is in conformity with the Station's 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 and Licensee have entered into an Asset Purchase
Agreement (the "Asset Purchase Agreement") under which Licensee has agreed to
sell the Station to Programmer, and have filed an application for FCC consent to
assign the Station license from Licensee to Programmer.
NOW, THEREFORE, in consideration of the above recitals and mutual
promises and covenants contained herein, the parties, intending to be bound
legally, agree as follows:
Section 1
Use of Station Air Time
1.1 Representations. Both Licensee and Programmer represent that they
are authorized to enter into this Agreement and that this Agreement constitutes
the legal, valid and binding obligation of each, enforceable against it in
accordance with its terms.
1.2 Effective Date; Term. The Effective Date of this Agreement shall be
the date of execution of this Agreement by all parties. It shall continue in
force until March 1, 1997, or until consummation of the assignment of the
Station license from Licensee to Programmer pursuant to the Asset Purchase
Agreement, whichever event occurs earlier, unless otherwise extended or
terminated by the parties.
<PAGE>
1.3 Scope. During the term hereof, 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 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 pay to Licensee a monthly fee of Fifty Thousand
Dollars ($50,000), payable no later than the fifteenth (15th) day of the month
to which such fee pertains, provided, however, that no fee shall be due for the
first five calendar months of the term 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 Station's
compliance with all applicable provisions of the Communications Act of 1934, as
amended, the rules, regulations and policies of the FCC and all other applicable
laws. Licensee shall be solely responsible for all non-capital, ordinary and
customary operating expenses of the Station, including but not limited to
maintenance of the studio and transmitting facility and costs of electricity
except that Licensee shall be entitled to reimbursement pursuant to Section
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, and shall pay directly, or
reimburse Licensee for, all other non-capital, ordinary and customary operating
expenses of the Station. Licensee shall employ at its expense employees
consisting of, at a minimum, those personnel required pursuant to FCC
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 Station and shall maintain insurance at its
present levels covering the Station's transmission facilities. During the term
of the Agreement, Programmer agrees to perform, without charge, routine
monitoring of Licensee's transmitter performance and tower lighting if and when
requested by Licensee.
1.6 Licensee Representations and Warranties. Licensee represents and
warrants as follows:
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(a) Licensee holds the licenses and other permits and
authorizations necessary for the present operation of the Station as set forth
in Attachment I. There is not now pending, or to Licensee's best knowledge,
threatened, any action by the FCC or by any other party to revoke, cancel,
suspend, refuse to renew or modify adversely any of such licenses, permits or
authorizations except as previously revealed in writing to Programmer. To the
Licensee's best knowledge, after due inquiry, Licensee, with respect to the
Station, is not in material violation of any statute, ordinance, rule,
regulation, policy, order or decree of any federal, state or local entity, court
or authority having jurisdiction over it or the Station, which would have an
adverse effect upon the Licensee, its assets utilized in the operation of the
Station, the Station or upon Licensee's ability to perform this Agreement.
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 by Licensee 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. Licensee shall,
during the term of this Agreement, not dispose of, transfer or assign any of
such assets and properties except with the prior written consent of the
Programmer.
(b) Licensee shall pay, in a timely fashion, all of the expenses
set forth on Attachment II hereto.
1.7 Programmer Responsibility. Programmer shall be solely responsible
for any expenses incurred in the origination and/or delivery of programming from
any remote location and for any publicity or promotional expenses incurred by
Programmer, including, without limitation, ASCAP, BMI, SESAC music license fees
for all programming provided by Programmer.
1.8 Contracts. Programmer will not be required to assume performance of
any of the Licensee's contracts and leases pertaining to the Station except as
indicated 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, of all 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 Hourly Credit. Programmer shall receive from Licensee, as a refund
consisting of a flat rate credit of $5.00 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 for Programmer's failure to deliver
its programming to Licensee), to broadcast the Programmer's 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 Station 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 programming for
the Station; provided, however, that Licensee shall maintain, for its sole use,
sufficient space at the Station's 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 Station's 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 Fresno, California ADI and shall at all times be subject to the good
faith oversight of the 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 Obligations. Although both parties shall
cooperate in the broadcast of emergency information over the station, 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. Such interruption shall not
entitle Programmer to any credits on fees. Licensee shall also coordinate with
Programmer the Station's hourly station identification announcements to be aired
in accord with FCC rules. Licensee shall continue to maintain a main studio, as
that term is defined by the FCC, within the Station's 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 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. 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 Station
facilities pursuant to Section 1.11 hereof.
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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 material respects with the
Policy Statement, with all rules regulations and policies of the FCC, and with
all reasonable changes subsequently made by Licensee. 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. Programmer shall furnish or cause to be
furnished the Artistic personnel and material for the programs as provided by
this Agreement and all programs shall be in accordance with the Policy Statement
and FCC requirements. All advertising spots and promotional material or
announcements 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 the
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 Programmer's programming which Licensee
reasonably believes to be unsatisfactory, unsuitable or contrary to the public
interest. Except as to KNAX(FM) Programmer shall have the right to change the
programming elements and/or format of the programming supplied to Licensee 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 its
programming on the Station, and that Programmer shall not broadcast any material
in violation of any law, rule, regulation 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 it provides to the Licensee. 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
it provides to Licensee. Licensee shall retain all revenues from the sale of
Station's 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. The Station's
outstanding accounts receivable on the Effective Date of this Agreement shall be
collected by Programmer for the benefit of Programmer and all accounts payable
shall be prorated to the Effective Date of this Agreement.
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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 to quarterly, or more frequently at the request
of the Licensee, 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 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, slander or defamation or otherwise
arising out of Programmer's broadcasts and sale of advertising time under this
Agreement to the extent permitted by law.
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' broadcasts 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 Station's 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 Commission on appeal.
Section 5
Access to Programmer Materials and Correspondence
5.1 Confidential Review. Prior to the provision of any 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 Station's 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.
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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. In the event that Programmer
fails to meet its political time obligations under the Communications Act of
1934, as amended, and the rules and regulations of the FCC and such failure
inhibits Licensee in the performance of its political time obligations, then to
the extent reasonably necessary to assure the Licensee's performance, Programmer
shall release advertising availabilities to Licensee; provided, however, that
all revenues realized by Licensee as a result of such a release of advertising
time shall be immediately paid to Programmer.
Section 6
Termination and Remedies Upon Default
6.1 Termination. 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 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;
(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; or
(e) the Asset Purchase Agreement is terminated in accordance with
its terms.
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) Notwithstanding Sections 6.2(b), (c), (d), 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 is
not operating within the parameters authorized by the FCC, 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 Station's effective coverage or operating parameters are not
restored within thirty (30) days of notice of the coverage or operating
deficiencies, then Programmer shall be entitled to a full refund, on a daily
basis, of the Hourly Credit amount set forth in Section 1.9 such refund not to
exceed the (i) amount of the monthly fee set forth in Section 1.4 hereof and
(ii) actual amount of rebate to advertisers, if any, until such deficiencies are
corrected and such refunds shall be made within ten (10) days of the end of the
month.
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(b) If for a period of five consecutive days or more Licensee
reduces its transmitter output power on the Station by fifty percent (50%) or
more, Programmer may elect a refund equal to one half of the Hourly Credit
amount set forth in Section 1.9 such refund not to exceed the (i) amount of the
monthly fee set forth in Section 1.4 hereof and (ii) actual amount of rebate to
advertisers, if any, for so long as such power reduction continues to occur if
Programmer has, in fact, been required to make rebates and/or other financial
accommodations to its advertisers and such refund shall be reflected in a refund
payment by Licensee to Programmer within ten (10) days of the end of the month.
(c) If Licensee uses an auxiliary or alternate transmitter for the
Station for a period of five (5) consecutive days or more, then the refund for
such period shall be twenty-five percent (25%) of the Hourly Credit amount set
forth in Section 1.9 such refund not to exceed the (i) amount of the monthly fee
set forth in Section 1.4 hereof and (ii) actual amount of rebates to advertisers
if any for so long as such auxiliary or alternate transmitter site is in use if
Programmer has, in fact, been required to make rebates and/or other financial
accommodations to its advertisers. Should such transmitter site move continue
for more than thirty (30) days, the refund for such period shall be equal to
fifty percent (50%) of the Hourly Credit amount set forth in Section 1.9 such
refund not to exceed the (i) amount of the monthly fee set forth in Section 1.4
hereof and (ii) actual amount of rebates to advertisers if any for so long as
such alternate transmitter site is in use. The refund shall be reflected in a
refund payment by Licensee to Programmer within ten (10) days of the end of the
month.
(d) 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, of the Hourly Credit amount set
forth in Section 1.9 such refund not to exceed the (i) amount of the monthly fee
set forth in Section 1.4 hereof and (ii) actual amoun of rebates to advertisers
if any and such refund shall be made within ten (10) days of the end of the
month.
6.3 Force Majeure. Any failure or impairment of the Station's
facilities or any delay or interruption in the broadcast of programs, or failure
at any time to furnish facilities, in whole or in part, for broadcast, due to
acts of god, strikes, lockouts, material or labor restrictions by any
governmental authority, civil riot, floods and any other cause not reasonably
within the control of Licensee will not be liable to Programmer, except to the
extent of allowing in each such case an appropriate refund for time not provided
based upon the Hourly Credit set forth under Section 1.9 such refund not to
exceed the (i) amount of the monthly fee set forth in Section 1.4 hereof and
(ii) actual amount of rebates to advertisers if any calculated upon the length
of time during which the failure or impairment exists or continues.
6.4 Other Agreements. During the term of this Agreement, 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 assignees, 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 unreasonably withheld, provided, however that
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 and Licensee has the
right to assign its payments hereunder to its Lenders upon written notification
to Programmer.
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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 Station.
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). The parties
shall execute a Certification in the form of Attachment VI hereto, as required
by Section 73.3555(a) (2) (ii) of the FCC's rules.
7.5 Entire Agreement. This Agreement and the Attachments hereto and the
Asset Purchase Agreement between Programmer and Licensee 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 of 1934, as amended, and
the Rules and Regulations of the FCC. The construction and performance of the
Agreement will be governed by the laws of the State of New York.
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.
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To Licensee: Breadbasket Broadcasting Corporation
c/o Osborn Communications Corporation
130 Mason Street
Greenwich, CT 06830
Attn: Frank Osborn, President
Fax: (203) 629-1749
Copies To: Kofi Asante, Esq.
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of Americas
New York, NY 10019-0604
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
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 an adequate remedy at law.
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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 Washington, DC 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
LICENSEE:
BREADBASKET BROADCASTING CORPORATION
By: _____________________________________
PROGRAMMER:
AMERICAN RADIO SYSTEMS CORPORATION
By: ____________________________________
11
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ATTACHMENT I
Station Coverage
KRBT(FM) and KNAX(FM) current FCC Licenses and contour maps on file
with the FCC.
12
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ATTACHMENT II
Station Expenses
The following expenses relating to the operation of the Station shall be paid by
Licensee, subject reimbursement to Programmer as set forth in Section 1.6(b) of
this Agreement:
a) Salary, payroll taxes, benefits and other costs relating to
the employment of the Station's [_____________].
b) Salary, payroll taxes benefits, and other costs relating to
the employment of the Station's [_________________].
c) Cost of tower rent electricity and other utilities directly
related to the operation of the Station's transmitter
facilities.
13
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ATTACHMENT IV
Broadcast Station Programming Policy Statement
14
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BROADCAST STATION
PROGRAMMING POLICY STATEMENT
Programmer agrees to cooperate with Licensee in the broadcasting of
programs of the highest possible standard of excellence and for this purpose to
observe the following regulations in the preparation, writing and broadcasting
of its programs.
I. No Plugola or Payola. The mention of any business activity or
"plug" for any commercial, professional, or other related
endeavor, except where contained in an actual commercial
message of a sponsor, is prohibited.
II. No Lotteries. Announcements giving any information about
lotteries or games prohibited by federal or state law or
regulation are prohibited.
III. Election Procedures. At least ninety (90) days before the
start of any primary or election campaign, Programmer will
clear with Licensee's general manager the rate Programmer will
charge for the time to be sold to candidates for the public
office and/or their supporters to make certain that the rate
charged is in conformance with the applicable law and station
policy.
IV. Required Announcements. Progammer shall broadcast (i) an
announcement in a form satisfactory to Licensee at the
beginning of each hour to identify the Station, (ii) an
announcement at the beginning and end of each program to
indicate that program time has been purchased by Programmer,
and (iii) any other announcements that may be required by law,
regulation, or Station policy.
V. Commercial Recordkeeping. Programmer shall not receive any
consideration in money, goods, services, or otherwise,
directly or indirectly (including to relatives) from any
persons or company for the presentation of any programming
over the station without airing an appropriate sponsorship
identification. No commercial messages ("plugs") or undue
references shall be made in programming presented over station
to any business venture, profit making activity, or other
interest (other than noncommercial announcements for bona fide
charities, church activities or other public service
activities) in which Programmer (or anyone else) is directly
or indirectly interested without the same having been approved
in advance by the general manager/chief engineer and such
broadcast being announced and logged or sponsored.
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VI. No Illegal Announcements No announcements or promotion
prohibited by federal or state law or regulation of any
lottery or game shall be made over the Station. Any game,
contest, or promotion relating to or to be presented over the
Station must be fully stated and explained in advance to
Licensee, which reserves the right in its sole discretion to
reject any game, contest, or promotion.
VII. Licensee Discretion Paramount In accordance with the
Licensee's responsibility under the Communications Act of
1934, as amended, and the Rules and Regulations of the Federal
Commissions, Licensee reserves the right to reject or
terminate any advertising proposed to be presented or being
presented over the Station which is in conflict with
Licensee's policy or which in Licensee's or its general
manager/chief engineer's sole judgment would not serve the
public interest.
Licensee may waive any of the foregoing regulations in specific
instances, if, in its opinion, good broadcasting in the public interest is
served.
In any case where questions of policy or interpretation arise,
Programmer should submit the same to Licensee for decision before making any
commitments in connection therewith.
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ATTACHMENT V
Payola Statement
17
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FORM OF PAYOLA AFFIDAVIT
City of ____________________ )
County of __________________ ) ss.
State of ___________________ )
ANTI-PAYOLA/PLUGOLA AFFIDAVIT
________________________, being first duly sworn, deposes and says as follows:
1. He is _________________________ for ________________________________.
(Position)
2. He has acted in the above capacity since _____________.
3. No matter has been broadcast by Station __________ for which service,
money or other valuable consideration has been directly or indirectly
paid, or promised to, or charged, or accepted, by him from any person,
which matter at the time so broadcast has not been announced or
otherwise indicated as paid for or furnished by such person.
4. So far as he is aware, no matter has been broadcast by Station _______
for which service, money, or other valuable consideration has been
directly or indirectly paid, or promised to, or charged, or accepted by
Station _______ in furnishing programs, from any person, which matter
at the time so broadcast has not been announced or otherwise indicated
as paid for or furnished by such person.
5. In future, he will not pay, promise to pay, request, or receive any
service, money, or any other valuable consideration, direct or
indirect, from a third party, in exchange for the influencing of, or
the attempt to influence, the preparation of presentation or broadcast
matter on Station ________.
6. Nothing contained herein is intended to, or shall, prohibit receipt or
acceptance of anything with the expressed knowledge and approval of my
employer, but henceforth any such approval must be given in writing by
someone expressly authorized to give such approval.
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7. He, his spouse and his immediate family do____ do not ____ have any
present direct or indirect ownership interest in (other than an
investment of less than five percent in a corporation whose stock is
publicly held), serve as an officer or director of, whether with or
without compensation, or serve as an employee of, any person, firm or
corporation engaged in:
1. The publishing of music;
2. The production, distribution (including wholesale and retail
sales outlets), manufacture or exploitation of music, films,
tapes, recordings or electrical transcriptions of any program
material intended for radio broadcast use;
3. The exploitation, promotion, or management of persons
rendering artistic, production and/or other services in the
entertainment field;
4. The ownership or operation of one or more radio or television
stations;
5. The wholesale or retail sale of records intended for public
purchase;
6. Advertising on Station ______, or any other station owned by
its licensee (excluding nominal stockholdings in publicly
owned companies).
8. The facts and circumstances relating to such interest are none _______
as follows________:
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
----------------------------------
Affiant
Subscribed and sworn to before me this ______ day of ________________, 199___.
- --------------------------------------
Notary Public
My Commission expires: __________________
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ATTACHMENT VI
FCC Certification
20
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CERTIFICATION
Pursuant to Section 73.3555(a) (2) (ii) of the FCC's Rules:
1. The licensee of the brokered stations affected by the foregoing Time
Brokerage Agreement hereby certifies that it will at all times maintain
ultimate control (as defined in FCC rules and regulations) over the
Station's facilities, including specifically control over the Station's
finances, personnel and programming; and
2. The licensee of the brokering stations hereby certifies that the proposed
Agreement for the time brokerage complies with the provisions of Section
73.3555(a) (2) (ii) of the FCC's rules.
Dated this ________ day of _____________________, 199______.
LICENSEE:
By: ______________________________________
Its: ______________________________________
PROGRAMMER: AMERICAN RADIO SYSTEMS CORPORATION
By: ______________________________________
Its: ______________________________________
21
EXHIBIT 10.60
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated _______________, 1996, by and
between American Radio Systems Corporation, a Delaware corporation ("Buyer"),
and Zapis Communications Corporation, an Ohio corporation ("Seller").
P R E M I S E S:
A. Seller is the licensee of and operates radio stations WAAF(FM) and
WWTM(AM), Worcester, Massachusetts ( collectively the "Stations", and each a
"Station") 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 the Stations for cash) by
Seller prior to the TBA Date as reflected on the Stations' billing records of
Seller.
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 of even 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.
1.3 "Seller's Best Knowledge" means the actual knowledge of Seller
without Seller having undertaken any special inquiry or investigation.
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.
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1.6 "Consents" means all of the consents, permits or approvals of
government authorities and other third parties necessary to convey the
Transferred 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 directly affect the Transferred
Assets 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 One Million Five Hundred and
Fifty Thousand Dollars ($1,550,000) held by Star Media Group 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 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, 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 operations of the Stations.
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 located in the Commonwealth of
Massachusetts which are owned or leased by Seller and used or useful as of the
date hereof in the operation of the Stations, plus such additions thereto and
deletions therefrom arising in the ordinary course of business of the Stations
between the date hereof and the Closing Date.
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1.15 "Purchase Price" means the purchase price specified in Section
2.3.
1.16 "Real Property" means all of the fee estates, buildings 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 the Stations' 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
6.4 hereto.
1.19 "Transferred Assets" means the tangible and intangible assets
owned and used or useful in connection with the operations of the Stations
located in the Commonwealth of Massachusetts, which assets are being sold,
transferred, or otherwise conveyed to Buyer hereunder, as specified in detail in
Section 2.1.
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 on the Closing Date, all of
the Transferred 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) Such trademarks, trade names, service marks and other
intellectual property and similar intangible assets relating to the
Stations, listed in Schedule 3.9 hereto;
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(f) All of the Seller's proprietary information presently
located in the Commonwealth of Massachusetts and presently used
exclusively in the operation of the Stations, which exclusively relate
to the Stations, 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 Stations, if any;
(g) All rights under warranties of Seller relating to the
Station or the Assets, if any;
(h) Except as set forth on Schedule 2.2, all books and records
relating exclusively to the business or operations of the Stations
located in the Commonwealth of Massachusetts, 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 and copy such books and
records made available to Seller for a reasonable period after the
Closing Date, not to exceed five (5) years; and
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, except to the extent
specifically assumed in Section 2.4, 2.5 or 6.10 of this Agreement.
(f) The Accounts Receivable.
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(g) Any other asset of Seller not located at either the
studio/office or transmitter sites of the Stations, or otherwise herein
defined as Transferred Asset.
(h) Notwithstanding any other provision of this Agreement,
Buyer acknowledges and agrees that it is not acquiring hereunder any assets
other than those specifically set forth in Section 2.1(a) - (h) above.
2.3 Purchase Price. The Purchase Price shall be Twenty-Four Million
Eight Hundred Thousand Dollars ($24,800,000) cash by wire transfer in U.S.
Dollars, of which Four Hundred Thousand Dollars ($400,000) shall be paid
simultaneously with the execution hereof as a non-refundable prepayment of the
Purchase Price. 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
herein to the extent not then paid. The Purchase Price shall be allocated among
the Stations and their respective tangible and intangible assets, including real
property, personal property, goodwill and license value, in accordance with the
results of an independent good faith appraisal undertaken by Buyer at its
expense.
2.4 Adjustments and Prorations. All revenues arising earned and accrued
from the Stations, even if not then billed, up until midnight on the day prior
to the TBA Date, and all expenses arising, accrued and incurred 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 Transferred Assets,
accrued employee benefits (except vacation time and sick pay) property and
equipment rentals, applicable copyright or other fees, sales and service
charges, taxes (except for taxes arising from the conveyance of the Transferred
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, except as otherwise set forth herein and Buyer
shall receive all revenues and shall be responsible for all expenses, costs and
obligations allocable to the conduct of the operations of the Stations 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,
not to exceed $______________, 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.
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A. Any adjustments or prorations will, insofar as feasible, be
determined 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 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 James Wymer and/or Doreen French 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
provided otherwise in 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 Transferred Assets or its operation 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.
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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
Ohio and is duly qualified to conduct its business in the Commonwealth of
Massachusetts, which is the only jurisdiction where the conduct of the business
or operations of the Stations requires such qualification. Seller has all
requisite corporate power and authority (i) to own, lease, and use the
Transferred Assets as presently owned, leased, and used, and (ii) to conduct the
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. 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 Transferred 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 Seller 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 except as created by this Agreement.
3.4 Licenses. Schedule 3.4 includes a true and complete list of the
Licenses. Seller has delivered to Buyer true and complete copies 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.
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3.5 Title to and Condition of Real Property. Schedule 3.5 contains a
description 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. To Seller's Best
Knowledge, 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, and (iii) 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 Seller's Best Knowledge, all towers, guy anchors, and buildings and
other improvements, included in the owned Transferred Assets are located
entirely on the Real Property listed in Schedule 3.5, except as specifically set
forth in Schedule 3.5. Seller has delivered to Buyer true and complete copies of
all leases or other material instruments pertaining to the Real Property
(including any and all amendments and other modifications of such instruments),.
To Seller's Best Knowledge, Seller is not in material breach, nor to Seller's
Best Knowledge is any other party in material breach, of the terms of any of
such leases or other instruments. All Real Property (including the improvements
thereof) is available for immediate use in the conduct of the business or
operations of the Stations. Seller has not received notice of nor are there any
outstanding, uncorrected building code violations, or other citations of any
governmental agency with respect to the Real PropertySeller 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 operation 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 (ordinary
wear and tear excepted), and is available for immediate use in the operation of
the Stations, 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 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.
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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
Stations for cash, made in a commercially reasonable manner at the Stations'
prevailing rates which are not prepaid and which may be cancelled by the
Stations 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 made in ordinary course and scope of
the operation of the Stations, not involving either aggregate liabilities under
all such contacts exceeding Twenty-Five Thousand Dollars ($25,000) 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. Seller
is not in material breach, nor to Seller's Best Knowledge is any other party in
material breach, of the the Assumed Contracts. Except for the Consents, Seller,
to Seller's Best Knowledge, 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, except as otherwise set forth in
the respective 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 Transferred Assets to
Buyer, or (iii) to enable Buyer to conduct the operation of the Stations in
substantially the same manner as such 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) used or
useful in the operation of the Stations. , Seller has delivered to Buyer
specimen copies of all such intellectual property.. 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 the Stations'
unaudited statements of income as at and for Seller's fiscal years ended
December 31, 1993, 1994 and 1995 have been or will be supplied to Buyer. The
same 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 of the
Stations as at their respective dates and the results of operations for the
periods then ended before depreciation, amortization, interest expense and
taxes. Buyer acknowledges that the such statements of income do not reflect home
office expenses, including without limitation all professional fees.
3.11 Insurance Schedule 3.11 comprises a true and complete list of all
insurance policies of Seller which insure any part of the Transferred 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 Transferred Assets of the Stations 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 Stations: all returns,
reports and statements which the Stations are 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 each Station's public
inspection file is located in its community of license 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 (to the extent current liability or
obligations exist) employed by Seller at the Stations, 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 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. 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 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, has not received any notice alleging it has failed to
comply in any material respect 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. No controversies, disputes, or
proceedings are pending or, to Seller's Best 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 Seller's
Best knowledge, 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. 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 Seller and relating to the Transferred
Assets, or operations of the Stations. , 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 Seller's Best
Knowledge, threatened (i) before the FCC relating to the 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 Seller's Best Knowledge, 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
Stations. To Seller's Best Knowledge, neither the ownership or use, nor the
conduct of the operation, of the Stations conflicts with rights of any other
person, firm or corporation, except as set forth on Schedule 3.17.
3.18 Environmental Matters. To Seller's Best Knowledge during Seller's
period of ownership, there has been no production, storage, treatment,
recycling, disposal, use, generation, discharge, release or other handling or
disposition of any kind by Seller (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. To Seller's Best Knowledge, there are no pending or threatened actions,
suits, claims, demands, legal proceedings, administrative proceedings, requests
for information, orother notices, proceedings or requests (collectively
"Claims") against or upon Seller concerning the Real Property 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 Environmenal
Response, Compensation and Liability Act, the Clean Air Act, the Safe Drinking
Water Act, the Toxic Substnaces 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 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 any Environmental Law with
respect to the Real Property 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.
3.19 Conduct of Business in Ordinary Course. Since January 1, 1996,
Seller has conducted the operations of the Stations only in the ordinary course
and has not:suffered any material loss or casualty in assets of the Stations.
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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 (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 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 is qualified to conduct business in the Commonweath of
Massachusetts. 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, or (iv) 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 Buyer.
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 Transferred Assets. Buyer further
represents and warrants that it is financially qualified to meet all terms,
conditions and undertakings contemplated by this Agreement, including the
payment of the Purchase Price.
4.5 Full Disclosure. No representation or warranty made by Buyer herein
nor any certificate, document or other instrument furnished or to be furnished
by 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 Seller and required
to make the statements herein or therein not misleading.
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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 Stations in the ordinary course of
business in accordance with Seller's 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. Subject to the provisions of the Time
Brokerage Agreement, 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 and Assumed Contracts;
(2) Contracts. Enter into any new Contracts except with prior
notice to Buyer if any one such Contract exceeds Two Thousand Dollars
($2,000) in value or payments, or if such Contracts in the aggregate
exceed Twenty-Five Thousand Dollars ($25,000) in value or payment;
(3) Disposition of Transferred Assets. Sell, assign, lease, or
otherwise transfer or dispose of any of the Transferred 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 Transferred 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 Licenses; or
(6) Rights. Waive any material right relating to the Stations
or the Transferred Assets.
B. Affirmative Covenants. Subject to the provisions of the Time
Brokerage Agreement, Seller shall do the following:
(1) Maintenance of Transferred Assets. Maintain all of the
Transferred 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 of spare parts and expendable supplies being maintained at
levels consistent with past practices;
(2) Insurance. Maintain the existing insurance policies on the
Stations and the Transferred Assets;
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(3) Consents. Use its reasonable efforts to obtain the
Consents;
(4) Notification. Promptly notify Buyer in writing of any
unusual or material developments with respect to the Transferred
Assets, 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;
(5) 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
(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 the Transferred 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 Transferred 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 twenty (20) 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 conveyance of the Transferred Assets hereunder is expressly
conditioned upon (i) the grant of the FCC Consent without any materially adverse
conditions on Buyer or Seller, (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.
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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 Transferred
Assets pursuant to this Agreement and the filing fees required by the FTC (in
conjunction with obtaining approval (the "HSR Consent") under the
Hart-Scott-Rodino Act). All filing fees required by the FCC 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, except for Star Media Group, whose fee shall be
solely the responsibility of Seller.
6.4 Time Brokerage Agreement. Simultaneous with the execution hereof,
Buyer and Seller shall enter into a Time Brokerage Agreement in the form set
forth in Schedule 6.4 to be effective as of the date of this Agreement or as of
such other date as the parties mutually agree.
6.5 Noncompetition Agreement. Buyer and Seller shall enter into at
Closing a Noncompetition Agreement in substantially the form set forth in
Schedule 6.5, which shall provide for no more than nominal consideration.
6.6 Confidentiality. The parties hereto agree to use their best efforts
not to:
A. Make any public announcement or disclosure of the delivery and
execution of this agreement, without the prior consent of the other;
B. Disclose the contents of this agreement or the transaction
contemplated hereunder to any third party, except for those third parties who
have a need to know and as required by law; and,
C. Except as set forth in Section 6.11 herein, disclose the
financial information provided the other to any third party, except for those
third parties who have a need to know.
The parties further agree that third parties who have a need to know
are the parties, their directors, officers, employees, and professional agents
and representatives. Each party shall advise any third party to whom disclosure
of the foregoing information is made hereunder of the confidential nature and
shall request that the confidentiality of such information be preserved.
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. Neither Buyer
nor Seller shall knowingly take any action which (i) is inconsistent with its
respective obligations hereunder, or which (ii) could hinder or delay the
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consummation of the transaction contemplated by this Agreement. Buyer will
cooperate with Seller in obtaining the consents to the assignment of the tower
site and studio leases for WAAF. Such cooperation shall include reasonable and
timely financial disclosure to assist Seller's effort to be released from its
obligations under such leases following the Closing Date. 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. Except to the extent specifically assumed by Buyer pursuant
to, or proximately caused by Buyer's activities arising under the Time Brokerage
Agreement, the risk of loss, damage or impairment, confiscation or condemnation
of any of the Transferred 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 Transferred Assets or
any other event occurs which prevents signal transmission by either Station in
the normal and usual manner and Seller cannot restore or replace the Transferred
Assets so that the conditions are materially cured and normal and usual
transmission is materially 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
Transferred Assets described above, if such assets have not been restored or
replaced and the Station's normal and usual transmission not materially 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 Transferred 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 Transferred 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 either
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.
B. Except as otherwise set forth herein, or in the Time Brokerage
Agreement, Buyer will not incur any liability on account of Seller's employees
in connection with the transaction contemplated by this Agreement, except for
assuming current vacation and sick leave entitlements of Seller's employees as
of the TBA Date.
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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 one hundred and
fifty (150) 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, even if the customer otherwise directs in writing. 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, is 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 Receivable, which Buyer shall pay to Seller if Buyer, in its sole
discretion, chooses to retain such Account Receivable. Seller shall retain the
right to collect any Account Receivable 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 Receivable. 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 Stations for the period of Seller's
ownership thereof. Seller further agrees to authorize the disclosure of such
audited financial information as is required by applicable law, regulations or
rules of any administrative or governmental agency, stock exchange or
self-regulatory agency.
SECTION 7
CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
7.1 Conditions to 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:
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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 (i) this Agreement and (ii) the TBA to be performed or complied with
by Seller 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 their 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. HSR Consent. All required waiting periods under the HSR Act
shall have lapsed with no adverse action or challenge pending.
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.
C. Time Brokerage Agreement. Buyer shall have in all material
respects performed and complied with the covenants, agreements, and conditions
required by the Time Brokerage Agreement to be performed and complied with
during its term, and prior to or on the Closing Date.
D. Deliveries. Buyer shall have made or stand willing and able to
make all the deliveries set forth in Section 8.3
E. HSR Consent. All required waiting periods under the HSR Act
shall have lapsed with no adverse action or challenge pending.
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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 become a Final
Order, but in no event prior to January 1, 1997 (the "Closing Date"), provided,
though, that Buyer may waive the requirement for a Final Order and schedule the
Closing Date, with ten (10) days written notice to Seller, at any time after the
receipt of FCC Consent, but in no event prior to January 1, 1997. 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 quit claim deed, bills
of sale, motor vehicle titles, assignments and other transfer documents
which shall be sufficient to vest 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
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 Ohio and Massachusetts 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) 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, delivery whereof shall be deemed to have
been made if the foregoing items are located at the Stations at
Closing;
(f) Noncompetition Agreement. The Noncompetition Agreement as
set forth in Schedule 6.5, modified to the Seller's reasonable
satisfaction;
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(g) 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, but subject to such Seller's counsel's
reasonable satisfaction and customary exceptions as to qualifications
and other matters; and
(h) 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, subject to such Buyer's counsel reasonable satisfaction.
(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.
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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, (and, in
the case of (a), such unsatisfied condition has not been cured within Twenty
(20) business days following receipt of such written notice) 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 July
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 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 timely consummate 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 Seller recognizes that in the event it
should refuse to perform under the provisions of this Agreement, that Buyer has
no adequate remedy at law since the Transferred Assets are unique. Buyer shall
therefore be entitled, as its sole remedy and in lieu of any other remedies,
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.
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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, warranties
and covenants contained in this Agreement shall be deemed continuing
representations,warranties and covenants shall survive to the Closing Date, and
continue thereafter for a period of twelve (12) months, except for those set
forth in Section 10.3(b) and (c), which shall survive indefinitely (the
"Survival Period"). No claim for indemnification may be made under this Section
10 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. In all events, the
rights, obligations and provisions for indemnification pursuant to the Time
Brokerage Agreement shall, for the term thereof, supersede the parties' rights
under this Section 10.
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, 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.
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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, subject to Section 10.1 hereof 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.
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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 delivery or the date set forth in the records of the delivery
service or on the return receipt, and (iv) addressed as follows:
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If to Seller: Zapis Communications Corporation
2510 St. Clair Avenue
Cleveland, Ohio 44114
Attn: Leon X Zapis, President
Fax: (216) 621-1856 and (216) 621-9135
with a copy
(which shall not
constitute notice) to: Thano G. Pasalis, Esq.
Suite 1575
55 Public Square
Cleveland, Ohio 44113
Fax: (216) 566-8762
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, provided, however, that (i) following such
assignment Buyer shall continue to remain liable to Seller for the satisfactory
performance of all of Buyer's obligations hereunder, including the full payment
of the Purchase Price, and (ii) no such assignment shall cause or contribute to
any material delay in the punctual performance of Buyer's obligations hereunder,
including without limitation the timely scheduling of the Closing Date pursuant
to Section 8.1 herein and the Closing. Upon such assignment having been made,
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the Assignee shall deliver to Seller a certificate acknowledging such assignee's
receipt of this Agreement, all the Schedules, the Time Brokerage Agreement and
the Escrow Agreement, and agreeing to be bound thereby and herby. Seller
hereunder desires to exchange, for other property of like kind and qualifying
use within the meaning of Section 1031 of the Internal Revenue Code of 1986, as
amended and the Regulations promulgated thereunder, fee title in the property
which is the subject of this contract. Seller expressly reserves the right to
assign its rights, but not its obligations, hereunder to a Qualified
Intermediary as provided in IRC Reg. 1.1031 (k)-1(g)(4) on or before the Closing
Date. 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 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.
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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: ZAPIS COMMUNICATIONS CORPORATION
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
3.8 Consents required
3.9 Trademarks; trade names; copyrights
3.11 Insurance policies
3.13 Employee benefits; health insurance; vacation policy
3.16 Claims; legal actions
6.4 Time Brokerage Agreement
6.5 Non-Competition Agreement
8.2 Opinion of Seller's General and FCC Counsels
8.3 Opinion of Buyer's General Counsel
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EXHIBIT 10.61
TIME BROKERAGE AGREEMENT
TIME BROKERAGE AGREEMENT, made the _____ day of _________, 1996 by and
between American Radio Systems Corporation, a Delaware corporation (the
"Programmer") and Zapis Communications Corporation, an Ohio corporation (the
"Licensee").
WHEREAS Licensee owns and operates Broadcast Stations WAAF(FM) and
WWTM(AM), Worcester, Massachusetts (collectively referred to herein as the
"Stations") pursuant to a license issued by the Federal Communications
Commission ("FCC").
WHEREAS Programmer is involved in radio station ownership and
operation.
WHEREAS the Licensee wishes to retain 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 (the "Asset Purchase Agreement") under which Licensee has agreed to
sell the Stations to Programmer, and have filed, or will file, an application
for FCC consent to assign the Station licenses from Licensee to Programmer.
NOW, THEREFORE, in consideration of the above recitals and mutual
promises and covenants contained herein, the parties, intending to be bound
legally, agree as follows:
Section 1
Use of Station Air Time
1.1 Representations. Both Licensee and Programmer represent that they
are authorized to enter into this Agreement and that this Agreement constitutes
the legal, valid and binding obligation of each, enforceable against it in
accordance with its terms.
<PAGE>
The representations and warranties of Licensee set forth in Sections 3.1 and 3.2
of the Asset Purchase Agreement, and those of Programmer set forth in Sections
4.1 and 4.2 thereof, are hereby incorporated by reference as if fully set forth
herein, and amended to the extent they refer to and are applicable to this
Agreement.
1.2 Effective Date; Term. The Effective Date of this Agreement shall be
August 1, 1996. It shall continue in force until July 1, 1997, or until
consummation of the assignment of the Station' license from Licensee to
Programmer pursuant to the Asset Purchase Agreement, whichever event occurs
earlier, unless otherwise extended or terminated by the parties (the "Term").
1.3 "Scope. During the term hereof, 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 Stations' 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 pay to Licensee a monthly fee of One Hundred and
Forty- Five Thousand Dollars ($145,000 U.S.), payable no later than the tenth
(10th) day of the month to which such fee pertains, without setoff or demand,
and Programmer shall reimburse Licensee for certain station expenses as set
forth in Section 1.6 hereof. Notwithstanding the foregoing, no such monthly fee
shall be due Licensee for the first five (5) calendar months of the term hereof.
1.5 Licensee Operation of the Stations. Licensee will have full
authority, power and control over the operations of the Stations 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 rules, regulations and policies of the FCC and all other applicable
laws. Licensee shall be solely responsible for 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 pursuant to Section
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, and shall pay directly, or
reimburse Licensee for, all other non-capital, ordinary and customary operating
expenses of the Stations. Licensee shall employ at its expense employees
consisting of, at a minimum, those personnel required pursuant to FCC
regulations, who will report to and be accountable to the Licensee. Licensee
shall be responsible for the salaries, taxes, insurance and related costs for
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all personnel it employs at the Stations and shall maintain insurance at its
present levels covering the Stations' transmission facilities. During the term
of the Agreement, Programmer agrees to perform, without charge, routine
monitoring of Licensee's transmitter performance and tower lighting if and when
requested by Licensee.
1.6 Licensee Representations and Warranties. Licensee represents and
warrants as follows:
(a) Licensee holds the licenses and other permits and
authorizations necessary for the present operation of the Stations as set forth
in Attachment I. There is not now pending, or to Licensee's best knowledge,
threatened, any action by the FCC or by any other party to revoke, cancel,
suspend, refuse to renew or modify adversely any of such licenses, permits or
authorizations except as previously revealed in writing to Programmer. To the
Licensee's best knowledge, after due inquiry, Licensee, with respect to the
Stations, is not in material violation of any statute, ordinance, rule,
regulation, policy, order or decree of any federal, state or local entity, court
or authority having jurisdiction over it or the Stations, which would have an
adverse effect upon the Licensee, its assets utilized in the operation of the
Stations, the Stations or upon Licensee's ability to perform this Agreement.
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 Stations, the Stations 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 Stations are and will
continue to comply in all material respects with the engineering requirements
set forth in the FCC licenses of the Stations. Licensee shall, during the term
of this Agreement, not dispose of, transfer or assign any of such assets and
properties except with the prior written consent of the Programmer.
(b) Licensee shall pay, in a timely fashion, all of the
non-capital, ordinary and customary expenses incurred in operating the Stations
as set forth on Attachment II, and shall provide Programmer with a
certificate(s) of such timely payment (with invoices attached thereto to the
extent such invoices exist) at one or more times within thirty (30) days of the
end of each month. Licensee shall be reimbursed by Programmer for all such
payments within five (5) business days after presentation of any and each
certificate of payment.
1.7 Programmer Responsibility. Programmer shall be solely responsible
for any expenses incurred in the origination and/or delivery of programming from
any remote location and for any publicity or promotional expenses incurred by
Programmer, including, without limitation, ASCAP, BMI, SESAC music license fees
for all programming provided by Programmer.
1.8 Contracts. During the Term, Programmer shall assume performance of
all of Licensee's contracts, trade and barter agreements, employment agreements,
and leases pertaining to the Stations, except as indicated on Attachment III
hereof.
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Programmer and Licensee acknowledge and agree that Licensee is not hereby
assigning such contracts to Programmer, but Programmer shall, during the Term,
perform Licensee's obligations thereunder. 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..
1.9 Hourly Credit. Programmer shall receive from Licensee, as a refund
consisting of a flat rate credit of $200 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 for Programmer's failure to deliver
its programming to Licensee), to broadcast the Programmer's programming. Such
refunds to Programmer shall be paid within ten (10) days of the end of each
month.
1.10 Stations 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 Stations. Licensee agrees to purchase such equipment or other material or
services which Programmer may reasonably suggest are necessary for the Stations'
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 Stations' complete facilities including the studios and
broadcast equipment for use by Programmer, if it so desires, in providing
programming for the Stations; provided, however, that Licensee shall maintain,
for its sole use, sufficient space at the Stations' studios for its 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
Stations.
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.
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2.2 Additional Licensee 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 greater public importance. Such interruption shall not entitle
Programmer to any credits on fees pursuant to Section 1.9 hereof or any other
provision of this Agreement. Licensee shall also coordinate with Programmer the
Stations' hourly station identification announcements to be aired in accord with
FCC rules. 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 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 stations' logs, receive and respond to the telephone
inquiries, control and oversee any remote control point for the Stations.
2.3 Responsibility for Employees and Expenses. 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), which
shall include the employees of Licensee employed at the Stations as of the date
hereof. Notwithstanding any other provision of this Agreement, none of
Licensee's former employees shall be terminated without Licensee's prior
consent, which shall not be unreasonably withheld. 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 as
set forth on Attachment II hereof. 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 1.11 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 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
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written notice to Programmer of such decision. Programmer shall furnish or cause
to be furnished the Artistic personnel and material for the programs as provided
by this Agreement and all programs shall be in accordance with the Policy
Statement and FCC requirements. All advertising spots and promotional material
or announcements 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 the
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 Programmer's programming which Licensee
reasonably believes to be unsatisfactory, unsuitable or contrary to the public
interest, or contrary to and inconsistent with the Stations' prior programming.
3.3 Programmer Compliance with Copyright Act. Programmer represents and
warrants to Licensee that Programmer has full authority to broadcast its
programming on the Stations, and that Programmer shall not broadcast any
material in violation of any law, rule, regulation 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. Subject to
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 it provides to the Licensee. 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
it provides to Licensee. 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. The Stations'
outstanding accounts receivable on the Effective Date of this Agreement shall be
collected by Programmer for the benefit of Licensee in accordance with Section
6.10 of the Asset Purchase Agreement, and all accounts payable shall be prorated
as of the Effective Date of this Agreement.
3.5 Payola. Programmer agrees that neither it nor its officers,
directors, shareholders, employees or agents 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 to quarterly, or more frequently at the request of
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the Licensee, caused to be executed and provide Licensee with a Payola
Affidavit, substantially in the form attached hereto as Attachment V, for each
of the Programmer, its officers, directors, shareholders, agents, and employees
as reasonably requested by Licensee. .
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 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, slander or defamation or otherwise
arising out of Programmer's broadcasts and sale of advertising time under this
Agreement to the extent permitted by law.
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' broadcasts 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 Commission on appeal.
Section 5
Access to Programmer Materials and Correspondence
5.1 Confidential Review. Prior to the providing of any 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,
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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. In the event that Programmer
fails to fulfill its obligations under the preceding sentence and such failure
inhibits Licensee in the performance of its political broadcast obligations,
then to the extent reasonably necessary to assure the Licensee's performance,
Programmer shall release advertising availabilities to Licensee; provided,
however, that all revenues realized by Licensee as a result of such a release of
advertising time shall be immediately paid to Programmer. Any such release shall
not be subject to Section 1.9 hereof.
Section 6
Termination and Remedies Upon Default
6.1 Termination. 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 in
material 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;
(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; or.
(e) the Asset Purchase Agreement is terminated in accordance with
its terms.
8
<PAGE>
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 for a period of five consecutive days or more Licensee
reduces its transmitter output power on the Stations by fifty percent (50%) or
more, Programmer may elect a refund equal to one half of the Hourly Credit
amount set forth in Section 1.9 for so long as such power reduction continues to
occur if Programmer has, in fact, been required to make rebates and/or other
financial accommodations to its advertisers and such refund shall be reflected
in a refund payment by Licensee to Programmer within ten (10) days of the end of
the month.
(b) If Licensee uses an auxiliary or alternate transmitter for the
Stations for a period of five (5) consecutive days or more, and if such use
results in a material loss or damage to Programmer then the refund for such
period shall be twenty-five percent (25%) of the Hourly Credit amount set forth
in Section 1.9 for so long as such auxiliary or alternate transmitter is in use
if Programmer has, in fact, been required to make rebates and/or other financial
accommodations to its advertisers. Should such use continue for more than thirty
(30) days, the refund for such period shall be equal to fifty percent (50%) of
the Hourly Credit amount set forth in Section 1.9 for so long as such auxiliary
or alternate transmitter is in use. The refund shall be reflected in a refund
payment by Licensee to Programmer within ten (10) days of the end of the month.
(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, of the Hourly Credit amount set
forth in Section 1.9 and such refund shall be made within ten (10) days of the
end of the month.
6.3 Force Majeure. Any failure or impairment of the Stations'
facilities or any delay or interruption in the broadcast of programs, or failure
at any time to furnish facilities, in whole or in part, for broadcast, due to
acts of god, strikes, lockouts, material or labor restrictions by any
governmental authority, civil riot, floods and any other cause not reasonably
within the control of Licensee will not cause Licensee to be liable to
Programmer, except to the extent of allowing in each such case an appropriate
refund for time not provided based upon the Hourly Credit set forth under
Section 1.9 calculated upon the length of time during which the failure or
impairment exists or continues.
6.4 Other Agreements. During the term of this Agreement, 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.
6.5 Licensee; Damages. In the event of a breach of the terms and
conditions of this Agreement on the part of Programmer, in addition to the
various rights and remedies provided in this Agreement and the Asset Purchase
Agreement, Licensee shall
9
<PAGE>
be entitled to any and all other damages in law or in equity to which it may be
entitled, including an accounting and damages for Programmer's failure to comply
with its obligations under the Time Brokerage Agreement.
Section 7
Miscellaneous
7.1 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, their successors and assignees, 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 unreasonably withheld, provided, however that
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 and Licensee has the
right to assign its payments hereunder to its Lenders upon written notification
to Programmer.
7.2 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.
7.3 FCC Certification (47 C.F.R. ss. 73.3555(a) (2) (ii). The parties
shall execute a Certification in the form of Attachment VI hereto, as required
by Section 73.3555(a) (2) (ii) of the FCC's rules.
7.4 Entire Agreement. This Agreement and the Attachments hereto and the
Asset Purchase Agreement between Programmer and Licensee 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.
7.5 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.
10
<PAGE>
7.6 Headings. The headings are for convenience only and will not
control or affect the meaning or construction of the provisions of this
Agreement.
7.7 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 of 1934, as amended, 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.
7.8 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: Zapis Communications Corporation
2510 St. Clair Avenue
Cleveland, Ohio 44114
Attn: Leon X. Zapis, President
Fax: (216) 621-1856 and (216) 621-9135
Copies To: Thano Pasalis, Esq.
Suite 1575
Illuminating Building
55 Public Square
Cleveland, Ohio 44113
Fax: (216) 566-8762
To Programmer: American Radio Systems Corporation
116 Huntington Avenue
Boston, MA 02116
Attn: Steven B. Dodge, President
Fax: (617) 375-7575
11
<PAGE>
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
7.9 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.
12
<PAGE>
7.10 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.
7.11 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
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
13
<PAGE>
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 7.10.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
LICENSEE:
ZAPIS COMMUNICATIONS CORPORATION
By: _____________________________________
PROGRAMMER:
AMERICAN RADIO SYSTEMS CORPORATION
By: ____________________________________
14
<PAGE>
ATTACHMENT I
Station Coverage
WAAF(FM) and WWTM(AM) current FCC Licenses and contour
maps on file with the FCC.
15
<PAGE>
ATTACHMENT II
Station Expenses
a) Salary, payroll taxes, benefits and other costs relating to
the employment of the Station's General Manager, pursuant to
his Employment Agreement, except that no reimbursement shall
be due Licensee by Programmer for any bonus thereunder
occasioned by the sale of the Stations..
b) Salary, payroll taxes benefits, and other costs relating to
the employment of the Station's Office Manager, Kathy
Chisholm.
c) Cost of tower rent, electricity and other utilities directly
related to the operation of the Station's transmitter
facilities.
d) The broadcast studios lease rent and all utility payments
related thereto.
16
<PAGE>
ATTACHMENT III
Any bonus due Bruce Mittman under his Employment Agreement with Licensee payable
in the event of the sale of the Stations.
17
<PAGE>
ATTACHMENT IV
Broadcast Station Programming Policy Statement
18
<PAGE>
BROADCAST STATION
PROGRAMMING POLICY STATEMENT
Programmer agrees to cooperate with Licensee in the broadcasting of
programs of the highest possible standard of excellence and for this purpose to
observe the following regulations in the preparation, writing and broadcasting
of its programs.
I. No Plugola or Payola. The mention of any business activity or
"plug" for any commercial, professional, or other related
endeavor, except where contained in an actual commercial
message of a sponsor, is prohibited.
II. No Lotteries. Announcements giving any information about
lotteries or games prohibited by federal or state law or
regulation are prohibited.
III. Election Procedures. At least ninety (90) days before the
start of any primary or election campaign, Programmer will
clear with Licensee's general manager the rate Programmer will
charge for the time to be sold to candidates for the public
office and/or their supporters to make certain that the rate
charged is in conformance with the applicable law and
Stations' policy.
IV. Required Announcements. Progammer shall broadcast (I) an
announcement in a form satisfactory to Licensee at the
beginning of each hour to identify the Stations, (ii) an
announcement at the beginning and end of each program to
indicate that program time has been purchased by Programmer,
and (iii) any other announcements that may be required by law,
regulation, or Stations' policy.
V. Commercial Recordkeeping. Neither Programmer nor its officers,
directors, agents, shareholders or employees, shall receive
any consideration in money, goods, services, or otherwise,
directly or indirectly (including to relatives) from any
persons or company for the presentation of any programming
over the Stations without reporting the same in advance to and
receiving the prior written consent of Licensee's general
manager. No commercial messages ("plugs") or undue references
shall be made in programming presented over Stations to any
business venture, profit making activity, or other interest
(other than noncommercial announcements for bona fide
charities, church activities or other public service
activities) in which Programmer (or anyone else) is directly
or indirectly interested without the same having been approved
in advance by the general manager and such broadcast being
announced as logged and sponsored.
19
<PAGE>
VI. No Illegal Announcements No announcements or promotion
prohibited by federal or state law or regulation of any
lottery or game shall be made over the Stations. Any game,
contest, or promotion relating to or to be presented over the
Stations must be fully stated and explained in advance to
Licensee, which reserves the right in its sole discretion to
reject any game, contest, or promotion.
VII. Licensee Discretion Paramount In accordance with the
Licensee's responsibility under the Communications Act of
1934, as amended, and the Rules and Regulations of the Federal
Communications Commission, Licensee reserves the right to
reject or terminate any advertising proposed to be presented
or being presented over the Stations which is in conflict with
Licensee's policy or which in Licensee's or its general
manager/chief engineer's sole judgment would not serve the
public interest.
Licensee may waive any of the foregoing regulations in specific
instances, if, in its opinion, good broadcasting in the public interest is
served.
In any case where questions of policy or interpretation arise,
Programmer should submit the same to Licensee for decision before making any
commitments in connection therewith.
20
<PAGE>
ATTACHMENT V
Payola Statement
21
<PAGE>
FORM OF PAYOLA AFFIDAVIT
City of ____________________ )
County of __________________ ) ss.
State of ___________________ )
ANTI-PAYOLA/PLUGOLA AFFIDAVIT
_________________________, being first duly sworn, deposes and says as follows:
1. He is _________________________ for ________________________________.
(Position)
2. He has acted in the above capacity since _____________.
3. No matter has been broadcast by Stations __________ for which service,
money or other valuable consideration has been directly or indirectly
paid, or promised to, or charged, or accepted, by him from any person,
which matter at the time so broadcast has not been announced or
otherwise indicated as paid for or furnished by such person.
4. So far as he is aware, no matter has been broadcast by Stations _______
for which service, money, or other valuable consideration has been
directly or indirectly paid, or promised to, or charged, or accepted by
Stations _______ in furnishing programs, from any person, which matter
at the time so broadcast has not been announced or otherwise indicated
as paid for or furnished by such person.
5. In future, he will not pay, promise to pay, request, or receive any
service, money, or any other valuable consideration, direct or
indirect, from a third party, in exchange for the influencing of, or
the attempt to influence, the preparation or presentation of broadcast
matter on Stations ________.
22
<PAGE>
6. He, his spouse and his immediate family do____ do not ____ have any
present direct or indirect ownership interest in (other than an
investment in a corporation whose stock is publicly held), serve as an
officer or director of, whether with or without compensation, or serve
as an employee of, any person, firm or corporation engaged in:
1. The publishing of music;
2. The production, distribution (including wholesale and retail
sales outlets), manufacture or exploitation of music, films,
tapes, recordings or electrical transcriptions of any program
material intended for radio broadcast use;
3. The exploitation, promotion, or management of persons
rendering artistic, production and/or other services in the
entertainment field;
4. The ownership or operation of one or more radio or television
stations;
5. The wholesale or retail sale of records, tapes and compact
discs intended for public purchase;
6. Advertising on Stations ______, or any other Stations owned by
its licensee (excluding nominal stockholdings in publicly
owned companies).
7. The facts and circumstances relating to such interest are none
_______ as follows________:
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------
Affiant
Subscribed and sworn to before me
this ______ day of ________________, 199___.
- --------------------------------------
Notary Public
My Commission expires: __________________
23
<PAGE>
ATTACHMENT VI
FCC Certification
24
<PAGE>
CERTIFICATION
Pursuant to Section 73.3555(a) (2) (ii) of the FCC's Rules:
1. The licensee of the brokered stations affected by the foregoing Time
Brokerage Agreement hereby certifies that it will at all times maintain
ultimate control (as defined in FCC rules and regulations) over the
Stations' facilities, including specifically control over the Stations'
finances, personnel and programming; and
2. The licensee of the brokering stations hereby certifies that the
proposed Agreement for the time brokerage complies with the provisions
of Section 73.3555(a) (2) (ii) of the FCC's rules.
Dated this ________ day of _____________________, 199______.
LICENSEE:
By: -------------------------------------
Its: -------------------------------------
PROGRAMMER: AMERICAN RADIO SYSTEMS CORPORATION
By: --------------------------------------
Its: --------------------------------------
25
EXHIBIT 10.62
EXCHANGE AGREEMENT
between
CHANCELLOR RADIO BROADCASTING COMPANY
WEAT-AM/FM, West Palm Beach, Florida
WOLL-FM, Riviera Beach, Florida
AND
AMERICAN RADIO SYSTEMS CORPORATION
KSTE-AM, Rancho Cordova, California
<PAGE>
EXCHANGE AGREEMENT
Table of Contents
Section 1. Asset Purchase Agreements.......................................7
1.1 California Agreement. ..................................7
1.2 Florida Agreement. ....................................8
Section 2. Exchange of Assets..............................................8
2.1 Tax Free Exchange. ....................................8
2.2 Transfer of Assets to ARS. .............................8
2.2.1 FCC Licenses. ..................................8
2.2.2 Other Governmental Authorizations. ............8
2.2.3 Tangible Personal Property. ...................8
2.2.4 Contracts. ....................................8
2.2.5 Intellectual Property. ........................9
2.2.6 Station Records. ...............................9
2.2.7 Manufacturer Vendor Warranties. ................9
2.2.8 Real Estate. ...................................9
2.2.9 All Other Florida Station Assets. .............9
2.3 Excluded Florida Assets. ...............................9
2.3.1 Cash. .........................................9
2.3.2 Receivables. .................................10
2.3.3 Consumed Property. ...........................10
2.3.4 Terminated Contracts. ........................10
2.3.5 Corporate Records. ...........................10
2.3.6 Insurance. ..................................10
2.3.7 Employee Plans. ..............................10
2.3.8 Corporate Name. ..............................10
2.3.9 Excluded Assets. ..............................10
2.4 Transfer of Assets to Chancellor. ......................10
2.4.1 FCC Licenses. .................................11
2.4.2 Other Governmental Authorizations. ...........11
2.4.3 Tangible Personal Property. ..................11
2.4.4 Contracts. ....................................11
2.4.5 Intellectual Property. ........................11
2.4.6 Station Records. ............................11
2.4.7 Manufacturer/Vendor Warranties. ..............11
2.4.8 Real Estate. .................................12
2.4.9 All Other California Station Assets ..........12
2.5 Excluded California Assets. ............................12
2.5.1 Cash. ........................................12
2.5.2 Receivables. .................................12
2.5.3 Consumed Property. ...........................12
2.5.4 Terminated Contracts. ........................12
2.5.5 Corporate Records. ...........................12
<PAGE>
2.5.6 Insurance. ...................................12
2.5.7 Employee Plans. ..............................12
2.6 Permitted Liens.........................................13
2.6.1 Florida Stations. ............................13
2.6.2 California Station. ...........................13
Section 3. Consideration..................................................13
3.1 Consideration From Chancellor...........................13
3.1.1 Florida Agreement. ...........................13
3.1.2 Florida .Agreement Fails To Close. ..........13
3.2 Consideration From ARS..................................13
3.3 Adjustments to Cash Payments. .........................14
3.3.1 Adjustments for California Station Operations. 14
3.3.2 Adjustments for Florida Station Operations. ..14
3.3.3 Definition of Buyer and Seller.................14
3.3.4 Items Subject to Adjustment. .................14
3.3.5 Ad Valorem of Real Estate Taxes. .............15
3.3.6 Dispute Procedure for Allocations. ............15
3.4 Allocation of Consideration. ..........................15
3.4.1 California Station's Barter and Trade. ......15
3.4.2 Florida Stations' Barter and Trade. ...........16
Section 4. Assumption of Obligations......................................16
4.1 California Assumed Liabilities. .......................16
4.2 California Retained Liabilities. ......................16
4.3 Florida Assumed Liabilities. ..........................16
4.4 Florida Retained Liabilities. .........................16
Section 5. Escrow Deposits................................................16
5.1 California Escrow. ....................................17
5.2 Florida Escrow. .......................................17
Section 6. Government Consents............................................17
6.1 FCC Consent. ..........................................17
6.2 FCC Applications. .....................................17
6.3 Filings. ...............................................18
Section 7. Local Marketing Agreements.....................................18
7.1 California Local Marketing Agreement. .................18
7.2 Florida Local Marketing Agreement. ....................18
Section 8. Collection of Accounts Receivable..............................18
8.1 California Accounts Receivable..........................18
8.2 Florida Accounts Receivable.............................19
Section 9. Third Party Consents...........................................20
9.1 California Consents. ..................................20
9.2 Florida Consents. .....................................20
<PAGE>
9.3 Failure to Obtain Consents..............................20
Section 10. Representations and Warranties of Chancellor...................21
10.1 Organization and Standing. ............................21
10.2 Authorization and Binding Obligation. ..................21
10.3 Qualification ..........................................21
10.4 Absence of Conflicting Agreements or Required Consents. 21
10.5 Litigation: Compliance with Law. ......................21
10.6 Broker /Finder Fees. ..................................22
10.7 Representations and Warranties as to the Florida
Stations. ...........................................22
Section 11. Representation and Warranties of ARS...........................22
11.1 Organization and Standing. ............................22
11.2 Authorization and Binding Obligation. .................22
11.3 Qualification. ........................................22
11.4 Absence of Conflicting Agreements or Required Consents. 22
11.5 Litigation: Compliance with Law. ......................23
11.6 Broker/Finder Fees. ...................................23
11.7 Representations and Warranties as to the California
Station. ............................................23
Section 12. Covenants of Chancellor........................................23
12.1 Conduct of Station:.....................................23
12.2 ........................................................25
12.3 No Inconsistent Action. ...............................25
12.4 Updating of Schedules. ................................25
12.5 Enforcement of Agreements. ............................25
12.6 FCC Reports. ..........................................26
12.7 Notification. .........................................26
12.8 Post-Closing Access. ..................................26
12.9 ........................................................26
Section 13. Covenants of ARS...............................................26
13.1 Conduct of Station:.................................26
13.2 ....................................................28
13.3 No Inconsistent Action. ...........................28
13.4 Updating of Schedules. ............................28
13.5 Enforcement of Agreements. ........................28
13.6 FCC Reports. ......................................28
13.7 Notification. .....................................29
13.8 Post-Closing Access. .............................29
13.9 ....................................................29
Section 14. Joint Covenants................................................29
14.1 Confidentiality. ..................................29
14.2 Cooperation. ......................................30
14.3 Control of Stations. ...............................30
14.4 Bulk Sales Laws. ..................................30
14.5 Public Announcements. .............................30
<PAGE>
14.6 Hart-Scott-Rodino. ....................................30
14.7 Employee Matters. .....................................30
Section 15. Conditions of Closing by Chancellor............................30
15.1 Representations, Warranties and Covenants. .............31
15.2 Compliance with Agreement. ............................31
15.3 Third Party Consents and Approvals; Estoppel
Certificates. ......................................31
15.4 Closing Certificates. .................................31
15.5 Governmental Consents...................................31
15.6 Adverse Proceedings. ..................................31
15.7 Closing Documents. ....................................31
Section 16. Conditions of Closing by ARS...................................32
16.1 Representations, Warranties and Covenants. .............32
16.2 Compliance with Agreement. ............................32
16.3 Third Party Consents and Approvals; Estoppel
Certificates. .......................................32
16.4 Closing Certificates. ..................................32
16.5 Governmental Approval...................................32
16.6 Adverse Proceedings. ..................................32
16.7 Closing Documents. ....................................33
Section 17. Closing........................................................33
17.1 Time and Place. .......................................33
17.2 Deliveries By Chancellor. .............................33
17.3 Delivery By ARS. ......................................33
17.4 ........................................................34
Section 18. Survival of Representations and Warranties.....................34
18.1 Representations and Warranties of Chancellor. .........34
18.2 Representations and Warranties of ARS. ................34
Section 19. Indemnification................................................34
19.1 Indemnification by Chancellor...........................34
19.2 Indemnification by ARS..................................35
19.3 Limitation on Reimbursement.............................35
19.4 Procedure for Indemnification...........................35
Section 20. Termination....................................................36
20.1 Right to Terminate. ...................................36
20.2 Liquidated Damages/Specific Performance.................37
Section 21. Expenses, Transfer Taxes, and Fees.............................38
21.1 Expenses. .............................................38
21.2 Transfer Taxes and Similar Charges. ...................38
21.3 Governmental Filing or Grant Fees. ....................38
Section 22. Miscellaneous..................................................38
22.1 Risk of Loss. .........................................38
<PAGE>
22.2 Assignment. ..........................................38
22.3 Amendments. ..........................................39
22.4 Headings. ............................................39
22.5 Governing Law. .......................................39
22.6 Notices. .............................................39
22.7 Schedules. ...........................................40
22.8 Entire Agreement. ....................................40
22.9 Severability. .......................................40
22.10 Counterparts. ........................................40
22.11 Binding Agreement. ...................................40
22.12 Governing Law. .......................................41
<PAGE>
EXCHANGE AGREEMENT
This Exchange Agreement is made effective as of July 31, 1996 by and
among America Radio Systems Corporation, a Delaware corporation ("ARS"), and
Chancellor Radio Broadcasting Company, a Delaware corporation ("Chancellor").
RECITALS
WHEREAS, ARS is a party to a certain Asset Purchase Agreement dated
March 26, 1996 between ARS and Fuller-Jeffrey Broadcasting Companies, Inc.
("FBC") pursuant to which ARS has purchased substantially all of FBC's assets
used or useful in the operation of AM broadcast station KSTE, Rancho Cordova,
California (the "California Station"), including the related KSTE broadcast
licenses and authorizations issued by the Federal Communications Commission
("FCC"). That Asset Purchase Agreement hereafter is referred to as the
"California Agreement".
WHEREAS, Chancellor is a party to a certain Asset Purchase Agreement,
dated May 14, 1996 among Chancellor and Chancellor Broadcasting Company and
OmniAmerica Group, WAPE FM License Partnership, WFYV-FM License Partnership,
WEAT-AM License Partnership, WEAT AM License Partnership, WXXL License
Partnership, WOLL License Partnership and WJHM-FM License Partnership
(collectively, "Omni") contemplating, inter alia, the purchase by Chancellor of
substantially all of Omni's assets used or useful in the operation of Stations
WEAT AM and FM, West Palm Beach, Florida, and Station WOLL (FM), Riviera Beach,
Florida (collectively, the "Florida Stations"), including the related FCC
broadcast licenses and authorizations. That Asset Purchase Agreement is
hereafter referred to as the "Florida Agreement".
WHEREAS, Chancellor and ARS desire to exchange the assets of the
Florida Stations for the assets of the California Station plus a cash payment by
ARS as provided herein.
WHEREAS, the parties intend the exchange of the Florida Stations and
the California Station to qualify as a tax free exchange of like-kind assets
pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended (the
"Code");
WHEREAS, effective August 1, 1996, (the "LMA Commencement Date"), (i)
Chancellor and ARS shall enter into Local Marketing Agreements ("LMAs") with
respect to the Florida Stations ("Florida Stations LMA"); and (ii) Chancellor
and ARS shall enter into a LMA with respect to the California Station
("California Station LMA").
Now, therefore, in contemplation of the recitals set out above and in
consideration of the mutual covenants and agreements contained herein, the
parties, intending to be contractually bound, agree as follows:
Section 1. Asset Purchase Agreements
1.1 California Agreement. ARS has complied in a timely fashion with all
material requirements of the California Agreement and has acquired the assets of
the California Station from FBC in the manner contemplated in the California
Agreement. ARS did not amend in any material respect the California Agreement or
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waive any right thereunder and shall not waive any continuing right thereunder
without the prior written consent of Chancellor. This prior written consent
shall not be unreasonably withheld by Chancellor. ARS shall enforce any and all
of its material rights under the California Agreement.
1.2 Florida Agreement. Chancellor shall comply in a timely fashion with
all material requirements of the Florida Agreement and shall use its reasonable
best efforts to acquire the assets of the Florida Stations from Omni at the
earliest practicable time and in the manner contemplated in the Florida
Agreement. Chancellor shall not amend in any material respect the Florida
Agreement or waive any right thereunder without the prior written consent of
ARS. This prior written consent shall not be unreasonably withheld by ARS.
Chancellor shall enforce any and all of its material rights under the Florida
Agreement.
Section 2. Exchange of Assets
2.1 Tax Free Exchange. The parties intend for this transaction to
qualify as a tax-free exchange under Section 1031 of the Code. In order to
attain this goal, the parties will, to the extent possible, exchange (i)
depreciable personal property in the same General Asset Class or Product Class,
as those terms are used in Treas. Regulation 1.1031(a)-2(b); and (ii)
non-depreciable personal property and intangible personal property for other
property of a like kind.
2.2 Transfer of Assets to ARS. Subject to the terms, conditions and
limitations contained herein, on the Closing Date as defined in Section 13.1,
Chancellor shall convey to ARS and ARS shall acquire from Chancellor (to the
extent Chancellor acquires the same from Omni) all of the following assets,
properties, interests and rights (the "Florida Assets") free and clear of liens
and encumbrances except the Florida Permitted Liens allowed under Section 2.6.1:
2.2.1 FCC Licenses. All licenses, permits, special temporary
authority, program test authority and authorizations of any type whatsoever
issued by the FCC, and any pending applications thereof, and used in connection
with the Florida Stations (the "Florida Licenses"), including those
authorizations for the Florida Stations identified in the pertinent portions of
Schedule 2.1.1 of this Agreement and any renewals or modifications thereof;
2.2.2 Other Governmental Authorizations. All licenses, permits,
and other authorizations of any nature whatsoever issued by a governmental
authority and used in the operation of the Florida Stations;
2.2.3 Tangible Personal Property. All equipment, office furniture
and fixtures, office materials and supplies, inventory, spare parts and all
other tangible personal-property of every kind and description, and Chancellor's
rights therein, owned, leased or held by Chancellor and used in connection, with
the operations of the Florida Stations, including but not limited to those items
described or listed in Schedule 2.2.3, together with any replacements thereof
and additions thereto, made before the Closing Date, and less any retirements or
dispositions thereof made before the Closing Date in the ordinary course of
business;
2.2.4 Contracts. All contracts, agreements, leases and legally
binding contractual rights of any kind, written or oral, relating to the
operation of the Florida Stations ("Florida Contracts"), listed in Schedule
2.2.4 or entered into before the Closing Date in the ordinary course of business
of the Florida Stations;
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2.2.5 Intellectual Property. All trademarks, trade names, service
marks (including the Call Signs WEAT, WEAT-FM and WOLL), franchises, copyrights,
Internet domain names and addresses,.including registrations and applications
for registration of any of them, computer software programs and providing
material of whatever form or nature, jingles, slogans, the Florida Stations'
logos and all other logos or licenses to use same and all other intangible
property rights of Chancellor, which are used exclusively in connection with the
operation of the Florida Stations, including but not limited to those listed in
Schedule 2.2.5 (collectively, the "Florida Intellectual Property") together with
any associated good will and any additions thereto before the Closing Date;
2.2.6 Station Records. All of the files, documents, records, and
books of account relating to the operation of the Florida Stations or to the
Florida Assets, including without limitation the Florida Stations' public files,
programming information and studies, technical information and engineering data.
news and advertising studies or consulting reports, marketing studies,
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, software programs and books
and records relating to employees, financial, accounting and operation matters;
but excluding records relating solely to any Excluded Asset (as hereinafter
defined);
2.2.7 Manufacturer Vendor Warranties. All manufacturer's and
vendors' warranties relating to items included in the Florida Assets and all
similar rights against third parties relating to items included in the Florida
Assets;
2.2.8 Real Estate. All real property used in operating the Florida
Stations together with all appurtenant easements thereunto and all structures,
fixtures and improvements located thereon as more fully described in Schedule
2.2.8, together with any additions thereto before the Closing Date ("the Florida
Real Estate"); provided however that the studios for Station WOLL located on
Blue Heron Boulevard in Riviera Beach, Florida shall not be conveyed to ARS and
are excluded from the Florida Real Estate, as Omni is in the process of donating
them to the State of Florida.
2.2.9 All Other Florida Station Assets. Except for Excluded
Assets, such other assets, properties, interests and rights that are used
exclusively in connection with the operation of the Florida Stations or that are
located as of the Closing Date on the Florida Real Estate.
2.3 Excluded Florida Assets. Notwithstanding anything to the contrary
contained herein, it is expressly understood and agreed that the Florida Assets
shall not include the following assets along with all rights, title and interest
therein (the "Excluded Florida Assets"):
2.3.1 Cash. All cash, marketable securities and cash equivalents
of Chancellor on hand and/or in banks;
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2.3.2 Receivables. All cash accounts receivable or notes
receivable of Chancellor;
2.3.3 Consumed Property. All tangible and intangible personal
property related to the Florida Stations disposed of or consumed in the ordinary
course of business of Chancellor or Omni before the Closing Date, or as
permitted hereunder;
2.3.4 Terminated Contracts. All non-assumed Contracts or Contracts
that have terminated or expired prior to the Closing Date in the ordinary course
of business of Chancellor or Omni or ARS as permitted hereunder;
2.3.5 Corporate Records. Chancellor's corporate seal, minute
books, charter documents, corporate stock record book and such other books and
records as pertain to the organization, existence or share capitalization of
Chancellor and duplicate copies of all books and records transferred to ARS
hereunder as are necessary to enable Chancellor to file its tax returns and
reports, as well as any other contracts, records or materials relating to
Chancellor or its business and not involving or relating to the Florida Assets
or the operation or operations of the Florida Stations;
2.3.6 Insurance. Contracts of insurance and all insurance proceeds
or claims made by Chancellor.
2.3.7 Employee Plans. 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 Chancellor;
2.3.8 Corporate Name. Any right to use the names "Chancellor,"
"Chancellor Broadcasting Company," or "Chancellor Radio Broadcasting Company"
and any variations thereof;
2.3.9 Excluded Assets. Those specific assets identified on the
Excluded Assets Schedule attached to this Agreement as Schedule 2.3.9;
2.3.10 All of Chancellor's rights in and to all causes of action;
2.3.11 All tax refunds relating to the period prior to the
Closing; and
2.3.12 All other assets or Contracts, including but not limited to
those assets or Contracts associated with the Florida Agreement, that are not
specifically listed in this Agreement as the Florida Assets or used or useful,
as determined by Chancellor, in the operation or operations of the Florida
Stations.
2.4 Transfer of Assets to Chancellor. Subject to the terms, conditions
and limitations contained herein, on the Closing Date, ARS shall convey to
Chancellor and Chancellor shall acquire from ARS ( to the extent ARS acquires
the same from FBC) all of the following assets, properties, interests and rights
(the "California Assets") free and clear of liens and encumbrances except the
California Permitted Liens under Section 2.6.2:
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2.4.1 FCC Licenses. All licenses, permits, special temporary
authority, program test authority and authorizations of any type whatsoever
issued by the FCC and any pending applications thereof, and used in connection
with the California Station (the "California Licenses"), including those
authorizations for the California Station identified in Schedule 2.4.1 to the
California Agreement and any renewals or modifications thereof.
2.4.2 Other Governmental Authorizations. All licenses, permits,
and other authorizations of any nature whatsoever issued by a governmental
authority and used in the operation of the California Station.
2.4.3 Tangible Personal Property. All equipment, office furniture
and fixtures, office materials and supplies, inventory, spare parts and all
other tangible personal property of every kind and description, and ARS's rights
therein, owned, leased or held by ARS and used in connection with the operations
of the California Station, including but not limited to those items described or
listed in Schedule 2.4.3, together with any replacements thereof and additions
thereto, made before the Closing Date, and less any retirements or dispositions
thereof made before the Closing Date in the ordinary course of business.
2.4.4 Contracts. All contracts, agreements, leases and legally
binding contractual rights of any kind, written or oral relating to the
operation of the California Station ("California Contracts"), listed in Schedule
2.4.4 or entered into before the Closing Date in the ordinary course of business
of the California Station.
2.4.5 Intellectual Property. All trademarks, trade names, service
marks (including the Call Sign KSTE), franchises, copyrights, including
registrations and applications for registration of any of them, computer
software programs and programming material of whatever form or nature, jingles,
slogans, the California Station's logos and all other logos or licenses to use
same and all other intangible property rights of ARS which are used exclusively
in connection with the operation of the California Station, including but not
limited to those listed Schedule 2.4.5 (collectively, the "California
Intellectual Property") together with any associated good will and any additions
thereto before the Closing Date;
2.4.6 Station Records. All of the files, documents, records, and
books of account relating to the operation of the California Station or to the
California Assets, including without limitation the California Station's public
files, programming information and studies, technical information and
engineering data, news and advertising studies or consulting reports, marketing
studies, 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, software programs and
books and records relating to employees, financial, accounting and operation
matters; but excluding records relating solely to any Excluded California Asset;
2.4.7 Manufacturer/Vendor Warranties. All manufacturers' and
vendors' warranties relating to items included in the California-Assets and all
similar rights against third parties relating to items included in the
California Assets;
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2.4.8 Real Estate. All real property used in operating the
California Station together with all appurtenant easements thereunto and all
structures, fixtures and improvements located thereon as more fully described in
Schedule 2.4.8, together with any additions thereto before the Closing Date (the
"California Real Estate"); and
2.4.9 All Other California Station Assets Except for Excluded
California Assets, such other assets, properties, interests and rights that are
used exclusively in connection with the operation of the California Station or
that are located as of the Closing Date on the California Real Estate.
2.5 Excluded California Assets. Notwithstanding anything to the
contrary contained herein, it is expressly understood and agreed that the
California Assets shall not include the following assets along with all rights,
title and interest therein (the "Excluded California Assets"):
2.5.1 Cash. All cash, marketable securities and cash equivalents
of ARS on hand and/or in banks;
2.5.2 Receivables. All cash accounts receivable or notes
receivable of ARS;
2.5.3 Consumed Property. All tangible and intangible personal
property related to the California Station disposed of or consumed in the
ordinary course of business of ARS or FBC before the Closing Date, or as
permitted under the terms hereof;
2.5.4 Terminated Contracts. All non-assumed Contracts or Contracts
that have terminated or expired prior to the Closing Date in the ordinary course
of business of ARS or FBC and as permitted hereunder;
2.5.5 Corporate Records. ARS's corporate seal, minute books,
charter documents, corporate stock record book and such other books and records
as pertain to the organization, existence or share capitalization of ARS and
duplicate copies of all books and records transferred to Chancellor hereunder as
are necessary to enable ARS to file its tax returns and reports as well as any
other records or materials relating to ARS or its business and not involving or
relating to the California Assets or the operation or operations of the
California Station;
2.5.6 Insurance. Contracts of insurance and all insurance proceeds
or claims made by ARS;
2.5.7 Employee Plans. 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 ARS; and
2.5.8 Any right, to use the name "ARS" or "American Radio" or
"American Radio Systems Corporation" and any variations thereof;
2.5.9 Those specific assets identified on the Excluded-Assets
Schedule attached to this Agreement as Schedule 2.5.9;
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2.5.10 All of ARS's rights in and to all causes of action;
2.5.11 All tax refunds relating to the period prior to the
Closing; and
2.5.12 All other assets or Contracts, including but not limited to
those assets or Contracts associated with the California Agreement that are not
specifically listed in this Agreement as the California Assets or used or
useful, as determined by ARS, in the operation or operations of the California
Station.
2.6 Permitted Liens.
2.6.1 Florida Stations. The Florida Assets shall be conveyed to
ARS free and clear of all liens and encumbrances except the liens and
encumbrances listed in Schedule 2.6.1 (the "Florida Permitted Liens").
