SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT
OF 1934 (NO FEE REQUIRED)
For the transition period from ___________ to _____________.
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 and Zip Code)
(617) 375-7500
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12 (b) of the Act:
Title of each class Name of Exchange on Which Registered
Class A Common Stock, $.01 par value New York Stock Exchange
Securities registered pursuant to Section 12 (g) of the Act:
(Title of Class)
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ].
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 3, 1997 was approximately $471,872,971. As of March 1,
1997, 15,176,397 shares of Class A Common Stock, 4,604,862 shares of Class B
Common Stock and 1,295,518 shares of Class C Common Stock were issued and
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the proxy statement for the annual shareholders meeting to be held
May 29, 1997 are incorporated by reference into Part III.
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
TABLE OF CONTENTS
Part I Page
ITEM 1. Business 1
ITEM 2. Properties 18
ITEM 3. Legal Proceedings 18
ITEM 4. Submission of Matters to a Vote of Security Holders 18
Part II
ITEM 5. Market for the Registrant's Common Equity and Related Stockholder
Matters 19
ITEM 6. Selected Financial Data 20
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations 25
ITEM 8. Financial Statements and Supplementary Data 33
ITEM 9. Changes In and Disagreements With Accountants On Accounting and
Financial Disclosure 33
PART III
ITEM 10. Directors and Executive Officers of the Registrant 34
ITEM 11. Executive Compensation 34
ITEM 12. Security Ownership of Certain Beneficial Owners and Management 34
ITEM 13. Certain Relationships and Related Transactions 34
PART IV.
ITEM 14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K 35
Signatures 36
<PAGE>
INTRODUCTION
American desires to take advantage of the new "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995. American's Annual Report
on Form 10-K contains "forward-looking statements" including statements
concerning projections, plans, objectives, future events or performance and
underlying assumptions and other statements which are other than statements of
historical fact. For a description of the important factors, among others, that
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, see "Management's Discussion and Analysis of Financial
Condition and Results of Operations".
PART I
ITEM 1. BUSINESS
General
American Radio Systems Corporation (the "Company" or "American") is a
national radio broadcasting company committed to acquiring, developing and
operating radio stations in markets where it can be a leading radio operator
(i.e., one of the top two radio operators in terms of local market revenues). In
July 1995, the Company organized American Tower Systems, Inc. (the Tower
Subsidiary or Tower) for the purpose of acquiring, developing, and operating
communications towers throughout the United States, for use by American's radio
stations, other radio operators and other communications related businesses. As
of December 31, 1996, the Company (which ranks among the four largest U.S. radio
broadcasting companies in terms of 1996 net revenues), owned and/or operated 71
stations (48 FM and 23 AM) in 14 markets consisting of Boston, Baltimore,
Hartford, Buffalo, Austin, West Palm Beach, Fresno, Rochester, Dayton, Las
Vegas, Omaha, Portland, Sacramento and San Jose and owned and operated over 200
stand-alone towers and rooftop towers. The Company is also a party to a merger
agreement (the EZ Merger) with EZ Communications, Inc. (EZ) pursuant to which
the Company will acquire over twenty additional stations in seven new markets
consisting of Charlotte, Kansas City, Philadelphia, Pittsburgh, New Orleans,
Seattle and St. Louis and additional stations in Sacramento. The Company expects
to consummate the EZ Merger in the second quarter of 1997. See Pending
Transactions.
See the table set forth on page 2 for additional information about the
Company's radio stations.
1
<PAGE>
The following table sets forth certain key information about the Company's
radio stations owned and operated as of December 31, 1996:
<TABLE>
<CAPTION>
Market Year Acquired Market Year Acquired
Market (1) & Revenue or began Market (1) & Revenue or began
Station Rank(3) LMA(2) Station Rank(3) LMA(2)
------------ ------- ------------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C>
Austin, TX 37 Las Vegas, NV 42
KKMJ-FM(2) 1995 KMZQ-FM 1996
KAMX-FM(2) 1995 KXTE-FM 1996
KJCE-AM(2) 1995 KMXB-FM 1996
KXNT-AM 1996
Baltimore, MD 19 KXNO-AM 1996
WQSR-FM 1994 KLUC-FM 1996
WBMD-AM 1994
WBGR-AM 1996 Omaha, NE 57
WWMX-FM(2) 1996 KGOR-FM 1996
WOCT-FM(2) 1996 KFAB-AM 1996
Boston, MA 9 Portland, OR 23
WBMX-FM 1988 KUFO-FM 1996
WRKO-AM 1988 KUPL-AM 1996
WEEI-AM 1992 KUPL-FM 1996
WEGQ-FM 1994 KKJZ-FM 1996
WAAF-FM(2) 1996 KBBT-FM 1996
WWTM-AM(2) 1996
Rochester, NY 54
Buffalo, NY 41 WCMF-FM 1983
WYRK-FM 1980 WRMM-FM 1988
WJYE-FM 1994 WCMF-AM 1988
WECK-AM 1994
WBLK-FM(2) 1996 Sacramento, CA 25
WSJZ-FM 1996 KSTE-AM 1996
KSFM-FM(2) 1996
Dayton, OH 55 KMJI-AM(2) 1996
WMMX-FM 1985 KYMX-FM 1996
WTUE-FM 1993 KCTC-AM 1996
WONE-AM 1993 KSSJ-FM 1996
WXEG-FM(2) 1996 KXOA-FM(2) 1996
WLQT-FM(2) 1996 KXOA-AM(2) 1996
WBTT-FM(2) 1996 KQPT-FM(2) 1996
Fresno, CA 62 San Jose, CA 43
KSKS-FM 1996 KSJO-FM 1996
KKDJ-FM 1996 KUFX-FM 1996
KMJ-AM 1996 KBAY-FM(2) 1996
KOQO-AM(2) 1996 KKSJ-AM(2) 1996
KOQO-FM(2) 1996
KNAX-FM 1996 West Palm Beach, FL 48
KVSR-FM 1996 WIRK-FM 1994
WKGR-FM 1995
Hartford, CT 34 WBZT-AM 1994
WZMX-FM 1988 WEAT-FM(2) 1996
WRCH-FM 1994 WEAT-AM(2) 1996
WTIC-AM 1996 WOLL-FM(2) 1996
WTIC-FM 1996
<FN>
(1) Actual community of license may differ from the metropolitan market served.
(2) Programmed and marketed under Local Marketing Agreement (LMA).
(3) Ranking of the principal radio market served by the station among all radio
markets in the United States by 1995 market revenue according to the Duncan
Guide. James H. Duncan, publisher of the Duncan Guide, is a director of the
Company.
</FN>
</TABLE>
2
<PAGE>
History
On November 1, 1993 the Company commenced operations following the merger
of four radio broadcasting entities: Stoner Broadcasting Systems, Inc., Atlantic
Radio, L.P., Multi Market Communications, Inc. and Boston AM Radio Corporation.
As a result, American owned and operated eleven FM and seven AM stations in
eight markets consisting of Boston, Hartford, Buffalo, Rochester, Dayton, Des
Moines, Binghamton and Louisville. Between November 1, 1993 and January 1, 1996,
American entered three new markets, Baltimore, Austin and West Palm Beach, and
disposed of all of its stations in Des Moines, Binghamton and Louisville. During
such period, American also agreed to purchase or acquired options to purchase
additional stations in several existing and new markets. See Notes to the
Consolidated Financial Statements of American.
Recent Transactions
1996 Station Acquisitions:
Baltimore: In October 1996, American acquired the assets of WBGR-AM for
approximately $2.8 million.
Buffalo: In August 1996, the Company acquired the assets of WSJZ-FM for
approximately $12.5 million. The Company had been programming and marketing the
station pursuant to an LMA beginning in April 1996.
Fresno: In December 1996, the Company acquired the assets of KNAX-FM and
KVSR-FM (formerly KRBT-FM) for approximately $11.0 million. American had been
programming and marketing the stations pursuant to an LMA beginning in August
1996.
Fresno, Omaha, Portland and Sacramento: In July 1996, the transactions
contemplated by a merger agreement by and between the Company and Henry
Broadcasting Company (HBC) were consummated. Pursuant thereto, the Company
acquired KUFO-FM and KUPL-AM (formerly KBBT-AM) in Portland, Oregon, KYMX-FM and
KCTC-AM in Sacramento, California, KGOR-FM and KFAB-AM in Omaha, Nebraska (See
pending transactions for information with respect to the sale of the Omaha
stations), and KSKS-FM, KKDJ-FM, and KMJ-AM in Fresno, California, for an
aggregate purchase price of approximately $110.4 million. The acquisition was
financed through a $5.0 million escrow deposit, the issuance of 1,879,034 shares
of Class A Common Stock valued at approximately $64.0 million, approximately
$4.1 million in available cash, together with the assumption of approximately
$37.3 million in long term debt, which was paid by the Company at closing. As
part of a related transaction with the principal stockholder of HBC, the Company
acquired certain real estate used in the business of HBC for approximately $2.0
million in cash and obtained a five-year option to acquire certain other real
estate for a purchase price of approximately $1.0 million.
Hartford: In May 1996, the Company consummated the acquisitions of WTIC-AM
and WTIC-FM. 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. The Company also paid $1.0 million for a two-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 . Upon receipt of FCC approval in May,
1996, the escrow deposit of $2.0 million, the loans and $1.1 million of
available cash were used to finance the acquisition. The Company also paid $3.5
million to purchase the tower of one of the stations in October 1995.
3
<PAGE>
Las Vegas: In October 1996, the Company acquired KMZQ-FM and KXTE-FM
(formerly KFBI-FM) for approximately $28.0 million. American had been
programming and marketing the stations pursuant to an LMA beginning in May 1996.
As part of such transaction, American paid an additional $0.2 million to acquire
the seller's right (and obligation) to purchase KXNT-AM (formerly KVEG-AM) for
approximately $1.9 million which purchase, as noted below, was consummated in
September 1996.
In September, 1996, the Company acquired the assets of KXNT-AM for
approximately $1.9 million. The Company had been programming and marketing the
station pursuant to an LMA beginning in May 1996.
In July 1996, the Company acquired the assets of KMXB-FM (formerly KJMZ-FM)
for approximately $8.0 million. The Company had been programming and marketing
the station pursuant to an LMA beginning in May 1996.
In July 1996, the Company acquired the assets of KLUC-FM and KXNO-AM for
approximately $11.0 million.
Philadelphia and Detroit: In May 1996, the Company consummated the
transactions contemplated by a merger agreement with Marlin Broadcasting, Inc.
(Marlin). American acquired WFLN-FM in Philadelphia, Pennsylvania, WQRS-FM in
Detroit, Michigan and WTMI-FM in Miami, Florida for an aggregate purchase price
of approximately $58.5 million, together with the assumption of approximately
$9.0 million of long-term debt which was paid in full at closing. The principal
stockholder of Marlin immediately thereafter acquired WTMI-FM from the Company
for approximately $18.0 million in cash. Proceeds from the sale of WTMI-FM were
held in an escrow account pursuant to a like-kind exchange agreement and were
utilized to partially fund the Portland and San Jose transaction discussed
below. The Company retained certain Philadelphia real estate and tower assets
valued at approximately $1.5 million. In June 1996, the Company entered into an
agreement with an unaffiliated party pursuant to which it will exchange the
assets of the Philadelphia station for two stations in Sacramento and sell the
Detroit station for approximately $20.0 million in cash. This party began
programming the Philadelphia and Detroit stations under an LMA beginning in June
1996. The net assets and liabilities of the Detroit and Philadelphia stations
included in this exchange agreement are carried on the consolidated balance
sheet as net assets held under exchange agreement. See 1997 Station
Acquisitions - Sacramento.
Portland: In July 1996, the Company acquired the assets of KBBT-FM
(formerly KDBX-FM) for approximately $14.0 million. The Company also granted the
seller the right to exercise American's option to acquire the assets of WBNW-AM.
Portland and San Jose: In August 1996, the Company acquired the assets of
KUPL-FM and KKJZ- FM in Portland, Oregon and KSJO-FM and KUFX-FM in San Jose,
California for approximately $103.0 million. The acquisition was partly financed
through $18.0 million in restricted cash. (See Philadelphia and Detroit
transaction discussed above).
Sacramento: In September 1996, the Company acquired the assets of KSSJ-FM
for approximately $14.0 million. The Company had been programming and marketing
the station pursuant to an LMA beginning in July 1996. (See Pending Transactions
- - EZ Merger - Sacramento for information with respect to the exchange of the
station).
In July 1996, the Company acquired the assets of KSTE-AM serving Rancho
Cordova, California for approximately $7.25 million. The Company had been
programming and marketing the station pursuant to an LMA beginning in April
1996. (See Pending Transactions - West Palm Beach for information with respect
to the exchange of the station).
1996 Station Dispositions
In December 1996, the Company sold WNEZ-AM serving New Britain, Connecticut
for approximately $710,000, and a loss of approximately $140,000 was recorded
upon disposition.
4
<PAGE>
1996 Tower Acquisitions:
In November 1996, the Tower Subsidiary acquired a 32.5 percent interest in
a partnership for approximately $325,000. The partnership owns and operates a
tower site in Los Angeles, California and was formed by the minority partner in
the Needham venture discussed below.
In October 1996, the Tower Subsidiary acquired the assets of tower sites
located in Hampton, Virginia and North Stonington, Connecticut for approximately
$1.4 million and 1.0 million, respectively.
In July 1996, the Tower Subsidiary entered into an agreement with an
unaffiliated party to operate a tower site in Needham, Massachusetts. In
connection therewith, the Tower Subsidiary advanced approximately $3.8 million
to the corporation. The Tower Subsidiary has a 50.1% interest in the
corporation. The accounts of the corporation are included in the consolidated
financial statements, with the other shareholder's investment reflected as
minority interest in subsidiary on the consolidated balance sheet.
In April 1996, 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 owns
three towers in Pennsylvania and BRIDAN Communications manages or has sublease
agreements with respect to approximately forty tower sites located throughout
the Mid-Atlantic region.
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 the Company's 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 at closing. Skyline Antenna Management manages
or has sublease agreements on approximately 200 antenna sites, primarily in the
northeast region of the United States.
Equity and Debt Financings
February Public Offerings: In February 1996, American consummated an
offering of 5,514,707 shares of Class A Common Stock at an offering price of $27
per share, including 4,501,337 shares sold by American and 1,013,370 shares sold
by the selling stockholders. Proceeds to American, net of underwriters' discount
and associated costs, were approximately $114.5 million. Concurrent with the
stock offering, American sold $175,000,000 principal amount of the American
Notes at a discount of $1,419,250 to yield 9.125%. Proceeds of the debt offering
to American, net of the underwriters' discount and associated costs, were
approximately $167.5 million.
June Private Offering: In June 1996, American consummated an offering
exempt from registration under the Securities Act of 137,500 shares of 7%
Convertible Exchangeable Preferred Stock, $1,000 liquidation preference. Net
proceeds to American from the offering were approximately $132.8 million. The
Convertible Preferred Stock is convertible into shares of Class A Common Stock
at a conversion price of $42.50, subject to adjustment for certain dilutive
stock issuances, and exchangeable at American's option after June 30, 1997 for
the Convertible Exchange Debentures which are convertible into Class A Common
Stock on the same terms as the Convertible Preferred Stock.
January 1997 Private Offering: In January 1997, American consummated an
offering exempt from registration under the Securities Act of 2,000,000 shares
of 11 3/8% Exchangeable Preferred Stock. Net proceeds to American from the
offering were approximately $192.4 million. The Exchangeable Preferred Stock is
exchangeable at American's option for the Exchange Debentures. American has the
option, on or prior to January 15, 2002, to pay dividends on the Exchangeable
Preferred Stock (and/or interest on the Exchange Debentures) in the form of
additional shares of Exchangeable Preferred Stock (or Exchange Debentures). The
Exchangeable Preferred Stock and Exchange Debentures are redeemable for cash at
any time after January 15, 2002 at the option of American, and American is
required to redeem all of the Exchangeable Preferred Stock outstanding on
January 15, 2009.
5
<PAGE>
Credit Agreements: In January 1997, American entered into two credit
agreements (the American Credit Agreement) pursuant to which American may borrow
a maximum combined principal amount of $900.0 million, of which $150.0 million
is available only to finance the repurchase of certain note obligations of EZ
which will be assumed by the Company in connection with the EZ Merger. In
November 1996, the Tower Subsidiary entered into a credit agreement (the Tower
Credit Agreement) pursuant to which Tower may borrow a maximum principal amount
of $90.0 million, pursuant to which the initial funding occurred in December
1996.
1997 Station Acquisitions:
Baltimore: In February 1997, the Company acquired the assets of WWMX-FM and
WOCT-FM for approximately $60.0 million and $30.0 million, respectively. The
Company had been programming and marketing the stations pursuant to an LMA
beginning in November 1996.
Boston, Worcester: In January 1997, the Company acquired the assets of
WAAF-FM and WWTM-AM in Worcester, Massachusetts for approximately $24.8 million.
The Company had been programming and marketing the stations pursuant to an LMA
beginning in August 1996.