2.6.2 California Station. The California Assets shall be conveyed
to Chancellor free and clear of all liens and encumbrances except the liens and
encumbrances listed in Schedule 2.6.2 (the "California Permitted Liens").
Section 3. Consideration.
3.1 Consideration From Chancellor.
3.1.1 Florida Agreement. If the Florida Agreement closes and
Chancellor acquires the Florida Assets, then the consideration delivered by
Chancellor to ARS shall consist of the Florida Assets described in Section 2.2.
Further. and subject to the limitations contained in Section 4.1, Chancellor
shall assume the California Assumed Liabilities.
3.1.2 Florida .Agreement Fails To Close. If the Florida Agreement
does not close and Chancellor does not acquire the Florida Assets, then the
consideration delivered by Chancellor to ARS for the purchase of the California
Assets shall consist of Seven Million Dollars ($7,000,000), subject to any
adjustments provided herein (the "Alternative California Cash Purchase Price").
The Alternative California Purchase Price shall be paid to ARS at Closing by
wire transfer of immediately available funds. Further and subject to the
limitations contained in Section 4.1, Chancellor shall assume the California
Assumed Liabilities.
3.2 Consideration From ARS.
The consideration delivered by ARS to Chancellor shall consist of:
(a) the California Assets described in Section 2.4 less any
Excluded California Assets described in Section 2.5. Further and subject to the
limitations contained in Section 4.3, ARS shall assume the Florida Assumed
Liabilities; and
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(b) the sum of Thirty-three Million Dollars ($33,000,000), subject
to any adjustments provided herein (the "Florida Cash Purchase Price"). This
Florida Cash Purchase Price shall be paid to Chancellor at Closing by wire
transfer of immediately available funds.
3.3 Adjustments to Cash Payments. The cash payment(s) contemplated in
Sections 3.1 and 3.2 shall be adjusted as follows:
3.3.1 Adjustments for California Station Operations. Subject to
the California Station LMA to be entered into pursuant to Section 7.1 herein,
income and expenses from the operation of the California Station shall be
allocated to the parties on the principle that (i) ARS shall be entitled to all
income attributable to, and shall be responsible for all expenses arising out
of, the operation of the California Station up to 11 :59 PM on the Closing Date
(the "Effective Time") and (ii) Chancellor shall be entitled to all income
attributable to, and shall be responsible for all expenses arising out of, the
operation of the California Station after the Effective Time. Overlapping items
of income and expense shall be prorated as of the Effective Time.
3.3.2 Adjustments for Florida Station Operations. Subject to the
Florida Station LMA to be entered into pursuant to Section 7.2, herein, income
and expenses from the operation of the California Station shall be allocated to
the parties on the principle that (i) ARS shall be entitled to all income
attributable to, and shall be responsible for all expenses arising out of, the
operation of the California Station up to the Effective Time and (ii) Chancellor
shall be entitled to all income attributable to, and shall be responsible for
all expenses arising out of, the operation of the California Station after the
Effective Time. Overlapping items of income and expense shall be prorated as of
the Effective Time.
3.3.3 Definition of Buyer and Seller.
(a) For purposes of Section 3.3.3 - 3.3.6, only, Buyer means (i)
Chancellor with respect to the California Station and (ii) ARS with respect to
the Florida Stations.
(b) For purposes of Section 3.3.3 - 3.3.6, only, Seller means (i)
ARS with respect to the California Station and (ii) Chancellor with respect to
the Florida Stations.
3.3.4 Items Subject to Adjustment. Items subject to adjustment
pursuant to Sections 3.3.1 and 3.3.2 include, but are not limited to expenses
for goods and services received both before and after the Effective Time,
utilities charges, ad valorem, real estate, property and other taxes (other than
income taxes, which shall be Seller's sole responsibility for all taxable
periods ending prior to and including the Closing Date, and those taxes arising
from the sale and transfer of any of the Florida Stations' or the California
Station's assets, which shall be paid as set forth in Section 21.2), income and
expenses under the various assumed contracts (other than Trade Agreements),
prepaid expenses, music and other license fees (including any retroactive
adjustments thereof, wages, salaries, and other employee benefit expenses
(whether such wages, salaries or benefits are current or deferred expenses)
(including, without limitation, liabilities accrued up to the Effective Time for
bonuses, commissions, vacation pay, payroll taxes, workers' compensation and
social security taxes) and rents and similar prepaid and deferred items.
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3.3.5 Ad Valorem of Real Estate Taxes. Ad valorem and other real
estate taxes shall be apportioned on the basis of the taxes assessed for the
most recently-completed calendar year, with a reapportionment as promptly as
practicable after the tax rates and real property valuations for the calendar
year in which the Closing occurs can be ascertained. In addition, Buyers shall
be entitled to a credit in this proration process for the amount of any taxes
(or other governmental charges) that are due and payable by Sellers, but are
being contested in good faith in appropriate proceedings and are secured by
Liens on the California Station's or Florida Stations' Assets that have not been
removed as of or before the Closing (but once such amounts are finally
determined, Buyers shall use such credit to remove such liens and return to
Sellers the excess of (i) the amount of such credit minus (ii) the amount of
such taxes or other governmental charges as finally determined, or Sellers shall
pay to Buyers the deficiency, as appropriate).
3.3.6 Dispute Procedure for Allocations. Allocation and proration
of the items set forth in Subsection 3.3.4 above shall be made by Buyers and a
statement thereof given to Sellers within thirty (30) days after the Closing
Date. Sellers shall give written notice of any objection thereto within twenty
(20) business days after delivery of such statement, detailing the reason for
such objection and stating the amount of the proposed final allocation and
proration. if a timely objection is made and the parties cannot reach agreement
within thirty (30) days-after receipt of the objection as to the amount of the
final allocation and proration, the matter shall be referred to Arthur Anderson,
L.L.P. (the "Independent Auditor") to resolve the matter, whose decision will be
final and binding on the parties, and whose fees and expenses shall be borne by
Buyers and Sellers in accordance with the following: each party shall pay an
amount equal to the sum of all fees and expenses of the Independent Auditor on a
proportional basis taking into account the amount of the net allocation and
proration proposed by each of Buyers and Sellers and the amount of the final
allocation and proration determined by the Independent Auditor (for example, if
Buyers proposed a payment of $10 to Sellers, Sellers proposed a payment of $100,
and the Independent Auditor propose a payment of $30, Buyers would pay 20/90ths
of the Independent Auditor's fees and Sellers would pay 70/90ths of those fees
based on the $90 in dispute between the parties).
3.4 Allocation of Consideration. The value of the consideration
(including cash) that each party is exchanging under this Exchange Agreement is
Forty Million Dollars ($40,000,000). Seven Million Dollars ($7,000,000) of the
consideration exchanged shall be allocated to the California Assets. The
allocation of consideration among each item included in the California Assets
and the Florida Assets shall be made by Broadcast Investment Analysts, Inc. on
the basis of its independent appraisal of the California Assets and the Florida
Assets. This independent appraisal shall be paid for equally by the parties and
shall be considered binding by the parties. The parties shall use such appraisal
for all purposes, including for purposes of the federal and state income tax
returns.
3.4.1 California Station's Barter and Trade. If the value of
trade, barter and similar arrangements for the sale of advertising time for
other than cash that are assumed by Chancellor under this Agreement is $50,000
(or more) greater than the value of the consideration to be received by
Chancellor on or after the California LMA Commencement Date with respect to the
California Station, ARS shall pay Chancellor the excess (other than the first
$50,000) within 30 days after the California LMA Commencement Date.
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3.4.2 Florida Stations' Barter and Trade. If the value of trade,
barter and similar arrangements for the sale of advertising time for other than
cash that are assumed by ARS under this Agreement is $150,000 (or more) greater
than the value of the consideration to be received by ARS on or after the
Florida LMA Commencement Date with respect to the Florida Stations, Chancellor
shall pay ARS the excess (other than the first $150,000) within 30 days after
the Florida LMA Commencement Date.
Section 4. Assumption of Obligations
4.1 California Assumed Liabilities. Subject to the provisions of this
Section 4, and subject to the California Station LMA as set forth in Section
7.1, hereof, Chancellor shall assume the obligations of ARS arising or to be
performed under such of the California Contracts as are listed in Schedule 4.1
hereto (the "California Assumed Liabilities"). In addition, Chancellor shall
assume ARS's post-closing obligations under Section 8 of the California
Agreement, however, such obligations shall be limited to providing assistance to
ARS and the selling party, and Chancellor shall have no obligation to provide
any payments which ARS may be obligated to make under the California Agreement.
4.2 California Retained Liabilities. Notwithstanding anything contained
in this Agreement to the contrary, Chancellor expressly does not, and shall not,
assume or agree to pay, satisfy, discharge or perform and will not be deemed by
virtue of the execution and delivery of this Agreement to have assumed or to
have agreed to pay, satisfy, discharge or perform, any liabilities, obligations
or commitments of ARS of any nature whatsoever whether accrued, absolute,
contingent or otherwise and whether or not disclosed to Chancellor, other than
the California Assumed Liabilities. All of such liabilities and obligations
shall be referred to herein collectively as the "California Retained
Liabilities".
4.3 Florida Assumed Liabilities. Subject to the provisions of this
Section 4, ARS shall assume the obligations of Chancellor arising or to be
performed on or after the Closing Date under such of the Florida Contracts as
are listed in Schedule 4.3 hereto (the "Florida Assumed Liabilities"). In
addition, ARS shall assume Chancellor's post-closing obligations under Article
11 of the Florida Agreement, however, such obligations shall be limited to
providing assistance to Chancellor and the selling party, and ARS shall have no
obligation to provide any payments which Chancellor may be obligated to make
under the Florida Agreement.
4.4 Florida Retained Liabilities. Notwithstanding anything contained in
this Agreement to the contrary, ARS expressly does not, and shall not, assume or
agree to pay, satisfy, discharge or perform and will not be deemed by virtue of
the execution and delivery of this Agreement to have assumed or to have agreed
to pay, satisfy, discharge or perform, any liabilities, obligations or
commitments of Chancellor of any nature whatsoever whether accrued, absolute,
contingent or otherwise and whether or not disclosed to ARS, other than the
Florida Assumed Liabilities. All such liabilities and obligations shall be
referred to herein collectively as the "Florida Retained Liabilities".
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Section 5. Escrow Deposits
5.1 California Escrow. Upon execution of this Agreement, Chancellor
shall deposit Three Hundred Fifty Thousand Dollars ($350,000) (the "California
Cash Deposit") or an original, irrevocable letter of credit, which should be in
a form reasonably satisfactory to ARS, issued by Banker's Trust Company for a
sum equal to the California Cash Deposit, with Star Media Group to be held
pursuant to the terms of the California Escrow Agreement appended hereto as
Exhibit 5.1. The California Deposit plus accrued interest shall be returned to
Chancellor at Closing. Further, if this Agreement terminates for any reason
other than a material breach of the Agreement by Chancellor, the California
Deposit plus accrued interest shall be returned to Chancellor.
5.2 Florida Escrow. Upon Execution of this Agreement, ARS shall deposit
Two Million Dollars ($2,000,000) (the "Florida Cash Deposit") or an original,
irrevocable letter of credit, which should be in a form reasonably satisfactory
to Chancellor, issued by Bank of New York for a sum equal to the Florida Cash
Deposit with Star Media Group to be held pursuant to the terms of the Florida
Escrow Agreement appended hereto as Exhibit 4.2. The Florida Deposit plus
accrued interest shall be paid to Chancellor at Closing and credited against the
cash payment required under Section 2.5 of this Agreement. If this Agreement
terminates for any reason other than a material breach of the Agreement by ARS,
the Florida Deposit plus accrued interest shall be returned to ARS.
Section 6. Government Consents
6.1 FCC Consent. The closing on the purchase and sale of the California
Assets and the Florida Assets is subject to and conditioned upon (a) the parties
obtaining the prior consent of the FCC to the transaction contemplated in this
Agreement "FCC Consent") and (b) the FCC action granting its consent becoming a
"Final Order," in essence. an action unappealable by virtue of (x) the
expiration of the period within which a timely request for appeal. review or
reconsideration could be filed and (y) the expiration of the period within which
the FCC or a Court could review the action on its own motion, such periods
having expired without the filing of any request for appeal, review or
reconsideration and without the review of the action on the FCC's or Court's own
motion.
6.2 FCC Applications. Within 10 days after the execution of this
Agreement or such earlier time as shall be agreed to by all of the parties
hereto, Chancellor and ARS shall file the applications with the PCC for FCC
Consent ("PCC Applications") to assign the California Station License to
Chancellor and the Florida Stations Licenses to ARS. Chancellor and ARS shall
prosecute the FCC Applications with all reasonable diligence and otherwise use
their best efforts to obtain the FCC Consents as expeditiously as practicable
(but neither Chancellor nor ARS shall have any obligation to satisfy
complainants or the FCC by taking any steps which would have a material adverse
effect upon Chancellor or ARS, or upon any of their Affiliates). If the FCC
Consents imposes any condition on Chancellor or ARS such party shall use its
reasonable efforts to comply with such condition; provided, however, that
neither Chancellor nor ARS shall be required hereunder to comply with any
condition that would have a material adverse effect upon it or any of its
Affiliates. If reconsideration of 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 Section 20 hereof.
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6.3 Filings. As promptly as practicable after the execution of this
Agreement, Chancellor and ARS shall use (cent)heir reasonable efforts to obtain,
and to cooperate with each other in obtaining, all authorizations, consents,
orders and approvals of any governmental authority that may be or become
necessary in connection with the consummation of the transactions contemplated
by this Agreement, and to take all reasonable actions to avoid the entry of any
order or decree by any governmental authority prohibiting the consummation of
the transactions contemplated hereby. These efforts shall include, without
limitation, filing any reports or notifications that may be required to be filed
by Chancellor and ARS under the Hart-Scott-Rodino Antitrust Improvements Act of
1976 (the "HSR Act") with the Federal Trade Commission and the Antitrust
Division of the Department of Justice. Each party shall furnish to one another
all such information in its possession as may be necessary for the completion of
the reports or notifications to be filed by the other.
Section 7. Local Marketing Agreements
7.1 California Local Marketing Agreement. On or before August 1, 1996,
the parties shall enter into a California Local Marketing Agreement (the
"California Station LMA") substantially in the form of the LMA appended hereto
as Exhibit 7.1.
7.2 Florida Local Marketing Agreement. On or before August 1, 1996, the
parties shall enter into a Florida Local Marketing Agreement (the "Florida
Stations LMA") substantially in the form of the LMA appended hereto as Exhibit
7.2. To the extent that Omni is required to be a party to the Florida Stations
LMA to effectuate its purposes, Chancellor shall use its commercially reasonable
efforts to obtain Omni's execution and performance of the Florida Stations LMA
and to assign or provide on terms reasonably satisfactory to ARS, as soon as
practicable after the execution of the Agreement, but no sooner than August 1,
1996, the rights of Chancellor under the Local Marketing Agreement, if executed,
currently being negotiated by Chancellor and Omni with respect to the Florida
Stations. ARS shall not have any claim or right, including, without limitation,
any right to terminate this Agreement or any claim for damages, to the extent
that ARS's operation of the Florida Stations under or in accordance with the
Florida Stations LMA (i) causes any representation or warranty of Chancellor to
be rendered inaccurate or (ii) conflicts with any covenant to be complied with
by Chancellor on or prior to the Closing Date.
Section 8. Collection of Accounts Receivable
8.1 California Accounts Receivable.
(a) Within five (5) days after the commencement of the California
Station LMA, ARS shall deliver to Chancellor a full and detailed list of the
accounts receivable relating to the California Station and its operations prior
to the Commencement Date ("California Accounts Receivable"), designating with
respect to each account receivable any portion thereof attributable to services
to be rendered by Chancellor after the Commencement Date. The California
Accounts Receivable shall not be purchased by Chancellor and Chancellor agrees,
however, that for a period of 90 days following the Commencement Date (the
"Collection Period"), it shall act as ARS's agent for purposes of the collection
of the California Accounts Receivable and shall use reasonable efforts
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to collect the California Accounts Receivable for the benefit of the ARS.
Chancellor shall remit to the ARS all amounts collected by the Chancellor for
the ARS's benefit fifteen days after the conclusion of the 90 day collection
period. The collection responsibilities imposed on Chancellor hereunder shall
not require the institution of suit or referral to a collection or similar
agency, or the institution of any proceeding against an account debtor under any
bankruptcy, insolvency, or similar law affecting the rights of creditors
generally. Any of the California Accounts Receivable which shall remain
uncollected by Chancellor at the conclusion of the Collection Period shall
remain ARS's assets and Chancellor's obligations under this Section 8.1 shall
terminate. Chancellor shall have no liability to ARS for the uncollectability of
any of the California Accounts Receivable.
(b) Chancellor agrees that it may not settle, discount payment of,
extend the terms of, or otherwise compromise any of the California Accounts
Receivable, except as consented to in writing by ARS. If at the Commencement
Date or at any time during the Collection Period an account debtor is in
bankruptcy, reorganization or similar proceeding, ARS will assume the full
collection responsibility as to such account and such account will no longer be
deemed a California Account Receivable for purposes of this Agreement. Following
the Commencement Date, Chancellor will give prompt notice to ARS of any such
bankruptcy, reorganization or other proceeding affecting any debtor of the
California Accounts Receivable after receiving notice thereof.
(c) During the Collection Period, any and all amounts paid to
Chancellor by an account debtor with respect to an account receivable shall be
applied first to payment of the California- Account Receivable, unless the
account debtor disputes such California Account Receivable, appropriately
documents such dispute in writing, and prompt notice (including all written
documentation) of such dispute is given by Chancellor to ARS. After the end of
the Collection Period, Chancellor shall forward to ARS all payments received
that are reasonably identifiable (by invoice number, date of service or other
unambiguous reference) with the California Accounts Receivable, within twenty
(20) days of receipt.
(d) Chancellor does not guarantee the collection of the whole or any
part of the California Accounts Receivable.
8.2 Florida Accounts Receivable.
(a) Within five (5) days of the Commencement of the Florida Stations
LMA, Chancellor shall deliver to ARS a full and detailed list of the accounts
receivable relating to the Florida Stations and its operations prior to the
Commencement Date ("Florida Accounts Receivable"), designating with respect to
each account receivable any portion thereof attributable to services to be
rendered by ARS-after the Commencement Date. The Florida Accounts Receivable
shall not be purchased by ARS and ARS agrees, however, that for a period of 90
days following the Commencement Date (the "Collection Period"), it shall act as
Chancellors agent for purposes of the collection of the Florida Accounts
Receivable and shall use reasonable efforts to collect the Florida Accounts
Receivable for the benefit of the Chancellor. ARS shall remit to Chancellor all
amounts collected by ARS for Chancellors benefit fifteen days after the
conclusion of the 90 day Collection Period. The collection responsibilities
imposed on ARS hereunder shall not require the institution of suit or referral
to a collection or similar agency, or the institution of any proceeding against
an account debtor under any bankruptcy, insolvency, or similar law affecting the
rights of creditors generally. Any of the Florida Accounts Receivable which
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shall remain uncollected by ARS at the conclusion of the Collection Period shall
remain Chancellor's assets and ARS's obligations under this Section 8.2 shall
terminate. ARS shall have no liability to Chancellor for the uncollectability of
any of the Florida Accounts Receivable.
(b) ARS agrees that it may not settle, discount payment of, extend the
terms of, or otherwise compromise any of the Florida Accounts- Receivable,
except as consented to in writing by Chancellor. If at the Commencement Date or
at any time during the Collection Period an account debtor is in bankruptcy,
reorganization or similar proceeding, Chancellor will assume the full collection
responsibility as to such account and such account will no longer be deemed a
Florida Account Receivable for purposes of this Agreement. Following the
Commencement Date, ARS will give prompt notice to Chancellor of any such
bankruptcy, reorganization or other proceeding affecting any debtor of the
Florida Accounts Receivable after receiving notice thereof.
(c) During the Collection Period, any and all amounts paid to ARS by an
account debtor with respect to an account receivable shall be applied first
payment to the Florida Accounts Receivable, unless the account debtor disputes
such Florida Account Receivable, appropriately documents such dispute in
writing, and prompt notice (including all written documentation) of such dispute
is given by ARS to Chancellor. After the end of the Collection Period, ARS shall
forward to Chancellor all payments received that are reasonably identifiable (by
invoice number, date of service or other unambiguous reference) with the Florida
Accounts Receivable, within twenty (20) days.
(d) ARS does not guarantee the collection of the whole or any part of
the Florida Accounts Receivable.
Section 9. Third Party Consents
9.1 California Consents. ARS shall use its reasonable best efforts to
obtain all third party consents necessary for the conveyance of the California
Assets to Chancellor without the imposition of any conditions that would be
adverse to Chancellor.
9.2 Florida Consents. Chancellor shall use its reasonable best efforts
to obtain all third party consents necessary for the conveyance of the Florida
Assets to ARS without the imposition of any conditions that would be adverse to
ARS.
9.3 Failure to Obtain Consents.
(a) If Chancellor fails to obtain any of the Consents referenced in
Section 9.2, Chancellor shall use its reasonable best efforts (i) to provide ARS
the financial and business benefits ARS would have enjoyed had the consent been
given and (ii), upon the request of ARS, to enforce in its name for the account
of ARS any rights that would otherwise have been available to ARS had the
consent been granted.
(b) If ARS fails to obtain any of the Consents referenced in Section
9.2, ARS shall use its reasonable best efforts (i) to provide Chancellor the
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financial and business benefits Chancellor would have enjoyed had the consent
been given and (ii), upon the request of Chancellor, to enforce in its name for
the account of Chancellor any rights that would otherwise have been available to
Chancellor had the consent been granted.
Section 10. Representations and Warranties of Chancellor
10.1 Organization and Standing. Chancellor is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is qualified to conduct business in the States of Florida and
California.
10.2 Authorization and Binding Obligation. Chancellor has all necessary
corporate power and authority to enter into and perform this Agreement and the
transactions contemplated hereby. Chancellor's execution, delivery and
performance of this Agreement and the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on behalf of
Chancellor and this Agreement constitutes a valid and binding obligation of
Chancellor, enforceable in accordance with its terms.
10.3 Qualification To Chancellor's knowledge, there is no fact,
allegation, condition, or circumstance that could reasonably be expected to
prevent the prompt grant of the FCC Consent. Chancellor knows of no &ct that
would, under the Communications Act of 1934, as amended, or the rules,
regulations and policies of the FCC, disqualify Chancellor from becoming the
licensee of either the Florida Stations or the California Station. There are no
proceedings, complaints, notices of forfeiture, claims, or investigations
pending or, to the knowledge of Chancellor threatened against any or in respect
of any of the broadcast stations licensed to Chancellor or its affiliates that
would materially impair the qualifications of Chancellor to become a licensee of
the Florida Stations or the California Station or that would delay the FCC's
processing of the FCC Applications.
10.4 Absence of Conflicting Agreements or Required Consents. Except as
set forth in Schedule 10.4 hereof, the execution, delivery and performance of
this Agreement by Chancellor: (a) do not violate or conflict with any of the
terms, conditions or provisions of the Certificate of Incorporation or By-Laws
of Chancellor; (b) do not require the consent of any third party not affiliated
with Chancellor; (c) will not violate any applicable law, judgment, order,
injunction, decree, rule, regulation or ruling of any governmental authority to
which Chancellor is a party; and (d) will not either alone or with the giving of
notice or the passage of time, violate the terms, conditions or provisions of,
or constitute a default under, any agreement, instrument, license or permit to
which Chancellor is now subject.
10.5 Litigation: Compliance with Law. Except as disclosed in Schedule
10.5, there is no litigation, administrative action, arbitration or other
proceeding, or petition, complaint or investigation before any court or
governmental body, pending against Chancellor that would adversely affect
Chancellor's ability to perform its obligations pursuant to this Agreement or
the agreements to be executed by Chancellor in connection herewith. Chancellor
has committed no violation of any applicable law, regulation or ordinance or any
other requirement of any governmental body or court which would have a material
adverse effect on Chancellor or its ability to perform their respective
obligations pursuant to this Agreement or the agreements to be executed in
connection herewith.
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10.6 Broker /Finder Fees. Star Media Group is the sole and exclusive
broker in this transaction. Chancellor 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 ARS has any liability. Chancellor is
solely responsible for Star Media Group's fee.
10.7 Representations and Warranties as to the Florida Stations.
Chancellor previously has delivered to ARS true, correct and complete copies of
the executed Florida Agreement together with all disclosure schedules, exhibits,
and annexes thereto. With respect to the Florida Stations, Chancellor to the
best of its knowledge, hereby makes (as of the date or dates on which those
representations and warranties were made to Chancellor by Omni) to ARS each and
every of the representations and warranties of Omni each of which is
incorporated herein by reference as though contained herein. Chancellor makes no
additional representations or warranties with respect to the Florida Stations.
Section 11. Representation and Warranties of ARS
11.1 Organization and 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 conduct business in the States of Florida and California
11.2 Authorization and Binding Obligation. ARS has all necessary
corporate power and authority to enter into and perform this Agreement and the
transactions contemplated hereby. ARS's execution, delivery and performance of
this Agreement and the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on behalf of ARS and this
Agreement constitutes a valid and binding obligation of ARS, enforceable in
accordance with its terms.
11.3 Qualification. To ARS's knowledge, there is no fact, allegation,
condition, or circumstance that could reasonably be expected to prevent the
prompt grant of the FCC Consent. MS knows of no fact that would, under the
Communications act of 1934, as amended, or the rules, regulations and policies
of the FCC, disqualify ARS from becoming the licensee of the Florida Stations.
There are no proceedings, complaints, notices of forfeiture, claims, or
investigations pending or, to the knowledge of ARS threatened against any or in
respect of any of the broadcast stations licensed to ARS or its affiliates that
would materially impair the qualifications of ARS to become a licensee of the
Florida Stations or remain the licensee of the California Station or that would
delay the FCC's processing of the FCC Applications.
11.4 Absence of Conflicting Agreements or Required Consents. Except as
set forth in Schedule 11.4 hereof, the execution, delivery and performance of
this Agreement by ARS: (a) do not violate or conflict with any of the terms,
conditions or provisions of the Certificate of Incorporation or By-Laws of ARS;
(b) do not require the consent of any third party not affiliated with MS; (c)
will not violate any applicable law, judgment, order, injunction, decree, rule,
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regulation or ruling of any governmental authority to which ARS is a party; and
(d) will not either alone or with the giving of notice or the passage of time,
violate the terms, conditions or provisions of, or constitute a default under,
any agreement, instrument, license or permit to which ARS is now subject.
11.5 Litigation: Compliance with Law. Except as disclosed in Schedule
11.5, there is no litigation, administrative action, arbitration or other
proceeding, or petition, complaint or investigation before any court or
governmental body, pending against ARS that would adversely affect ARS's ability
to perform its obligations pursuant to this Agreement or the agreements to be
executed by ARS in connection herewith. ARS has committed no violation of any
applicable law, regulation or ordinance or any other requirement of any
governmental body or court which would have a material adverse effect on ARS or
its ability to perform its obligations pursuant to this Agreement or the
agreements to be executed in connection herewith.
11.6 Broker/Finder Fees. Star Media Group is the sole and exclusive
broker in this transaction. ARS 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 Chancellor has any liability. Chancellor is solely
responsible for Star Media Group's fee.
11.7 Representations and Warranties as to the California Station. ARS
previously has delivered to Chancellor true, correct and complete copies of the
executed California Agreement together will all disclosure schedules, exhibits,
and annexes thereto. With respect to the California Station, ARS to the best of
its knowledge, hereby makes to Chancellor each and every of the representations
and warranties contained in the California Agreement, each of which is
incorporated herein by reference as though contained herein. In addition, ARS
makes each and every of the representations and warranties contained in the
California Agreement to Chancellor for the period after the FBC Closing when ARS
acquired the California Station and the Closing Date hereunder, subject to the
California Station LMA.
Section 12. Covenants of Chancellor
12.1 Conduct of Station:
12.1.1 Chancellor covenants and agrees with ARS that between the
date hereof and the Florida Stations LMA Commencement Date (except as otherwise
noted below), Chancellor with respect to the Florida Stations (to the extent
that it is programming the Florida Stations pursuant to a local marketing
agreement with Omni and is authorized under that said local marketing agreement
to do so) shall:
(i) use commercially reasonable efforts to maintain the Florida
Stations present business organization, keep available the services of the
Florida Stations' employees and independent contractors, preserve the Florida
Stations' relationships with the Florida Stations' customers and others having
business relationships with the Florida Stations, and refrain from materially
and adversely changing any of the Florida Stations' business policies including
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but not limited to advertising (including substantially. the same amount of cash
expenditure), marketing, pricing, purchasing, personnel, sales, and budget
policies);
(ii) maintain the Florida Stations' books of account and records
in the usual and ordinary manner and in accordance with generally accepted
accounting principles;
(iii) operate the Florida Stations in the usual and ordinary
course of business in accordance with past practice and conduct the Florida
Stations' business in all material respects in compliance with the terms of the
Florida Licenses and all applicable laws, rules, and regulations, including,
without limitation, the applicable rules and regulations of the FCC through the
Closing Date;
(iv) use, repair, and, if necessary, replace any of WEAT
(AM)/(FM)'s, and WOLL (FM)'s studios and the Florida Stations' transmission
assets in a reasonable manner consistent with historical practice and maintain
its assets in substantially their current condition, ordinary wear and tear
excepted;
(v) maintain appropriate insurance for the Florida Stations
through the Closing Date;
(vi) not incur any debts or obligations to be performed by ARS
pursuant to the Florida Agreement that exceeds Ten-thousand Dollars ($10,000)
individually or Twenty-five Thousand Dollars ($25,000) in the aggregate through
the Closing Date;
(vii) not lease, mortgage, pledge, or subject to a lien, claim, or
encumbrance (other than Permitted Liens ) any of the Florida Assets or sell or
transfer any of the Florida Assets without replacing such Florida Assets with an
asset of substantially the same value and utility;
(viii) without the prior consent of ARS, which consent shall not
be unreasonably withheld or delayed, (x) not modify or extend any Florida
Stations' Contracts or (y) enter into any new Florida Stations' Contract the
payments under which exceeds Ten-thousand Dollars ($10,000) individually or
Twenty-five Thousand Dollars ($25,000) in the aggregate through the Commencement
Date;
(ix) not make or grant any general wage or salary increase or
generally materially modify the Florida Stations' employees' terms and
conditions of employment;
(x) not make any change in the Florida Stations- accounting
principles, methods, or practices followed by it or depreciation or amortization
policies or rates;
(xi) not make any loans or make any dividends or distributions
other than of Excluded Assets of the Florida Stations;
(xii) other than in the ordinary course of business, not cancel or
compromise any debt or claim, or waive or release any right, of material value;
.
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(xiii) enforce, in its own name and for the benefit of ARS, all
representations, warranties and covenants of Omni under the Florida Agreement
insofar as such representations, warranties and covenants affect or relate to
the Florida Assets. The quantity, identity, character, quality of and title to
the Florida Assets conveyed by Chancellor to ARS hereunder shall be
substantially the same as the quantity, identity, character and quality of and
title to the assets of the Florida Stations received by Chancellor from Omni
pursuant to the Florida Agreement.
12.1.2 For purposes of compliance with Section 12.1, any violation
of the above-referenced covenants resulting in liabilities to ARS, in the
aggregate, less than the Indemnification Basket as defined in Section 19.3
below, shall not be deemed material. Such liabilities shall nevertheless
constitute Damages for purposes of the indemnification agreement contained in
the Section 19 hereof.
12.2 Chancellor shall give or cause the Florida Stations to (i) give
ARS and ARS's counsel, accountants, engineers and other representatives,
including environmental consultants, reasonable access during normal business
hours to all of Chancellor's properties, books, Contracts, Trade Agreements,
reports and records including financial information and tax returns relating to
the Florida Stations, and to all real estate, buildings and equipment relating
to the Florida Stations, in order that ARS may have full opportunity to make
such investigation at the sole expense of ARS, including but not limited to,
environmental assessments, as it desires of the affairs of the Florida Stations
and (ii) furnish ARS with information, and copies of all documents and
agreements including but not limited to financial and operating data and other
information concerning the financial condition, results of operations and
business of the Florida Stations, that ARS may reasonably request. The rights of
ARS under this Section shall not be exercised in such a manner as to interfere
unreasonably with the business of the Florida Stations.
12.3 No Inconsistent Action. Chancellor shall not take any action that
is materially inconsistent with its obligations under this Agreement.
12.4 Updating of Schedules. From time to time prior to the Closing,
Chancellor will supplement or amend the Schedules delivered in connection
herewith with respect to any matter which exists or occurs after the date of
this Agreement and which, if existing or occurring at or prior to the date of
this Agreement, would have been required to be set forth or described in such
Schedules or which is necessary to correct any information in such Schedules
which has been rendered inaccurate thereby. No matter so disclosed shall affect
the requirements of Section 16.1, but if the Closing hereunder shall occur, no
said matter disclosed pursuant to Section 12.3 shall have the basis for any
claims for indemnification hereunder.
12.5 Enforcement of Agreements. Chancellor shall use its reasonable
best efforts to perform and carry out all their respective obligations under,
and, if necessary, Chancellor shall seek the specific performance of the
transactions contemplated by the Florida Agreement. Chancellor shall use its
reasonable best efforts to perform and carry out, and to cause the other parties
thereto to perform and carry out, all their respective obligations under the
LMA's relating to the Florida Stations.
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12.6 FCC Reports. From the Time of Closing on the Florida Agreement
until the Closing Date hereunder, Chancellor shall file on a current basis until
the Closing Date all material reports and documents required to be filed with
the FCC with respect to the Florida Stations' Licenses. Copies of each such
report and document filed between the date hereof and the Closing Date shall be
furnished to ARS promptly after its filing.
12.7 Notification. Chancellor shall promptly notify ARS in writing of
(i) any litigation,. arbitration or administrative proceeding pending or, to its
knowledge, threatened against Chancellor which challenges the transactions
contemplated hereby or (ii) the failure of Chancellor, or any employee or agent
of Chancellor to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfy in any material respect
any covenant, condition or agreement to be complied with or satisfied-by it
hereunder and (iii) the occurrence of any event that would entitle ARS to
terminate this Agreement pursuant to Section 20. No matter so disclosed shall
affect the requirements of Section 16.1, but if the Closing hereunder shall
occur, no said matter disclosed pursuant to Section 12.3 shall have the basis
for any claims for indemnification hereunder.
12.8 Post-Closing Access. Chancellor, for a period of five (5) years
following the Closing Date, shall make available during normal business hours
for audit and inspection by ARS and its representatives, for any reasonable
purpose and upon reasonable notice, all records, files, documents and
correspondence transferred to it hereunder relating to the pre-closing period.
Chancellor shall at no time dispose of or destroy any such records, files,
documents and correspondence without giving thirty (30) days prior notice to ARS
to permit ARS, at its expense, to examine, duplicate or-take possession bf and
title to such records, files, documents and correspondence. All information,
records, files, documents and correspondence made available or disclosed to ARS
under this Section 12.7 shall be kept confidential by ARS.
12.9 Chancellor will use commercially reasonable efforts to obtain all
necessary consents, authorizations, or approvals, in each case, required for the
consummation of the transactions contemplated by this Agreement.
Section 13. Covenants of ARS
13.1 Conduct of Station:
13.1.1 ARS covenants and agrees with Chancellor that between the
date hereof and the California Station LMA Commencement Date (except as
otherwise noted below), ARS with respect to the California Station shall:
(i) use commercially reasonable efforts to maintain the California
Station's present business organization, keep available the services of the
California Station's employees and independent contractors, preserve the
California Station's relationships with the California Station's customers and
others having business relationships with the California Station, and refrain
from materially and adversely changing any of the California Station's business
policies including but not limited to advertising (including substantially the
same amount of cash expenditure), marketing, pricing, purchasing, personnel,
sales, and budget policies);
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(ii) maintain the California Station's books of account and
records in the usual and ordinary manner and in accordance with generally
accepted accounting principles;
(iii) operate in the usual and ordinary course of business in
accordance with past practice and conduct the California Station's business in
all material respects in compliance with the terms of the California Licenses
and all applicable laws, rules, and regulations, including, without limitation,
the applicable rules and regulations of the FCC through the Closing Date;
(iv) use, repair, and, if necessary, replace any California
Station studio and transmission assets in a reasonable manner consistent with
historical practice and maintain its assets in substantially their current
condition, ordinary wear and tear excepted;
(v) maintain appropriate insurance for the California Station
through the Closing Date;
(vi) not incur any debts or obligations to be performed by
Chancellor pursuant to the California Agreement that exceeds Five Thousand
Dollars ($5,000) individually or Ten Thousand Dollars ($10,000) in the aggregate
through the Closing Date;
(vii) not lease, mortgage, pledge, or subject to a lien, claim, or
encumbrance (other than Permitted Liens ) any of the California Assets or sell
or transfer any of the California Assets without replacing such California
Assets with an asset of substantially the same value and utility;
(viii) without the prior consent of Chancellor, which consent
shall not be unreasonably withheld or delayed, (x) not modify or extend any
California Station Contracts or (y) enter into any new California Station
Contract the payments under which exceeds Five Thousand Dollars ($5,000)
individually or Ten Thousand Dollars ($10,000) in the aggregate through the
Commencement Date;
(ix) not make or grant any general wage or salary increase or
generally materially modify the California Station's employees' terms and
conditions of employment;
(x) not make any change in the California Station's accounting
principles, methods, or practices followed by it or depreciation or amortization
policies or rates;
(xi) not make any loans or make any dividends or distributions
other than of Excluded Assets of the California Station;
(xii) other than in the ordinary course of business, not cancel or
compromise any debt or claim, or waive or release any right, of material value;
(xiii) ARS shall enforce, in its own name and for the benefit of
Chancellor, all representations, warranties and covenants of FBC under the
California Agreement insofar as such representations, warranties and covenants
affect or relate to the California Assets.
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The quantity, identity, character, quality of and title to the California Assets
conveyed by ARS to Chancellor hereunder shall be substantially the same as the
quantity, identity, character and quality of and title to the assets of the
California Station received by ARS from FBC pursuant to the California
Agreement.
13.1.2 For purposes of compliance with Section 13.1, any violation
of the above-referenced covenants resulting in liabilities to Chancellor, in the
aggregate, less than the Indemnification Basket as defined in Section 19.3
below, shall not be deemed material. Such liabilities shall nevertheless
constitute Damages for purposes of the indemnification agreement contained in
Section 19 hereof.
13.2 ARS shall give or cause the California Station to (i) give
Chancellor and Chancellor's counsel, accountants, engineers and other
representatives, including environmental consultants, reasonable access during
normal business hours to all of ARS's properties, books, Contracts, Trade
Agreements, reports and records including financial information and tax returns
relating to the California Station, and to all real estate, buildings and
equipment relating to the California Station, in order that Chancellor may have
full opportunity to make such investigation, including but not limited to,
environmental assessments, as it desires of the affairs of the California
Station and (ii) furnish Chancellor with information, and copies of all
documents and agreements including but not limited to financial and operating
data and other information concerning the financial condition, results of
operations and business of the California Station, that Chancellor may
reasonably request. The rights of Chancellor under this Section shall not be
exercised in such a manner as to interfere unreasonably with the business of the
California Station.
13.3 No Inconsistent Action. ARS shall not take any action that is
materially inconsistent with its obligations under this Agreement.
13.4 Updating of Schedules. From time to time prior to the Closing, ARS
will supplement or amend the Schedules delivered in connection herewith with
respect to any matter which exists or occurs after the date of this Agreement
and which, if existing or occurring at or prior to the date of this Agreement,
would have been required to be set forth or described in such Schedules or which
is necessary to correct any information in such Schedules which has been
rendered inaccurate thereby No matter so disclosed shall affect the requirements
of Section 16.1, but if the Closing hereunder shall occur, no said matter
disclosed pursuant to Section 12.3 shall have the basis for any claims for
indemnification hereunder.
13.5 Enforcement of Agreements. ARS shall use its reasonable best
efforts to perform and carry out all their respective obligations under, the FBC
Agreement. ARS shall use its reasonable best efforts to perform and carry out,
and to cause the other parties thereto to perform and carry out, all their
respective obligations under the LMA's relating to the California Station.
13.6 FCC Reports. From the Time of Closing on the California Station
until the Closing Date hereunder, ARS shall file on a current basis until the
Closing Date all material reports and documents required to be filed with the
FCC with respect to the California Station Licenses. Copies of each such report
and document filed between the date hereof and the Closing Date shall be
furnished to Chancellor promptly after its filing.
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13.7 Notification. ARS shall promptly notify Chancellor in writing of
(i) any litigation, arbitration or administrative proceeding pending or, to its
knowledge, threatened against ARS which challenges the transactions contemplated
hereby or (ii) the failure of ARS, or any employee or agent of ARS to comply
with or satisfy in any material respect any covenant, condition or agreement to
be complied with or. satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it hereunder and (iii) the
occurrence of any event that would entitle Chancellor to terminate this
Agreement pursuant to Section 20. No matter so disclosed shall affect the
requirements of Section 16.1, but if the Closing hereunder shall occur, no said
matter disclosed pursuant to Section 12.3 shall have the basis for any claims
for indemnification hereunder
13.8 Post-Closing Access. ARS, for a period of five (5) years following
the Closing Date, shall make available during normal business hours for audit
and inspection by Chancellor and its representatives, for any reasonable purpose
and upon reasonable notice, all records, files, documents and correspondence
transferred to it hereunder relating to the pre-closing period. ARS shall at no
time dispose of or destroy any such records, files, documents and correspondence
without giving thirty (30) days prior notice to Chancellor to permit Chancellor.
at its expense, to examine, duplicate or take possession of and title to such
records, files, documents and correspondence. All information, records, files,
documents and correspondence made available or disclosed under this Section 13.8
shall be kept confidential.
13.9 ARS will use commercially reasonable efforts to obtain all
necessary consents, authorizations, or approvals, in each case, required for the
consummation of the transactions contemplated by this Agreement.
Section 14. Joint Covenants
Chancellor and ARS covenant and agree that they shall act in accordance
with the following:
14.1 Confidentiality. Each of Chancellor and ARS shall each keep
confidential all information obtained by it with respect to the other parties
hereto in connection with this Agreement and the negotiations preceding this
Agreement, 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 party hereto, without retaining a copy thereof, any schedules, documents
or other written information obtained from such other party in connection with
this Agreement and the transactions contemplated hereby except to the extent
required or useful in connection with any claim made with respect to the
transactions contemplated by this Agreement or the negotiation thereof.
Notwithstanding the foregoing, no 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, or
(ii) is or becomes publicly known through no fault of the receiving party or its
agents, or (iii) is required to be disclosed pursuant to an order or request of
a judicial or government authority (provided the non-disclosing party is given
reasonable prior notice such that it may seek, at its expense, confidential
treatment of the information to be disclosed), (iv) is developed by the
receiving party independently of the disclosure by the disclosing party, (v) is
required to be disclosed under applicable law or rule, as determined by counsel
for the receiving party or (vi) is required to be disclosed in connection with
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any sale, in whole or in party of the assets, stock or business of Chancellor or
Chancellor Broadcasting Company or ARS, respectively, provided the recipient of
said information has executed a confidentiality agreement for such a
transaction.
14.2 Cooperation. Chancellor and ARS shall cooperate fully with one
another 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.
14.3 Control of Stations. Prior to Closing, Chancellor shall not,
directly or indirectly, control or direct the operations of the California
Station, and ARS shall not, directly or indirectly, control or direct the
operations of the Florida Stations. Such operations, including complete control
over the Florida Stations' or the California Station's programming, employees
and policies, shall be the sole responsibility of current licensees.
14.4 Bulk Sales Laws. Chancellor hereby waives compliance by MS and ARS
hereby waives compliance by Chancellor with the provisions of the '"bulk sales"
or similar laws of any state. ARS agrees to indemnify Chancellor and Chancellor
agrees to indemnify ARS and each party agrees to hold the other harmless from
any and all loss, cost, damage and expense (including but not limited to,
reasonable attorney's fees) sustained by one party as a result of any failure of
the other party to comply with any "bulk sales" or similar laws.
14.5 Public Announcements. Neither Chancellor nor ARS shall issue any
press release or make any disclosure with respect to the transaction
contemplated by this Agreement without the prior written approval of the other
party, except as may be required by applicable law or by obligations pursuant to
any listing agreement with any securities exchange or any stock exchange
regulations.
14.6 Hart-Scott-Rodino. ARS and Chancellor shall submit to the United
States Department of Justice and the United States Federal Trade Commission not
later than 15 business days after the date of this Agreement all of the forms
and information applicable to this transaction required under the
Hart-Scott-Rodino Act (the "HSR Act") and will use commercially reasonable
efforts to respond promptly to any request by them for additional information.
14.7 Employee Matters. Each party hereby consents to the other making
such offers of employment relating to the Florida Stations and the California
Station subject to the effectiveness of the LMAs between the parties of even
date herewith. ARS shall be responsible for all obligations or liabilities to
those employees not offered employment by Chancellor, and Chancellor shall have
no obligations with respect to the employees (herein referred to as "Retained
Employees"). Chancellor shall be responsible for all obligations or liabilities
to those employees not offered employment by ARS, and ARS shall have no
obligations with respect to the Retained Employees.
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Section 15. Conditions of Closing by Chancellor
The obligations of Chancellor hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of all of the following
conditions:
15.1 Representations, Warranties and Covenants. All representations and
warranties of ARS made in this Agreement or in any Exhibit, Schedule or document
delivered pursuant hereto, shall be true and complete in all material respects
as of the date hereof and on and as of the Closing Date as if made on and as of
that date, except for changes expressly permitted or contemplated by the terms
of this Agreement and except those given as of a specified date.
15.2 Compliance with Agreement. 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.
15.3 Third Party Consents and Approvals; Estoppel Certificates. ARS has
obtained all material third-party consents and approvals, if any, required for
the transfer or continuance, as the case may be, of the Contracts on Schedule
2.4.4 (and contracts that would have been on Schedule 2.4.4 had they been in
existence on the date of this Agreement) and, if requested by Chancellor prior
to 45 days of the date of the Closing, such third parties have provided estoppel
certificates, nondisturbance agreements, and/or written clarifications of the
rights of Chancellor thereunder, all in form and substance reasonably
satisfactory to Chancellor.
15.4 Closing Certificates. Chancellor shall have received a
certificate, dated as of the Closing Date, from ARS, executed by an appropriate
officer of ARS to the effect of Sections 15.1 and 15.2.
15.5 Governmental Consents.
(a) The FCC Consents shall have been issued by the FCC without any
conditions that would otherwise permit Buyers to terminate this Agreement
pursuant to Section 20.1(e), below, and each such FCC consent shall have become
a Final Order (as defined in Section 6.1).
(b) All applicable notification and waiting period requirements under
the HSR Act shall have been satisfied.
(c) All other material authorizations, consents, approvals, and
clearances of federal, state, or local Governmental Entities required to permit
the consummation of the transactions contemplated by this Agreement shall have
been obtained.
15.6 Adverse Proceedings. No injunction, order, decree or judgment of
any court, agency or other Governmental Entities shall have been rendered
against Chancellor or ARS which would render it unlawful, as of the Closing
Date, to effect the transactions contemplated by this Agreement in accordance
with its terms.
15.7 Closing Documents. ARS shall have delivered or caused to be
delivered to Chancellor, on the Closing Date, all deeds, bills of sale,
endorsements, assignments and other instruments of conveyance and transfer
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consistent with the terms hereof and otherwise reasonably satisfactory in form
and substance to Chancellor, effecting the sale, transfer, assignment and
conveyance of the California Station's Assets to Chancellor.
Section 16. Conditions of Closing by ARS
The obligations of ARS hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of all of the following
conditions:
16.1 Representations, Warranties and Covenants. All representations and
warranties of Chancellor made in this Agreement or in any Exhibit, Schedule or
document delivered pursuant hereto, shall be true and complete in all material
respects as of the date hereof and on and as of the Closing Date as if made on
and as of that date, except for changes expressly permitted or contemplated by
the terms of this Agreement and except those given as of a specified date.
16.2 Compliance with Agreement. All the terms, covenants, and
conditions to be complied with and performed by Chancellor on or prior to the
Closing Date shall have been complied with or performed in all material
respects.
16.3 Third Party Consents and Approvals; Estoppel Certificates.
Chancellor has obtained all material third-party consents and approvals, if any,
required for the transfer or continuance, as the case may be, of the, Contracts
on Schedule 2.2.4 (and contracts that would have been on Schedule 2.2.4 had they
been in existence on the date of this Agreement) and, if requested by ARS prior
to 45 days of the date of the Closing, such third parties have provided estoppel
certificates, non-disturbance agreements, and/or written clarifications of the
rights of ARS thereunder, all in form and substance reasonably satisfactory to
ARS.
16.4 Closing Certificates. ARS shall have received a certificate, dated
as of the Closing Date, from Chancellor, executed by an appropriate officer of
Chancellor to the effect of Sections 16.1 and 16.2.
16.5 Governmental Approval.
(a) The FCC Consents shall have been issued by the FCC and each shall
have become a Final Order (as defined in Section 6.1).
(b) All applicable notification and waiting period requirements under
the HSR Act shall have been satisfied.
(c) All other material authorizations, consents, approvals, and
clearances of federal, state or local Governmental Entities required to permit
the consummation of the transactions contemplated by this Agreement shall have
been obtained.
16.6 Adverse Proceedings. No injunction, decree or judgment of any
court, agency or other governmental entities shall have been rendered against
Chancellor or ARS which would render it unlawful, as of the Closing date, to
effect the transactions contemplated by this Agreement in accordance with its
terms.
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16.7 Closing Documents. Chancellor shall have delivered or caused to be
delivered to ARS, on the Closing Date, all deeds, bills of sale, endorsements,
assignments and other instruments of conveyance and transfer consistent with the
terms hereof and otherwise reasonably satisfactory in form and substance to ARS,
effecting the sale, transfer, assignment and conveyance of the Florida Station's
Assets to ARS.
Section 17. Closing
17.1 Time and Place. A closing on the exchange and sale of the
California assets and the Florida Assets shall take place at 12655 North Central
Expressway, Suite 405, Dallas, Texas on the date agreed on by the parties, said
date to be within ten days after the latter of (x) all necessary FCC action(s)
approving the transactions contemplated herein become Final Orders and (y) the
expiration or termination of the waiting period under the H.S.R. Act (the
"Closing Date").
17.2 Deliveries By Chancellor. At closing, Chancellor shall deliver to
ARS documents conveying title to the Florida Assets to ARS in substantially the
same manner as Chancellor received title to the Florida Assets from Omni, it
being the intention of the parties to vest in ARS all of Chancellor's rights,
title and interest in the Florida Assets received from Omni such that the
Florida Assets conveyed to ARS are substantially the same Florida Assets (in
terms of identity, quantity, quality, utility, value, nature of title conveyed,
etc.) as the Florida Assets that were conveyed to Chancellor by Omni pursuant to
the Florida Agreement. The deliveries from Chancellor to ARS shall include:
(a) An Assignment of Government Authorizations conveying the Florida
Licenses and all other governmental permits, licences and authorizations used in
the operation of the Florida Stations.
(b) A Bill of Sale for all items of personal property included in the
Florida Assets.
(c) Deeds conveying title to all Florida Real Estate owned in fee
simple by Chancellor and used in the operation of the Florida Stations.
(d) Assignments of leases conveying all of Chancellor's right, title
and interest in all Florida Real Estate leased by Chancellor.
(e) All other conveyances, assignments and documents reasonably
necessary to vest in ARS title to the Florida Assets as contemplated in this
Agreement.
17.3 Delivery By ARS. At Closing, ARS shall deliver to Chancellor by
wire transfer of available funds the cash payment specified in Section 3.2. In
addition, ARS shall deliver to Chancellor documents conveying title to the
California Assets in substantially the same manner as ARS received title to the
California Assets from FBC, it being the intention of the parties to vest in
Chancellor all of ARS's rights, title and interest in and to the California
Assets received from FBC such that the California Assets conveyed to Chancellor
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are substantially the same California Assets (in terms of identity, quality,
quantity; utility, value, nature of title conveyed, etc.) as the California
Assets that were conveyed to ARS by FBC pursuant to the California Agreement.
The deliveries from ARS to Chancellor shall include:
(a) An Assignment of Government Authorizations conveying the California
Licenses and all other governmental permits, licences and authorizations used in
the operation of the California Station.
(b) A Bill of Sale for all items of personal property included in the
California Assets.
(c) Deeds conveying title to all Florida Real Estate owned in fee
simple by ARS and used in the operation of the California Station.
(d) Assignments of leases conveying all of ARS's right, title and
interest in all Florida Real Estate leased by ARS.
(e) All other conveyances, assignments and documents reasonably
necessary to vest in Chancellor's title to the California Assets as contemplated
in this Agreement.
17.4 If the Closing shall not have occurred before July 1, 1997 because
ARS is unable to transfer the California Station's Assets or Chancellor is
unable to convey the Florida Station's Assets, the parties shall consummate the
sale of all the assets of the California Station or the Florida Stations
separately for a cash price of Seven Million Dollars ($7,000,000) and Forty
Million Dollars ($40,000,000) respectively.
Section 18. Survival of Representations and Warranties
18.1 Representations and Warranties of Chancellor. The representations
and warranties made in the Florida Agreement by Omni to Chancellor with respect
to the Florida Assets shall survive for the period specified in the Florida
Agreement. Chancellor shall enforce these representations and warranties in its
name for the benefit of ARS. No other representations or warranties shall
survive Closing.
18.2 Representations and Warranties of ARS. The representations and
warranties made in the California Agreement by FBC to ARS with respect to the
California Assets shall survive for the period specified in the California
Agreement. ARS shall enforce these representations and warranties in its name
for the benefit of Chancellor. No other representations or warranties shall
survive closing.
Section 19. Indemnification
19.1 Indemnification by Chancellor.
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(a) Chancellor shall indemnify and hold ARS harmless from all damages,
losses, costs, suits, actions, causes of action and liabilities of any nature
whatsoever, including costs of suit and attorneys fees, arising out of
Chancellor's ownership or operation of the California Station and, the Florida
Retained Liabilities and the Chancellor covenants hereunder after the Closing
Date.
(b) Chancellor shall enforce, in its own name and for the benefit of
ARS, all indemnification provisions of the Florida Agreement.
19.2 Indemnification by ARS.
(a) ARS shall indemnify and hold Chancellor harmless from all damages,
losses, costs, suits, actions, causes of action and liabilities of any nature
whatsoever, including costs of suit and attorneys fees, arising out of ARS's
ownership or operation of the Florida Stations and the California Retained
Liabilities and ARS's covenants hereunder.
(b) ARS shall enforce, in its own name and for the benefit of
Chancellor, all indemnification provisions of the California Agreement.
19.3 Limitation on Reimbursement.
(a) Neither Chancellor nor ARS shall be entitled to reimbursement for
damages incurred or suffered with respect to its respective claims until and
only to the extent that the aggregate damages with respect to its respective
claims to which it is otherwise entitled to reimbursement exceeds $100,000 (the
"Indemnification Basket"). The individual parties shall not be entitled to
reimbursement for damages in excess of $2,000,000 in the aggregate.
(b) For all purposes of this Agreement, the amount of damages, and the
amount reimbursable with respect thereto, shall be reduced to the extent of any
insurance proceeds or other third party recovery received with respect to such
damages.
19.4 Procedure for Indemnification.
(a) If any claim or proceeding covered by Section 15 to indemnify and
hold harmless shall arise, the Party who seeks indemnification (the "Indemnified
Party") shall give written notice thereof to the other party (the "Indemnitor")
promptly but in no event more than ten (10) days after the Indemnified Party
learns of the existence of such claim or proceeding. Any claim for
indemnification hereunder shall be accompanied by evidence demonstrating the
Indemnified Party's right or possible right to indemnification, including a copy
of all supporting documents relevant thereto. After the Indemnitor acknowledges
its obligations to defend against or settle any such claim or proceeding, the
Indemnitor shall not be liable to the Indemnified Party under this Section 15
for any legal or other expenses subsequently incurred by the Indemnified Party
in connection with the defense thereof; provided, however, that the Indemnified
Party shall have the right to employ counsel to represent it if, in the
indemnified Party's sole judgment, it is advisable for the Indemnified Party to
be represented by separate counsel, in which event the reasonable fees and
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expenses of such separate counsel shall be paid by the Indemnified Party. The
Parties shall fully cooperate in the defense of each claim or proceeding and
shall make available to each other all books or records necessary or appropriate
for such defense.
(b) The Indemnitor shall have the right to employ counsel reasonably
acceptable to the Indemnified Party to defend against the claim or proceeding or
to compromise, settle or otherwise dispose of the same; provided, however, that
no settlement or compromise shall be effected without the express prior written
consent of the Indemnified Party, which consent shall not be unreasonably
withheld or delayed; and, provided further, that if the Indemnified Party does
not consent to a bona fide offer of settlement made by a third party and the
settlement involves only the payment of money, then the Indemnitor may, in lieu
of payment of that amount to such third party, pay that amount to the
Indemnified Party. After such payment to the Indemnified Party, the Indemnitor
shall have no further liability with respect to that claim or proceeding and the
Indemnified Party shall assume full responsibility for the defense, payment or
settlement of such claim or proceeding.
(c) If the Indemnitor fails to acknowledge in writing its obligation to
defend against or settle any claim or proceeding within twenty (20) days after
receiving notice of the claim or proceeding from the Indemnified Party (or such
shorter time specified in the notice as the circumstances of the matter may
dictate), the Indemnified Party shall be free to dispose of the matter, at the
expense of the Indemnitor, in any way that the Indemnified Party deems in its
best interest, subject to the Indemnitors right subsequently to contest through
appropriate proceedings its obligation to provide indemnification.
(d) The Indemnitor shall be subrogated to all rights of the Indemnified
Party against any third party with respect to any claim for which
indemnification is paid by the Indemnitor to the extent of such payment.
Section 20. Termination
20.1 Right to Terminate. This Agreement may be terminated at any time
prior to closing as follows:
(a) by the mutual consent of the parties;
(b) by written notice of (i) Chancellor to ARS if ARS breaches in any
material respect any of its representations or warranties or defaults in any
material respect in the observance or in the due and timely performance of any
of its covenants or agreements herein contained and such breach or default shall
not be cured within thirty (30) days of the date of notice of breach or default
served by-Chancellor or (ii) ARS to Chancellor if Chancellor breaches in any
material respect any of its representations or warranties or default in any
material respect in the observance or in the due and timely performance of any
of its covenants or agreements herein contained and such breach or default shall
not be cured within thirty (30) days of the notice of breach or default served
by ARS; but such notice and cure period shall not apply in the case of
Chancellor's or ARS's failure to consummate the transactions in accordance with
the terms and times specified in Section 22.11 of this Agreement.
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(c) by Chancellor or ARS by written notice to the other, if a court of
competent jurisdiction or other Governmental Entity shall have issued an order,
decree or ruling or taken any other action (which order, decree or ruling the
parties hereto shall use their best efforts to lift), in each case permanently
restraining, permanently enjoining or otherwise prohibiting the transactions
contemplated by this Agreement, and such order, decree, ruling or other action
shall have become final and nonappealable;
(d) by the party whose qualifications are not at issue, if, for any
reason, the FCC denies or dismisses any of the FCC Applications and the time for
reconsideration or court review under the Communications Act with respect to
such denial or dismissal has expired and there is not pending with respect
thereto a timely filed petition for reconsideration or request for review;
(e) by written notice of Chancellor to ARS or by ARS to Chancellor, if
the Closing shall not have been consummated on or before July 1, 1997;
Notwithstanding the foregoing, no party hereto may effect a termination hereof
if such party is in material default or breach of this Agreement.
20.2 Liquidated Damages/Specific Performance.
20.2.1 If this Agreement is terminated pursuant to Section 20.1 (b) the
parties agree and acknowledge that the parties will suffer damages that are not
practicable to ascertain. Accordingly, in the event this Agreement is terminated
pursuant to Section 20.1(b)(i), Chancellor shall be entitled to the sum of Two
Million Dollars ($2,000,000) as liquidated damages, payable solely and
exclusively by drawing upon the Escrow Deposit pursuant to the Escrow Agreement.
In the event this Agreement is terminated pursuant to Section 20.1(b)(ii), ARS
shall be entitled to the sum of Three Hundred Fifty Thousand Dollars ($350,000)
as liquidated damages payable solely and exclusively by drawing upon the Escrow
Deposit pursuant to the Escrow Agreement. The parties agree that the foregoing
liquidated damages are reasonable considering all the circumstances existing as
of the date hereof and constitute the parties' good faith estimate of the actual
damages reasonably expected to result from the termination of this Agreement
pursuant to Section 20.1(b). Section 20.2.1 shall be their sole and exclusive
remedy if the Closing does not occur with respect to any damage whatsoever as a
result of any claim or cause of action asserted by Sellers relating to or
arising from breaches of the representations, warranties or covenants contained
in this Agreement and to be made or performed at or prior to the Closing. Except
for a termination pursuant to Section 20.1(b) (for which the sole recourse of
ARS, as the Seller of the California Station, or Chancellor, the Seller of the
Florida Stations shall be as provided in this Section 20.2.1 or pursuant to
Section 20.1(a) (for which no party shall have any liability to the other), the
termination of this Agreement shall not relieve the parties for any liability or
obligation relating the their breaches of this Agreement occurring prior to such
termination.
20.2.2 The parties hereto agree that the broadcast stations subject to
this Exchange Agreement are unique and the harm to either ARS, as the Florida
Stations' Buyer, or Chancellor, as the California Station's Buyer from breach by
ARS, as the California Station's Seller, or Chancellor, as the Florida Stations'
Seller, cannot adequately be compensated by damages. Therefore, the parties
hereto agree that either party shall have the right to have this Exchange
Agreement specifically performed by the other party as a Seller as follows:
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(a) In the event of an uncured breach by ARS, as Seller of the
California Station or Chancellor, as Buyer of the California Station, shall have
the right to seek specific performance.
(b) In the event of an uncured breach by Chancellor, as Seller of the
Florida Station, ARS, as Buyer of the Florida Stations shall have the right to
seek specific performance. To the extent that Chancellor's breach relates to a
failure to enforce Chancellor's rights under the Florida Agreement ARS may seek
specific performance compelling Chancellor to enforce the Florida Agreement.
Section 21. Expenses, Transfer Taxes, and Fees
21.1 Expenses. Except as set forth in Sections 21.2 and, 21.3 below,
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.
21.2 Transfer Taxes and Similar Charges. All costs of transferring the
Florida Assets in accordance with this Agreement, including recordation,
transfer and documentary taxes and fees, an any excise, sales or use taxes,
shall be borne by ARS. All costs of transferring the California Station in
accordance with this Agreement, including recordation, transfer and documentary
taxes and fees, and any excise, sales or use taxes, shall be borne by
Chancellor. Chancellor and ARS shall, in good faith, attempt to calculate all
such taxes and fees prior to Closing and to settle their respective obligations
therefore on or before the Closing Date.
21.3 Governmental Filing or Grant Fees. Any filing or grant fees
imposed by any governmental authority the consent of which is required for the
consummation of the transactions contemplated hereby, including but not limited
to, the FCC, the FTC, and the Department of Justice shall be borne equally by
Chancellor and ARS.
Section 22. Miscellaneous
22.1 Risk of Loss. Prior to Closing, risk of loss to the Florida
Stations shall be borne by Chancellor and risk of loss to the California Station
shall be borne by ARS.
22.2 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto, whether by operation of law or otherwise; provided, however, that
without releasing the Parties from any of their obligations or liabilities
hereunder (a) nothing in this Agreement shall limit any Party's ability to sell
or transfer any or all of its respective assets (whether by sale of stock or
assets, or by merger, consolidation or otherwise) or its respective rights under
this Agreement without the consent of the other party, (b) nothing in this
agreement shall limit (i) Chancellor's ability to assign the California Licenses
(including the right to acquire the California Licenses at the Closing) to
Chancellor Broadcasting Licensee Company or any other subsidiary of Chancellor
without the consent of Sellers, or (ii) ARS's ability to assign the Florida
Licenses to American Radio Systems License Corp. or any other subsidiary of ARS
without the consent of Sellers, and (c) nothing in this Agreement shall limit a
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party's ability to make a collateral assignment of its rights under this
Agreement to any institutional lender that provides funds to that party without
the consent of the other. Each party shall execute . an acknowledgment of such
assignment(s) and collateral assignments in such forms as the other party or its
institutional lenders may from time to time reasonably request; provided,
however, that unless written notice is given to a party that any such collateral
assignment has been foreclosed upon, that party shall be entitled to deal
exclusively with the other party as to any matters arising under this Agreement
or any of the other agreements delivered pursuant hereto. In the event of such
an assignment, the provisions of this Agreement shall inure to the benefit of
and be binding on all parties' successors and assigns.
22.3 Amendments. No amendment, waiver of compliance with any provision
or condition hereof or consent pursuant to this Agreement shall be effective
unless evidenced by an instrument in writing signed by the party against whom
enforcement of any waiver, amendment, change, extension or discharge is sought.
22.4 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.
22.5 Governing Law. The construction and performance of this Agreement
shall be governed by the laws of the State of Florida without giving effect to
the choice of law provisions thereof.
22.6 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 third day after deposit in the U.S. mail if mailed by registered or
certified mail, postage prepaid and return receipt requested; or on the day
after delivery to a nationally recognized overnight courier service if sent by.
an overnight delivery service for next morning delivery, and shall be addressed
to the following addresses:
(a) In the case of ARS to:
American Radio Systems Corporation
116 Huntington Avenue
Boston, MA 02116
Attn: Steven B. Dodge, Chairman
With a copy to:
Michael B. Milsom
Vice President and General Counsel
American Radio Systems Corporation
116 Huntington Avenue
Boston, MA 02116
(b) In the case of Chancellor, to:
Steven Dinetz
President and Chief Executive Officer
Chancellor Radio Broadcasting Company
12655 N. Central Expressway
Suite 405
Dallas, TX 75243
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With a copy to:
Matthew L. Leibowitz, Esq.
Leibowitz & Associates, P.A.
One S.E. Third Avenue, Suite 1450
Miami, Florida 33131
and
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court
Suite 1600
Dallas, TX 75201
Attention: Lawrence D. Stuart, Jr.
and
Weil, Gotshal & Manges, LLP
100 Crescent Court
Suite 1300
Dallas, Texas 75201
Attention: Jeremy W. Dickens
22.7 Schedules. The schedules and exhibits attached to this Agreement
are hereby made a part of this Agreement as if set forth in full herein.
22.8 Entire Agreement. This Agreement contains the entire agreement
among the parties hereto with respect to its subject matter and supersedes all
negotiations, prior discussions, agreements, letters of intent, and
understandings, written or oral, relating to the subject matter of this
Agreement.
22.9 Severability. If any provision of this Agreement is held to be
unenforceable, invalid, or void to any extent for any reason, that provision
shall remain in force and effect to the maximum extent allowable, and the
enforceability and validity of the remaining provisions of this Agreement shall
not be affected thereby.
22.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together shall constitute but one and the same instrument.
22.11 Binding Agreement. The parties shall each have fifteen (15) days
from the execution of this Agreement to deliver all Schedules associated
herewith. The parties shall each have thirty (30) days from the execution of
this agreement to conduct an investigation that includes, but is not limited to,
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reviewing the Schedules to this Exchange agreement, reviewing the Stations'
financial performance, real estate, contracts, environmental compliance,
equipment, studio, transmitter, engineering, litigation, licenses and all other
aspects of the Stations' assets and their ownership, performance and operations
reasonably examinable in such an investigation. If either party's investigation
reveals a material misrepresentation or a material omission made by the Selling
party, then the purchasing party shall give notice to the defects to the selling
party, who will then have fifteen (15) days to cure the defects. If the selling
party does not cure such a defect within the allowed period, the affected
purchasing party may terminate this Agreement by giving notice to the other
party within fifteen (15) days after the allowed cure period without recourse to
the selling party.
22.12 Governing Law. The obligations of Chancellor and ARS 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
Federal Communications Commission. The construction and performance of this
Agreement will be governed by the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties have caused this Exchange Agreement to
be executed effective as of the date first written above.
Chancellor Radio American Radio
Broadcasting Company Systems Corporation
By___________________________ By________________________________
Steven Dinetz Steven B. Dodge
President President
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EXHIBIT 10.63
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated _______________, 1996, by and
between American Radio Systems Corporation, a Delaware corporation ("Buyer"),
and The Brown Organization, a California corporation ("Seller").
P R E M I S E S:
A. Seller is the licensee of and operates radio station KQPT(FM),
KXOA(FM), and KXOA(AM), Sacramento, California (collectively the "Stations", and
each a "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 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 the Stations for cash) by
Seller prior to the TBA Date as reflected on the billing records of Seller
relating to the 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.
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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 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 Five Million Dollars
($5,000,000) held by Media Venture Partners 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 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 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 Stations.
1.14 "Personal Property" means all of the machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, spare
parts, and
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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 leasehold interests, easements,
licenses, rights to access, right-of-way, and other real property interest owned
by Seller (or, as set forth in Section 6.12 herein, the Commerce Circle Real
Property owned by affiliates of 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
6.4 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; including the Commerce Circle Real Property as
set forth in Section 6.12 herein;
(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 Stations,
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
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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 choses 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 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,
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 Forty-Nine Million
Eight Hundred Thousand Dollars ($ 49,800,000), less the amount to be allocated
to the Commerce Circle Real Property, which is to be determined by an appraisal
to be made by a certified appraiser who is a member of MAI, at Seller's expense.
The Purchase Price
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shall be adjusted to reflect any adjustments or prorations made and agreed to as
of the TBA Date as to trade or barter agreements as provided in the last
sentence of the first paragraph of Section 2.4 herein. The Purchase Price shall
be allocated among the Stations and their respective tangible and intangible
assets, including real property, personal property, goodwill and license value,
in accordance with the results of an independent appraisal undertaken by Buyer
at its expense and performed by Broadcast Investment Analysts, Inc. of
Washington, D.C.
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 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 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 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 Denis J.
Brumm on behalf of
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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. 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, other than those incurred by Buyer pursuant to the provisions
of the Time Brokerage Agreement.
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
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 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
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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. 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 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 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 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
delivered to Buyer true and complete copies of all 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
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the terms of any of such 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
Stations, 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
material items of 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
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 Stations, 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
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 and substantially at rate card and which are not prepaid and
which may be cancelled by the Stations 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 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). Other than the Contracts, the Seller requires
no contract or agreement to enable it to carry on the business of the Stations
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 has not received any
written notice 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
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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 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 to the extent the same are registered, are fully
assignable to Buyer. Seller has delivered to Buyer copies of all documents
establishing such rights, licenses, or other authority. Seller has not received
written notice 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 Stations 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 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 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 of the Stations has been cancelled by the 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 are 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
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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 Stations,
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 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.. 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 with any employee of the Stations, which are not terminable at will,
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
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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, and to 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 and relating to 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 relating to the
Stations. 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. The operations of the Stations by Seller
are and have been conducted in material compliance with all applicable
environmental laws to the best of knowledge of Philip A. Melrose, President of
the Radio Division of Seller, and Mick Rush, Seller's Chief Engineer. There are
no pending or threatened actions, suits, claims, demands, legal proceedings,
administrative proceedings, requests for information, or other notices,
proceedings or requests against or upon Seller based on or relating to any
environmental matters, and Seller has no knowledge that any such claims will be
asserted.
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 business assets or
properties, or condition (financial or otherwise) of the Stations, including
without limitation any damage, destruction or loss affecting the Assets and any
material decreases in operating cash flow (but excluding decrease in audience
ratings solely);
(b) Made any material increase in compensation payable or to become
payable to any of the employees of Seller at the Stations, or any bonus payment
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made or promised to any employee of Seller at the Stations, or any material
change in personnel policies, employee benefits or other compensation
arrangements affecting the employees of Seller at the Stations; or
(c) Made any sale, assignment, lease or other transfer of any of the
Assets other than in the normal and usual course of business with suitable
replacements being obtained therefor.
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.
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 California. 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.
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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 (including, without
limitation, its multiple ownership rules, 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 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, subject to the terms
of the Time Brokerage Agreement, operate the Stations 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 Stations, 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 Fifty Thousand Dollars
($50,000) 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 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;
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(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 Stations;
(6) Rights. Waive any material right relating to the Stations 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 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 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 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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(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 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 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, (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, gains,
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 or the
FTC (in conjunction with obtaining approval (the "HSR Consent") under the
Hart-Scott-Rodino Act) shall be paid equally by Seller and Buyer. Except as
otherwise provided in this Agreement, each party
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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, except for Media Venture Partners and Blackburn
& Company, Inc., whose fees shall be solely the responsibility of Buyer.
6.4 Time Brokerage Agreement. Buyer and Seller shall enter into a Time
Brokerage Agreement in the form set forth in Schedule 6.4 to be effective as of
the date of this Agreement or as of such other date as the parties mutually
agree.
6.5 Noncompetition Agreement. Buyer and Seller shall enter into at
Closing a Noncompetition Agreement, which shall provide for consideration in the
amount of Two Hundred Thousand Dollars ($200,000) 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.
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.
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B. If any damage or destruction of the Assets or any other event occurs
which prevents signal transmission by any 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 any 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.
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, and as to employees hired by
Buyer with respect to matters subsequent to such hiring, 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.
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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
termination of the Time Brokerage Agreement (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 shall pay to Seller the amount of
such Account, if Buyer, in its sole discretion, chooses to retain such Account.
Seller shall retain the right to collect any Account as to which the Buyer
chooses not to retain, 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 Stations 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 Commerce Circle Real Property. Concurrent with the execution and
delivery of this Agreement, Buyer shall enter into a Purchase and Sale Agreement
in substantially the form set forth on Schedule 6.12 hereto (the Commerce Circle
Agreement) with the Estate of Willet H. Brown and The Peter Brown 1992 Trust,
Tenants-in-Common, with respect to the real property located at 280 Commerce
Circle, Sacramento, California (the "Commerce Circle Real Property"). The
Commerce Circle
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Agreement shall provide that the closing of the conveyance of such real property
shall be simultaneous with, and conditioned upon, the Closing hereunder.
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.
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. Commerce Circle Real Property. The Closing under the Commerce Circle
Agreement shall have occurred in accordance with its terms.
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
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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 five
(5) days following the date upon which the FCC Consent has become a Final Order,
but in no event prior to January 14, 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, but in no event prior to January 14, 1997. Closing shall
be held at the offices of Seller at _________________, California 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
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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 California
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) 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;
(f) Noncompetition Agreement. The Noncompetition Agreement as set forth
in Schedule 6.5; and
(g) 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.
(h) 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
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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:
(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;
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(b) If the Closing shall not have occurred on or before December 31,
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
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.
AGREED TO: BUYER: _____________________________
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 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 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 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, 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) Except to the extent caused by or related to Buyer's management of
the Stations pursuant to the Time Brokerage Agreement, or assumed by Buyer
thereunder, 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:
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(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 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
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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 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: The Brown Organization
280 Commerce Circle
Sacramento, CA 95815
Attn: Phil Melrose, Director
Fax: (916) 923-9321
with copies
(which shall not
constitute notice) to: The Brown Organization
5700 Wilshire Blvd., Suite 480
Los Angeles, CA 90036-3659
Attn: Michael J. Brown, President
Fax: (213) 954-8940
Raymond C. Sandler, Esq.
Sandler & Rosen
1801 Avenue of the Stars, Suite 510
Los Angeles, CA 90067
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Fax: (310) 277-5954
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 (or any
portion thereof) 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 California.
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
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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: THE BROWN ORGANIZATION
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
3.8 Consents required
3.9 Trademarks; trade names; copyrights
3.11 Insurance policies
3.13 Employee benefits; health insurance; vacation policy
3.16 Claims; legal actions
6.4 Time Brokerage Agreement
6.5 Non-Competition Agreement
6.12 Commerce Circle Agreement
8.2 Opinion of Seller's General and FCC Counsels
8.3 Opinion of Buyer's General Counsel
29
EXHIBIT 10.64
TIME BROKERAGE AGREEMENT
TIME BROKERAGE AGREEMENT, made as of this _____ day of __________, 1996
by and between American Radio Systems Corporation, a Delaware corporation (the
"Programmer") and The Brown Organization, a California corporation (the
"Licensee").
WHEREAS Licensee owns and operates Broadcast Stations KQPT(FM),
KXOA(FM) and KXOA(AM), Sacramento, California (collectively referred to herein
as the "Station") pursuant to a license issued by the Federal Communications
Commission ("FCC").
WHEREAS Programmer is involved in radio station ownership and
operation.
WHEREAS the Licensee wishes to retain Programmer to provide programming
for the Station that is in conformity with the Station's 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 and Licensee have entered into an Asset Purchase
Agreement (the "Asset Purchase Agreement") under which Licensee has agreed to
sell the Station to Programmer, and have filed an application for FCC consent to
assign the Station license from Licensee to Programmer.
NOW, THEREFORE, in consideration of the above recitals and mutual
promises and covenants contained herein, the parties, intending to be bound
legally, agree as follows:
Section 1
Use of Station Air Time
1.1 Representations. Both Licensee and Programmer represent that they
are authorized to enter into this Agreement and that this Agreement constitutes
the legal, valid and binding obligation of each, enforceable against it in
accordance with its terms.
1.2 Effective Date; Term. The Effective Date of this Agreement shall be
August 1, 1996. It shall continue in force until December 31, 1997, or until
consummation of the assignment of the Station license from Licensee to
<PAGE>
Programmer pursuant to the Asset Purchase Agreement, whichever event occurs
earlier, unless otherwise extended or terminated by the parties.
1.3 Scope. During the term hereof, 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-seven (167) hours
per week. The Licensee may use the remaining one hour 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, which until such notice to the contrary,
shall be from 6:00 a.m. to 7:00 a.m. each Sunday. 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 pay to Licensee a monthly fee of One Hundred
Ninety-Six Thousand Dollars ($196,000), payable no later than the tenth (10th)
day of the month to which such fee pertains, and Programmer shall reimburse
Licensee for certain station expenses 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 Station's
compliance with all applicable provisions of the Communications Act of 1934, as
amended, the rules, regulations and policies of the FCC and all other applicable
laws. Licensee shall be solely responsible for payment of those operating
expenses of the Station listed on Attachment II hereof, including but not
limited to maintenance of the studio and transmitting facility and costs of
electricity except that Licensee shall be entitled to reimbursement pursuant to
Section 1.6(b). Programmer shall be responsible for the costs of its programming
and personnel as provided in Sections 1.7 and 2.3 hereof. Programmer shall pay
directly to vendors all payments due under the contracts listed on Attachment
III. Programmer shall also pay directly, or reimburse Licensee for, all other
expenses of the Station, whether or not listed on Attachments II and III.