Dayton: In February 1997, the Company acquired the assets of WXEG-FM for
approximately $3.6 million. The Company had previously loaned approximately $3.6
million to the owner of the station. In December 1995, the Company entered into
an agreement with Steven B. Dodge, Chairman of the Board and Chief Executive
Officer of the Company, relating to this station pursuant to which Mr. Dodge had
agreed to provide financing to a newly organized company which acquired the
station in December 1995. Pursuant to the agreement, the Company acquired Mr.
Dodge's approximately $2.2 million loan (including accrued interest) which had
been assumed by the new owner, along with his right to acquire the station. The
Company also loaned an additional approximately $1.4 million to the new owner to
finance the acquisition of the station. The acquisition was financed with
proceeds from the loans. The Company had been programming and marketing the
station pursuant to an LMA beginning in April 1996.
In February 1997, Company acquired the assets of WLQT-FM and WBTT-FM
(formerly WDOL-FM) for approximately $12.0 million. The Company had previously
loaned approximately $12.0 million to the owner of the stations. The acquisition
was financed with proceeds from the loan. The Company had been programming and
marketing the stations pursuant to an LMA beginning in April 1996.
Rochester: In February 1997, the Company consummated the transactions
contemplated by a series of agreements pursuant to which the Company acquired
the assets of WVOR-FM, WPXY-FM, WHAM-AM and WHTK-AM for approximately $31.5
million, including working capital. The Company had previously loaned
approximately $28.5 million to the owner of the stations. The acquisition was
financed with proceeds from the loan, a $2.0 million escrow deposit and
available cash. In accordance with a October 1996 consent decree with the
Antitrust Division of the U.S. Department of Justice and the Attorney General of
the State of New York, the Company is required to divest WHAM-AM and WVOR- FM,
within a certain period of time. See Pending Transactions - Rochester and
Cincinnati.
Sacramento: In February 1997, the Company consummated an agreement to
exchange the Philadelphia station which it acquired as part of the Marlin
Transaction for KSFM-FM and KMJI-AM serving Sacramento, California. The Company
also sold the Detroit station acquired as part of the Marlin transaction to the
owner of the Sacramento stations for approximately $20.0 million. See Recent
Transactions -Philadelphia and Detroit and Pending Transactions - Sacramento.
In March 1997, the Company acquired the assets of KXOA-AM/FM and KQPT-FM in
Sacramento, California for approximately $50.0 million. The Company began
programming and marketing the stations pursuant to an LMA beginning in August
1996. See Pending Transactions - Sacramento.
6
<PAGE>
San Jose: In February 1997, the Company acquired the assets of KBAY-FM and
KKSJ-AM for approximately $31.0 million. The Company had been programming and
marketing the stations pursuant to an LMA beginning in August 1996.
West Palm Beach: In March 1997, the Company consummated an agreement to
exchange the assets of KSTE-AM in Sacramento, California plus approximately
$33.0 million in cash for the assets of WEAT-FM, WEAT-AM and WOLL-FM in West
Palm Beach, Florida. The party to the exchange agreement began programming and
marketing KSTE-AM pursuant to an LMA and the Company began programming and
marketing the West Palm stations pursuant to an LMA beginning in August 1996.
Under current FCC regulations, the Company is permitted to own five FM stations
in West Palm Beach; accordingly, it will be required to dispose of one station
in West Palm Beach.
Pending Transactions
Charlotte, Kansas City, Philadelphia, Pittsburgh, New Orleans, Sacramento,
Seattle, and St. Louis:
In August 1996, the Company entered into a merger agreement (as amended in
September 1996) with EZ pursuant to which EZ will be merged directly with and
into the Company . Pursuant to the merger agreement, each holder of EZ Common
Stock will receive (i) $11.75 in cash and (ii) 0.9 shares of the Company's Class
A Common Stock. Based on the number of shares of EZ Common Stock outstanding at
December 31, 1996, the Company will pay approximately $107.4 million in cash and
issue approximately 8,228,400 shares of the Company's Class A Common Stock
(excluding options to purchase an aggregate of 514,400 shares of the Company's
Class A Common Stock which will be assumed pursuant to the EZ Merger). EZ
currently owns and/or operates twenty-six radio stations in eight markets as
follows: WSOC- FM and WSSS-FM in Charlotte, North Carolina; KFKF-FM, KBEQ-FM and
KOWW-AM 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, KBKS-FM, KRPM-AM and KYCW-FM in
Seattle, Washington and KYKY-FM, KEZK-FM, KFNS-AM and KSD- AM/FM in St. Louis,
Missouri. As a result of existing FCC regulations and the Sacramento stations
either owned by the Company or under agreement to purchase or sell by the
Company, upon consummation of the EZ Merger, the Company will be required to
sell one radio station in Sacramento, KSSJ-FM, (in addition to KXOA-FM and
KSTE-AM). See West Palm Beach and Sacramento below. Termination of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) waiting period
with respect to the EZ Merger has occurred. Subject to the receipt of FCC
approval, the Company expects to consummate the EZ Merger in the second quarter
of 1997.
EZ is a party to several pending transactions which are expected to be
consummated subsequent to the EZ Merger and the applicable regulatory approvals.
EZ is a party to an asset exchange agreement, pursuant to which EZ will exchange
the New Orleans stations for KBKS-FM and KRPM-AM in Seattle and $7.5 million. In
December 1996, EZ entered into an agreement pursuant to which it will exchange
its Philadelphia stations for stations in Charlotte, North Carolina, (WRFX-FM,
WPEG-FM, WBAV-AM/FM and WFNZ-AM) and purchase WNKS-FM in Charlotte for $10.0
million. Pursuant to FCC and HSR Act requirements, EZ then entered into an
exchange agreement pursuant to which it will exchange WRFX-FM for WDSY-AM/FM in
Pittsburgh and $20.0 million. In December 1996, EZ entered into an agreement to
sell KMPS-AM in Seattle for approximately $2.0 million. In November 1996, the
Company entered into an agreement to sell the assets of KSD-AM in St. Louis for
approximately $10.0 million and the buyer began programming and marketing the
station pursuant to an LMA in January 1997. All of such transactions are subject
to receipt of FCC approval and, in certain cases, the expiration or earlier
termination of the HSR Act waiting period and will be consummated in the second
or third quarter of 1997.
Austin: In February 1997, the Company executed its option to acquire the
assets of KKMJ-FM, KAMX-FM (formerly KPTY-FM) and KJCE-AM for approximately
$28.7 million. In August 1995, the Company paid a deposit of $3.0 million for a
two-year option to acquire the assets of these stations which will be credited
toward the purchase price. The Company has been programming and marketing the
stations pursuant to an LMA beginning in September 1995. The HSR Act waiting
period was terminated early and subject to the receipt of FCC approval, the
acquisition is expected to be consummated in the first half of 1997.
7
<PAGE>
Buffalo: In August 1995, the Company entered into an agreement to acquire
the assets of WBLK-FM for approximately $8.0 million and then assigned its
purchase right and agreed to make loans to finance the purchase to PBRB. PBRB
consummated the acquisition in March 1996 utilizing the proceeds of the loan and
the Company began programming and marketing the station pursuant to an LMA
beginning in March 1996. The Company intends to exercise its option to acquire
WBLK-FM (which acquisition may take the form of a merger with PBRB). Subject to
the receipt of FCC approval, and the expiration or earlier termination of the
HSR Act waiting period, the acquisition or merger is expected to be consummated
in the second or third quarter of 1997.
Cincinnati : In January 1997, the Company entered into and consummated a
merger agreement pursuant to which it became a party to an agreement to acquire
the assets of WGRR-FM for approximately $30.0 million. The Company began
programming and marketing the station pursuant to an LMA beginning in March
1997. American issued approximately 18,300 shares of Class A Common Stock
pursuant to such merger. The HSR Act waiting period was terminated early and FCC
approval has been received. The acquisition is expected to be consummated in the
second quarter of 1997.
Fresno: In July 1996, the Company entered into an agreement to purchase the
assets of KOQO-AM/FM for approximately $6.0 million. The Company began
programming and marketing the stations pursuant to an LMA beginning in August
1996. A petition to deny the assignment of the FCC licenses of these stations
was filed with the FCC in September 1996. American and the seller have filed
oppositions to the petition to deny and believe that it is without merit and
will not further affect or substantially delay consummation. Subject to the
receipt of FCC approvals, the Company expects to consummate this acquisition in
the second quarter of 1997.
Omaha: In October 1996, the Company entered into an agreement, as amended,
to sell KGOR-FM and KFAB-AM and Business Music Service for approximately $38.0
million. The carrying values of these assets have been adjusted from the
original purchase price allocation to reflect the anticipated net proceeds from
the sale and accordingly, no gain or loss will be recognized on the transaction.
Omaha net revenues of $3,504,000 and operating expenses of approximately
$2,486,000 are included in the accompanying statement of operations for the year
ended December 31, 1996. FCC approval has been received and the HSR Act waiting
period was terminated early. The Company expects to consummate the sale in the
first half of 1997.
Rochester: In February 1997, the Company entered into an agreement to sell
WCMF-AM for approximately $650,000. Net revenues and operating expenses included
in the accompanying statement of operations for the years ended December 31,
1994, 1995 and 1996 were not material. Subject to the receipt of FCC approval,
the Company expects to consummate the sale in the second quarter of 1997.
In October 1995, American entered into a joint sales agreement with the
owner of an FM station in Rochester under which the Company, in exchange for a
fixed payment, had the right to sell advertising for the station and to retain
all such advertising revenue. American also acquired an assignable option to
purchase the station for approximately $5.0 million. In connection with the
consent decree described in Rochester and Cincinnati below, American assigned
this purchase option to the third party described below and the joint sales
agreement was canceled in February 1997. See Rochester and Cincinnati below.
In February 1997, the Company entered into an agreement to acquire the
assets of WAQB-FM, a newly licensed Class A FM radio station, for approximately
$3.5 million. FCC approval has been received and the Company expects to
consummate the acquisition in the first half of 1997.
Rochester and Cincinnati: In December 1996, the Company entered into an
agreement to exchange the assets of WHAM-AM, WVOR-FM and WHTK-AM, together with
$16.0 million for the assets of WKRQ-FM in Cincinnati, Ohio. (See 1997 Station
Acquisitions -Rochester). In connection therewith, the party to this agreement
began programming and marketing the Rochester stations pursuant to an LMA
beginning in February 1997. The Company began programming and marketing WKRQ-FM
pursuant to an LMA beginning in March 1997. FCC approval has been received and
pursuant to certain consent decrees entered into by both parties, the Antitrust
Division of the U.S. Department of Justice has approved this transaction. The
Company expects to consummate the exchange in the first half of 1997.
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Sacramento: In October 1996, the Company entered into an agreement to sell
KXOA-FM for approximately $27.5 million in cash. The Company began programming
and marketing the stations pursuant to an LMA beginning in August 1996, which
was terminated in January 1997 when the party to the agreement began programming
and marketing the station pursuant to an LMA. The HSR Act waiting period was
terminated early and subject to the receipt of FCC approval, the Company expects
to consummate the sale in the first half of 1997.
In December 1996, the Company entered into an agreement to sell KMJI-AM
for approximately $1.5 million. FCC approval has been received and the Company
expects to consummate the sale in the first half of 1997.
San Jose: In March 1997, the Company entered into a merger agreement
pursuant to which the Company will acquire the assets of KEZR-FM and KLUE-FM
serving Monterey, California in exchange for approximately 723,000 shares of
Class A Common Stock valued at approximately $20.0 million and $4.0 million in
cash. Subject to the receipt of FCC approval and the expiration or earlier
termination of the HSR Act waiting period, the Company expects to consummate the
merger in the first half of 1997.
In March 1997, the Company entered into an agreement to sell KKSJ-AM for
approximately $3.2 million. Subject to the receipt of FCC approval, the Company
expects to consummate the sale in the second quarter of 1997.
West Palm Beach: In March 1996, the Company loaned PBRB $7.2 million to
finance the acquisition of WMBX-FM (formerly WHLG-FM) and WSTU-AM. The Company
has an option to acquire, and a right of first refusal with respect to, the
stations. In November 1996, PBRB sold WSTU-AM to a third party. The Company
intends to exercise its option to acquire WMBX-FM and WPBZ-FM (which
acquisitions may take the form of a merger of PBRB into the Company). Subject to
the receipt of FCC approval and the expiration or earlier termination of the HSR
Act waiting periods, such acquisitions are expected to occur in the third
quarter of 1997 utilizing proceeds from the WMBX-FM and WPBZ-FM loans in the
aggregate principal amount of approximately $17.3 million and $2.75 million in
cash.
In December 1996, the Company acquired an option to purchase another FM
station for approximately $11.0 million. The Company also agreed to loan up to
$150,000 to the party to this option agreement. Subject to certain conditions,
including the receipt of FCC approval, the Company expects to exercise its
option and consummate the acquisition in the third quarter of 1997.
Tower Subsidiary: In February 1997, the Tower Subsidiary entered into
agreements with three entities which are affiliated with one another to acquire
tower sites and a tower site management business in Southern California for
approximately $32.1 million. Consummation of the transaction is conditioned on,
among other things, the expiration or earlier termination of the HSR Act waiting
period. Subject to such expiration or termination, the acquisitions are expected
to be consummated in the second quarter of 1997.
In December 1996, the Tower Subsidiary entered into a letter of intent to
acquire certain tower sites and tower site management agreements, located
primarily in Northern California, for approximately $42.0 million. The Tower
Subsidiary also agreed to loan the sellers approximately $1.35 million.
Consummation of the transaction is conditioned on, among other things,
negotiation and execution of definitive purchase and sale agreements and the
expiration or earlier termination of the HSR Act waiting period. Subject to such
expiration or termination, the acquisition is expected to be consummated in the
second quarter of 1997.
The Company is also pursuing the acquisitions of tower properties and
additional radio stations in new and existing markets, none of which have
definitive purchase agreements.
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Operating Philosophy
American's objective is to operate leading radio station groups in each of
its markets as measured by audience ratings and revenue share. Management
believes that station groups create the opportunity to develop leadership
positions within American's markets, which significantly improve its stations'
appeal to advertisers and their revenue and profit potential. American believes
that group, rather than individual, station results present a more meaningful
measure of performance because a significant percentage of revenues in most of
its markets is earned by companies owning multiple stations. Consistent with
such belief, American seeks to enhance the overall performance of its groups
through means such as complementary programming and joint marketing of its
individual stations.
To maintain or improve its position in each market, American combines
extensive research with an assessment of its competitors' vulnerabilities in
order to identify specific audience opportunities within each market. American
then tailors the programming, marketing and promotion of each station to
maximize its appeal to its target audience. Management seeks to create a
distinct and marketable personality for each of its stations in order to enhance
audience share and listener loyalty, and to protect against vulnerability to
other format competition. To help achieve this objective, American employs and
promotes distinctive, high-profile on-air personalities in many of its stations.
American's radio stations employ a number of programming formats, each of
which is designed to appeal to a specific target audience in each local market.
American's portfolio of stations is diversified in terms of format, target
audience and geographic location. Management believes this diversification helps
to insulate its performance from potential local economic downturns, competitive
attacks and changes in listening preferences. American's station groups are, in
many instances, composed of stations in different phases of development.
Management believes this configuration enables it to maximize the growth
potential of those station groups, while reducing the risks associated with
launching new formats and undertaking other means of improving under-performing
properties.
Management employs an operating philosophy designed to achieve market
leadership which includes: (i) owning multiple stations and establishing program
formats within its individual markets that target specific diverse demographics,
(ii) developing and maintaining popular programming to attract a large share of
the target audience, (iii) promoting its radio stations frequently to develop
high awareness among its target listeners, (iv) leveraging the skills of
experienced general managers with strong local market knowledge, and (v)
developing well trained client-oriented local sales professionals.
Strategic Programming of Station Groups: American customizes the
programming of its groups to maximize their combined audience share and revenue
potential. American does not utilize a predetermined formula to target
demographic niches; instead, American believes that each market has individual
characteristics and should be evaluated independently.
In certain cases, American utilizes stations to serve a demographic group
by operating stations with formats that target similar or complementary
audiences. For example, in Boston, American owns two AM stations with
complementary formats (Talk and Sports/Talk) and overlapping demographics (Men
35- 54). Management believes that if two of its stations which target similar
audiences can achieve a large enough percentage of that audience, it will be
able to secure a higher percentage of the advertising directed to that audience
than its comparative market share of that audience.
Popular Programming: American tailors the programming, marketing and
promotion of each station to maximize its appeal to that station's target
audience and to create a distinct and marketable personality for each station.
An important element of this approach is American's strong preference for
employing and promoting high profile and marketable on-air personalities,
especially in the morning drive day part, which is 6-10 a.m. In order to adjust
to developing trends and identify new opportunities, American conducts frequent
market research to provide its stations with the information necessary to refine
and improve their programming and assess the vulnerabilities of competitors.
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Aggressive Station Promotion: American's stations typically engage in
significant local promotional activities, including extensive community
involvement. American's stations also typically advertise on local television,
utilize billboards and print media, participate in telemarketing and direct
mailings and sponsor local contests, concerts and events. In Boston, WBMX-FM
sponsors events such as "MIX Fest", WRKO-AM sponsors "Taste of Boston" and
WEEI-AM sponsors "The Hot Dog Safari". In Hartford, WZMX-FM sponsors an annual
"penny pitch" charity event designed to raise funds for the Hartford Children's
Hospital. See Community Involvement. American has also invested in database
marketing programs with the objective of developing more personal contact with
listeners.