Licensee shall employ at its expense (but subject to reimbursement by
Programmer) employees consisting of, at a minimum, those personnel required
pursuant to FCC regulations, who will report to and be accountable to the
Licensee. Licensee shall maintain insurance at its present levels covering the
Station's transmission facilities. During the term of the Agreement, Programmer
agrees to perform, without charge, routine monitoring of Licensee's transmitter
performance and tower lighting if and when requested by Licensee.
1.6 Licensee Representations and Warranties. Licensee represents and
warrants as follows:
(a) Licensee holds the licenses and other permits and authorizations
necessary for the present operation of the Station as set forth in Attachment I.
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There is not now pending, or to Licensee's best knowledge, threatened, any
action by the FCC or by any other party to revoke, cancel, suspend, refuse to
renew or modify adversely any of such licenses, permits or authorizations except
as previously revealed in writing to Programmer. To the Licensee's best
knowledge, Licensee, with respect to the Station, is not in material violation
of any statute, ordinance, rule, regulation, policy, order or decree of any
federal, state or local entity, court or authority having jurisdiction over it
or the Station, which would have an adverse effect upon the Licensee, its assets
utilized in the operation of the Station, the Station or upon Licensee's ability
to perform this Agreement. 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 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. Licensee
shall, during the term of this Agreement, not dispose of, transfer or assign any
of such assets and properties except with the prior written consent of the
Programmer.
(b) Licensee shall pay, in a timely fashion, those expenses incurred in
operating the Station as set forth on Attachment II hereto, including lease
payments, utilities, taxes, etc. and shall provide Programmer with a
certificate(s) of such timely payment (with invoices attached thereto to the
extent such invoices exist) at one or more times within thirty (30) days of the
end of each month. Licensee shall be reimbursed by Programmer for all such
payments within five (5) business days after presentation of any and each
certificate of payment.
1.7 Programmer Responsibility. Programmer shall be solely responsible
for any expenses incurred in the origination and/or delivery of programming from
any remote location and for any publicity or promotional expenses incurred by
Programmer, including, without limitation, ASCAP, BMI, SESAC music license fees
for all programming provided by Programmer.
1.8 Contracts. Programmer will not be required to assume performance of
any of the Licensee's contracts and leases pertaining to the Station except for
all contracts for sale of advertising time on the Station, and all of those
contracts 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 of all 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 Hourly Credit. Programmer shall receive from Licensee, as a refund
consisting of a flat rate credit of $132.50 per hour for KXOA(FM), $132.50 per
hour for KQPT(FM) and $0 per hour for KXOA(AM) ("Hourly Credit"), for any part
of the weekly one hundred sixty-seven (167) hours of programming time that
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Licensee uses to broadcast its own programming including periods during which
Licensee is unable, for any reason (except for Programmer's failure to deliver
its programming to Licensee and except as provided in Paragraph 6.2), to
broadcast the Programmer's 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.
1.11 Use of Station 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 programming for
the Station; provided, however, that Licensee shall maintain, for its sole use,
sufficient space at the Station's 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 Station's 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.
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 Obligations. Although both parties shall
cooperate in the broadcast of emergency information over the station, 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. Such interruption shall not
entitle Programmer to any credits on fees. Licensee shall also coordinate with
Programmer the Station's hourly station identification announcements to be aired
in accord with FCC rules. Licensee shall continue to maintain a main studio, as
that term is defined by the FCC, within the Station's 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
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and program lists on a timely basis. Programmer shall, upon request by Licensee,
provide Licensee 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 the
telephone inquiries, control and oversee any remote control point for the
Station.
2.3 Responsibility for Employees and Expenses. 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 other
personnel it employs. All personnel shall be subject to the overall supervision
of Licensee, consistent with Programmer's right to the use of the Station
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 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. Programmer shall furnish or cause
to be furnished the Artistic personnel and material for the programs as provided
by this Agreement and all programs shall be in accordance with the Policy
Statement and FCC requirements. All advertising spots and promotional material
or announcements 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 the
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 Programmer's programming which Licensee
reasonably believes to be unsatisfactory, unsuitable or contrary to the public
interest.
3.3 Programmer Compliance with Copyright Act. Programmer represents and
warrants to Licensee that Programmer has full authority to broadcast its
programming on the Station, and that Programmer shall not broadcast any material
in violation of any law, rule, regulation 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
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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 it provides to the Licensee. 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 its sales people and to any national sales representative
engaged by it for the purpose of selling national advertising which is carried
during the programming it provides to Licensee. Licensee shall retain all
revenues from the sale of Station's 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. The Station's outstanding accounts receivable on the Effective Date of
this Agreement shall be collected by Programmer for the benefit of Licensee as
set forth in Section 6.10 of the Asset Purchase Agreement and all accounts
payable shall be prorated to the Effective Date of this Agreement.
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 to quarterly, or more frequently at the request
of the Licensee, 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 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, slander or defamation or otherwise
arising out of Programmer's broadcasts and sale of advertising time under this
Agreement to the extent permitted by law.
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' broadcasts to the extent permitted by law.
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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 Station's 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 Commission on appeal.
4.5 Insurance. Programmer and Licensee shall each maintain during the
Term of this Agreement broadcaster's primary and excess liability coverage in an
amount not less than Ten Million Dollars ($10,000,000) in the aggregate issued
by an insurance carrier or carriers with an A.M. Best rating of "A-" or higher.
Programmer's policy shall name Licensee and its affiliates and their respective
partners, directors, officers, employees, agents, successors and assigns as
additional insureds. Licensee's policy shall name Programmer and its affiliates
and their respective partners, directors, officers, employees, agents,
successors and assigns as additional insureds. Programmer's and Licensee's
respective policies shall provide the other party with at least thirty (30) days
prior written notice of any cancellation or termination. Each party will
immediately serve the other party with notice and a copy of any letters of
complaint it receives concerning any program for the other party's review and
for inclusion in Licensee's public inspection file.
Section 5
Access to Programmer Materials and Correspondence
5.1 Confidential Review. Prior to the provision of any 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 Station's 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. In the event that Programmer
fails to meet its political time obligations under the Communications Act of
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1934, as amended, and the rules and regulations of the FCC and such failure
inhibits Licensee in the performance of its political time obligations, then to
the extent reasonably necessary to assure the Licensee's performance, Programmer
shall release advertising availabilities to Licensee; provided, however, that
all revenues realized by Licensee as a result of such a release of advertising
time shall be immediately paid to Programmer.
Section 6
Termination and Remedies Upon Default
6.1 Termination. 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;
(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; or.
(e) the Asset Purchase Agreement is terminated in accordance with its
terms.
6.2 Programmer's Remedies for Operational Deficiencies. Programmer
shall have the following remedies for deficiencies in or events related to any
of Licensee's transmitting facilities, in each case to be available to
Programmer only after such interruption exceeds twelve (12) consecutive hours in
duration, or several such interruptions total more than thirty-six (36) hours
during any broadcast month.
(a) If, during the Term hereof, the Station fails to operate within the
parameters authorized by the FCC, 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 a consulting engineer, hired at its expense, that the coverage or
operating parameters are not materially deficient. If the Station's effective
coverage or operating parameters are not restored within thirty (30) days of
notice of the coverage or operating deficiencies, then Programmer shall be
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entitled to its actual damages, which shall not exceed, on a daily basis, the
Hourly Credit amount set forth in Section 1.9 for so long as such deficiencies
continue.
(b) If for a period of five consecutive days or more Licensee reduces
its transmitter output power on the Station by fifty percent (50%) or more,
Programmer may elect a refund equal its actual damages, not to exceed an amount
equal to one half of the Hourly Credit amount set forth in Section 1.9 for so
long as such power reduction continues to occur if Programmer has, in fact, been
required to make rebates and/or other financial accommodations to its
advertisers and such refund shall be reflected in a refund payment by Licensee
to Programmer within ten (10) days of the end of the month.
(c) If Licensee uses an auxiliary or alternate transmitter for the
Station for a period of five (5) consecutive days or more, and such uses causes
a reduction in the range or strength of the Station's signal, then the refund
for such period shall be equal to Programmer's actual damages, which shall not
exceed, on a daily basis, twenty-five percent (25%) of the Hourly Credit amount
set forth in Section 1.9 for so long as such auxiliary or alternate transmitter
site is in use if Programmer has, in fact, been required to make rebates and/or
other financial accommodations to its advertisers. Should such transmitter site
move continue for more than thirty (30) days, the refund for such period shall
be equal to fifty percent (50%) of the Hourly Credit amount set forth in Section
1.9 for so long as such alternate transmitter site is in use. The refund shall
be reflected in a refund payment by Licensee to Programmer within ten (10) days
of the end of the month.
(d) 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 during the time the Station is off the air, beyond
such periods, on a daily basis, of the Hourly Credit amount set forth in Section
1.9 and such refund shall be made within ten (10) days of the end of the month.
6.3 Force Majeure. Any failure or impairment of the Station's
facilities or any delay or interruption in the broadcast of programs, or failure
at any time to furnish facilities, in whole or in part, for broadcast, due to
acts of god, strikes, lockouts, material or labor restrictions by any
governmental authority, civil riot, floods and any other cause not reasonably
within the control of Licensee will not be liable to Programmer.
6.4 Other Agreements. During the term of this Agreement, 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 insure to the
benefit of the parties hereto, their successors and assignees, 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
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other party which shall not be unreasonable withheld, provided, however that
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, following such
assignment Programmer shall remain liable to Licensee for the obligations of
Licensee hereunder, and Licensee has the right to assign its payments hereunder
to its Lenders upon written notification to Programmer.
7.2 Call Letters. Programmer shall not apply to the FCC for authority
to change the call letters of the Station without the prior written consent of
Licensee. Licensee shall cooperate with Programmer and receive Programmer's
consent prior to making any change in the call letters of the Station.
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). The parties
shall execute a Certification in the form of Attachment VI hereto, as required
by Section 73.3555(a) (2) (ii) of the FCC's rules.
7.5 Entire Agreement. This Agreement and the Attachments hereto and the
Asset Purchase Agreement between Programmer and Licensee 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 of 1934, as amended, and
the Rules and Regulations of the FCC. The construction and performance of the
Agreement will be governed by the laws of the State of California.
7.9 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
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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:
To Licensee: The Brown Organization
280 Commerce Circle
Sacramento, CA 95815
Attn: Phil Melrose, Director
Fax: (916) 923-9321
Copies to: The Brown Organization
5700 Wilshire Blvd., Suite 480
Los Angeles, CA 90036-3659
Attn: Michael J. Brown, President
Fax: (213) 954-8940
Raymond C. Sandler, Esq.
Sandler & Rosen
1801 Avenue of the Stars, Suite 510
Los Angeles, CA 90067
Fax: (310) 277-5954
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
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.
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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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
LICENSEE:
THE BROWN ORGANIZATION
By: _____________________________________
PROGRAMMER:
AMERICAN RADIO SYSTEMS CORPORATION
By: ____________________________________
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ATTACHMENT I
Station Coverage
KQPT(FM), KXOA(FM) and KXOA(AM) current FCC Licenses and contour
maps on file with the FCC.
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ATTACHMENT II
Station Expenses
The following expenses relating to the operation of the Station are the sole
responsibility of the Licensee:
a) Salary, payroll taxes, benefits and other costs relating to
the employment of the Station's [_____________].
b) Salary, payroll taxes benefits, and other costs relating to
the employment of the Station's [_________________].
c) Cost of tower rent electricity and other utilities directly
related to the operation of the Station's transmitter
facilities.
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ATTACHMENT IV
Broadcast Station Programming Policy Statement
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BROADCAST STATION
PROGRAMMING POLICY STATEMENT
Programmer agrees to cooperate with Licensee in the broadcasting of
programs of the highest possible standard of excellence and for this purpose to
observe the following regulations in the preparation, writing and broadcasting
of its programs.
I. No Plugola or Payola. The mention of any business activity or
"plug" for any commercial, professional, or other related
endeavor, except where contained in an actual commercial
message of a sponsor, is prohibited.
II. No Lotteries. Announcements giving any information about
lotteries or games prohibited by federal or state law or
regulation are prohibited.
III. Election Procedures. At least ninety (90) days before the
start of any primary or election campaign, Programmer will
clear with Licensee's general manager the rate Programmer will
charge for the time to be sold to candidates for the public
office and/or their supporters to make certain that the rate
charged is in conformance with the applicable law and station
policy.
IV. Required Announcements. Progammer shall broadcast (I) an
announcement in a form satisfactory to Licensee at the
beginning of each hour to identify the Station, (ii) an
announcement at the beginning and end of each program to
indicate that program time has been purchased by Programmer,
and (iii) any other announcements that may be required by law,
regulation, or Station policy.
V. Commercial Recordkeeping. Programmer shall not receive any
consideration in money, goods, services, or otherwise,
directly or indirectly (including to relatives) from any
persons or company for the presentation of any programming
over the station without reporting the same in advance to and
receiving the prior written consent of Licensee's general
manager. No commercial messages ("plugs") or undue references
shall be made in programming presented over station to any
business venture, profit making activity, or other interest
(other than noncommercial announcements for bona fide
charities, church activities or other public service
activities) in which Programmer (or anyone else) is directly
or indirectly interested without the same having been approved
in advance by the general manager/chief engineer and such
broadcast being announced and logged and sponsored.
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VI. No Illegal Announcements No announcements or promotion
prohibited by federal or state law or regulation of any
lottery or game shall be made over the Station. Any game,
contest, or promotion relating to or to be presented over the
Station must be fully stated and explained in advance to
Licensee, which reserves the right in its sole discretion to
reject any game, contest, or promotion.
VII. Licensee Discretion Paramount In accordance with the
Licensee's responsibility under the Communications Act of
1934, as amended, and the Rules and Regulations of the Federal
Commissions, Licensee reserves the right to reject or
terminate any advertising proposed to be presented or being
presented over the Station which is in conflict with
Licensee's policy or which in Licensee's or its general
manager/chief engineer's sole judgment would not serve the
public interest.
Licensee may waive any of the foregoing regulations in specific
instances, if, in its opinion, good broadcasting in the public interest is
served.
In any case where questions of policy or interpretation arise,
Programmer should submit the same to Licensee for decision before making any
commitments in connection therewith.
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ATTACHMENT V
Payola Statement
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FORM OF PAYOLA AFFIDAVIT
City of ____________________ )
County of __________________ ) ss.
State of ___________________ )
ANTI-PAYOLA/PLUGOLA AFFIDAVIT
_____________________, being first duly sworn, deposes and says as follows:
1. He is _________________________ for____________________________.
(Position)
2. He has acted in the above capacity since _____________.
3. No matter has been broadcast by Station __________ for which service,
money or other valuable consideration has been directly or indirectly
paid, or promised to, or charged, or accepted, by him from any person,
which matter at the time so broadcast has not been announced or
otherwise indicated as paid for or furnished by such person.
4. So far as he is aware, no matter has been broadcast by Station _______
for which service, money, or other valuable consideration has been
directly or indirectly paid, or promised to, or charged, or accepted by
Station _______ in furnishing programs, from any person, which matter
at the time so broadcast has not been announced or otherwise indicated
as paid for or furnished by such person.
5. In future, he will not pay, promise to pay, request, or receive any
service, money, or any other valuable consideration, direct or
indirect, from a third party, in exchange for the influencing of, or
the attempt to influence, the preparation of presentation or broadcast
matter on Station ________.
6. Nothing contained herein is intended to, or shall prohibit receipt or
acceptance of anything with the expressed knowledge and approval of my
employer, but henceforth any such approval must be given in writing by
someone expressly authorized to give such approval.
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7. He, his spouse and his immediate family do____ do not ____ have any
present direct or indirect ownership interest in (other than an
investment in a corporation whose stock is publicly held), serve as an
officer or director of, whether with or without compensation, or serve
as an employee of, any person, firm or corporation engaged in:
1. The publishing of music;
2. The production, distribution (including wholesale and retail
sales outlets), manufacture or exploitation of music, films,
tapes, recordings or electrical transcriptions of any program
material intended for radio broadcast use;
3. The exploitation, promotion, or management of persons
rendering artistic, production and/or other services in the
entertainment field;
4. The ownership or operation of one or more radio or television
stations;
5. The wholesale or retail sale of records intended for public
purchase;
6. Advertising on Station ______, or any other station owned by
its licensee (excluding nominal stockholdings in publicly
owned companies).
8. The facts and circumstances relating to such interest are none _______
as follows________:
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------
Affiant
Subscribed and sworn to before me
this ______ day of ________________, 199___.
______________________________________
Notary Public
My Commission expires: __________________
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ATTACHMENT VI
FCC Certification
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CERTIFICATION
Pursuant to Section 73.3555(a) (2) (ii) of the FCC's Rules:
1 The licensee of the brokered stations affected by the foregoing Time
Brokerage Agreement hereby certifies that it will at all times maintain
ultimate control (as defined in FCC rules and regulations) over the
Station's facilities, including specifically control over the Station's
finances, personnel and programming; and
2. The licensee of the brokering stations hereby certifies that the
proposed Agreement for the time brokerage complies with the provisions
of Section 73.3555(a) (2) (ii) of the FCC's rules.
Dated this ________ day of _____________________, 199______.
LICENSEE:
By: ______________________________________
Its: ______________________________________
PROGRAMMER: AMERICAN RADIO SYSTEMS CORPORATION
By: ______________________________________
Its: ______________________________________
22
EXHIBIT 10.65
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated as of July 23, 1996, by and
between American Radio Systems Corporation, a Delaware corporation ("Buyer"),
and D & V Equinox XX, a California corporation ("Seller").
P R E M I S E S:
A. Seller is the licensee of and operates radio stations KOQO(AM),
Clovis, California and KOQO(FM), Fresno, 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 held for use solely 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 all notes and accounts receivable of
Seller arising from the business and operations of the Stations accrued as of
the TBA Date.
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 and (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.
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.
<PAGE>
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 which relate solely to 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 hereof and the Closing Date.
1.7 "Escrow Deposit" shall mean the sum of Three Hundred Thousand
Dollars ($300,000) to be held by The Bank of Northern Virginia (the "Escrow
Agent") pursuant to an Escrow Agreement of even date, by and among Buyer,
Seller, and the Escrow Agent in the form of Schedule 1.7 hereto.
1.8 "Excluded Assets" shall mean those assets described in Section 2.2
herein and those assets set forth on Schedule 2.2 hereto.
1.9 "FCC Consent" means the initial written authorization by the FCC
granting its consent to the assignment of the FCC Licenses to Buyer as
contemplated by this Agreement.
1.10 "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.
1.11 "Final Order" means the written authorization 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.
1.12 "Licenses" means all of the material 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 which are necessary for Seller's conduct of
the business or operations of the Stations all of which are listed on Schedule
3.4.
1.13 "Material Adverse Effect" shall mean a material adverse effect on
the Assets or the business or operations of the Stations.
1.14 "Personal Property" means all of the machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, spare parts, and
other tangible personal property which are owned or leased by Seller and used or
held for use as of the date hereof solely in the conduct of the business or
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operations of the Stations, all of which is listed on Schedule 3.6, 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, easements,
licenses, rights to access, right-of-way, and other real property interests
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 commencement date of the Time Brokerage
Agreement.
1.18 "Time Brokerage Agreement" means the Time Brokerage Agreement
entered into between Buyer and Seller in substantially the form set forth on
Schedule 6.11.
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 on the Closing Date, the
following assets (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), including, without limitation, the following:
(a) The Personal Property including, without limitation, the property
and equipment specified in Schedule 3.6 hereto;
(b) The Real Property interests identified on Schedule 3.5;
(c) All of Seller's rights under the Licenses to the extent assignable;
(d) All of Seller's rights under the Assumed Contracts;
(e) All trademarks, trade names, and service marks and all other
intellectual property, information and similar intangible assets owned by Seller
and used or held for use solely in the conduct of the business of the Stations,
all of which are listed in Schedule 3.9 hereto;
(f) All of Seller's proprietary information, used or held for use
solely in the conduct of the business of the Stations, 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 Stations, if any;
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(g) All books and records of Seller 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 period,
of three (3) years following the Closing; and
(h) All of Seller's goodwill in, and going concern value of, the
Stations.
2.2 Excluded Assets. Notwithstanding anything else herein, the parties
hereto acknowledge and agree that Buyer is not purchasing and Seller is not
selling, and that the Assets shall exclude, the following assets (the "Excluded
Assets"):
(a) All of Seller's cash and cash equivalents on hand and 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, other than the books and records
described in 2.1(g) above;
(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 contracts, property or other asset listed on Schedule 2.2
hereto.
(h) Any Licenses which are not assignable to Buyer (other than the FCC
Licenses).
2.3 Purchase Price.
(a) The Purchase Price shall be Six Million Dollars ($6,000,000). The
Purchase Price shall be adjusted to reflect any adjustments or prorations made
and agreed to at Closing as provided in Section 2.4 hereof.
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(b) The tangible and intangible assets, including goodwill and license
value, of the Stations shall be allocated in accordance with the results of an
independent appraisal undertaken by Buyer prior to the Closing. Seller may, but
is under no obligation, to adopt or use the results of such independent
appraisal.
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, 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, except as otherwise set forth in the Time Brokerage Agreement.
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 "Closing 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 Closing, together with a copy of any working papers relating to such Closing
Certificate and such other supporting evidence as Seller may reasonably request.
If Seller shall conclude that the Closing 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 Closing
Certificate, provide to Buyer its written statement of any discrepancies
believed to exist. Joseph L. Winn on behalf of Buyer, and Gus Corona 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
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retained to review the Closing 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
Closing, 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 as otherwise set
forth in the Time Brokerage Agreement, as of the Closing Date, Buyer shall
assume, pay, discharge and perform (i) all of the obligations and liabilities of
Seller under the Licenses assigned to Buyer hereunder and the Assumed Contracts
arising on and 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, (iii) all obligations and liabilities for which Buyer receives a
proration adjustment hereunder and (iv) obligations to Employees as set forth in
Section 2.6. All other obligations and liabilities of Seller, including (i) any
obligations under any Contract not included in the Assumed Contracts, (ii) any
obligations arising under the Assumed Contracts 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, 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
California and is duly qualified to conduct its business in the state of
California, which is the only jurisdiction where the conduct of the business or
operations of the Stations requires such qualification. Seller has all requisite
corporate power and corporate 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. 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.
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3.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement by Seller have been duly authorized by (i) 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 such enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws from time to time
in effect affecting creditors' rights generally, or by principles governing the
availability of equitable remedies.
3.3 Absence of Conflicting Agreements. Except for the Consents and
except as set forth on Schedule 3.3, the execution, delivery, and performance of
this Agreement and the documents contemplated hereby (with or without the giving
of notice, the lapse of time, or both): (i) do es not require the consent of any
third party; (ii) will not conflict with any provision of Seller's articles of
incorporation or By Laws; (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 it is bound; or (v) will not create any material 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 copies of the Licenses
(including any and all amendments and other modifications thereto). The Licenses
were validly issued with the Seller designated thereon being the authorized
legal holder thereof. The Licenses comprise all of the material 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 Stations 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, mortages, 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, and (iii) 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 Seller's knowledge, all towers, guy
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anchors, and buildings and other improvements, included in the owned Assets are
located entirely on the Real Property listed in Schedule 3.5. Seller has
delivered to Buyer true and complete copies of all leases, or other material
instruments comprising the Real Property (including any and all amendments and
other modifications of such instruments), all of which instruments are valid and
binding on Seller and enforceable against Seller 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 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 Stations, and (iii) materially complies with all applicable building,
electrical and zoning codes and all regualtions 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 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 Stations, and the transmitting and studio equipment included
in the Personal Property (i) has been maintained consistent in all material
respects with FCC rules and regulations, and (ii) will permit the Stations and
any unit auxiliaries thereto to operate in accordance in all material respects
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 and substantially at rate card and which are not prepaid and
which may be cancelled by the Stations without penalty on not more than thirty
(30) days notice, (ii) miscellaneous service contracts terminable without
penalty, and (iii) other contracts not involving liabilities under any such
contact 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).
Other than the Contracts, the Seller requires no contract or agreement to enable
it to carry on the business of the Stations as presently conducted. All of the
Assumed Contracts are in full force and effect, and are valid, binding and
enforceable on Seller in accordance with their terms, except as such
enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws from time to time in effect
affecting creditors' rights generally or by principles governing the
availability of equitable remedies . Seller is not in material breach, nor to
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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, Seller has not
received written notice from 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 , assuming all of the Consents are obtained, 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) for Seller 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
Stations in substantially the manner now 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 held for use solely in the conduct of the business or
operations of the Stations, all of which are valid and, to Seller's knowledge,
uncontested. Seller has delivered to Buyer copies of all documents establishing
such rights, licenses, or other authority. Seller has not received any written
notice 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 Stations (consolidated with other stations
previously co-owned by 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, and present fairly the financial
condition of the Stations as at their respective dates and the results of
operations for the periods then ended. Seller shall provide to Buyer on or
before the Closing similarly prepared financial statements for the Stations
alone.
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 for stations of similar size and value. 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
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policy of Seller with respect to the Assets or the Stations 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: 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 in all material respects with the FCC's rules
and regulations.
3.13 Employee Benefit Plans. 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 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. 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 ("ERISA"), 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 contracts of employment
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. 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
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such laws, rules or regulations. No controversies, disputes, or proceedings are
pending or, to Seller's knowledge, threatened, between it and employees of the
Stations. No labor union or other collective bargaining unit represents any of
the employees of the Stations. To Seller's knowledge, 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 occured 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 which relates to
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 Seller's 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 Seller's knowledge, Seller has complied
with, and has conducted the operations of the Stations, in all material respects
in compliance with, (i) the Licenses, and (ii) all applicable federal, state and
local laws, rules, regulations and ordinances.
3.18 Environmental Matters.
(a) During Seller's period of ownership and, to the knowledge
of Seller, during those of its predecessors, 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
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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 knowledge, those of its predecessors, are and have been
conducted, as the case may be, in material compliance with all applicable
Environmental Laws. There are no pending or to Seller's knowledge, 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, 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 material compliance with
any 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 therafter, 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 Conduct of Business in Ordinary Course. Since December 31, 1995,
Seller has conducted the business and operations of the Stations only in the
ordinary course and has not:
A. Suffered any damage loss or change in the assets, properties or
operations of the Stations which has or is reasonably expected to have a
Material Adverse Effect.
B. Made any material increase in compensation payable or to become
payable to any of the employees of the Stations, or any bonus payment made or
promised to any employee of the Stations, or any material change in personnel
policies, employee benefits or other compensation arrangements affecting the
employees of the Stations; or
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C. Made any sale, assignment, lease or other transfer of any properties
of the Stations other than in the normal and usual course of business with
suitable replacements being obtained therefor.
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 be made in order 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 is qualified to conduct business in the State of California. 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 such enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws in effect from time to
time affecting creditors' rights generally, or by principles governing the
availability of 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
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assignee of the licenses, permits and authorizations listed on Schedule 3.4
hereto, or as an owner and/or operator of the 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,
the Time Brokerage 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 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. Enter into any new Contracts except in the
ordinary course of business;
(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) liens which will
be removed prior to the Closing Date;
(5) 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;
(6) Programming. Make any material changes in the broadcast
hours or in the percentages of types of programming broadcast by the
Station, or make any other material changes in the Station's
programming policies, except such changes as in the good faith judgment
of the Seller are required by the public interest;
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(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.
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 solely 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 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
Stations 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
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;
(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 Stations and the Assets are subject.
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(7) Preservation of Business. Use its reasonable efforts 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.
(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.
5.2 Post-Closing Covenants. After the Closing, Seller will take such
actions, and execute and deliver to Buyer such further 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 contemplated by 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 commercially reasonable 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 commercially reasonable
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 or Seller, (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 Control of the Stations. Except as provided for in the Time
Brokerage Agreement Buyer shall not, directly or indirectly, control, supervise,
direct, or attempt to control, supervise or direct, the operations of the
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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, gains,
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. 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 W. John Grandy Radio Brokers, whose
fee shall be paid by 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, or except as to the extent disclosure of
information is required by any applicable law or regulation, by any authorized
administrative or governmenal agency or, in the opinion of counsel to Buyer, in
connection with any public offering, pursuant to applicable requirements of the
securities laws or any stock exchange or self-regulatory organization, 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 commercially reasonable efforts to consummate the
transaction contemplated hereby and to fulfill their obligations hereunder.
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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 material 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 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.
6.9 Accounts Receivable. Seller shall deliver to Buyer on or as soon as
practicable after the date of this Agreement a complete and detailed statement
showing the name, amount and age of each Account Receivable. Buyer shall use
reasonable efforts in the ordinary course of business to collect the Accounts
Receivable for a period of Ninety (90) days following 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, no later than the twentieth (20th) day
following the end of the preceding month, the amounts collected during such
calendar month with respect to the Accounts Receivable. 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 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,
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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 Receivable
unless Buyer shall have engaged in willful misconduct or gross negligence or
failed to use commercially reasonable efforts in the collection of such Account
Receivable. 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.
6.10 Audit Cooperation. Seller agrees to fully cooperate, and use
reasonable efforts to cause its accounting firm 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 statements to the extent disclosure of information is required
of Buyer by applicable law, regulations or rules of any administrative or
governmental agency, stock exchange or self-regulatory agency.
6.11 Time Brokerage Agreement. Seller and Buyer hereby agree to enter
into a Time Brokerage Agreement in substantially the form set forth in Schedule
6.11, attached hereto.
6.12 Employee Matters.
A. Within five (5) business days after execution of this Agreement,
Seller shall provide 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 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 liability on account of unemployment
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insurance contributions, termination payments, retirement, pension,
profit-sharing, bonus, severance pay, disability, health, accrued vacation,
accured sick leave (unless pro-rated adjustment is made as to vacation or sick
leave) or other employee benefit plans, practices, agreements, or
understandings.
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 or all of which may be waived in
whole or in part by Buyer, 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, 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. The Consent with respect to each of the Contracts on
Schedule 3.7 which has been designated with a double asterisk 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 to be assigned
to Buyer hereunder (including the FCC Licenses), and there shall not have been
any modification of any of such Licenses which has a Material Adverse Effect. 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 Conditions. That the Stations shall have achieved Gross
Revenues of no less than One Million Eight Hundred Thousand Dollars
($1,800,000), and Cash Flow of no less than Six Hundred Thousand Dollars
($600,000) for the twelve month period ending June 30, 1996. For the purposes of
this section, Gross Revenues will be defined as gross income from advertising
time sales excluding non-cash barter or trade transactions, if any, and Cash
Flow will be defined as net income excluding non-cash 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.
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G. No Actions or Proceedings. No action or proceeding by any court
administrative body or governmental agency shall have been instituted or
threatened which would enjoin, restrain or prohibit, or might result in
substantial damages in respect of, this Agreement or the complete consummation
of the transactions contemplated by this Agreement, and which would in the
reasonable judgment of Buyer make it inadvisable to consummate such
transactions, and no law or regulation shall be in effect and no court order
shall have been entered in any action or proceeding instituted by any party
which enjoins, restrains, or prohibits this Agreement or the complete
consummation of the transactions as contemplated by this Agreement, in any case
other than filings before the FCC which have been dismissed or denied by the
FCC. H. FCC Authorization. The FCC Consent shall have been obtained and become
effective, shall contain no condition materially adverse to Buyer and shall have
become a Final Order.
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 or all of which may be waived in
whole or in part by the Seller, 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.
C. Deliveries. Buyer shall have made or stand willing and able to make
all the deliveries set forth in Section 8.3.
D. No Actions or Proceedings. No action or proceeding by any court,
administrative body or governmental agency shall have been instituted or
threatened which would enjoin, restrain or prohibit, or might result in
substantial damages in respect of, this Agreement or the complete consummation
of the transactions contemplated by this Agreement, and which would in the
reasonable judgment of Seller make it inadvisable to consummate such
transactions, and no law or regulation shall be in effect and no court order
shall have been entered in any action or proceeding instituted by any party
which enjoins, restrains or prohibits this Agreement or the complete
consummation of the transactions as contemplated by this Agreement, in any case
other than filings before the FCC which have been dismissed or denied by the
FCC.
E. FCC Authorization. The FCC Consent shall have been obtained and
become effective, shall contain no condition materially adverse to Seller and
shall have become a Final Order.
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SECTION 8
CLOSING AND CLOSING DELIVERIES
8.1 Closing. The closing shall take place at 10:00am on the date, ten
(10) days following the date upon which the FCC Consent has become a Final Order
(the "Closing Date"); provided however, 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 receipt of the FCC Consent. 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 bills of sale, motor vehicle
titles, assignments and other transfer documents which shall be sufficient to
vest 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) Seller'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 Seller's Board of Directors,
authorizing and approving the execution of this Agreement by the 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 an appropriate California 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) 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 solely in connection with its operations of the Stations;
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(f) Noncompetition Agreement. The Noncompetition Agreement as set forth
in Schedule 6.5; and
(g) 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;
(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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SECTION 9
RIGHTS OF BUYER AND SELLER
ON TERMINATION OR BREACH
9.1 Termination. This Agreement may be terminated any time prior to the
Closing Date (except as otherwise provided below):
A. With the mutual consent of Buyer and Seller;
B. By either party, if by December 31, 1997 the Closing is not
consummated;
C. By Seller, if there has been a material misrepresentation
or breach of warranty on the part of Buyer in the representations and
warranties contained herein, a material breach of covenants on the part
of Buyer and the same has not been cured within thirty (30) days after
notice thereof, or if Buyer fails to make the deliveries required for
closing pursuant to Section 8.3 hereof. In the event of any termination
pursuant to this Section 9.1(C), written notice setting forth the
reasons therefor shall forthwith be given by Seller to Buyer;
D. By Buyer, if there has been a material misrepresentation or
breach of warranty on the part of Seller in the representations and
warranties contained herein, a material breach of covenants on the part
of Seller and the same has not been cured within thirty (30) days after
notice thereof, or if Seller fails to make the deliveries required for
Closing pursuant to Section 8.2 hereof. In the event of any termination
pursuant to this Section 9.1(D), written notice setting forth the
reasons therefor shall forthwith be given by Buyer to Seller; and
E. By any party hereto if the FCC has denied the FCC Consent
in an order which has become final.
F. By either party hereto if such party is entitled to, and
exercises its right to, terminate the Time Brokerage Agreement pursuant
to Section 6.1(b) thereof. Notwithstanding anything herein to the
contrary, the right to terminate this Agreement under paragraphs B, C
or D of this Section 9.1 shall not be available to any party to the
extent the failure of such party to fulfill any of its obligation under
this Agreement has been the cause of, or resulted in, the failure of
the Closing to occur on or before such date (as a result, for example,
of an action or failure to act causing a failure of a condition
precedent).
9.2 Effect of Termination.
A. In the event of the termination of this Agreement by Seller
pursuant to Sections 9.1(C) or 9.1(F) hereof, the Escrow Deposit shall
be paid to Seller (together with any and all interest earned thereon)
as liquidated damages. In the event of the termination of this
Agreement pursuant to Sections 9.1(A), 9.1 (B), 9.1 (D) or 9.1 (E)
hereof, the Escrow Deposit shall be returned to Buyer, together with
any and all interest earned thereon. In the event that the Closing
takes place, the Escrow Deposit shall be paid to Seller as a portion of
the Purchase Price in accordance with Section 2.3 and any and all
interest earned on the Escrow Deposit shall be paid to Buyer. Seller
and Buyer shall deliver to the Escrow Agent joint written instructions
directing the Escrow Agent to pay the Escrow Deposit in accordance with
this Section 9.2.
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B. Except as set forth in Section 9.2(A) and except for any
provisions of this Agreement which expressly survive any termination of
this Agreement, in the event of the termination of this Agreement by
Seller or Buyer pursuant to Section 9.1 hereof neither Buyer nor Seller
shall have any further liability hereunder, including any liability for
losses, liabilities, obligations, damages, deficiencies, actions,
suits, proceedings, demands, assessments, orders, judgments, costs and
expenses (including the reasonable fees, disbursements and expenses of
attorneys and consultants) of any kind or nature whasoever.
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 may 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.
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 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 or covenant
or agreement at Closing such party shall be deemed to have waived such
misrepresentation or breach.
10.2 Indemnification by Seller. Seller shall indemnify and hold Buyer
harmless against and with respect to, and shall reimburse Buyer for:
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A. Any and all losses, liabilities or damages resulting from
any breach of warranty, representation, or any covenants or agreements
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.
E. The rights of Buyer under this Section 10.2 shall be
limited as follows:
(i) All rights to indemnification under this Section
10.2 with respect to any losses or claims shall expire on the last day
of the Survival Period and Buyer shall have no right to make any claim
hereunder after such day, except that if prior to the date of
expiration a specific state of facts shall have become known which may
constitute or give rise to any claim as to which indemnity may be
payable and Buyer shall have given notice of such facts to Seller, then
the right to indemnification with respect thereto shall remain in
effect without regard to when such matter shall have been finally
determined and disposed of, according to the date on which notice of
the applicable claim is given.
(ii) Buyer agrees that if the Closing occurs, the
rights to indemnification set forth in this Section 10.2 shall, except
as otherwise required by law, be exclusive of all rights to
indemnification or other remedies that Buyer would otherwise have in
connection with the matters and transactions contemplated by this
Agreement.
(iii) Buyer agrees that if (a) Seller is unable to
fulfill the conditions to Closing set forth in Section 7 hereof because
a representation or warranty of Seller contained herein is not true,
accurate and complete as of the Closing Date and (b) Buyer elects to
proceed with the Closing, then from and after the Closing Date Seller
shall not have any liability or obligation under this Agreement to
Buyer in respect of such untruth, inaccuracy or incompleteness or any
loss resulting therefrom.
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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 breach of warranty, representation or of any covenants or
agreements 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.
D. The rights of Seller under this Section 10.3 shall be
limited as follows:
(i) All rights to indemnification under this Section 10.3
shall expire on the last day of the Survival Period. If prior to the
date of expiration a specific state of facts shall have become known
which may constitute or give rise to any claim as to which indemnity
may be payable and Seller shall have given notice of such facts to
Buyer, then the right to indemnification with respect thereto shall
remain in effect without regard to when such matter shall have been
finally determined and disposed of, according to the date on which
notice of the applicable claim is given.
(ii) Seller agrees that if the Closing occurs, the rights to
indemnification set forth in this Section 10.3 shall, except as
otherwise required by law, be exclusive of all rights to
indemnification or other remedies that Seller would otherwise have in
connection with the transactions contemplated by this Agreement.
(iii) Seller agrees that if (a) Buyer is unable to fulfill the
conditions to Closing set forth in Section 7 hereof because a
representation or warranty of Buyer contained herein is not true,
accurate and complete as of the Closing Date and (b) Seller elects to
proceed with the Closing, then from and after the Closing Date Buyer
shall not have any liability or obligations under this Agreement to
Seller in respect of such untruth, inaccuracy or incompleteness or any
loss resulting therefrom.
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10.4 Limitations on Indemnification. In no event shall any party hereto
have any liability to the other party under this Section 10 for consequential,
incidental or punitive damages, regardless of the theory of recovery. Each party
hereto agrees to use reasonable efforts to mitigate any loss which forms the
basis of any claim for indemnification hereunder.
10.5 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. 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. The Indemnifying Party shall have the right, with the consent of the
Claimant, which consent shall not be unreasonably withheld, to settle all claims
made by a third party which are amenable to settlement; provided, that the
Indemnifying Party's obligation to indemnify the Claimant therfore will be fully
satisfied.
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E. 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.
F. 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.
G. 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 and their successors and assigns 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: D & V Equinox XX
216 El Camino Drive
Beverly Hills, CA 90212
Attn: Mr. Dwight Case
Fax: (310) 659-3700
with a copy (which
shall not constitute
notice) to: Theodore D. Kramer, Esq.
Haley, Bader & Potts
4350 North Fairfax Drive
Suite 900
Arlington, VA 22203-1633
Fax: (703) 841-2345
If to Buyer: American Radio Systems
116 Huntington Avenue
Boston, MA 02116
Attention: Steven B. Dodge, President
Fax: (617) 375-7575
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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
11.2.
11.2 Benefit and Binding Effect. Neither party hereto may assign this
Agreement without the prior written consent of the other party hereto. 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.
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,
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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 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: D & V EQUINOX XX
By: ___________________________________
BUYER: AMERICAN RADIO SYSTEMS CORPORATION
By: ___________________________________
Title:
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SCHEDULES TO ASSET PURCHASE AGREEMENT
1.7 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 Non-Competition Agreement
6.11 Time Brokerage Agreement
8.2 Opinion of Seller's General and FCC Counsels
8.3 Opinion of Buyer's General Counsel
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EXHIBIT 10.66
TIME BROKERAGE AGREEMENT
TIME BROKERAGE AGREEMENT, made as of this 1st day of August, 1996 by
and between American Radio Systems Corporation, a Delaware corporation (the
"Programmer") and D & V Equinox XX, a California corporation (the "Licensee").
WHEREAS Licensee owns and operates Broadcast Station KOQO(FM), Fresno
and KOQO(AM), Clovis, California (together referred to herein as the "Stations")
pursuant to a license issued by the Federal Communications Commission ("FCC").
WHEREAS Programmer is involved in radio station ownership and
operation.
WHEREAS the Licensee wishes to retain 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 havel entered into an Asset Purchase
Agreement (the "Asset Purchase Agreement") under which Licensee has agreed to
sell the Stations to Programmer, and have filed an application for FCC consent
to assign the Stations licenses from Licensee to Programmer.
NOW, THEREFORE, in consideration of the above recitals and mutual
promises and covenants contained herein, the parties, intending to be bound
legally, agree as follows:
Section 1
Use of Station Air Time
1.1 Representations. Both Licensee and Programmer represent that they
are authorized to enter into this Agreement and that this Agreement constitutes
the legal, valid and binding obligation of each, enforceable against it in
accordance with its terms.
1.2 Effective Date; Term. The Effective Date of this Agreement shall be
the date of execution of this Agreement by all parties. It shall continue in
force until December 31, 1997, or until consummation of the assignment of the
Station licenses from
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Licensee to Programmer pursuant to the Asset Purchase Agreement, whichever event
occurs earlier, unless otherwise extended or terminated by the parties.
1.3 Scope. During the term hereof, Licensee shall make available to
Programmer time on the Stations as set forth in this Agreement. Programmer shall
deliver programming, which shall be in accordance with the rules, regulations
and policies of the FCC and the Communications Act of 1934, as amended
("Communications Act"), at its expense, to the Stations' 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. All
programming provided by Programmer and transmitted over the Stations shall be
subject to the supervision and control of Licensee.
1.4 Consideration. As consideration for the air time made available
hereunder, Programmer shall pay to Licensee a monthly fee of Forty Thousand
Dollars ($40,000), payable no later than the fifteenth (15th) day of the month
to which such fee pertains, and Programmer shall reimburse Licensee for certain
station expenses as set forth in Section 1.6 hereof.
1.5 Licensee Operation of the Stations. Licensee will have full
authority, power and control over the operations of the Stations during the term
of this Agreement, including without limitation, control over the Stations'
finances, personnel and programming. Licensee will bear all responsibility for
the Stations' compliance with all applicable provisions of the Communications
Act, the rules, regulations and policies of the FCC and all other applicable
laws. Licensee shall be solely responsible for 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 pursuant to Section
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, and shall pay directly, or
reimburse Licensee for, all other non-capital, ordinary and customary operating
expenses of the Stations. Programmer shall also be responsible for all of its
promotional expenses in connection with the programming it is to furnish for
broadcast on the Stations. Licensee shall employ at its expense employees
consisting of, at a minimum, those personnel required pursuant to FCC
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 Station's transmission facilities. During the term
of the Agreement, Programmer agrees to perform, without charge, routine
monitoring of Licensee's transmitter performance and tower lighting if and when
requested by Licensee.
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1.6 Licensee Representations and Warranties. Licensee represents and
warrants as follows:
(a) Licensee holds the licenses and other permits and authorizations
necessary for the present operation of the Stations as set forth in Attachment
I. There is not now pending, or to Licensee's best knowledge, threatened, any
action by the FCC or by any other party to revoke, cancel, suspend, refuse to
renew or modify adversely any of such licenses, permits or authorizations except
as previously revealed in writing to Programmer. To the Licensee's best
knowledge, after due inquiry, Licensee, with respect to the Stations, is not in
material violation of any statute, ordinance, rule, regulation, policy, order or
decree of any federal, state or local entity, court or authority having
jurisdiction over it or the Stations, which would have an adverse effect upon
the Licensee, its assets utilized in the operation of the Stations, the Stations
or upon Licensee's ability to perform this Agreement. 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 Stations,
the Stations 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 Stations are and will continue to comply in all
material respects with the engineering requirements set forth in the FCC
licenses of the Stations. Licensee shall, during the term of this Agreement, not
dispose of, transfer or assign any of such assets and properties except with the
prior written consent of the Programmer.
(b) Licensee shall pay, in a timely fashion, all of the non-capital,
ordinary and customary expenses incurred in operating the Stations including
lease payments, utilities, taxes, etc. and shall provide Programmer with a
certificate(s) of such timely payment (with invoices attached thereto to the
extent such invoices exist) at one or more times within thirty (30) days of the
end of each month. Licensee shall be reimbursed by Programmer for all such
payments within five (5) business days after presentation of any and each
certificate of payment.
1.7 Programmer Responsibility. Programmer shall be solely responsible
for any expenses incurred in the origination and/or delivery of programming from
any remote location and for any publicity or promotional expenses incurred by
Programmer, including, without limitation, ASCAP, BMI, SESAC music license fees
for all programming provided by Programmer, and any and all other copyright
license fees attributable to its programming to be broadcast on the Stations.
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 as
indicated 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, of all existing trade and barter
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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 Hourly Credit. Programmer shall receive from Licensee, as a refund
consisting of a flat rate credit of $55.00 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 for Programmer's failure to deliver
its programming to Licensee), to broadcast the Programmer's 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 Stations. Licensee agrees to purchase such equipment or other material or
services which Programmer may reasonably suggest are necessary for the Stations'
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 Station 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 programming for
the Stations; 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
Stations or for any other stations owned or time-brokered by the Programmer
within the Fresno, California ADI and shall at all times be subject to the good
faith oversight of the 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.
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2.2 Additional Licensee Obligations. Although both parties shall
cooperate in the broadcast of emergency information over the station, 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. Such interruption shall not
entitle Programmer to any credits on fees. Licensee shall also coordinate with
Programmer the Stations' hourly station identification announcements to be aired
in accord with FCC rules. 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 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 the
telephone inquiries, control and oversee any remote control point for the
Stations.
2.3 Responsibility for Employees and Expenses. 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 Station
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 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. Programmer shall furnish or cause
to be furnished the personnel and material for the programs as provided by this
Agreement and all programs shall be in accordance with the Policy Statement and
FCC requirements. All advertising spots and promotional material or
announcements 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.
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3.2 Licensee Control of Programming. Programmer recognizes that the
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 Programmer's programming which Licensee
reasonably believes 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 supplied to Licensee 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 its
programming on the Stations, and that Programmer shall not broadcast any
material in violation of any law, rule, regulation 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 it provides to the Licensee. 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
it provides to Licensee. 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. The Stations'
outstanding accounts receivable on the Effective Date of this Agreement shall be
collected by Programmer for the benefit of Programmer and all accounts payable
shall be prorated to the Effective Date of this Agreement.
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 to quarterly, or more frequently at the request
of the Licensee, 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 from and against any and all claims, judgments, 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, adjudicated or alleged instances of
lible, slander, defamation, invasion of privacy, misappropriation of proprietary
right, illegal competition, unlawful trade practice, infringement of trademark
or infringement of copyright occuring in the course or otherwise arising out of
Programmer's broadcasts and sale of advertising time under this Agreement to the
extent permitted by law.
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' broadcasts 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 Commission on appeal.
Section 5
Access to Programmer Materials and Correspondence
5.1 Confidential Review. Prior to the provision of any 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.
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5.2 Political Advertising. Programmer shall cooperate with Licensee to
assist Licensee in complying with the Communications Act and 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. In the event that Programmer fails to meet its political time obligations
under the Communications Act, and the rules and regulations of the FCC and such
failure inhibits Licensee in the performance of its political time obligations,
then to the extent reasonably necessary to assure the Licensee's performance,
Programmer shall release advertising availabilities to Licensee; provided,
however, that all revenues realized by Licensee as a result of such a release of
advertising time shall be immediately paid to Programmer.
Section 6
Termination and Remedies Upon Default
6.1 Termination. 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 written notice
from the non- breaching party;
(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; or.
(e) the Asset Purchase Agreement is terminated in accordance with its
terms.
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 within the parameters authorized
by the FCC, Licensee
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shall be obligated, at its expense, to take such steps as are reasonably
necessary to restore the effective operating parameters of the relevant Stations
or demonstrate, by the use of the report of another consulting engineer, hired
at its expense, that the operating parameters are not materially deficient. If
the Stations' operating parameters are not restored within thirty (30) days of
notice of the coverage or operating deficiencies, then Programmer shall be
entitled to a full refund, on a daily basis, of the Hourly Credit amount set
forth in Section 1.9 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 consecutive days or more Licensee reduces
its transmitter output power on the Stations by fifty percent (50%) or more,
Programmer may elect a refund equal to one half of the Hourly Credit amount set
forth in Section 1.9 for so long as such power reduction continues to occur if
Programmer has, in fact, been required to make rebates and/or other financial
accommodations to its advertisers and such refund shall be reflected in a refund
payment by Licensee to Programmer within ten (10) days of the end of the month.
(c) If Licensee uses an auxiliary or alternate transmitter for the
Stations for a period of five (5) consecutive days or more, then the refund for
such period shall be twenty-five percent (25%) of the Hourly Credit amount set
forth in Section 1.9 for so long as such auxiliary or alternate transmitter site
is in use if Programmer has, in fact, been required to make rebates and/or other
financial accommodations to its advertisers. Should such transmitter site move
continue for more than thirty (30) days, the refund for such period shall be
equal to fifty percent (50%) of the Hourly Credit amount set forth in Section
1.9 for so long as such alternate transmitter site is in use. The refund shall
be reflected in a refund payment by Licensee to Programmer within ten (10) days
of the end of the month.
(d) 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, of the Hourly Credit amount set
forth in Section 1.9 and such refund shall be made within ten (10) days of the
end of the month.
6.3 Force Majeure. Any failure or impairment of the Stations'
facilities or any delay or interruption in the broadcast of programs, or failure
at any time to furnish facilities, in whole or in part, for broadcast, due to
acts of god, strikes, lockouts, material or labor restrictions by any
governmental authority, civil riot, floods and any other cause not reasonably
within the control of Licensee will not be liable to Programmer, except to the
extent of allowing in each such case an appropriate refund for time not provided
based upon the Hourly Credit set forth under Section 1.9 calculated upon the
length of time during which the failure or impairment exists or continues.
6.4 Other Agreements. During the term of this Agreement, 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 insure to the
benefit of the parties hereto, their successors and assignees, including
specifically any purchaser of the Station or 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 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 and
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). The parties
shall execute a Certification in the form of Attachment VI hereto, as required
by Section 73.3555(a) (2) (ii) of the FCC's rules.
7.5 Entire Agreement. This Agreement and the Attachments hereto and the
Asset Purchase Agreement between Programmer and Licensee 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.
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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 State of California.
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: D & V Equinox XX
216 El Camino Drive
Beverly Hills, CA 90212
Attn: Mr. Dwight Case
Fax: (310) 659-3700
Copies To: Theodore D. Kramer, Esq.
Haley, Bader & Potts
4350 North Fairfax Drive
Suite 900
Arlington, VA 22203-1633
Fax: (703) 841-2345
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
11
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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 Washington, DC 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
LICENSEE:
D & V EQUINOX XX
By: _____________________________________
Dwight Case, President
12
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PROGRAMMER:
AMERICAN RADIO SYSTEMS CORPORATION
By: ____________________________________
13
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ATTACHMENT I
Station Coverage
KOQO(FM) and KOQO(AM) current FCC Licenses and contour maps on file
with the FCC.
14
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ATTACHMENT II
Station Expenses
a) Salary, payroll taxes, benefits and other costs relating to the employment
of the Stations' General Manager.
b) Salary, payroll taxes benefits, and other costs relating to the employment
of the Stations' Business Manager.
c) Cost of tower rent electricity and other utilities directly related to the
operation of the Station's transmitter facilities.
15
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ATTACHMENT IV
Broadcast Station Programming Policy Statement
16
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BROADCAST STATION
PROGRAMMING POLICY STATEMENT
Programmer agrees to cooperate with Licensee in the broadcasting of
programs of the highest possible standard of excellence and for this purpose to
observe the following regulations in the preparation, writing and broadcasting
of its programs.
I. No Plugola or Payola. The mention of any business activity or "plug" for
any commercial, professional, or other related endeavor, except where
contained in an actual commercial message of a sponsor, is prohibited.
II. No Lotteries. Announcements giving any information about lotteries or games
prohibited by federal or state law or regulation are prohibited.
III. Election Procedures. At least ninety (90) days before the start of any
primary or election campaign, Programmer will clear with Licensee's general
manager the rate Programmer will charge for the time to be sold to
candidates for the public office and/or their supporters to make certain
that the rate charged is in conformance with the applicable law and station
policy.
IV. Required Announcements. Progammer shall broadcast (I) an announcement in a
form satisfactory to Licensee at the beginning of each hour to identify the
Stations, (ii) an announcement at the beginning and end of each program to
indicate that program time has been purchased by Programmer, and (iii) any
other announcements that may be required by law, regulation, or Stations'
policy.
V. Commercial Recordkeeping. Programmer shall not receive any consideration in
money, goods, services, or otherwise, directly or indirectly (including to
relatives) from any persons or company for the presentation of any
programming over the station without reporting the same in advance to and
receiving the prior written consent of Licensee's general manager. No
commercial messages ("plugs") or undue references shall be made in
programming presented over station to any business venture, profit making
activity, or other interest (other than noncommercial announcements for
bona fide charities, church activities or other public service activities)
in which Programmer (or anyone else) is directly or indirectly interested
without the same having been approved in advance by the general
manager/chief engineer and such broadcast being announced and logged and
sponsored.
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VI. No Illegal Announcements No announcements or promotion prohibited by
federal or state law or regulation of any lottery or game shall be made
over the Stations. Any game, contest, or promotion relating to or to be
presented over the Stations must be fully stated and explained in advance
to Licensee, which reserves the right in its sole discretion to reject any
game, contest, or promotion.
VII. Licensee Discretion Paramount In accordance with the Licensee's
responsibility under the Communications Act of 1934, as amended, and the
Rules and Regulations of the Federal Commissions, Licensee reserves the
right to reject or terminate any advertising proposed to be presented or
being presented over the Stations which is in conflict with Licensee's
policy or which in Licensee's or its general manager/chief engineer's sole
judgment would not serve the public interest.
Licensee may waive any of the foregoing regulations in specific instances,
if, in its opinion, good broadcasting in the public interest is served.
In any case where questions of policy or interpretation arise, Programmer
should submit the same to Licensee for decision before making any commitments in
connection therewith.
18
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ATTACHMENT V
Payola Statement
19
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FORM OF PAYOLA AFFIDAVIT
City of ____________________ )
County of __________________ ) ss.
State of ___________________ )
ANTI-PAYOLA/PLUGOLA AFFIDAVIT
________________________, being first duly sworn, deposes and says as follows:
1. He is _________________________ for _________________________________.
(Position)
2. He has acted in the above capacity since _____________.
3. No matter has been broadcast by Stations __________ for which service,
money or other valuable consideration has been directly or indirectly paid,
or promised to, or charged, or accepted, by him from any person, which
matter at the time so broadcast has not been announced or otherwise
indicated as paid for or furnished by such person.
4. So far as he is aware, no matter has been broadcast by Stations _______ for
which service, money, or other valuable consideration has been directly or
indirectly paid, or promised to, or charged, or accepted by Stations
_______ in furnishing programs, from any person, which matter at the time
so broadcast has not been announced or otherwise indicated as paid for or
furnished by such person.
5. In future, he will not pay, promise to pay, request, or receive any
service, money, or any other valuable consideration, direct or indirect,
from a third party, in exchange for the influencing of, or the attempt to
influence, the preparation of presentation or broadcast matter on Stations
________.
6. Nothing contained herein is intended to, or shall prohibit receipt or
acceptance of anything with the expressed knowledge and approval of my
employer, but henceforth any such approval must be given in writing by
someone expressly authorized to give such approval.
20
<PAGE>
7. He, his spouse and his immediate family do____ do not ____ have any present
direct or indirect ownership interest in (other than an investment in a
corporation whose stock is publicly held), serve as an officer or director
of, whether with or without compensation, or serve as an employee of, any
person, firm or corporation engaged in:
1. The publishing of music;
2. The production, distribution (including wholesale and retail sales
outlets), manufacture or exploitation of music, films, tapes,
recordings or electrical transcriptions of any program material
intended for radio broadcast use;
3. The exploitation, promotion, or management of persons rendering
artistic, production and/or other services in the entertainment field;
4. The ownership or operation of one or more radio or television
stations;
5. The wholesale or retail sale of records intended for public purchase;
6. Advertising on Stations ______, or any other station owned by its
licensee (excluding nominal stockholdings in publicly owned
companies).
8. The facts and circumstances relating to such interest are none _______ as
follows________:
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
______________________________________
Affiant
Subscribed and sworn to before me
this ______ day of ________________, 199___.
___________________________________________
Notary Public
My Commission expires: ___________________
21
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ATTACHMENT VI
FCC Certification
22
<PAGE>
CERTIFICATION
Pursuant to Section 73.3555(a) (2) (ii) of the FCC's Rules:
1. The licensee of the brokered stations affected by the foregoing Time
Brokerage Agreement hereby certifies that it will at all times
maintain ultimate control (as defined in FCC rules and regulations)
over the Station's facilities, including specifically control over the
Station's finances, personnel and programming; and
2. The licensee of the brokering stations hereby certifies that the
proposed Agreement for the time brokerage complies with the provisions
of Section 73.3555(a) (2) (ii) of the FCC's rules.
Dated this ________ day of _____________________, 199______.
LICENSEE:
By: ______________________________________
Its: ______________________________________
PROGRAMMER: AMERICAN RADIO SYSTEMS CORPORATION
By: ______________________________________
Its: ______________________________________
23
EXHIBIT 10.67
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated _______________, 1996, by
and between American Radio Systems Corporation, a Delaware corporation
("Buyer"), and Mortenson Broadcasting Company, an Ohio corporation ("Seller").
P R E M I S E S:
A. Seller is the licensee of and operates radio station WBGR(AM),
Baltimore, Maryland (the "Station") 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.
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 the Station for cash) by
Seller prior to the Closing 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 in
connection with the conduct of the business or operations of the Station, being
such assets as are specifically set forth in Section 2.1 herein, which 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, except employment or
employee-related 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.
<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 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 Two Hundred Thousand Dollars
($200,000) held by Americom Radio Brokers, Inc. as Escrow Agent pursuant to an
Escrow Agreement of even date, by and among Buyer, Seller, and Escrow Agent in
the form of Schedule 1.8 hereto.
1.9 "Excluded Assets" shall mean those assets described or set forth in
Section 2.2 herein, in addition to any assets not specifically set forth in
Section 2.1 herein.
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, 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.
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<PAGE>
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 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 all as
specifically set forth in Section 3.6 hereof and in Schedule 3.6 hereto.
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 interests owned by Seller and
used in the conduct of the business or operations of the Station which are
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.
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 and all other
information and similar intangible assets relating to the Station,
including those isted 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;
3
<PAGE>
(g) All choses 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 four (4) years.
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 four (4) years from
the Closing Date any information dealing exclusively with the business
and operations of the Station, and Seller's other books and records
related to internal 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 Two Million Seven
Hundred and Seventy-Five Thousand ($2,775,000). The Purchase Price shall be
adjusted to reflect any adjustments or prorations made and agreed to at Closing
as provided in Section 2.4 hereof.
2.4 Adjustments and Prorations. All revenues arising from the Station
up until midnight on the day prior to the Closing Date, and all expenses arising
from the Station up until midnight on the day prior to the Closing 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
4
<PAGE>
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 Closing 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 Closing 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 Closing for which trade or
barter consideration has been received by the Seller prior to the Closing.
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 "Closing 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 Closing, together with a copy of any working papers relating to such Closing
Certificate and such other supporting evidence as Seller may reasonably request.
If Seller shall conclude that the Closing 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 Closing
Certificate, provide to Buyer its written statement of any discrepancies
believed to exist. Joseph L. Winn on behalf of Buyer, and Jack Mortenson 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 Closing 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 Closing, 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.
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2.5 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
Ohio 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. Each 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. 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 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.
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3.3 Absence of Conflicting Agreements. To Seller's knowledge and
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 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 copies 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. 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 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, and (iii) 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, except
as specifically set forth in 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 other
modifications of such instruments), all of which instruments are valid, binding
and enforceable in accordance with their terms. To Seller's knowledge, Seller is
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not in material breach, nor 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, to Seller's
knowledge 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 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). Other than the Contracts, to Seller's
knowledge the Seller requires no contract or agreement to enable it to carry on
its business as presently conducted. To Seller's knowledge, 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
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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. To Seller's knowledge, 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 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 in the conduct of the business or operations of the
Station, all of which are valid and in good standing and, to 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 compiled
financial statements of Seller containing statements of income relating to the
business and operations of the Station 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, and present fairly the operating income and
financial condition of the Station 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.
3.12 Reports. To Seller's knowledge, 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
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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 to Seller's knowledge, 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 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. To Seller's knowledge, 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
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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.
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 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
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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 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, 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 any 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 Conduct of Business in Ordinary Course. Since January 1, 1995,
Seller has conducted the business and operations of the Station only in the
ordinary course and has not:
(a) Suffered any material adverse change in the business
assets or properties, or condition (financial or otherwise) of Seller
or of the Station, including without limitation any damage, destruction
or loss affecting the Assets and any material decreases in operating
cash flow;
(b) 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
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(c) 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.
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.
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 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.
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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 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 trade or barter contracts;
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 Five Thousand
Dollars ($5,000), 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 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;
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(5) Programming. Make any material changes in the broadcast
hours or in the percentages of types of programming broadcast by the
Station, or make any other material changes in the Station's
programming policies, except such changes as in the good faith judgment
of the Seller are required by the public interest;
(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 Station;
(7) Rights. Waive any material right relating to the Station
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.
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 (but not relating to Seller's other
operations or business) 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 (but not relating to Seller's other operaitons
or business) 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;
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(4) Consents. Use its reasonable efforts to obtain the
Consents;
(5) Preservation of Business. Use its reasonable efforts 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
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;
(8) Personnel. Promptly notify Buyer as personnel vacancies
occur at the Station and consider for employment all personnel
recommended by Buyer for such vacant positions;
(9) 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;
(10) Financial Information. Furnish to Buyer within fifteen
(15) days after the end of each month ending between the date hereof
and the Closing Date a statement of income and expense relating to the
Station's operations 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.
(11) 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
(12) 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.
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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, (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 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. Seller and Buyer shall each pay 50% of
all sales, gains, 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. 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 Americom, whose fee shall be solely
the responsibility of Seller.
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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.
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.
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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. Within five (5) business days after execution of this Agreement,
Seller shall provide 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 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 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 Closing, 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 Closing 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 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, unless the customer otherwise directs in writing. 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
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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 Station for the period of Seller's
ownership thereof.
SECTION 7
CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
7.1 Conditions to 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, 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
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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. Adverse Change. Between the date of this Agreement and the Closing
Date, there shall have been no material adverse change in the Assets or the
Stations (as set forth in Section 3.19 (a)), including, without limitation,
Seller's having achieved at the Station no less than Three Hundred and
Forty-Four Thousand Dollars ($344,000) in income from operations during the
twelve month period ending December 31, 1995. For purposes of this provision,
income from operations shall be determined in the manner set forth in the
Financial Statements for the twelve month period ending December 31, 1995
previously supplied to Buyer.
G. Real Property Survey. Buyer shall have obtained at its expense a
location survey with respect to the Station's tower site verifying that all
towers, guy anchors, buildings and other improvements are located entirely on
the Real Property listed in Schedule 3.5.
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.
C. Deliveries. Buyer shall have made or stand willing and able to make
all the deliveries set forth in Section 8.3.
D. Real Property Survey. Buyer shall have obtained at its expense a
location survey with respect to the Station's tower site verifying that all
towers, guy anchors, buildings and other improvements are located entirely on
the Real Property listed in Schedule 3.5.
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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 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 __________________________ 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 an appropriate Ohio 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
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Articles of Incorporation and By Laws as in effect on the date hereof, certified
by Seller's Secretary as of the Closing Date;
(e) 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;
(f) Noncompetition Agreement. The Noncompetition Agreement as set forth
in Schedule 6.5; and
(g) 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;
(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.
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(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 Closing shall not have occurred on or before
January 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 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 from the investment of the
Escrow Deposit, less any compensation due the Escrow Agent, shall be paid to
Seller.
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9.3 Specific Performance. The parties recognize that in the event
Seller should refuse to perform under the provisions of this Agreement, monetary
damages would not be adequate. Buyer shall therefore be entitled, as its
exclusive remedy hereunder, , 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. 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 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. As of the effective date
of this Agreement, neither party is aware of any misrepresentation or breach of
warranty under this Agreement on the part of the other party hereto.
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, 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
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.
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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
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: Mortenson Broadcasting Company
3191 Nicholasville Road
Lexington, KY 40503
Attn: Jack Mortenson
Fax: (606) 245-1600
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with a copy
(which shall not
constitute notice) to: Matthews & Rigsby, PLLC
201 W. Short Street
Lexington, KY 40507
Attn: William F. Rigsby, Esq.
Fax: (606) 233-4642
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
11.2.
11.2 Benefit and Binding Effect. Neither party hereto may assign this
Agreement without the prior written consent of the other party hereto, except
(i) 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 and (ii) Seller may assign its rights hereunder to a qualified
intermediary party as part of a IRS Code Section 1031 tax-free exchange of
assets. In the event of such a tax-free exchange of assets, Seller shall remain
liable to Buyer to for its obligations and shall indemnify Buyer from and
against any loss, damage or liability arising or resulting from its such
assignment or such tax-free exchange of assets 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.
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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 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: MORTENSON BROADCASTING COMPANY
By: ______________________________________
Title:
BUYER: AMERICAN RADIO SYSTEMS CORPORATION
By: ______________________________________
Title:
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SCHEDULES TO ASSET PURCHASE AGREEMENT
1.8 Escrow Agreement
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
3.16 Claims; legal actions
6.5 Non-Competition Agreement
8.2 Opinion of Seller's General and FCC Counsels
8.3 Opinion of Buyer's General Counsel
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EXHIBIT 10.68
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated _______________, 1996, by
and between American Radio Systems Corporation, a Delaware corporation
("Buyer"), and Olympic Broadcasters, Inc., a Nevada corporation ("Seller").
P R E M I S E S:
A. Seller is the licensee of and operates radio station KSSJ(FM),
Shingle Springs, California (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.
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 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.
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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 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 Seven Hundred Thousand
Dollars ($700,000) held by Star Media Group as Escrow Agent pursuant to an
Escrow Agreement of even date, by and among Buyer, Seller, and Escrow Agent in
the form of Schedule 1.8 hereto.
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 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 commencemenet 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
6.4 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 and all other
intellectual property and similar intangible assets relating to the
Station, including those listed in Schedule 3.9 hereto;
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(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 choses 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
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.
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2.3 Purchase Price. The Purchase Price shall be Thirteen Million Five
Hundred Thousand Dollars ($13,500,000). 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 Time Brokerage Agreement, and all
expenses arising from the Station up until midnight on the day prior to the
Closing 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 Closing 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 Closing 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 Closing Date for which trade or barter consideration has been
received by the Seller prior to the Closing 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 adjustments and prorations to be
made pursuant to this Section 2.4, including any adjustments and prorations made
at the Closing 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 Irv
Schiffman on behalf of Seller, or their respective designees, shall attempt
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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. 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
Nevada and is duly qualified to conduct its business in the State of California,
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 Agreement and the documents contemplated
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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 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 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 leases or other instruments. All Real
Property (including the improvements thereof) (i) is in good condition and
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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.
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 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). 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.
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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 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 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.
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
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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 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.
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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.
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. 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 against or upon Seller based on or relating to
any environmental matters, and Seller has no knowledge that any such claims will
be asserted.
3.19 Conduct of Business in Ordinary Course. Since January 1, 1996,
Seller has conducted the business and operations of the Station only in the
ordinary course and has not:
(a) Suffered any material adverse change in the business
assets or properties, or condition (financial or otherwise) of Seller
or of the Station, including without limitation any damage, destruction
or loss affecting the Assets and any material decreases in operating
cash flow (but excluding decrease in audience ratings solely);
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(b) 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
(c) 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.
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.
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 California. 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;
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(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 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 Joint Operating 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 One Thousand Dollars
($1,000) in value or payments, or if such Contracts in the aggregate
exceed Five Thousand Dollars ($5,000) 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;
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(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 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.
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6.2 Taxes, Fees and Expenses. Buyer shall pay all sales, gains,
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. 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, except for Star Media Group, whose fee shall be
solely the responsibility of Seller.
6.4 Time Brokerage Agreement. Buyer and Seller shall enter into a Time
Brokerage Agreement in the form set forth in Schedule 6.4 to be effective as of
the date of this Agreement or as of such other date as the parties mutually
agree.
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.
6.8 Risk of Loss.
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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.
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
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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, unless the customer otherwise
directs in writing. 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 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.
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6.12 Signal Upgrade. Seller shall use its commercially reasonable
efforts to pursue (i) all approvals, permits and authorizations required for the
relocation of the Station's transmitter site to the facility located at Mount
Ararat, California (the "Local Approvals") and (ii) the approval of an FCC
Construction Permit to increase the Station's authorized power to between 18 and
47kW (the "Signal Upgrade"). In the event Seller obtains the Local Approvals
prior to the Closing Date, the Purchase Price shall be increased by Five Hundred
Thousand Dollars ($500,000). In the event Seller obtains the Local Approvals
subsequent to the Closing Date but prior to (i) February 15, 1997, Buyer shall
remit to Seller the amount of Five Hundred Thousand Dollars ($500,000); (ii)
March 15, 1997, Buyer shall remit to Seller the amount of Four Hundred Thousand
Dollars; (iii) April 15, 1997, Buyer shall remit to Seller the amount of Three
Hundred Thousand Dollars ($300,000); (iv) May 15, 1997, Buyer shall remit to
Seller the amount of Two Hundred Thousand Dollars; or (v) June 15, 1997, Buyer
shall remit to Seller the amount of One Hundred Thousand Dollars ($100,000),
with any such payment to be considered an addition to the Purchase Price. No
additional payment shall be due Seller by Buyer if the Local Approvals have not
been obtained by June 15, 1997.
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.
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
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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
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.
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 five
(5) days following the date upon which the FCC Consent has become a Final Order
and the earlier of (i) the date upon which the Local Approvals and the FCC
Construction Permit for the Signal Upgrade have both been obtained or (ii)
February 15, 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.
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
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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 California
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 California,
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(h) 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(e) 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 March
31, 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
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, 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)
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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 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 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, 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:
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(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
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.
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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 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: Olympic Broadcasters, Inc.
1434 N.W. Benfield Drive
Portland, OR 97229
Attn: Doug Kahle
Fax: (503) 297-7399
and to: William Rademaker, Jr.
1325 4th Avenue
Suite 1940
Seattle, WA 98101
Fax: (206) 624-5014
with a copy
(which shall not
constitute notice) to: Cohn & Marks
1333 New Hampshire Avenue, N.W.
Suite 600
Washington, DC 20036-1573
Attn: Richard A. Helmick
Fax: (202) 293-4827
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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.
11.3 Governing Law. This Agreement shall be governed, construed, and
enforced in accordance with the laws of the State of California.
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
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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 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: OLYMPIC BROADCASTERS, INC.
By: _______________________________
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
3.16 Claims; legal actions
6.1 Time Brokerage Agreement
6.5 Non-Competition Agreement
8.2 Opinion of Seller's General and FCC Counsels
8.3 Opinion of Buyer's General Counsel
29
EXHIBIT 10.69
TIME BROKERAGE AGREEMENT
TIME BROKERAGE AGREEMENT, made this _____ day of ___________, 1996 by
and between American Radio Systems Corporation (the "Programmer") and Olympic
Broadcasters, Inc. (the "Licensee").
WHEREAS Licensee owns and operates Broadcast Station, KSSJ(FM), Shingle
Springs, California (the "Station") pursuant to a license issued by the Federal
Communications Commission ("FCC").
WHEREAS Programmer is involved in radio station ownership and
operation.
WHEREAS the Licensee wishes to retain Programmer to provide programming
for the Station that is in conformity with the Station's 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 and Licensee are simultaneously entering into an
Asset Purchase Agreement (the "Asset Purchase Agreement") under which Licensee
is agreeing to sell the Station to Programmer, and Programmer and Licensee will
file with the FCC an application for consent to assign the Station's licenses
from Licensee to Programmer.
NOW, THEREFORE, in consideration of the above recitals and mutual
promises and covenants contained herein, the parties, intending to be bound
legally, agree as follows:
Section 1
Use of Station Air Time
1.1 Representations. Both Licensee and Programmer represent that they
are authorized to enter into this Agreement and that this Agreement constitutes
the legal, valid and binding obligation of each, enforceable against it in
accordance with its terms.
1.2 Effective Date; Term. The Effective Date of this Agreement shall be
July 1, 1996. It shall continue in force until March 31, 1997, or until
consummation of the assignment of the Station license from Licensee to
Programmer pursuant to the Asset Purchase Agreement, whichever event occurs
earlier, unless otherwise extended or terminated by the parties.
<PAGE>
1.3 Scope. During the term hereof, 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 shall 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 pay to Licensee a monthly fee of One Dollar ($1.00),
payable no later than the fifteenth (15th) day of the month to which such fee
pertains, and Programmer shall reimburse Licensee for certain station expenses
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 Station's
compliance with all applicable provisions of the Communications Act of 1934, as
amended, the rules, regulations and policies of the FCC and all other applicable
laws. Licensee shall be solely responsible for all non-capital, ordinary and
customary operating expenses of the Station, including but not limited to
maintenance of the studio and transmitting facility and costs of electricity
except that Licensee shall be entitled to reimbursement pursuant to Section
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, and shall pay directly, or
reimburse Licensee for, all other non-capital, ordinary and customary operating
expenses of the Station. Licensee shall employ at its expense employees
consisting of, at a minimum, such management and staff personnel as required by
FCC 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 Station and shall maintain insurance at its
present levels covering the Station's transmission facilities. During the term
of the Agreement, Programmer agrees to perform, without charge, routine
monitoring of Licensee's transmitter performance and tower lighting if and when
requested by Licensee.
1.6 Licensee Representations and Warranties. Licensee represents and
warrants as follows:
(a) Licensee holds the licenses and other permits and authorizations
necessary for the present operation of the Station as set forth in Attachment I.
There is not now pending, or to Licensee's best knowledge, threatened, any
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action by the FCC or by any other party to revoke, cancel, suspend, refuse to
renew or modify adversely any of such licenses, permits or authorizations except
as previously revealed in writing to Programmer. To the Licensee's best
knowledge, after due inquiry, Licensee, with respect to the Station, is not in
material violation of any statute, ordinance, rule, regulation, policy, order or
decree of any federal, state or local entity, court or authority having
jurisdiction over it or the Station, which would have an adverse effect upon the
Licensee, its assets utilized in the operation of the Station, the Station or
upon Licensee's ability to perform this Agreement. 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 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. Licensee shall, during the term of this Agreement, not
dispose of, transfer or assign any of such assets and properties except with the
prior written consent of the Programmer.
(b) Licensee shall pay, in a timely fashion, all of the non-capital,
ordinary and customary expenses incurred in operating the Station including
lease payments, utilities, taxes, etc., as set forth in Attachment II, and shall
provide Programmer with a certificate(s) of such timely payment (with invoices
attached thereto to the extent such invoices exist) at one or more times within
thirty (30) days of the end of each month. Licensee shall be reimbursed by
Programmer for those payments listed on Attachment II within five (5) business
days after presentation of any and each certificate of payment.
1.7 Programmer Responsibility. Programmer shall be solely responsible
for any expenses incurred in the origination and/or delivery of programming from
any remote location and for any publicity or promotional expenses incurred by
Programmer, including, without limitation, ASCAP, BMI, SESAC music license fees
for all programming provided by Programmer.
1.8 Contracts. Programmer will not be required to assume performance of
any of the Licensee's contracts and leases pertaining to the Station except as
indicated 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 as listed on Attachment III-A and Licensee shall
assign all of its rights under those trade and barter agreements to Programmer.
1.9 Hourly Credit. Programmer shall receive from Licensee, as a refund
consisting of a flat rate credit of $950.00 per hour ("Hourly Credit"), for any
part of the weekly one hundred sixty-four (164) hours of programming time
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that Licensee uses to broadcast its own programming including periods during
which Licensee is unable, for any reason (except for Programmer's failure to
deliver its programming to Licensee), to broadcast the Programmer's 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.
1.11 Use of Station Studios. Licensee shall have full use of the
station's facilities to the extent necessary to fulfull its programming
obligation hereunder and in compliance with FCC regulations. 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 programming for the Station; provided, however, that Licensee shall
maintain, for its sole use, sufficient space at the Station's studios for its
management level employees. Under the overall supervision o Licensee, Programmer
shall and may peacefully and quietly have the full use of and enjoy the use of
the Station's 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 and for any other stations owned or time-brokered by
the Programmer within the Sacramento, California market, and shall at all times
be subject to the oversight of the 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 Obligations. Although both parties shall
cooperate in the broadcast of emergency information over the station, 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
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Licensee, is of overriding public importance. Such interruption shall not
entitle Programmer to any credits on fees. Licensee shall also coordinate with
Programmer the Station's hourly station identification announcements to be aired
in accord with FCC rules. Licensee shall continue to maintain a main studio, as
that term is defined by the FCC, within the Station's 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 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 the
telephone inquiries, control and oversee any remote control point for the
Station.