Strong Local Management and Sales Effort: In each of its markets, American
employs a highly experienced general manager who is responsible for the
performance of the stations in his or her market. The general managers of
American's stations have an average of six years experience as general managers
and an average of more than twenty years experience in the radio industry. A
portion of each general manager's compensation is dependent on the financial
results of the stations in his or her markets, aligning the manager's goals with
those of American. As incentive compensation, American's general managers and
executive officers have been granted options to purchase shares of common stock
which are subject to vesting provisions over a five-year period. Since a
significant portion of American's revenues are generated from local advertising,
American also focuses on developing a high quality, client-oriented local sales
force at each radio station. Such a sales force allows American to establish and
maintain direct relationships with advertisers and capture significant
advertising dollars.
Acquisition Strategy
American intends to continue to pursue the acquisition of additional radio
stations in new and existing markets in order to achieve, among other things,
increased size and greater geographic diversification. American expects to
concentrate these efforts in markets ranked in the top 60 (with an emphasis on
markets ranked 10 through 50) in terms of radio advertising revenues where
management believes it can achieve a substantial market position. When
evaluating acquisition opportunities in new markets, American also assesses the
potential to achieve a leading position in audience share and to generate strong
cash flow growth through improved programming, marketing, sales and operating
efficiencies. While American intends to continue to focus its principal
acquisition efforts on radio stations, it also intends to continue to expand its
ownership and operation of communications towers and to explore the syndication
of radio programming. American intends to pursue acquisitions opportunistically
and to evaluate both market and station characteristics.
Market Selection Considerations: American intends to make acquisitions in
markets that provide the opportunity to obtain a leadership position in both
audience share and revenue share. In assessing its potential to achieve this
leadership, American evaluates the existence of under-served audience segments
and competitors with perceived vulnerabilities. In addition, American considers
the potential to acquire two or more FM stations in the market. American
believes the potential to acquire two or more FM stations is essential to its
ability to achieve leading audience shares, broad acceptance with advertisers,
and sustainable growth in profitability. American will also consider the
acquisition of AM stations which it believes have profit potential and whose
ownership will enhance American's overall appeal to advertisers.
American seeks to acquire stations in markets that have already witnessed
or are poised for significant group activity. American also closely examines the
state of the economy in its potential markets, specifically the size, historical
growth rates and projected future growth rates of the market's radio advertising
revenue, population and retail sales.
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Station Selection Considerations: Within markets meeting the above
criteria, American intends to acquire stations in varying stages of development,
based primarily on management's evaluation of the target station's facilities,
including the relative strength and market coverage of its signal, and its past
and current operating performance. When entering a new market, American
generally plans to employ a "core station" strategy, acquiring a
well-established and profitable station, thereby reducing the risk of entering a
new market. Having established its presence in a new market, American may then
continue its selective acquisition of under-performing stations which generally
represent greater growth potential than well-established and profitable
stations. By applying its turnaround expertise, and leveraging the core
station's management and market presence, American believes that it will be able
to promote the development of under-performing stations and thereby enhance
asset value.
Purchase Price Considerations: American has never applied a fixed formula
to determine the purchase price of radio stations. In determining the purchase
price for an acquisition, management places emphasis on multiples of projected
station broadcast cash flow rather than historical measures. This is because
American frequently considers acquisitions of radio stations requiring
significant reconfiguration which have nominal or negative historical station
broadcast cash flow.
American believes that its acquisition strategy, if properly implemented,
could have a number of benefits, including the following: (i) diversification of
revenues and broadcast cash flow across a greater number of stations and
markets, (ii) more efficient utilization of its senior management team, (iii)
enhanced appeal to top industry management talent, and (iv) increased overall
scale which should broaden the range of and facilitate American's capital
raising activities.
Advertising Sales
Virtually all of the Company's revenues are generated from the sale of
local and national advertising for broadcast on its radio stations. In each of
1994, 1995 and 1996, approximately 77% and 23% of the Company's net revenues
were generated from local and national advertising, respectively. The Company
believes that radio is one of the most efficient and cost effective means for
advertisers to reach specific demographic groups. Advertising rates charged by
radio stations are based primarily on (i) a station's share of the audience in
the demographic groups targeted by advertisers, (ii) the number of stations in
the market competing for the same demographic groups and (iii) the supply of and
demand for radio advertising time. Rates are generally highest during morning
and afternoon commuting hours.
Depending on the format of a particular station, there are a predetermined
number of advertisements that are broadcast each hour. The Company determines
the number of advertisements broadcast hourly that can maximize available
revenue dollars without jeopardizing listening levels. The Company's revenues
vary throughout the year. The Company's first calendar quarter historically
produces the lowest revenues for the year, while each of the other quarters
produces roughly equivalent revenues. Although the number of advertisements
broadcast during a given time period may vary, the total number of
advertisements broadcast on a particular station generally does not vary
significantly from year to year. As is typical of the radio broadcasting
industry, American's stations respond to changing demands for advertising
inventory by varying prices rather than by varying the target inventory level
for a particular station. Most changes in revenues are therefore the result of
pricing changes rather than changes in the available inventory.
Local and most regional advertising sales are made by a station's sales
staff. To achieve greater control over advertising dollars, the Company's sales
force focuses on establishing direct relationships with local advertisers.
National sales are made by firms specializing in such sales and are compensated
on a commission-only basis. The majority of advertising contracts run for only a
few weeks.
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Advertising sales in connection with its sports network generated
approximately 8% of the Company's revenues during 1996. The Company believes
that sports broadcasting, absent unusual circumstances, is a stable source of
advertising revenues. There is less competition for the sports listener, since
only one radio station can offer a particular game. In addition, due to the
higher degree of audience predictability, sports advertisers tend to sign
contracts which are generally longer term and more stable than the Company's
other advertisers. American's sports network also benefits from a dedicated and
experienced sales force that has specialized expertise in sports advertising.
The Company believes its strong multi-station combinations give it
significant advantages in the competition for advertising dollars. A duopoly in
a market better positions American to access a significant share of a given
demographic segment, making its stations more attractive to advertisers seeking
to reach that segment. In addition, management believes the larger size of the
American organization attracts a higher quality sales force, a key asset for the
profitability of a radio station.
Competition
The financial success of each of the Company's radio stations is dependent,
to a significant degree, upon its audience ratings and its share of the overall
radio advertising revenue within its geographic market and the popularity of its
programming within that market and, to a lesser extent, on the economic health
of the geographic market in which it operates. Radio broadcasting is a highly
competitive business. Each of the Company's radio stations compete for audience
share and advertising revenue directly with other media, such as billboards,
newspapers, television, magazines, direct mail, compact discs and music videos.
With the elimination of restrictions on the number of radio stations which may
be owned nationally by a single operator and the liberalization of local
ownership restriction effected by the Telecommunications Act, the radio industry
is experiencing a concentration of ownership, as a result of which, competition
may intensify as a limited number of larger companies with greater resources
emerge.
The radio broadcasting industry is also subject to competition from new
media technologies that are being developed or introduced, such as the delivery
of audio programming by cable television systems and by digital audio
broadcasting (DAB). DAB may provide a medium for the delivery by satellite or
terrestrial means of multiple new audio programming formats to local and
national audiences. The radio broadcasting industry historically has grown in
terms of total revenues despite the introduction of new technologies for the
delivery of entertainment and information, such as television broadcasting,
cable television, audio tapes and compact discs. Another possible competitor to
traditional radio is In Band On Channel (IBOC) digital radio. IBOC could provide
multi-channel, multi-format digital radio services in the same bandwidth
currently occupied by traditional FM radio services. See Federal Regulation of
Radio Broadcasting below.
In addition to management experience, factors that may materially influence
a station's competitiveness include the station's rank in its market, its
authorized transmission power, general radio signal strength, audience
characteristics, local program acceptance and the number of characteristics of
other stations in the market area. The Company attempts to improve its
competitive position in each market by devoting extensive research to its
stations' programming, implementing advertising campaigns aimed at the
demographic groups for which its stations program and managing its sales efforts
to attract a larger share of advertising dollars.
Employees
As of December 31, 1996, American employed 1,931 employees (1,237 full time
and 694 part time persons). American has three agreements with the American
Federation of Television and Radio Artists (AFTRA) covering various on-air
personnel at four of its Boston stations and at two of its Hartford stations.
American also has agreements with the International Brotherhood of Electrical
Workers, AFL- CIO (IBEW) in Boston expiring on April 30, 1997 and in Fresno
which expired on March 1, 1997, and is currently in negotiation. American
considers its relations with its employees, AFTRA, and IBEW to be satisfactory.