2.3 Responsibility for Employees and Expenses. 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 Station
facilities pursuant to Section 1.11 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 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. Programmer shall furnish or cause
to be furnished the artistic personnel and material for the programs as provided
by this Agreement and all programs shall be in accordance with the Policy
Statement and FCC requirements. All advertising spots and promotional material
or announcements 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 Licensee and Programmer.
3.2 Licensee Control of Programming. Programmer recognizes that the
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 Programmer's programming which Licensee
reasonably believes to be unsatisfactory, unsuitable or contrary to the public
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interest. Provided that the Station's programming is not changed from a "smooth
jazz" format, Programmer shall have the right to change the programming elements
of the programming supplied to Licensee 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 its
programming on the Station, and that Programmer shall not broadcast any material
in violation of any law, rule, regulation 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, Programmer 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 it provides to the Licensee. Programmer
may sell advertising, consistent with applicable rules, regulations and the
Policy Statement, on the Station in combination with any other broadcast Station
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 it provides
to Licensee. Licensee shall retain all revenues from the sale of Station's'
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 neither it nor its
officers,directors, employees, agents or representatives will 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 to quarterly, or more frequently at the request
of the Licensee, provide Licensee with Payola Affidavits, substantially in the
form attached hereto as Attachment V, executed on behalf of Programmer and by
programming personnel and agents at the Station under the supervision of
Programmer.
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 from and against any and all claims, losses, costs,
liabilities, damages, FCC forfeitures and expenses (including reasonable legal
6
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fees and other expenses incidental thereto) of every kind, nature and
description, including but not limited to, slander or defamation or otherwise
arising out of Programmer's broadcasts and sale of advertising time under this
Agreement to the extent permitted by law.
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' broadcasts 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 Station's license renewal
application, Licensee and 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 will seek reversal of the staff
decision by appeal to the full Commission, at Programmer's option and expense.
If such appeal is unavailing, then the parties shall either reform the Agreement
or terminate it pursuant to Section 6.1(a).
Section 5
Access to Programmer Materials and Correspondence
5.1 Confidential Review. Prior to the provision of any 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 Station's 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 enable Licensee to comply with the lowest unit rate, equal
opportunities and reasonable access requirements of federal law. Programmer
shall release advertising availabilities to Licensee as necessary to permit
Licensee to comply with Licensee's programming obligations in the event that
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Programmer fails to meet its political time obligations under the Communications
Act of 1934, as amended, and the rules and regulations of the FCC and such
failure inhibit Licensee in the performance of its political time obligations;
provided, however, that all revenues realized by Licensee as a result of such a
release of advertising time shall be immediately paid to Programmer.
Section 6
Termination and Remedies Upon Default
6.1 Termination. In addition to other remedies available at law or
equity and subject to 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;
(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.
(e) if such party has a right to, and is exercising such right, to
terminate the Asset Purchase Agreement.
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 is not operating within the parameters authorized by
the FCC or that the Station's actual coverage of the market is materially less
than that set forth on Attachment I, 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 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 Station's'
effective coverage or operating parameters are not restored within thirty (30)
days of notice of the coverage or operating deficiencies, then Programmer shall
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be entitled to a full refund, on a daily basis, of the Hourly Credit amount set
forth in Section 1.9 until such deficiencies are corrected and such refunds
shall be made within ten (10) days of the end of the month. Nothing herein,
however, shall entitle Programmer to any such refund on the basis of the
Station's reduced power associated with the incident referred to in Schedule 3.6
of the Asset Purchase Agreement.
(b) If for a period of five consecutive days or more Licensee reduces
its transmitter output power on the Station by fifty percent (50%) or more,
Programmer may elect a refund equal to one half of the Hourly Credit amount set
forth in Section 1.9 for so long as such power reduction continues to occur if
Programmer has, in fact, been required to make rebates and/or other financial
accommodations to its advertisers and such refund shall be reflected in a refund
payment by Licensee to Programmer within ten (10) days of the end of the month.
(c) If Licensee uses an auxiliary or alternate transmitter for the
Station for a period of five (5) consecutive days or more, then the refund for
such period shall be twenty-five percent (25%) of the Hourly Credit amount set
forth in Section 1.9 for so long as such auxiliary or alternate transmitter site
is in use if Programmer has, in fact, been required to make rebates and/or other
financial accommodations to its advertisers. Should such transmitter site move
continue for more than thirty (30) days, the refund for such period shall be
equal to fifty percent (50%) of the Hourly Credit amount set forth in Section
1.9 for so long as such alternate transmitter site is in use. The refund shall
be reflected in a refund payment by Licensee to Programmer within ten (10) days
of the end of the month.
(d) 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, of the Hourly Credit amount set
forth in Section 1.9 and such refund shall be made within ten (10) days of the
end of the month.
6.3 Force Majeure. Any failure or impairment of the Station's
facilities or any delay or interruption in the broadcast of programs, or failure
at any time to furnish facilities, in whole or in part, for broadcast, due to
acts of God, strikes, lockouts, material or labor restrictions by any
governmental authority, civil riot, floods and any other cause not reasonably
within the control of Licensee will not render Licensee liable to Programmer,
except to the extent of allowing in each such case an appropriate refund for
time not provided based upon the Hourly Credit set forth under Section 1.9
calculated upon the length of time during which the failure or impairment exists
or continues.
6.4 Other Agreements. During the term of this Agreement, 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.
9
<PAGE>
Section 7
Miscellaneous
7.1 Assignment. This Agreement shall be binding upon and insure to the
benefit of the parties hereto, their successors and assignees, 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 unreasonably withheld, provided, however that
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 and Licensee has the
right to assign its payments hereunder to its Lenders upon written notification
to Programmer.
7.2 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.
7.3 FCC Certification (47 C.F.R. ss. 73.3555(a) (2) (ii). The parties
shall execute a Certification in the form of Attachment VI hereto, as required
by Section 73.3555(a) (2) (ii) of the FCC's rules.
7.4 Entire Agreement. This Agreement and the Attachments hereto and the
Asset Purchase Agreement between Programmer and Licensee 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.
7.5 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.
7.6 Headings. The headings are for convenience only and will not
control or affect the meaning or construction of the provisions of this
Agreement.
7.7 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 of 1934, as amended, 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.
7.8 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
10
<PAGE>
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:
To Licensee: Olympic Broadcasters, Inc.
1434 N.W. Benfield Drive
Portland, OR 97229
Attn: Doug Kahle, President
Fax: (503) 297-7399
William Rademaker, Jr.
1325 4th Avenue
Suite 1940
Seattle, WA 98101
Fax: (206) 624-5014
with a copy to: Cohn & Marks
1333 New Hampshire Avenue, N.W.
Suite 600
Washington, DC 20036-1573
Attn: Richard A. Helmick, Esq.
Fax: (202) 293-4827
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 Avenue, N.W.
Suite 800
Washington, DC 20036-68027
John R. Feore, Jr. Esq.
Fax: (202) 776-2222
7.9 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.
11
<PAGE>
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, or (ii) an action to enforce the award of
the arbitration panel rendered in accordance with this Section.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
LICENSEE:
OLYMPIC BROADCASTERS, INC.
By: _____________________________________
PROGRAMMER:
AMERICAN RADIO SYSTEMS CORPORATION
By: ____________________________________
12
<PAGE>
ATTACHMENT I
Station Coverage
KSSJ(FM) current FCC Licenses and contour maps on file with the FCC.
13
<PAGE>
ATTACHMENT II
Station Expenses
14
<PAGE>
ATTACHMENT III
Contracts
15
<PAGE>
ATTACHMENT IV
Broadcast Station Programming Policy Statement
16
<PAGE>
BROADCAST STATION
PROGRAMMING POLICY STATEMENT
Programmer agrees to cooperate with Licensee in the broadcasting of
programs of the highest possible standard of excellence and for this purpose to
observe the following regulations in the preparation, writing and broadcasting
of its programs.
I. No Plugola or Payola. The mention of any business activity or
"plug" for any commercial, professional, or other related
endeavor, except where contained in an actual commercial
message of a sponsor, is prohibited.
II. No Lotteries. Announcements giving any information about
lotteries or games prohibited by federal or state law or
regulation are prohibited.
III. Election Procedures. At least ninety (90) days before the
start of any primary or election campaign, Programmer will
clear with Licensee's general manager the rate Programmer will
charge for the time to be sold to candidates for the public
office and/or their supporters to make certain that the rate
charged is in conformance with the applicable law and station
policy.
IV. Required Announcements. Progammer shall broadcast (i) an
announcement in a form satisfactory to Licensee at the
beginning of each hour to identify the Station, (ii) an
announcement at the beginning and end of each program to
indicate that program time has been purchased by Programmer,
and (iii) any other announcements that may be required by law,
regulation, or Station policy.
V. Commercial Recordkeeping. Programmer shall not receive any
consideration in money, goods, services, or otherwise,
directly or indirectly (including to relatives) from any
persons or company for the presentation of any programming
over the station without reporting the same in advance to and
receiving the prior written consent of Licensee's general
manager. No commercial messages ("plugs") or undue references
shall be made in programming presented over station to any
business venture, profit making activity, or other interest
(other than noncommercial announcements for bona fide
charities, church activities or other public service
activities) in which Programmer (or anyone else) is directly
or indirectly interested without the same having been approved
in advance by the general manager/chief engineer and such
broadcast being announced and logged and sponsored.
17
<PAGE>
VI. No Illegal Announcements No announcements or promotion
prohibited by federal or state law or regulation of any
lottery or game shall be made over the Station. Any game,
contest, or promotion relating to or to be presented over the
Station must be fully stated and explained in advance to
Licensee, which reserves the right in its sole discretion to
reject any game, contest, or promotion.
VII. Licensee Discretion Paramount In accordance with the
Licensee's responsibility under the Communications Act of
1934, as amended, and the Rules and Regulations of the Federal
Commissions, Licensee reserves the right to reject or
terminate any advertising proposed to be presented or being
presented over the Station which is in conflict with
Licensee's policy or which in Licensee's or its general
manager/chief engineer's sole judgment would not serve the
public interest.
Licensee may waive any of the foregoing regulations in specific
instances, if, in its opinion, good broadcasting in the public interest is
served.
In any case where questions of policy or interpretation arise,
Programmer should submit the same to Licensee for decision before making any
commitments in connection therewith.
18
<PAGE>
ATTACHMENT V
Payola Statement
19
<PAGE>
FORM OF PAYOLA AFFIDAVIT
City of ____________________ )
County of __________________ ) ss.
State of ___________________ )
ANTI-PAYOLA/PLUGOLA AFFIDAVIT
___________________, being first duly sworn, deposes and says as follows:
1. He is _________________________ for _______________________.
(Position)
2. He has acted in the above capacity since _____________.
3. No matter has been broadcast by Station __________ for which
service, money or other valuable consideration has been
directly or indirectly paid, or promised to, or charged, or
accepted, by him from any person, which matter at the time so
broadcast has not been announced or otherwise indicated as
paid for or furnished by such person.
4. So far as he is aware, no matter has been broadcast by Station
_______ for which service, money, or other valuable
consideration has been directly or indirectly paid, or
promised to, or charged, or accepted by Station _______ in
furnishing programs, from any person, which matter at the time
so broadcast has not been announced or otherwise indicated as
paid for or furnished by such person.
5. In future, he will not pay, promise to pay, request, or
receive any service, money, or any other valuable
consideration, direct or indirect, from a third party, in
exchange for the influencing of, or the attempt to influence,
the preparation of presentation or broadcast matter on Station
________.
6. Nothing contained herein is intended to, or shall prohibit
receipt or acceptance of anything with the expressed knowledge
and approval of my employer, but henceforth any such approval
must be given in writing by someone expressly authorized to
give such approval.
20
<PAGE>
7. He, his spouse and his immediate family do____ do not ____
have any present direct or indirect ownership interest in
(other than an investment in a corporation whose stock is
publicly held), serve as an officer or director of, whether
with or without compensation, or serve as an employee of, any
person, firm or corporation engaged in:
1. The publishing of music;
2. The production, distribution (including wholesale and
retail sales outlets), manufacture or exploitation of
music, films, tapes, recordings or electrical
transcriptions of any program material intended for
radio broadcast use;
3. The exploitation, promotion, or management of persons
rendering artistic, production and/or other services
in the entertainment field;
4. The ownership or operation of one or more radio or
television stations;
5. The wholesale or retail sale of records intended for
public purchase;
6. Advertising on Station ______, or any other station
owned by its licensee (excluding nominal
stockholdings in publicly owned companies).
8. The facts and circumstances relating to such interest are none
_______ as follows________:
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------
Affiant
Subscribed and sworn to before me
this ______ day of ________________, 199___.
___________________________________________
Notary Public
My Commission expires: __________________
21
<PAGE>
ATTACHMENT VI
FCC Certification
22
<PAGE>
CERTIFICATION
Pursuant to Section 73.3555(a) (2) (ii) of the FCC's Rules:
1. The licensee of the brokered stations affected by the
foregoing Time Brokerage Agreement hereby certifies
that it will at all times maintain ultimate control
(as defined in FCC rules and regulations) over the
Station's facilities, including specifically control
over the Station's finances, personnel and
programming; and
2. The licensee of the brokering stations hereby
certifies that the proposed Agreement for the time
brokerage complies with the provisions of Section
73.3555(a) (2) (ii) of the FCC's rules.
Dated this ________ day of _____________________, 199______.
LICENSEE: OLYMPIC BROADCASTERS, INC.
By: ____________________________________
Its: ___________________________________
PROGRAMMER: AMERICAN RADIO SYSTEMS CORPORATION
By: ____________________________________
Its: ___________________________________
23
EXHIBIT 10.70
CHANCELLOR RADIO BROADCASTING COMPANY
LOCAL MARKETING AGREEMENT
(SACRAMENTO)
with
AMERICAN RADIO SYSTEMS CORPORATION
for
KSTE-AM, Rancho Cordova, California
<PAGE>
TABLE OF CONTENTS
1. Agreement Term.......................................................2
2. Programmer's Purchase of Airtime and Provision of Programming........2
3. Representations......................................................2
4. Consideration........................................................2
5. Collection of Accounts Receivable....................................3
6. ARS Control of the Station...........................................3
7. Programmer Responsibility............................................4
8. Contracts............................................................6
9. Employees............................................................6
10. Public Affairs Programming...........................................6
11. Additional License Obligations.......................................7
12. Broadcast Station Programming Policy Statement.......................7
13. Compliance with Copyright Act........................................7
14. Payola...............................................................8
15. Sales................................................................8
16. Local Marketing Agreement Challenge..................................8
17. Confidential Review..................................................8
18. Major Defaults; Termination..........................................9
18.1 Programmer's Major Defaults..............................9
18.2 ARS's Major Defaults.....................................9
18.3 Cure Periods............................................10
18.4 Termination Upon Occurrence of Major Default............10
18.5 Termination Upon Failure of Consummation of
Exchange Agreement.....................................10
i
<PAGE>
19. Liabilities Upon Termination........................................10
20. No Format Changes...................................................11
21. ARS's Indemnification...............................................11
22. Programmer's Indemnification........................................12
23. Procedure for Indemnification.......................................12
24. Dispute Over Indemnification........................................13
25. Programmer's Remedies for Operational Deficiencies..................13
26. Force Majeure.......................................................14
27. Other Agreements....................................................14
28. Assignment..........................................................14
29. Entire Agreement....................................................14
30. Taxes...............................................................14
31. Headings............................................................14
32. Governing Law.......................................................14
33. Notices.............................................................15
34. Severability........................................................16
35. Certifications......................................................16
36. No Joint Venture....................................................16
37. Beneficiaries.......................................................16
ii
<PAGE>
LOCAL MARKETING AGREEMENT
THIS LOCAL MARKETING AGREEMENT ("LMA" or "Agreement"), made as of July
31, 1996 by and between AMERICAN RADIO SYSTEMS CORPORATION ("ARS" or "Owner" or
"Licensee") and CHANCELLOR BROADCASTING COMPANY and CHANCELLOR RADIO
BROADCASTING COMPANY (collectively, "Chancellor" or "Programmer") both Delaware
corporations.
RECITALS
WHEREAS, ARS is a party to a certain Asset Purchase Agreement dated
March 26, 1996 between ARS and Fuller-Jeffrey Broadcasting Companies, Inc.
("FBC") contemplating the purchase by ARS of substantially all of FBC's assets
used or useful in the operation of AM broadcast station KSTE, Rancho Cordova,
California (the "Station"), including the related KSTE broadcast licenses and
authorizations issued by the Federal Communications Commission ("FCC"). That
Asset Purchase Agreement hereafter is referred to as the "California Agreement".
WHEREAS, Chancellor is a party to a certain Asset Purchase Agreement
("Purchase Agreement") dated May 14, 1996 among Chancellor and Chancellor
Broadcasting Company and OmniAmerica Group, WAPE-FM License Partnership, WFYV-FM
License Partnership, WEAT-AM License Partnership, WEAT-FM License Partnership,
WXXL License Partnership, WOLL License Partnership and WJHM-FM License
Partnership (collectively "Omni") contemplating, inter alia,, the purchase by
Chancellor of substantially all of Omni's assets used or useful in the operation
of Stations WEAT-AM/FM, West Palm Beach, Florida and Station WOLL-FM, Riviera
Beach Florida (collectively, the "Florida Stations"j, including the related FCC
broadcast licenses and authorizations. That Purchase Agreement is hereafter
referred to as the "Florida Agreement".
WHEREAS, ARS wishes to retain Chancellor to provide programming for the
Station pursuant to the terms and conditions set forth in this Agreement and in
conformity with the Station's policies and practices and the Federal
Communications Commission's ("FCC") rules and regulations concerning such
arrangements;
WHEREAS, Chancellor will broadcast such programming and sell
advertising that is in conformance with the Station's policies and all FCC rules
and regulations, including the requirement that the ultimate control of the
Station be maintained by ARS; and
WHEREAS, Chancellor and ARS intend to enter into an Exchange Agreement
(the "Exchange Agreement"), which would qualify as a tax free exchange of
like-kind assets pursuant to Section 1031 of the Internal Revenue Code of 1986,
as amended, pursuant to which ARS will agree to transfer to Chancellor, and
Chancellor has agreed to acquire from ARS, substantially all of the assets and
businesses of the Station; and Chancellor will agree to transfer to ARS, and ARS
has agreed to acquire from Chancellor, substantially all of the assets and
businesses of the Florida Stations.
1
<PAGE>
NOW THEREFORE, for and in consideration of the mutual covenants herein
contained, the parties, intending to be legally bound, agree as follows:
1. Agreement Term.
The term of this agreement will begin on August 1, 1996 ("Commencement
Date") and will continue until the Programmer acquires the assets of the Station
unless earlier terminated in accordance with the provisions set forth herein.
2. Programmer's Purchase of Airtime and Provision of Programming.
(a) During the term of this Agreement, Programmer shall
transmit programming, including commercials, that it produces or owns to the
Station twenty-four (24) hours per day Monday through Friday and for forty-eight
(48) hours during Saturday through Sunday, provided that ARS may broadcast up to
two (2) hours of programming for the Station which is aimed at serving the needs
and interests of the Station's communities of license during the morning(s) of
Saturday and/or Sunday subject to Section 10 hereto.
(b) To facilitate delivery of programming by Programmer
hereunder, ARS hereby grants to Programmer the right for the term of this
Agreement to use substantially all of the equipment located in the Station's
studios and currently used by ARS for broadcasting programs on the Station. ~n
addition, Programmer shall have, and ARS hereby grants to Programmer, a License
to enter on the premises currently occupied by the Station for the purpose of
producing its programming hereunder; provided, however, ~hat ARS shall maintain,
for its use, sufficient space at the Station's studios to enable ARS to conduct
its operations and originate programming. Accordingly, Programmer shall hold ARS
harmless from all costs, fees and expenses incurred with respect to any personal
injury suffered by any employee or agent of Programmer while on the property of
ARS. Programmer shall also be responsible for and shall reimburse ARS for any
damage to the property of ARS caused by Programmers' employees or agents.
3. Representations.
Each of ARS and Programmer represent as to itself that it is authorized
to enter into this Agreement and that this Agreement constitutes the legal,
valid and binding obligation of such party, enforceable against it in accordance
with its terms. Programmer hereby represents and warrants to ARS that Programmer
is an experienced radio broadcast station owner and operator and is fully
familiar with all pertinent legal requirements, including but not- limited to,
the Communications Act of 1934, as amended (the "Act"), and the Commission's
rules, regulations and policies governing the operation of radio broadcast
stations. Programmer will comply with all legal requirements, including but not
limited to the Act and the Commission's rules, regulations and policies.
4. Consideration.
2
<PAGE>
During the term of this Agreement, Programmer shall pay ARS the
payments set forth on the Payment Schedule executed in connection herewith.
5. Collection of Accounts Receivable.
(a) The accounts receivable of the Station generated prior to the
Commencement Date (the "Pre-LMA Receivables") shall be and remain the property
of ARS. Within 5 business days after the Commencement Date, ARS shall furnish
Chancellor with a list (certified by the Chief Financial Officer of ARS to be a
true and complete list) of all accounts receivable of ARS which remain
outstanding as of the Commencement Date. Chancellor agrees that if, after the
Commencement Date, it shall receive payment, directed to ARS, in respect to any
Pre-LMA Receivable, Chancellor shall remit to ARS, within five (5) business days
after the end of each month, any amounts received by Chancellor during the
preceding month (whether or not directed on their face to ARS), which are in
payment for advertising broadcast by the Station prior to the Commencement Date.
(b) During the period starting on the Commencement Date and ending
ninety (90) days thereafter, Chancellor shall use reasonable efforts, consistent
with ARS's current billing and collection practices and in the ordinary course
of the business, to assist ARS in the collection of any outstanding Pre-LMA
Receivables; provided, however, that, notwithstanding the foregoing, Chancellor
shall be under no obligation to commence litigation, employ counsel or engage
the services of a collection agency to effect collection. Chancellor shall not
make any compromise, adjustment, concession or settlement of any Pre-LMA
Receivable without ARS's express written consent and Chancellor shall be under
no obligation to compromise, adjust, concede or settle any accounts receivable
generated after the Commencement Date or otherwise grant any credit or allowance
to effect collection of a Pre-LMA Receivable. Absent written evidence that an
account debtor owing a Pre-LMA Receivable is disputing in good faith any portion
of such Pre-LMA Receivable, any payments received by Chancellor after the
Commencement Date from such account debtor shall be presumed to represent
payment on any undisputed portion of such Pre-LMA Receivable which is then
outstanding (with each such payment received from such account debtor to be
applied first to the most-aged Pre-LMA Receivable then owing from such account
debtor).
(c) ARS agrees to remit to Chancellor within S business days after the
end of each month, any amounts received by ARS during the preceding month
(whether or not directed on their face to Chancellor) which are in payment for
advertising broadcast by the Station after the Commencement Date.
(d) Chancellor shall not set-off any claim or amount against any of the
Pre-LMA
6. ARS Control of the Station.
3
<PAGE>
(a) ARS will have full authority, power and control over the management
and operations of the Station during the term of this Agreement. ARS will bear
all responsibility for the Station's compliance with all applicable provisions
of the Act, the rules, regulations and policies of the FCC and all other
applicable laws, including without limitation, the retention of control over the
policies, programming and operation of the Station, including the right to
preempt programming which in its good faith judgment it deems unsuitable or
contrary to the public interest. ARS shall be solely responsible for and pay in
a timely manner all real and personal property taxes, mortgage fees and expenses
and other real property costs, all studio and transmitter site leases, any
utilities (excluding telephone charges), and all costs and expenses for the
maintenance of all transmitter equipment. Programmer shall cooperate with and
assist ARS in complying with all FCC rules and regulations.
(b) ARS retains ultimate control over the Station and their premises.
Accordingly, all employees of Programmer present at the Station or on their
premises must comply with the policies and rules promulgated by ARS. In no event
shall Programmer, or Programmer's employees, represent, depict, describe or
portray Programmer as the Licensee of the Station To this end, all employees of
Programmer, whose work involves the Station, shall be informed as to ARS's
ultimate control over the Station and Programmer's subordinate capacity, and all
printed materials and promotional announcements shall accurately describe all of
the roles and responsibilities of ARS and Programmer.
(c) The Station's transmission equipment shall be maintained by ARS in
a condition consistent with good engineering practices and in compliance in all
material respects with the Act and all other applicable rules, regulations and
technical standards of the FCC. All capital expenditures reasonably required to
maintain the technical quality of the transmission equipment and its compliance
with applicable laws and regulations shall be made at the sole expense of ARS in
a timely fashion.
(d) ARS shall employ at its expense a management-level employee at the
Station and such other person for each Station as necessary to fulfill ARS's
duties hereunder and its obligations under the FCC's rules. A manager shall
direct the day-to-day operations of each Station and shall report to and be
accountable to ARS. ARS shall be responsible for the salaries, taxes, insurance
and related costs for all personnel it employs at the Station.
(e) ARS shall pay all regulatory fees, file all necessary applications,
maintain the Station's local public inspection files within the Station's
communities of license and shall prepare and place in such inspection file all
required documents including, but not limited to the Station's quarterly issues
and program lists on a timely basis.
7. Programmer Responsibility.
(a) Programmer shall be solely responsible for all expenses incurred in
the origination and/or delivery of programming from any remote location and for
all operating expenses of the Station (including telephone expenses Md expenses
related to sales, marketing,
4
<PAGE>
promotion, advertising, billing arid collections, and traffic), except that ARS
shall be responsible for the costs as provided in Section 6 hereof. Programmer
shall cooperate fully with ARS in responding to any questions, comment, inquiry
or complaint from any third party, including any governmental authority or agent
thereof, that may relate to or arise from the Station or its operations,
including the programming. In the event of Programmer's receipt of any question,
comment inquiry or complaint that may relate to or arise from the Station or its
operations, Programmer shall promptly notify ARS of the same.
(b) 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.
(c) Programmer shall cause the Station to transmit any required tests
of the Emergency Broadcast System or successor Emergency Alert System at such
times as are directed by ARS.
(d) Political Advertising and Announcements. Programmer shall maintain
and deliver to ARS all records and information required by the FCC to be placed
in the public inspection files of the Station pertaining to the broadcast of
political programming and advertisements, in accordance with the provisions of
Sections 73.1940 and 73.3526 of the FCC's rules and agrees to broadcast
sponsored programming addressing political issues, in accordance with the
provisions of Section 73.1212 of the FCC's rules.
1. Programmer's sale or use of commercial ti ne on the Station
shall conform to all federal and state laws governing the sale of political
advertising on radio stations. At least ninety (90) days before the start of any
primary or general election campaign, Programmer will clear with Licensee the
rates to be charged political candidates for public office and rate cards to be
sure that the rates and the rate cards are in conformance with all laws,
including requirements for providing reasonable time to state and local
candidates (as determined by the Licensee).
2. When required by law, Programmer shall sell such political
advertising time only at the Station's lowest unit rate. Within seven (7) days
after the broadcast of political advertising, Programmer shall review the
commercial spots that have aired on the Station, so as to insure that each
political candidate was charged the lowest unit rate. In the event a refund or
credit is due, Programmer shall pay such refund or provide such credits within
seven (7) days. The Programmer recognizes candidates' need to maximize their
campaign funds, and thus will provide such rebates or credits on a more
expeditious basis as the election day approaches.
3. Within twenty-four (24) hours of any request to purchase time
on any Station on behalf of a candidate for public office or to support or urge
defeat of an issue on an election ballot, Programmer will provide documentation
of the request, and its disposition, to Licensee so that appropriate records can
be placed in the Station's public file.
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4. In the event that Programmer fails to provide adequate
broadcast time for the broadcast of paid political programming or advertising by
political candidates, Licensee shall have the right to preempt commercial
announcements supplied by Programmer to make time available to these political
candidates.
5. Programmer shall furnish within its programming, on behalf of
ARS, all of the Station's identification announcements required by the FCC's
rules. Programmer shall provide information with respect to any of its
programming which is responsive to the public needs and interests of the area
served by the Station so as to assist ARS in the preparation of any required
programming reports, and provide other information to enable ARS to prepare
other records, reports and logs required by the FCC or other local, state or
federal governmental agencies.
8. Contracts.
Programmer shall perform and discharge the obligations of ARS from and
after the Commencement Date under the contracts and agreements listed in the
Schedules to the Exchange Agreement. In addition, Programmer shall perform and
discharge all obligations of the Station under all trade agreements from and
after the Commencement Date. Any receivables generated prior to the Commencement
Date shall be remitted to ARS pursuant to Section 8.1 of the Exchange Agreement.
Programmer will not enter into any third-party contracts, leases or agreements
which will bind ARS in any way except with ARS's prior written approval.
9. Employees.
Schedule B hereto contains a listing of the name, salary or
compensation and job description of all employees of the Station as of ______.
Pursuant to Section 14.7 of the Exchange Agreement, Programmer may, but shall
not be obligated to (other than through its own actions independent of any
provisions of this Agreement or through the assumption of any employment
contracts hereunder), offer employment to any employee of the Station who was
employed by ARS at or before the Commencement Date.
10. Public Affairs Programming.
Notwithstanding any other provision of this Agreement, Programmer
recognizes that ARS has certain obligations to broadcast programming to meet the
needs and interests of the community of license for the Station. ARS shall have
the right to air specific programing on issues of importance to the local
community. Nothing in this Agreement shall abrogate the unrestricted authority
of ARS 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. Accordingly, ARS may broadcast public affairs
programming as outlined in Section 2 hereof. ARS may air this programming in
either one two (2) hour block or any combination of half hour or full hour
blocks of time during the -hours of 6 am. to 9 a.m. Saturday and/or Sunday.
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11. Additional License Obligations.
Although both parties shall cooperate in the broadcast of emergency
information over the Station, ARS 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 ARS, is of overriding public importance.
ARS shall also coordinate with Programmer the Station's hourly station
identification announcements to be aired in accordance with FCC rules. ARS shall
continue to maintain a main studio, as that term is defined by the FCC, within
each of the Station's principal community contours and shall staff it as
required by the FCC. ARS shall be responsible for the salaries, taxes, insurance
and related costs for all personnel it employs at the Station and shall maintain
insurance at its present levels covering the Station's transmission-facilities.
In addition, ARS shall pay any federal regulatory fees, maintain its local
public inspection file within the Station's communities of license and shall
prepare and place in such public inspection file all required documents
including, but not limited to, its quarterly issues and program lists on a
timely basis. ARS shall also receive and respond to telephone inquiries from the
general public. Programmer shall provide ARS with information with respect to
certain of Programmer's programs which may be included in ARS's quarterly issues
and programs lists.
12. Broadcast Station Programming Policy Statement.
ARS has adopted and will enforce a Broadcast Station Programming Policy
Statement (the "Policy Statement"), a copy of which appears as Attachment I
hereto and which may be amended to meet changing regulatory requirements by ARS
upon reasonable advance written notice to Programmer. Programmer agrees and
covenants to comply in all material respects with the Policy Statement and with
all rules and regulations of the FCC. If ARS reasonably determines that a
program, commercial or other material supplied by Programmer does not comply
with the Policy Statement, or if ARS reasonably believes that some or all of a
program, commercial or other material is unsuitable or contrary to the public
interest, it may suspend or cancel such program, commercial or other material
and shall provide written notice to Programmer of such decision. Programmer
shall provide programs only in accordance with the Policy Statement and FCC
requirements. All advertising spots and promotional material or announcements
shall-comply with applicable federal, state and local regulation and policies
and the Policy Statement, and shall be produced in accordance with quality
standards established by ARS.
13. Compliance with Copyright Act.
Programmer represents and warrants to ARS that Programmer has full
authority to broadcast its programming on the Station and the Programmer shall
not broadcast any material in violation of any laws, rule, regulation 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. ARS will maintain as appropriate its own ASCAP, BMI and SESAC
licenses for the performance of Programmer's programs and Programmer shall
reimburse ARS
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for the costs of such licenses obtained by ARS within thirty (30) days when
paid. The right to use the programming and to authorize its use in any manner
shall be and remain vested in Programmer.
14. Payola.
Programmer agrees that neither it nor its employees or agents will
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 third
party providing such compensation, gift or gratuity 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 to execute and to provide ARS with payola Affidavits from
itself, and all of its employees and agents who are involved with providing
programming on the Station, at such times as ARS may reasonably request,
substantially in the form attached hereto as Attachment II.
15. Sales.
Programmer shall retain all revenues from the sale of advertising time
within the programming it provides to ARS and pay all expenses attributable
thereto.- Programmer may sell advertising, consistent with applicable rules,
regulations and the Policy Statements 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 it provides to ARS. ARS shall retain all revenues from the sale of
the Station's advertising during the hours each week in which ARS airs its own
nonentertainment programming.
16. Local Marketing Agreement Challenge.
If this Agreement is challenged at the FCC, counsel for ARS and counsel
for Programmer shall defend the Agreement and the parties' performance
thereunder throughout all FCC proceedings with Programmer and ARS each being
responsible for its own costs. If portions of this Agreement do not receive the
approval of the FC(C staff, then the parties shall reform the Agreement subject
to their respective reasonable business judgment and advise-of counsel or, at
ARS's or Programmer's option, seek reversal of the staff decision and approval
from the full Commission on appeal.
17. Confidential Review.
Prior to the provision of any programming by Programmer to ARS under
this Agreement, Programmer shall acquaint ARS with the nature and type of the
programming to be provided. ARS, solely for the purpose of ensuring Programmer's
compliance with the law, FCC rules and
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the Station's policies, shall be entitled to review and pre-empt at its
discretion from time to time on a confidential basis any programming material
and any other documents it may reasonably request, including all rate cards and
disclosure statements related to Programmer's political advertising. Programmer
shall promptly provide ARS with copies of all correspondence and complaints
received from the public as well as copies of all program logs and promotional
materials.
18. Major Defaults; Termination.
18.1 Programmer's Major Defaults. The occurrence of any of the
following, after the expiration of the applicable cure periods, if any, will be
deemed to be a "Major Default" by Programmer under this Agreement:
(a) Programmer's failure to timely pay any of the consideration
provided for in Section 4 and the Payment Schedule executed in connection
herewith or other payments required hereunder;
(b) Except as otherwise provided for in this Agreement, the
failure of Programmer to supply the programs for broadcast on the Station in
accordance with Section 2 hereof;
(c) Any termination of this Agreement by Programmer other than
as permitted in Section 18.4 or 18.5; or
(d) In the event of a voluntary filing by Programmer (or
involuntary filing with respect to Programmer not vacated with ninety (90) days
after such filing) of a petition for reorganization or dissolution under federal
bankruptcy laws or under substantially equivalent state laws.
18.2 ARS's Major Defaults. The occurrence of any of the
following, after the expiration of the applicable cure periods, if any, will be
deemed to be a "Major Default" by ARS under this Agreement:
(a) Except as otherwise provided for in this Agreement, the
failure of ARS to broadcast the programs supplied by Programmer in accordance
with Section 2 hereof;
(b) Any termination of this Agreement by ARS other than as
permitted in Section 18.4 or 18.5; or
(c) In the event of a voluntary filing by ARS (or involuntary
filing with respect to ARS not vacated with ninety (90) days after such filing)
of a petition for reorganization or dissolution- under federal bankruptcy laws
or under substantially equivalent state laws.
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18.3 Cure Periods. The cure periods before any event listed in
Section 18.1 or 18.2 shall become a Major Default are as follows:
(a) Payment by Programmer. The consideration to be paid to ARS
must be received by ARS within five (5) days after ARS gives written notice of
non-payment to Programmer.
(b) Certain Matters. There shall be no cure period for:
(i) a termination by Programmer described in Section
18.1(c); or
(ii) a termination by ARS described in Section 18.2(b)
hereof.
(c) Programs and Broadcast Matters. With respect to Programmer's
failure to provide programs referred to in Section 18.1(b) hereof or ARS's
failure to broadcast programs referred to in Section 1 8.2(a) hereof, the period
allowed for cure shall be ten (10) business days from the giving of written
notice of such failure to the defaulting party by the non-defaulting party.
(d) Other Matters. With respect to all matters capable of being
cured other than those described in Sections 18.3(a), 18.3(b) or 18.3(c) above,
the cure period shall be twenty (20) business days after written notice to the
defaulting party is given by the non-defaulting party or, with respect to
matters that through the exercise of reasonable diligence cannot be ruled within
such ten (10) day period, such longer period not to exceed ninety (90) days as
is reasonably necessary to effect such cure through the exercise of reasonable
diligence.
18.4 Termination Upon Occurrence of Major Default. Upon the
occurrence and continuation of a Major Default the non-defaulting party may
terminate this Agreement by giving written notice to the defaulting party within
sixty (60) days of such occurrence, provided that the non-defaulting party has
not also committed a Major Default hereunder which has not been waived. Such
written notice shall specify a termination date which is not less than seven (7)
days nor more than ninety (90) days from the date such notice is given. In the
event the non d(cent)faulting party does not exercise such right of termination
by giving such written notice within such sixty (60) day period, then the Major
Default giving rise to such right of termination shall be deemed waived and the
Agreement shall continue in full force and effect.
18.5 Termination Upon Failure of Consummation of Exchange
Agreement. Notwithstanding any other provision hereof, this Agreement may be
terminated by either party at any time following termination of the Exchange
Agreement.
19. Liabilities Upon Termination.
(a) Programmer shall be solely responsible for all of its
liabilities, debts and obligations incident to its purchase of broadcast time
hereunder, including, without limitation,
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accounts payable and unaired advertisements, but not for ARS's federal, state,
and local tax liabilities associated with Programmer's payments to ARS as
provided herein. Upon termination pursuant to Sections 18.4 or 18.5 hereto, ARS
shall be under no further obligation to make available to Programmer any
broadcast time or broadcast transmission facilities, provided that ARS agrees
that it will cooperate reasonably with Programmer to discharge in exchange for
reasonable compensation any remaining obligations of Programmer in the form of
air time following the termination date. At the date of termination, Programmer
shall return to ARS any equipment or property of the Station used by Programmer,
its employees or agents, in substantially the same condition as such equipment
existed on the Commencement Date, shall restore ARS's technical facilities to
substantially the same condition as such facilities existed on the Commencement
Date, ordinary wear and tear accepted, shall reassign to ARS all contracts and
agreements relating to the Station listed on the Schedules to the Exchange
Agreement which were assumed by Programmer upon the Commencement Date, and shall
otherwise take such actions to restore to the extent then practicable the
parties hereto to their respective positions prior to the Commencement Date.
(b) Upon termination of this Agreement pursuant to this Section
18 or as a result of the expiration of the term of this Agreement other than by
the Closing under the Exchange Agreement, each party shall be free to pursue any
and all remedies available to it at law, in equity or otherwise. All amounts
accrued or payable to ARS up to the date of termination which have not been paid
shall be immediately due and payable. Programmer shall, in addition to its other
legal and equitable rights and remedies under this Agreement or under applicable
law, be entitled immediately to cease providing any further programs to be
broadcast on the Station, and all amounts which have been prepaid to ARS for any
partial month beyond the termination shall be immediately due and payable to
Programmer. Programmer shall return all confidential information with respect to
the Station to the ARS. Programmer shall reassign all of ARS's accounts
receivable to ARS. Programmer shall remit to ARS all amounts collected with
respect to ARS's accounts receivable within five (5) business days of
termination hereunder.
Upon termination, Programmer shall be responsible for debts and
obligations resulting from the use of the Station's air time and equipment by
Programmer including, without limitation, accounts payable and net barter
balances in excess of Fifty Thousand Dollars ($50,000), relating to the period
on and after the date of this Agreement and up to the termination of this
Agreement and shall be entitled to the revenues and other credits for that
period.
20. No Format Changes.
During this Agreement, Programmer shall not materially change the
entertainment format of the Station.
21. ARS's Indemnification.
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ARS shall indemnify, defend, hold and save Programmer harmless from and
against any and all claims, losses, costs, liabilities, damages, FCC
forfeitures, and expenses, including counsel fees, of every kind, nature, and
description, including libel, slander, illegal competition or trade practices,
or infringement of trade marks or program titles, violation of rights of
privacy, and infringement of copyrights and proprietary rights arising out of:
(a) ARS's operation of the Station (not including the operation
of the Station by Programmer) under this Agreement; and
(b) breach of any warranty, representation, covenant, agreement
or obligation of ARS contained in this Agreement.
22. Programmer's Indemnification.
Programmer shall indemnify, defend, hold and save ARS harmless from and
against any and all claims, losses, costs, liabilities, damages, FCC
forfeitures, and expenses, including counsel fees, of every kind, nature, and
description, including libel, slander, illegal competition or trade practices,
or infringement of trade marks or program titles, violation of rights of
privacy, and infringement of copyrights and proprietary rights arising out of:
(a) the programming furnished by Programmer under this
Agreement,
(b) the actions or failure to act of its employees or agents
under this Agreement
(c) breach of any warranty, representation, covenant, agreement
or obligation
of Programmer contained in this Agreement.
23. Procedure for Indemnification.
The party seeking indemnification under this paragraph ("Indemnitee")
shall give the party from whom it seeks indemnification ("Indemnitor") prompt
notice, as provided herein, of the assertion of such a claim provided, however,
that the failure to give notice of a claim within a reasonable time shall only
relieve the Indemnitor of liability to the extent it is materially prejudiced
thereby. Promptly after receipt of written notice, as provided herein, of a
claim by a person or entity not a party to this Agreement, the Indemnitor shall
assume the defense of such claim; provided, however, that:
(a) If the Indemnitor fails, within a reasonable time after
receipt of notice of such claim, to assume the defense thereof, the Indemnitee
shall have the right to undertake the defense, compromise, and settlement of
such claim on behalf of and for the account and risk of Indemnitor, subject to
the right of the Indemnitor (upon notifying the Indemnitee of its election to do
so) to assume the defense of such claim at any time prior to the settlement,
compromise, judgment, or other final determination thereof;
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(b) If in the reasonable judgment of the Indemnitee, based upon
the advise of its counsel, a direct or indirect conflict of interest exists
between the Indemnitee and Indemnitor, the Indemnitee shall (upon notifying the
Indemnitor of its election to do so) have the right to undertake the defense,
compromise, and settlement of such claim on behalf of and for the account and
risk of Indemnitor (it being understood and agreed that the Indemnitor shall not
be entitled to assume the defense of such claim);
(c) If the Indemnitee in its sole discretion elects, it shall
(upon notifying the Indemnitor of its election to do so) be entitled to employ
separate counsel and to participate in the defense of such claim, but the fee
and expenses of counsel so employed shall (except as contemplated by clauses (a)
and (b) above) be borne solely by Indemnitee;
(d) The Indemnitor shall not settle or compromise any claim or
consent to the entry of any judgment that does not include as an unconditional
term thereof the grant by the claimant or plaintiff to each Indemnitee of a
release from any and all liability in respect thereof; and
(e) The Indemnitor shall not settle or compromise any claim in
any manner, or consent to the entry of any judgment, that could reasonably be
expected to have a material adverse effect on the Indemnitee.
24. Dispute Over Indemnification.
If upon presentation of a claim for indemnity hereunder, the Indemnitor
does not agree that all, or part, of such claim is subject to the
indemnification obligations imposed upon it pursuant to this Agreement, it shall
promptly so notify the Indemnitee. Thereupon, the parties shall attempt to
resolve their dispute, including where appropriate reaching an agreement as to
that portion of the claim, if any, which both concede is subject to
indemnification. To the extent that the parties are unable to reach some
compromise within thirty (30) days thereafter, the parties shall be free to
pursue all appropriate legal and equitable remedies.
25. Programmer's Remedies for Operational Deficiencies.
Except as set forth in this Section 25, and except for reductions in
power or interruptions occurring between the hours of 12:00 midnight and 6:00
am. as a result of maintenance or repairs or during such periods that the
Station are operating from its authorized auxiliary antenna, if any of the
normal broadcast transmissions of the Station are interrupted, interfered with.
or in any way impaired with so that the Station are not operating at full
licensed power and antenna height or are off the air, or in the event that ARS
preempts Chancellor's programming, Programmer shall be entitled to an equitable
reduction in the amount of its monthly fee which is proportionate to the period
of time that the Station's operations are deficient, the Station's programming
is preempted or the Station are off the air;
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26. Force Majeure.
Any failure or impairment of the Station's facilities or any delay or
interruption in the broadcast of programs, or failure at any time to furnish
facilities, in whole or in part, for broadcast due to Acts of God, strikes,
lockouts, maternal or labor restrictions by any governmental authority, civil
riot, floods and any other cause not reasonably within the control of ARS
(including any obligation of ARS to reduce power or suspend operation to a-void
occupational exposure to harmful RF radiation), shall not constitute a breach of
this Agreement and ARS will not be-liable to Programmer.
27. Other Agreements.
During the term of this Agreement, ARS will not enter into any other
local marketing, program provision, local management or similar agreement with
any third party with respect to the Station.
28. Assignment.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto, their successors and assignees, including specifically any
purchaser of the Station from ARS. Neither party may assign its rights without
the prior written consent of the other party which consent shall not be
unreasonably withheld.
29. Entire Agreement.
This Agreement, and the Attachments hereto, 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.
30. Taxes.
ARS 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. Each party shall be responsible
for any sales tax imposed on advertising aired during the programming provided
by that party.
31. Headings.
The headings are for convenience only and will not control or affect
the meaning or construction of the provisions of this Agreement.
32. Governing Law.
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The obligations of ARS and Programmer are subject to applicable
federal, state and local law, rules and regulations, including, but not limited
to, the Act and the Rules and Regulations of the FCC. The construction and
performance of the Agreement will be governed by the laws of the State of
California
33. 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; on the third
day after deposit in the U.S. mail if mailed by registered or certified mail,
postage prepaid and return receipt requested; on the day after delivery to a
nationally recognized overnight courier service if sent by an overnight delivery
service for next morning delivery and shall be addressed to the following
addresses:
To Programmer: Chancellor Broadcasting Company
12655 N. Central Expressway, Suite 321
Dallas, Texas 75243
Attention: Mr. Steven Dinetz
Telecopier Number: (214) 239-0220
Copy to: Matthew L. Leibowitz, Esq.
Leibowitz & Associates
One S.E. Third Avenue, Suite 1450
Miami, Florida 33131
Telecopier Number: (305) 530-9417
To ARS: American Radio Systems Corporation
116 Huntington Avenue
Boston, Massachusetts 02116
Attention: Mr. Steven Dodge
Telecopier Number: (617) 375-7575
Copy to: Michael Milsom, Esq.
116 Huntington Avenue
Boston, MA 02116
Telecopier Number: (617) 375-7575
The date of any such notice and service thereof shall be deemed to be:
(a) the day of delivery if hand delivered or delivered by
overnight courier;
(b) the day of delivery as indicated on the return receipt if
dispatched by mail, or
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(c) 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 sent by overnight courier on the date of the
telecopy transmission is delivered.
Either party may change its address for the purpose of notice by giving
notice of such change in accordance with the provisions of this paragraph.
34. 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.
35. Certifications.
(a) Control of Station. ARS hereby verifies that it will
maintain control of the Station and their facilities, including specifically
control over the Station's finances. personnel and programming during the term
of this Agreement.
(b) Compliance with Ownership Rules. Programmer hereby verifies
that the arrangement contemplated by this Agreement complies with the provisions
of Section 73.3555(a) of the rules and regulations of the FCC.
36. No Joint Venture.
The parties agree that nothing herein shall constitute a joint venture
or partnership between them.
37. Beneficiaries.
Nothing in this Agreement, express or implied, is intended to confer on
any person other than the parties hereto and their respective successors and
assigns any rights, remedies, obligations, or liabilities under or by reason of
this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
CHANCELLOR RADIO BROADCASTING COMPANY
By:____________________________________
Steven Dinetz
President
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AMERICAN RADIO SYSTEMS CORPORATION
By:___________________________________
Steven B. Dodge
President
17
EXHIBIT 10.71
CHANCELLOR RADIO BROADCASTING COMPANY
LOCAL MARKETING AGREEMENT
(WEST PALM BEACH)
with
AMERICAN RADIO SYSTEMS CORPORATION
for
WEAT-AM/FM WOLL-FM West Palm Beach, Florida
WOLL-FM Riviera Beach, Florida
<PAGE>
TABLE OF CONTENTS
1. Agreement Term.......................................................2
2. Programmer's Purchase of Airtime and Provision of Programming........2
3. Representations......................................................2
4. Consideration........................................................3
5. Collection of Accounts Receivable....................................3
6. Chancellor Control of the Florida Stations...........................3
7. Programmer Responsibility............................................4
8. Contracts............................................................6
9. Employees............................................................6
10. Public Affairs Programming...........................................6
11. Additional License Obligations.......................................7
12. Broadcast Stations Programming Policy Statement......................7
13. Compliance with Copyright Act........................................8
14. Payola...............................................................8
15. Sales................................................................8
16. Local Marketing Agreement Challenge..................................8
17. Confidential Review..................................................9
18. Major Defaults: Termination..........................................9
18.1 Programmer's Major Defaults..............................9
18.2 Chancellor's Major Defaults.............................10
18.3 Cure Periods............................................10
18.4 Termination Upon Occurrence of Major Default............10
18.5 Termination Upon Failure of Consummation of
Exchange Agreement.....................................11
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19. Liabilities Upon Termination...............................11
20. No Format Changes..........................................12
21. Chancellor's Indemnification...............................12
22. Programmer's Indemnification...............................12
23. Procedure for Indemnification..............................13
24. Dispute Over Indemnification...............................13
25. Programmer's Remedies for Operational Deficiencies.........14
26. Force Majeure..............................................14
27. Other Agreements...........................................14
28. Assignment.................................................14
29. Entire Agreement...........................................14
30. Taxes......................................................15
31. Headings...................................................15
32. Governing Law..............................................15
33. Notices....................................................15
34. Severability...............................................16
35. Certifications.............................................16
36. No Joint Venture...........................................17
37. Beneficiaries..............................................17
ii
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LOCAL MARKETING AGREEMENT
THIS LOCAL MARKETING AGREEMENT ("LMA" or "Agreement"), made as of July 31,
1996 by and between AMERICAN RADIO SYSTEMS CORPORATION ("ARS" or "Programmer')
and CHANCELLOR RADIO BROADCASTING COMPANY ("Chancellor"), both Delaware
corporations.
RECITALS
WHEREAS, ARS is a party to a certain Asset Purchase Agreement dated
March 26, 1996 between ARS and Fuller-Jeffrey Broadcasting Companies, Inc.
("FBC") pursuant to which ARS has purchased substantially all of FBC's assets
used or useful in the operation of AM broadcast station KSTE, Rancho Cordova,
California (the "California Station"), including the related KSTE broadcast
licenses and authorizations issued by the Federal Communications Commission
("FCC'). That Asset Purchase Agreement hereafter is referred to as the
"California Agreement;"
WHEREAS, Chancellor is a party to a certain Asset Purchase Agreement
("Purchase Agreement") dated May 14, 1996 among Chancellor and Chancellor
Broadcasting Company and OmniAmerica Group, WAPE-FM License Partnership, WFYV-FM
License Partnership, WEAT-AM License Partnership, WEAT-FM License Partnership,
WXXL License Partnership, WOLL License Partnership and- WJHM-FM License
Partnership (collectively "Omni") contemplating, inter alia, the purchase by
Chancellor of substantially all of Omni's assets used or useful in the operation
of Stations WEAT-AM/FM, West Palm Beach, Florida and Station WOLL-FM, Riviera
Beach, Florida (collectively, the "Florida Stations"), including the related FCC
broadcast licenses and authorizations. That Purchase Agreement is hereafter
referred to as the "Florida Agreement;"
WHEREAS, Chancellor wishes to retain ARS to provide programming for the
Stations pursuant to the terms and conditions set forth in this Agreement and in
conformity with the Florida Stations' policies and practices and the Federal
Communications Commission's ("FCC") rules and regulations concerning such
arrangements;
WHEREAS, ARS will broadcast such programming and sell advertising that
is in conformance with the Stations' policies and all FCC rules and regulations,
including the requirement that the ultimate control of the Stations be
maintained by Chancellor; and
WHEREAS, Chancellor and ARS intend to enter into an Exchange Agreement
(the "Exchange Agreement"), which would qualify as a tax free exchange of
like-kind assets pursuant to Section 1031 of the Internal Revenue Code of 1986,
as amended, pursuant to which Chancellor will agree to transfer to ARS, and ARS
has agreed to acquire from Chancellor, substantially all of the assets and
businesses of the Florida Stations; and ARS will agree to transfer to
Chancellor, and Chancellor has agreed to acquire from ARS, substantially all of
the assets and businesses of the California Station.
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NOW THEREFORE, for and in consideration of the mutual covenants herein
contained, the parties, intending to be legally bound, agree as follows:
1. Agreement Term.
The term of this Agreement will begin on August 1, 1996 ("Commencement
Date") and will continue until the Programmer acquires the assets of the Florida
Stations unless earlier terminated in accordance with the provisions set forth
herein.
2. Programmer's Purchase of Airtime and Provision of Programming.
(a) During the term of this Agreement, Programmer shall transmit
programming, including commercials, that it produces or owns to the Florida
Stations twenty-four (24) hours per day Monday through Friday and for
forty-eight (48) hours during Saturday through Sunday, provided that Chancellor
may broadcast up to two (2) hours of programming for the Florida Stations which
is aimed at serving the needs and interests of the Florida Stations' communities
of license during the morning(s) of Saturday and/or Sunday subject to Section 10
hereto.
(b) To facilitate delivery of programming by Programmer hereunder,
Chancellor hereby grants to Programmer the right for the terms of this Agreement
to use substantially all of the equipment located in the Florida Stations'
studios and currently used by Chancellor for broadcasting programs on the
Florida Stations. In addition, Programmer shall have, and Chancellor hereby
grants to Programmer, a license to enter on the premises currently occupied by
the Florida Stations for the purpose of producing its programming hereunder;
provided, however, that Chancellor shall maintain, for its use, sufficient space
at the Florida Stations' studios to enable Chancellor to conduct its operations
and originate programming. Accordingly, Programmer shall hold Chancellor
harmless from all costs, fees and expenses incurred with respect to any personal
injury suffered by any employee or agent of Programmer while on the property of
Chancellor. Programmer shall also be responsible for and shall reimburse
Chancellor for any damage to the property of Chancellor caused by Programmers'
employees or agents.
3. Representations.
Each of Chancellor and Programmer represent as to itself that it is
authorized to enter into this Agreement and that this Agreement constitutes the
legal, valid and binding obligation of such party, enforceable against it in
accordance with its terms. Programmer hereby represents and warrants to
Chancellor that Programmer is an experienced radio broadcast station owner and
operator and is fully familiar with all pertinent legal requirements, including
but not limited to, the Communications Act of 1934, as amended (the "Act"), and
the Commission's rules, regulations and policies governing the operation of
radio broadcast stations. Programmer will comply with all legal requirements,
including but not limited to the Act and the Commission's rules, regulations and
policies.
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4. Consideration.
During the term of this Agreement, Programmer shall pay Chancellor the
payments set forth on the Payment Schedule executed in connection herewith.
5. Collection of Accounts Receivable.
(a) The accounts receivable of the Florida Stations generated prior to
the Commencement Date (the "Pre-LMA Receivables") shall be and remain the
property of Chancellor. Within 5 business days after the Commencement Date,
Chancellor shall furnish ARS with a list (certified by the Chief Financial
Officer of Chancellor to be a true and complete list) of all accounts receivable
of Chancellor which remain outstanding as of the Commencement Date; ARS agrees
that if, after the Commencement Date, it shall receive payment, directed to
Chancellor, in respect to any Pre-LMA Receivable, ARS shall remit to Chancellor,
within five (5) business days after the end of each month, any amounts received
by ARS during the preceding month (whether or not directed on their face to
Chancellor), which are in payment for advertising broadcast by the Florida
Stations prior to the Commencement Date.
(b) During the period starting on the Commencement Date and ending
ninety (90) days thereafter, ARS shall use reasonable efforts, consistent with
Chancellor's current billing and collection practices and in the ordinary course
of the business, to assist Chancellor in the collection of any outstanding
Pre-LMA Receivables; provided, however, that, notwithstanding the foregoing, ARS
shall be under no obligation to commence litigation, employ counsel or engage
the services of a collection agency to effect collection. ARS shall not make any
compromise, adjustment, concession or settlement of any Pre-LMA Receivable
without Chancellor's express written consent and ARS shall be under no
obligation to compromise, adjust, concede or settle any accounts receivable
generated after the Commencement Date or otherwise grant any credit or allowance
to effect collection of a Pre-LMA Receivable. Absent-written evidence that an
account debtor owing a Pre-LMA Receivable is disputing in good faith any portion
of such Pre-LMA Receivable, any payments received by ARS after the Commencement
Date from such account debtor shall be presumed to represent payment on any
undisputed portion of such Pre-LMA Receivable which is then outstanding (with
each such payment received from such account debtor to be applied first- to the
most-aged Pre-LMA Receivable then owing from such account debtor). Receivables.
(c) Chancellor agrees to remit to ARS within S business days after the
end of each month, any amounts received by Chancellor during the preceding month
(whether or not directed on their face to ARS which are in payment for
advertising broadcast by the Florida Stations after the Commencement Date.
(d) ARS shall not set-off any claim or amount against any of the
Pre-LMA
6. Chancellor Control of the Florida Stations.
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(a) Chancellor will have full authority, power and control over the
management and operations of the Florida Stations during the term of this
Agreement. Chancellor will bear all. responsibility for the Florida Stations'
compliance with all applicable provisions of the Act, the rules, regulations and
policies of the FCC and -all other applicable laws, including without
limitation, the retention of control over the policies, programming and
operation of the Florida Stations, including the right to preempt programming
which in its good faith judgment it deems unsuitable or contrary to the public
interest. Chancellor shall be solely responsible for and pay in a timely manner
all real and personal property taxes, mortgage fees and expenses and other real
property costs, all studio and transmitter site leases, any utilities (excluding
telephone charges), and all costs and expenses for the maintenance of all
transmitter equipment. Programmer shall cooperate with and assist Chancellor in
complying with all FCC rules and regulations.
(b) Chancellor retains ultimate control over the Florida Stations and
their premises. Accordingly, all employees of Programmer present at the Florida
Stations or on their premises must comply with the policies and rules
promulgated by Chancellor. In no event shall Programmer, or Programmer's
employees, represent, depict, describe or portray Programmer as the Licensee of
the Florida Stations. To this end, all employees of Programmer, whose work
involves the Florida Stations, shall be informed as to Chancellor's ultimate
control over the Florida Stations and Programmer's subordinate capacity, and all
printed materials and promotional announcements shall accurately describe all of
the roles and responsibilities of Chancellor and Programmer.
(c) The Florida Stations' transmission equipment shall be maintained by
Chancellor in a condition consistent with good engineering practices and in
compliance in all material respects with the Act and all other applicable rules,
regulations and technical standards of the FCC. All capital expenditures
reasonably required to maintain the technical quality of the transmission
equipment and its compliance with applicable laws and regulations shall be made
at the sole expense of Chancellor in a timely fashion.
(d) Chancellor shall employ at its expense a management-level employee
at the Florida Stations and such other person for each Florida Stations as
necessary to fulfill Chancellor's duties hereunder and its obligations under the
FCC's rules. A manager shall direct the day-to-day operations of each Florida
Station and shall report to and be accountable to Chancellor. Chancellor shall
be responsible for the salaries, taxes, insurance and related costs for all
personnel it employs at the Florida stations.
(e) Chancellor shall pay all regulatory fees, file all necessary
applications, maintain the Florida Stations' local public inspection files
within the Florida Stations' communities of license and shall prepare and place
in such inspection file all required documents including, but not limited to the
Florida Stations' quarterly issues and program lists on a timely basis.
7. Programmer Responsibility.
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(a) Programmer shall be solely responsible for all expenses incurred in
the origination and/or delivery of programming from any remote location and for
all operating expenses of the Florida Stations (including telephone expenses and
expenses related to sales, marketing, promotion, advertising, billing and
collections, and traffic), except that Chancellor shall be responsible for the
costs as provided in Section 6 hereof. Programmer shall cooperate fully with
Chancellor in responding to any questions, comment, inquiry or complaint from
any third party, including any governmental authority or agent thereof, that may
relate to or arise from the Florida Stations or its operations, including the
programming. In the event of Programmer's receipt of any question, comment
inquiry or complaint that may relate to or arise from the Florida Stations or
its operations, Programmer shall promptly notify Chancellor of the same.
(b) 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).
(c) Programmer shall cause the Florida Stations to transmit any
required tests of the Emergency Broadcast System or successor Emergency Alert
System at such times as are directed by Chancellor.
(d) Political Advertising and Announcements. Programmer shall maintain
and deliver to Chancellor all records and information required by the FCC to be
placed in the public inspection files of the Florida Stations pertaining to the
broadcast of political programming and advertisements, in accordance with the
provisions of Sections 73.1940 and 73.3526 of the FCC's rules and agrees to
broadcast sponsored programming addressing political issues, in accordance with
the provisions of Section 73.1212 of the FCC's rules.
1. Programmer's sale or use of commercial time on the Florida
Stations shall conform to all federal and state laws governing the sale of
political advertising on radio Florida Stations. At least ninety (90) days
before the start of any primary or general election campaign, Programmer will
clear with Licensee the rates to be charged political candidates for public
office and rate cards to be sure that the rates and the rate cards are in
conformance with all laws, including requirements for providing reasonable time
to state and local candidates (as determined by the Licensee).
2. When required by law, Programmer shall sell such political
advertising time only at the Florida Stations' lowest unit rates. Within seven
(7) days after the broadcast of political advertising, Programmer shall review
the commercial spots-that have aired on the Florida Stations, so as to insure
that each political candidate was charged the lowest unit rate. In the event a
refund or credit is due, Programer shall pay such refund or provide such-credits
within seven (7) days. The Programmer recognizes candidates' need to maximize
their campaign funds, and thus will provide such rebates or credits on a more
expeditious basis as the election day approaches.
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3. Within twenty-four (24) hours of any request to purchase time
on any of the Florida Stations on behalf of a candidate for public office or to
support or urge defeat of an issue on an election ballot, Programmer will
provide documentation of the request, and its disposition, to Licensee so that
appropriate records can be placed in the Florida Stations' public file.
4. In the event that Programmer fails to provide adequate
broadcast time for the broadcast of paid political programming or advertising by
political candidates, Licensee shall have the right to preempt commercial
announcements supplied by Programmer to make time available to these political
candidates.
5. Programmer shall furnish within its programming, on behalf of
Chancellor, all of the Florida Stations' identification announcements required
by the FCC's rules. Programmer shall provide information with respect to any of
its programming which is responsive to the public needs and interests of the
area served by the Florida Stations so as to assist Chancellor in the
preparation of any required programming reports, and provide other information
to enable Chancellor to prepare other records, reports and logs required by the
FCC or other local, state or federal governmental agencies.
8. Contracts.
Programmer shall perform and discharge the obligations of Chancellor
from and after the Commencement Date under the contracts and agreements listed
in the Schedules to the Exchange Agreement. In addition, Programmer shall
perform and discharge all obligations of the Florida Stations under all trade
agreements from and after the Commencement Date. Any receivables generated prior
to the Commencement Date shall be remitted to Chancellor pursuant to Section 8.2
of the Exchange Agreement. Programmer will not enter into any third-party
contracts, leases or agreements which will bind Chancellor in any way except
with Chancellor's prior written approval.
9. Employees.
Schedule B hereto contains a listing of the name, salary or
compensation and job description of all employees of the Florida Stations as of
May 15, 1996. Pursuant to Section 14.7 of the Exchange Agreement, Programmer
may, but shall not be obligated to (other than through its own actions
independent of any provisions of this Agreement or through the assumption of any
employment contracts hereunder), offer employment to any employee of the Florida
Stations who was employed by Chancellor at or before the Commencement Date.
10. Public Affairs Programming.
Notwithstanding any other provision of this Agreement, Programmer
recognizes that Chancellor has certain obligations to broadcast programming to
meet the needs and interests of
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the community of license for the Florida Stations. Chancellor shall have the
right to air specific programming on issues of importance to the local
community. Nothing in this Agreement shall abrogate the unrestricted authority
of Chancellor to discharge its obligations to the public and to comply with the
lav, rules and policies of the FCC with respect to meeting the ascertained needs
and interests of the public. Accordingly, Chancellor may broadcast public
affairs programming as outlined in Section 2 hereof. Chancellor may air this
programming in either one two (2) hour block or any combination of half hour or
full hour blocks of time during the hours of 6 a.m. to 9 am. on Saturday and/or
Sunday.
11. Additional License Obligations.
Although both parties shall cooperate in the broadcast of emergency
information over the Florida Stations, Chancellor 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 Chancellor, is of overriding
public importance. Chancellor shall also coordinate with Programmer the Florida
Stations' hourly station identification announcements to be aired in accordance
with FCC rules. Chancellor shall continue to maintain a main studio, as that
term is defined by the FCC, within each of the Florida Stations' principal
community contours and shall staff it as required by the FCC. Chancellor shall
be responsible for the salaries, taxes, insurance and related costs for all
personnel it employs at the Florida Stations and shall maintain insurance at its
present levels covering the Florida Stations' transmission facilities. In
addition, Chancellor shall pay any federal regulatory fees, maintain its local
public inspection file within the Florida Stations' communities of license and
shall prepare and place in such public inspection file all required documents
including, but not limited to, its quarterly issues and program lists on a
timely basis. Chancellor shall also receive and respond to telephone inquiries
from the general public . Programmer shall provide Chancellor with information
with respect to certain of Programmer's programs which may be included in
Chancellor's quarterly issues and programs lists.
12. Broadcast Stations Programming Policy Statement.
Chancellor has adopted and will enforce a Broadcast Stations
Programming Policy Statement (the "Policy Statement"), a copy of-which appears
as Attachment I hereto and which may be amended to meet changing regulatory
requirements by Chancellor upon reasonable advance written notice to Programmer.
Programmer agrees and covenants to comply in all material respects with the
Policy Statement and with all rules and regulations of the FCC. If Chancellor
reasonably determines that a program, commercial or other material supplied by
Programmer does not comply with the Policy Statement, or if Chancellor
reasonably believes that some or all of a program, commercial or other material
is unsuitable or contrary to the public interest, it may suspend or cancel such
program, commercial or other material and shall provide written notice to
Programmer of such decision. Programmer shall provide programs only in
accordance with the Policy Statement and FCC requirements. All advertising spots
and promotional material or announcements shall comply with applicable federal,
state and local
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regulation and policies and the Policy Statement, and shall be produced in
accordance with quality standards established by Chancellor.
13. Compliance with Copyright Act.
Programmer represents and warrants to Chancellor that Programmer has
full authority to broadcast its programming. on the Florida Stations and the
Programmer shall not broadcast any material in violation of any law, rule,
regulation or the Copyright Act. All music supplied by Programmer shall be: (i)
licensed by ASCAP, BMI or SESAC; (ii) in the public domain; or (iii) cleared at
the source by Programmer. Chancellor will maintain as appropriate its own ASCAP,
BMI and SESAC licenses for the performance of Programmer's programs and
Programmer shall reimburse Chancellor for the costs of such licenses obtained by
Chancellor within thirty (30) days when paid. The right to use the programming
and to authorize its use in any manner shall be and remain vested in Programmer.
14. Payola.
Programmer agrees that neither it nor its employees or agents will
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 third
party providing such compensation, gift or gratuity 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 to execute and to provide Chancellor with payola Affidavits
from itself, and all of its employees and agents who are involved with providing
programming on the Florida Stations, at such times as Chancellor may reasonably
request, substantially in the form attached hereto as Attachment II.
15. Sales.
Programmer shall retain all revenues from the sale of advertising time
within the programming it provides to Chancellor and pay all expenses
attributable thereto. Programmer may sell advertising, consistent with
applicable rules, regulations and the Policy Statement, on the Florida 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 it provides to Chancellor. Chancellor
shall retain all revenues from the sale of the Florida Stations' advertising
during the hours each week in which Chancellor airs its own nonentertainment
programming.
16. Local Marketing Agreement Challenge.
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If this Agreement is challenged at the FCC, counsel for Chancellor and
counsel for Programmer shall defend the Agreement and the parties' performance
thereunder throughout all FCC proceedings with Programmer and Chancellor each
being responsible for its own costs. If portions of this Agreement do not
receive the approval of the FCC staff, then the parties shall reform the
Agreement subject to their respective reasonable business judgment and advise of
counsel or, at Chancellor's or Programmer's option, seek reversal of the staff
decision and approval from the full Commission on appeal.
17. Confidential Review.
Prior to the provision of any programming by Programmer to Chancellor
under this Agreement, Programmer shall acquaint Chancellor with the nature and
type of the programming to be provided. Chancellor, solely for the purpose of
ensuring Programmer's compliance with the law, FCC rules and the Florida
Stations' policies, shall be entitled to review and pre-empt at its discretion
from time to time on a confidential basis any programming material and any other
documents it may reasonably request, including all rate cards and disclosure
statements related to Programmer's political advertising. Programmer shall
promptly provide Chancellor with copies of all correspondence and complaints
received from the public as well as copies of all program logs and promotional
materials.
18. Major Defaults: Termination.
18.1 Programmer's Major Defaults. The occurrence of any of the
following, after the expiration of the applicable cure periods, if any, will be
deemed to be a "Major Default" by Programmer under this Agreement: .
(a) Programmer's failure to timely pay any of the consideration
provided for in Section 4 and the Payment Schedule executed in connection
herewith or other payments required hereunder;
(b) Except as otherwise provided for in this Agreement, the
failure of Programmer to supply the programs for broadcast on the Florida
Stations in accordance with Section 2 hereof;
(c) Any termination of this Agreement by Programmer other than as
permitted in Section 18.4 or 18.5; or
(d) In the event of a voluntary filing by Programmer (or
involuntary filing with respect to Programmer not vacated with ninety (90) days
after such filing) of a petition for reorganization or dissolution under federal
bankruptcy laws or under substantially equivalent state laws.
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18.2 Chancellor's Major Defaults. The occurrence of any of the
following, after the expiration of the applicable cure periods, if any, will be
deemed to be a "Major Default" by Chancellor under this Agreement:
(a) Except as otherwise provided for in this Agreement, the
failure of Chancellor to broadcast the programs supplied by Programmer in
accordance with Section 2 hereof;
(b) Any termination of this Agreement by Chancellor other than as
permitted in Section 18.4 or 18.5; or
(c) In the event of a voluntary filing by Chancellor (or
involuntary filing with respect to Chancellor not vacated with ninety (90) days
after such filing) of a petition for reorganization or dissolution under federal
bankruptcy laws or under substantially equivalent state laws;
18.3 Cure Periods. The cure periods before any event listed in
Section 18.1 or 18.2 shall become a Major Default are as follows:
(a) Payment by Programmer. The consideration to be paid to
Chancellor must be received by Chancellor within five (5) days after Chancellor
gives written notice of non-payment to Programmer.
(b) Certain Matters. There shall be no cure period for:
(i) a termination by Programmer described in Section 18.1(c);
or
(ii) a termination by Chancellor described in Section 18.2(b)
hereof.
(c) Programs and Broadcast Matters. With respect to Programmer's
failure to provide programs referred to in Section 18.1(b) hereof or
Chancellor's failure to broadcast programs referred to in Section 18.2(a)
hereof, the period allowed for cure shall be ten (10) business days from the
giving of written notice of such failure to the defaulting party by the
non-defaulting party.
(d) Other Matters. With respect to all matters capable of being
cured other than those described in Sections 18.3(a), 18.3(b) or 18.3(c) above,
the cure period shall be twenty (20) business days after written notice to the
defaulting party is given by the non-defaulting party or, with respect to
matters that through the exercise of reasonable diligence cannot be cured within
such ten (10) day period, such longer period not to exceed ninety (90) days as
is reasonably necessary to effect such cure through the exercise of reasonable
diligence.
18.4 Termination Upon Occurrence of Major Default. Upon the
occurrence and continuation of a Major Default the non-defaulting party may
terminate this Agreement by
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giving written notice to the defaulting party within sixty (60) days of such
occurrence, provided that the non-defaulting party has not also committed a
Major Default hereunder which has not been waived. Such written notice shall
specify a termination date which is not less than seven (7) days nor more than
ninety (90) days from the date such notice is given. In the event the
non-defaulting party does not exercise such right of termination by giving such
written notice within such sixty (60) day period, then the Major Default giving
rise to such right of termination shall be deemed waived and the Agreement shall
continue in full force and effect.
18.5 Termination Upon Failure of Consummation of Exchange
Agreement. Notwithstanding any other provision hereof, this Agreement may be
terminated by either party at any time following termination of the Exchange
Agreement.
19. Liabilities Upon Termination.
(a) Programmer shall be solely responsible for all of its
liabilities, debts and obligations incident to its purchase of broadcast time
hereunder, including, without limitation, accounts payable and unaired
advertisements, but not for Chancellor's federal, state, and local tax
liabilities associated with Programmer's payments to Chancellor as provided
herein. Upon termination pursuant to Sections 18.4 or 18.5 hereto, Chancellor
shall be under no further obligation to make available to Programmer any
broadcast time or broadcast transmission facilities, provided that Chancellor
agrees that it will cooperate reasonably with Programmer to discharge in
exchange for reasonable compensation any remaining obligations of Programmer in
the form of air time following the termination date, At the date of termination,
Programmer shall return to Chancellor any equipment or property of the Florida
Stations used by Programmer, its employees or agents, in substantially the same
condition as such equipment existed on the Commencement Date, shall restore
Chancellor's technical facilities to substantially the same condition as such
facilities existed on the Commencement Date, ordinary wear and tear excepted,
shall reassign to Chancellor all contracts and agreements relating to the
Florida Stations listed on the Schedules to the Exchange Agreement which were
assumed by Programmer upon the Commencement Date, and shall otherwise take such
actions to restore to the extent then practicable the parties hereto to their
respective positions prior to the Commencement Date.
(b) Upon termination of this Agreement pursuant to this Section 18
or as a result of the expiration of the term of this Agreement other than by the
Closing under the Exchange Agreement, each party shall be free to pursue any and
all remedies available to it at law, in equity or otherwise. All amounts accrued
or payable to Chancellor up to the date of termination which have not been paid
shall be immediately due and payable. Programmer shall, in addition to its other
legal and equitable rights and remedies under this Agreement or under applicable
law, be entitled immediately to cease providing any further programs to be
broadcast on the Florida Stations, and all amounts which have been prepaid to
Chancellor for any partial month beyond the termination shall be immediately due
and payable to Programmer. Programmer shall return all confidential information
with respect to the Florida Stations to the Chancellor. Programmer shall
reassign all of Chancellor's accounts receivable to Chancellor.
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Programmer shall remit to Chancellor all amounts collected with respect to
Chancellor's accounts receivable within five (5) business days of termination
hereunder.
Upon termination, Programmer shall be responsible for debts and
obligations resulting from the use of the Florida Stations' air time and
equipment by Programmer including, without limitation, accounts payable and net
barter balances in excess of Fifty Thousand Dollars ($50,000), relating to the
period on and after the date of this Agreement and up to the termination of this
Agreement and shall be entitled to the revenues and other credits for that
period.
20. No Format Changes.
During this Agreement, Programmer shall not materially change the
entertainment format of the Florida Stations.
21. Chancellor's Indemnification.
Chancellor shall indemnify, defend, hold and save Programmer harmless
from and against any and all claims, losses, costs, liabilities, damages, FCC
forfeitures, and expenses, including counsel fees, of every kind, nature, and
description, including libel, slander, illegal competition or trade practices,
or infringement of trade marks or program titles, violation of rights of
privacy, and infringement of copyrights and proprietary rights arising out of:
(a) Chancellor's operation of the Florida Stations (not including
the operation of the Florida Stations by Programmer) under this Agreement, and
(b) breach of any warranty, representation, covenant, agreement or
obligation of Chancellor contained in this Agreement.
22. Programmer's Indemnification.
Programmer shall indemnify, defend, hold and save Chancellor harmless
from and against any and all claims, losses, costs, liabilities, damages, FCC
forfeitures. and expenses, including counsel fees, of every kind, nature, and
description, including libel, slander, illegal competition or trade practices,
or infringement of trade marks or program titles, violation of rights and of
privacy, and infringement of copyrights and proprietary rights arising out of:
(a) the programming furnished by Programmer under this Agreement,
(b) the actions or failure to act of its employees or agents under
this Agreement; and
(c) breach of any warranty, representation, covenant, agreement or
obligation of Programmer contained in this Agreement.
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23. Procedure for Indemnification.
The party seeking indemnification under this paragraph("Indemnitee")
shall give the party from whom it seeks indemnification ("Indemnitor') prompt
notice, as provided herein, of the assertion of such a claim provided, however,
that the failure to give notice of a claim within a reasonable time shall only
relieve the Indemnitor of liability to the extent it is materially prejudiced
thereby. Promptly after receipt of written notice, as provided herein, of a
claim by a person or entity not a party to this Agreement, the Indemnitor shall
assume the defense of such claim; provided, however, that:
(a) If the Indemnitor fails, within a reasonable time after
receipt of notice of such claim, to assume the defense thereof, the Indemnitee
shall have the right to undertake the defense, compromise, and settlement of
such claim on behalf of and for the account and risk of Indemnitor, subject to
the right of the Indemnitor (upon notifying the Indemnitee of its election to do
so) to assume the defense of such claim at any time prior to the settlement,
compromise, judgment, or other final determination thereof;
(b) If in the reasonable judgment of the Indemnitee, based upon
the advise of its counsel, a direct or indirect conflict of interest exists
between the Indemnitee and Indemnitor, the Indemnitee shall (upon notifying the
Indemnitor of its election to do so) have the right to undertake the defense,
compromise, and settlement of such claim on behalf of and for the account and
risk of Indemnitor (it being understood and agreed that the Indemnitor shall not
be entitled to assume the defense of such claim);
(c) If the Indemnitee in its sole discretion elects, it shall
(upon notifying the Indemnitor of its election to do so) be entitled to employ
separate counsel and to participate in the defense of such claim, but the fee
and expenses of counsel so employed shall (except as contemplated by clauses (a)
and (b) above) be borne solely by Indemnitee;
(d) The Indemnitor shall not settle or compromise any claim or
consent to the entry of any judgment that does not include as an unconditional
term thereof the grant by the claimant or plaintiff to each Indemnitee of a
release from any and all liability in respect thereof; and
(e) The Indemnitor shall not settle or compromise any claim in any
manner, or consent to the entry of any judgment, that could reasonably be
expected to have a material adverse effect on the Indemnitee .