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Community Involvement
American considers its community involvement to be of considerable
importance, and, to that end, each of its stations participates in many
community programs, fund raisers and activities that benefit a wide variety of
organizations. Charitable organizations that have been the beneficiaries of
American's telethons, marathons, walkathons, swimathons, parades, food banks,
fairs and festivals include, among others, the American Cancer Society, American
Heart Association, Big Brothers, Big Sisters, Red Cross, United Way, Salvation
Army, Jimmy Fund (Dana Farber Cancer Institute), St. Jude's Hospital and many
other organizations.
Federal Regulation of Radio Broadcasting
The radio broadcasting industry is subject to extensive and changing
regulatory oversight, governing, among other things, technical operations,
ownership and business and employment practices, and certain types of program
content (including indecent and obscene program material).
The ownership, operation and sale of radio broadcast stations (including
those licensed to American) are subject to the jurisdiction of the FCC, which
acts under authority granted by the Communications Act. The Communications Act
prohibits the assignment of an FCC license or any transfer of control of an FCC
licensee without the prior written approval of the FCC. In determining whether
to grant requests for consents to such assignments or transfers, and in
determining whether to grant or renew a radio broadcast license, the FCC
considers a number of factors pertaining to the licensee (and proposed licensee)
including compliance with alien ownership restrictions and rules governing the
multiple ownership and cross-ownership of broadcast and other media properties,
the "character" of the applicant and those persons or entities holding
"attributable" interests in the applicant and compliance with the Anti-Drug
Abuse Act of 1988. Among other things, the FCC assigns frequency bands for radio
broadcast stations; issues, renews, revokes and modifies radio broadcast station
licenses; regulates transmitting equipment used by radio broadcast stations; and
adopts and implements regulations and policies that directly or indirectly
affect the ownership, operation, program content and employment and business
practices of radio broadcast stations. The FCC also has the power to impose
penalties for violations of its rules and the Communications Act.
On February 8, 1996, the President signed the Telecommunications Act which
substantially amended the Communications Act. The Telecommunications Act, among
other things, eliminated the national radio broadcast ownership restrictions in
the FCC's broadcast ownership regulations and raised the ceiling on the number
of radio broadcast stations that a single entity may own in a local radio
market. The precise number of stations that may be commonly owned in a
particular local market depends upon the number of commercial radio stations
serving the local market.
The following is a brief summary of certain provisions of the
Communications Act and specific FCC rules and policies. Reference should be made
to the Communications Act, the FCC's rules and the public notices and rulings of
the FCC for further information concerning the nature and extent of federal
regulation of radio broadcast stations.
License Renewal-Under present FCC rules, radio broadcast licenses are
granted for maximum terms of seven years and upon application may be renewed for
additional terms. The Telecommunications Act now permits the FCC to grant radio
broadcast licenses for terms up to eight years. The FCC has begun a rule making
proceeding in which it has proposed to extend the license term for radio
broadcast stations to the full eight year term permitted by the
Telecommunications Act. Broadcast licenses may be renewed through an application
to the FCC and licensees are entitled to renewal expectancies. The
Communications Act authorizes the filing of petitions to deny a license renewal
application during specified periods after the renewal application has been
filed. Interested parties, including members of the public, may file petitions
as a means to raise issues concerning the renewal applicant's qualifications.
The FCC may not consider applications for the channel by other parties until it
first has decided to deny renewal to the incumbent. Before denying renewal to an
incumbent, the FCC must allow the licensee a hearing on the licensee's alleged
failure to satisfy the statutory standard. The Communications Act now prohibits
the FCC from considering whether another licensee would be preferable until it
first has determined that the incumbent does not qualify for renewal. In the
vast majority of cases the FCC has renewed incumbent operators'
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station licenses. Also, during certain periods when a renewal application is
pending, the transferability of the applicant's license may be restricted.
Certain of EZ's stations have license renewal applications pending and this
could affect the timing of the consummation of the EZ Merger. American is not
aware of any facts or circumstances that would prevent it from obtaining renewal
of the radio broadcast licenses that it holds. There can be no assurance,
however, that each of American's licenses will necessarily be renewed.
Ownership Matters. The FCC's broadcast multiple ownership rules restrict
the number of radio broadcast stations one person or entity may own, operate or
control in a local market. The Telecommunications Act raised the limitation on
the number of radio broadcast stations that a single entity may own in a given
local market, as follows:
(i) In radio markets with 14 or fewer commercial radio stations, one
person or entity may hold attributable interests in up to five radio
stations, no more than three of which may be in any one service (i.e.,
AM or FM), as long as the commonly owned stations amount to no more
than 50% of the commercial radio stations in that market;
(ii) In radio markets with between 15 and 29 commercial radio stations, one
person or entity may hold attributable interests in up to six radio
stations, no more than four of which may be in any one service;
(iii)In radio markets with between 30 and 44 commercial radio stations,
one person or entity may hold attributable interest in up to seven
radio stations, no more than four of which may be in any one service;
and
(iv) In radio markets with 45 or more commercial radio stations, one person
or entity may hold attributable interests in up to eight radio
stations, no more than five of which may be in any one service.
The FCC rules also generally restrict the common ownership, operation or
control of (i) a radio broadcast station and a television broadcast station
serving the same local market, and (ii) a radio broadcast station and a daily
newspaper serving the same local market. Under these "cross-ownership" rules,
American, absent waivers, would not be permitted to acquire an attributable
interest in any daily newspaper or television broadcast station (other than a
low-power television station) in a local market where it then owned any radio
broadcast station. American is not aware of any reason why these cross-ownership
rules would require any change in American's current ownership of radio
broadcast stations.
Programming and Operation: The Communications Act requires broadcasters to
serve the "public interest". A broadcast licensee is required to present
programming in response to community problems, needs and interest and to
maintain certain records demonstrating its responsiveness. The FCC will
generally consider complaints from listeners concerning a broadcast station's
programming when it evaluates the licensee's renewal application, but such
complaints may be filed and considered at any time. Stations also must follow
various FCC rules that regulate, among other things, political advertising, the
broadcast of obscene or indecent programming, sponsorship identification, the
broadcast of contests and lotteries and technical operation (including limits on
human exposure to radio frequency energy). From time to time, complaints may be
filed against American's stations alleging violations of these or other rules.
A complaint is pending against a station licensed to American alleging
violation of the political broadcasting rules by discriminatory political sales
practices. American believes that these complaints will not, either separately
or in the aggregate, result in either monetary forfeitures of a material nature
or any other regulatory action which might have a materially adverse effect on
American's stations or FCC licenses.
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In addition, licensees must develop and implement programs designed to
promote equal employment opportunities and must submit reports to the FCC on
these matters annually and in connection with the licensee's renewal
application. The FCC has begun a rule making proceeding to revise its equal
employment opportunity rules. At this time, however, American cannot predict
what changes, if any, the FCC will implement, or the effect of those changes on
American's current equal employment opportunity programs.
Local Marketing Agreements: In recent years, a number of radio stations,
including certain of American's stations, have entered into what are referred to
as "local marketing agreements" (LMAs), "time brokerage agreements" (TBAs) or
joint sales and service agreements. These agreements take various forms.
Separately owned and licensed stations may agree to function cooperatively with
respect to certain other matters, subject to compliance with the antitrust laws
and the FCC's rules and policies, including the requirement that the licensee of
each station maintain independent control over the programming and other
operations of its own station. A radio broadcast station that brokers time on
another radio broadcast station or engages in a TBA or LMA with a radio
broadcast station in the same market will be considered to have an attributable
ownership interest in the brokered radio station for purposes of the FCC's
multiple ownership rules, if the arrangement covers more than 15% of the
brokered station's weekly broadcast hours.
Failure to observe these or other FCC rules and policies may result in the
imposition of various sanctions, including admonishment, fines, the grant of
"short" (less than the full) renewal terms or, for particularly egregious
violations, the denial of a license renewal application, the revocation of FCC
licenses or the denial of FCC consent to acquire additional broadcast
properties.
Digital Audio Broadcasting: The FCC recently has allocated spectrum to a
new technology, digital audio broadcasting (DAB), to deliver satellite-based
audio programming to a national or regional audience and is considering
regulations for a DAB service. DAB may provide a medium for the delivery by
satellite or terrestrial means of multiple new audio programming formats with
compact disc quality sound to local and national audiences. Another form of DAB,
known as In-Band On Channel (IBOC) DAB could provide DAB in the present FM radio
band. Thus far, the FCC has not granted the pending requests for authorizations
to offer satellite radio, nor has it adopted regulations for the proposed
satellite radio service. A rule making proceeding is pending before the FCC to
adopt DAB regulations, however. There are currently several pending satellite
DAB applications, and the FCC has begun rulemaking to establish services and
operational standards for satellite DAB. The FCC has granted at least one
applicant a waiver to begin satellite construction. Implementation of DAB or
IBOC would provide an additional audio programming service that could compete
with American's radio stations for listeners, but the effect upon American
cannot be predicted.
Future Changes: The Congress and the FCC have under consideration, and may
in the future consider and adopt, new laws, regulations and policies regarding a
wide variety of matters that could, directly or indirectly: (i) affect the
operation, ownership and profitability of American and its radio stations; (ii)
result in the loss of audience share and advertising revenue of American's radio
stations; and (iii) affect the ability of American to acquire additional radio
stations or finance such acquisitions. Such matters include, but are not limited
to, for example, changes to the license renewal process; proposals to impose
spectrum use or other governmentally-imposed fees upon licensees; proposals to
repeal or modify some or all of the FCC's multiple ownership rules and/or
policies; proposals to restrict or prohibit the advertising of beer, wine and
other alcoholic beverages on radio and television; changes in the FCC's cross-
interest, multiple ownership, alien ownership and cross-ownership rules and
policies; changes to broadcast technical requirements; proposals to limit the
tax deductibility of advertising expenses by advertisers; and proposals to
auction the right to use the broadcast spectrum to the highest bidder, instead
of granting broadcast licenses and subsequent license renewals free of charge.
American cannot predict what other matters may be considered in the future,
nor can it judge in advance what impact, if any, the implementation of any of
these proposals or changes might have on its business.
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Executive Officers of the Registrant
Steven B. Dodge has been Chairman of the Board, President and Chief
Executive Officer since the founding of the Company. Mr. Dodge was the founder
in 1988 of Atlantic Radio, L.P. Prior to forming Atlantic Radio L.P., Mr. Dodge
served as Chairman and Chief Executive Officer of American Cablesystems
Corporation, a cable television company he founded in 1978 and operated as a
privately-held company until 1986 when it completed a public offering in which
its stock was priced at $14.50 per share. American Cablesystems was merged into
Continental Cablevision, Inc. in 1988 in a transaction valued at more than $750
million, or $46.50 per share. Mr. Dodge serves as a director of American Media,
Inc. Mr. Dodge is 51 years old.
Joseph L. Winn has been the Treasurer, Chief Financial Officer and a
director since the founding of the Company. In addition to serving as Chief
Financial Officer of the Company, Mr. Winn was Co-Chief Operating Officer
responsible for Boston operations until May 1994 when Mr. Gehron joined
American. Mr. Winn served as Chief Financial Officer and a director of the
general partner of Atlantic Radio L.P. since its organization. He also served as
Executive Vice President of the general partner of Atlantic Radio L.P. from its
organization until June 1992, and as its President from June 1992 until the
organization of American. Prior to joining Atlantic Radio, L.P., Mr. Winn served
as Senior Vice President and Corporate Controller of American Cablesystems since
joining that company in 1983. Mr. Winn is 45 years old.
John R. Gehron joined American in May 1994 as a director and Co-Chief
Operating Officer and served as a director from then until February 16, 1995.
With more than twenty years of radio experience, Mr. Gehron began his career as
a program director in Philadelphia, New York and Chicago before he joined
Capital Cities/ABC in 1983 as Vice President-General Manager of WLS-AM/FM in
Chicago. In 1987, Mr. Gehron joined CBS and launched WODS-FM in Boston, bringing
the station rank from fifteen to first within three years. Mr. Gehron joined
Pyramid Broadcasting in 1989 as Vice President-General Manager for WNUA-FM in
Chicago which, under his aegis, established a national standard for the "smooth
jazz" format and became a major factor in the Chicago market. Mr. Gehron is 50
years old.
David Pearlman has been Co-Chief Operating Officer since the founding of
the Company, and served as a director from then until February 16, 1995. Mr.
Pearlman organized Multi Market Communications, Inc. in 1990. Mr. Pearlman has
over 24 years of radio experience that includes 14 years at Westinghouse where,
in a capacity of vice president/general manager, he launched an all news format
on WMAQ-AM in Chicago and negotiated the country's first FM sports rights
agreement in Houston at KODA-FM, which station became one of Westinghouse's top
performing radio stations under his management. Mr. Pearlman was the first three
time winner of Westinghouse's Winner's Circle Award, signifying management
excellence. In addition, Mr. Pearlman was the president and chief executive
officer of First City Broadcasting, a privately owned radio operating group that
experienced significant performance gains in key markets under his leadership.
Mr. Pearlman is 46 years old.
Don Bouloukos joined American in August 1996 and became Co-Chief Operating
Officer in September 1996. Prior to joining American, Mr. Bouloukos served as
president of Capital Cities/ABC owned radio stations for more than ten years,
having previously been Vice President-Operations for ABC owned radio stations.
Mr. Bouloukos, as Vice President-Operations for ABC, had been responsible for
the daily operations for the station group, which consisted of twelve stations.
In 1980, Mr. Bouloukos served as Vice President and General Manager of
WLS-AM/FM, the ABC owned station in Chicago and headed the AM station there
since 1970. With 24 years of radio experience, Mr. Bouloukos began his career at
WFYR in Chicago before joining WLS-AM/FM. Mr. Bouloukos is 48 years old.
Upon consummation the the EZ Merger, Alan Box is expected to be elected to
the office of Executive Vice President. Alan Box joined EZ in 1974 as the
General Manager of EZ's Washington, D.C. area radio station. He became Executive
Vice president and General Manager and a director of EZ in 1979, President of EZ
in 1985 and Chief Executive Officer of EZ in 1995. He serves as a director of
the George Mason Bankshares and the George Mason Bank. Previously, Mr. Box
served as the Chairman of the NAB Digital Audio Broadcast Task Force and as a
director of the NAB. Currently, Mr. Box is the Chairman of the NAB's Futures
Committee. Mr. Box is 45 years old.
17
<PAGE>
ITEM 2. PROPERTIES.
American's corporate headquarters are located in leased facilities at 116
Huntington Avenue, Boston, Massachusetts.
The properties used by American's radio stations and owned by the Tower
Subsidiary consist of office and studio facilities, towers, and tower and
transmitter sites. Station studio and sales offices are generally located in a
downtown or business district. Antennas are located on either an American-owned
or leased tower. Transmitter and tower sites are generally located to provide
maximum market coverage. American believes that owning its tower and transmitter
sites is an important goal for the Company inasmuch as such ownership provides a
station with the stabilizing benefits of predictable cash flow and lower fixed
operating costs.
American owns many of its towers, transmitter sites and studio facilities.
Certain office and studio facilities, towers and tower and transmitter sites are
also leased by American under leases that expire in three to twenty-five years,
most of which are renewable. American does not anticipate any difficulties in
renewing its leases, where required, or in leasing additional space, if
required, and it believes that its properties are adequate for its operations.
American owns substantially all of the equipment it uses, including its
transmitting antennas, transmitters, studio equipment and general office
equipment.
American believes that its properties are in good condition and suitable
for its operations; however, American continually reviews opportunities to
upgrade its properties. Substantially all of the property and assets currently
owned and leased by the Tower subsidiary are pledged as security for the lenders
under the Tower Credit Agreement. See Notes to Consolidated Financial Statements
of American for additional information regarding the Company's credit agreements
and the minimum annual rental commitments of American.
ITEM 3. LEGAL PROCEEDINGS.
From time to time, American becomes involved in various claims and lawsuits
that are incidental to its business. In the opinion of American's management,
there are no legal or regulatory proceedings pending against American which
could have a material impact on financial position, the results of operations or
liquidity.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A Special Meeting of Stockholders was held on December 17, 1996 to consider
and act upon the following matters. The results of the stockholder voting were
as follows:
1. To approve and adopt the Agreement and Plan of Merger with EZ
Communications, Inc. dated as of August 5, 1996, as amended and
restated as of September 27, 1996.
Votes Cast For Votes Cast Against Votes Withheld Non-Vote
56,404,280 45,830 12,341 117,081
2. To approve an amendment to the Company's Restated Certificate of
Incorporation, as amended, to increase the authorized number of shares
of Preferred Stock and Common Stock, to permit, among other things,
the consummation of the above merger.
Votes Cast For Votes Cast Against Votes Withheld Non-Vote
55,255,805 1,320,252 3,475 0
18
<PAGE>
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
Shares of the Company's Class A Common Stock, par value $.01 per share (the
"Class A Shares" ) were quoted on the Nasdaq National Market System under the
symbol "AMRD" from the consummation of the Common Stock initial public offering
in June 1995 through February 4, 1997. On February 5, 1997, the Company began
trading on the New York Stock Exchange under the symbol "AFM". The following
table sets forth, for the calendar quarters indicated, the high and low sales
prices of the Class A Shares while quoted on the Nasdaq National Market System,
as reported in published financial sources. There is no public trading market
for the Company's Class B Common Stock, par value $.01 per share (the "Class B
Shares"), or the Company's Class C Common Stock, par value $.01 per share (the
"Class C Shares").