24. Dispute Over Indemnification.
If upon presentation of a claim for indemnity hereunder, the Indemnitor
does not agree that all, or part, of such claim is subject to the
indemnification obligations imposed upon it pursuant to this Agreement, it shall
promptly so notify the Indemnitee. Thereupon, the parties
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shall attempt to resolve their dispute, including where appropriate reaching an
agreement as to that portion of the claim, if any, which both concede is subject
to indemnification. To the extent that the parties are unable to reach some
compromise within thirty (30) days thereafter, the parties shall be free to
pursue all appropriate legal and equitable remedies.
25. Programmer's Remedies for Operational Deficiencies.
Except as set forth in this Section 25, and except for reductions in
power or interruptions occurring between the hours of 12:00 midnight and 6:00
a.m. as a result of maintenance or repairs or during such periods that the
Florida Stations are operating from its authorized auxiliary antenna, if any of
the normal broadcast transmissions of the Florida Stations are interrupted,
interfered with, or in any way impaired with so that the Florida Stations are
not operating at full licensed power and antenna height or are off the air, or
in the event that Chancellor preempts Chancellor's programming, Programmer shall
be entitled to an equitable reduction in the amount of its monthly fee which is
proportionate to the period of time that the Florida Stations' operations are
deficient, the Florida Stations' programming is preempted or the Florida
Stations are off the air.
26. Force Majeure.
Any failure or impairment of the Florida Stations' facilities or any
delay or interruption in the broadcast of programs, or failure at any time to
furnish facilities, in whole or in part, for broadcast due to Acts of God,
strikes, lockouts, material or labor restrictions by any governmental authority,
civil riot, floods and any other cause not reasonably within the control of
Chancellor (including any obligation of Chancellor to reduce power or suspend
operation to avoid occupational exposure to harmful RF radiation), shall not
constitute a breach of this Agreement and Chancellor will not be liable to
Programmer.
27. Other Agreements.
During the term of this Agreement, Chancellor will not enter into any
other local marketing, program provision, local management or similar agreement
with any third party with respect to the Florida Stations.
28. Assignment.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto, their successors and assignees, including specifically any
purchaser of the Florida Stations form Chancellor. Neither party may assign its
rights without the prior written consent of the other party which consent shall
not be unreasonably withheld.
29. Entire Agreement.
14
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This Agreement, and the Attachments hereto, embody the entire agreement
and understanding of the pa,-ties 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.
30. Taxes.
Chancellor 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. Such party shall be responsible
for any sales tax imposed on advertising aired during the programming provided
by that party.
31. Headings.
The headings are for convenience only and will not control or affect
the meaning or construction of the provisions of this Agreement.
32. Governing Law.
The obligations of Chancellor and Programmer are subject to applicable
federal, state and local law, rules and regulations, including, but not limited
to, the Act and the Rules and Regulations of the FCC. The construction and
performance of the Agreement will be governed by the laws of the State of
Florida
33. 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; on the third
day after deposit in the U.S. mail if mailed by registered or certified mail,
postage prepaid and return receipt requested; on the day after delivery to a
nationally recognized overnight courier service if sent by an overnight delivery
service for next morning delivery and shall be addressed to the following
addresses:
To Programmer: Chancellor Broadcasting Company
12655 N. Central Expressway, Suite 321
Dallas, Texas 75243
Attention: Mr. Steven Dinetz
Telecopier Number: (214) 239-0220
Copy to: Matthew L. Leibowitz, Esq.
Leibowitz & Associates
One S.E. Third Avenue, Suite 1450
Miami, Florida 33131
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Telecopier Number: (305) 530-9417
To ARS: American Radio Systems Corporation
116 Huntington Avenue
Boston, Massachusetts 02116
Attention: Mr. Steven Dodge
Telecopier Number: (617) 375-7575
Copy to: Michael Milsom, Esq.
116 Huntington Avenue
Boston, MA 02116
Telecopier Number: (617) 375-7575
The date of any such notice and service thereof shall be deemed to be:
(a) the day of delivery if hand delivered or delivered by
overnight courier;
(b) the day of delivery as indicated on the return receipt if
dispatched by mail, or
(c) 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 sent by overnight courier on the date of the
telecopy transmission is delivered.
Either party may change its address for the purpose of notice by giving
notice of such change in accordance with the provisions of this paragraph.
34. 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.
35. Certifications.
(a) Control of Florida Stations. Chancellor hereby verifies that
it will maintain control of the Florida Stations and their facilities, including
specifically control over the Florida Stations' finances, personnel and
programming during the term of this Agreement.
(b) Compliance with Ownership Rules. Programmer hereby verifies
that the arrangement contemplated by this Agreement complies with the provisions
of Section 73.3555(a) of the rules and regulations of the FCC.
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36. No Joint Venture.
The parties agree that nothing herein shall constitute a joint venture
or partnership between them.
37. Beneficiaries.
Nothing in this Agreement, express or implied, is intended to confer on
any person . other than the parties hereto and their respective successors and
assigns any rights, remedies, obligations, or liabilities under or by reason of
this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
CHANCELLOR RADIO BROADCASTING COMPANY
By:______________________________________
Steven Dinetz
President
AMERICAN RADIO SYSTEMS CORPORATION
By:______________________________________
Steven B. Dodge
President
17
EXHIBIT 10.72
ASSET EXCHANGE AGREEMENT
By and Between
AMERICAN RADIO SYSTEMS CORPORATION
and
SECRET COMMUNICATIONS LIMITED PARTNERSHIP
Dated as of
May 30, 1996
<PAGE>
TABLE OF CONTENTS
ARTICLE 1 DEFINED TERMS.............................................2
ARTICLE 2 EXCHANGE OF LICENSES AND STATIONS.........................2
2.1 Agreement to Exchange Licenses and Stations...............2
2.2 Assumption of Liabilities and Obligations. ...............4
2.3 Like-Kind Exchanges.......................................6
2.4 Closing Date..............................................7
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SECRET..................7
3.1 Organization and Business; Power and Authority;
Effect of Transaction...................................7
3.2 Financial and Other Information. ........................8
3.3 Changes in Condition......................................9
3.4 Materiality...............................................9
3.5 Title to Properties; Leases...............................9
3.6 Compliance with Private Authorizations...................10
3.7 Compliance with Governmental Authorizations and
Applicable Law.......................................10
3.8 Intangible Assets........................................12
3.9 Related Transactions.....................................12
3.10 Insurance................................................12
3.11 Tax Matters..............................................13
3.12 Employee Retirement Income Security Act of 1974..........13
3.13 Absence of Sensitive Payments............................13
3.14 Inapplicability of Specified Statutes....................13
3.15 Employment Arrangements..................................14
3.16 Material Agreements......................................14
3.17 Ordinary Course of Business..............................14
3.18 Broker or Finder.........................................15
3.19 Solvency.................................................16
3.20 Environmental Matters....................................16
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF AMERICAN...............17
4.1 Organization and Business; Power and Authority;
Effect of Transaction.................................17
4.2 Financial and Other Information. .......................18
4.3 Changes in Condition.....................................18
4.4 Materiality..............................................18
4.5 Title to Properties; Leases..............................19
4.6 Compliance with Private Authorizations...................20
4.7 Compliance with Governmental Authorizations
and Applicable Law....................................20
4.8 Intangible Assets........................................22
<PAGE>
4.9 Related Transactions.....................................22
4.10 Insurance................................................22
4.11 Tax Matters..............................................23
4.12 Employee Retirement Income Security Act of 1974..........23
4.13 Absence of Sensitive Payments............................23
4.14 Inapplicability of Specified Statutes....................23
4.15 Employment Arrangements..................................24
4.16 Material Agreements......................................24
4.17 Ordinary Course of Business..............................25
4.18 Broker or Finder.........................................26
4.19 Solvency.................................................26
4.20 Environmental Matters....................................26
ARTICLE 5 COVENANTS................................................27
5.1 Access to Information; Confidentiality...................27
5.2 Agreement to Cooperate...................................28
5.3 Public Announcements.....................................30
5.4 Notification of Certain Matters..........................30
5.5 No Solicitation..........................................31
ARTICLE 6 CLOSING CONDITIONS.......................................31
6.1 Conditions to Obligations of Each Party to
Effect the Exchange....................................31
6.2 Conditions to Obligations of American....................33
6.3 Conditions to Obligations of Secret......................35
ARTICLE 7 TERMINATION, AMENDMENT AND WAIVER........................36
7.1 Termination..............................................36
7.2 Effect of Termination....................................37
7.3 Amendment................................................38
7.4 Waiver...................................................38
7.5 Fees, Expenses and Other Payments........................38
ARTICLE 8 INDEMNIFICATION..........................................38
8.1 Survival.................................................38
8.2 Indemnification..........................................39
8.3 Limitation of Liability..................................39
8.4 Notice of Claims.........................................39
8.5 Defense of Third Party Claims............................40
8.6 Exclusive Remedy.........................................40
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ARTICLE 9 GENERAL PROVISIONS.......................................40
9.1 Notices..................................................40
9.2 Specific Performance; Other Rights and Remedies..........41
9.3 Severability.............................................41
9.4 Counterparts.............................................42
9.5 Section Headings.........................................42
9.6 Governing Law............................................42
9.7 Further Acts.............................................42
9.8 Entire Agreement.........................................42
9.9 Assignment...............................................43
9.10 Parties in Interest......................................43
9.11 Mutual Drafting..........................................43
APPENDIX A: Definitions
EXHIBITS:
EXHIBIT A-1: Form of American Stations LMA (Section 5.2(d))
EXHIBIT A-2: Form of Detroit LMA (Section 5.2(d))
EXHIBIT A-3: Form of Philadelphia LMA (Section 5.2(d))
EXHIBIT B-1: Form of Studio Lease (Section 6.1(d))
EXHIBIT B-2: Form of Tower Lease (Section 6.1(d))
EXHIBIT C-1: Opinion Items for Counsel of Secret (Section 6.2(b))
EXHIBIT C-2: Opinion Items for FCC Counsel of Secret (Section 6.2(b))
EXHIBIT D-1: Opinion Items for Counsel of American (Section 6.3(b))
EXHIBIT D-2: Opinion Items for FCC Counsel of American (Section 6.3(b))
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ASSET EXCHANGE AGREEMENT
This ASSET EXCHANGE AGREEMENT (this "Agreement") is dated as of May 30,
1996, by and between American Radio Systems Corporation, a Delaware corporation
("American"), and Secret Communications Limited Partnership, a Delaware limited
partnership ("Secret").
WHEREAS, Secret is the licensee of and operates radio stations KSFM-FM
and KMJI-AM, Sacramento, California (individually, a "Secret Station" and
collectively, the "Secret Stations") pursuant to licenses issued by the FCC (the
"Secret Licenses");
WHEREAS, upon the consummation of the transactions contemplated by the
Agreement and Plan and Merger (the "Marlin Agreement"), dated as of March 15,
1996, by and among American, ARS Acquisition Company, Inc. and Marlin
Broadcasting Company, Inc. ("Marlin"), Marlin will become a wholly-owned
subsidiary of American;
WHEREAS, Marlin is and will be the licensee of and operates and will
have the right to operate, pursuant to a license to be issued to it by the FCC
(the "Detroit License"), radio station WQRS-FM, Detroit, Michigan (the "Detroit
Station") and Franklin Broadcasting Company, a wholly-owned subsidiary of
Marlin, is and will be the licensee of and operates and will have the right to
operate, pursuant to a license to be issued to it by the FCC ("Philadelphia
License"), WFLN-FM, Philadelphia, Pennsylvania (the "Philadelphia Station" and
collectively, with the Detroit Station, the "American Stations"),
WHEREAS, American and Secret desire to exchange the Philadelphia
License for the Secret Licenses and to exchange the Philadelphia Assets (other
than the Philadelphia License) for the Secret Assets (other than the Secret
Licenses) on the terms and conditions hereinafter set forth (or, if Franklin
becomes a party hereto, to have Franklin engage in such exchanges);
WHEREAS, the parties hereto intend the Philadelphia Exchange to qualify
as a Like-Kind Exchange (as defined herein);
WHEREAS, American and Secret desire to exchange the Detroit Assets
(including the Detroit License) for cash in the amount hereinafter set forth or,
at the option of American, to exchange the Detroit Assets (other than the
Detroit License) and the Detroit License for the New Exchange Assets and the New
Exchange License, respectively, on the terms and conditions hereinafter set
forth (or, if Marlin becomes a party hereto, to have Marlin engage in such
exchanges);
NOW, THEREFORE, in consideration of the above premises and the
covenants and agreements contained herein, American and Secret, intending to be
legally bound, do hereby covenant and agree as follows:
<PAGE>
ARTICLE 1
DEFINED TERMS
As used herein, unless the context otherwise requires, the terms
defined in Appendix A shall have the respective meanings set forth therein.
Terms defined in the singular shall have a comparable meaning when used in the
plural, and vice versa, and the reference to any gender shall be deemed to
include all genders. Unless otherwise defined or the context otherwise clearly
requires, terms for which meanings are provided in this Agreement shall have
such meanings when used in either Disclosure Schedule and each Collateral
Document executed or required to be executed pursuant hereto or thereto or
otherwise delivered, from time to time, pursuant hereto or thereto.
ARTICLE 2
EXCHANGE OF LICENSES AND STATIONS
2.1 Agreement to Exchange Licenses and Stations. Subject to the terms
and conditions set forth in this Agreement, Secret and American hereby agree to
exchange, transfer and deliver (or, in the case of American, to cause Marlin and
Franklin to agree to exchange, transfer and deliver) on the Closing Date, the
Secret Assets and the American Assets, free and clear of any Liens of any nature
whatsoever except Permitted Liens, on the following terms and conditions:
(a) the Secret Assets other than the Secret Licenses will be
exchanged by Secret with American or Franklin (if it becomes a party
hereto), as the case may be, for the Philadelphia Assets other than the
Philadelphia Licenses (the "Philadelphia Asset Exchange");
(b) the Philadelphia License will be exchanged by American
Radio Systems License Corp., a wholly-owned subsidiary of American
("American License") or Franklin (if it becomes a party to this
Agreement), as the case may be, with Secret for the Secret Licenses
(the "Philadelphia License Exchange" and, collectively with the
Philadelphia Asset Exchange, the "Philadelphia Exchange"); and
(c) the Detroit Assets (including the Detroit Licenses) will
be exchanged by American and American License, or Marlin (if it becomes
a party to this Agreement), as the case may be, with Secret for cash in
the aggregate amount of $20,000,000 (to be allocated among the Detroit
License and the other Detroit Assets as American and Secret shall
agree, consistent with the Exchange Schedule), payable by wire transfer
of immediately available funds to such accounts as American shall
designate in writing; provided, however, that in the event American
shall, or cause Marlin to, elect to effect one or more Like-Kind
Exchanges pursuant to the provisions of Section 2.3, the provisions of
Section 2.3 shall govern any such exchange (the "Detroit Exchange" and,
collectively with the Philadelphia Exchange, the "Exchange").
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This Agreement, and the representations, warranties, covenants and
agreements of American, are based on the premise that, following the
consummation of the transactions contemplated by the Marlin Agreement, Franklin
will be merged into Marlin and, thereafter, Marlin will be merged into American,
and the Detroit License and the Philadelphia License will be transferred to
American License. Anything in this Agreement to the contrary notwithstanding,
American shall have the right, in its sole and absolute discretion, not to
proceed with such mergers and License transfers, in which event American shall
cause Marlin (which owns the Detroit Assets) and Franklin (which owns the
Philadelphia Assets) to become parties to this Agreement, in which event
Franklin will agree to transfer those Assets and Licenses as described in
clauses (a) and (b) of this Section and will be the transferee of the Secret
Assets (including the Secret Licenses) and Marlin will agree to transfer those
Assets and Licenses as described in clause (c) of this Section and will be the
transferee of the $20,000,000 (or the New Exchange Assets and the New Exchange
Licenses pursuant to the provisions of Section 2.3). In such event, (i) the
representations and warranties of American with respect to the ownership and
operation of the American Stations and American Assets shall be deemed to apply
to the ownership and operation thereof by Marlin and Franklin, as the case may
be, (ii) American shall cause Marlin and Franklin to enter into the American
Stations LMA, (iii) American shall furnish and shall cause Marlin and Franklin
to furnish, at the Closing, such agreements, certificates, opinions and other
documents as Secret may reasonably request in order to provide Secret with the
same rights and remedies as it would have had had such mergers and License
transfers occurred, and (iv) all of the other provisions of this Agreement
(including without limitation the obligations of Secret set forth in Section
5.4) shall remain in full force and effect. In the event American does proceed
with such License transfers, American will cause American License to become a
party to this Agreement, in which event American License will agree to transfer
the Philadelphia License and the Detroit License as described in clauses (b) and
(c) of this Section.
On or prior to the consummation of the Philadelphia Exchange and the
Detroit Exchange, American and Secret will negotiate in good faith and agree
upon a schedule setting forth the fair market value of the Philadelphia Assets
(including the Philadelphia License), the Secret Assets (including the Secret
License) and the Detroit Assets (including the Detroit License) and the New
Exchange Assets and the New Exchange Licenses (the "Exchange Schedule"). The
Exchange Schedule shall be reasonable and shall be prepared in accordance with
Sections 1031 and 1060 of the Code and the Regulations thereunder. American and
Secret each agrees to file all Federal, state and local Tax Returns in
accordance with the Exchange Schedule.
For purposes of this Agreement, the terms "Secret Assets", "Detroit
Assets", "Philadelphia Assets" and "American Assets" shall mean all of the
Assets associated with the respective Stations, other than the Excluded Assets.
For purposes of this Agreement, the term "Excluded Assets" shall mean the
following Assets:
(i) all cash and cash equivalents;
(ii) all Accounts Receivable of American, Marlin, Franklin or
any other direct or indirect Subsidiary of American and Secret relating
to the American Stations and the Secret Stations, respectively;
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(iii) the corporate or partnership names of each of American,
Marlin and Franklin and Secret;
(iv) all books and records which any person is required by
Applicable Law to retain, subject to the right of the other party to
have access and to copy for a period of three (3) years from the
Closing Date;
(v) any pension, profit-sharing or employee benefit plans,
including any assets in any related trusts;
(vi) all of the real estate and buildings or other structures
thereon to be owned by American, Franklin or any other direct or
indirect Subsidiary of American upon consummation of the transactions
contemplated by the Marlin Agreement and relating to the Philadelphia
Station, including without limitation the tower site and contiguous
property, the property on which the studio is located, the tower, the
studio buildings and any other structures on such property;
(vii) all insurance policies relating to the American Assets
and the Secret Assets, respectively;
(viii) software programs and other assets at Secret's
principal executive offices used to provide certain financial and
accounting services for the Secret Stations;
(ix) all rights of American under the Marlin Agreement and all
related agreements; and
(x) any and all products, profits and proceeds of, and
including without limitation any Claims with respect to, any of the
foregoing.
2.2 Assumption of Liabilities and Obligations.
(a) As of the Closing Date, (i) American shall assume and agree to pay,
discharge and perform all of the obligations and liabilities of Secret with
respect to the ownership and operation of the Secret Stations and the Secret
Assets, and (ii) Secret shall assume and agree to pay, discharge and perform all
of the obligations and liabilities of American with respect to the ownership and
operation of the American Stations and the American Assets, including, in both
cases, without limitation the FCC Licenses and the Contracts, except to the
extent that, in either case, any such obligation or liability relates to or
arises out of the Nonassumed Obligations of Secret or of American, all of which
Nonassumed Obligations of Secret and of American shall be and remain the sole
and exclusive obligations and liabilities of Secret and American, respectively.
(b) The term "Nonassumed Obligations" shall mean all of the obligations
and liabilities of Secret or of American, as the case may be, arising out of or
relating to:
(i) the ownership and operation of the Secret Stations and the
American Stations, as the case may be, and the related Assets, on or
prior to the Closing Date, except to the extent otherwise provided in
the Secret Stations LMA and the American Stations LMA, respectively;
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<PAGE>
(ii) those required to be disclosed in either Disclosure
Schedule which are not so disclosed or which, if disclosed, Section
2.2(b)(ii) of the appropriate Disclosure Schedule indicates that
American or Secret, as the case may be, will not assume such obligation
or liability;
(iii) any breach of any warranty or any misrepresentation by
Secret or American under this Agreement or any Collateral Document;
(iv) Secret's or American's, as the case may be, breach or
violation of, or its failure to perform, any of its obligations,
covenants, agreements or undertakings set forth in this Agreement or
any Collateral Document, including without limitation Article 5 of this
Agreement;
(v) any obligation or liability relating to any Excluded
Asset;
(vi) any obligation or liability with respect to Indebtedness
for Money Borrowed;
(vii) any taxes, fees, expenses or other amounts required to
be paid by Secret or American pursuant to the provisions of this
Agreement or any Collateral Document;
(viii) any Contract with any Affiliate of Secret or American;
and
(ix) any obligation or liability of American (or Marlin and
Franklin) with respect to future spots, whether or not disclosed in
Section 4.16 of the American Disclosure Schedule, to Advertising Agency
Associates, Inc., Allan R. Hackel or RMR.
(c) The term "Assumed Liabilities" shall mean all of the obligations
and liabilities of one of the parties that the other party has agreed to assume
and pay, discharge and perform pursuant to the foregoing provisions of this
Section.
(d) Notwithstanding anything contained in this Agreement to the
contrary and except as otherwise provided in the Secret Stations LMA or the
American Stations LMA, as the case may be, any utility charges or operating
expenses (including without limitation any Taxes) relating to periods or
incurred in the ordinary course of business prior to the Closing Date shall be
prorated over the applicable service period, with the transferring party
responsible for any such charges or expenses on or prior to the Closing Date and
the transferee party responsible for any such charges or expenses relating to
any subsequent period. For these purposes, Taxes attributable to a period that
begins before and ends after the Closing Date shall be treated on a "closing of
the books" basis as two partial periods, one ending at the close of the Closing
Date and the other beginning on the day after the Closing Date, except that
Taxes (such as property Taxes) imposed on a periodic basis shall be allocated on
a daily basis. Any party which shall have paid any such charges or expenses
which, pursuant to the terms hereof or any LMA Agreement, are the responsibility
of the other party hereunder shall furnish such other party with a detailed
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statement of any such charges or expenses as soon as practicable after payment
thereof. The parties shall use their best efforts to agree upon such charges or
expenses and upon such agreement, Secret or American, as the case may be, shall
promptly reimburse the other party for any charges or expenses paid by the other
party and not previously reimbursed. Nothing contained in this Section 2.2(d) is
intended or shall be deemed to amend or modify the indemnification provisions of
Article 8 nor to reallocate responsibility for the matters set forth herein.
2.3 Like-Kind Exchanges. In the event American desires to effect one or
more Like-Kind Exchanges pursuant to the provisions of this Section, it shall
give prompt written notice to Secret of such intention, identifying the owner or
owners (the "Proposed Transferor(s)") of the license or licenses (collectively,
the "New Exchange License") and the business and other assets of one or more
U.S. radio stations selected by American proposed to be exchanged (the "New
Exchange Assets") and the terms and conditions of the purchase of the New
Exchange License and the New Exchange Assets to be made by Secret. In such
event, Secret covenants and agrees as follows:
(a) to consent to and acknowledge the assignment of this
Agreement (or such portions thereof as American shall, in its sole and
absolute discretion, determine) by American or Marlin, as the case may
be, to a Qualified Intermediary, in which event the purchase price for
the Detroit Assets and the Detroit License shall be paid by Secret at
the Closing directly to such Qualified Intermediary;
(b) to enter into and/or consent to the assignment of such
agreements (including without limitation this Agreement) as American
may reasonably request in order to consummate the acquisition of the
New Exchange Assets and the New Exchange License and the Detroit
Exchange; and
(c) to make appropriate filings with the FCC and to amend any
FCC filings theretofore made and otherwise to comply with the
provisions of Section 5.2(a) and the other applicable provisions of
this Agreement in order to enable American to effect a Like-Kind
Exchange with respect to the New Exchange Assets and the New Exchange
License.
American covenants and agrees as follows:
(i) it will, in the event Secret is required to make payment
in excess of $20,000,000 for the New Exchange Assets and the New
Exchange License, make payment or cause payment to be made by Marlin of
such excess directly to the Proposed Transferor(s) or, in American's
sole and absolute discretion, advance funds or cause funds to be
advanced by Marlin as part of the Detroit Exchange to Secret in an
amount necessary for it to make such payment to the Proposed
Transferor(s);
(ii) Secret shall not assume any risks or any adverse Tax or
financial consequences as a result of the Detroit Exchange being
effected in the form of one or more Like-Kind Exchanges;
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(iii) the New Exchange Assets and the New Exchange License
shall be acquired by American solely on the basis of representations,
warranties, covenants and agreements of the Proposed Transferor(s) of
the New Exchange Assets and the New Exchange License;
(iv) any recourse of the Proposed Transferor(s) for Claims in
connection with the transfer of the New Exchange Assets and the New
Exchange License shall be made solely against American and/or Marlin;
and
(v) it will indemnify and hold harmless Secret from and
against any liabilities, losses, damages and expenses relating to any
simultaneous or deferred Like-Kind Exchange relating to the Detroit
Assets, including without limitation any increase in Tax payable as a
consequence thereof.
Anything in this Section to the contrary notwithstanding, American shall have no
right, without the written consent of Secret, to extend the Termination Date
because of its rights under this Section.
2.4 Closing Date. The closing of the Exchange (the "Closing") shall
take place at Sullivan & Worcester LLP, One Post Office Square, Boston,
Massachusetts 02109, at 10:00 a.m., local time, on the tenth (10th) business day
after the FCC Consents (or those with respect to which the Exchange of Stations
is to occur) shall become Final Orders, or such other date, prior to the
Termination Date, as the parties may agree (the "Closing Date"). In the event
that the consummation of the Philadelphia Exchange does not occur simultaneously
with the Detroit Exchange (whether for cash and/or the New Exchange Assets and
the New Exchange License), the date of each such consummation shall be a Closing
Date. At the Closing (or, if applicable, each Closing), each of the parties
shall deliver such bills of sale, assignments, assumptions of liabilities
(including without limitation, in the case of Secret, its assumption of
American's obligations under the Marlin Agreement with respect to the American
Stations set forth in Section 2.4 of the American Disclosure Schedule), opinions
and other instruments and documents as are described in this Agreement or as may
be otherwise reasonably requested by the parties and their respective counsel.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SECRET
Secret hereby represents, warrants and covenants to, and agrees with,
American as follows:
3.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) Secret is a limited partnership duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization, has all
requisite power and authority (partnership and other) to own or hold under lease
its properties and to conduct its business as now conducted.
(b) Secret has all requisite power and authority (partnership and
other) and has in full force and effect all Governmental Authorizations and
Private Authorizations, except for those set forth in Section 3.1(b) of the
Secret Disclosure Schedule which must be obtained prior to the Closing
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Date, necessary to enable it to execute and deliver, and to perform its
obligations under, this Agreement and each Collateral Document executed or
required to be executed pursuant hereto or thereto or to consummate the Exchange
and the other Transactions; and the execution, delivery and performance of this
Agreement and each Collateral Document executed or required to be executed
pursuant hereto or thereto have been duly authorized by all requisite
partnership or other action on the part of Secret and its general partners. This
Agreement has been duly executed and delivered by Secret and constitutes, and
each Collateral Document executed or required to be executed pursuant hereto or
thereto or to consummate the Exchange and the other Transactions when executed
and delivered by Secret will constitute, legal, valid and binding obligations of
Secret, enforceable in accordance with their respective terms.
(c) Except as set forth in Section 3.1(c) of the Secret Disclosure
Schedule, neither the execution and delivery by Secret of this Agreement or any
Collateral Document executed or required to be executed by it pursuant hereto or
thereto, nor the consummation by Secret of the Exchange and the other
Transactions, nor compliance with the terms, conditions and provisions hereof or
thereof by Secret:
(i) will conflict with, or result in a breach or violation of,
or constitute a default under, any Organic Document of Secret or any
Applicable Law on the part of Secret, or will conflict with, or result
in a breach or violation of, or constitute a default under, or permit
the acceleration of any obligation or liability in, or but for any
requirement of giving of notice or passage of time or both would
constitute such a conflict with, breach or violation of, or default
under, or permit any such acceleration in, any Contractual Obligation
of Secret; or
(ii) will require Secret to make or obtain any Governmental
Authorization, Governmental Filing or Private Authorization, except for
the FCC Consents and filings under the Hart-Scott-Rodino Act.
(d) Secret does not have any Subsidiaries.
3.2 Financial and Other Information.
(a) Secret has heretofore furnished to American copies of the unaudited
financial statements of the Secret Stations listed in Section 3.2(a) of the
Secret Disclosure Schedule (the "Secret Financial Statements"). The Secret
Financial Statements, including in each case the notes thereto, have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby, except as otherwise noted therein or as set forth in
Section 3.2(a) of the Secret Disclosure Schedule (which schedule reflects the
inclusion of "barter" transactions and the effects thereof), are true, accurate
and complete, do not contain any untrue statement of a material fact or omit to
state a material fact required by GAAP to be stated therein or necessary in
order to make the statements contained therein not misleading, and fairly
present the results of operations of the Secret Stations, on the bases therein
stated, as of the respective dates thereof, and for the respective periods
covered thereby subject, in the case of unaudited financial statements, to
normal year-end audit adjustments and accruals.
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(b) The Broadcast Cash Flow of the Secret Stations for the twelve (12)
months ended March 31, 1996 was not less than $1,150,000.
3.3 Changes in Condition. Since March 31, 1996, except to the extent
specifically described in Section 3.3 of the Secret Disclosure Schedule, there
has been no Material Adverse Change in Secret. There is no Event known to Secret
which Materially Adversely Affects, or (so far as Secret can now reasonably
foresee) is likely to Materially Adversely Affect, Secret, except to the extent
specifically described in Section 3.3 of the Secret Disclosure Schedule.
3.4 Materiality. The representations and warranties set forth in this
Article would in the aggregate be true and correct even without the materiality
exceptions or qualifications contained therein or set forth in the Secret
Disclosure Schedule, except for such exceptions and qualifications including
without limitation those set forth in the Secret Disclosure Schedule which, in
the aggregate for all such representations and warranties, are not and could not
reasonably be expected to be Materially Adverse to Secret.
3.5 Title to Properties; Leases.
(a) There is no real property owned by Secret that is part of the
Secret Assets. Secret has good indefeasible and merchantable title to all
assets, tangible and intangible, constituting a part of the Secret Assets, in
each case free and clear of all Liens, except (i) Permitted Liens and (ii) Liens
set forth on Section 3.5(a) of the Secret Disclosure Schedule. Except for
financing statements evidencing Liens referred to in the preceding sentence (a
true, accurate and complete list and description of which is set forth in
Section 3.5(a) of the Secret Disclosure Schedule), no financing statements under
the Uniform Commercial Code and no other filing which names Secret as debtor or
which covers or purports to cover any of the Secret Assets is on file in any
state or other jurisdiction, and Secret has not signed or agreed to sign any
such financing statement or filing or any agreement authorizing any secured
party thereunder to file any such financing statement or filing. Except as
otherwise set forth in Schedule 3.5(a) of the Secret Disclosure Schedule, each
Lease or other occupancy or other agreement under which Secret holds real or
personal property constituting a part of the Secret Assets has been duly
authorized, executed and delivered by Secret and, to Secret's knowledge,
information and belief, each of the other parties thereto, and is a legal, valid
and binding obligation of Secret, and, to Secret's knowledge, information and
belief, each of the other parties thereto, enforceable in accordance with its
terms. Secret has a valid leasehold interest in and enjoys peaceful and
undisturbed possession under all Leases pursuant to which it holds any such real
property or tangible personal property. All of such Leases are valid and
subsisting and in full force and effect; neither Secret nor, to Secret's
knowledge, information and belief, any other party thereto, is in default in the
performance, observance or fulfillment of any obligation, covenant or condition
contained in any such Lease.
(b) Section 3.5(b) of the Secret Disclosure Schedule contains a true,
accurate and complete description of all real property constituting a part of
the Secret Assets leased by Secret and all Leases under which such real property
is leased and an identification of all material items of fixed assets and
equipment used in the business of the Secret Stations (other than those
constituting Excluded Assets). None of the fixed assets or equipment is subject
to contracts of sale, and none is held by Secret as lessee or as conditional
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sales vendee under any Lease or conditional sales contract and none is subject
to any title retention agreement, except as set forth in Section 3.5(b) of the
Secret Disclosure Schedule. Except as set forth in Section 3.5(b) of the Secret
Disclosure Schedule, such real property (other than land), fixtures, fixed
assets and other material items of personal property, including equipment, are
in a state of good repair and maintenance and are in good operating condition,
normal wear and tear excepted, have been maintained in a manner consistent with
generally accepted standards of good engineering practice and currently permit
the Secret Stations to be operated in accordance with the terms and conditions
of their respective FCC Licenses and all Applicable Laws.
(c) Except as set forth in Section 3.5(c) of the Secret Disclosure
Schedule, since August 1, 1994, Secret has not received any notice that any such
real property leased by Secret and reflected in Section 3.5(b) of the Secret
Disclosure Schedule or the use thereof, violates any applicable title covenant,
condition, restriction or reservation or any applicable zoning, wetlands, land
use or other Applicable Law.
3.6 Compliance with Private Authorizations. Section 3.6 of the Secret
Disclosure Schedule sets forth a true, accurate and complete list and
description of each Private Authorization which individually is material to the
Secret Assets or either of the Secret Stations, all of which are in full force
and effect. Secret has obtained all Private Authorizations which are necessary
for the ownership and operation by Secret of the Secret Assets and the Secret
Stations and the conduct of business thereof as now conducted or as presently
proposed to be conducted or which, if not obtained and maintained, could, singly
or in the aggregate, Materially Adversely Affect Secret. Secret is not in breach
or violation of, or in default in the performance, observance or fulfillment of,
any such Private Authorization, and no Event exists or has occurred, which
constitutes, or but for any requirement of giving of notice or passage of time
or both would constitute, such a breach, violation or default, under any such
Private Authorization, except for such defaults, breaches or violations as do
not and will not have in the aggregate any Material Adverse Effect on Secret. No
such Private Authorization is the subject of any pending or, to Secret's
knowledge, information or belief, threatened attack, revocation or termination.
3.7 Compliance with Governmental Authorizations and Applicable Law.
(a) Section 3.7(a) of the Secret Disclosure Schedule contains a
description of:
(i) all Legal Actions pending or, to Secret's knowledge,
information and belief, at any time since August 1, 1994 was pending or
is currently threatened against Secret with respect to the business,
operation or ownership of any of the Secret Assets or either of the
Secret Stations;
(ii) all Claims and Legal Actions pending or, to Secret's
knowledge, information and belief, threatened against Secret with
respect to the business, operation or ownership of any of the Secret
Assets or either of the Secret Stations which, individually or in the
aggregate, are reasonably likely to result in the revocation or
termination of any of the FCC Licenses or the imposition of any
restriction of such a nature as would Adversely affect the ownership or
operations of either of the Secret Stations; in particular, but without
limiting the generality of the foregoing, there are no applications,
complaints or Legal Actions
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pending or, to Secret's knowledge, information and belief, threatened
(x) before the FCC relating to the business or operations of either of
the Secret Stations other than applications, complaints or Legal
Actions which affect the radio broadcasting industry generally, or (y)
before any Authority involving charges of illegal discrimination by
either of the Secret Stations under any federal or state employment
Laws; and
(iii) each Governmental Authorization (including without
limitation all FCC Licenses) required under Applicable Laws to own and
operate each of the Secret Stations, as currently conducted or proposed
to be conducted on or prior to the Closing Date, all of which are in
full force and effect.
(b) Secret is the authorized legal holder of the FCC Licenses listed in
Section 3.7(a) of the Secret Disclosure Schedule, none of which is subject to
any restriction or condition which would limit in any respect the operations of
either of the Secret Stations as currently conducted or proposed to be conducted
on or prior to the Closing Date. The FCC Licenses listed in Section 3.7(a) of
the Secret Disclosure Schedule are valid and in good standing, are in full force
and effect and are not impaired in any Material respect by any act or omission
of Secret or its partners, officers, directors, employees or agents, and the
operation of each of the Secret Stations is in accordance in all Material
respects with the FCC Licenses. All Material reports, forms and statements
required to be filed by Secret with the FCC with respect to each of the Secret
Stations have been filed and are true, complete and accurate in all Material
respects. To the knowledge, information and belief of Secret, under the FCA,
there are no facts that would disqualify it as the transferee of the control of
the American Stations.
Secret has obtained all Governmental Authorizations in addition to the
FCC Licenses listed in Section 3.7(a) of the Secret Disclosure Schedule which
are necessary for the ownership or uses of the Secret Assets and the conduct of
the business of each of the Secret Stations as now conducted or as presently
proposed to be conducted and which, if not obtained and maintained, would singly
or in the aggregate, have any Material Adverse Effect on Secret. No such
Governmental Authorization is the subject of any pending or, to Secret's
knowledge, information and belief, threatened challenge or proceeding to revoke
or terminate any such Governmental Authorization. Secret has no reason to
believe that any such Governmental Authorization would not be renewed in the
name of Secret by the granting Authority in the ordinary course.
Neither Secret nor any partner or officer (in connection with
ownership, operation of the Secret Assets or the conduct of the business of
either of the Secret Stations) is in or is charged by any Authority with or, to
Secret's knowledge, information and belief, at any time since August 1, 1994 has
been in or has been charged by any Authority with, or is threatened or under
investigation by any Authority with respect to, breach or violation of, or
default in the performance, observance or fulfillment of, any Governmental
Authorization listed in Section 3.7(a) of the Secret Disclosure Schedule or any
Applicable Law relating to the ownership and operation of the Secret Assets or
the conduct of the business of either of the Secret Stations, and no Event
exists or has occurred, which constitutes, or but for any requirement of giving
of notice or passage of time or both would constitute, such a breach, violation
or default, under
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(x) any Governmental Authorization or any Applicable Law,
except for such breaches, violations or defaults as do not and will not
have in the aggregate any Material Adverse Effect on Secret, or
(y) any Material requirement of any insurance carrier,
applicable to the business or operations of the Secret Assets or the
Secret Stations;
except as otherwise specifically described in Section 3.7(b) of the Secret
Disclosure Schedule.
(c) With respect to matters, if any, of a nature referred to in Section
3.7(a) or 3.7(b) of the Secret Disclosure Schedule, except as otherwise
specifically described in Schedule 3.7(c) of the Secret Disclosure Schedule, all
such information and matters set forth in the Secret Disclosure Schedule, if
adversely determined against Secret, will not, in the aggregate, Materially
Adversely Affect Secret.
3.8 Intangible Assets. Section 3.8 of the Secret Disclosure Schedule
sets forth a true, accurate and complete description of all Intangible Assets
(other than Governmental Authorizations) relating to the ownership and operation
of the Secret Assets or the conduct of the business of either of the Secret
Stations held or used by Secret, including without limitation the nature of
Secret's interest in each and the extent to which the same have been duly
registered in the offices as indicated therein. Secret owns or possesses or
otherwise has the right to use all such other Intangible Assets necessary for
the ownership and operation of the Secret Assets and the conduct of the business
of either of the Secret Stations as currently conducted. Except as set forth in
Section 3.8(a) of the Secret Disclosure Schedule, no Intangible Assets (except
Governmental Authorizations and the Intangible Assets so set forth) are required
for the ownership or operation of the Secret Assets or the conduct of the
business of either of the Secret Stations as currently owned, operated and
conducted or proposed to be owned, operated and conducted on or prior to the
Closing Date.
3.9 Related Transactions. Secret is not a party or subject to any
Contractual Obligation relating to the ownership and operation of the Secret
Assets or the conduct of the business of either of the Secret Stations between
Secret and any of its partners (or any of their partners, officers, directors or
stockholders), employees or, to the knowledge, information and belief of Secret,
any Affiliate of any thereof, including without limitation any Contractual
Obligation providing for the furnishing of services to or by, providing for
rental of property, real, personal or mixed, to or from, or providing for the
lending or borrowing of money to or from or otherwise requiring payments to or
from, any such Person, other than (i) Employment Arrangements listed or
described in Section 3.15(a) of the Secret Disclosure Schedule and (ii)
management services and consulting arrangements between Secret and its partners
or their Affiliates which constitute Excluded Assets and Nonassumed Obligations
of Secret.
3.10 Insurance. Secret or one of its Affiliates maintains, with respect
to the Secret Assets and the Secret Stations, policies of fire and extended
coverage and casualty, liability and other forms of insurance in such amounts
and against such risks and losses as are in its reasonable business judgment
prudent and shall use reasonable business efforts to keep such insurance or
comparable insurance in full force and effect through the Closing Date, except
to the extent otherwise provided in the Secret Stations LMA.
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3.11 Tax Matters.
(a) Secret has in respect of the Secret Assets and the Secret Stations
filed all Material Tax Returns which are required to be filed, and has paid, or
made adequate provision for the payment of, all Taxes which have or may become
due and payable pursuant to said Tax Returns and all other governmental charges
and assessments received to date other than those Taxes being contested in good
faith. All Taxes in respect of the Secret Assets and the Secret Stations which
Secret is required by law to withhold and collect have been duly withheld and
collected, and have been paid over, in a timely manner, to the proper
Authorities to the extent due and payable. Secret has not executed any waiver to
extend, or otherwise taken or failed to take any action that would have the
effect of extending, the applicable statute of limitations in respect of any Tax
associated with the Secret Assets or the Secret Stations for the fiscal years
prior to and including the most recent fiscal year.
(b) Federal and state income Tax Returns of Secret have not been
examined by the IRS or applicable state Authority, and Secret has not been
notified of any proposed examination, except as shown in Section 3.11(b) of the
Secret Disclosure Schedule.
3.12 Employee Retirement Income Security Act of 1974.
(a) All group health Plans of Secret or any ERISA Affiliate have been
operated in compliance with the group health plan continuation coverage
requirements of COBRA such that any noncompliance will not result in any
Material liability to Secret;
(b) No liability to the PBGC or to any other Person under Title IV of
ERISA has been or is expected by Secret to be incurred by Secret with respect to
any Plan, and there has been no event or condition which presents a risk of
termination of any Plan by the PBGC; and
(c) Neither Secret nor any ERISA Affiliate is or ever has been a party
to any Multiemployer Plan or made contributions to any such Plan.
3.13 Absence of Sensitive Payments. Neither Secret nor, to Secret's
knowledge, information and belief, any of its partners, officers, directors,
employees, agents or other representatives, has with respect to the Secret
Assets or the Secret Stations (a) made any contributions, payments or gifts to
or for the private use of any governmental official, employee or agent where
either the payment or the purpose of such contribution, payment or gift is
illegal under the laws of the United States or the jurisdiction in which made or
(b) established or maintained any unrecorded fund or asset for any purpose or
made any false or artificial entries on its books.
3.14 Inapplicability of Specified Statutes. Secret is not a "holding
company", or a "subsidiary company" or an "affiliate" of a "holding company", as
such terms are defined in the Public Utility Holding Company Act of 1935, as
amended, or an "investment company" or a company "controlled" by or acting on
behalf of an "investment company", as defined in the Investment Company Act of
1940, as amended, or a "carrier" or a person which is in control of a "carrier",
as defined in section 11301 of Title 49, U.S.C.
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3.15 Employment Arrangements. Secret has no obligation or liability,
contingent or other, under any Employment Arrangement with any Secret Station
Employee, other than those listed or described in Section 3.15 of the Secret
Disclosure Schedule. Except as described in Section 3.15 of the Secret
Disclosure Schedule, (i) none of the Secret Station Employees is now, or, to
Secret's knowledge, information and belief, since August 1, 1994, has been,
represented by any labor union or other employee collective bargaining
organization, and Secret is not, and has never been, a party to any labor or
other collective bargaining agreement with respect to the Secret Station
Employees, (ii) there are no pending grievances, disputes or controversies with
any union or any other employee or collective bargaining organization of such
employees, or threats of strikes, work stoppages or slowdowns or any pending
demands for collective bargaining by any such union or other organization, and
(iii) neither Secret nor any of such employees is now, or, to Secret's
knowledge, information and belief, has since August 1, 1994 been, subject to or
involved in or, to Secret's knowledge, information and belief, threatened with,
any union elections, petitions therefore or other organizational or recruiting
activities, in each case with respect to any Secret Station Employees. Secret
has performed in all Material respects all obligations required to be performed
under all Employment Arrangements and is not in Material breach or violation of
or in Material default or arrears under any of the terms, provisions or
conditions thereof.
3.16 Material Agreements. Listed on Section 3.16 of the Secret
Disclosure Schedule are all Material Agreements relating to the ownership or
operation of the Secret Assets or the conduct of the business of either of the
Secret Stations or to which Secret is a party or to which it is bound or which
any of the Secret Assets is subject. True, accurate and complete copies of each
of such Material Agreements have been made available by Secret to American and
Secret has provided American with photocopies of all such Material Agreements
requested by American (or true, accurate and complete descriptions thereof have
been set forth in Section 3.16 of the Secret Disclosure Schedule, if any such
Material Agreements are oral). All of such Material Agreements are valid,
binding and legally enforceable obligations of Secret and, to Secret's
knowledge, information and belief, all other parties thereto, and Secret is
validly and lawfully conducting the business of each of the Secret Stations and
owning and operating the Subject Assets under each of such Material Agreements.
Secret has duly complied with all of the terms and conditions of each such
Material Agreement and has not done or performed, or failed to do or perform
(and there is no pending or, to the knowledge, information and belief of Secret,
threatened Claim that Secret has not so complied, done and performed or failed
to do and perform) any act which would invalidate or provide grounds for the
other party thereto to terminate (with or without notice, passage of time or
both) such Material Agreement or impair the rights or benefits, or increase the
costs, of Secret under any of such Material Agreements.
3.17 Ordinary Course of Business. Secret, from the end of its most
recent fiscal quarter to the date hereof, except (i) as may be described on
Section 3.17 of the Secret Disclosure Schedule, or (ii) as may be required or
expressly contemplated by the terms of this Agreement, with respect to the
Secret Assets and each of the Secret Stations:
(a) has operated its business in the normal, usual and customary manner
in the ordinary and regular course of business, consistent with prior practice;
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(b) has not sold or otherwise disposed of or contracted to sell or
otherwise dispose of any of its properties or assets having a value in excess of
$10,000, other than in the ordinary course of business;
(c) except in each case in the ordinary course of business, consistent
with prior practice:
(i) has not incurred any obligations or liabilities (fixed,
contingent or other) having a value in excess of $20,000;
(ii) has not entered into any commitments having a value in
excess of $20,000; and
(iii) has not canceled any debts or claims;
(d) has not made or committed to make any additions to its property or
any purchases of equipment, except for normal maintenance and replacements;
(e) except as described in Section 3.17(e) of the Secret Disclosure
Schedule, has not increased the compensation payable or to become payable to any
of its employees other than in the ordinary course of business or otherwise
altered, modified or changed the terms of their employment;
(f) has not suffered any Material damage, destruction or loss (whether
or not covered by insurance) or any acquisition or taking of property by any
Authority;
(g) has not waived any rights of Material value without fair and
adequate consideration;
(h) has not experienced any work stoppage;
(i) except in the ordinary course of business, has not entered into,
amended or terminated any Lease, Governmental Authorization, Private
Authorization, Material Agreement, Employment Arrangement or Contractual
Obligation, or any transaction, agreement or arrangement with any Affiliate of
Secret; and
(j) has not entered into any trade or barter arrangements with respect
to the Secret Stations (i) which are outside the ordinary course of business,
(ii) otherwise than in accordance with Secret's prior policies and practices, or
(iii) if, together with all trade and barter arrangements entered into after
March 31, 1996, such arrangements would cause the difference between fair value
of Secret's trade assets and trade liabilities with respect to the Secret
Stations to become more unfavorable to Secret by more than $10,000.
3.18 Broker or Finder. No Person assisted in or brought about the
negotiation of this Agreement, the Exchange or the subject matter of any other
Transactions in the capacity of broker, agent or finder or in any similar
capacity on behalf of Secret.
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3.19 Solvency. As of the execution and delivery of this Agreement,
Secret is, and immediately prior to giving effect to the consummation of the
Exchange and the other Transactions will be, solvent.
3.20 Environmental Matters.
(a) Except as set forth in Section 3.20(a) of the Secret Disclosure
Schedule, with respect to the Secret Assets, Secret:
(i) to the knowledge, information and belief of Secret, has
not been notified that it is potentially liable under, has not received
any request for information or other correspondence concerning its
potential liability with respect to any site or facility under, and is
not a "potentially responsible party" under, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended, the Resource Conservation Recovery Act, as amended, or any
similar state law;
(ii) has not entered into or received any consent decree,
compliance order or administrative order issued pursuant to any
Environmental Law;
(iii) is not a party in interest or in default under any
judgment, order, writ, injunction or decree of any final order issued
pursuant to any Environmental Law;
(iv) is, to the knowledge, information and belief of Secret,
in substantial compliance in all Material respects with all
Environmental Laws, has, to Secret's knowledge, information and belief,
obtained all Environmental Permits required under Environmental Laws,
and is not the subject of or, to Secret's knowledge, information and
belief, threatened with any Legal Action involving a demand for damages
or other potential liability including any Lien with respect to
Material violations or Material breaches of any Environmental Law; and
(v) has no knowledge of any past or present Event related to
the Secret Stations or the Secret Assets which Event, individually or
in the aggregate, will interfere with or prevent continued Material
compliance with all Environmental Laws, or which, individually or in
the aggregate, will form the basis of any Material Claim for the
release or threatened release into the environment, of any Hazardous
Material.
(b) Except as set forth in Section 3.20(b) of the Secret Disclosure
Schedule:
(i) Secret has not disposed of, released, buried or placed on
any property or facility leased by Secret for use in the business of
the Secret Stations during the period that such facilities and
properties were leased by it or on the property of any other Person any
Hazardous Materials which to Secret's knowledge, information and belief
could reasonably form the basis for a Material Claim; and
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(ii) to the knowledge, information and belief of Secret,
Secret does not have any above-ground or underground fuel storage tanks
on property leased by it for use in the business of the Secret
Stations.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF AMERICAN
American represents, warrants and covenants to, and agrees with, Secret
as follows:
4.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) American is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation, has all
requisite power and authority (corporate and other) to own or hold under lease
its properties and to conduct its business as now conducted.
(b) American has all requisite power and authority (corporate and
other) and has in full force and effect all Governmental Authorizations and
Private Authorizations, except for those set forth in Section 4.1(b) of the
American Disclosure Schedule which must be obtained prior to the Closing Date,
necessary to enable it to execute and deliver, and to perform its obligations
under, this Agreement and each Collateral Document executed or required to be
executed pursuant hereto or thereto or to consummate the Exchange and the other
Transactions; and the execution, delivery and performance of this Agreement and
each Collateral Document executed or required to be executed pursuant hereto or
thereto have been duly authorized by all requisite corporate or other action on
the part of American. This Agreement has been duly executed and delivered by
American and constitutes, and each Collateral Document executed or required to
be executed pursuant hereto or thereto or to consummate the Exchange and the
other Transactions when executed and delivered by American will constitute,
legal, valid and binding obligations of American, enforceable in accordance with
their respective terms.
(c) Except as set forth in Section 4.1(c) of the American Disclosure
Schedule, neither the execution and delivery by American of this Agreement or
any Collateral Document executed or required to be executed by it pursuant
hereto or thereto, nor the consummation by American of the Exchange and the
other Transactions, nor compliance with the terms, conditions and provisions
hereof or thereof by American:
(i) will conflict with, or result in a breach or violation of,
or constitute a default under, any Organic Document of American or any
Applicable Law on the part of American, or will conflict with, or
result in a breach or violation of, or constitute a default under, or
permit the acceleration of any obligation or liability in, or but for
any requirement of giving of notice or passage of time or both would
constitute such a conflict with, breach or violation of, or default
under, or permit any such acceleration in, any Contractual Obligation
of American; or
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(ii) will require American to make or obtain any Governmental
Authorization, Governmental Filing or Private Authorization, except for
the FCC Consents and filings under the Hart-Scott-Rodino Act.
(d) American does not have any Subsidiaries which own or have any
interest in or are a party to any agreement, arrangement or understanding
relating to either of the American Stations or any of the American Assets other
than those set forth on Section 4.1(d) of the American Disclosure Schedule, each
of which is a corporation which is duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, with full power
and authority (corporate and other) to own or hold under lease its properties
and to conduct its business as now conducted. American owns all of the
outstanding capital stock of each such Subsidiary. Except as the context
otherwise requires, the representations and warranties of`American set forth in
this Article shall apply to each of such Subsidiaries with the same force and
effect as though each of them was named in each Section hereof.
4.2 Financial and Other Information.
(a) American has heretofore furnished to Secret copies of the financial
statements of the American Stations listed in Section 4.2(a) of the American
Disclosure Schedule (the "American Financial Statements"). The American
Financial Statements, including in each case the notes thereto, have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby, except as otherwise noted therein or as set forth in
Section 4.2(a) of the American Disclosure Schedule (which schedule reflects the
inclusion of "barter" transactions and the effects thereof), are true, accurate
and complete, do not contain any untrue statement of a material fact or omit to
state a material fact required by GAAP to be stated therein or necessary in
order to make the statements contained therein not misleading, and fairly
present the results of operations of the American Stations, on the bases therein
stated, as of the respective dates thereof, and for the respective periods
covered thereby subject, in the case of unaudited financial statements, to
normal year-end audit adjustments and accruals.
(b) The Broadcast Cash Flow for the twelve (12) months ended March 31,
1996 was not less than $1,500,000 for the Philadelphia Station and $700,000 for
the Detroit Station.
4.3 Changes in Condition. Since March 31, 1996, except to the extent
specifically described in Section 4.3 of the American Disclosure Schedule, there
has been no Material Adverse Change in American. There is no Event known to
American which Materially Adversely Affects, or (so far as American can now
reasonably foresee) is likely to Materially Adversely Affect, American, except
to the extent specifically described in Section 4.3 of the American Disclosure
Schedule.
4.4 Materiality. The representations and warranties set forth in this
Article would in the aggregate be true and correct even without the materiality
exceptions or qualifications contained therein or set forth in the American
Disclosure Schedule, except for such exceptions and qualifications including
without limitation those set forth in the American Disclosure Schedule which, in
the aggregate for all such representations and warranties, are not and could not
reasonably be expected to be Materially Adverse to American.
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4.5 Title to Properties; Leases.
(a) There is no real property that is or will be owned by American that
is or will be part of the American Assets. American will, assuming consummation
of the transactions contemplated by the Marlin Agreement, have good indefeasible
and merchantable title to all assets, tangible and intangible, constituting a
part of the American Assets, in each case free and clear of all Liens, except
(i) Permitted Liens and (ii) Liens set forth on Section 4.5(a) of the American
Disclosure Schedule. Except for financing statements evidencing Liens referred
to in the preceding sentence (a true, accurate and complete list and description
of which is set forth in Section 4.5(a) of the American Disclosure Schedule), no
financing statements under the Uniform Commercial Code and no other filing which
names American or Marlin as debtor or which covers or purports to cover any of
the American Assets is on file in any state or other jurisdiction, and neither
Marlin nor American has signed or agreed to sign any such financing statement or
filing or any agreement authorizing any secured party thereunder to file any
such financing statement or filing. Except as otherwise set forth in Schedule
4.5(a) of the American Disclosure Schedule, each Lease or other occupancy or
other agreement under which American will, assuming consummation of the
transactions contemplated by the Marlin Agreement, hold real or personal
property constituting a part of the American Assets has been duly authorized,
executed and delivered by American and, to American's knowledge, information and
belief, each of the other parties thereto, and is a legal, valid and binding
obligation of American, and, to American's knowledge, information and belief,
each of the other parties thereto, enforceable in accordance with its terms.
American will, assuming consummation of the transactions contemplated by the
Marlin Agreement, have a valid leasehold interest in and enjoy peaceful and
undisturbed possession under all Leases pursuant to which it will hold any such
real property or tangible personal property. Assuming consummation of the
transactions contemplated by the Marlin Agreement, (x) all of such Leases will
be valid and subsisting and in full force and effect, and (y) neither American
nor, to American's knowledge, information and belief, any other party thereto,
will be in default in the performance, observance or fulfillment of any
obligation, covenant or condition contained in any such Lease.
(b) Section 4.5(b) of the American Disclosure Schedule contains a true,
accurate and complete description of all real property constituting a part of
the American Assets which will, assuming consummation of the transactions
contemplated by the Marlin Agreement, be leased by American and all Leases under
which such real property will, assuming such consummation, be leased, and an
identification of all material items of fixed assets and equipment used in the
business of the American Stations (other than those constituting Excluded
Assets). None of the fixed assets or equipment is subject to contracts of sale
(other than pursuant to the Marlin Agreement), and none will, assuming
consummation of the transactions contemplated by the Marlin Agreement, be held
by American as lessee or as conditional sales vendee under any Lease or
conditional sales contract and none will be subject to any title retention
agreement, except as set forth in Section 4.5(b) of the American Disclosure
Schedule. Except as set forth in Section 4.5(b) of the American Disclosure
Schedule, such real property (other than land), fixtures, fixed assets and other
material items of personal property, including equipment, are in a state of good
repair and maintenance and are in good operating condition, normal wear and tear
excepted, have been maintained in a manner consistent with generally accepted
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standards of good engineering practice and will, assuming consummation of the
transactions contemplated by the Marlin Agreement, permit the American Stations
to be operated in accordance with the terms and conditions of their respective
FCC Licenses and all Applicable Laws.
(c) Except as set forth in Section 4.5(c) of the American Disclosure
Schedule, American has not received any notice or otherwise been advised by
Marlin that any such real property owned or leased by Marlin and reflected in
Section 4.5(b) of the American Disclosure Schedule or the use thereof, violates
any applicable title covenant, condition, restriction or reservation or any
applicable zoning, wetlands, land use or other Applicable Law.
4.6 Compliance with Private Authorizations. Section 4.6 of the American
Disclosure Schedule sets forth a true, accurate and complete list and
description of each Private Authorization which individually is material to the
American Assets or either of the American Stations, all of which are in full
force and effect. American will, assuming consummation of the transactions
contemplated by the Marlin Agreement, have obtained all Private Authorizations
which are necessary for the ownership and operation by American of the American
Assets and the American Stations and the conduct of business thereof as now
conducted or as presently proposed to be conducted or which, if not obtained and
maintained, could, singly or in the aggregate, Materially Adversely Affect
American. American will, assuming consummation of the transactions contemplated
by the Marlin Agreement, not be in breach or violation of, or in default in the
performance, observance or fulfillment of, any such Private Authorization, and
no Event exists or has occurred, which constitutes, or but for any requirement
of giving of notice or passage of time or both would constitute, such a breach,
violation or default, under any such Private Authorization, except for such
defaults, breaches or violations as do not and will not have in the aggregate
any Material Adverse Effect on American. No such Private Authorization is the
subject of any pending or, to American's knowledge, information or belief,
threatened attack, revocation or termination.
4.7 Compliance with Governmental Authorizations and Applicable Law.
(a) Section 4.7(a) of the American Disclosure Schedule contains a
description of:
(i) all Legal Actions pending or, to American's knowledge,
information and belief, at any time since August 1, 1994 was pending or
is currently threatened against American or Marlin with respect to the
business, operation or ownership of any of the American Assets or
either of the American Stations;
(ii) all Claims and Legal Actions pending or, to American's
knowledge, information and belief, threatened against American or
Marlin with respect to the business, operation or ownership of any of
the American Assets or either of the American Stations which,
individually or in the aggregate, are reasonably likely to result in
the revocation or termination of any of the FCC Licenses or the
imposition of any restriction of such a nature as would Adversely
affect the ownership or operations of either of the American Stations;
in particular, but without limiting the generality of the foregoing,
there are no applications, complaints or Legal Actions pending or, to
American's knowledge, information and belief, threatened (x) before the
FCC relating to the business or operations of either of the American
Stations other than applications, complaints or Legal Actions which
affect the radio broadcasting industry generally, or (y) before any
Authority involving charges of illegal discrimination by either of the
American Stations under any federal or state employment Laws; and
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(iii) each Governmental Authorization (including without
limitation all FCC Licenses) required under Applicable Laws to own and
operate each of the American Stations, as currently conducted or
proposed to be conducted on or prior to the Closing Date, all of which
are in full force and effect.
(b) American will, assuming consummation of the transactions
contemplated by the Marlin Agreement, be the authorized legal holder of the FCC
Licenses listed in Section 4.7(a) of the American Disclosure Schedule, none of
which will, assuming such consummation, be subject to any restriction or
condition which would limit in any respect the operations of either of the
American Stations as proposed to be conducted on or prior to the Closing Date.
The FCC Licenses listed in Section 4.7(a) of the American Disclosure Schedule
are valid and in good standing, are in full force and effect and are not
impaired in any Material respect by any act or omission of American or Marlin or
either of its officers, directors, employees or agents, and the operation of
each of the American Stations is in accordance in all Material respects with the
FCC Licenses. All Material reports, forms and statements required to be filed by
American or Marlin with the FCC with respect to each of the American Stations
have been filed and are true, complete and accurate in all Material respects. To
the knowledge, information and belief of American, under the FCA, there are no
facts that would disqualify it as the transferee of the control of the Secret
Stations.
American will, assuming consummation of the transactions contemplated
by the Marlin Agreement, have obtained all Governmental Authorizations in
addition to the FCC Licenses listed in Section 4.7(a) of the American Disclosure
Schedule which are necessary for the ownership or uses of the American Assets
and the conduct of the business of each of the American Stations as now
conducted or as presently proposed to be conducted and which, if not obtained
and maintained, would singly or in the aggregate, have any Material Adverse
Effect on American. No such Governmental Authorization is the subject of any
pending or, to American's knowledge, information and belief, threatened
challenge or proceeding to revoke or terminate any such Governmental
Authorization. American has no reason to believe that any such Governmental
Authorization would not be renewed in the name of American by the granting
Authority in the ordinary course.
Neither Marlin nor American nor any officer or director of either (in
connection with ownership, operation of the American Assets or the conduct of
the business of either of the American Stations) is in or is charged by any
Authority with or, to American's knowledge, information and belief, at any time
since August 1, 1994 has been in or has been charged by any Authority with, or
is threatened or under investigation by any Authority with respect to, breach or
violation of, or default in the performance, observance or fulfillment of, any
Governmental Authorization listed in Section 4.7(a) of the American Disclosure
Schedule or any Applicable Law relating to the ownership and operation of the
American Assets or the conduct of the business of either of the American
Stations, and no Event exists or has occurred, which constitutes, or but for any
requirement of giving of notice or passage of time or both would constitute,
such a breach, violation or default, under
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(x) any Governmental Authorization or any Applicable Law,
except for such breaches, violations or defaults as do not and will not
have in the aggregate any Material Adverse Effect on American, or
(y) any Material requirement of any insurance carrier,
applicable to the business or operations of the American Assets or the
American Stations;
except as otherwise specifically described in Section 4.7(b) of the American
Disclosure Schedule.
(c) With respect to matters, if any, of a nature referred to in Section
4.7(a) or 4.7(b) of the American Disclosure Schedule, except as otherwise
specifically described in Schedule 4.7(c) of the American Disclosure Schedule,
all such information and matters set forth in the American Disclosure Schedule,
if adversely determined against American, will not, in the aggregate, Materially
Adversely Affect American.
4.8 Intangible Assets. Section 4.8 of the American Disclosure Schedule
sets forth a true, accurate and complete description of all Intangible Assets
(other than Governmental Authorizations) relating to the ownership and operation
of the American Assets or the conduct of the business of either of the American
Stations to be held or used by American, including without limitation the nature
of American's interest in each and the extent to which the same have been duly
registered in the offices as indicated therein, assuming consummation of the
transactions contemplated by the Marlin Agreement. American will, assuming such
consummation, own or possess or otherwise have the right to use all such other
Intangible Assets necessary for the ownership and operation of the American
Assets and the conduct of the business of either of the American Stations as
currently conducted. Except as set forth in Section 4.8(a) of the American
Disclosure Schedule, no Intangible Assets (except Governmental Authorizations
and the Intangible Assets so set forth) are required for the ownership or
operation of the American Assets or the conduct of the business of either of the
American Stations as currently owned, operated and conducted or proposed to be
owned, operated and conducted on or prior to the Closing Date.
4.9 Related Transactions. American will, assuming consummation of the
transactions contemplated by the Marlin Agreement, not be a party or subject to
any Contractual Obligation relating to the ownership and operation of the
American Assets or the conduct of the business of either of the American
Stations between American and any of the former stockholders of Marlin (or any
of their officers, directors or stockholders) or its stockholders (or any of
their officers, directors or stockholders), employees or, to the knowledge,
information and belief of American, any Affiliate of any thereof, including
without limitation any Contractual Obligation providing for the furnishing of
services to or by, providing for rental of property, real, personal or mixed, to
or from, or providing for the lending or borrowing of money to or from or
otherwise requiring payments to or from, any such Person, other than (i)
Employment Arrangements listed or described in Section 4.15(a) of the American
Disclosure Schedule and (ii) Contractual Obligations between American and
officers which constitute Excluded Assets and Nonassumed Obligations of
American.
4.10 Insurance. Marlin or one of its Affiliates maintains, with respect
to the American Assets and the American Stations, policies of fire and extended
coverage and casualty, liability and other forms of insurance in such amounts
and against such risks and losses as are in American's reasonable business
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judgment prudent and American shall use reasonable business efforts to ensure
than such insurance or comparable insurance is maintained in full force and
effect through the Closing Date, except to the extent otherwise provided in the
American Stations LMA.
4.11 Tax Matters.
(a) Marlin has in respect of the American Assets and the American
Stations filed all Material Tax Returns which are required to be filed, and has
paid, or made adequate provision for the payment of, all Taxes which have or may
become due and payable pursuant to said Tax Returns and all other governmental
charges and assessments received to date other than those Taxes being contested
in good faith. All Taxes in respect of the American Assets and the American
Stations which Marlin is required by law to withhold and collect have been duly
withheld and collected, and have been paid over, in a timely manner, to the
proper Authorities to the extent due and payable. Marlin has not executed any
waiver to extend, or otherwise taken or failed to take any action that would
have the effect of extending, the applicable statute of limitations in respect
of any Tax associated with the American Assets or the American Stations for the
fiscal years prior to and including the most recent fiscal year.
(b) Federal and state income Tax Returns of American have not been
examined by the IRS or applicable state Authority, and American has not been
notified of any proposed examination, except as shown in Section 4.11(b) of the
American Disclosure Schedule.
4.12 Employee Retirement Income Security Act of 1974.
(a) All group health Plans of Marlin or any ERISA Affiliate have been
operated in compliance in all Material respects with the group health plan
continuation coverage requirements of COBRA such that any noncompliance will not
result in any Material liability to American.
(b) No liability to the PBGC or to any other Person under Title IV of
ERISA has been or is expected by American to be incurred by Marlin with respect
to any Plan, and there has been no event or condition which presents a risk of
termination of any Plan by the PBGC; and
(c) Neither Marlin nor any ERISA Affiliate is or ever has been a party
to any Multiemployer Plan or made contributions to any such Plan.
4.13 Absence of Sensitive Payments. Neither Marlin nor, to American's
knowledge, information and belief, any of Marlin's officers, directors,
employees, agents or other representatives, has with respect to the American
Assets or the American Stations (a) made any contributions, payments or gifts to
or for the private use of any governmental official, employee or agent where
either the payment or the purpose of such contribution, payment or gift is
illegal under the laws of the United States or the jurisdiction in which made or
(b) established or maintained any unrecorded fund or asset for any purpose or
made any false or artificial entries on its books.
4.14 Inapplicability of Specified Statutes. American is not a "holding
company", or a "subsidiary company" or an "affiliate" of a "holding company", as
such terms are defined in the Public Utility Holding Company Act of 1945, as
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amended, or an "investment company" or a company "controlled" by or acting on
behalf of an "investment company", as defined in the Investment Company Act of
1940, as amended, or a "carrier" or a person which is in control of a "carrier",
as defined in section 11401 of Title 49, U.S.C.
4.15 Employment Arrangements. American will, assuming consummation of
the transactions contemplated by the Marlin Agreement, have no obligation or
liability, contingent or other, under any Employment Arrangement with any
American Station Employee, other than those listed or described in Section 4.15
of the American Disclosure Schedule. Except as described in Section 4.15 of the
American Disclosure Schedule, (i) none of the American Station Employees is now,
or, to American's knowledge, information and belief, since August 1, 1994, has
been, represented by any labor union or other employee collective bargaining
organization, and Marlin is not, and has never been, a party to any labor or
other collective bargaining agreement with respect to the American Station
Employees, (ii) there are no pending grievances, disputes or controversies with
any union or any other employee or collective bargaining organization of such
employees, or threats of strikes, work stoppages or slowdowns or any pending
demands for collective bargaining by any such union or other organization, and
(iii) neither Marlin nor any of such employees is now, or, to American's
knowledge, information and belief, has since August 1, 1994 been, subject to or
involved in or, to American's knowledge, information and belief, threatened
with, any union elections, petitions therefore or other organizational or
recruiting activities, in each case with respect to any American Station
Employees. Marlin has performed in all Material respects all obligations
required to be performed under all Employment Arrangements and is not in
Material breach or violation of or in default or arrears under any of the terms,
provisions or conditions thereof.
4.16 Material Agreements. Listed on Section 4.16 of the American
Disclosure Schedule are all Material Agreements relating to the ownership or
operation of the American Assets or the conduct of the business of either of the
American Stations or to which American will, assuming consummation of the
transactions contemplated by the Marlin Agreement, be a party or to which it
will be bound or which any of the American Assets will be subject. True,
accurate and complete copies of each of such Material Agreements have been made
available by American to Secret and American has provided Secret with
photocopies of all such Material Agreements requested by Secret (or true,
accurate and complete descriptions thereof have been set forth in Section 4.16
of the American Disclosure Schedule, if any such Material Agreements are oral).
All of such Material Agreements will, assuming consummation of the transactions
contemplated by the Marlin Agreement, be valid, binding and legally enforceable
obligations of American and, to American's knowledge, information and belief,
all other parties thereto, and American will, assuming such consummation, be
validly and lawfully conducting the business of each of the American Stations
and owning and operating the Subject Assets under each of such Material
Agreements. Marlin has and American will, assuming consummation of the
transactions contemplated by the Marlin Agreement, have duly complied with all
of the terms and conditions of each such Material Agreement and not have not
done or performed, or failed to do or perform (and there is no pending or, to
the knowledge, information and belief of American, threatened Claim that Marlin
has not so complied, done and performed or failed to do and perform) any act
which would invalidate or provide grounds for the other party thereto to
terminate (with or without notice, passage of time or both) such Material
Agreement or impair the rights or benefits, or increase the costs, of American
under any of such Material Agreements.
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4.17 Ordinary Course of Business. Marlin, from the end of its most
recent fiscal quarter to the date hereof, except (i) as may be described on
Section 4.17 of the American Disclosure Schedule, (ii) as may be required or
expressly contemplated by the terms of this Agreement or the Marlin Agreement,
or (iii) as are reflected in the Company Financial Statements (as defined in the
Marlin Agreement), with respect to the American Assets and each of the American
Stations:
(a) has operated its business in the normal, usual and
customary manner in the ordinary and regular course of business,
consistent with prior practice;
(b) has not sold or otherwise disposed of or contracted to
sell or otherwise dispose of any of its properties or assets having a
value in excess of $10,000, other than in the ordinary course of
business;
(c) except in each case in the ordinary course of business,
consistent with prior practice:
(i) has not incurred any obligations or liabilities (fixed,
contingent or other) having a value in excess of $20,000;
(ii) has not entered into any commitments having a value in
excess of $20,000; and
(iii) has not canceled any debts or claims;
(d) has not made or committed to make any additions to its
property or any purchases of equipment, except for normal maintenance
and replacements;
(e) except as described in Section 4.17(e) of the American
Disclosure Schedule, has not increased the compensation payable or to
become payable to any of its employees other than in the ordinary
course of business or otherwise altered, modified or changed the terms
of their employment;
(f) has not suffered any Material damage, destruction or loss
(whether or not covered by insurance) or any acquisition or taking of
property by any Authority;
(g) has not waived any rights of Material value without fair
and adequate consideration;
(h) has not experienced any work stoppage;
(i) except in the ordinary course of business, has not entered
into, amended or terminated any Lease, Governmental Authorization,
Private Authorization, Material Agreement, Employment Arrangement or
Contractual Obligation, or any transaction, agreement or arrangement
with any Affiliate of American; and
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(j) has not entered into any trade or barter arrangements with
respect to the American Stations (i) which are outside the ordinary
course of business, (ii) otherwise than in accordance with Marlin's
prior policies and practices, or (iii) if, together with all trade and
barter arrangements entered into after December 29, 1995, such
arrangements would cause the fair value of Marlin's trade liabilities
with respect to the American Stations to exceed the fair value of its
trade assets with respect to such Stations by more than $250,000;
provided, however, that in the event the Philadelphia Exchange shall
occur and the Detroit Exchange shall not, either simultaneously or at
any time thereafter, occur, the excess of the trade liabilities of the
Philadelphia Stations over the trade assets of the Philadelphia
Stations shall not exceed $150,000, it being understood that to the
extent such $250,000 (or $150,000) is exceeded, the purchase price
shall be adjusted (i.e., the American Assets (or the Philadelphia
Assets) shall include cash) in an amount equal to such excess.
4.18 Broker or Finder. No Person assisted in or brought about the
negotiation of this Agreement, the Exchange or the subject matter of any other
Transactions in the capacity of broker, agent or finder or in any similar
capacity on behalf of American other than Blackburn & Company, Inc., which was
retained by, and whose fees and expenses will be paid by, American.
4.19 Solvency. As of the execution and delivery of this Agreement,
American is, and immediately prior to giving effect to the consummation of the
Exchange and the other Transactions will be, solvent.
4.20 Environmental Matters.
(a) Except as set forth in Section 4.20(a) of the American Disclosure
Schedule, with respect to the American Assets:
(i) to the knowledge, information and belief of American,
Marlin has not been notified that it is potentially liable under, has
not received any request for information or other correspondence
concerning its potential liability with respect to any site or facility
under, and is not a "potentially responsible party" under, the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, the Resource Conservation Recovery Act, as amended,
or any similar state law;
(ii) Marlin has not entered into or received any consent
decree, compliance order or administrative order issued pursuant to any
Environmental Law;
(iii) Marlin is not a party in interest or in default under
any judgment, order, writ, injunction or decree of any final order
issued pursuant to any Environmental Law;
(iv) Marlin is, to the knowledge, information and belief of
American, in substantial compliance in all Material respects with all
Environmental Laws, has, to American's knowledge, information and
belief, obtained all Environmental Permits required under Environmental
Laws, and is not the subject of or, to American's knowledge,
information and belief, threatened with any Legal Action involving a
demand for damages or other potential liability including any Lien with
respect to Material violations or Material breaches of any
Environmental Law; and
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(v) Marlin has no knowledge of any past or present Event
related to the American Stations or the American Assets which Event,
individually or in the aggregate, will interfere with or prevent
continued Material compliance with all Environmental Laws, or which,
individually or in the aggregate, will form the basis of any Material
Claim for the release or threatened release into the environment, of
any Hazardous Material.
(b) Except as set forth in Section 4.20(b) of the American Disclosure
Schedule:
(i) Marlin has not disposed of, released, buried or placed on
any property or facility owned or leased by Marlin for use in the
business of the American Stations during the period that such
facilities and properties were owned or leased by Marlin or on the
property of any other Person any Hazardous Materials which to
American's knowledge, information and belief could reasonably form the
basis for a Material Claim (provided, that with respect to the
underground fuel oil storage tank referred to in such Section 4.20(b)
of the American Disclosure Schedule, American represents only that it
has no knowledge that any releases of Hazardous Materials from such
tank have taken place); and
(ii) to the knowledge, information and belief of American,
Marlin does not have any above-ground or underground fuel storage tanks
on property leased by it for use in the business of the American
Stations.
ARTICLE 5
COVENANTS
5.1 Access to Information; Confidentiality.
(a) Each party shall afford, and prior to the consummation of the
transactions contemplated by the Marlin Agreement American will use its
reasonable business efforts to cause Marlin to afford, to the other party and
its accountants, counsel, financial advisors and other representatives (the
"Representatives") full access during normal business hours throughout the
period prior to the Closing Date to all of its (and its Subsidiaries')
properties, books, contracts, commitments and records (including without
limitation Tax Returns) relating to the Assets and the Stations and, during such
period, shall furnish promptly upon request (i) a copy of each report, schedule
and other document filed or received by any of them pursuant to the requirements
of any Applicable Law (including without limitation the FCA) or filed by it or
any of its Subsidiaries with any Authority in connection with the Exchange and
other Transactions or which may have a Material effect on their respective
Assets or Stations or their businesses, operations, properties, prospects,
personnel, condition, (financial or other), or results of operations, (ii) to
the extent not provided for pursuant to the preceding clause, all financial
records, ledgers, workpapers and other sources of financial information
possessed or controlled by Secret or its accountants deemed by American or its
Representatives necessary or useful for the purpose of performing an audit of
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the business of the Secret Stations and certifying financial statements and
financial information, and (iii) such other information concerning any of the
foregoing as American or Secret shall reasonably request. All non-public
information furnished pursuant to the provisions of this Agreement, including
without limitation this Section, will be kept confidential and shall not,
without the prior written consent of the party disclosing such information, be
disclosed by the other party in any manner whatsoever, in whole or in part, and
shall not be used for any purposes, other than in connection with the Exchange
and the other Transactions. In no event shall either party or any of its
Representatives use such information to the detriment of the other party. Each
party agrees to reveal such information only to those of its Representatives or
other Persons who need to know such the information for the purpose of
evaluating the Exchange and the other Transactions, who are informed of the
confidential nature of such information and who shall undertake in writing (a
copy of which, if requested, will be furnished to the disclosing party) to act
in accordance with the terms and conditions of this Agreement.
(b) Subject to the terms and conditions of Section 5.1(a), each party
may disclose such information as may be necessary in connection with seeking all
Governmental and Private Authorizations or that is required by Applicable Law to
be disclosed. In the event that this Agreement is terminated in accordance with
its terms, each party shall promptly redeliver all non-public written material
provided pursuant to this Section or any other provision of this Agreement or
otherwise in connection with the Exchange and the other Transactions and shall
not retain any copies, extracts or other reproductions in whole or in part of
such written material other than one copy thereof which shall be delivered to
independent counsel for such party.
(c) No investigation pursuant to this Section or otherwise shall affect
any representation or warranty in this Agreement of either party or any
condition to the obligations of the parties hereto.
5.2 Agreement to Cooperate.
(a) Each of the parties hereto shall use reasonable business efforts
(x) to take, or cause to be taken, all actions and to do, or cause to be done,
all things necessary, proper or advisable under Applicable Law to consummate the
Exchange and make effective the other Transactions, and (y) to refrain from
taking, or cause to be taken, any action and to refrain from doing or causing to
be done, any thing which could impede or impair the consummation of the Exchange
or the making effective of the other Transactions, including, in all cases,
without limitation using its reasonable business efforts (i) to prepare and file
with the applicable Authorities as promptly as practicable after the execution
of this Agreement all requisite applications and amendments thereto, together
with related information, data and exhibits, necessary to request issuance of
orders approving the Exchange and the other Transactions by all such applicable
Authorities, each of which must be obtained or become final in order to satisfy
the condition applicable to it set forth in Section 6.1(c), (ii) to obtain all
necessary or appropriate waivers, consents and approvals, (iii) to effect all
necessary registrations, filings and submissions (including without limitation
filings under the Hart-Scott- Rodino Act and all filings necessary for American
and Secret to own and operate the Secret Stations and the American Stations,
respectively), (iv) to lift any injunction or other legal bar to the Exchange or
any of the other Transactions (and, in such case, to proceed with the Exchange
and the other Transactions as expeditiously as possible), and (v) to obtain the
satisfaction of the conditions specified in Article 6, including without
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limitation the truth and correctness as of the Closing Date as if made on and as
of the Closing Date of the representations and warranties of such party and the
performance and satisfaction as of the Closing Date of all agreements and
conditions to be performed or satisfied by such party. Without limiting the
generality of the foregoing, the parties acknowledge and agree that the
assignment of the FCC Licenses as contemplated by this Agreement is subject to
the prior consent and approval of the FCC. Within ten (10) business days
following the consummation of the transactions contemplated by the Marlin
Agreement, Secret and American shall file with the FCC appropriate applications
for FCC Consents. The parties shall prosecute said applications with all
reasonable diligence and otherwise use reasonable business efforts to obtain the
grant of FCC Consents to such applications as expeditiously as practicable. If
the FCC Consents, or any of them, imposes any condition on either party hereto
(or, in the case of American, Marlin or Franklin), such party shall use
reasonable business 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 any FCC Consent,
Secret and American 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 the provisions of Section 7.1).
The Exchange is expressly conditioned upon the grant of the Final Order as to
the FCC Consents for the transfer of the FCC Licenses for the Stations without
any condition Materially Adverse to the party acquiring such Stations.
(b) The parties shall cooperate with one another in the preparation,
execution and filing of all Returns, questionnaires, applications, or other
documents regarding any real property transfer or gains, sales, use, transfer,
value added, stock transfer and stamp Taxes, any transfer, recording,
registration and other fees, and any similar Taxes which become payable in
connection with the Exchange and the other Transactions that are required or
permitted to be filed on or before the Closing Date.
(c) Secret shall cooperate and use its reasonable business efforts to
cause its independent accountants to reasonably cooperate with American, and at
American's expense, in order to enable American to have its independent
accountants prepare audited financial statements for the Secret Stations
described in Section 6.2(d). Without limiting the generality of the foregoing,
Secret agrees that it will (i) consent to the use of such audited financial
statements in any registration statement or other document filed by American (or
any of its Subsidiaries) under the Securities Act or the Exchange Act and (ii)
execute and deliver, and cause its partners and officers to execute and deliver,
such "representation" letters as are customarily delivered in connection with
audits and as American's independent accountants may reasonably request under
the circumstances.
(d) Simultaneously with the acquisition by American of the American
Stations, but subject to the conditions that (i) all of the representations and
warranties of American set forth in Article 4 shall be true and correct in all
material respects as of the date of such acquisition with the same force and
effect as though made on and as of such date except those which speak as of a
certain date which shall continue to be true and correct as of such date of
acquisition (including without limitation giving effect to any later obtained
knowledge, information or belief of Secret or American), and (ii) no Legal
Action shall be pending before or threatened in writing by any Authority seeking
to enjoin, restrain, prohibit or make illegal or to impose any Materially
Adverse conditions in connection with, the consummation of the Exchange and the
other Transactions, or which might, in the reasonable business judgment of
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either Secret or American, based upon the advice of counsel, have a Material
Adverse Effect on the Assets and Stations to be acquired by it (it being
understood and agreed that a written request by any Authority for information
with respect to the Exchange or any other Transaction, which information could
be used in connection with such Legal Action, shall not be deemed to be a threat
of any such Legal Action), American and Secret shall execute and deliver local
management agreements with respect to each of the American Stations
substantially in the form of Exhibit A-2 (Detroit) and A-3 (Philadelphia)
attached hereto and made a part hereof (collectively, the "American Stations
LMA"). The parties acknowledge and agree that they have heretofore executed and
delivered a local management agreement with respect to each of the Secret
Stations substantially in the form of Exhibit A-1 attached hereto and made a
part hereof (the "Secret Stations LMA"). Anything in this Agreement to the
contrary notwithstanding, including without limitation any provision of Articles
3 and 4 and Sections 6.2 and 6.3, (A) Secret shall not be liable in any respect
to the extent any of its representations and warranties contained in Article 3,
and American shall not be liable in any respect to the extent any of its
representations and warranties contained in Article 4, are not true and correct
in any material respect on and as of the Closing Date due solely to the
existence and operation of the Secret Stations LMA and the American Stations
LMA, respectively, (B) the conditions set forth in Sections 6.2(f) and 6.3(e)
shall not be deemed to be not satisfied as a result of any action or failure to
act of American pursuant to the provisions of the Secret Stations LMA and of
Secret pursuant to the provisions of the American Stations LMA, respectively,
and (C) the certificates to be delivered to American and Secret pursuant to the
provisions of Section 6.2(c) and 6.3(c), respectively, shall not be required to
address any of such representations and warranties that are not true and correct
in any material respect on and as of the Closing Date due to the existence and
operation of such agreements.
(e) The parties to this Agreement intend the Philadelphia Exchange
(and, if applicable, the Detroit Exchange) to qualify as an exchange described
in Section 1031 of the Code and shall use their reasonable best efforts to
cooperate in achieving such a result. Notwithstanding the preceding sentence,
the parties to this Agreement will rely solely on their own advisors in
determining the tax consequences of the transactions contemplated by this
Agreement and each party is not relying, and will not rely, on any
representations or assurances of any other party regarding such consequences
other than the representations, warranties, covenants and agreements set forth
in writing in this Agreement or furnished pursuant to the provisions hereof.
5.3 Public Announcements. Until the Closing, or in the event of
termination of this Agreement, each party shall consult with the other before
issuing any press release or otherwise making any public statements with respect
to this Agreement, the Exchange or any other Transaction and shall not issue any
such press release or make any such public statement without the prior consent
of the other. Notwithstanding the foregoing, Secret acknowledges and agrees that
American may, without the prior consent of Secret, issue such press releases or
make such public statements as may be required by Applicable Law, in which case,
to the extent practicable, American will consult with Secret regarding the
nature, extent and form of such press release or public statement.
5.4 Notification of Certain Matters. Each party shall give prompt
notice to the other, of the occurrence or non-occurrence of any Event the
occurrence or non-occurrence of which would be likely to cause (i) any
representation or warranty made by it contained in this Agreement (and, in the
case of American, of Marlin in the Marlin Agreement) to be untrue or inaccurate
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in any respect such that one or more of the conditions of Closing might not be
satisfied, or (ii) any covenant, condition or agreement made by it contained in
this Agreement (and, in the case of American, of Marlin in the Marlin Agreement)
not to be complied with or satisfied, or (iii) any change to be made in the
Secret Disclosure Schedule or the American Disclosure Schedule, as the case may
be, in any respect such that one or more of the conditions of Closing might not
be satisfied, and any failure made by it (and, in the case of American, of
Marlin in the Marlin Agreement) to comply with or satisfy, or be able to comply
with or satisfy, any covenant, condition or agreement to be complied with or
satisfied by it hereunder (or thereunder) in any respect such that one or more
of the conditions of Closing might not be satisfied; provided, however, that the
delivery of any notice pursuant to this Section shall not limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
5.5 No Solicitation. Each party shall not, nor shall it permit any
Subsidiary, or any of its Representatives (including, without limitation, any
investment banker, broker, finder, attorney or accountant retained by it) to,
initiate, solicit or facilitate, directly or indirectly, any inquiries or the
making of any proposal with respect to any Alternative Transaction, engage in
any discussions or negotiations concerning, or provide to any other Person any
information or data relating to, it or any Subsidiary for the purposes of, or
otherwise cooperate in any way with or assist or participate in, or facilitate
any inquiries or the making of any proposal which constitutes, or may reasonably
be expected to lead to, a proposal to seek or effect any Alternative
Transaction, or agree to or endorse any Alternative Transaction. "Alternative
Transaction" means a transaction or series of related transactions (other than
the Exchange and the other Transactions) resulting in (i) any merger or
consolidation of either, regardless of whether it is the surviving Entity unless
the surviving Entity remains obligated under this Agreement to the same extent
as it was, or (ii) any sale or other disposition of all or any substantial part
of the Assets owned by it or either of the Stations owned or, in the case of
American, to be owned by it. The provisions of this Section shall apply to each
of American's Subsidiaries.
ARTICLE 6
CLOSING CONDITIONS
6.1 Conditions to Obligations of Each Party to Effect the Exchange. The
respective obligations of each party to effect the Exchange shall, except as
hereinafter provided in this Section, be subject to the satisfaction at or prior
to the Closing Date of the following conditions, any or all of which may be
waived, in whole or in part, to the extent permitted by Applicable Law:
(a) The acquisition of the American Stations, pursuant to the
consummation of the transactions contemplated by the Marlin Agreement,
shall have occurred without the waiver by American of any material
condition to such consummation which could have a Material Adverse
Effect on the American Stations or the American Assets, unless either
(i) American shall have agreed to indemnify and hold harmless Secret
with respect to the consequences of such waiver on terms reasonably
satisfactory to American and Secret, or (ii) in the event the subject
matter of such waiver is such that indemnification is not capable of
providing Secret with substantially comparable benefits it would have
received had such waiver not been required, the parties shall have
agreed to an adjustment in the terms of the Exchange, which they agree
to negotiate in good faith;
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(b) As of the Closing Date, no Legal Action shall be pending
before or threatened in writing by any Authority seeking to enjoin,
restrain, prohibit or make illegal or to impose any Materially Adverse
conditions in connection with, the consummation of the Exchange and the
other Transactions, or which might, in the reasonable business judgment
of American or Secret, based upon the advice of counsel, have a
Material Adverse Effect on the Assets and Stations to be acquired by
it, it being understood and agreed that a written request by any
Authority for information with respect to the Exchange or any other
Transaction, which information could be used in connection with such
Legal Action, shall not be deemed to be a threat of any such Legal
Action;
(c) All authorizations, consents, waivers, orders or approvals
required to be obtained from all Authorities, and all filings,
submissions, registrations, notices or declarations required to be made
by American and Secret with any Authority, prior to the consummation of
the Exchange and the other Transactions, shall have been obtained from,
and made with, the FCC and all other required Authorities, except for
such authorizations, consents, waivers, orders, approvals, filings,
registrations, notices or declarations the failure to obtain or make
would not, in the reasonable business judgment of each of the parties,
have a Material Adverse Effect on the Assets and Stations being
acquired by such party. Without limiting the generality of the
foregoing, the FCC shall have issued all necessary consents and
approvals in connection with the transactions contemplated by this
Agreement, the same shall have become Final Orders, and any conditions
precedent to the effectiveness of such Final Orders which are specified
therein shall have been satisfied as provided in Section 5.2(a); and
(d) Secret and American or one of its Subsidiaries shall have
entered into (i) a real estate lease substantially in the form of
Exhibit B-1 attached hereto and made a part hereof (the "Studio Lease")
and (ii) a real estate lease substantially in the form of Exhibit B- 2
attached hereto and made a part hereof (the "Tower Lease").
Anything in this Section or elsewhere in this Agreement to the contrary
notwithstanding,
(i) American and Secret shall be obligated to
consummate (x) the Philadelphia Exchange, whether or not the
Detroit Exchange (whether for cash or pursuant to one or more
Like-Kind Exchanges) can then be consummated, and (y) the
Detroit Exchange, if permitted by the FCC, notwithstanding the
pendency of license renewal proceedings before the FCC with
respect to the Detroit Station; provided, however, that none
of the parties shall be obligated to consummate the Detroit
Exchange prior to the consummation of the Philadelphia
Exchange;
(ii) In the event American is unwilling to consummate
the acquisition of the American Stations pursuant to the
Marlin Agreement because of a breach of warranty or
misrepresentation on the part of Marlin or the failure of
Marlin to perform any of its obligations or agreements
thereunder or to satisfy one or more of
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the conditions to American's obligations to consummate such
acquisition (any such breach, misrepresentation or failure
being herein referred to as a "Marlin Breach"), and Secret
desires American to waive such Marlin Breach, whether or not
the same could have a Material Adverse Effect on American,
American shall be obligated to waive such Marlin Breach and to
consummate such acquisition in the event Secret shall have
agreed (x) to waive the comparable provisions of this
Agreement (without any adjustment in the amount or form of
consideration to be exchanged hereunder), and (y) in the event
the Exchange is not consummated in its entirety, (i) to
indemnify and hold harmless American with respect to the
consequences of such waiver on terms reasonably satisfactory
to American and Secret or, in the event the subject matter of
such waiver is such that indemnification is not capable of
providing American with substantially comparable benefits it
would have received had such waiver not been required, (ii)
the parties shall have agreed to a monetary or other payment
by Secret to American, which they agree to negotiate in good
faith.; and
(iii) American shall not consent to the termination
of the Marlin Agreement without the prior written consent of
Secret which consent shall not unreasonably be withheld,
delayed or conditioned.
6.2 Conditions to Obligations of American. The obligation of American
to effect the Exchange shall be subject to the satisfaction of the following
conditions, any or all of which may be waived, in whole or in part, to the
extent permitted by Applicable Law:
(a) All agreements, certificates, opinions and other documents
shall be reasonably satisfactory in form, scope and substance to
American and its counsel, and American and its counsel shall have
received all information and copies of all documents, including records
of corporate proceedings, which they may reasonably request in
connection therewith, such documents where appropriate to be certified
by proper corporate officers;
(b) Secret shall have furnished American and, at American's
request, any bank or other financial institution providing credit to
American or any Subsidiary, with favorable opinions, dated the Closing
Date of Sidley & Austin, counsel for Secret, or Arthur Schiller, Esq.,
General Counsel of Secret, with respect to the matters set forth in
Exhibit C-1 and of Wiley, Rein & Fielding, FCC counsel for Secret, with
respect to the matters set forth in Exhibit C-2 and, in each case, with
respect to such other matters incident to the Exchange and the other
Transactions, as American or its counsel may reasonably request or
which may be reasonably requested by any such bank or financial
institution or their respective counsel;
(c) The representations, warranties, covenants and agreements
of Secret contained in this Agreement or otherwise made in writing by
it or on its behalf pursuant hereto or otherwise made in connection
with the Exchange and the other Transactions shall be true and correct
in all material respects at and as of the Closing Date with the same
force and effect as though made on and as of such date except those
which speak as of a certain date which shall continue to be true and
correct as of such date on the Closing Date (including without
limitation giving effect to any later obtained knowledge, information
or
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belief of Secret or American); each and all of the agreements and
conditions to be performed or satisfied by Secret hereunder at or prior
to the Closing Date shall have been duly performed or satisfied in all
material respects; and Secret shall have furnished American with such
certificates and other documents evidencing the truth of such
representations, warranties, covenants and agreements and the
performance of such agreements or conditions as American or its counsel
shall have reasonably requested;
(d) American shall have received from its independent
accountants a report (which shall be unqualified as to the scope of the
audit, access to the books and records and the cooperation of
management) on the financial statements (consisting of balance sheets
for each of the fiscal years ended December 31, 1994 and 1995 and
statements of operations and cash flow for each of the three years in
the period ended December 31, 1995) of the Secret Stations, which
financial statements shall have been prepared in conformity with GAAP
and Regulation S-X under the Securities Act;
(e) All authorizations, consents, waivers, orders or approvals
required to be obtained from all Persons (other than Authorities) prior
to the consummation of the Exchange and the other Transactions,
including without limitation those required in order to vest fully in
American all right, title and interest in and to all of the Secret
Assets and the Secret Stations (including without limitation all
Private Authorizations and Material Agreements of Secret and all
modifications of Contractual Obligations heretofore requested by
American and set forth in Schedule 6.2(e) of the American Disclosure
Schedule) and the full enjoyment thereof shall have been obtained,
without the imposition, individually or in the aggregate, of any
condition or requirement which could Materially Adversely Affect
Secret;
(f) Between the date of this Agreement and the Closing Date,
there shall not have occurred and be continuing any Material Adverse
Change in Secret from that reflected in the most recent Secret
Financial Statements; as of the Closing Date, the FCC Licenses with
respect to each of the Secret Stations shall not have been Materially
and Adversely Affected by any act, or failure to act, of Secret;
(g) If any simultaneous Like-Kind Exchange contemplated by
Section 2.3 is to be made as part of the Detroit Exchange, the
acquisition of the New Exchange Assets and the New Exchange License
which are to be the subject of such Like-Kind Exchange shall have been
consummated prior to, or simultaneously with, the Detroit Exchange,
unless the inability or failure to consummate such Like-Kind Exchange
is due to acts, facts or circumstances other than the failure, breach
or default of Secret; provided, however, that if such Like-Kind
Exchange shall not be consummated prior to or simultaneously with the
Detroit Exchange for any reason other than the failure, breach or
default of Secret, the Detroit Exchange shall take the form of one or
more deferred Like-Kind Exchanges in which event (i) this Agreement
shall be assigned by American to a Qualified Intermediary, (ii)
pursuant to the direction of such Qualified Intermediary, the Detroit
Assets (including the Detroit License) shall be conveyed directly to
Secret by Marlin, and (iii) in exchange for the Detroit License and the
Detroit Assets, Secret shall pay $20,000,000 directly to such Qualified
Intermediary; and
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(h) Secret shall have delivered or cause to be delivered to
American all of the Collateral Documents and other agreements,
documents and instruments required to be delivered by Secret to
American at or prior to the Closing pursuant to the terms of this
Agreement.
6.3 Conditions to Obligations of Secret. The obligation of Secret to
effect the Exchange shall be subject to the satisfaction of the following
conditions, any or all of which may be waived, in whole or in part, to the
extent permitted by Applicable Law:
(a) All agreements, certificates, opinions and other documents
shall be reasonably satisfactory in form, scope and substance to Secret
and its counsel, and Secret and its counsel shall have received all
information and copies of all documents, including records of corporate
proceedings, which they may reasonably request in connection therewith,
such documents where appropriate to be certified by proper corporate
officers;
(b) American shall have furnished Secret and, at Secret's
request, any bank of other financial institution providing credit to
Secret or any Subsidiary, with favorable opinions, dated the Closing
Date of Sullivan & Worcester LLP, counsel for American, with respect to
the matters set forth in Exhibit D-1 and of Dow, Lohnes & Albertson,
FCC counsel for American, with respect to the matters set forth in
Exhibit D-2, and, in each case, with respect to such other matters
incident to the Exchange and the other Transactions, as Secret or its
counsel may reasonably request or which may be reasonably requested by
any such bank or financial institution or their respective counsel;
(c) The representations, warranties, covenants and agreements
of American contained in this Agreement or otherwise made in writing by
it or on its behalf pursuant hereto or otherwise made in connection
with the Exchange and the other Transactions shall be true and correct
in all material respects at and as of the Closing Date with the same
force and effect as though made on and as of such date except those
which speak as of a certain date which shall continue to be true and
correct as of such date on the Closing Date (including without
limitation giving effect to any later obtained knowledge, information
or belief of American or Secret); each and all of the agreements and
conditions to be performed or satisfied by American hereunder at or
prior to the Closing Date shall have been duly performed or satisfied
in all material respects; and American shall have furnished Secret with
such certificates and other documents evidencing the truth of such
representations, warranties, covenants and agreements and the
performance of such agreements or conditions as Secret or its counsel
shall have reasonably requested;
(d) All authorizations, consents, waivers, orders or approvals
required to be obtained from all Persons (other than Authorities) prior
to the consummation of the Exchange and the other Transactions,
including without limitation those required in order to vest fully in
Secret all right, title and interest in and to all of the American
Assets and the American Stations (including without limitation all
Private Authorizations and Material Agreements of American and its
Subsidiaries and all modifications of Contractual Obligations
heretofore requested by Secret and set forth in Schedule 6.3(d) of the
Secret Disclosure Schedule) and the full enjoyment thereof shall have
been obtained, without the imposition, individually or in the
aggregate, of any condition or requirement which could Materially
Adversely Affect American;
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(e) Between the date of this Agreement and the Closing Date,
there shall not have occurred and be continuing any Material Adverse
Change in American from that reflected in the most recent American
Financial Statements; as of the Closing Date, the FCC Licenses with
respect to each of the American Stations shall not have been Materially
and Adversely Affected by any act, or failure to act, of American; and
(f) American shall have delivered or cause to be delivered to
Secret all of the Collateral Documents and other agreements, documents
and instruments required to be delivered by American or any Subsidiary
of American to Secret at or prior to the Closing pursuant to the terms
of this Agreement.
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time prior to
the Closing Date:
(a) by mutual consent of Secret and American;
(b) by either American or Secret if (i) any permanent
injunction, decree or judgment by any Authority preventing the
consummation of the Exchange shall have become final and nonappealable
or (ii) the Marlin Agreement is terminated; or
(c) by Secret in the event (i) Secret is not in Material
breach of this Agreement and none of its representations or warranties
shall have become and continue to be untrue in any Material respect,
and (ii) either (A) the Exchange and the other Transactions have not
been consummated prior to the Termination Date and American is in
Material breach of this Agreement or any of its representations or
warranties shall have become and continue to be untrue in any Material
respect, or (B) such a breach or untruth exists and is not capable of
being cured by and will prevent or delay consummation of the Exchange
by or beyond the Termination Date; or
(d) by American in the event (i) American is not in Material
breach of this Agreement and none of its representations or warranties
shall have become and continue to be untrue in any Material respect,
and (ii) either (A) the Exchange and the other Transactions have not
been consummated prior to the Termination Date and Secret is in
Material breach of this Agreement or any of its representations or
warranties shall have become and continue to be untrue in any Material
respect, or (B) such a breach or untruth exists and is not capable of
being cured by and will prevent or delay consummation of the Exchange
by or beyond the Termination Date; or
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(e) by American in the event (i) American is not in Material
breach of this Agreement and none of its representations or warranties
shall have become and continue to be untrue in any Material respect,
and (ii) American requires the consent of the holders of its 9% Senior
Subordinated Notes due 2006 under its Indenture, dated as of February
1, 1996, with respect to such Notes, and is either unable or, in its
sole and absolute discretion, unwilling to seek, such consent.
The term "Termination Date" shall mean March 1, 1997 or such other date
as the parties may, from time to time, mutually agree.
The right of American or Secret to terminate this Agreement pursuant to
this Section shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of either party, any Person controlling
any such party or any of their respective Representatives whether prior to or
after the execution of this Agreement.
7.2 Effect of Termination.
(a) Except as provided in Sections 5.1 and 5.3, this Section and
Section 7.5, in the event of the termination of this Agreement pursuant to
Section 7.1, this Agreement shall forthwith become void, there shall be no
liability on the part of either party, or any of their respective partners,
stockholders, officers or directors, to the other and all rights and obligations
of either party shall cease; provided, however, that such termination shall not
relieve either party from liability for any misrepresentation or breach of any
of its warranties, covenants or agreements set forth in this Agreement.
(b) In the event this Agreement is terminated by (i) Secret pursuant to
the provisions of Section 7.1(c), or (ii) American pursuant to the provisions of
Section 7.1(d), then the terminating party shall be entitled to liquidated
damages in the amount of $5,000,000, it being agreed that such amount shall
constitute full payment for any and all damages suffered by the terminating
party by reason of other party's failure to consummate the Exchange. American
and Secret agree in advance that actual damages would be difficult to ascertain
and that $5,000,000 is a fair and equitable amount to reimburse Secret or
American, as the case may be, for damages sustained due to American's or
Secret's failure to consummate the Exchange for the above-stated reasons.
Notwithstanding the foregoing, each party shall have the right to seek specific
performance pursuant to the provisions of Section 9.2.
(c) In the event this Agreement is terminated (i) by the parties
pursuant to the provisions of Section 7.1(a) or (ii) by Secret or American
pursuant to the provision of Section 7.1 (b), except as provided in Section
7.2(a), neither of the parties shall have any further rights or remedies.
(d) In the event this Agreement is terminated by American pursuant to
the provisions of Section 7.1(e), then Secret shall be entitled to liquidated
damages in the amount of $2,000,000, it being agreed that such amount shall
constitute full payment for any and all damages suffered by Secret by reason of
American's failure to consummate the Exchange for the reasons set forth in
Section 7.1(e). American and Secret agree in advance that actual damages would
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be difficult to ascertain and that $2,000,000 is a fair and equitable amount to
reimburse Secret for damages sustained due to American's failure to consummate
the Exchange for the above-stated reason. Secret agrees that it shall not, under
such circumstances, have the right to seek specific performance pursuant to the
provisions of Section 9.2.
7.3 Amendment. This Agreement may be amended from time to time by the
parties hereto at any time prior to the Closing Date but only by an instrument
in writing signed by the parties hereto.
7.4 Waiver. At any time prior to the Closing Date, except to the extent
not permitted by Applicable Law, American or Secret may extend the time for the
performance of any of the obligations or other acts of the other, subject,
however, to the provisions of Section 7.1, waive any inaccuracies in the
representations and warranties of the other contained herein or in any document
delivered pursuant hereto, and waive compliance by the other with any of the
agreements, covenants or conditions contained herein. Any such extension or
waiver shall be valid only if set forth in an instrument in writing signed by
the party or parties to be bound thereby.
7.5 Fees, Expenses and Other Payments. All costs and expenses, incurred
in connection with (a) any filing fees (including without limitation
Hart-Scott-Rodino filings and FCC filing fees), transfer taxes, sales taxes,
document stamps or other charges levied by any Authority in connection with this
Agreement, the Exchange and the other Transactions, and (b) all severance and
comparable benefits payable as a result of the termination of all American
Station Employees (by American) and all Secret Station Employees (by Secret),
including without limitation any of such benefits which become payable prior to
the Closing Date in connection with the operation of the Secret Stations LMA or
the American Stations LMA, shall be borne equally by American and Secret. All
other costs and expenses incurred in connection with this Agreement, the
Exchange and the other Transactions, and in compliance with Applicable Law and
Contractual Obligations as a consequence hereof and thereof, including without
limitation fees and disbursements of counsel, financial advisors and accountants
incurred by the parties hereto shall be borne solely and entirely by the party
which has incurred such costs and expenses (with respect to such party, its
"Expenses").
ARTICLE 8
INDEMNIFICATION
8.1 Survival. The representations, warranties, covenants and agreements
of the parties contained in or made pursuant to this Agreement or any Collateral
Document shall survive the Closing and shall remain operative and in full force
and effect for a period of (a) two (2) years after the Closing Date or (b) the
applicable statute of limitations in the case of matters of a nature referred to
in Sections 3.1, 3.7(b), 4.1 and 4.7(b) (the "Indemnity Period"), regardless of
any investigation or statement as to the results thereof made by or on behalf of
any party hereto. No claim for indemnification, other than with respect to
fraud, may be asserted after the expiration of the Indemnity Period.
Notwithstanding anything herein to the contrary, any representation, warranty,
covenant and agreement which is the subject of a Claim which is asserted in
writing prior to the expiration of the Indemnity Period shall survive with
respect to such Claim or any dispute with respect thereto until the final
resolution thereof.
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8.2 Indemnification. Each party (the "indemnifying party") agrees that
on and after the Closing it shall indemnify and hold harmless the other party
(the "indemnified party") from and against any and all damages, claims, losses,
expenses, costs, obligations and liabilities, including without limitation
liabilities for all reasonable attorneys', accountants' and experts' fees and
expenses including those incurred to enforce the terms of this Agreement or any
Collateral Document (collectively, "Loss and Expense"), suffered, directly or
indirectly, by the indemnified party by reason of, or arising out of:
(a) any breach of representation or warranty made by the
indemnifying party pursuant to this Agreement or any Collateral
Document or any failure by the indemnifying party to perform or fulfill
any of its respective covenants or agreements set forth in this
Agreement or any Collateral Document; or
(b) any Legal Action or other Claim by any third party
relating to the indemnifying party or the ownership or operations of
any of its Assets or the conduct of the business of its Stations to the
extent such Legal Action or other Claim has also resulted in a breach
of representation or warranty by the indemnifying party pursuant to
this Agreement or any Collateral Document; or
(c) In the case of American, any Legal Action or other Claim
by any third party relating to the failure of American to obtain the
consent referred to in Section 7.1(e).
8.3 Limitation of Liability. Notwithstanding the provisions of Section
8.2, after the Closing, each indemnifying party's rights to indemnification
shall be subject to the following limitations: (i) the indemnified party shall
be entitled to recover its Loss and Expense in respect of any Claim only in the
event that the aggregate Loss and Expense for all Claims exceeds, in the
aggregate, $50,000, in which event the indemnified party shall be entitled to
recover all such Loss and Expense, and (ii) in no event shall the aggregate
amount required to be paid by each indemnifying party pursuant to the provisions
of this Section exceed $3,000,000, except for any Loss or Expense arising out of
matters of a nature referred to in Sections 3.1 and 4.1 and the first paragraph
of Section 3.7(b) and 4.7(b) as to which the limitations set forth in this
clause (ii) shall not apply. The provisions of the immediately preceding
sentence of this Section with respect to the limitation on each indemnifying
party's obligation to indemnify the indemnified party in respect of Loss and
Expense shall not be applicable to any claims which are based on fraud or
willful or intentional breach of representation or warranty.
8.4 Notice of Claims. If an indemnified party believes that it has
suffered or incurred any Loss and Expense, it shall notify the indemnifying
party promptly in writing, and in any event within the applicable time period
specified in Section 8.4, describing such Loss and Expense, all with reasonable
particularity and containing a reference to the provisions of this Agreement in
respect of which such Loss and Expense shall have occurred. If any Legal Action
is instituted by a third party with respect to which an indemnified party
intends to claim any liability or expense as Loss and Expense under this
Article, such indemnified party shall promptly notify the indemnifying party
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of such Legal Action, but the failure to so notify the indemnifying party shall
not relieve such indemnifying party of its obligations under this Article,
except to the extent such failure to notify prejudices such indemnifying party's
ability to defend against such Claim.
8.5 Defense of Third Party Claims. The indemnifying party shall have
the right to conduct and control, through counsel of their own choosing,
reasonably acceptable to the indemnified party, any third party Legal Action or
other Claim, but the indemnified party may, at its election, participate in the
defense thereof at its sole cost and expense; provided, however, that if the
indemnifying party shall fail to defend any such Legal Action or other Claim,
then the indemnified party may defend, through counsel of its own choosing, such
Legal Action or other Claim, and (so long as it gives the indemnifying party at
least fifteen (15) days' notice of the terms of the proposed settlement thereof
and permits the indemnifying party to then undertake the defense thereof) settle
such Legal Action or other Claim and to recover the amount of such settlement or
of any judgment and the reasonable costs and expenses of such defense. The
indemnifying party shall not compromise or settle any such Legal Action or other
Claim without the prior written consent of the indemnified party.
8.6 Exclusive Remedy. Except for fraud or as otherwise provided in
Section 9.2, the indemnification provided in this Article shall be the sole and
exclusive post-Closing remedy available to either party against the other party
for any Claim under this Agreement.
ARTICLE 9
GENERAL PROVISIONS
9.1 Notices. All notices and other communications which by any
provision of this Agreement are required or permitted to be given shall be given
in writing and shall be (a) mailed by first-class or express mail, or by
recognized courier service, postage prepaid, (b) sent by telex, telegram,
telecopy or other form of rapid transmission, confirmed by mailing (by first
class or express mail, or by recognized courier service, postage prepaid)
written confirmation at substantially the same time as such rapid transmission,
or (c) personally delivered to the receiving party (which if other than an
individual shall be an officer or other responsible party of the receiving
party). All such notices and communications shall be mailed, sent or delivered
as follows:
(a) If to American:
116 Huntington Avenue
Boston, Massachusetts 02116
Attention: Steven B. Dodge, President and Chief Executive Officer
Telecopier No.: (617) 375-7575
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with a copy to:
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attention: Norman A. Bikales, Esq.
Telecopier No.: (617) 338-2880
(b) If to Secret:
312 Walnut Street, #3550
Cincinnati, OH 45202
Attention: Frank Wood, Chief Executive Officer
Telecopier No.:
1200 Shermer Road, 4th floor
Northbrook, Illinois 60062
Attention: Arthur Schiller, Esq., General Counsel
Telecopier No.: (847) 498-2104
with a copy to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Dennis V. Osimitz, Esq.
Telecopier No.: (312) 853-7036
or to such other person(s), telex or facsimile number(s) or address(es) as the
party to receive any such communication or notice may have designated by written
notice to the other party.
9.2 Specific Performance; Other Rights and Remedies. Each party
recognizes and agrees that in the event the other party should refuse to perform
any of its obligations under this Agreement or any Collateral Document, the
remedy at law would be inadequate and agrees that for breach of such provisions,
each party shall, in addition to such other remedies as may be available to it
at law or in equity or as provided in Article 7, be entitled to injunctive
relief and to enforce its rights by an action for specific performance to the
extent permitted by Applicable Law. Each party hereby waives any requirement for
security or the posting of any bond or other surety in connection with any
temporary or permanent award of injunctive, mandatory or other equitable relief.
Nothing herein contained shall be construed as prohibiting each party from
pursuing any other remedies available to it pursuant to the provisions of, and
subject to the limitations contained in, this Agreement for such breach or
threatened breach.
9.3 Severability. If any term or provision of this Agreement shall be
held or deemed to be, or shall in fact be, invalid, inoperative, illegal or
unenforceable as applied to any particular case in any jurisdiction or
jurisdictions, or in all jurisdictions or in all cases, because of the
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conflicting of any provision with any constitution or statute or rule of public
policy or for any other reason, such circumstance shall not have the effect of
rendering the provision or provisions in question invalid, inoperative, illegal
or unenforceable in any other jurisdiction or in any other case or circumstance
or of rendering any other provision or provisions herein contained invalid,
inoperative, illegal or unenforceable to the extent that such other provisions
are not themselves actually in conflict with such constitution, statute or rule
of public policy, but this Agreement shall be reformed and construed in any such
jurisdiction or case as if such invalid, inoperative, illegal or unenforceable
provision had never been contained herein and such provision reformed so that it
would be valid, operative and enforceable to the maximum extent permitted in
such jurisdiction or in such case. Notwithstanding the foregoing, in the event
of any such determination the effect of which is to Affect Materially and
Adversely either party, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by Applicable Law in an acceptable
manner to the end that the Exchange and the other Transactions are fulfilled and
consummated to the maximum extent possible.
9.4 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, binding upon all of the
parties. In pleading or proving any provision of this Agreement, it shall not be
necessary to produce more than one of such counterparts.
9.5 Section Headings. The headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
9.6 Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by, and construed in accordance
with, the applicable laws of the United States of America and the laws of the
State of New York applicable to contracts made and performed in such State and,
in any event, without giving effect to any choice or conflict of laws provision
or rule that would cause the application of domestic substantive laws of any
other jurisdiction. Anything in this Agreement to the contrary notwithstanding,
including without limitation the provisions of Article 8, in the event of any
dispute between the parties which results in a Legal Action, the prevailing
party shall be entitled to receive from the non-prevailing party reimbursement
for reasonable legal fees and expenses incurred by such prevailing party in such
Legal Action.
9.7 Further Acts. Each party agrees that at any time, and from time to
time, before and after the consummation of the transactions contemplated by this
Agreement, it will do all such things and execute and deliver all such
Collateral Documents and other assurances, as any other party or its counsel
reasonably deems necessary or desirable in order to carry out the terms and
conditions of this Agreement and the transactions contemplated hereby or to
facilitate the enjoyment of any of the rights created hereby or to be created
hereunder.
9.8 Entire Agreement. This Agreement (together with the Disclosure
Schedules and the other Collateral Documents delivered in connection herewith),
constitutes the entire agreement of the parties and supersedes all prior
agreements and undertakings, both written and oral, between the parties, with
respect to the subject matter hereof, including without limitation that certain
letter of intent, dated March 29, 1996, between the parties.
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9.9 Assignment. This Agreement shall not be assignable by either party
and any such assignment shall be null and void, except that it shall inure to
the benefit of and by binding upon any successor to each party by operation of
law, including by way of merger, consolidation or sale of all or substantially
all of its assets, and each party may assign its rights and remedies hereunder
to any bank or other financial institution which has loaned funds or otherwise
extended credit to it. In addition, American shall be entitled to assign this
Agreement in connection with one or more deferred Like-Kind Exchanges with
respect to the Detroit Assets and/or the Detroit License, and, in the event of
any such assignment, Secret agrees to execute, upon the request of American an
acknowledgment of such assignment and its consent thereto.
9.10 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any Person any right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement,
except as otherwise provided in Section 9.9.
9.11 Mutual Drafting. This Agreement is the result of the joint efforts
of American and Secret, and each provision hereof has been subject to the mutual
consultation, negotiation and agreement of the parties and there shall be no
construction against either party based on any presumption of that party's
involvement in the drafting thereof.
IN WITNESS WHEREOF, American and Secret have caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
AMERICAN RADIO SYSTEMS CORPORATION
By:_____________________________________
Name:
Title:
SECRET COMMUNICATIONS LIMITED PARTNERSHIP
By Broadcast Alchemy, L.P., a General Partner
By Lane Broadcasting, Inc., its General Partner
By:______________________________________
Name:
Title:
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ARS ACQUISITION II, INC.
(formerly Marlin Broadcasting, Inc.)
By:______________________________________
Name:
Title:
FRANKLIN BROADCASTING COMPANY
By:______________________________________
Name:
Title:
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APPENDIX A
DEFINITIONS
As used in this Agreement, unless the context otherwise requires, the
following terms (or any variant in the form thereof) have the following
respective meanings. Terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa, and the reference to any gender
shall be deemed to include all genders. Unless otherwise defined or the context
otherwise clearly requires, terms for which meanings are provided herein shall
have such meanings when used in either Disclosure Schedule, and each Collateral
Document executed or required to be executed pursuant hereto or thereto or
otherwise delivered, from time to time, pursuant hereto or thereto. References
to "hereof", "herein" or similar terms are intended to refer to the Agreement as
a whole and not a particular section, and references to "this Section" are
intended to refer to the entire section and not a particular subsection thereof.
Accounts Receivable shall mean (a) any and all rights to the payment of
money or other forms of consideration of any kind at any time now or hereafter
owing or to be owing to American or Secret, as the case may be, attributable to
the sale of time or talent on one of its Stations (whether classified under the
Uniform Commercial Code of any state as accounts, contract rights, chattel
paper, general intangibles or otherwise), including without limitation accounts
receivable, letters of credit and the right to receive payment thereunder,
chattel paper, insurance proceeds, contract rights, notes, drafts, instruments,
documents, acceptances, and all other debts, obligations and liabilities in
whatever form now or hereafter owing from any other Person, all guarantees,
security and Liens for the payment of any thereof, and all of American's or
Secret's, as the case may be, rights to goods, now owned or hereafter acquired,
sold (delivered, undelivered, in transit or returned) which may be represented
thereby; and (b) all proceeds of any of the foregoing.
Adverse, Adversely, when used alone or in conjunction with other terms
(including without limitation "Affect," "Change" and "Effect") shall mean any
Event which is reasonably likely, in the reasonable business judgment of
American or Secret, as the case may be, to be expected to (a) adversely affect
the validity or enforceability of this Agreement or the likelihood of
consummation of the Exchange, or (b) adversely affect the business, operations,
management, properties or prospects, or the condition, financial or other, or
results of operation of the Secret Stations or the American Stations (or, in the
event of a consummation of the Philadelphia Exchange which is not
contemporaneous with the Detroit Exchange, the Philadelphia Station), as the
case may be, or (c) impair Secret's or American's, as the case may be, ability
to fulfill its obligations under the terms of this Agreement, or (d) adversely
affect the aggregate rights and remedies of American or Secret, as the case may
be, under this Agreement. Notwithstanding the foregoing, and anything in this
Agreement to the contrary notwithstanding, any Event affecting the radio
broadcasting industry generally shall not be deemed to constitute an Adverse
Change, have an Adverse Effect or to Adversely Affect or Effect.
Affiliate, Affiliated shall mean, with respect to any Person, (a) any
other Person at the time directly or indirectly controlling, controlled by or
under direct or indirect common control with such Person, (b) any other Person
of which such Person at the time owns, or has the right to acquire, directly or
indirectly, twenty percent (20%) or more of any class of the capital stock or
<PAGE>
beneficial interest, (c) any other Person which at the time owns, or has the
right to acquire, directly or indirectly, twenty percent (20%) or more of any
class of the capital stock or beneficial interest of such Person, (d) any
executive officer or director of such Person, (e) with respect to any
partnership, joint venture or similar Entity, any general partner thereof, and
(f) when used with respect to an individual, shall include any member of such
individual's immediate family or a family trust.
Agreement shall mean this Agreement as originally in effect, including,
unless the context otherwise specifically requires, this Appendix A, the
American Disclosure Schedule, the Secret Disclosure Schedule and all exhibits
hereto, and as any of the same may from time to time be supplemented, amended,
modified or restated in the manner herein or therein provided.
American shall have the meaning given to it in the Preamble.
American Assets shall have the meaning given to it in Section 2.1.
American Disclosure Schedule shall mean the American Disclosure
Schedule dated as of the date of this Agreement delivered by American to Secret.
American Financial Statements shall have the meaning given to it in
Section 4.2(a).
American License shall have the meaning given to it in Section 2.1.
American Station Employees shall have the meaning given to it in
Section 4.12(a).
American Stations shall have the meaning given to it in the third
Whereas paragraph.
American Stations LMA shall have the meaning given to it in Section
5.2(d).
American's knowledge (including the term "to the knowledge, information
and belief of American") means the knowledge of any American director or
executive officer, and that such director or executive officer, after reasonable
inquiry of appropriate American executives and reasonable review of appropriate
American records, to the degree customary in connection with transactions such
as the Exchange, shall have reason to believe and shall believe that the subject
representation of warranty is true and accurate as stated.
Applicable Law shall mean any Law of any Authority, whether domestic or
foreign, including without limitation all federal and state securities and
Environmental Laws, to which a Person is subject or by which it or any of its
business or operations is subject or any of its property or assets is bound.
Assets shall mean the business and the tangible and intangible assets
used in connection with the conduct of the business or operations of one or more
of the Stations, which business and assets are being exchanged, transferred or
otherwise conveyed hereunder, including without including without limitation the
following:
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(a) the Personal Property;
(b) the Real Property;
(c) the Governmental Authorizations;
(d) the Contracts (other than the Nonassumed Obligations);
(e) all Intellectual Property and other 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
Stations;
(f) all claims, choses in action and rights under warranties
relating to any Station or any of the Assets;
(g) all books and records relating to the business or
operations of each Station, including executed copies of the written
Contracts, and all records required by the FCC to be kept, subject to
the right of the conveying party to have such books and records made
available to it for a reasonable period, not to exceed three (3) years;
and
(h) any and all products, profits and proceeds of, and
including without limitation any Claims with respect to, any of the
foregoing;
provided, however, that notwithstanding the foregoing, the term Assets shall not
include any of the Excluded Assets.
Assumed Liabilities shall have the meaning given to it in Section
2.2(c).
Authority shall mean any governmental or quasi-governmental authority,
whether administrative, executive, judicial, legislative or other, or any
combination thereof, including without limitation any federal, state,
territorial, county, municipal or other government or governmental or
quasi-governmental agency, arbitrator, authority, board, body, branch, bureau,
central bank or comparable agency or Entity, commission, corporation, court,
department, instrumentality, master, mediator, panel, referee, system or other
political unit or subdivision or other Entity of any of the foregoing, whether
domestic or foreign.
Benefit Arrangement shall mean any material benefit arrangement that is
not a Plan, including (a) any employment or consulting agreement (b) any
arrangement providing for insurance coverage or workers' compensation benefits,
(c) any incentive bonus or deferred bonus arrangement, (d) any arrangement
providing termination allowance, severance or similar benefits, (e) any equity
compensation plan, (f) any deferred compensation plan, and (g) any compensation
policy and practice, but only to the extent that it covers or relates to any
officer, employee or other Person involved in the ownership and operation of the
Assets or the conduct of the business of any of the Stations.
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Broadcast Cash Flow shall mean, with respect to the American Stations
and the Secret Stations, the excess, if any, of the net revenues (exclusive of
trade or barter items) of such Stations over operating expenses (exclusive of
trade or barter items and corporate overhead) of such Stations.
Claims shall mean any and all debts, liabilities, obligations, losses,
damages, deficiencies, assessments and penalties, together with all Legal
Actions, pending or threatened, claims and judgments of whatever kind and nature
relating thereto, and all fees, costs, expenses and disbursements (including
without limitation reasonable attorneys' and other legal fees, costs and
expenses) relating to any of the foregoing.
Closing shall have the meaning given to it in Section 2.4.
Closing Date shall have the meaning given to it in Section 2.4.
COBRA shall mean the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended, as set forth in Section 4980B of the Code and Part 6 of
Subtitle B of Title I of ERISA.
Code shall mean the Internal Revenue Code of 1986, and the rules and
regulations thereunder, all as from time to time in effect, or any successor
law, rules or regulations, and any reference to any statutory or regulatory
provision shall be deemed to be a reference to any successor statutory or
regulatory provision.
Collateral Document shall mean any agreement, certificate, contract,
instrument, notice, opinion or other document delivered pursuant to the
provisions of this Agreement or any Collateral Document, including without
limitation the American Stations LMA, the Secret Stations LMA, the Real Estate
Leases and any agreements executed in connection with a Like-Kind Exchange
pursuant to the provisions of Section 2.3.
Contract, Contractual Obligation shall mean any agreement, arrangement,
commitment, contract, covenant, indemnity, undertaking or other obligation or
liability which involves the ownership and operation of the Assets or the
conduct of the business of any of the Stations.
Control (including the terms "controlled," "controlled by" and "under
common control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the management or
policies of a Person, or the disposition of such Person's assets or properties,
whether through the ownership of stock, equity or other ownership, by contract,
arrangement or understanding, or as trustee or executor, by contract or credit
arrangement or otherwise.
Detroit Assets shall have the meaning given to it in Section 2.1.
Detroit Exchange shall have the meaning given to it in Section 2.1.
Detroit License shall have the meaning given to it in the third Whereas
paragraph.
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Detroit Station shall have the meaning given to it in the third Whereas
paragraph.
Disclosure Schedule shall mean the American Disclosure Schedule or the
Secret Disclosure Schedule, as the case may be.
Employment Arrangement shall mean, with respect to American or Secret,
any employment, consulting, retainer, severance or similar contract, agreement,
plan, arrangement or policy (exclusive of any which is terminable within thirty
(30) days without liability, penalty or payment of any kind by such Person or
any Affiliate), or providing for severance, termination payments, insurance
coverage (including any self-insured arrangements), workers compensation,
disability benefits, life, health, medical, dental or hospitalization benefits,
supplemental unemployment benefits, vacation or sick leave benefits, pension or
retirement benefits or for deferred compensation, profit-sharing, bonuses, stock
options, stock purchase or appreciation rights or other forms of incentive
compensation or post-retirement insurance, compensation or post-retirement
insurance, compensation or benefits, or any collective bargaining or other labor
agreement, whether or not any of the foregoing is subject to the provisions of
ERISA, but only to the extent that it covers or relates to any officer, employee
or other Person involved in the ownership and operation of any of the Assets or
the conduct of the business of any of the Stations.
Encumber shall mean to suffer, accept, agree to or permit the
imposition of a Lien.
Entity shall mean any corporation, firm, unincorporated organization,
association, partnership, limited liability company, trust (inter vivos or
testamentary), estate of a deceased, insane or incompetent individual, business
trust, joint stock company, joint venture or other organization, entity or
business, whether acting in an individual, fiduciary or other capacity, or any
Authority.
Environmental Law shall mean any Law relating to or otherwise imposing
liability or standards of conduct concerning pollution or protection of the
environment, including without limitation Laws relating to emissions,
discharges, releases or threatened releases of Hazardous Materials or other
chemicals or industrial pollutants, substances, materials or wastes into the
environment (including, without limitation, ambient air, surface water, ground
water, mining or reclamation or mined land, land surface or subsurface strata)
or otherwise relating to the manufacture, processing, generation, distribution,
use, treatment, storage, disposal, cleanup, transport or handling of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances, materials
or wastes. Environmental Laws shall include without limitation the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. Section 6901
et seq.), the Hazardous Material Transportation Act (49 U.S.C. Section 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et
seq.), the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.),
the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances Control
Act (15 U.S.C. Section 2601 et seq.), the Occupational Safety and Health Act (29
U.S.C. Section 651 et seq.), the Federal Insecticide Fungicide and Rodenticide
Act (7 U.S.C. Section 136 et seq.), and the Surface Mining Control and
Reclamation Act of 1977 (30 U.S.C. Section 1201 et seq.), and any analogous
federal, state, local or foreign, Laws, and the rules and regulations
promulgated thereunder all as from time to time in effect, and any reference to
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any statutory or regulatory provision shall be deemed to be a reference to any
successor statutory or regulatory provision.
Environmental Permit shall mean any Governmental Authorization required
by or pursuant to any Environmental Law.
ERISA shall mean the Employee Retirement Income Security Act of 1974,
and the rules and regulations thereunder, all as from time to time in effect, or
any successor law, rules or regulations, and any reference to any statutory or
regulatory provision shall be deemed to be a reference to any successor
statutory or regulatory provision.
ERISA Affiliate shall mean any Person that is treated as a single
employer with Secret, American or Marlin, as the case may be, under Sections
414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA.
Event shall mean the existence or occurrence of any act, action,
activity, circumstance, condition, event, fact, failure to act, omission,
incident or practice, or any set or combination of any of the foregoing.
Exchange shall have the meaning given to it in Section 2.1 and, as
applicable, shall include (a) any Like-Kind Exchange pursuant to the provisions
of Section 2.3, and (b) in the event of more than one Closing, each exchange of
Stations to be consummated at each such Closing.
Exchange Act shall mean the Securities Exchange Act of 1934, and the
rules and regulations thereunder, all as from time to time in effect, or any
successor law, rules or regulations, and any reference to any statutory or
regulatory provision shall be deemed to be a reference to any successor
statutory or regulatory provision.
Exchange Schedule shall have the meaning given to it in Section 2.1.
Excluded Assets shall have the meaning given to it in Section 2.1.
FCA shall mean the Communication Act of 1934, and the rules and
regulations thereunder, all as from time to time in effect, or any successor
law, rules or regulations, and any reference to any statutory or regulatory
provision shall be deemed to be a reference to any successor statutory or
regulatory provision.
FCC shall mean the Federal Communications Commission and shall include
any successor Authority.
FCC Consents shall mean the actions of the FCC granting its consents to
the transfer of the FCC Licenses relating to the Secret Stations to American and
the American Stations to Secret and shall include, in the event of any Like-Kind
Exchange, the New Exchange License.
FCC Licenses shall mean all Governmental Authorizations issued by the
FCC to Secret or American or its Subsidiaries in connection with the ownership,
operation and conduct of the business of the Secret Stations and the American
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Stations, as the case may be, and shall include, in the event of any Like-Kind
Exchange, the New Exchange License and any other Governmental Authorizations
issued by the FCC with respect to the Stations included within the New Exchange
Assets.
Final Order shall mean, with respect to any Authority, including
without limitation the FCC, one with respect to which no appeal, no stay, no
petition or application for rehearing, reconsideration, review or stay, whether
on motion of the applicable Authority or other Person or otherwise, and no other
Legal Action contesting such consent or approval, is in effect or pending and as
to which the time or deadline for filing any such appeal, petition or
application or other Legal Action has expired or, if filed, has been denied,
dismissed or withdrawn, and the time or deadline for instituting any further
Legal Action has expired.
Franklin shall have the meaning given to it in the third Whereas
paragraph.
GAAP shall mean generally accepted accounting principles as in effect
from time to time in the United States of America.
Governmental Authorizations shall mean all approvals, concessions,
consents, franchises, licenses, permits, plans, registrations and other
authorizations of all Authorities, including the FCC Licenses, issued by the
FCC, the Federal Aviation Administration and any other Authority in connection
with the conduct of business or operations of any of the Stations.
Governmental Filings shall mean all filings, including franchise and
similar Tax filings, and the payment of all fees, assessments, interest and
penalties associated with such filings, with all Authorities.
Hazardous Materials shall mean and include any substance, material,
waste, constituent, compound, chemical, natural or man-made element or force (in
whatever state of matter): (a) the presence of which requires investigation or
remediation under any Environmental Law, or (b) that is defined as a "hazardous
waste" or "hazardous substance" under any Environmental Law; or (c) that is
toxic, explosive, corrosive, etiologic, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous and is regulated by any
applicable Authority or subject to any Environmental Law; or (d) the presence of
which on the real property owned or leased by such Person causes or threatens to
cause a nuisance upon any such real property or to adjacent properties or poses
or threatens to pose a hazard to the health or safety of persons on or about any
such real property; or (e) the presence of which on adjacent properties could
constitute a trespass by such Person; or (f) that contains gasoline, diesel fuel
or other petroleum hydrocarbons, or any by-products or fractions thereof,
natural gas, polychlorinated biphenyls ("PCBs") and PCB-containing equipment,
radon or other radioactive elements, ionizing radiation, electromagnetic field
radiation and other non-ionizing radiation, sonic forces and other natural
forces, lead, asbestos or asbestos- containing materials ("ACM"), or urea
formaldehyde foam insulation.
Indebtedness shall mean, with respect to any Person, (a) all items,
except items of capital stock or of surplus or of general contingency or
deferred tax reserves or any minority interest in any Subsidiary of such Person
to the extent such interest is treated as a liability with indeterminate term
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<PAGE>
on the consolidated balance sheet of such Person, which in accordance with GAAP
would be included in determining total liabilities as shown on the liability
side of a balance sheet of such Person, (b) all obligations secured by any Lien
to which any property or asset owned or held by such Person is subject, whether
or not the obligation secured thereby shall have been assumed, and (c) to the
extent not otherwise included, all Contractual Obligations of such Person
constituting capitalized leases and all obligations of such Person with respect
to Leases constituting part of a sale and leaseback arrangement.
Indebtedness for Money Borrowed shall mean, with respect to American
and Secret, money borrowed and Indebtedness represented by notes payable and
drafts accepted representing extensions of credit, all obligations evidenced by
bonds, debentures, notes or other similar instruments, the maximum amount
currently or at any time thereafter available to be drawn under all outstanding
letters of credit issued for the account of such Person, all Indebtedness upon
which interest charges are customarily paid by such Person, and all Indebtedness
(including capitalized lease obligations) issued or assumed as full or partial
payment for property or services, whether or not any such notes, drafts,
obligations or Indebtedness represent Indebtedness for money borrowed, but shall
not include (a) trade payables, (b) expenses accrued in the ordinary course of
business, or (c) customer advance payments and customer deposits received in the
ordinary course of business.
Intangible Assets shall mean all assets and property lacking physical
properties the evidence of ownership of which must customarily be maintained by
independent registration, documentation, certification, recordation or other
means, and shall include, without limitation, concessions, copyrights,
franchises, license, patents, permits, service marks, trademarks, trade names,
and applications with respect to any of the foregoing, technology and know-how.
Intellectual Property shall mean any and all research, information,
inventions, designs, procedures, developments, discoveries, improvements,
patents and applications therefor, trademarks and applications therefor, service
marks, trade names copyrights and applications therefor, logos, trade secrets,
drawing, plans, systems, methods, specifications, computer software programs,
tapes, discs and related data processing software (including without limitation
object and source codes) owned by such Person or in which it has an ownership
interest and all other manufacturing, engineering, technical, research and
development data and know-how made, conceived, developed and/or acquired by such
Person, which relate to the manufacture, production or processing of any
products developed or sold by such Person or which are within the scope of or
usable in connection with such Person's business as it may, from time to time,
hereafter be conducted or proposed to be conducted.
Law shall mean any (a) administrative, judicial, legislative or other
action, code, consent decree, constitution, decree, directive, enactment,
finding, guideline, law, injunction, interpretation, judgment, order, ordinance,
policy statement, proclamation, promulgation, regulation, requirement, rule,
rule of law, rule of public policy, settlement agreement, statute, or writ or
any Authority, domestic or foreign; (b) the common law, or other legal or
quasi-legal precedent; or (c) arbitrator's, mediator's or referee's award,
decision, finding or recommendation; including, in each such case or instance,
any interpretation, directive, guideline or request, whether or not having the
force of law including, in all cases, without limitation any particular section,
part or provision thereof.
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Lease shall mean any lease of property, whether real, personal or
mixed, and all amendments thereto.
Legal Action shall mean, with respect to any Person, any and all
litigation or legal or other actions, arbitrations, counterclaims,
investigations, proceedings, requests for material information by or pursuant to
the order of any Authority or suits, at law or in arbitration, equity or
admiralty, whether or not purported to be brought on behalf of such Person
affecting such Person or any of such Person's business, property or assets.
Lien shall mean any of the following: mortgage; lien (statutory or
other); or other security agreement, arrangement or interest; hypothecation,
pledge or other deposit arrangement; assignment; charge; levy; executory
seizure; attachment; garnishment; encumbrance (including any easement,
exception, reservation or limitation, right of way, and the like); conditional
sale, title retention or other similar agreement, arrangement, device or
restriction; preemptive or similar right; any financing lease involving
substantially the same economic effect as any of the foregoing; the filing of
any financing statement under the Uniform Commercial Code or comparable law of
any jurisdiction; restriction on sale, transfer, assignment, disposition or
other alienation; or any option, equity, claim or right of or obligation to, any
other Person, of whatever kind and character.
Like-Kind Exchange shall mean an exchange of assets of the nature
contemplated by the provisions of Section 1031 of the Code.
Loss and Expense shall have the meaning given to it in Section 8.2.
Marlin shall have the meaning given to it in the second Whereas
paragraph.
Marlin Agreement shall have the meaning given to it in the second
Whereas paragraph
Marlin Breach shall have the meaning given to it in Section 6.1.
Material, Materially or materiality for the purposes of this Agreement,
shall, unless specifically stated to the contrary, be determined without regard
to the fact that various provisions of this Agreement set forth specific dollar
amounts.
Material Agreement shall mean, with respect to any Person, any
Contractual Obligation which (a) was not entered into in the ordinary course of
business, (b) was entered into in the ordinary course of business which (i)
involved the purchase, sale or lease of goods or materials, or purchase of
services, aggregating more than Ten Thousand Dollars ($10,000) during any of the
last three fiscal years, (ii) extends for more than three (3) months, or (iii)
is not terminable on thirty (30) days or less notice without penalty or other
payment, (c) involves Indebtedness for Money Borrowed, (d) is or otherwise
constitutes a written agency, broker, dealer, license, distributorship, sales
representative or similar written agreement, or (e) accounted for more than
three percent (3%) of the revenues of the American Stations or the Secret
Stations in any of the last three fiscal years or is likely to account for more
than three percent (3%) of revenues of the American Stations or the Secret
Stations during the current fiscal year.
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Multiemployer Plan shall mean a Plan which is a "multiemployer plan"
within the meaning of Section 4001(a)3 of ERISA.
New Exchange Assets shall have the meaning given to it in Section 2.3.
New Exchange License shall have the meaning given to it in Section 2.3.
Nonassumed Obligations shall have the meaning given to it in Section
2.2(b).
Organic Document shall mean, with respect to a Person which is a
corporation, its charter, its by-laws and all stockholder agreements, voting
trusts and similar arrangements applicable to any of its capital stock and, with
respect to a Person which is a partnership, its agreement and certificate of
partnership, any agreements among partners, and any management and similar
agreements between the partnership and any general partners (or any Affiliate
thereof).
PBGC shall mean the Pension Benefit Guaranty Corporation and any Entity
succeeding to any or all of its functions under ERISA.
Permitted Liens shall mean (a) Liens for current taxes not yet due and
payable, and (b) such imperfections of title, easements, encumbrances and
mortgages or other Liens, if any, as are not, individually or in the aggregate,
substantial in character, amount or extent and do not Materially detract from
the value, or Materially interfere with the present use, of the property subject
thereto or affected thereby, or otherwise Materially impair the business or
operations of the Secret Stations,or the American Stations, as the case may be.
Person shall mean any natural individual or any Entity.
Personal Property shall mean all of the machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, inventory,
spare parts and other tangible personal property which are owned or leased by
Secret or American, as the case may be, and used or useful as of the date hereof
in the conduct of the business or operations of the Secret Stations or the
American Stations, as the case may be, plus such additions thereto and deletions
therefrom arising in the ordinary course of business between the date hereof and
the Closing Date.
Philadelphia Asset Exchange shall have the meaning given to it in
Section 2.1.
Philadelphia Assets shall have the meaning given to it in Section 2.1.
Philadelphia Exchange shall have the meaning given to it in Section
2.1.
Philadelphia License shall have the meaning given to it in the third
Whereas paragraph.
Philadelphia License Exchange shall have the meaning given to it in
Section 2.1.
Philadelphia Station shall have the meaning given it in the third
Whereas paragraph.
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Plan shall mean, with respect to any Person and at a particular time,
any employee benefit plan which is covered by ERISA and in respect of which such
Person or an ERISA Affiliate is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA, but only to the extent that it covers or relates to any
officer, employee or other Person involved in the ownership and operation of the
Assets or the conduct of the business of any of the Stations.
Private Authorizations shall mean all approvals, concessions, consents,
franchises, licenses, permits, and other authorizations of all Persons (other
than Authorities) including without limitation those with respect to copyrights,
computer software programs, patents, service marks, trademarks, trade names,
technology and know-how.
Proposed Transferor(s) shall have the meaning given to it in Section
2.3.
Qualified Intermediary shall mean a qualified intermediary within the
meaning of ss. 1.1031(k)-1(g)(4) of the Regulations.
Real Estate Leases means the Studio Lease and the Tower Lease.
Real Property shall mean all of the fee estates and buildings and other
improvements thereon, leasehold interest, easements, licenses, rights to access,
right-of- way, and other real property interest which are owned or used by
Secret or American, as the case may be, as of the date hereof, in the operations
of any Secret Station or American Station, as the case may be, plus such
additions thereto and deletions therefrom arising in the ordinary course of
business between the date hereof and the Closing Date.
Regulations shall mean the federal income tax regulations promulgated
under the Code, as such Regulations may be amended from time to time. All
references herein to specific sections of the Regulations shall be deemed also
to refer to any corresponding provisions of succeeding Regulations, and all
references to temporary Regulations shall be deemed also to refer to any
corresponding provisions of final Regulations.
Representatives shall have the meaning given to it in Section 5.1(a).
SEC shall mean the United States Securities and Exchange Commission, or
any successor Authority.
Secret shall have the meaning given to it in the Preamble.
Secret Assets shall have the meaning given to it in Section 2.1.
Secret Disclosure Schedule shall mean the Secret Disclosure Schedule
dated as of the date of this Agreement delivered by Secret to American.
Secret Financial Statements shall have the meaning given to it in
Section 3.2(a).
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<PAGE>
Secret Licenses shall have the meaning given to it in the first Whereas
paragraph.
Secret Station Employees shall have the meaning given it in the Section
3.12(a).
Secret Stations shall have the meaning given it in the first Whereas
paragraph.
Secret Stations LMA shall have the meaning given it in the Section
5.2(d).
Secret's knowledge (including the term "to the knowledge, information
and belief of Secret") means the knowledge of any Secret partner (or any
partner, director or executive officer of any partner), and that such Person,
after reasonable inquiry of appropriate executives of Secret (and its partners)
and reasonable review of appropriate Secret records, to the extent customary in
transactions such as the Exchange, shall have reason to believe and shall
believe that the subject representation or warranty is true and accurate as
stated.
Securities Act shall mean the Securities Act of 1933, and the rules and
regulations of the SEC thereunder, all as from time to time in effect, or any
successor law, rules or regulations, and any reference to any statutory or
regulatory provision shall be deemed to be a reference to any successor
statutory or regulatory provision.
Stations shall mean, collectively, the Secret Stations and the American
Stations and shall include, in the event of any Like-Kind Exchange, the Stations
included within the New Exchange Assets.
Studio Lease shall have the meaning given to it in Section 6.1(d).
Subsidiary shall mean, with respect to a Person, any Entity a majority
of the capital stock ordinarily entitled to vote for the election of directors
of which, or if no such voting stock is outstanding, a majority of the equity
interests of which, is owned directly or indirectly, legally or beneficially, by
such Person or any other Person controlled by such Person.
Tax (and "Taxable", which shall mean subject to Tax), shall mean, with
respect to any Person, (a) all taxes (domestic or foreign), including without
limitation any income (net, gross or other including recapture of any tax items
such as investment tax credits), alternative or add-on minimum tax, gross
income, gross receipts, gains, sales, use, leasing, lease, user, ad valorem,
transfer, recording, franchise, profits, property (real or personal, tangible or
intangible), fuel, license, withholding on amounts paid to or by such Person,
payroll, employment, unemployment, social security, excise, severance, stamp,
occupation, premium, environmental or windfall profit tax, custom, duty or other
tax, or other like assessment or charge of any kind whatsoever, together with
any interest, levies, assessments, charges, penalties, addition to tax or
additional amount imposed by any Taxing Authority, (b) any joint or several
liability of such Person with any other Person for the payment of any amounts of
the type described in (a) and (c) any liability of such Person for the payment
of any amounts of the type described in (a) as a result of any express or
implied obligation to indemnify any other Person.
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<PAGE>
Tax Claim shall mean any Claim which relates to Taxes, including
without limitation the representations and warranties set forth in Section 3.11
or 4.11.
Tax Return or Returns shall mean all returns, consolidated or otherwise
(including without limitation information returns), required to be filed with
any Authority with respect to Taxes.
Taxing Authority shall mean any Authority responsible for the
imposition of any Tax.
Termination Date shall have the meaning given to it in Section 7.1.
Tower Lease shall have the meaning given to it in Section 6.1(d).
Transactions shall mean the Exchange and all of the other transactions
contemplated to be consummated on or prior to the Closing Date, including
without limitation the execution, delivery and performance of the Collateral
Documents and any Like-Kind Exchange.
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EXHIBIT 10.73
TIME BROKERAGE AGREEMENT
TIME BROKERAGE AGREEMENT, made as of this 1st day of May, 1996 by and
between American Radio Systems Corporation (the "Programmer") and Secret
Communications, L.P. (the "Licensee").
WHEREAS Licensee owns and operates Broadcast Stations, KMJI(AM),
Sacramento, California and KSFM(FM), Woodland, California (each, a "Station" and
together, the "Stations") pursuant to a license issued by the Federal
Communications Commission ("FCC").
WHEREAS Programmer is involved in radio station ownership and
operation.
WHEREAS the Licensee wishes to retain 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 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 intend to enter into an Asset Exchange
Agreement (the "Asset Exchange Agreement") under which Licensee shall agree to
sell the Stations to Programmer, and Programmer and Licensee will file with the
FCC an application for consent to assign the Stations' licenses from Licensee to
Programmer.
NOW, THEREFORE, in consideration of the above recitals and mutual
promises and covenants contained herein, the parties, intending to be bound
legally, agree as follows:
Section 1
Use of Station Air Time
1.1 Representations. Both Licensee and Programmer represent that they
are authorized to enter into this Agreement and that this Agreement constitutes
the legal, valid and binding obligation of each, enforceable against it in
accordance with its terms.
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1.2 Effective Date; Term. The Effective Date of this Agreement shall be
May 1, 1996. It shall continue in force until March 1, 1997, or until
consummation of the assignment of the Stations' license from Licensee to
Programmer pursuant to the Asset Exchange Agreement, whichever event occurs
earlier, unless otherwise extended or terminated by the parties.
1.3 Scope. During the term hereof, 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 Stations' transmitter
facilities or other authorized remote control points 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 shall 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 pay to Licensee a monthly fee of Two Hundred
Thousand Dollars ($200,000), payable no later than the fifteenth (15th) day of
the month to which such fee pertains, and Programmer shall reimburse Licensee
for certain station expenses as set forth in Section 1.6 hereof.
1.5 Licensee Operation of the Stations. Licensee will have full
authority, power and control over the operations of the Stations 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 rules, regulations and policies of the FCC and all other applicable
laws. Licensee shall be solely responsible for all non-capital, ordinary and
customary operating expenses associated with the transmission of broadcast
signals by the Stations, including but not limited to maintenance of the
transmitting facility and the costs of electricity associated with such
transmissions. 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 the Agreement, Programmer agrees to perform,
without charge, routine monitoring of Licensee's transmitter performance and
tower lighting if and when requested by Licensee.
1.6 Licensee Representations and Warranties. Licensee represents and
warrants as follows:
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(a) Licensee holds the licenses and other permits and authorizations
necessary for the present operation of the Stations as set forth in Attachment
I. There is not now pending, or to Licensee's best knowledge, threatened, any
action by the FCC or by any other party to revoke, cancel, suspend, refuse to
renew or modify adversely any of such licenses, permits or authorizations except
as previously revealed in writing to Programmer. To the Licensee's best
knowledge, after due inquiry, Licensee, with respect to the Stations, is not in
material violation of any statute, ordinance, rule, regulation, policy, order or
decree of any federal, state or local entity, court or authority having
jurisdiction over it or the Stations, which would have a material adverse effect
upon the Licensee, its assets utilized in the operation of the Stations, the
Stations or upon Licensee's ability to perform this Agreement. Licensee shall
not knowingly take any action or omit to take any action which would have a
material adverse impact upon the Licensee, its assets utilized in the operation
of the Stations, the Stations 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, except to the extent such tardiness would have no
material adverse affect on the Stations. The transmission facilities of the
Stations are and will continue to comply in all material respects with the
engineering requirements set forth in the FCC licenses of the Stations. Licensee
shall, during the term of this Agreement, not dispose of, transfer or assign any
of such assets and properties except with the prior written consent of the
Programmer.
(b) Licensee shall pay, in a timely fashion, all of the non-capital,
ordinary and customary expenses incurred in operating the Stations including
lease payments, utilities, taxes, etc., as set forth in Attachment II, and shall
provide Programmer with a certificate(s) of such timely payment (with invoices
attached thereto to the extent such invoices exist) at one or more times within
thirty (30) days of the end of each month.
1.7 Programmer Responsibility. Programmer shall be solely responsible
for any expenses incurred in the origination and/or delivery of programming from
any remote location and for any publicity or promotional expenses incurred by
Programmer, including, without limitation, ASCAP, BMI, SESAC music license fees
for all programming provided by Programmer.
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 as
indicated 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 as listed on Attachment III-A and
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Licensee shall assign all of its rights under those trade and barter agreements
to Programmer.
1.9 Hourly Credit. Programmer shall receive from Licensee, as a refund
consisting of a flat rate credit of $300.00 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 for Programmer's failure to deliver
its programming to Licensee), to broadcast the Programmer's programming. Such
refunds to Programmer shall be paid within ten (10) days of the end of each
month.
1.10 Use of Stations' Studios. Licensee shall have full use of the
stations' facilities and properties to the extent necessary to fulfull its
programming obligation hereunder and in compliance with FCC regulations. The
day-to-day maintenance of such facilities and properties shall be the
responsibility of Programmer, subject to the reasonable satisfaction of
Licensee. 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 programming for the Stations;
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 Stations or for other
radio stations owned or managed by Programmer, and shall at all times be subject
to the oversight of the 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 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
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public importance. Such interruption shall not entitle Programmer to any credits
on fees. Licensee shall also coordinate with Programmer the Stations' hourly
station identification announcements to be aired in accord with FCC rules.
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 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 Stations' 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. 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 1.11 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 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. Programmer shall furnish or cause
to be furnished the artistic personnel and material for the programs as provided
by this Agreement and all programs shall be in accordance with the Policy
Statement and FCC requirements. All advertising spots and promotional material
or announcements 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 Licensee and Programmer.
3.2 Licensee Control of Programming. Programmer recognizes that the
Licensee has full authority to control the operation of the Stations. The
parties agree that
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Licensee's authority includes but is not limited to the right to reject or
refuse such portions of the Programmer's programming which Licensee reasonably
believes to be unsatisfactory, unsuitable or contrary to the public interest.
Programmer shall have the right to change the programming elements of the
programming supplied to Licensee by giving Licensee at least twenty-four (24)
hours notice of such changes, but shall not change the programming format of the
Station with the Licensee's prior written consent.
3.3 Programmer Compliance with Copyright Act. Programmer represents and
warrants to Licensee that Programmer has full authority to broadcast its
programming on the Stations, and that Programmer shall not broadcast any
material in violation of any law, rule, regulation 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, Programmer 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 it provides to the Licensee. Programmer
may sell advertising, consistent with applicable rules, regulations and the
Policy Statement, on the Stations in combination with any other broadcast
station 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
it provides to Licensee. 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 neither it nor its
officers,directors, employees, agents or representatives will 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 to quarterly, or more frequently at the request
of the Licensee, provide Licensee with Payola Affidavits, substantially in the
form attached hereto as Attachment V, executed on behalf of Programmer and by
programming personnel and agents at the Stations under the supervision of
Programmer.
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 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 slander or defamation or otherwise,
arising out of Programmer's broadcasts and sale of advertising time under this
Agreement to the extent permitted by law.
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' broadcasts 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, Licensee and 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 will seek reversal of the staff
decision by appeal to the full Commission, at Programmer's option and expense.
If such appeal is unavailing, then the parties shall either reform the Agreement
or terminate it pursuant to Section 6.1(a).
4.5 Insurance. Programmer shall obtain and maintain a General and
Broadcast liability policy with respect to the Stations, and Licensee shall
obtain and maintain fire and casualty policies with respect thereto. Licensee
shall be named an additional insured on Programmer's liability policies.
Section 5
Access to Programmer Materials and Correspondence
5.1 Confidential Review. Prior to the provision of any 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
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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 enable Licensee to comply with the lowest unit rate, equal
opportunities and reasonable access requirements of federal law. Programmer
shall release advertising availabilities to Licensee as necessary to permit
Licensee to comply with Licensee's obligations under the Communications Act of
1934, as amended, and the rules and regulations of the FCC; provided, however,
that all revenues realized by Licensee as a result of such a release of
advertising time shall be immediately paid to Programmer.
Section 6
Termination and Remedies Upon Default
6.1 Termination. In addition to other remedies available at law or
equity and subject to 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;
(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.
(e) if such party has a right to, and is exercising such right, to
terminate the Asset Exchange Agreement.
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(f) if the Asset Exchange Agreement between Licensee and Programmer is
not executed and delivered on or before May 31, 1996, or, once executed and
delivered, if such Agreement is terminated in accordance with its terms.
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 either Station is not operating within the parameters authorized
by the FCC or that either Station's actual coverage of the market is materially
less than it that set forth on Attachment I, Licensee shall be obligated, at its
expense, to take such steps as are reasonably necessary to restore the effective
coverage or operating parameters of such Stations 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 such Stations'
effective coverage or operating parameters are not restored within thirty (30)
days of notice of the coverage or operating deficiencies, then Programmer shall
be entitled to a full refund, on a daily basis, of the Hourly Credit amount set
forth in Section 1.9 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 consecutive days or more Licensee reduces
its transmitter output power on either Station by fifty percent (50%) or more,
Programmer may elect a refund equal to twenty-five percent (25%) of the Hourly
Credit amount set forth in Section 1.9 for so long as such power reduction
continues to occur if Programmer has, in fact, been required to make rebates
and/or other financial accommodations to its advertisers and such refund shall
be reflected in a refund payment by Licensee to Programmer within ten (10) days
of the end of the month.
(c) If Licensee uses an auxiliary or alternate transmitter for either
Station for a period of five (5) consecutive days or more, then the refund for
such period shall be twelve and one-half percent (12.5%) of the Hourly Credit
amount set forth in Section 1.9 for so long as such auxiliary or alternate
transmitter site is in use if Programmer has, in fact, been required to make
rebates and/or other financial accommodations to its advertisers. Should such
use of an auxiliary or alternate transmitter continue for more than thirty (30)
days, the refund for such period shall be equal to twenty-five percent (25%) of
the Hourly Credit amount set forth in Section 1.9 for so long as such alternate
transmitter site is in use. The refund shall be reflected in a refund payment by
Licensee to Programmer within ten (10) days of the end of the month.
(d) If, due to damage to or failure of transmission equipment, either
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 fifty
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percent (50%) refund, on a daily basis, of the Hourly Credit amount set forth in
Section 1.9 and such refund shall be made within ten (10) days of the end of the
month.
6.3 Force Majeure. Any failure or impairment of the Stations'
facilities or any delay or interruption in the broadcast of programs, or failure
at any time to furnish facilities, in whole or in part, for broadcast, due to
acts of God, strikes, lockouts, material or labor restrictions by any
governmental authority, civil riot, floods and any other cause not reasonably
within the control of Licensee will not render Licensee liable to Programmer,
except to the extent of allowing in each such case an appropriate refund for
time not provided based upon the Hourly Credit set forth under Section 1.9
calculated upon the length of time during which the failure or impairment exists
or continues.
6.4 Other Agreements. During the term of this Agreement, 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.
Section 7
Miscellaneous
7.1 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, their successors and assignees. Neither party may
assign its rights under this Agreement without the prior written consent of the
other party which shall not be unreasonably withheld, provided, however that
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 and Licensee has the
right to assign its rights hereunder to its lenders
7.2 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.
7.3 FCC Certification (47 C.F.R. ss. 73.3555(a) (2) (ii). The parties
shall execute a Certification in the form of Attachment VI hereto, as required
by Section 73.3555(a) (2) (ii) of the FCC's rules.
7.4 Entire Agreement. This Agreement and the Attachments hereto and the
Asset Agreement between Programmer and Licensee 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.
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7.5 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.
7.6 Headings. The headings are for convenience only and will not
control or affect the meaning or construction of the provisions of this
Agreement.
7.7 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 of 1934, as amended, and
the Rules and Regulations of the FCC. The construction and performance of the
Agreement will be governed by the laws of the State of New York.
7.8 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:
To Licensee: Secret Communications, L.P.
312 Walnut Street, Suite 3550
Cincinnati, OH 45202
Attn: Frank E. Wood
President & CEO
Fax: (513) 621-3299
Copies To: Larry A. Barden, Esq.
Sidley & Austin
One First National Plaza
Chicago, IL 60603
Fax: (312) 853-7036
and to: Arthur J. Schiller
General Counsel
Secret Communications, LP
1200 Shermer Road
Northbrook, IL 60062
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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 Avenue, N.W.
Suite 800
Washington, DC 20036-68027
John R. Feore, Jr. Esq.
Fax: (202) 776-2222
7.9 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
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, or (ii) an action to enforce the award of
the arbitration panel rendered in accordance with this Section.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
LICENSEE:
SECRET COMMUNICATIONS, L.P.
By:____________________________________
PROGRAMMER:
AMERICAN RADIO SYSTEMS CORPORATION
By:____________________________________
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ATTACHMENT I
Station Coverage
KMJI(AM) and KSFM(FM) current FCC Licenses and contour maps on file
with the FCC.
14
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ATTACHMENT II
Station Expenses
15
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ATTACHMENT III
Contracts
16
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ATTACHMENT IV
Broadcast Station Programming Policy Statement
17
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BROADCAST STATION
PROGRAMMING POLICY STATEMENT
Programmer agrees to cooperate with Licensee in the broadcasting of
programs of the highest possible standard of excellence and for this purpose to
observe the following regulations in the preparation, writing and broadcasting
of its programs.
I. No Plugola or Payola. The mention of any business activity or "plug"
for any commercial, professional, or other related endeavor, except
where contained in an actual commercial message of a sponsor, is
prohibited.
II. No Indecency. The Programmer shall not permit the broadcasting of any
indecent programming (as such term is applied by the FCC) by the
Stations.
III. Election Procedures. At least ninety (90) days before the start of any
primary or election campaign, Programmer will clear with Licensee's
general manager the rate Programmer will charge for the time to be
sold to candidates for the public office and/or their supporters to
make certain that the rate charged is in conformance with the
applicable law and station policy. Programmer shall, in addition,
comply with all FCC requirements regarding "equal time" or equal
opportunity for candidates. Programmer shall refrain from broadcasting
political editorials on the Stations.
IV. Required Announcements. Progammer shall broadcast (i) an announcement
in a form satisfactory to Licensee at the beginning of each hour to
identify the Station, and (ii) any other announcements that may be
required by law, regulation, or Station policy.
V. Commercial Recordkeeping. Programmer shall not receive any
consideration in money, goods, services, or otherwise, directly or
indirectly (including to relatives) from any persons or company for
the presentation of any programming over the station without reporting
the same in advance to and receiving the prior written consent of
Licensee's general manager. No commercial messages ("plugs") or undue
references shall be made in programming presented over station to any
business venture, profit making activity, or other interest (other
than noncommercial announcements for bona fide charities, church
activities or other public service activities) in which Programmer (or
anyone else) is directly or indirectly interested without the same
having been approved in
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advance by the general manager and such broadcast being announced and
logged and sponsored.
VI. No Illegal Announcements No announcements or promotion prohibited by
federal or state law or regulation of any lottery or game shall be
made over the Station. Any game, contest, or promotion relating to or
to be presented over the Station must be fully stated and explained in
advance to Licensee, which reserves the right in its sole discretion
to reject any game, contest, or promotion.
VII. No Defamation or Personal Attack. TheProgrammer shall not permit the
broadcasting of any material which is defamatory or which constitutes
a personal attack (as such term is applied by the FCC) by the
Stations.
Licensee may waive any of the foregoing regulations in specific instances,
if, in its opinion, good broadcasting in the public interest is served.
In accordance with the Licensee's responsibility under the Communications
Act of 1934, as amended, and the Rules and Regulations of the Federal
Communications Commission, Licensee reserves the right to reject or terminate
any advertising proposed to be presented or being presented over the Station
which is in conflict with Licensee's policy or which in Licensee's or its
general manager's sole judgment would not serve the public interest.
In any case where questions of policy or interpretation arise, Programmer
should submit the same to Licensee for decision before making any commitments in
connection therewith.
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ATTACHMENT V
Payola Statement
20
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FORM OF PAYOLA AFFIDAVIT
City of ____________________ )
County of __________________ ) ss.
State of ___________________ )
ANTI-PAYOLA/PLUGOLA AFFIDAVIT
_______________________, being first duly sworn, deposes and says as follows:
1. He is _________________________ for ________________________________.
(Position)
2. He has acted in the above capacity since _____________.
3. No matter has been broadcast by Station __________ for which service,
money or other valuable consideration has been directly or indirectly
paid, or promised to, or charged, or accepted, by him from any person,
which matter at the time so broadcast has not been announced or
otherwise indicated as paid for or furnished by such person.
4. So far as he is aware, no matter has been broadcast by Station _______
for which service, money, or other valuable consideration has been
directly or indirectly paid, or promised to, or charged, or accepted by
Station _______ in furnishing programs, from any person, which matter
at the time so broadcast has not been announced or otherwise indicated
as paid for or furnished by such person.
5. In future, he will not pay, promise to pay, request, or receive any
service, money, or any other valuable consideration, direct or
indirect, from a third party, in exchange for the influencing of, or
the attempt to influence, the preparation of presentation or broadcast
matter on Station ________.
6. Nothing contained herein is intended to, or shall prohibit receipt or
acceptance of anything with the expressed knowledge and approval of my
employer, but henceforth any such approval must be given in writing by
someone expressly authorized to give such approval.
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7. He, his spouse and his immediate family do____ do not ____ have any
present direct or indirect ownership interest in (other than an
investment in a corporation whose stock is publicly held), serve as an
officer or director of, whether with or without compensation, or serve
as an employee of, any person, firm or corporation engaged in:
1. The publishing of music;
2. The production, distribution (including wholesale and retail
sales outlets), manufacture or exploitation of music, films,
tapes, recordings or electrical transcriptions of any program
material intended for radio broadcast use;
3. The exploitation, promotion, or management of persons rendering
artistic, production and/or other services in the entertainment
field;
4. The ownership or operation of one or more radio or television
stations;
5. The wholesale or retail sale of records intended for public
purchase;
6. Advertising on Station ______, or any other station owned by its
licensee (excluding nominal stockholdings in publicly owned
companies).
8. The facts and circumstances relating to such interest are none _______
as follows________:
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
____________________________________
Affiant
Subscribed and sworn to before me
this ______ day of ________________, 199___.
___________________________________________
Notary Public
My Commission expires: __________________
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ATTACHMENT VI
FCC Certification
24
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CERTIFICATION
Pursuant to Section 73.3555(a) (2) (ii) of the FCC's Rules:
1. The licensee of the brokered stations affected by the foregoing Time
Brokerage Agreement hereby certifies that it will at all times maintain
ultimate control (as defined in FCC rules and regulations) over the
Station's facilities, including specifically control over the Station's
finances, personnel and programming; and
2. The licensee of the brokering stations hereby certifies that the proposed
Agreement for the time brokerage complies with the provisions of Section
73.3555(a) (3) (iii) of the FCC's rules.
Dated this ________ day of _____________________, 199______.
LICENSEE: ________________________________________
By: ____________________________________
Its:____________________________________
PROGRAMMER: AMERICAN RADIO SYSTEMS CORPORATION
By: ____________________________________
Its:____________________________________
25
EXHIBIT 10.74
TIME BROKERAGE AGREEMENT
TIME BROKERAGE AGREEMENT, made as of this 1st day of June, 1996 by and
between American Radio Systems License Corp. (the "Licensee") and Secret
Communications, L.P. (the "Programmer").
WHEREAS Licensee owns and operates Broadcast Station, WQRS(FM),
Philadelphia, Pennsylvania (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 retain Programmer to provide programming
for the Station that is in conformity with the Station's 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 and Licensee have entered into an Asset Exchange
Agreement (the "Asset Exchange Agreement") under which Licensee has agreed to
sell the Station to Programmer, and Programmer and Licensee will file with the
FCC an application for consent to assign the Station's licenses from Licensee to
Programmer.
NOW, THEREFORE, in consideration of the above recitals and mutual
promises and covenants contained herein, the parties, intending to be bound
legally, agree as follows:
Section 1
Use of Station Air Time
1.1 Representations. Both Licensee and Programmer represent that they
are authorized to enter into this Agreement and that this Agreement constitutes
the legal, valid and binding obligation of each, enforceable against it in
accordance with its terms.
1.2 Effective Date; Term. The Effective Date of this Agreement shall be
June 1, 1996. It shall continue in force until March 1, 1997, or until
consummation of the assignment of the Station's license from Licensee to
Programmer pursuant to the Asset Exchange Agreement, whichever event occurs
earlier, unless otherwise extended or terminated by the parties.
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1.3 Scope. During the term hereof, 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 points 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 shall 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 pay to Licensee a monthly fee of One Hundred
Thirty-Three Thousand Three Hundred and Thirty-Three Dollars ($133,333.00),
payable no later than the fifteenth (15th) day of the month to which such fee
pertains, and Programmer shall reimburse Licensee for certain station expenses
as set forth in Section 1.6 hereof.
1.5 Licensee Operation of the Stations. 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 rules, regulations and policies of the FCC and all other applicable
laws. Licensee shall be solely responsible for all non-capital, ordinary and
customary operating expenses associated with the transmission of broadcast
signals by the Station, including but not limited to maintenance of the
transmitting facility and the costs of electricity associated with such
transmissions. Licensee shall be responsible for the salaries, taxes, insurance
and related costs for all personnel it employs at the Station and shall maintain
insurance at its present levels covering the Station's transmission facilities.
During the term of the Agreement, Programmer agrees to perform, without charge,
routine monitoring of Licensee's transmitter performance and tower lighting if
and when requested by Licensee.
1.6 Licensee Representations and Warranties. Licensee represents and
warrants as follows:
(a) Licensee holds the licenses and other permits and authorizations
necessary for the present operation of the Station as set forth in Attachment I.
There is not now pending, or to Licensee's best knowledge, threatened, any
action by the FCC or by any other party to revoke, cancel, suspend, refuse to
renew or modify adversely any of such licenses, permits or authorizations except
as previously revealed in writing to Programmer. To the Licensee's best
knowledge, after due inquiry, Licensee, with respect to the Station, is not in
material violation of any statute, ordinance, rule, regulation, policy, order or
decree of any federal, state or local entity, court or authority having
jurisdiction over it or the Station, which would have a material adverse effect
upon the Licensee, its assets utilized in the operation of the Station, the
Station or upon Licensee's ability to perform this Agreement. Licensee shall not
knowingly take any action or omit to take any action which would have a material
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
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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, except to the extent such tardiness would have no material
adverse affect on the Station. The transmission 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. Licensee shall,
during the term of this Agreement, not dispose of, transfer or assign any of
such assets and properties except with the prior written consent of the
Programmer.
(b) Licensee shall pay, in a timely fashion, all of the non-capital,
ordinary and customary expenses incurred in operating the Station including
lease payments, utilities, taxes, etc., as set forth in Attachment II, and shall
provide Programmer with a certificate(s) of such timely payment (with invoices
attached thereto to the extent such invoices exist) at one or more times within
thirty (30) days of the end of each month.
1.7 Programmer Responsibility. Programmer shall be solely responsible
for any expenses incurred in the origination and/or delivery of programming from
any remote location and for any publicity or promotional expenses incurred by
Programmer, including, without limitation, ASCAP, BMI, SESAC music license fees
for all programming provided by Programmer.
1.8 Contracts. Programmer will not be required to assume performance of
any of the Licensee's contracts and leases pertaining to the Station except as
indicated 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 as listed on Attachment III-A and Licensee shall
assign all of its rights under those trade and barter agreements to Programmer.
1.9 Hourly Credit. Programmer shall receive from Licensee, as a refund
consisting of a flat rate credit of $________ 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 for Programmer's failure to
deliver its programming to Licensee), to broadcast the Programmer's programming.
Such refunds to Programmer shall be paid within ten (10) days of the end of each
month.
1.10 Use of Stations' Studios. Licensee shall have full use of the
Station's facilities and properties to the extent necessary to fulfull its
programming obligation hereunder and in compliance with FCC regulations. The
day-to-day maintenance of such facilities and properties shall be the
responsibility of Programmer, subject to the reasonable satisfaction of
Licensee. 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 programming for the Station;
provided, however, that Licensee shall maintain, for its sole use, sufficient
space at the Station's studios for its management level employees. Under the
overall supervision of Licensee, Programmer shall and may peacefully and quietly
have the full use of
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and enjoy the use of the Station's 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 other radio stations
owned or managed by Programmer, and shall at all times be subject to the
oversight of the 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 Obligations. Although both parties shall
cooperate in the broadcast of emergency information over the station, 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. Such interruption shall not
entitle Programmer to any credits on fees. Licensee shall also coordinate with
Programmer the Station's hourly station identification announcements to be aired
in accord with FCC rules. Licensee shall continue to maintain a main studio, as
that term is defined by the FCC, within the Station's 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 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's 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. 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 Station's
facilities pursuant to Section 1.11 hereof.
Section 3
Station Programming Policies
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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 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. Programmer shall furnish or cause
to be furnished the artistic personnel and material for the programs as provided
by this Agreement and all programs shall be in accordance with the Policy
Statement and FCC requirements. All advertising spots and promotional material
or announcements 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 Licensee and Programmer.
3.2 Licensee Control of Programming. Programmer recognizes that the
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 Programmer's programming which Licensee
reasonably believes to be unsatisfactory, unsuitable or contrary to the public
interest. Programmer shall have the right to change the programming elements of
the programming supplied to Licensee by giving Licensee at least twenty-four
(24) hours notice of such changes, but shall not change the programming format
of the Station with the Licensee's prior written consent.
3.3 Programmer Compliance with Copyright Act. Programmer represents and
warrants to Licensee that Programmer has full authority to broadcast its
programming on the Station, and that Programmer shall not broadcast any material
in violation of any law, rule, regulation 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, Programmer 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 it provides to the Licensee. Programmer
may sell advertising, consistent with applicable rules, regulations and the
Policy Statement, on the Station in combination with any other broadcast station
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 it provides
to Licensee. Licensee shall retain all revenues from the sale of Station's
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 neither it nor its
officers,directors, employees, agents or representatives will 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
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"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 to quarterly, or more frequently at the request
of the Licensee, provide Licensee with Payola Affidavits, substantially in the
form attached hereto as Attachment V, executed on behalf of Programmer and by
programming personnel and agents at the Station under the supervision of
Programmer.
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 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 slander or defamation or otherwise,
arising out of Programmer's broadcasts and sale of advertising time under this
Agreement to the extent permitted by law.
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' broadcasts 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, Licensee and 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 will seek reversal of the staff
decision by appeal to the full Commission, at Programmer's option and expense.
If such appeal is unavailing, then the parties shall either reform the Agreement
or terminate it pursuant to Section 6.1(a).
4.5 Insurance. Programmer shall obtain and maintain a General and
Broadcast liability policy with respect to the Station, and Licensee shall
obtain and maintain fire and casualty policies with respect thereto. Licensee
shall be named an additional insured on Programmer's liability policies.
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Section 5
Access to Programmer Materials and Correspondence
5.1 Confidential Review. Prior to the provision of any 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 Station's 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 enable Licensee to comply with the lowest unit rate, equal
opportunities and reasonable access requirements of federal law. Programmer
shall release advertising availabilities to Licensee as necessary to permit
Licensee to comply with Licensee's obligations under the Communications Act of
1934, as amended, and the rules and regulations of the FCC; provided, however,
that all revenues realized by Licensee as a result of such a release of
advertising time shall be immediately paid to Programmer.
Section 6
Termination and Remedies Upon Default
6.1 Termination. In addition to other remedies available at law or
equity and subject to 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;
(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.
(e) if such party has a right to, and is exercising such right, to
terminate the Asset Exchange Agreement.
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(f) if the Asset Exchange Agreement between Licensee and Programmer is
not executed and delivered on or before June 11, 1996, or, once executed and
delivered, if such Agreement is terminated in accordance with its terms.
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 is not operating within the parameters authorized by
the FCC or that the Station's actual coverage of the market is materially less
than it that set forth on Attachment I, 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 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 Station's
effective coverage or operating parameters are not restored within thirty (30)
days of notice of the coverage or operating deficiencies, then Programmer shall
be entitled to a full refund, on a daily basis, of the Hourly Credit amount set
forth in Section 1.9 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 consecutive days or more Licensee reduces
its transmitter output power on the Station by fifty percent (50%) or more,
Programmer may elect a refund equal to fifty percent (50%) of the Hourly Credit
amount set forth in Section 1.9 for so long as such power reduction continues to
occur if Programmer has, in fact, been required to make rebates and/or other
financial accommodations to its advertisers and such refund shall be reflected
in a refund payment by Licensee to Programmer within ten (10) days of the end of
the month.
(c) If Licensee uses an auxiliary or alternate transmitter for the
Station for a period of five (5) consecutive days or more, then the refund for
such period shall be twenty-five percent (25%) of the Hourly Credit amount set
forth in Section 1.9 for so long as such auxiliary or alternate transmitter site
is in use if Programmer has, in fact, been required to make rebates and/or other
financial accommodations to its advertisers. Should such use of an auxiliary or
alternate transmitter continue for more than thirty (30) days, the refund for
such period shall be equal to fifty percent (50%) of the Hourly Credit amount
set forth in Section 1.9 for so long as such alternate transmitter site is in
use. The refund shall be reflected in a refund payment by Licensee to Programmer
within ten (10) days of the end of the month.
(d) 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, of the Hourly Credit amount set
forth in Section 1.9 and such refund shall be made within ten (10) days of the
end of the month.
6.3 Force Majeure. Any failure or impairment of the Station's
facilities or any delay or interruption in the broadcast of programs, or failure
at any time to furnish facilities, in whole or in part, for broadcast, due to
acts of God, strikes, lockouts, material or labor restrictions by
8
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any governmental authority, civil riot, floods and any other cause not
reasonably within the control of Licensee will not render Licensee liable to
Programmer, except to the extent of allowing in each such case an appropriate
refund for time not provided based upon the Hourly Credit set forth under
Section 1.9 calculated upon the length of time during which the failure or
impairment exists or continues.
6.4 Other Agreements. During the term of this Agreement, 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 assignees. Neither party may
assign its rights under this Agreement without the prior written consent of the
other party which shall not be unreasonably withheld, provided, however that
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 [Secret Communications, L.P.] and Licensee has the right to
assign its rights hereunder to its lenders.
7.2 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.
7.3 FCC Certification (47 C.F.R. ss. 73.3555(a) (2) (ii). The parties
shall execute a Certification in the form of Attachment VI hereto, as required
by Section 73.3555(a) (2) (ii) of the FCC's rules.
7.4 Entire Agreement. This Agreement and the Attachments hereto and the
Asset Exchange Agreement between Programmer and Licensee 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.
7.5 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.
7.6 Headings. The headings are for convenience only and will not
control or affect the meaning or construction of the provisions of this
Agreement.
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7.7 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 of 1934, as amended, and
the Rules and Regulations of the FCC. The construction and performance of the
Agreement will be governed by the laws of the State of New York.
7.8 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:
To Programmer: Secret Communications, L.P.
312 Walnut Street, Suite 3550
Cincinnati, OH 45202
Attn: Frank E. Wood
President & CEO
Fax: (513) 621-3299
Copies To: Larry A. Barden, Esq.
Sidley & Austin
One First National Plaza
Chicago, IL 60603
Fax: (312) 853-7036
and to: Arthur J. Schiller
General Counsel
Secret Communications, LP
1200 Shermer Road
Northbrook, IL 60062
To Licensee: 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 Avenue, N.W.
Suite 800
Washington, DC 20036-68027
John R. Feore, Jr. Esq.
Fax: (202) 776-2222
7.9 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
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, or (ii) an action to enforce the award of
the arbitration panel rendered in accordance with this Section.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and
year first above written.
PROGRAMMER:
SECRET COMMUNICATIONS, L.P.
By:____________________________________
LICENSEE:
AMERICAN RADIO SYSTEMS CORPORATION
By:____________________________________
11
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ATTACHMENT I
Station Coverage
WQRS(FM) current FCC Licenses and contour maps on file
with the FCC.
12
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ATTACHMENT II
Station Expenses
13
<PAGE>
ATTACHMENT III
Contracts
14
<PAGE>
ATTACHMENT IV
Broadcast Station Programming Policy Statement
15
<PAGE>
BROADCAST STATION
PROGRAMMING POLICY STATEMENT
Programmer agrees to cooperate with Licensee in the broadcasting of
programs of the highest possible standard of excellence and for this purpose to
observe the following regulations in the preparation, writing and broadcasting
of its programs.
I. No Plugola or Payola. The mention of any business activity or "plug"
for any commercial, professional, or other related endeavor, except
where contained in an actual commercial message of a sponsor, is
prohibited.
II. No Indecency. The Programmer shall not permit the broadcasting of any
indecent programming (as such term is applied by the FCC) by the
Stations.
III. Election Procedures. At least ninety (90) days before the start of any
primary or election campaign, Programmer will clear with Licensee's
general manager the rate Programmer will charge for the time to be
sold to candidates for the public office and/or their supporters to
make certain that the rate charged is in conformance with the
applicable law and station policy. Programmer shall, in addition,
comply with all FCC requirements regarding "equal time" or equal
opportunity for candidates. Programmer shall refrain from broadcasting
political editorials on the Stations.
IV. Required Announcements. Progammer shall broadcast (i) an announcement
in a form satisfactory to Licensee at the beginning of each hour to
identify the Station, and (ii) any other announcements that may be
required by law, regulation, or Station policy.
V. Commercial Recordkeeping. Programmer shall not receive any
consideration in money, goods, services, or otherwise, directly or
indirectly (including to relatives) from any persons or company for
the presentation of any programming over the station without reporting
the same in advance to and receiving the prior written consent of
Licensee's general manager. No commercial messages ("plugs") or undue
references shall be made in programming presented over station to any
business venture, profit making activity, or other interest (other
than noncommercial announcements for bona fide charities, church
activities or other public service activities) in which Programmer (or
anyone else) is directly or indirectly interested without the same
having been approved in advance by the general manager and such
broadcast being announced and logged and sponsored.
VI. No Illegal Announcements No announcements or promotion prohibited by
federal or state law or regulation of any lottery or game shall be
made over the Station. Any game, contest, or promotion relating to or
to be presented over the
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Station must be fully stated and explained in advance to Licensee,
which reserves the right in its sole discretion to reject any game,
contest, or promotion.
VII. No Defamation or Personal Attack. The Programmer shall not permit the
broadcasting of any material which is defamatory or which constitutes
a personal attack (as such term is applied by the FCC) by the
Stations.
Licensee may waive any of the foregoing regulations in specific
instances, if, in its opinion, good broadcasting in the public interest is
served.
In accordance with the Licensee's responsibility under the
Communications Act of 1934, as amended, and the Rules and Regulations of the
Federal Communications Commission, Licensee reserves the right to reject or
terminate any advertising proposed to be presented or being presented over the
Station which is in conflict with Licensee's policy or which in Licensee's or
its general manager's sole judgment would not serve the public interest.
In any case where questions of policy or interpretation arise,
Programmer should submit the same to Licensee for decision before making any
commitments in connection therewith.
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ATTACHMENT V
Payola Statement
18
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FORM OF PAYOLA AFFIDAVIT
City of ____________________ )
County of __________________ ) ss.
State of ___________________ )
ANTI-PAYOLA/PLUGOLA AFFIDAVIT
__________________________, being first duly sworn, deposes and says as follows:
1. He is _________________________ for ________________________________.
(Position)
2. He has acted in the above capacity since _____________.
3. No matter has been broadcast by Station __________ for which service, money
or other valuable consideration has been directly or indirectly paid, or
promised to, or charged, or accepted, by him from any person, which matter
at the time so broadcast has not been announced or otherwise indicated as
paid for or furnished by such person.
4. So far as he is aware, no matter has been broadcast by Station _______ for
which service, money, or other valuable consideration has been directly or
indirectly paid, or promised to, or charged, or accepted by Station _______
in furnishing programs, from any person, which matter at the time so
broadcast has not been announced or otherwise indicated as paid for or
furnished by such person.
5. In future, he will not pay, promise to pay, request, or receive any
service, money, or any other valuable consideration, direct or indirect,
from a third party, in exchange for the influencing of, or the attempt to
influence, the preparation of presentation or broadcast matter on Station
________.
6. Nothing contained herein is intended to, or shall prohibit receipt or
acceptance of anything with the expressed knowledge and approval of my
employer, but henceforth any such approval must be given in writing by
someone expressly authorized to give such approval.
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7. He, his spouse and his immediate family do____ do not ____ have any present
direct or indirect ownership interest in (other than an investment in a
corporation whose stock is publicly held), serve as an officer or director
of, whether with or without compensation, or serve as an employee of, any
person, firm or corporation engaged in:
1. The publishing of music;
2. The production, distribution (including wholesale and retail sales
outlets), manufacture or exploitation of music, films, tapes,
recordings or electrical transcriptions of any program material
intended for radio broadcast use;
3. The exploitation, promotion, or management of persons rendering
artistic, production and/or other services in the entertainment field;
4. The ownership or operation of one or more radio or television
stations;
5. The wholesale or retail sale of records intended for public purchase;
6. Advertising on Station ______, or any other station owned by its
licensee (excluding nominal stockholdings in publicly owned
companies).
8. The facts and circumstances relating to such interest are none _______ as
follows________:
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
_________________________________
Affiant
Subscribed and sworn to before me
this ______ day of ______________, 199___.
_________________________________________
Notary Public
My Commission expires: __________________
21
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ATTACHMENT VI
FCC Certification
22
<PAGE>
CERTIFICATION
Pursuant to Section 73.3555(a) (2) (ii) of the FCC's Rules:
1. The licensee of the brokered stations affected by the foregoing Time
Brokerage Agreement hereby certifies that it will at all times maintain
ultimate control (as defined in FCC rules and regulations) over the
Station's facilities, including specifically control over the Station's
finances, personnel and programming; and
2. The licensee of the brokering stations hereby certifies that the
proposed Agreement for the time brokerage complies with the provisions
of Section 73.3555(a) (3) (iii) of the FCC's rules.
Dated this ________ day of _____________________, 199______.
LICENSEE: __________________________________
By: _____________________________
Its: _____________________________
PROGRAMMER: AMERICAN RADIO SYSTEMS CORPORATION
By: _____________________________
Its: _____________________________
23
EXHIBIT 10.75
TIME BROKERAGE AGREEMENT
TIME BROKERAGE AGREEMENT, made as of this 1st day of June, 1996 by
and between American Radio Systems License Corp. (the "Licensee") and Secret
Communications, L.P. (the "Programmer").
WHEREAS Licensee owns and operates Broadcast Station, WFLN(FM),
Philadelphia, Pennsylvania (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 retain Programmer to provide programming
for the Station that is in conformity with the Station's 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 and Licensee have entered into an Asset Exchange
Agreement (the "Asset Exchange Agreement") under which Licensee has agreed to
sell the Station to Programmer, and Programmer and Licensee will file with the
FCC an application for consent to assign the Station's licenses from Licensee to
Programmer.
NOW, THEREFORE, in consideration of the above recitals and mutual
promises and covenants contained herein, the parties, intending to be bound
legally, agree as follows:
Section 1
Use of Station Air Time
1.1 Representations. Both Licensee and Programmer represent that they
are authorized to enter into this Agreement and that this Agreement constitutes
the legal, valid and binding obligation of each, enforceable against it in
accordance with its terms.
1.2 Effective Date; Term. The Effective Date of this Agreement shall be
June 1, 1996. It shall continue in force until March 1, 1997, or until
consummation of the assignment of the Station's license from Licensee to
Programmer pursuant to the Asset Exchange Agreement, whichever event occurs
earlier, unless otherwise extended or terminated by the parties.
<PAGE>
1.3 Scope. During the term hereof, 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 points 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 shall 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 pay to Licensee a monthly fee of One Hundred Thirty-
Three Thousand Three Hundred and Thirty-Three Dollars ($133,333.00), payable no
later than the fifteenth (15th) day of the month to which such fee pertains, and
Programmer shall reimburse Licensee for certain station expenses as set forth in
Section 1.6 hereof.
1.5 Licensee Operation of the Stations. 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 rules, regulations and policies of the FCC and all other applicable
laws. Licensee shall be solely responsible for all non-capital, ordinary and
customary operating expenses associated with the transmission of broadcast
signals by the Station, including but not limited to maintenance of the
transmitting facility and the costs of electricity associated with such
transmissions. Licensee shall be responsible for the salaries, taxes, insurance
and related costs for all personnel it employs at the Station and shall maintain
insurance at its present levels covering the Station's transmission facilities.
During the term of the Agreement, Programmer agrees to perform, without charge,
routine monitoring of Licensee's transmitter performance and tower lighting if
and when requested by Licensee.
1.6 Licensee Representations and Warranties. Licensee represents and
warrants as follows:
(a) Licensee holds the licenses and other permits and authorizations
necessary for the present operation of the Station as set forth in Attachment I.
There is not now pending, or to Licensee's best knowledge, threatened, any
action by the FCC or by any other party to revoke, cancel, suspend, refuse to
renew or modify adversely any of such licenses, permits or authorizations except
as previously revealed in writing to Programmer. To the Licensee's best
knowledge, after due inquiry, Licensee, with respect to the Station, is not in
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material violation of any statute, ordinance, rule, regulation, policy, order or
decree of any federal, state or local entity, court or authority having
jurisdiction over it or the Station, which would have a material adverse effect
upon the Licensee, its assets utilized in the operation of the Station, the
Station or upon Licensee's ability to perform this Agreement. Licensee shall not
knowingly take any action or omit to take any action which would have a material
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 in a timely and
complete manner, except to the extent such tardiness would have no material
adverse affect on the Station. The transmission 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. Licensee shall,
during the term of this Agreement, not dispose of, transfer or assign any of
such assets and properties except with the prior written consent of the
Programmer.
(b) Licensee shall pay, in a timely fashion, all of the non-capital,
ordinary and customary expenses incurred in operating the Station including
lease payments, utilities, taxes, etc., as set forth in Attachment II, and shall
provide Programmer with a certificate(s) of such timely payment (with invoices
attached thereto to the extent such invoices exist) at one or more times within
thirty (30) days of the end of each month.
1.7 Programmer Responsibility. Programmer shall be solely responsible
for any expenses incurred in the origination and/or delivery of programming from
any remote location and for any publicity or promotional expenses incurred by
Programmer, including, without limitation, ASCAP, BMI, SESAC music license fees
for all programming provided by Programmer.
1.8 Contracts. Programmer will not be required to assume performance of
any of the Licensee's contracts and leases pertaining to the Station except as
indicated 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 as listed on Attachment III-A and Licensee shall
assign all of its rights under those trade and barter agreements to Programmer.
1.9 Hourly Credit. Programmer shall receive from Licensee, as a refund
consisting of a flat rate credit of $________ 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 for Programmer's failure to
deliver its programming to Licensee), to broadcast the Programmer's programming.
Such refunds to Programmer shall be paid within ten (10) days of the end of each
month.
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1.10 Use of Stations' Studios. Licensee shall have full use of the
Station's facilities and properties to the extent necessary to fulfull its
programming obligation hereunder and in compliance with FCC regulations. The
day-to-day maintenance of such facilities and properties shall be the
responsibility of Programmer, subject to the reasonable satisfaction of
Licensee. 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 programming for the Station;
provided, however, that Licensee shall maintain, for its sole use, sufficient
space at the Station's 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 Station's 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 other radio
stations owned or managed by Programmer, and shall at all times be subject to
the oversight of the 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 Obligations. Although both parties shall
cooperate in the broadcast of emergency information over the station, 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. Such interruption shall not
entitle Programmer to any credits on fees. Licensee shall also coordinate with
Programmer the Station's hourly station identification announcements to be aired
in accord with FCC rules. Licensee shall continue to maintain a main studio, as
that term is defined by the FCC, within the Station's 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 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's 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. Programmer shall employ
and be solely responsible for the salaries, taxes, insurance and related costs
for all personnel employed by Programmer (including, without limitation,
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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 Station's
facilities pursuant to Section 1.11 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 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. Programmer shall furnish or cause
to be furnished the artistic personnel and material for the programs as provided
by this Agreement and all programs shall be in accordance with the Policy
Statement and FCC requirements. All advertising spots and promotional material
or announcements 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 Licensee and Programmer.
3.2 Licensee Control of Programming. Programmer recognizes that the
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 Programmer's programming which Licensee
reasonably believes to be unsatisfactory, unsuitable or contrary to the public
interest. Programmer shall have the right to change the programming elements of
the programming supplied to Licensee by giving Licensee at least twenty-four
(24) hours notice of such changes, but shall not change the programming format
of the Station with the Licensee's prior written consent.
3.3 Programmer Compliance with Copyright Act. Programmer represents and
warrants to Licensee that Programmer has full authority to broadcast its
programming on the Station, and that Programmer shall not broadcast any material
in violation of any law, rule, regulation 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, Programmer 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 it provides to the Licensee. Programmer
may sell advertising, consistent with applicable rules, regulations and the
Policy Statement, on the Station in combination with any other broadcast station
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 it provides
to Licensee. Licensee shall retain all revenues from the sale of Station's
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 neither it nor its
officers,directors, employees, agents or representatives will 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 to quarterly, or more frequently at the request
of the Licensee, provide Licensee with Payola Affidavits, substantially in the
form attached hereto as Attachment V, executed on behalf of Programmer and by
programming personnel and agents at the Station under the supervision of
Programmer.
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 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 slander or defamation or otherwise,
arising out of Programmer's broadcasts and sale of advertising time under this
Agreement to the extent permitted by law.
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' broadcasts 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.
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4.4 Time Brokerage Challenge. If this Agreement is challenged at the
FCC, whether or not in connection with the Stations' license renewal
application, Licensee and 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 will seek reversal of the staff
decision by appeal to the full Commission, at Programmer's option and expense.
If such appeal is unavailing, then the parties shall either reform the Agreement
or terminate it pursuant to Section 6.1(a).
4.5 Insurance. Programmer shall obtain and maintain a General and
Broadcast liability policy with respect to the Station, and Licensee shall
obtain and maintain fire and casualty policies with respect thereto. Licensee
shall be named an additional insured on Programmer's liability policies.
Section 5
Access to Programmer Materials and Correspondence
5.1 Confidential Review. Prior to the provision of any 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 Station's 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 enable Licensee to comply with the lowest unit rate, equal
opportunities and reasonable access requirements of federal law. Programmer
shall release advertising availabilities to Licensee as necessary to permit
Licensee to comply with Licensee's obligations under the Communications Act of
1934, as amended, and the rules and regulations of the FCC; provided, however,
that all revenues realized by Licensee as a result of such a release of
advertising time shall be immediately paid to Programmer.
Section 6
Termination and Remedies Upon Default
6.1 Termination. In addition to other remedies available at law or
equity and subject to the provisions of Section 1.2 hereof, this Agreement may
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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;
(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.
(e) if such party has a right to, and is exercising such right, to
terminate the Asset Exchange Agreement.
(f) if the Asset Exchange Agreement between Licensee and Programmer is
not executed and delivered on or before June 11, 1996, or, once executed and
delivered, if such Agreement is terminated in accordance with its terms.
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 is not operating within the parameters authorized by
the FCC or that the Station's actual coverage of the market is materially less
than it that set forth on Attachment I, 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 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 Station's
effective coverage or operating parameters are not restored within thirty (30)
days of notice of the coverage or operating deficiencies, then Programmer shall
be entitled to a full refund, on a daily basis, of the Hourly Credit amount set
forth in Section 1.9 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 consecutive days or more Licensee reduces
its transmitter output power on the Station by fifty percent (50%) or more,
Programmer may elect a refund equal to fifty percent (50%) of the Hourly Credit
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amount set forth in Section 1.9 for so long as such power reduction continues to
occur if Programmer has, in fact, been required to make rebates and/or other
financial accommodations to its advertisers and such refund shall be reflected
in a refund payment by Licensee to Programmer within ten (10) days of the end of
the month.
(c) If Licensee uses an auxiliary or alternate transmitter for the
Station for a period of five (5) consecutive days or more, then the refund for
such period shall be twenty-five percent (25%) of the Hourly Credit amount set
forth in Section 1.9 for so long as such auxiliary or alternate transmitter site
is in use if Programmer has, in fact, been required to make rebates and/or other
financial accommodations to its advertisers. Should such use of an auxiliary or
alternate transmitter continue for more than thirty (30) days, the refund for
such period shall be equal to fifty percent (50%) of the Hourly Credit amount
set forth in Section 1.9 for so long as such alternate transmitter site is in
use. The refund shall be reflected in a refund payment by Licensee to Programmer
within ten (10) days of the end of the month.
(d) 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, of the Hourly Credit amount set
forth in Section 1.9 and such refund shall be made within ten (10) days of the
end of the month.
6.3 Force Majeure. Any failure or impairment of the Station's
facilities or any delay or interruption in the broadcast of programs, or failure
at any time to furnish facilities, in whole or in part, for broadcast, due to
acts of God, strikes, lockouts, material or labor restrictions by any
governmental authority, civil riot, floods and any other cause not reasonably
within the control of Licensee will not render Licensee liable to Programmer,
except to the extent of allowing in each such case an appropriate refund for
time not provided based upon the Hourly Credit set forth under Section 1.9
calculated upon the length of time during which the failure or impairment exists
or continues.
6.4 Other Agreements. During the term of this Agreement, 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 assignees. Neither party may
assign its rights under this Agreement without the prior written consent of the
other party which shall not be unreasonably withheld, provided, however that
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 [Secret Communications, L.P.] and Licensee has the right to
assign its rights hereunder to its lenders.
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7.2 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.
7.3 FCC Certification (47 C.F.R. ss. 73.3555(a) (2) (ii). The parties
shall execute a Certification in the form of Attachment VI hereto, as required
by Section 73.3555(a) (2) (ii) of the FCC's rules.
7.4 Entire Agreement. This Agreement and the Attachments hereto and the
Asset Exchange Agreement between Programmer and Licensee 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.
7.5 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.
7.6 Headings. The headings are for convenience only and will not
control or affect the meaning or construction of the provisions of this
Agreement.
7.7 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 of 1934, as amended, and
the Rules and Regulations of the FCC. The construction and performance of the
Agreement will be governed by the laws of the State of New York.
7.8 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:
To Programmer: Secret Communications, L.P.
312 Walnut Street, Suite 3550
Cincinnati, OH 45202
Attn: Frank E. Wood
President & CEO
Fax: (513) 621-3299
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Copies To: Larry A. Barden, Esq.
Sidley & Austin
One First National Plaza
Chicago, IL 60603
Fax: (312) 853-7036
and to: Arthur J. Schiller
General Counsel
Secret Communications, LP
1200 Shermer Road
Northbrook, IL 60062
To Licensee: 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 Avenue, N.W.
Suite 800
Washington, DC 20036-68027
John R. Feore, Jr. Esq.
Fax: (202) 776-2222
7.9 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
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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, or (ii) an action to enforce the award of
the arbitration panel rendered in accordance with this Section.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
PROGRAMMER:
SECRET COMMUNICATIONS, L.P.
By: _____________________________________
LICENSEE:
AMERICAN RADIO SYSTEMS CORPORATION
By: ____________________________________
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ATTACHMENT I
Station Coverage
WFLN(FM) current FCC Licenses and contour maps on file
with the FCC.
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ATTACHMENT II
Station Expenses
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ATTACHMENT III
Contracts
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ATTACHMENT IV
Broadcast Station Programming Policy Statement
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BROADCAST STATION
PROGRAMMING POLICY STATEMENT
Programmer agrees to cooperate with Licensee in the broadcasting of
programs of the highest possible standard of excellence and for this purpose to
observe the following regulations in the preparation, writing and broadcasting
of its programs.
I. No Plugola or Payola. The mention of any business activity or
"plug" for any commercial, professional, or other related
endeavor, except where contained in an actual commercial
message of a sponsor, is prohibited.
II. No Indecency. The Programmer shall not permit the broadcasting
of any indecent programming (as such term is applied by the
FCC) by the Stations.
III. Election Procedures. At least ninety (90) days before the
start of any primary or election campaign, Programmer will
clear with Licensee's general manager the rate Programmer will
charge for the time to be sold to candidates for the public
office and/or their supporters to make certain that the rate
charged is in conformance with the applicable law and station
policy. Programmer shall, in addition, comply with all FCC
requirements regarding "equal time" or equal opportunity for
candidates. Programmer shall refrain from broadcasting
political editorials on the Stations.
IV. Required Announcements. Progammer shall broadcast (i) an
announcement in a form satisfactory to Licensee at the
beginning of each hour to identify the Station, and (ii) any
other announcements that may be required by law, regulation,
or Station policy.
V. Commercial Recordkeeping. Programmer shall not receive any
consideration in money, goods, services, or otherwise,
directly or indirectly (including to relatives) from any
persons or company for the presentation of any programming
over the station without reporting the same in advance to and
receiving the prior written consent of Licensee's general
manager. No commercial messages ("plugs") or undue references
shall be made in programming presented over station to any
business venture, profit making activity, or other interest
(other than noncommercial announcements for bona fide
charities, church activities or other public service
activities) in which Programmer (or anyone else) is directly
or indirectly interested without the same having been approved
in advance by the general manager and such broadcast being
announced and logged and sponsored.
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VI. No Illegal Announcements No announcements or promotion
prohibited by federal or state law or regulation of any
lottery or game shall be made over the Station. Any game,
contest, or promotion relating to or to be presented over the
Station must be fully stated and explained in advance to
Licensee, which reserves the right in its sole discretion to
reject any game, contest, or promotion.
VII. No Defamation or Personal Attack. The Programmer shall not
permit the broadcasting of any material which is defamatory or
which constitutes a personal attack (as such term is applied
by the FCC) by the Stations.
Licensee may waive any of the foregoing regulations in specific
instances, if, in its opinion, good broadcasting in the public interest is
served.
In accordance with the Licensee's responsibility under the
Communications Act of 1934, as amended, and the Rules and Regulations of the
Federal Communications Commission, Licensee reserves the right to reject or
terminate any advertising proposed to be presented or being presented over the
Station which is in conflict with Licensee's policy or which in Licensee's or
its general manager's sole judgment would not serve the public interest.
In any case where questions of policy or interpretation arise,
Programmer should submit the same to Licensee for decision before making any
commitments in connection therewith.
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ATTACHMENT V
Payola Statement
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FORM OF PAYOLA AFFIDAVIT
City of ____________________ )
County of __________________ ) ss.
State of ___________________ )
ANTI-PAYOLA/PLUGOLA AFFIDAVIT
_____________________, being first duly sworn, deposes and says as follows:
1. He is _________________________ for ________________________________.
(Position)
2. He has acted in the above capacity since _____________.
3. No matter has been broadcast by Station __________ for which service,
money or other valuable consideration has been directly or indirectly
paid, or promised to, or charged, or accepted, by him from any person,
which matter at the time so broadcast has not been announced or
otherwise indicated as paid for or furnished by such person.
4. So far as he is aware, no matter has been broadcast by Station _______
for which service, money, or other valuable consideration has been
directly or indirectly paid, or promised to, or charged, or accepted by
Station _______ in furnishing programs, from any person, which matter
at the time so broadcast has not been announced or otherwise indicated
as paid for or furnished by such person.
5. In future, he will not pay, promise to pay, request, or receive any
service, money, or any other valuable consideration, direct or
indirect, from a third party, in exchange for the influencing of, or
the attempt to influence, the preparation of presentation or broadcast
matter on Station ________.
6. Nothing contained herein is intended to, or shall prohibit receipt or
acceptance of anything with the expressed knowledge and approval of my
employer, but henceforth any such approval must be given in writing by
someone expressly authorized to give such approval.
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7. He, his spouse and his immediate family do____ do not ____ have any
present direct or indirect ownership interest in (other than an
investment in a corporation whose stock is publicly held), serve as an
officer or director of, whether with or without compensation, or serve
as an employee of, any person, firm or corporation engaged in:
1. The publishing of music;
2. The production, distribution (including wholesale and retail
sales outlets), manufacture or exploitation of music, films,
tapes, recordings or electrical transcriptions of any program
material intended for radio broadcast use;
3. The exploitation, promotion, or management of persons
rendering artistic, production and/or other services in the
entertainment field;
4. The ownership or operation of one or more radio or television
stations;
5. The wholesale or retail sale of records intended for public
purchase;
6. Advertising on Station ______, or any other station owned by
its licensee (excluding nominal stockholdings in publicly
owned companies).
8. The facts and circumstances relating to such interest are none _______
as follows________:
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
------------------------------
Affiant
Subscribed and sworn to before me
this ______ day of ________________, 199___.
________________________________________
Notary Public
My Commission expires: __________________
21
<PAGE>
ATTACHMENT VI
FCC Certification
22
<PAGE>
CERTIFICATION
Pursuant to Section 73.3555(a) (2) (ii) of the FCC's Rules:
1. The licensee of the brokered stations affected by the
foregoing Time Brokerage Agreement hereby certifies that it
will at all times maintain ultimate control (as defined in FCC
rules and regulations) over the Station's facilities,
including specifically control over the Station's finances,
personnel and programming; and
2. The licensee of the brokering stations hereby certifies that
the proposed Agreement for the time brokerage complies with
the provisions of Section 73.3555(a) (3) (iii) of the FCC's
rules.
Dated this ________ day of _____________________, 199______.
LICENSEE: ________________________________________
By: ______________________________________
Its: ______________________________________
PROGRAMMER: AMERICAN RADIO SYSTEMS CORPORATION
By: ______________________________________
Its: ______________________________________
23
EXHIBIT 10.76
ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT dated as of May 1, 1996 by and
among Crescent Communications L.P., a Delaware limited partnership ("Crescent"),
American Radio Systems Corporation, a Delaware corporation ("ARS"), and K-G
Communications, Inc., a Nevada corporation ("K-G").
WHEREAS, pursuant to an Asset Purchase Agreement dated as of April 19,
1996 (the "Asset Purchase Agreement") by and between Crescent and ARS, Crescent
has agreed to assign and transfer to ARS, and ARS has agreed to purchase from
Crescent, all of Crescent's rights in, to and under the Assets of the Stations
as set forth therein (the "Asset Purchase"). All capitalized terms used herein
and not defined shall have the meanings given to them in the Asset Purchase
Agreement;
WHEREAS, Crescent has previously agreed with K-G and Jules Kutner to
purchase from K-G all of K-G's rights in radio station KVEG-AM as set forth in
that certain Asset Purchase Agreement dated February 7, 1996 (the "K-G Purchase
Agreement");
WHEREAS, Crescent has, in connection with its obligations under the K-G
Purchase Agreement and pursuant to an Escrow Agreement dated February 7, 1996
(the "Escrow Agreement"), deposited $90,000 with the Escrow Agent thereunder
(the "Escrow Deposit");
WHEREAS, Crescent and Broadcasting Asset Management Corporation ("BAM")
have entered into a letter agreement dated April 30, 1996 whereby BAM has agreed
to pay to Crescent $10,000 for reimbursement of expenses incurred in connection
with the K-G Asset Purchase Agreement (the "Broker Agreement"); and
WHEREAS, Crescent desires to assign and transfer to ARS all of
Crescent's rights, and ARS desires to assume all of Crescent's obligations,
under the K-G Purchase Agreement, the Escrow Agreement and the Broker Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Assignment and Assumption. Crescent hereby assigns, transfers and
delivers to ARS, and ARS hereby accepts, all of Crescent's right, title and
interest in, to and under the K-G Purchase Agreement, the Escrow Agreement
(including, without limitation, the Escrow Deposit) and the Broker Agreement
(the "Assignment"). ARS hereby assumes and hereafter shall pay, discharge and
perform when due all of Crescent's obligations under the K-G Purchase Agreement,
including payment of the purchase price thereunder, the Escrow Agreement and the
Broker Agreement.
2. Purchase Price. In consideration of the Assignrnent by Crescent, ARS
shall pay and deliver to Crescent upon execution of this Agreement, by bank
check or wire transfer of immediately available funds, the sum of Two Hundred
Thousand Dollars ($200,000).
3. Indemnity. ARS hereby agrees to indemnify, protect, defend and hold
Crescent harmless from and against any and all claims, liabilities, demands,
obligations, losses, costs, damages or expenses of any nature whatsoever
(including, without limitation, reasonable attorneys' fees and costs) which
Crescent may incur, sustain or suffer or which may be asserted against Crescent,
arising out of, pertaining to or in any way related to the K-G Purchase
Agreement and the Escrow Agreement.
<PAGE>
4. Consent and Release. K-G hereby consents to the Assignment and
forever releases and discharges Crescent and its successors and assigns and
their respective officers, directors, partners and affiliates, from, and agrees
to hereafter look to ARS for full satisfaction and performance of, any and all
claims, obligations, covenants and restrictions made in connection with the K-G
Purchase Agreement and the Escrow Agreement. K-G further agrees with Crescent
that Crescent and K-G shall take all actions necessary to effect a proper
withdrawal of any and all filings made pursuant to the K-G Asset Purchase
Agreement, including, without limitation, the pending application for FCC
Assignment Consent filed with the FCC.
5. Governing Law. The validity and interpretation of this Assignment
and Assumption Agreement and the performance by the parties hereto of their
respective duties and obligations hereunder shall be governed by the internal
laws of The Commonwealth of Massachusetts, without regard to its conflicts or
choice of law provisions.
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Assignment and Assumption Agreement as of the date first written above.
AMERICAN RADIO SYSTEMS
CORPORATION, a Delaware corporation
By:_____________________________________
Name:
Title:
CRESCENT COMMUNICATIONS L.P., a
Delaware limited partnership
By: Crescent Communications GP, Inc., its
General Partner
By:_____________________________________
Name:
Title:
K-G COMMUNICATIONS, INC., a Nevada
corporation
By:_____________________________________
Name:
Title:
2
EXHIBIT 10.77
ASSET PURCHASE AGREEMENT
Dated as of February 7, 1996
among
K-G COMMUNICATIONS, INC. and JULES KUTNER
and
CRESCENT COMMUNICATIONS L.P.
with respect to radio station
KVEG-AM, Las Vegas, Nevada
<PAGE>
TABLE OF CONTENTS
RECITALS....................................................................1
SECTION 1. Purchase and Sale of Properties and Assets................5
1.1 Station Assets. .................................5
1.2 Excluded Assets. ................................7
1.3 Liabilities......................................7
1.4 The Closing. ...................................8
1.5 Purchase Price. ................................9
1.6 Pro Rations. ...................................9
1.7 Allocation of Purchase Price.....................9
1.8 Employees, Wages and Benefits...................10
1.9 Transfer of Station Assets. ...................10
1.10 Availability of Records and Contracts. ........10
1.11 Further Assurances. ...........................10
1.12 Sales and Transfer Taxes. .....................11
1.13 Deposit. ......................................11
SECTION 2. Representations and Warranties of Seller and the
Selling Stockholder................................11
2.1 Organization and Power. .......................11
2.2 Required Action. ..............................11
2.3 No Defaults. ..................................12
2.4 Financial Statements. .........................12
2.5 Business Since the Base Balance Sheet Date. ...12
2.6 Licenses. .....................................13
2.7 Condition and Operation of Assets. .............13
2.8 Title, Liens, Etc. .............................14
2.9 Employees: Employee Benefits. .................14
2.10 Litigation. ...................................15
2.11 Brokers. .......................................15
2.12 Approvals and Consents. ........................15
2.13 Trademarks. etc.................................15
2.14 Contracts. ....................................15
2.15 Hazardous Materials. ..........................16
2.16 Compliance with Laws............................17
2.17 Taxes...........................................17
2.18 Disclosure. ....................................18
SECTION 3. Representations and Warranties of Purchaser..............18
3.1 Organization and Power; Control.................18
3.2 Required Action.................................19
3.3 No Defaults.....................................19
3.4 Litigation......................................19
3.5 Brokers. .......................................19
3.6 Approvals and Consents..........................19
3.7 Qualification as a Licensee.....................19
<PAGE>
SECTION 4. Covenants of Seller and the Selling Stockholder
Pending the Closing...................................20
4.1 Operation of the Business........................20
4.2 Investigation. ..................................22
4.3 Representations and Warranties...................22
4.4 Consents.........................................22
4.5 FCC Applications.................................23
4.6 Consummation of Agreement........................24
4.7 Updating of Information..........................24
4.8 Periodic Financial Statements....................24
4.9 Consent and Estoppel.............................24
4.10 Release of Liens.................................24
4.11 No Shopping......................................24
SECTION 5. Covenants of Purchaser Pending the Closing................24
5.1 Representations and Warranties...................25
5.2 FCC Applications.................................25
5.3 Notice of Proceedings............................25
5.4 Consummation of Agreement........................25
5.5 Noninterference..................................25
5.6 Cooperation......................................26
SECTION 6. Conditions to the Obligations of Seller and
the Selling Stockholder...............................26
6.1 Representations. Warranties. Covenants...........26
6.2 No Actions or Proceedings........................27
6.3 Opinion of Counsel...............................27
6.4 FCC Authorization................................27
SECTION 7. Conditions to the Obligations of Purchaser................27
7.1 Representations. Warranties. Covenants...........27
7.2 No Actions or Proceedings........................28
7.3 Opinions of Counsel..............................28
7.4 Damage to the Station Assets.....................28
7.5 Material Contracts...............................28
7.6 Release of Liens.................................29
SECTION 8. Termination...............................................29
8.1 Termination......................................29
8.2 Liabilities Upon Termination.....................30
SECTION 9. Survival: Indemnification.................................30
9.1 Survival.........................................30
9.2 Indemnification by Seller and the
Selling Stockholder............................30
9.3 Indemnification by Purchaser.....................32
9.4 Seller Remedies Prior to Closing.................33
9.5 Equitable Remedies. .............................33
9.6 Certain Limitations..............................33
(ii)
<PAGE>
SECTION 10. Definitions.....................................33
10.1 Defined Terms...................................33
10.2 Cross-Reference Table...........................34
SECTION 11. Miscellaneous...................................36
11.1 Expenses. ......................................36
11.2 Bulk Sales Law..................................36
11.3 Assignment......................................36
11.4 Public Announcement.............................36
11.5 Notices.........................................36
11.6 Captions........................................37
11.7 Law Governing...................................37
11.8 Confidentiality. ..............................37
11.9 Dispute Resolution..............................38
11.10 Waiver of Provisions............................39
11.11 Counterparts....................................39
11.12 Entire Agreement................................39
11.13 Access to Books and Records.....................39
11.14 Time of Essence.................................40
11.15 Severability....................................40
11.16 General Interpretive Rules......................40
EXHIBITS
Exhibit A - Form of Escrow Agreement
Exhibit B - Form of Consent and Estoppel
Exhibit C - Form of Purchaser's Counsel's Opinion
Exhibit D - Form of Seller's Counsel's Opinion
Exhibit E - Form of Seller's FCC Counsel's Opinion
SCHEDULES
Schedule 1.1(a) - Licenses and Authorizations
Schedule 1.1(b) - Tangible Personal Property
Schedule 1.1(c) - Real Property and Leases
Schedule 1.1(e) - Contracts
Schedule 1.1(f) - Trademarks, etc.
Schedule 2.4 - Existing Financial Statements
Schedule 2.9(a) - Employees
Schedule 2.9(b) - Employee Benefits
Schedule 2.10 - Litigation
Schedule 2.17 - Insurance
(iii)
<PAGE>
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of February 7, 1996, by and between
KG Communications, Inc., a Nevada corporation ("Seller") and Jules Kutner (the
"Selling Stockholder") and Crescent Communications L.P., a Delaware limited
partnership ("Purchaser").
RECITALS:
WHEREAS, Seller is the licensee of radio broadcast station KVEG-AM, Las
Vegas, Nevada (the "Station"), pursuant to certain FCC Authorizations (as
hereinafter defined) issued by the Federal Communications Commission (the
"FCC"), and owns certain assets used OT held for use solely in connection with
the operation of the Station;
WHEREAS, the Selling Stockholder is the beneficial owner of the
majority of the issued and outstanding capital stock of the Seller;
WHEREAS, Seller desires to sell, assign and transfer to Purchaser the
Station, all rights associated with the FCC Authorizations with respect to the
Station, and all of the assets described in more detail below, and Purchaser
desires to purchase from Seller the Station, all rights associated with such FCC
Authorizations, and all of the assets described in more detail below, all
subject to the terms and conditions hereof; and
WHEREAS, the FCC Authorizations may not be assigned to Purchaser
without the prior consent of the FCC.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements hereinafter set forth, the parties
agree as follows:
SECTION 1. Purchase and Sale of Properties and Assets.
1.1 Station Assets. On the Closing Date (as defined in Section 1.4
hereof), subject to and in reliance upon the covenants, representations,
warranties and agreements herein set forth, and subject to the terms and
conditions herein contained, Seller will grant, convey, sell, assign, transfer
and deliver to Purchaser, and Purchaser agrees to purchase, all properties,
assets, privileges, rights, interests and claims, real and personal, tangible
and intangible, of every type and description, wherever located, including
business and goodwill that are owned by Seller and used or held for use in
connection with the business and operations of the Station, other than the
Excluded Assets (as defined in Section 1.2 hereof) (the "Station Assets").
Without limiting the foregoing, the Station Assets shall include the following,
except to the extent that any of the following are included within the Excluded
Assets:
(a) Licenses and Authorizations. All rights associated with the
licenses, permits and authorizations issued or granted to Seller by the FCC (the
"FCC Authorizations") or any other governmental authority, with respect to the
<PAGE>
operation of the Station or with respect to the Station Assets, including
without limitation those licenses and authorizations listed on Schedule 1. l(a)
attached hereto, and all applications therefor, together with any renewals,
extensions, or modifications thereof and additions thereto;
(b) Tangible Personal Property. All equipment, vehicles,
furniture, fixtures, office materials and supplies, spare parts, and other
tangible personal property of every kind and description owned by Seller as of
the date of this Agreement and used OT held for use in connection with the
business and operations of the Station, including without limitation those
listed on Schedule l . l(b) attached hereto, and any additions, improvements,
replacements and alterations thereto made between the date of this Agreement and
the Closing Date;
(c) Real Property. All land, leaseholds and other interests of
every kind and description in real property, buildings, towers, and antennae,
and fixtures and improvements thereon owned by Seller as of the date of this
Agreement and used or held for use in connection with the business and
operations of the Station, including without limitation those listed on Schedule
l.1(c) attached hereto, and any additions, improvements, replacements and
alterations thereto made between the date of this Agreement and the Closing Date
(collectively, the "Station Real Property");
(d) Agreements for Sale of Time. All rights of Seller under orders
and agreements for the sale of advertising time on the Station now existing, or
entered into in the ordinary course of business between the date of this
Agreement and the Closing Date, except those which on the Closing Date have
already been fulfilled or have expired;
(e) Other Contracts. All rights of Seller under (i) those
Contracts listed on Schedule l . l(e) attached hereto, and (ii) all Contracts
that have been or will have been entered into in the ordinary course of the
Station's business between the date of this Agreement and the Closing Date,
provided that such Contracts in the ordinary course of business do not obligate
Purchaser in an amount in excess of ten thousand dollars ($10,000) per annum for
any such Contract, or fifty thousand dollars ($50,000) per annum for all such
Contracts in the aggregate but excluding any Restricted Contract (as defined in
Section 4.4(a) hereof) as to which any required consent for the assignment
thereof to Purchaser is not obtained (collectively, the "Excluded Restricted
Contracts") and excluding any Contract for the sale of advertising time on the
Station, which are provided for in Section 1.1(d). The term "Contract" means any
unexpired agreement, arrangement, commitment or understanding, written or oral,
expressed or implied, to which the Station or Seller with respect to the Station
is a party or by which it is bound but the term "Contract" does not include any
Receivable (as such term is defined in Section 1.2);
(f) Call Letters; Trademarks. etc. The Station's call letters and
all trademarks, service marks, franchises, patents, trade names, jingles,
slogans and logotypes and other intangible rights, owned by Seller as of the
date of this Agreement and used or held for use in connection with the business
and operations of the Station, including those listed on Schedule 1. l(fl, and
all related common-law and statutory intellectual property owned by or licensed
to Seller and used in connection with the business and operations of the
Station, and those acquired by Seller in connection with the business and
operations of the Station between the date of this Agreement and the Closing
Date;
2
<PAGE>
(g) Programming and Copyrights. All programs, programming
materials, music libraries and elements thereof of whatever form or nature owned
by Seller as of the date of this Agreement and used or held for use in
connection with the business and operations of the Station, whether recorded on
tape or any other substance or intended for live performance, and whether
completed or in production, and all related common-law and statutory copyrights
owned by or licensed to Seller and used in connection with the business and
operations of the Station, together with all such programs, other materials and
copyrights acquired by Seller in connection with the business and operations of
the Station between the date of this Agreement and the Closing Date;
(h) FCC Records. All FCC logs and other records that relate to the
operation of the Station or to the Station Assets;
(i) Files and Records. All files, records, books, logs,
engineering reports, advertising reports, programming studies, consulting
reports, marketing data, local public records file materials, sales materials,
ratings reports, budgets, financial reports, ledgers and journals of Seller
relating to the business and operations of the Station or to the Station Assets
which can be obtained with reasonable efforts, excluding Seller's corporate and
tax records. Seller will not destroy any such records not transferred without
prior notice to Purchaser; and
(j) Goodwill; Other Intangible Assets. All of Seller's goodwill
in, and the going concern value of, the Station and all intangible assets used
by Seller in the operation of the Station, including without limitation all
computer software, magnetic media, electronic data processing files, systems and
programs, business lists, customer lists, trade secrets and sales and operating
plans.
1.2 Excluded Assets. There shall be excluded from the Station Assets
and retained by Seller, to the extent in existence on the Closing Date, the
following assets (the "Excluded Assets"):
(a) Receivables. All notes and accounts receivable of Seller
outstanding on the Closing Date (collectively, "Receivables").
(b) Cash and Investments. All cash and cash equivalents on hand or
in bank accounts and other cash items and investment securities of Seller.
(c) Tax Items. All claims, rights and interest in and to any
refunds for federal, state or local Taxes for periods prior to the Closing Date.
1.3 Liabilities.
(a) The Station Assets shall be sold and conveyed to Purchaser
free and clear of all mortgages, liens, security interests, defects in title and
encumbrances (collectively, "Security Interests") except for (i) easements,
other rights or restrictions of record and other minor Security Interests, none
of which, individually or in the aggregate, materially detract from the value
of, or materially interfere with the business of the Station or the use or
operation of, the Station Assets, (ii) in the case of Contracts, to the extent
that the benefits thereof may depend upon future performance as required by the
Contracts' respective terms, and (iii) statutory liens not yet delinquent. The
Security Interests referred to in the foregoing clauses (i)-(ii) are
collectively referred to herein as "Permitted Security Interests."
3
<PAGE>
(b) Pursuant to an Assumption of Liabilities Agreement, Purchaser
shall on and as of the Closing Date accept and assume, and shall become and be
fully liable and responsible for, and (as between the parties hereto) Seller
shall have no further liability or responsibility for or with respect to,
liabilities and obligations arising out of events occurring after the Closing
Date related to Purchaser's ownership of the Station Assets, or Purchaser's
operation of the Station after the Closing Date, including all obligations and
liabilities of Seller which are to be performed after the Closing Date, in each
case arising under any contract the rights to which are to be assigned to
Purchaser pursuant to Section l . l(d) and (e) hereof, other than any
obligations of Seller to broadcast advertising for payment other than cash
(collectively, the "Assumed Liabilities"); provided, however, that Purchaser
shall not assume any obligation under any Contract to provide any pension,
vacation or similar or other benefit to any employee of the Station or for the
employment of any person; and provided, further, that Purchaser shall not be
required to assume any Contract as to which Seller is in material default.
(c) Except as otherwise specifically provided in this Agreement,
Purchaser shall not assume, pay for or be liable for any obligation or liability
of Seller arising from events occurred or activities performed prior to the
Closing or relating to the business and operation of the Station prior to the
Closing Date of any kind or nature, known, unknown, contingent or otherwise,
including (i) any obligation to any employee or former employee of the Station,
including without limitation, any pension, retirement, or profit-sharing plan or
trust and any obligation with respect to vacation earned but not taken before
the Closing Date by employees of the Station, (ii) any obligations under any
law, including without limitation antitrust, civil rights, health, safety,
labor, discrimination and environmental laws, (iii) liabilities incurred by
Seller in connection with this Agreement and the transactions provided for
herein, including counsel and accountant's fees, and expenses pertaining to the
performance by Seller of its obligations hereunder, (iv) Taxes of Seller or the
Selling Stockholder (whether relating to periods before or after the
transactions contemplated in this Agreement or incurred by Seller or the Selling
Stockholder in connection with this Agreement and the transactions provided for
herein), including any liability for Taxes arising out of the inclusion of
Seller in any group filing consolidated, combined or unitary tax returns or
arising out of any transferee liability, and (v) liabilities in connection with
or relating to all actions, suits, claims, proceedings, demands, assessments and
judgments, costs, losses, liabilities, damages, deficiencies and expenses
(whether or not arising out of third-party claims), including interest,
penalties, reasonable attorneys' and accountants' fees and all amounts paid in
investigation, defense or settlement of any of the foregoing.
1.4 The Closing. The consummation of the transactions provided for in
this Agreement (the "Closing") shall take place at the offices of Goodwin,
Procter & Hoar, Boston, Massachusetts, at 10:00 a.m., local time, on (a) the
date not later than ten (10) business days after the satisfaction or waiver of
the conditions set forth in Sections 6.4 and 7.4 hereof with respect to FCC
approvals or (b) such other place, time or date as the parties shall agree upon
in writing, unless this Agreement is otherwise terminated pursuant to Section
8.1 hereof. The date on which the Closing is to occur is referred to herein as
the "Closing Date." Notwithstanding the provisions of Section 8.1 hereof, if as
of the Closing Date, any condition precedent described in Sections 6 and 7 has
not been satisfied, the party who is entitled to require such condition be
satisfied may (in its sole discretion) notify the other party of the absence of
such condition precedent at or before the Closing and simultaneously therewith
4
<PAGE>
postpone the Closing until ten (10) days after all such conditions have been (or
are able to be) performed, and such postponed date shall constitute the new
Closing Date for all purposes hereunder.
1.5 Purchase Price. In consideration of the sale by Seller to Purchaser
of the Station Assets, subject to the assumption by Purchaser of the Assumed
Liabilities and the satisfaction of all of the conditions contained herein,
Purchaser agrees that at the Closing it will pay to Seller the aggregate
purchase price (the "Purchase Price") of One Million Eight Hundred Ten Thousand
Dollars ($1,810,000), subject to adjustment as provided herein and in Section
1.6. The Purchase Price shall be paid in cash by wire transfer of immediately
available funds to an account specified by Seller. At the Closing Purchaser
shall pay the brokerage fee due Broadcasting Asset Management Corporation and
Force Communications and Consultants by Seller (the "Brokerage Fee") in cash by
wire transfer of immediately available funds to an account specified by
Broadcasting Asset Management Corporation. The Purchase Price shall be reduced
by the Brokerage Fee paid by Purchaser.
1.6 Pro Rations. The following items shall be prorated between Seller
and Purchaser with the proration to be made as of 12:00 a.m. on the Closing Date
and paid in cash within ninety (90) days of the Closing Date: power and
utilities charges, ad valorem property taxes upon the basis of the most recent
assessment available (including, without limitation, real estate taxes and
personal property taxes), frequency discounts, if any (i.e., obligations of the
Station to rebate a portion of amounts paid with respect to advertising or to
reduce the rate on future advertising orders in the event that the customer's
advertising orders exceed certain minimum volume requirements), agreements for
sale of time for other than cash upon the basis of the amount of the goods and
services received and the amount of the time run as of the Closing Date, prepaid
cash time sales agreements, prepaid rents and any other items customarily
prorated in transactions of this nature which Seller and Purchaser mutually
agree upon. All special assessments and similar charges or liens imposed against
the Station Real Property in respect of any period of time until the Closing
Date, whether payable in installments or otherwise, shall be the responsibility
of Seller, and amounts payable with respect to such special assessments, charges
or liens in respect of any period of time on or after the Closing Date shall be
the responsibility of Purchaser and shall be adjusted as required hereunder. To
the extent not inconsistent with the express provisions of this Agreement, the
prorations made pursuant to this Section 1.6 shall be made in accordance with
generally accepted accounting principles applied consistently with Seller's past
practices and policies. If Seller and Purchaser are unable to agree on the
amount of the prorations, the dispute shall be submitted within 30 days to a
"Big 6" accounting firm not having a business relationship with Seller or
Purchaser and appointed by Seller and Purchaser for resolution of the dispute,
such resolution to be final, conclusive and binding on Seller and Purchaser.
Purchaser and Seller shall share equally the cost and expenses of such
accounting firm, but each party shall bear its own legal and other expenses, if
any.
1.7 Allocation of Purchase Price.
At or prior to the Closing, Purchaser and Seller shall agree on an
allocation of the Purchase Price (as adjusted pursuant to Section 1.6), which
allocation shall be set forth on Schedule 1.7 and attached to this Agreement at
the Closing. Such allocation shall be made in accordance with (a) the respective
fair market values of the Station Assets being purchased and sold, and (b) the
provisions of Section 1060 of the Code, and shall be binding upon Purchaser and
5
<PAGE>
Seller for all purposes (including financial accounting purposes, financial and
regulatory reporting purposes and tax purposes). Purchaser, Seller and the
Selling Stockholder each further agrees to file its Federal income tax returns
and its other tax returns reflecting such allocation, Form 8594 and any other
reports required by Section 1060 of the Code, in accordance with said Schedule
1.7.
1.8 Employees, Wages and Benefits.
(a) Seller shall terminate all employees of the Station
effective as of the Closing and shall pay any costs associated with such
terminations, including without limitation, any severance obligations, and
Purchaser shall not assume or have any obligations or liabilities with respect
to such employees or such terminations. Seller shall pay all wages, salaries,
commissions, and the cost of all fringe benefits provided to employees of the
Station which shall have become due for work performed as of and through the day
proceeding the Closing Date, and Seller shall collect and pay all Taxes in
respect of such wages, salaries, commissions and benefits. Seller acknowledges
and agrees that Purchaser shall not acquire any rights or interest of Seller in,
or assume or have any obligations or liabilities of Seller under, any benefit
plans maintained by, or for the benefit of employees of, the Station prior to
the Closing Date including without limitation obligations for severance or
vacation accrued but not taken as of the Closing Date.
(b) Purchaser specifically reserves to itself the right to
employ or reject any of Seller's employees or other applicants in its sole and
absolute discretion. Nothing in this Agreement shall be construed as a
commitment or obligation of Purchaser to accept for employment, or otherwise
continue the employment of, any of Seller's employees.
1.9 Transfer of Station Assets. At the Closing, Seller shall deliver to
Purchaser good and sufficient instruments of transfer transferring to Purchaser
title to all of the Station Assets. Such instruments of transfer (a) shall be in
the form and will contain the warranties, covenants and other provisions (not
inconsistent with the provisions hereof) which are usual and customary for
transferring the type of property involved under the laws of the jurisdictions
applicable to such transfers, (b) shall be in form and substance reasonably
satisfactory to Purchaser and its counsel, and (c) shall effectively vest in
Purchaser good and marketable title to all the Station Assets, free and clear of
all Security Interests, other than Permitted Security Interests.
1.10 Availability of Records and Contracts. To the extent not
previously provided to Purchaser, at the Closing, Seller shall deliver to
Purchaser all of the contracts and Assumed Time Sales Agreements to be assumed
by Purchaser, with such assignments thereof and consents to assignments as are
necessary to assure Purchaser of the full benefit of the same (except to the
extent such consent is not obtained in accordance with the provisions of Section
4.4 hereof). Seller shall also deliver to Purchaser at the Closing all of
Seller's files and records constituting Station Assets under Section 1.1(i) and
copies of corporate and tax records of Seller.
1.11 Further Assurances. Seller and the Selling Stockholder from time
to time after the Closing at the request of Purchaser and without further
consideration shall execute and deliver further instruments of transfer and
assignment and take such other action as Purchaser may reasonably require to
more effectively transfer and assign to, and vest in, Purchaser the Station
Assets. Seller shall cooperate with Purchaser to permit Purchaser to enjoy
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Seller's rating and benefits under the workmen's compensation laws and
unemployment compensation laws of applicable jurisdictions, to the extent
permitted by such laws.
1.12 Sales and Transfer Taxes. All sales, transfer use, recordation,
documentary, stamp, excise taxes, fees and duties (including any real estate
transfer taxes) under applicable law incurred in connection with this Agreement
or the transactions contemplated thereby will be borne and paid by Seller.
1.13 Deposit. Contemporaneously with the execution and delivery hereof,
Purchaser shall deliver to the Escrow Agent the sum of Ninety Thousand Dollars
($90,000) (the "Deposit"). The Deposit shall be held in escrow by the Escrow
Agent subject to an escrow agreement in the form attached hereto as Exhibit A
(the "Escrow Agreement", and in the event of any termination of this Agreement
the Deposit shall be distributed in accordance with the provisions of Section
8.2 hereof and the Escrow Agreement. In the event that the Closing takes place,
then the Deposit (and any and all interest earned thereon) shall be applied for
Purchaser's account to the Purchase Price due Seller at the Closing as provided
in Section 1.5.
SECTION 2. Representations and Warranties of Seller and the Selling Stockholder.
As a material inducement to Purchaser to enter into this Agreement and
consummate the transactions contemplated hereby, Seller and the Selling
Stockholder jointly and severally hereby represent and warrant to Purchaser as
follows:
2.1 Organization and Power. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada with
the requisite power and authority to carry on the business of the Station as it
is now conducted, to own and operate the Station and to enter into this
Agreement and carry out the transactions contemplated hereby.
2.2 Required Action. All corporate actions and proceedings necessary to
be taken by or on the part of Seller in connection with the transactions
contemplated by this Agreement have been duly and validly taken, and this
Agreement has been duly and validly authorized, executed and delivered by
Seller, and constitutes, or when executed and delivered will constitute, the
legal, valid and binding obligation of Seller, enforceable against Seller in
accordance with and subject to its terms, except as such enforceability may be
limited by applicable bankruptcy, reorganization, insolvency, moratorium or
other similar laws from time to time in effect affecting creditors' rights
generally or by principles governing the availability of equitable remedies.
Each Selling Stockholder has full right, authority, power and capacity to enter
into this Agreement and each agreement, document and instrument to be executed
and delivered by or on behalf of him pursuant to, or as contemplated by this
Agreement and to carry out the transactions contemplated hereby and thereby.
This Agreement and each agreement, document and instrument executed and
delivered by each Selling Stockholder pursuant to, or as contemplated by this
Agreement constitute, or when executed and delivered will constitute, valid and
binding obligations of such Selling Stockholder enforceable in accordance with
their respective terms, except as such enforceability may be limited by
applicable bankruptcy, reorganization, insolvency, moratorium or other similar
laws from time to time in effect affecting creditors' rights generally or by
principles governing the availability of equitable remedies.
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2.3 No Defaults. The execution, delivery and performance by Seller of
this Agreement, and each other agreement, document and instrument to be executed
and delivered by Seller pursuant to this Agreement (collectively, the "Seller
Documents") do not and will not (a) violate any provision of the Articles of
Incorporation, as amended to date, of Seller, (b) assuming that the consents
referred to in Section 4.4 hereof or otherwise contemplated hereby are obtained,
constitute a violation of, or conflict with or result n any breach of,
acceleration of any obligation under, right of termination under, or default
under, any mortgage, indenture, agreement or instrument to which Seller is a
party or by which Seller or its property is bound or affected, (c) violate any
judgment, decree, order, statute, rule or regulation applicable to seller or the
Station, (d) require Seller to obtain any approval, consent or waiver of, or to
make any filing with, any person or entity (governmental or otherwise) that has
not been obtained or made, except s contemplated by Section 4.5 (FCC
Applications), or (e) result in the creation or imposition of any mortgage,
pledge, lien, security interest or other charge or encumbrance on any of
Seller's assets or properties. The execution, delivery and performance by each
Selling Stockholder of this Agreement and each other agreement, document and
instrument to be delivered by such Selling Stockholder pursuant to this
Agreement (collectively, the "Selling Stockholder Documents") do not and will
not (a) violate any judgment, decree, order, statute, rule or regulation
applicable to such Selling Stockholder, (b) require such Selling Stockholder to
obtain any approval, consent or waiver of, or to make any filing with, any
person or entity (governmental or otherwise) that has not been obtained or made,
or (c) constitute a violation of, or conflict with or result in any breach of,
acceleration of any obligation under, right of termination under, or default
under any mortgage, indenture, agreement or instrument to which such Selling
Stockholder is a party or by which the property of such Selling Stockholder is
bound or affected.
2.4 Financial Statements. Seller has delivered to Purchaser copies of
(i) the unaudited balance sheet of Seller as of December 31, 1994 (the "Base
Balance Sheet Date") and audited statements of income, retained earnings and
cash flow for the fiscal year then ended and (ii) an unaudited balance sheet of
Seller as of December 31, 1995 and unaudited statements of income, retained
earnings and cash flow for the fiscal year then ended (collectively, "Existing
Financial Statements'). Attached hereto as Schedule 2.4 are true copies of the
Existing Financial Statements. The Existing Financial Statements have been, and
any additional statements delivered to Purchaser pursuant to Section 4.9 hereof
will be, prepared in accordance with generally accepted accounting principles
consistently applied and present fairly in all material respects the financial
condition or results of operations, as the case may be, of Seller as of the date
thereof or for the period then ended (except for the absence of footnotes in the
case of unaudited financial statements). As of the Base Balance Sheet Date,
there were no material liabilities or obligations of Seller with respect to the
Station, fixed, contingent or otherwise, that were not recorded or disclosed in
the Base Balance Sheet.
2.5 Business Since the Base Balance Sheet Date. From December 31, 1994
to the date of this Agreement:
(a) there has been no material adverse change in the financial
condition or business of the Station or in the Station Assets;
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(b) the business of the Station has, in all material respects,
been conducted in the ordinary course of business and in substantially the same
manner as it was conducted before the Base Balance Sheet Date;
(c) there has not been any material obligation or liability
(contingent or other) incurred by Seller with respect to the Station other than
obligations and liabilities incurred in the ordinary course of business;
(d) there has not been any purchase, sale or other disposition, or
any agreement or other arrangement, oral or written, for the purchase, sale or
other disposition, of any material properties or assets of the Station other
than in the ordinary course of business; and
(e) there has not been any damage, destruction or loss, whether or
not covered by insurance, materially and adversely affecting the Station.
2.6 Licenses. As of the date of this Agreement, Seller is the holder of
the FCC Authorizations with respect to the Station. The FCC Authorizations
constitute all of the licenses and authorizations required under the
Communications Act of 1934, as amended (the "Communications Act"), or the
current rules, regulations, and policies of the FCC for operation of the Station
as now operated. All of the FCC Authorizations are in full force and effect. No
other licenses, permits or authorizations of any governmental department or
agency other than the FCC are required for the operation of the Station which
have not been duly obtained. As of the date hereof, there is not pending, or to
the knowledge of Seller or of the Selling Stockholder, threatened any action, by
or before the FCC to revoke, cancel, rescind or modify any of the FCC
Authorizations (other than proceedings to amend FCC rules of general
applicability or otherwise affecting the broadcast industry generally), and
there is not now issued or outstanding, or to the knowledge of Seller or of the
Selling Stockholder, pending or threatened, by or before the FCC, any order to
show cause, notice of violation, notice of apparent liability, or notice of
forfeiture or complaint against Seller with respect to the Station, other than
regularly scheduled license renewal proceedings. The Station is operating in
compliance in all material respects with such FCC Authorizations, the
Communications Act, and the current rules, regulations, and policies of the FCC.
The FCC's most recent renewals of the FCC Authorizations were not challenged by
any petition to deny or any competing application as of the date hereof. There
are no facts relating to Seller or the Selling Stockholder or any of their
respective affiliates that, under the Communications Act or the current rules,
regulations, policies and practices of the FCC in effect on the date hereof,
would be reasonably likely to cause the FCC to deny FCC renewal of the FCC
Authorizations or deny FCC consent to the sale of the Station to the Purchaser
hereunder.
2.7 Condition and Operation of Assets. All Station Real Property and
all tangible Station Assets are in good repair and operating condition, ordinary
wear and tear excepted, and have been maintained in all material respects in
accordance with standard industry practices. All Station Real Property and all
other tangible Station Assets, and Seller's use of the same, comply in all
material respects with all applicable ordinances and regulations and building or
other laws. All Station Real Property and all other tangible Station Assets
comply in all material respects with the requirements, standards, rules and
regulations of the FCC and of the FCC Authorizations. The transmitters for the
Station are operating in all material respects in accordance with and within the
parameters established by the FCC and such FCC Authorizations. The broadcast
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towers for the Station are in compliance in all material respects with all
applicable laws, including the Federal Aviation Act and all rules and
regulations promulgated thereunder.
2.8 Title, Liens, Etc. Schedule 1.1(b) attached hereto lists all items
of tangible personal property of every kind or description owned by Seller and
used or held for use in connection with the business or operations of the
Station, other than Excluded Assets. Seller does not own any fee interest in any
real property. Schedule 1. l(c) attached hereto contains descriptions of all
leaseholds and other interests of every kind and description in real property,
buildings, towers and antennae owned by Seller and used or held for use in
connection with the business and operations of the Station. The Station Assets
include all material assets and properties (including leasehold interests and
other interests in real property) as of the date hereof used or held for use by
Seller to conduct the business of the Station as presently conducted, free and
clear of all Security Interests, except for Permitted Security Interests. Seller
now has and shall convey to Purchaser at the Closing, good and marketable title
to all Station Assets (including the leasehold interests constituting part of
the Station Real Property), free and clear of any subtenants or other parties in
possession, licenses, claims, options, judgments, easements, encroachments,
restrictions, liens or other encumbrances other than the Permitted Security
Interests and, with respect to such leasehold interests, the terms of applicable
lease agreements that could in any way terminate or otherwise materially
interfere with the possession of the property or exercise of rights by the
tenant under any lease or that could require the payment of money by the tenant
under the lease. The leasehold interests that constitute a part of the Station
Real Property (other than studio or office space located in a commercial office
building) are valid leasehold interests in the respective properties and are
not, as a result of any action of Seller or of the Selling Stockholder, subject
to any rights of subtenants or other parties in possession, licenses, claims,
options, judgments, easements, encroachments, restrictions, liens or other
encumbrances of record whether granted to the respective landlords or otherwise
which would materially interfere with the rights of Seller under such leases.
2.9 Employees: Employee Benefits. Except as set forth on Schedule
2.9(a) hereto, Seller has no written or oral contracts of employment with any
employee of the Station and is not a party to or subject to any collective
bargaining agreements with respect to the Station. No application for
recognition of a collective bargaining unit is now pending before the National
Labor Relations Board and Seller has no knowledge of any concerted effort to
unionize any of the Station's employees. Schedule 2.9(a) hereto sets forth the
total number of employees of the Station as of the date hereof and the amount of
annual compensation currently paid to each such employee. Except as described on
Schedule 2.9(b) hereto, Seller does not maintain with respect to employees of
the Station, and is not required with respect to employees of the Station to
make contributions to, any "employee benefit plan" (within the meaning of
Section 3(3) of ERISA) including any pension, welfare, savings or other benefit
plan or arrangement, whether written or oral (a "Benefit Plan") and related
trust agreements. Seller has furnished Purchaser with true, complete and
accurate copies of any Benefit Plan which relates to or covers any employees of
the Station (a "Station Benefit Plan") and related trust agreements as in effect
on the date hereof. No Station Benefit Plan is a "multiemployer plan" (within
the meaning of Section 3(37) of ERISA). Each of the Station Benefit Plans is in
compliance in all material respects with all applicable requirements of ERISA,
the Internal Revenue Code of 1996, as amended (the "Code"), and other applicable
law. Each of the Station Benefit Plans has been administered in all material
respects in accordance with its terms and with applicable legal requirements. No
unfunded liabilities exist with respect to any Station Benefit Plan which is a
"defined benefit plan" (within the meaning of Section 3(35) of ERISA). Seller
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has not engaged in a "prohibited transaction" or breach of fiduciary
responsibility with respect to any Station Benefit Plan which could subject
Purchaser to a penalty tax or other liability under ERISA or the Code.
2.10 Litigation. Except as described in Schedule 2.10 hereto, there is
no litigation, proceeding or, to the knowledge of Seller, investigation of any
nature pending or, to the knowledge of Seller, threatened against Seller or the
Selling Stockholder related to or affecting the Station or any Station Asset.
Seller has not been operating under, is not subject to, and is not in default
with respect to, any order, writ, injunction or decree of any court or federal,
state, municipal or other governmental department, commission, board, agency or
instrumentality, foreign or domestic. With respect to each matter set forth
therein, Schedule 2.10 sets forth a description of the forum for the matter, the
parties thereto and the type and amount of relief sought.
2.11 Brokers. Other than Broadcasting Asset Management Corporation and
Force Communications and Consultants, the fees of which shall be paid by Seller,
Seller has not retained any broker or finder or other person who would have any
valid claim against any of the parties to this Agreement for a commission or
brokerage fee in connection with this Agreement or the transactions contemplated
hereby. Seller and the Selling Stockholder will indemnify Purchaser for any
breach of the representation set forth in this Section 2.11 pursuant to Section
9.2(b) hereof.
2.12 Approvals and Consents. The only approvals or consents of persons
or entities not a party to this Agreement that are legally or contractually
required to be obtained by Seller and the Selling Stockholder in connection with
the consummation of the transactions contemplated by this Agreement are those
which are contemplated by Sections 4.4 (Consents), 4.5(b) (FCC Applications) and
7.4 (FCC Authorization).
2.13 Trademarks. etc. Schedule 1.1(f) hereto sets forth a list of all
trademarks, service marks, franchises, patents, trade names, logotypes and other
intangible rights owned and used or held for use by Seller in connection with
the business or operation of the Station and which are material to the financial
condition, business or assets of the Station. All such rights are free and clear
of all mortgages, liens, security interests and encumbrances, other than
Permitted Security Interests. Neither Seller nor any Selling Stockholder has
received any notice that the use of such rights by the Station conflicts with,
infringes upon or violates any such rights of any other person in any material
respect.
2.14 Contracts. Seller has provided to Purchaser complete and correct
copies of all Contracts listed on Schedule 1. l(e) attached hereto and all
Assumed Time Sales Agreements. All Contracts listed on such Schedule are valid,
subsisting, in full force and effect and binding upon Seller and, to the
knowledge of Seller and the Selling Stockholder, upon the other parties thereto,
in accordance with their respective terms (subject to laws affecting creditors
rights and equitable principles generally), and Seller has satisfied or provided
for all of its liabilities and obligations thereunder required to be satisfied
prior to or on the date of this Agreement and is not in material default under
any of them nor, to the knowledge of Seller, is any other party to any such
Contract in material default thereunder nor, to the knowledge of Seller, does
any condition exist that with notice or lapse of time or both would constitute a
material default by Seller thereunder. Furthermore, and not in limitation of the
generality of the foregoing, with respect to Contracts that are leases of
Station Real Property ("Leases"),
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(a) each of the Leases is in full force and effect on the
terms set forth therein and has not been modified, amended, or altered, in
writing or otherwise, except as indicated on Schedule 1.1(e);
(b) all material obligations of the landlord or lessor under
the Leases which have accrued as of the date hereof have been performed in all
material respects, and no landlord or lessor is in material default under or in
arrears in the payment of any material sum or in the performance of any material
obligation required of it under any Lease, and no material circumstance exists
which, with notice or the passage of time, or both, would give rise to a
material default by the landlord or lessor under any Lease; and
(c) all material obligations of the tenant or lessee under the
Leases which have accrued have been performed in all material respects, and
Seller is not in material default under or in arrears in the payment of any
material sum or in the performance of any material obligation required of it
under any Lease, and there has been no act or omission which, with notice or the
passage of time, or both, would give rise to a material default by Seller;
Seller has not received any notice of any alleged default from any landlord or
lessor or any claim of defense to enforcement of any lease.
2.15 Hazardous Materials. Except as permitted by or consistent with
applicable Environmental Laws:
(a) no Hazardous Waste (as defined below) has ever been generated,
transported, used, stored, disposed of on any of the Station Real Property;
(b) no Hazardous Material (as defined below) has ever been or is
threatened to be spilled, released, or disposed of on, under or about the
Station Real Property or has ever come to be located in the soil or groundwater
of any Station Real Property;
(c) no asbestos, asbestos-containing materials, poly-chlorinated
biphenyls (PCBs) or PCB compounds have ever been contained on or about the
Station Real Property nor have such substances been used in the construction,
repair or alteration of any portion of the Station Real Property or any
equipment thereon;
(d) no underground storage tanks have ever been placed on or under
the Station Real Property and there are no underground storage tanks on or under
the Station Real Property;
(e) the tangible assets and operations of the Station do not
result in exposure of workers or the general public to levels of radio frequency
radiation in excess of the "Radio Frequency Protection Guides" recommended in
"American National Standard Safety Levels With Respect to Human Exposure to
Radio Frequency Electromagnetic Fields, 300 KHz to GHz" 100 issued by the
American National Standard Institute; and
(f) the operations of the Station as currently conducted by Seller
are, and the Station Real Property is, in compliance in all material respects
with all applicable Environmental Laws.
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Neither Seller nor any Selling Stockholder has ever entered into or
been subject to any judgment, consent decree, compliance order, or
administrative order with respect to any environmental or health and safety
matter or received any request for information, notice, demand letter,
administrative inquiry, or formal or informal complaint or claim with respect to
any environmental or health and safety matter or the enforcement of any
Environmental Law, in each case involving the Station Real Property, the Station
Assets or the operation of the Station.
Seller has provided to Purchaser copies of all material documents,
records, and information in the possession of Seller, the Selling Stockholder or
any of their affiliates (including any partnership or joint venture of which
Seller is a partner or venturer) concerning any environmental or health and
safety matter relevant to Seller, whether generated by Seller or others,
including environmental audits, environmental risk assessments, site
assessments, documentation regarding off-site disposal of Hazardous Materials,
spill control plans and reports, correspondence, permits, licenses, approvals,
consents, and other authorizations related to environmental or health and safety
matters issued by any governmental agency, in any such case involving the
Station Real Property, the Station Assets or the operation of the Stations.
For the purpose of this Agreement, (x) "Hazardous Materials" shall mean
substances defined as "hazardous substances," "hazardous materials," "hazardous
wastes" or "toxic substances" in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. ss.9601, et seq.
("CERCLA"), the Resource Conservation and Recovery Act, as amended 42 U.S.C.
ss.6901, et seq. ("RCRA"), any analogous state and local laws, and any
substances defined as Hazardous Materials in the regulations adopted and
publications promulgated pursuant to said laws, asbestos and asbestos containing
material and petroleum products, including fuel oil, and (y) "Environmental
Laws" means any law, statute, regulation or court order binding upon Seller,
consent decree binding upon Seller, or settlement agreement to which the Seller
is a party, which imposed liability for or standards of conduct concerning the
manufacture, processing, generation, distribution, use, treatment, storage,
disposal, release, threat of release, cleanup, transport or handling of
pollutants, contaminants, or Hazardous Materials, including CERCLA, RCRA, any
other so-called "Superfund" or "Superlien" law, the Toxic Substances Control
Act, the Hazardous Materials Transportation Act, as amended, their implementing
regulations or any other similar federal, state or local statutes or
regulations.
2.16 Compliance with Laws. The tangible Station Assets are insured to
the extent disclosed in Schedule 2.17 and all insurance policies and
arrangements of Seller in effect as of the date hereof are disclosed in said
Schedule. Said insurance policies and arrangements are in full force and effect,
all premiums with respect thereto are currently paid, and Seller is in
compliance in all material respects with the terms thereof. Said insurance is
adequate and customary for the business engaged in by Seller and is sufficient
for compliance by Seller with all requirements of law and all agreements and
leases to which Seller is a party.
2.17 Taxes.
(a) Seller has paid or caused to be paid all federal, state,
local, foreign and other taxes, including without limitation income taxes,
estimated taxes, alternative minimum taxes, excise taxes, sales taxes, use
taxes, value-added taxes, gross receipts taxes, franchise taxes, capital stock
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taxes, employment and payroll-related taxes, withholding taxes, stamp taxes,
transfer taxes, windfall profit taxes, environmental taxes and property taxes,
whether or not measured in whole or in part by net income, and all deficiencies,
or other additions to tax, interest, fines and penalties owed by it
(collectively, "Taxes"), required to be paid by it through the date hereof
whether disputed or not.
(b) Neither the Internal Revenue Service nor any other
governmental authority is now asserting or, to the knowledge of Seller and the
Selling Stockholder, threatening to assert against Seller any deficiency or
claim for additional Taxes and, no event has occurred which could impose on
Purchaser any liability for any Taxes due or to become due from Seller by any
taxing authority. Seller is not a party to any closing agreement pursuant to
Section 7121 of the Code.
(c) There has not been any audit of any tax return applicable to
Seller or the Station Assets, no audit of any tax return applicable to Seller or
the Station Assets is in progress, and neither Seller nor the Selling
Stockholder have been notified by any tax authority that any such audit is
contemplated or pending. No extension of time with respect to any date on which
a tax return was or is to be filed by Seller is in force, and no waiver or
agreement by Seller is in force for the extension of time for the assessment or
payment of any Taxes.
(d) Seller is not a "foreign person" within the meaning of Section
1445 of the Code and Treasury Regulations Section 1.1445-2.
2.18 Disclosure. The representations, warranties and statements
continued in this Agreement and in the certificates, exhibits and schedules
delivered by Seller pursuant to this Agreement to Purchaser do not contain any
untrue statement of a material fact, and, when taken together, do not omit to
state a material fact required to be stated therein or necessary in order to
make such representations, warranties or statements not misleading in light of
the circumstances under which they were made.
SECTION 3. Representations and Warranties of Purchaser.
As a material inducement to Seller and the Selling Stockholder to enter
into this Agreement and consummate the transactions contemplated hereby,
Purchaser represents and warrants to the Seller and the Selling Stockholder as
follows:
3.1 Organization and Power; Control.
(a) Purchaser is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Delaware. Purchaser
has the requisite partnership power and authority to own or lease its properties
and to conduct its business as now conducted, and to enter into and complete the
transactions contemplated by this Agreement.
(b) The general partner of Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
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3.2 Required Action. All partnership actions and proceedings necessary
to be taken by or on the part of Purchaser in connection with the transactions
contemplated by this Agreement (including all corporate actions and proceedings
of the general partner of Purchaser) have been duly and validly taken, and each
of the Purchaser Documents (as defined in Section 3.3) has been duly and validly
authorized, executed, and delivered by or on behalf of Purchaser, and each of
the Purchaser Documents constitutes, or when executed and delivered will
constitute, the valid and binding obligation of Purchaser, enforceable against
Purchaser in accordance with and subject to its terms, except as such
enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws from time to time in effect
affecting creditors' rights generally or by principles governing the
availability of equitable remedies.
3.3 No Defaults. The execution, delivery and performance by Purchaser
of this Agreement, and each other agreement, document and instrument to be
executed and delivered by Purchaser pursuant to this Agreement (collectively,
the "Purchaser Documents") do not and will not (a) violate any provisions of the
Agreement of Limited Partnership, as amended, of Purchaser, (b) violate any
statute, rule or regulation applicable to Purchaser, or require Purchaser to
obtain any approval, consent or waiver of, or to make any filing with, any
person or entity that has not been obtained or made, except as contemplated by
Section 5.2 (FCC Applications) or (c) constitute a violation of, conflict with,
or result in a breach of, constitute a default under, accelerate any obligation
under or give rise to a right of termination of, any indenture or loan or credit
agreement or any other agreement, contract, instrument, mortgage, lien, order,
writ, judgment, injunction, decree, determination or arbitration award to which
Purchaser is a party or by which the property of Purchaser is bound or affected,
except where such breach, default, acceleration or right of termination would
not have a material adverse effect on the properties, assets, business or
financial condition of Purchaser or Purchaser's execution, delivery and
performance of the Purchaser Documents.
3.4 Litigation. There is no litigation, proceeding or, to Purchaser's
knowledge, investigation of any nature pending or, to Purchaser's knowledge,
threatened against or affecting it that, if adversely determined, would prevent
or hinder the consummation of- the transactions contemplated by this Agreement,
other than proceedings affecting the broadcast industry generally.
3.5 Brokers. Purchaser has not retained any broker or finder or other
person who would have any valid claim against any of the parties to this
Agreement for a commission or brokerage fee in connection with this Agreement or
the transactions contemplated hereby. Purchaser will indemnify Seller and the
Selling Stockholder for any breach of the representation set forth in this
Section 3.5 pursuant to Section 9.3(b) hereof.
3.6 Approvals and Consents. The only approvals or consents of persons
or entities not a party to this Agreement that are legally or contractually
required to be obtained by Purchaser in connection with the consummation of the
transactions contemplated by this Agreement are those which are contemplated by
Section 6.4 (FCC Authorization).
3.7 Qualification as a Licensee. To Purchaser's knowledge, there are no
facts which would, as a matter of law (including the Communications Act and
present rules, regulations and practices of the FCC), (a) disqualify Purchaser
from acquiring the Station Assets as contemplated by this Agreement or by the
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application concerning such matters to be filed with the FCC or (b) prevent or
delay the consummation of the transactions contemplated herein within the time
contemplated hereby.
SECTION 4. Covenants of Seller and the Selling Stockholder Pending the Closing.
Seller and the Selling Stockholder covenant and agree that from the
date hereof until the completion of the Closing:
4.1 Operation of the Business.
(a) Except as otherwise permitted pursuant to the prior written
consent of Purchaser, Seller shall:
(i) continue to carry on the business of the Station
in the ordinary course consistent in all material respects with
past practices (except for the transactions and actions
contemplated hereby) and shall not materially change or alter the
current programming format of the Station;
(ii) keep its books and accounts, records and files
in the ordinary course of business;
(iii) operate the Station in accordance with the
terms of the FCC Authorizations and in compliance in all material
respects with all applicable laws, rules and regulations,
including FCC rules and regulations;
(iv) file on a timely basis any necessary
applications for renewal of, and to preserve in full force and
effect, the FCC Authorizations for their full terms;
(v) maintain insurance upon all of the tangible
Station Assets in such amounts, and of such kinds and issued by
such insurers as in effect on the date hereof as reflected in
Schedule 2.17, or insurance providing substantially equivalent
coverage, with respect to such Station Assets and with respect to
the operation of the Station;
(vi) use and operate the Station Assets in a manner
consistent with past practice and maintain all tangible properties
in good repair and operating condition subject only to ordinary
wear and tear;
(vii) perform and comply in all material respects
with the terms of the Contracts set forth in Schedule 1. l(e)
hereto, and keep such Contracts in full force and effect;
(viii) continue to promote and advertise the Station
to the extent and in the manner consistent with past practices;
(ix) use Seller's best efforts to preserve the
business organization of the Station intact; and
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(x) use Seller's best efforts to preserve the
goodwill of the Station's advertisers, suppliers, customers, and
others having business relations with it.
(b) Notwithstanding anything herein to the contrary, nothing
contained in this Agreement shall give Purchaser any right to control the
programming, operations, or any other matter relating to the Station prior to
the Closing Date, and Seller shall have complete control of the programming,
operations, and all other matters relating to the Station up to the Closing
Date.
(c) From the date hereof through the Closing Date, Seller shall
promptly notify Purchaser of any actions or proceedings that from the date
hereof are commenced or, to the knowledge of Seller and the Selling Stockholder,
threatened against the Station or, to the knowledge of Seller and the Selling
Stockholder, against any partner, employee, consultant, agent, or other
representative of Seller with respect to the business of the Station or the
Station Assets.
(d) Prior to the Closing Date, Seller shall not, without the prior
written consent of Purchaser:
(i) sell, lease, transfer, or agree to sell, lease
or otherwise dispose of or transfer any Station Assets other than
the sale of advertising time in the ordinary course of business;
(ii) other than with respect to employees at will,
enter into any contract of employment with any employee or
employees of the Station (other than Contracts executed prior to
the date hereof and listed on Schedule 1.1 (e) or any collective
bargaining agreement representing any employees of the Station;
(iii) renegotiate, modify, amend or terminate any
Contract listed in Schedule 1.1 (e) hereto;
(iv) apply to the FCC for any construction permit
that would restrict the Station's present operations, or make any
material change in the Station's buildings, leasehold
improvements, or fixtures;
(v) increase the rates of direct or bonus
compensation payable or become payable to any officer, employee,
agent or consultant of the Station, except (A) in the ordinary
course of business consistent with past practices or (B) in
accordance with the existing terms of contracts entered into prior
to the date of this Agreement;
(vi) incur, assume, acquire, renew or allow the
renewal of, or agree to incur, assume, acquire, renew or allow the
renewal of, any obligation or liability with respect to the
Station or the Station Assets except in the ordinary course of
business consistent with past practices;
(vii) mortgage, pledge or subject to any Security
Interest, other than Permitted Security Interests, any of the
Station Assets;
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(viii) cancel or compromise any debt or claim
relating to the Station or the Station Assets, other than in the
ordinary course of business consistent with past practices, or
waive or release any material right relating to the Station or the
Station Assets to be assigned hereunder to Purchaser; provided,
however, that notwithstanding any provision herein to the
contrary, between the date of this Agreement and the Closing Date,
Seller shall be permitted to take those actions necessary to
reduce its trade agreement balances even if such actions are not
in the ordinary course of business and not consistent with past
practices; or
(ix) otherwise enter into or renew any Contract with
respect to the Station or the Station Assets except, as to any
contract not constituting a Material Contract, in the ordinary
course of business. .
4.2 Investigation. At the reasonable request of Purchaser and upon
reasonable advance notice, Seller shall, from time to time give or cause to be
given to Purchaser and its representatives or representatives of any prospective
lender to Purchaser (a) reasonable access at times reasonably designated by
Purchaser, to all facilities, property, accounts, books, deeds, title papers,
insurance policies, licenses, agreements, contracts, commitments, records and
files of every character, equipment, machinery, fixtures, furniture, vehicles
and notes and accounts payable of Seller with respect to the Station and to the
Station Assets, (b) reasonable access to all management-level employees and all
agents of Seller, and (c) all such other information concerning the Station
Assets or the affairs of the Station as Purchaser may reasonably request.
4.3 Representations and Warranties. Seller shall give written notice to
Purchaser promptly upon Seller or any Selling Stockholder learning of the
occurrence of any event that would cause or constitute a material breach or
would have caused a material breach had such event occurred or been known to
Seller or to the Selling Stockholder prior to the date hereof, of any of
Seller's or of the Selling Stockholder's representations or warranties contained
in this Agreement or in any Schedule hereto.
4.4 Consents.
(a) Schedule 1.1(e) hereto contains a list of all Contracts to be
assumed by Purchaser pursuant to Section 1.3 hereof (other than Contracts
referred to in Section 1.1(d) hereof and Contracts entered into between the date
of this Agreement and the Closing Date). Contracts listed on Schedule 1.1(e)
with respect to which a consent or approval to the transactions provided for in
this Agreement is required are designated with an asterisk. The Contracts set
forth on Schedule 1.1(e) as to which such a consent or consents are required are
sometimes referred to herein as "Restricted Contracts. " Seller and Purchaser
agree that the only Contracts that are material to the business or operations of
the Station are those designated with a double asterisk on Schedule 1.1(e)
hereto and that such material Contracts (whether or not they are Restricted
Contracts are referred to herein as "Material Contracts."
(b) Notwithstanding any other Section of this Agreement, to the
extent that the consent or approval of any third person is required under any
Restricted Contract in order to assign any such Restricted Contract from Seller
to Purchaser or otherwise by reason of the transactions provided for in this
Agreement, Seller will use its best efforts to obtain such consents and
approvals.
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If any such consent or approval is not obtained, Seller will use its best
efforts to secure an arrangement satisfactory to Purchaser intended to provide
for Purchaser following the Closing the benefits under such Restricted Contract;
provided, however, that nothing in this Section shall excuse Seller from
obtaining, all such consents or approvals required with respect to any Material
Contract which is also a Restricted Contract.
(c) Nothing in this Agreement will constitute a transfer or an
attempted transfer of any Restricted Contract or any governmental permit,
license or authorization which by its terms or under applicable law or
governmental rules or regulations requires the consent or approval of a third
party (including a governmental authority) unless such consent or approval shall
have been obtained.
4.5 FCC Applications.
(a) FCC Assignment Consent. As promptly as practicable after the
date of this Agreement, and in no event later than five (5) business days after
the date hereof, Seller shall file applications (after receiving Purchaser's
portion of such applications pursuant to Section 5.2 in a form suitable for
filing) with the FCC required to obtain the FCC Assignment Consent (as defined
in Section 10.1). Seller shall diligently take, or cooperate in the taking of,
all steps that are necessary, proper or desirable to expedite the preparation of
such applications and their prosecution to a favorable conclusion, including,
without limitation, compliance with the public notice requirements of the
Communications Act. Seller shall promptly provide Purchaser with a copy of any
pleading, order, or other document served on Seller or on the Selling
Stockholder relating to such applications. Seller shall cooperate with Purchaser
and use reasonable, diligent and good faith efforts to obtain the FCC Assignment
Consent and a Final Order. Seller shall in good faith make all reasonable
efforts to answer FCC inquiries and third-party objections (including Petitions
to Deny), if any, with respect to the application for FCC Assignment Consent and
to avoid designation for hearing. Seller will bear its own legal, accounting and
other fees and expenses involved in the preparation and prosecution of the
application for FCC Assignment Consent, except as provided in Section 11.1
hereof.
(b) FCC Renewal. Seller shall file timely applications and comply
in all material respects with all applicable FCC rules and regulations for
renewal by the FCC of any of the FCC Authorizations for which it is appropriate,
consistent with Seller's past practices, but in any event in a manner no less
diligent, timely or otherwise favorable than normal practices of entities owning
radio stations, to apply for such renewal between the date of this Agreement and
the Closing Date.
(c) Control of Station. The transactions contemplated hereby are
expressly conditioned upon receipt of the FCC Assignment Consent and a Final
Order, and nothing contained in this Agreement shall give Purchaser the right to
control the programming, equipment, personnel or operations of the Station prior
to the Closing Date.
(d) Notice of Proceedings. Seller shall promptly notify Purchaser
in writing upon (a) becoming aware of any order or decree or any complaint
praying for an order or decree restraining or enjoining the consummation of this
Agreement or the transactions contemplated hereunder, or (b) receiving any
notice from any governmental department, court, agency or commission of its
intention (i) to institute an investigation into, or institute a suit or
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proceeding to restrain or enjoin, the consummation of this Agreement or such
transactions, or (ii) to nullify or render ineffective this Agreement or such
transactions if consummated.
4.6 Consummation of Agreement. Subject to the provisions of Section 8.1
of this Agreement: (a) Seller and the Selling Stockholder shall use all
reasonable efforts to fulfill and perform all conditions and obligations on its
part to be fulfilled and performed under this Agreement, and to cause the
transactions contemplated by this Agreement to be fully carried out; and (b)
Seller and the Selling Stockholder shall not take any action or omit to take any
action that would make consummation of the transactions contemplated by this
Agreement contrary to the Communications Act or the rules, regulations, or
policies of the FCC.
4.7 Updating of Information. On the Closing Date, Seller shall deliver
to Purchaser (a) information necessary to update the Schedules hereto and the
lists, documents and other information furnished by Seller as contemplated by
this Agreement, and (b) updated copies of documents relating to or included as a
part of such Schedules, in order that all such Schedules, lists, documents and
other information and items shall be complete and accurate in all material
respects.
4.8 Periodic Financial Statements. Between the date of this Agreement
and the Closing Date, Seller shall furnish to Purchaser as soon as practicable
after the end of each month copies of the unaudited statement of income of
Seller for such month and the portion of the fiscal year of Seller ending on the
last day of such month and an unaudited balance sheet of Seller as of the last
day of such month.
4.9 Consent and Estoppel. Seller shall obtain on or prior to the
Closing from all landlords, lessors and sublessors under each Lease with respect
to Station Real Property where a broadcast tower is located, a consent and
estoppel certificate in the form of Exhibit B hereto.
4.10 Release of Liens. Seller shall obtain and deliver to Purchaser at
or prior to the Closing releases of any liens or Security Interests that are not
Permitted Security Interests.
4.11 No Shopping. Unless and until this Agreement shall have been
terminated, neither Seller, the Selling Stockholder nor any of their respective
Affiliates, advisors or representatives shall, directly or indirectly, solicit,
encourage or initiate any contact with, negotiate with, or provide any
information to, endorse or enter into any agreement with respect to, or take any
other action to facilitate any person or group, other than Purchaser and its
representatives, concerning any inquiries or the making of any proposals
concerning any merger, sale of all or substantially all of the Station Assets,
acquisition of a substantial equity interest in Seller or any similar
transaction involving Seller (collectively an "Acquisition Proposal"). Seller
and the Selling Stockholder shall promptly inform Purchaser in writing of any
requests for information, inquires or proposals relating to, and material terms
of, any Acquisition Proposal that Seller or the Selling Stockholder may receive
from any person after the date of this Agreement and prior to the Closing Date.
SECTION 5. Covenants of Purchaser Pending the Closing.
Purchaser covenants and agrees that from the date hereof until the completion of
the Closing:
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5.1 Representations and Warranties. Purchaser shall give written notice
to Seller promptly upon learning of the occurrence of any event that would cause
or constitute a material breach or would have caused a material breach had such
event occurred or been known to Purchaser prior to the date hereof, of any of
the representations and warranties of Purchaser contained in this Agreement.
5.2 FCC Applications. As promptly as practicable after the date of this
Agreement, and in no event later than four (4) business days after the date
hereof, Purchaser will complete and deliver to Seller fully executed copies of
assignee's portions of applications to the FCC, in form suitable for filing,
requesting the FCC Assignment Consent. Purchaser shall diligently take, or
cooperate in the taking of, all steps that are necessary, proper or desirable to
expedite the preparation of such applications and their prosecution to a
favorable conclusion. Purchaser will promptly provide Seller with copies of any
pleading, order, or other document served on it relating to such applications.
Purchaser shall cooperate with Seller and use reasonable, diligent and good
faith efforts to obtain the FCC Assignment Consent and a Final Order. Purchaser
will in good faith make all reasonable efforts to answer FCC inquiries and
respond to third-party objections (including Petitions to Deny), if any, with
respect to the application for FCC Assignment Consent and to avoid designation
for hearing. Purchaser will bear its own legal and other fees and expenses
involved in the preparation and prosecution of the application for FCC
Assignment Consent, except as provided in Section 11.1 hereof.
5.3 Notice of Proceedings. Purchaser shall promptly notify Seller, in
writing upon (a) becoming aware of any order or decree or any complaint praying
for an order or decree restraining or enjoining the consummation of this
Agreement or the transactions contemplated hereunder, or (b) receiving any
notice from any governmental department, court, agency or commission of its
intention (i) to institute an investigation into, or institute a suit or
proceeding to restrain or enjoin, the consummation of this Agreement or such
transactions, or (ii) to nullify or render ineffective this Agreement or such
transactions if consummated.
5.4 Consummation of Agreement. Subject to the provisions of Section 8.1
of this Agreement: (a) Purchaser shall use all reasonable efforts to fulfill and
perform all conditions and obligations on its part to be fulfilled and performed
under this Agreement, and to cause the transactions contemplated by this
Agreement to be fully carried out; and (b) Purchaser shall not take any action
or omit to take any action that would make consummation of the transactions
contemplated by this Agreement contrary to the Communications Act or the rules,
regulations, or policies of the FCC.
5.5 Noninterference. Purchaser shall not, and shall cause Purchaser's
general partner and its officers, employees, agents and representatives not to
(a) interfere with the Station's operations or the conduct of the Station's
business or (b) take or fail to take any action which Seller in good faith
reasonably believes could adversely affect (i) Seller's relationships with
employees, advertisers, suppliers and others having business relationships
and/or dealings with Seller or the Station or (ii) the business, operations,
organization, reputation or good will of the Station, provided that Purchaser
and Seller acknowledge that the rights provided to Purchaser hereunder,
including pursuant to Section and 4.2 (Investigation), will require reasonable
access under the conditions specified in such Section to the personnel,
facilities and records of the Station, and no such action on the part of
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Purchaser shall be deemed a breach or violation hereof as long as such action is
reasonable and is conducted in good faith with no intent to harm the Station.
5.6 Cooperation. Purchaser shall cooperate with Seller (which
cooperation shall not involve the payment or commitment to pay any money to any
person or entity), including by providing to Seller Purchaser's financial
statements and related information which Seller may from time to time reasonably
request, to assist Seller in obtaining releases from the obligations,
liabilities and commitments to be assumed by Purchaser hereunder.
SECTION 6. Conditions to the Obligations of Seller and the Selling Stockholder.
The obligations of Seller and the Selling Stockholder under this
Agreement are subject to the fulfillment, in the discretion of Seller and the
Selling Stockholder of the following conditions prior to or at the Closing Date:
6.1 Representations. Warranties. Covenants.
(a) Each of the representations and warranties of Purchaser
contained in this Agreement shall be true and correct in all material respects
at and as of the Closing Date and with the same force and effect as though made
on and as of the Closing Date.
(b) Purchaser shall have performed and satisfied in all material
respects all agreements, covenants and conditions hereunder which by the terms
hereof are to be performed and satisfied by Purchaser on or prior to the Closing
Date.
(c) Purchaser shall have furnished Seller with a certificate,
dated the Closing Date and duly executed by the President or a Vice President of
the general partner of Purchaser to the effect that the conditions set forth in
subparagraphs (a) and (b) of this Section 6.1 have been satisfied.
(d) Purchaser shall have furnished Seller with:
(i) certified resolutions of the Board of Directors
of the general partner of the Purchaser approving the execution
and delivery of this Agreement and each of the other Purchaser
Documents and authorizing the consummation of the transactions
contemplated hereby and thereby;
(ii) governmental certificates showing that (A)
Purchaser is duly organized and in good standing in the State of
Delaware and (B) the general partner of Purchaser is duly
incorporated and in good standing in the State of Delaware; and
(iii) a certificate of the Secretary of the general
partner of the Purchaser attesting as to the incumbency of each
officer who shall execute any Purchaser Document on behalf of
Purchaser.
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6.2 No Actions or Proceedings. No action or proceeding by or before any
court, administrative body or governmental agency shall have been instituted or
threatened which would enjoin, restrain or prohibit this Agreement or the
complete consummation of the transactions contemplated by this Agreement, and no
law or regulation shall be in effect and no court order shall have been entered
in any action or proceeding instituted by any party which enjoins, restrains or
prohibits this Agreement or the complete consummation of the transactions as
contemplated by this Agreement, in any case other than filings before the FCC
which have been dismissed or denied by the FCC.
6.3 Opinion of Counsel.
Seller shall have received an opinion of Goodwin, Procter & Hoar,
Purchaser's counsel, dated the Closing Date, in the form attached to this
Agreement as Exhibit C.
6.4 FCC Authorization. The FCC Assignment Consent shall have been
obtained and become effective, shall contain no condition materially adverse to
Seller and shall have become a Final Order.
SECTION 7. Conditions to the Obligations of Purchaser.
The obligations of Purchaser under this Agreement are subject to the
fulfillment, in the discretion of Purchaser, of the following conditions prior
to or at the Closing Date:
7.1 Representations. Warranties. Covenants.
(a) Each of the representations and warranties of the Seller
contained in this Agreement shall be true and correct in all material respects
at and as of the Closing Date with the same force and effect as though made on
and as of the Closing Date.
(b) Seller and the Selling Stockholder shall each have performed
and satisfied in all material respects all agreements, covenants and conditions
hereunder which by the terms hereof are to be performed and satisfied by Seller
and the Selling Stockholder, respectively, on or prior to the Closing Date.
(c) Seller and the Selling Stockholder shall each have furnished
Purchaser with a certificate, dated the Closing Date and duly executed by
Seller's President or a Vice President and by the Selling Stockholder,
respectively, to the effect that the conditions set forth in subparagraphs (a)
and (b) of this Section 7.1 have been satisfied.
(d) Seller and the Selling Stockholder shall have furnished
Purchaser with:
(i) certified resolutions of Seller approving the
execution and delivery of this Agreement and each of the other
Seller Documents and authorizing the consummation of the
transactions contemplated hereby and thereby;
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(ii) governmental certificates showing that Seller
is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada and is qualified to
do business in the State of Nevada; and
(iii) a certificate of the Secretary of Seller
attesting as to the incumbency of each person who shall execute
any of the Seller Documents on behalf of Seller.
7.2 No Actions or Proceedings. No action or proceeding by or before any
court, administrative body or governmental agency shall have been instituted or
threatened which would enjoin, restrain or prohibit this Agreement or the
complete consummation of the transactions contemplated by this Agreement, and no
law or regulation shall be in effect and no court order shall have been entered
in any action or proceeding instituted by any party which enjoins, restrains or
prohibits this Agreement or the complete consummation of the transactions as
contemplated by this Agreement, in any case other than filings before the FCC
which have been dismissed or denied by the FCC.
7.3 Opinions of Counsel.
(a) Purchaser shall have received an opinion of Streich Lang,
P.A., counsel to Seller and the Selling Stockholder, dated the Closing Date, in
the form attached hereto as Exhibit D-1 and an opinion of Adam Kutner, Esq.,
counsel to Seller and the Selling Stockholder, dated the Closing Date, in the
form attached hereto as Exhibit D-2.
(b) Purchaser shall have received an opinion of Robert Olander,
Esq., FCC counsel to Seller, dated the Closing Date, in the form attached hereto
as Exhibit E.
(c) FCC Authorization. The FCC Assignment Consent shall have been
obtained and become effective, shall contain no condition materially adverse to
Purchaser and shall have become a Final Order.
7.4 Damage to the Station Assets. The Station Assets shall not have
suffered damage on account of fire, explosion, earthquake or other cause of any
nature that is sufficient to prevent operation of the Station for a period of at
least seven (7) consecutive calendar days; provided, however, that this
condition shall be deemed to be satisfied if either (a) Purchaser shall have
accepted an assignment from Seller of any rights to insurance proceeds with
respect to such damage, which assignment Seller shall promptly send to Purchaser
and Purchaser may accept or reject in its sole discretion; or (b) Seller shall
have offered to repair such damage; Purchaser shall have accepted such offer;
and Seller shall have completed such repairs to the reasonable satisfaction of
Purchaser.
7.5 Material Contracts. All Material Contracts, whether or not they are
Restricted Contracts, shall have been duly and validly assigned to Purchaser by
Seller, and all consents and approvals required in connection with the
consummation of the transactions contemplated hereby under any Material Contract
which is also a Restricted Contract shall have been obtained without conditions
materially and adversely affecting Purchaser and which do not require Purchaser
to pay money to any party to any such Contract in excess of amounts required to
be so paid pursuant to the terms and conditions thereof. All such Material
Contracts shall remain in full force and effect and shall not have been amended,
modified, repudiated or breached in any material respect by either
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party thereto, and Seller shall not have received notice of or have knowledge of
any fact which would result in a termination, repudiation or material breach of
any Material Contract.
7.6 Release of Liens. Seller shall have obtained and delivered to
Purchaser at or prior to the Closing the releases of liens and Security
Interests referred to in Section 4.11.
SECTION 8. Termination.
8.1 Termination. This Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing Date:
(a) by either Purchaser or Seller, on or after the date of the
denial by the FCC of the FCC Assignment Consent in an order which has become
final, provided that the terminating party is not in material breach of this
Agreement;
(b) by either party, on December 31, 1996 if the FCC has not
granted the FCC Assignment Consent by such date, provided that the terminating
party is not in material breach of this Agreement;
(c) by the mutual consent of Purchaser and Seller;
(d) by Seller, provided that neither Seller nor the Selling
Stockholder is in material breach of this Agreement, if either (i) Purchaser is
in material breach of this Agreement and such breach shall remain uncured for a
period of five (5) business days after Seller shall have given notice of such
breach to Purchaser, (ii) Purchaser shall have explicitly or by conduct
repudiated this Agreement and such repudiation shall have remained uncured for a
period of five (5) business days after Seller shall have given notice thereof to
Purchaser, or (iii) at or prior to the Closing Date any of the conditions in
Section 6 shall not have been satisfied, complied with or performed in all
material respects (unless such failure of satisfaction, noncompliance or
nonperformance is the result directly or indirectly of any action or failure to
act on the part of Seller or the Selling Stockholder) and Seller shall not have
waived such failure of satisfaction, noncompliance or nonperformance;
(e) by Purchaser, provided that Purchaser is not in material
breach of this Agreement, if either (i) Seller or the Selling Stockholder is in
material breach of this Agreement and such breach shall remain uncured for a
period of five (5) business days after Purchaser shall have given notice of such
breach to Seller, (ii) Seller or the Selling Stockholder shall have explicitly
or by conduct repudiated this Agreement and such repudiation shall have remained
uncured for a period of five (5) business days after Purchaser shall have given
notice thereof to Seller, or (iii) at or prior to the Closing Date any of the
conditions in Section 7 shall not have been satisfied, complied with or
performed in all material respects (unless such failure of satisfaction,
noncompliance or nonperformance is the result directly or indirectly of any
action or failure to act on the part of Purchaser) and Purchaser shall not have
waived such failure of satisfaction, noncompliance or nonperformance;
(f) by either Purchaser or Seller if any court of competent
jurisdiction in the United States or any other United States governmental body
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shall have issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the transactions contemplated
hereby and such order, decree, ruling or other action shall have become final
and nonappealable.
8.2 Liabilities Upon Termination. If this Agreement is terminated
pursuant to Section 8.1 hereof, none of the parties hereto shall have any
further liability hereunder or any further obligation to one another with
respect to this Agreement and the transactions contemplated hereby, except that
(a) in the event of a termination by Seller pursuant to Section 8.1(d), Seller
shall be entitled to receive the Deposit (together with any and all interest
earned thereon) as liquidated damages and in lieu of any other remedy which
Seller may have at law or in equity, and (b) in the event of a termination by
Purchaser pursuant to Section 8.1(e), Purchaser shall be entitled to a return of
the Deposit (together with any and all interest earned thereon) and to pursue
any remedy which it may have, whether at law or in equity, and (c) in the event
of any termination of this Agreement other than as provided in the preceding
clause (a) and clause (b), the Deposit (together with any and all interest
earned thereon) shall be returned to Purchaser. Seller and Purchaser shall
deliver to the Escrow Agent joint written instructions directing the Escrow
Agent to pay the Escrow Deposit in accordance with this Section 8.2.
SECTION 9. Survival: Indemnification.
9.1 Survival. All representations, warranties, covenants, agreements
and indemnities contained in this Agreement, or in any Schedule, Exhibit,
certificate, agreement, document or statement delivered pursuant hereto, shall
survive the Closing and not be affected in any respect by any investigation
conducted by any party hereto or any information which any party may receive;
provided, however, that the representations and warranties contained in Sections
2 and 3 hereof shall expire and terminate and shall be of no further force or
effect on the date two (2) years following the Closing Date (except for the
representations set forth in Section 2.8 (Title, Liens, Etc.), 2.15 (Hazardous
Materials) and 2.18 (Taxes), which will survive until the expiration of the
applicable statute of limitations period), except that any claim for breach
thereof made prior to such expiration date shall survive thereafter and as to
any such claim such expiration will not affect Purchaser's rights of
indemnification under Section 9.2 hereof or Seller's rights of indemnification
under Section 9.3 hereof.
9.2 Indemnification by Seller and the Selling Stockholder.
(a) Seller and the Selling Stockholder jointly and severally
agree to indemnify and hold harmless Purchaser, the partners of Purchaser, the
shareholders of such partners and their respective officers, directors,
employees and agents (individually, a "Purchaser Indemnified Party" and
collectively, "Purchaser Indemnified Parties") against and in respect of all
losses, liabilities, obligations, damages, deficiencies, actions, suits,
- -proceedings, demands, assessments, orders, judgments, costs and expenses
(including the reasonable fees, disbursements and expenses of attorneys and
consultants) of any kind or nature whatsoever, to the extent sustained, suffered
or incurred by or made against any Purchaser Indemnified Party to the extent
based upon, arising out of or in connection with: (i) any breach of any
representation or warranty made by Seller or any Selling Stockholder in this
Agreement or in any Schedule, Exhibit, certificate, agreement or other
instrument delivered pursuant to or under this Agreement (collectively,
n
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"Purchaser Representatio and Warranty Claims"); (ii) any breach of any covenant
or agreement made by Seller or by any Selling Stockholder in this Agreement or
in any Schedule, Exhibit, certificate, agreement or other instrument delivered
pursuant to or under this Agreement; (iii) any claim made by any employee or
former employee of the Station against a Purchaser Indemnified Party which claim
relates to, results from or arises out of such employee's employment, employee
benefits or termination, in each case, on or prior to the Closing Date; (iv) any
other claim made by any person or entity who or that is not a party hereto or a
subsidiary or affiliate of a party hereto (collectively, a "Third Party Claim")
made against a Purchaser Indemnified Party which relates to, results from or
arises out of Seller's ownership or operation of any Station Asset or Seller's
conduct of the business of the Station prior to the Closing Date, so long as the
Third Party Claim is not assumed by Purchaser hereunder; and (v) any of the
litigation, proceedings or investigations described in Schedule 2.10 hereto
(such claims under clauses (i) through (v) being hereinafter collectively
referred to as "Purchaser Indemnifiable Claims").
(b) All rights of Purchaser Indemnified Parties to
indemnification with respect to Purchaser Representation and Warranty Claims
shall expire on the date set forth in Section 9.1. If prior to the date of
expiration a Purchaser Indemnified Party shall have given notice to Seller of a
Purchaser Indemnifiable Claim that has arisen prior to the date of expiration,
then the right to indemnification with respect thereto shall remain in effect
without regard to when such matter shall have been finally determined and
disposed of. The limitations herein with respect to Purchaser Representation and
Warranty Claims shall not limit the rights of any Purchaser Indemnified Party
with respect to any other claim, including any claims arising under clause (ii),
(iii),(iv) or (v) of Section 9.2(a).
(c) Seller and the Selling Stockholder shall satisfy their
obligations fol indemnification hereunder within sixty (60) days after written
notice thereof from Purchaser to Seller. Purchaser shall promptly notify Seller
in writing of all matters which may give rise to the right to indemnification
hereunder, it being understood, however, that the failure to so notify Seller
shall not relieve Seller or the Selling Stockholder from any liability that any
may have under this Section 9.2 (except to the extent that it has been
prejudiced in any material respect by such failure) or from any liability that
they may have otherwise. Seller and the Selling Stockholder shall not be liable
to the Purchaser Indemnified Parties for any legal or other expenses incurred by
the Purchaser Indemnified Parties in connection with the defense of any such
Purchaser Indemnified Claim if and so long as (i) Seller and the Selling
Stockholder shall have acknowledged its obligation to indemnify the Purchaser
Indemnified Parties in respect of such Purchaser Indemnifiable Claim, (ii)
Seller and the Selling Stockholder shall assume the defense of any such
Purchaser Indemnifiable Claim and use their best efforts to defend such
Purchaser Indemnifiable Claim, (iii) Seller and the Selling Stockholder shall
provide Purchaser with reasonable reports as to the status of such Purchaser
Indemnifiable Claim, and (iv) Seller and the Selling Stockholder shall not
settle any Purchaser Indemnifiable Claim or consent to the entry of any judgment
in litigation arising from such a claim without obtaining a release of Purchaser
from all liability in respect to such claim or litigation; provided, however,
that the Purchaser Indemnified Parties shall have the right to employ counsel to
represent them, in their sole discretion, and in such event the fees and
expenses of such counsel shall be paid by the Purchaser Indemnified Parties.
Purchaser and Seller and the Selling Stockholder shall keep each other informed
of all settlement negotiations with third parties and of the progress of any
litigation with third parties. Purchaser and Seller and the Selling Stockholder
27
<PAGE>
shall permit each other reasonable access to books and records and otherwise
cooperate with all reasonable requests of each other in connection with any
matter or claim for indemnification by a third party.
9.3 Indemnification by Purchaser.
(a) Purchaser agrees at any time on or after the Closing Date
to indemnify and hold harmless Seller and the Selling Stockholder and its
shareholders, officers, directors, employees and agents (individually, a "Seller
Indemnified Party" and collectively, "Seller Indemnified Parties") at all times
against and in respect of all losses, liabilities, obligations, damages,
deficiencies, actions, suits, proceedings, demands, assessments, orders,
judgments, costs and expenses (including the reasonable fees, disbursements and
expenses of attorneys and consultants) of any kind or nature whatsoever, to the
extent sustained, suffered or incurred by or made against any Seller Indemnified
Party, to the extent based upon, arising out of or in connection with: (i) any
breach of any representation or warranty made by Purchaser in this Agreement or
in any Schedule, Exhibit, certificate, agreement or other instrument delivered
pursuant to or under this Agreement (collectively, "Seller Representation and
Warranty Claims"); (ii) any breach of any covenant or agreement made by
Purchaser in this Agreement or in any Schedule, Exhibit, certificate, financial
statement, agreement or other instrument delivered pursuant to or under this
Agreement; (iii) any Third Party Claim made against Seller which relates to,
results from or arises out of the ownership or operation of any Station Asset or
Purchaser's conduct of the Station's business on or after the Closing Date; and
(iv) any of the Assumed Liabilities (such claims under clauses (i), (ii), (iii)
and (iv) being hereinafter collectively referred to as "Seller Indemnifiable
Claims").
(b) All rights of Seller Indemnified Parties to
indemnification with respect to Seller Representation and Warranty Claims shall
expire on the date set forth in Section 9.1. If prior to the date of expiration
a Seller Indemnified Party shall have given notice to Purchaser of a Purchaser
Indemnifiable Claim that has arisen prior to the date of expiration, then the
right to indemnification with respect thereto shall remain in effect without
regard to when such matter shall have been finally determined and disposed of.
The limitations herein with respect to Seller Representation and Warranty Claims
shall not limit the rights of any Seller Indemnified Party with respect to any
other claims, including any claims arising under clause (ii), (iii) or (iv) of
Section 9.3(a).
(c) Purchaser shall satisfy its obligations for
indemnification hereunder within sixty (60) days after written notice thereof
from Seller to Purchaser. Seller shall promptly notify Purchaser in writing of
all matters which may give rise to the right to indemnification hereunder, it
being understood, however, that the failure to so notify Purchaser shall not
relieve Purchaser of any liability it may have under this Section 9.3 (except to
the extent that it has been prejudiced in any material respect by such failure)
or from any liability that it may have otherwise. Purchaser shall not be liable
to the Seller Indemnified Parties for any legal or other expenses subsequently
incurred by the Seller Indemnified Parties in connection with the defense of any
such Seller Indemnifiable Claim if and so long as (i) Purchaser shall have
acknowledged its obligation to indemnify the Seller Indemnified Parties in
respect of such Seller Indemnifiable Claim, (ii) Purchaser shall assume the
defense of any such Seller Indemnifiable Claim and use its best efforts to
defend such Seller Indemnifiable Claim, (iii) Purchaser shall provide Seller
with reasonable reports as to the status of such Seller Indemnifiable Claim and
(iv) Purchaser shall not settle any Seller Indemnifiable Claim or consent to the
entry of any judgment in litigation arising from such a claim without obtaining
28
<PAGE>
a release of Purchaser from all liability in respect to such claim or
litigation; provided, however, that the Seller Indemnified Parties shall have
the right to employ counsel to represent them, in their sole discretion, and in
such event the fees and expenses of such counsel shall be paid by the Seller
Indemnified Parties. Purchaser and Seller shall keep each other informed of all
settlement negotiations with third parties and of the progress of any litigation
with third parties. Purchaser and Seller shall permit each other reasonable
access to books and records and otherwise cooperate with all reasonable requests
of each other in connection with any matter or claim for indemnification by a
third party.
9.4 Seller Remedies Prior to Closing. Prior to the Closing, the sole
and exclusive remedy of Seller for breaches of representations, warranties and
covenants hereunder by Purchaser shall be to terminate this Agreement and to
receive the Deposit as liquidated damages as and to the extent provided in
Section 8.2.
9.5 Equitable Remedies. The parties hereto acknowledge that the Station
Assets are unique and that irreparable damage would result if this Agreement is
not specifically enforced, and that, therefore, the rights of Purchaser and
obligations of Seller and of the Selling Stockholder under this Agreement may be
enforced by a decree of specific performance issued by a court of competent
jurisdiction and appropriate equitable relief may be applied for and granted in
connection therewith.
9.6 Certain Limitations. Neither party (including any Seller
Indemnified Party and Purchaser Indemnified Party entitled to indemnification
under Section 9.2 or 9.3) shall be entitled to assert any claim for
indemnification hereunder until the aggregate amount of all claims of such party
for indemnification hereunder exceeds Ten Thousand Dollars ($10,000) (the
"Agreed De Minimis Amount"); provided; however, that (a) if the aggregate of all
such claims exceeds the Agreed De Minimis Amount, the party providing
indemnification shall be responsible for the full amount of such claims,
including the Agreed De Minimis Amount, and (b) no such limitation shall apply
to any Purchaser Indemnifiable Claims arising under Section 9.2(a)(v)
SECTION 10. Definitions.
10.1 Defined Terms . As used herein, the following terms shall have the
meanings indicated:
(a) Affiliate: with respect to any person, a person controlling,
controlled by or under common control with such person.
(b) Code: The Internal Revenue Code of 1986, as amended from time
to time.
(c) ERISA: The Employee Retirement Income Security Act of 1974, as
amended from time to time.
(d) Escrow Agent: Escrow Agent means Broadcast Asset Management
Corporation, the party which shall serve as agent pursuant to the Escrow
Agreement.
29
<PAGE>
(e) FCC Assignment Consent: The initial written authorization by
the FCC to the assignment of all material FCC Authorizations with respect to the
Station to the Purchaser, which authorization shall have become effective.
(f) Final Order: The written authorization by the FCC constituting
the FCC Assignment Consent, which has not been reversed, stayed, enjoined, set
aside, annulled or suspended and with respect to which no timely filed requests
for administrative or judicial review or stay are pending and as to which the
time for filing any such requests or for the FCC to set aside such action on its
own motion has expired.
(g) All federal, state, local and foreign taxes including, without
limitation, income, unemployment, withholding, payroll, social security, real
property, personal property, excise, sales, use and franchise taxes, levies,
assessments, imposts, duties, licenses and registration fees and charges of any
similar nature whatsoever, including interest, penalties and additions with
respect thereto and any interest in respect of such additions or penalties.
10.2 Cross-Reference Table. As used herein, the following terms shall
have the meanings set forth in the sections listed below:
Term Section
Acquisition Proposal...................................... 4.12
Assumed Liabilities....................................... 1.3(b)
Assumed Times Sales Agreement............................. 1.1(d)
Base Balance Sheet........................................ 2.4
Base Balance Sheet Date................................... 2.4
Closing................................................... 1.4
Closing Date.............................................. 1.4
Communications Act........................................ 2.6
Contracts................................................. 1.1(e)
CPR Rules................................................. 11.10
Deposit................................................... 1.13
Environmental Laws........................................ 2.15(y)
Escrow Agreement.......................................... 1.13
Excluded Assets........................................... 1.2
Excluded Restricted Contracts............................. 1.2
30
<PAGE>
FCC....................................................... Introduction
FCC Authorizations........................................ 1.1(a)
Hazardous Materials....................................... 2.15(x)
Leases.................................................... 2.14
Material Contracts........................................ 4.4(a)
Permitted Security Interests.............................. 1.3(a)
Purchase Price............................................ 1.5
Purchaser................................................. Introduction
Purchaser Documents....................................... 3.2
Purchaser Indemnifiable Claims............................ 9.2(a)
Purchaser Indemnified Party(ies).......................... 9.2(a)
Receivables............................................... 1.2(a)
Restricted Contracts...................................... 4.4(a)
Security Interests........................................ 1.3(a)
Seller.................................................... Introduction
Seller Documents.......................................... 2.3
Seller Indemnifiable Claims............................... 9.3(a)
Seller Indemnified Party(ies)............................. 9.3(a)
Station Assets............................................ 1.1
Station................................................... Introduction
Station Real Property..................................... 1.1(c)
Taxes..................................................... 2.18(a)
Third Party Claim......................................... 9.2(a)
31
<PAGE>
SECTION 11. Miscellaneous.
11.1 Expenses. Each party hereto shall bear all of its expenses
incurred in connection with the transactions contemplated by this Agreement,
including without limitation, accounting and legal fees incurred in connection
herewith; provided, however, that Purchaser and Seller shall each pay one half
of any FCC filing and grant fees required to be paid in connection with the FCC
applications referred to in Sections 4.5 and 5.2 hereof.
11.2 Bulk Sales Law. Purchaser hereby waives compliance with the
provisions of any applicable bulk sales law and Seller and each of the Selling
Stockholder jointly and severally agree to hold Purchaser harmless in accordance
with Section 9.2 (Indemnification by Seller and the Selling Stockholder) from
all claims made by creditors with respect to non-compliance with any bulk sales
law, except to the extent that such claims result from Assumed Liabilities.
11.3 Assignment. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by Seller without the prior written
consent, in its sole discretion, of Purchaser. Purchaser may, in its sole
discretion, assign its rights or obligations hereunder without the consent of
Seller. Subject to the foregoing, this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, and no other person shall have any right, benefit or obligation
hereunder.
11.4 Public Announcement. Prior to the Closing Date, no party shall,
without the prior written consent of the other party, make any press release or
other public announcement concerning the transactions contemplated by this
Agreement, except as and to the extent that such party shall be so obligated by
law, in which case such party shall give advance notice to the other parties and
the parties shall use their best efforts to cause a mutually agreeable release
or announcement to be issued.
11.5 Notices. Notices and other communications provided for herein
shall be in writing (which shall include notice by telex or facsimile
transmission) and shall be delivered or mailed (or if by telex, graphic scanning
or facsimile communications equipment of the sending party hereto, delivered by
such equipment), addressed as follows:
If to Purchaser:
Crescent Communications L.P.
55 Green Street
San Francisco, CA 94111
Telecopier: (415) 616-5700
Attention: Allen B. Shaw
32
<PAGE>
copy (which shall not constitute notice) to:
Goodwin, Procter & Hoar
Exchange Place
Boston, MA 02109
Telecopier: (617) 523-1231
Attention: David F. Dietz, P.C.
If to Seller or the Selling Stockholder:
K-G Communications, Inc.
1455 E. Tropicana
Suite 250
Las Vegas, NV 89119
Telecopier: (702) 262-6601
Attention: Jerry Kutner
copy (which shall not constitute notice) to:
Streigh Lang, P.A.
3800 Howard Hughes Parkway
Suite 1500
Las Vegas, NV 89109
Attention: Mark Gibbons, Esq.
or to such other address as a party may from time to time designate in writing
in accordance with this Section 11.6. All notice and other communications given
to any party hereto in accordance with the provisions of this Agreement shall be
deemed to have been given or made when confirmation of delivery is received by
the sender in the case of telex or facsimile notice and otherwise when such
notice is received.
11.6 Captions. The captions of Articles and Sections of this Agreement
are for convenience only and shall not control or affect the meaning or
construction of any of the provisions of this Agreement.
11.7 Law Governing. This Agreement shall be governed by, construed, and
enforced in accordance with the laws of the State of Nevada, excluding such
state's conflict of law principles.
11.8 Confidentiality. Purchaser shall keep and shall cause its general
partner and their respective directors, officers, employees, agents, auditors,
providers of financing (including without limitation any prospective lender to
Purchaser), and other advisers, counselors or consultants (collectively,
"Purchaser's Representatives") to keep, all information with respect to Seller
and/or the Station obtained in connection with the negotiation and performance
of this Agreement to be treated as confidential and shall not disclose, and
shall cause Purchaser's Representatives not to disclose, such information to any
third party without Seller's express prior written consent, except such
disclosures as may be necessary to carry out the transactions contemplated by
this Agreement. Purchaser shall not use or permit any Purchaser's Representative
33
<PAGE>
to use any such information in a manner detrimental to Seller or the Station.
All information, including documents, already provided or to be provided by or
on behalf of Seller to Purchaser or any of the Purchaser's Representatives
pursuant to this Agreement shall be designated as "Restricted Information",
except such information as (a) is generally known in the radio broadcasting
industry other than by breach of Purchaser's obligations hereunder, (b) has been
published, broadcast or otherwise disseminated to the public or the radio
broadcasting industry other than by breach of Purchaser's obligations hereunder
or (c) has been disclosed to Purchaser without restriction on disclosure or use
by third parties having a right to do so. If this Agreement is terminated for
any reason, other than consummation of the transactions contemplated hereby, the
obligations under this Section 11.9 shall survive and continue for a period of
one year from the date hereof.
11.9 Dispute Resolution. Except as provided below, any dispute arising
out of or relating to this Agreement or the breach, termination or validity
hereof shall be finally settled by arbitration conducted expeditiously in
accordance with the Center for Public Resources Rules for Nonadministered
Arbitration of Business Disputes (the "CPR Rules"). The Center for Public
Resources shall appoint a neutral advisor from its National CPR Panel. The
arbitration shall be governed by the United States Arbitration Act, 9. U.S.C.
ss.ss.1-16, and judgment upon the award rendered by the arbitrators may be
entered by any court having jurisdiction thereof. The place of arbitration shall
be San Francisco, California.
Such proceedings shall be administered by the neutral advisor in
accordance with the CPR Rules as he/she deems appropriate, however, such
proceedings shall be guided by the following agreed upon procedures:
(a) mandatory exchange of all relevant documents, to be
accomplished within forty-five (45) days of the initiation of the procedure;
(b) no other discovery;
(c) hearings before the neutral advisor which shall consist of
a summary presentation by each side of not more than three hours; such hearings
to take place on one or two days at a maximum; and
(d) decision to be rendered not more than 10 days following such
hearings.
Notwithstanding anything to the contrary contained herein, the
provisions of this Section 11.10 shall not apply with regard to any equitable
remedies to which any party may be entitled hereunder.
Seller, each Selling Stockholder and Purchaser (a) hereby irrevocably
submit to the jurisdiction of the United States District Court for the District
of Northern California, for the purpose of enforcing the award or decision in
any such proceeding and (b) hereby waive, and agree not to assert, by way of
motion, as a defense, or otherwise, in any such suit, action or proceeding, any
claim that is not subject personally to the jurisdiction of the above-named
courts, that its property is exempt or immune from attachment or execution, that
the suit, action or proceeding is brought in an inconvenient forum, that the
venue of the suit, action or proceeding is improper or that this Agreement or
the subject matter hereof may not be enforced in or by such court, and (c)
34
<PAGE>
hereby waive and agree not to seek any review by any court of any other
jurisdiction which may be called upon to grant an enforcement of the judgment of
any such court. Seller, each Selling Stockholder and Purchaser hereby consent to
service of process by registered mail at the address to which notices are to be
given. Seller, each Selling Stockholder and Purchaser agree that their
submission to jurisdiction and their consent to service of process by mail is
made for the express benefit of the other parties hereto. Final judgment against
Seller, any Selling Stockholder and Purchaser in any such action, suit or
proceeding may be enforced in other jurisdictions by suit, action or proceeding
on the judgment, or in any other manner provided by or pursuant to the laws of
such other jurisdiction; provided, however, that any party may at its option
bring suit, or institute other judicial proceedings, in any state or federal
court of the United States or of any country or place where the other parties or
their assets, may be found.
11.10 Waiver of Provisions. The terms, covenants, representations,
warranties, and conditions of this Agreement may be waived only by a written
instrument executed by the party waiving compliance. The failure of any party at
any time or times to require performance of any provision of this Agreement
shall in no manner affect the right of such party at a later date to enforce the
same. No waiver by any party of any condition or the breach of any provision,
term, covenant, representation, or warranty contained in this Agreement, whether
by conduct or otherwise, in any one or more instances shall be deemed to be
construed as a further or continuing waiver of any such condition or of the
breach of any other provision, term, covenant, representation, or warranty of
this Agreement.
11.11 Counterparts. This Agreement may be executed in several
counterparts, and all counterparts so executed shall constitute one agreement,
binding on the parties hereto, notwithstanding that the parties are not
signatory to the same counterpart.
11.12 Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes and
cancels any and all prior or contemporaneous arrangements, understandings and
agreements between them relating to the subject matter hereof (including the
Letter of Intent dated September 29, 1995), and may not be amended or modified
except in a writing signed by the party to be bound.
11.13 Access to Books and Records. After the Closing Date, Purchaser
shall upon Seller's request, in connection with the preparation by Seller of tax
returns and for such other purposes as Seller shall reasonably request, (i)
provide to the officers and other authorized representatives of Seller, full
access, during normal business hours, to any and all premises, properties,
files, books, records, documents and other information of the Station, (ii)
cause its officers and the Station to furnish to Seller and its authorized
representatives any and all financial, technical and operating data and other
information pertaining to the Station, (iii) make available to Seller and their
authorized representatives personnel of Purchaser to consult with such persons
and (iv) make available for inspection and copying by Seller at Seller's expense
true and complete copies of any documents relating to the foregoing. Purchaser
shall retain the files, books, records and documents of the Station for at least
five (5) years after the Closing Date. thereafter, Purchaser shall give the
Seller thirty (30) calendar days prior written notice of the proposed
destruction of any such files, books, records or documents and, at the request
and expense of Seller, shall deliver to Seller, any of such files, books,
records or documents that Seller may request. Seller shall likewise afford
Purchaser reasonable access to records in its custody and control relating to
35
<PAGE>
the Station or the Station Assets for such purposes as Purchaser may reasonably
request on terms and conditions substantially equivalent to those set forth
above.
11.14 Time of Essence. Purchaser, Seller and the Selling Stockholder
agree that "time is of the essence" as to the performance of this Agreement and
the transactions contemplated hereby.
11.15 Severability. If any term, covenant, condition or provision of
this Agreement, or the application thereof to any party or circumstance shall to
any extent be held invalid or unenforceable, the remainder of this Agreement or
the application of such term or provision to parties or circumstances other than
those as to which it is held invalid or unenforceable shall not be affected
thereby, and each term, covenant, condition or provision of this Agreement shall
be valid and be enforced to the fullest extent permitted by law, provided that
such unenforceable provision shall be curtailed, limited or eliminated only to
the extent necessary to remove such invalidity or unenforceability with respect
to the applicable law as it shall then be applied.
11.16 General Interpretive Rules. For purposes of this Agreement,
except as otherwise provided or unless the context otherwise requires, (i) the
terms defined in Section 10 have the meanings assigned to them in such Section
and include the plural as well as the singular and the use of any gender herein
shall be deemed to include the other genders; (ii) references herein to
"Sections" and other subdivisions, and to "Exhibits" and "Schedules," without
reference to another document, are to designated Sections and other subdivisions
of, and to Exhibits and Schedules to, this Agreement; (iii) reference to a
subsection without further reference to a Section is a reference to such
subsection contained in the same Section in which the reference appears and this
rule shall also apply to paragraphs and other subdivisions; (iv) "including"
means including but not limited to; (v) "knowledge" means knowledge obtained in
the ordinary course of operations as conducted by a reasonable business person,
but without special investigation or audit; and (vi)the words "herein,"
"hereof," "hereunder" and other words of similar import refer to this Agreement
as a whole and not to any particular provision.
[Remainder of page intentionally left blank]
36
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
K-G COMMUNICATIONS, INC.
By: _____________________________
Jerry Kutner, President
By: _____________________________
Jules Kutner
CRESCENT COMMUNICATIONS L.P.
By: CRESCENT COMMUNICATIONS
GP, INC.
Its General Partner
By: _____________________________
Allen B. Shaw, President
37
<TABLE>
<CAPTION>
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
American Radio Systems Corporation
EXHIBIT 11
(In thousands, except per share data)
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
-------- -------- -------- -------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average shares of common stock 19,153 10,070 18,075 9,330
Add:
Common stock equivalents in the form of
stock options and warrants 989 793 951 751
Weighted average common stock and ------- ------- ------- --------
common stock equivalents 20,142 10,863 19,026 10,081
Net Income:
Net income applicable to common
stockholders $ 2,077 $ 379 $ 1,621 $ 5,067
Primary and fully diluted per common share
amounts:
Net income applicable to common
stockholders $ .10 $ .03 $ .09 $ .50
</TABLE>
<TABLE>
<CAPTION>
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
American Radio Systems Corporation
EXHIBIT 12
(In thousands, except ratio data)
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
-------- -------- -------- -------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Computation of Earnings:
Income from continuing operations before
income taxes $ 4,018 $ 1,127 $ 3,191 $10,301
Add:
Interest expense (1) 4,262 2,703 8,964 5,885
Rent expense (2) 234 120 429 241
------- ------- ------- -------
Earnings as adjusted 8,514 3,950 12,584 16,427
Computation of Fixed Charges:
Interest expense (1) 4,262 2,703 8,964 5,885
Rent expense (2) 234 120 429 241
Preferred dividends 134 297 134 815
Fixed charges 4,630 3,120 9,527 6,941
Ratio of earnings to combined fixed charges 1.84 1.27 1.32 2.37
- ------------------
<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>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 149,175
<SECURITIES> 0
<RECEIVABLES> 32,028
<ALLOWANCES> 3,020
<INVENTORY> 0
<CURRENT-ASSETS> 186,781
<PP&E> 52,417
<DEPRECIATION> 6,678
<TOTAL-ASSETS> 542,044
<CURRENT-LIABILITIES> 21,708
<BONDS> 175,086
0
1
<COMMON> 192
<OTHER-SE> 333,709
<TOTAL-LIABILITY-AND-EQUITY> 542,044
<SALES> 0
<TOTAL-REVENUES> 61,426
<CGS> 0
<TOTAL-COSTS> 45,696
<OTHER-EXPENSES> 7,179
<LOSS-PROVISION> 898
<INTEREST-EXPENSE> 8,964
<INCOME-PRETAX> 3,191
<INCOME-TAX> 1,436
<INCOME-CONTINUING> 1,755
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,755
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
</TABLE>
EXHIBIT 99-1
[GRAPHIC OMITTED]
FOR IMMEDIATE RELEASE Contact:
American Radio Systems:
Joseph L. Winn, Chief Financial Officer or
Bruce Danziger, Director of
Investor Relations at (617) 375-7500
EZ Communications, Inc.:
Ron Peele, Chief Financial
Officer (703) 591-1000
AMERICAN RADIO SYSTEMS AND EZ COMMUNICATIONS TO MERGE
BOSTON - August 5, 1996 -- American Radio Systems (NASDAQ: AMRD) and EZ
Communications (NASDAQ: EZCIA) announced today a definitive merger agreement
combining two of this country's leading radio broadcasters and creating one of
the Top 5 radio broadcasting companies in the U.S.
EZ shareholders will receive 0.9 shares of American's Class A Common
Stock and $11.75 in cash per share of EZ. This transaction involves issuing
approximately 8.7 million American Radio shares for EZ's 9.6 million
fully-diluted shares outstanding. Closing is expected to be in early 1997
subject to FCC approval, the expiration of the Hart-Scott-Rodino waiting period
and shareholder approval of both American Radio and EZ.
Steve Dodge, Chairman and Chief Executive Officer of American Radio,
said, "The merger of EZ and American Radio creates one of the most attractive
portfolios of stations in the industry." The combined radio group will include
96 radio stations in 20 markets, making it one of the largest and most
geographically diversified radio groups in the U.S. On a pro forma basis for
this transaction and all other pending acquisitions, American's 1996 revenues
are estimated to be approximately $340 million. Mr. Dodge added "We have
carefully assessed EZ's markets and stations, and we believe they have stunning
growth potential. We know ours do. We believe American Radio Systems is as fine
a platform for long-term value creation as exists in radio today."
(continued)
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116 Huntington Avenue, Boston, Massachusetts 02116
(617) 375-7500 FAX (617) 375-7575
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With a strong presence in attractive US markets ranked by revenue 7th
to 62nd, including five of the top ten projected growth markets as determined by
the U.S. Department of Commerce, the new radio company will be well positioned
to take advantage of the opportunities in this fast growing business. Ownership
of radio clusters in attractive markets provides significant operating
efficiencies and access to a larger more diverse audience, thus creating a
better range of products and services for advertisers.
Art Kellar, Chairman of EZ, said, "This is a tremendous opportunity for
EZ shareholders and employees. Teaming with the American Radio group will open
new opportunities for us all, and solidly position our company as a leader in
the radio broadcasting industry." Alan Box, EZ's President and Chief Executive
Officer, said, "I am looking forward to working with Steve Dodge and the
talented team at American Radio. Steve has a long history of success and
creating value."
Mr. Kellar and Mr. Box, who together control approximately 74.9% of the
fully-diluted voting power of EZ have agreed to vote for the transaction. In
addition, Mr. Dodge and the other directors of American, who hold in excess of
40% of the voting power of American Radio, have also agreed to vote for the
transaction. Mr. Dodge has recommended that Mr. Kellar and Mr. Box become
members of the American Radio Board of Directors, and that Mr. Kellar be a
member of American's Executive Committee and Compensation Committee. Mr. Box
will continue with the combined company as Executive Vice President with a range
of responsibilities including acquisitions and new revenue development. He will
represent American Radio on the Board of Radio Data Group and will sit on the
Board of American Tower Systems, a wholly-owned subsidiary of American Radio. He
will also be a member, along with Steve Dodge, Joe Winn, Dave Pearlman and John
Gehron of American's Operations Committee.
CS First Boston Corporation acted as financial advisor to EZ with
respect to this transaction. Morgan Stanley & Co. Incorporated acted as
financial advisor to American with respect to this transaction.
# # #
AMERICAN RADIO SYSTEMS CORPORATION AND EZ COMMUNICATIONS, INC. MANAGEMENT WILL
BE CONDUCTING A CONFERENCE CALL AT 11:00 A.M. (EDT) (1-800- 288-8976) TODAY AND
WILL BE AVAILABLE FOR QUESTIONS. A RECORDING OF THE CALL WILL BE AVAILABLE AT
1-800-475-6701 (Access Code 312602) UNTIL MIDNIGHT WEDNESDAY, AUGUST 7 FOR THOSE
PARTIES UNABLE TO LISTEN TO THE LIVE CALL.
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116 Huntington Avenue, Boston, Massachusetts 02116
(617) 375-7500 FAX (617) 375-7575