1996: High Low
First Quarter ...................................$ 34 1/2 $ 25
Second Quarter .................................. 43 1/2 30 1/4
Third Quarter ................................... 43 33
Fourth Quarter .................................. 37 3/4 23 7/8
1995: High Low
Second Quarter (commencing June 9, 1995).........$ 26 $ 18 1/4
Third Quarter ................................... 29 3/4 23
Fourth Quarter .................................. 28 1/2 19 1/2
As of March 1, 1997, there were 380 holders of record (which number does
not include the number of stockholders whose shares are held of record by a
broker or clearing agency but does include each such brokerage house or clearing
agency as one record holder) of the Class A Shares; 62 holders of record of the
Class B shares and one holder of record of the Class C shares.
The Company has not paid dividends on its shares of Common Stock and the
payment of dividends on Common Stock is restricted by the terms of the American
Credit Agreement and the Indenture under which the 9% Senior Subordinated Notes
were issued in February 1996. It is not anticipated that any dividends will be
paid on any shares of any class of the Company's Common Stock in the foreseeable
future.
19
<PAGE>
ITEM 6. SELECTED COMBINED FINANCIAL DATA OF AMERICAN AND THE
PREDECESSOR ENTITIES
The following Selected Combined Financial Data have been derived from the
consolidated financial statements of American and the Predecessor Entities. The
following financial data present the combined operating results and financial
position of the Predecessor Entities for the periods prior to the date of the
Combination (November 1, 1993) for 1992 and the ten months ended October 31,
1993 as if such entities had combined effective January 1, 1992 or, if later,
the commencement of operations of certain Predecessor Entities. The information
as of December 31, 1994, 1995 and 1996 and for each of the years then ended is
based on the historical American consolidated financial statements. This
selected financial data should be read in connection with such financial
statements and notes thereto and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" appearing elsewhere in this Form
10-K.
<TABLE>
<CAPTION>
SELECTED COMBINED FINANCIAL DATA
American Radio Systems Corporation
(In thousands, except per share data)
Combined Predecessor Entities (1) American (1) Combined (1) American
--------------------------------- ------------ ------------ ---------
Two
Ten Months Months Year
Year Ended Ended Ended Ended
Statement of December 31, October 31, December 31, December 31, Years Ended December 31,
Operations Data: 1992 (2) 1993 1993 1993 (2) 1994 (2) 1995 (2) 1996 (2)
-------- ---- ---- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenues $ 46,306 $ 45,010 $ 8,943 $ 53,953 $ 68,034 $ 97,772 $178,019
Station operating
expenses 36,698 37,058 6,493 43,551 50,129 66,448 120,004
Net local marketing
agreement expense 600 8,128
Depreciation and
amortization 4,465 5,900 1,415 7,315 9,920 12,364 17,810
Operating income (loss) 1,486 (845) 91 (754) 5,756 14,452 27,031
Interest expense- net 4,370 5,517 801 6,318 7,051 10,062 16,762
Gains (losses) on sale of
assets, net (964) 3,133 3,133 2,278 11,544 (308)
Income (loss) before
extraordinary losses (4,233) (4,877) (447) (5,324) (73) 9,105 5,135
Extraordinary losses (1,160) (817)
Net income (loss) (4,233) (4,877) (447) (5,324) (1,233) 8,288 162
Income (loss) before
extraordinary losses
per common share $ (.08) $ (.21) $ .65 $ .01
======== ======== ======== ========
Balance Sheet Data:
Working capital $ 354 $ 1,331 $ 8,496 $ 16,342 $ 22,045 $ 34,986
Total assets 56,872 64,236 63,424 158,121 248,796 796,303
Long-term debt,
including current
portion and deferred
interest 51,491 59,610 57,355 130,590 152,504 330,672
<FN>
(1) The information for the Combined Predecessor Entities includes the results of operations of the following entities for the
following periods: Stoner and Atlantic - the year ended December 31, 1992 and ten months ended October 31, 1993; Multi Market -
the fiscal year ended August 31, 1992 (included in calendar year 1992) and the sum of (a) eight-twelfths of the fiscal year
ended August 31, 1993, and (b) the historical results for the two months ended October 31, 1993 (included in the ten months
ended October 31, 1993); and Boston AM - the one- month period ended December 31, 1992 (in calendar year 1992) and the ten
months ended October 31, 1993 (in that period). In addition, the 1993 financial information combines the Predecessor Entities
for the ten months ended October 31, 1993 and historical American financial statements for the two month period ended December
31, 1993.
(2) Year-to-year comparisons are significantly affected by the timing of acquisitions and dispositions of radio stations, which
have been numerous during the periods shown. See "Business" for a description of the acquisitions and dispositions made in
1996.
</FN>
</TABLE>
20
<PAGE>
SELECTED FINANCIAL DATA
OF PREDECESSOR ENTITIES
The following Selected Financial Data for each of Stoner, Atlantic, Multi Market
and Boston AM presented below is derived from those respective companies'
financial statements which have been audited by independent accountants.
<TABLE>
<CAPTION>
SBS Holding, Inc. and Subsidiary (Stoner)
(In thousands)
Ten Months
Year Ended Ended
December 27 October 31,
1992 (a) 1993 (a)
------------ ----------
<S> <C> <C>
Statement of Operations Data :
Net revenues $ 21,072 $ 20,797
Operating expenses 15,488 14,874
Depreciation and amortization 1,208 1,711
Corporate general and administrative expenses 2,355 1,883
-------- --------
Operating income 2,021 2,329
Interest expense, net 863 1,500
Gain (loss) on sale of assets, net (504) 3,133
Provision for income taxes 382 1,690
Cumulative effect of change in accounting principles (b) 155
-------- --------
Net income $ 272 $ 2,117
======== ========
Balance Sheet Data :
Working capital $ 2,333 $ 3,868
Total assets 16,083 30,692
Long-term debt, including current portion 17,300 27,000
<FN>
(a) Year-to-year comparisons are significantly affected by the timing of
acquisitions and dispositions of radio stations and, with respect to
the ten months ended October 31, 1993, seasonality.
(b) Includes cumulative effect of adopting Statement of Financial
Accounting Standards (FAS) No. 109, Accounting for Income Taxes, ($155)
in 1993.
</FN>
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
Atlantic Radio, L.P. and Subsidiaries
(In thousands)
Ten Months
Year Ended Ended
December 27 October 31,
1992 (a) 1993 (a)
------------ ----------
<S> <C> <C>
Statement of Operations Data :
Net revenues $ 22,416 $ 18,643
Operating expenses 19,103 16,252
Depreciation and amortization 2,591 3,414
Corporate general and administrative expenses 638 835
-------- --------
Operating income (loss) 84 (1,858)
Interest expense, net 3,086 2,972
Loss on sale of assets, net (460) (b)
-------- --------
Net loss $ (3,462) $ (4,830)
======== ========
Balance Sheet Data :
Working capital (deficiency) $ (269) $ 1,174
Total assets 27,253 21,767
Long-term debt, including current portion 25,456 23,779
<FN>
(a) Year-to-year comparisons are significantly affected by the timing of
acquisitions and dispositions of radio stations and, with respect to
the ten months ended October 31, 1993, seasonality.
(b) Relates to sale of two radio stations in Rochester, New York to Stoner.
</FN>
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Multi Market Communications, Inc.
(In thousands)
Two Months
Year Ended Year Ended Ended
August 31, August 31, October 31,
1992 1993 1993 (a)
---------- ----------- -----------
<S> <C> <C> <C>
Statement of Operations Data :
Net revenues $ 2,565 $ 3,355 $ 510
Operating expenses 1,891 2,880 452
Depreciation and amortization 649 652 54
Corporate general and administrative expenses 664 146 82
------- ------- -------
Operating loss (639) (323) (78)
Interest expense, net 349 326 44
Other non-operating income (expense) (3) 52 7
Extraordinary gain 359 (b)
------- ------- -------
Net loss $ (991) $ (238) $ (115)
======= ======= =======
Balance Sheet Data :
Working capital (deficiency) $(2,631) $(3,664) $(3,727)
Total assets 6,888 6,532 6,423
Long-term debt, including current portion 4,332 4,250 4,200
<FN>
(a) Comparison of the fiscal years ended August 31 on a pro rata basis to
the two months ended October 31, 1993 is significantly affected due to
seasonality.
(b) Represents gain on the forgiveness of debt.
</FN>
</TABLE>
23
<PAGE>
Boston AM Radio Corporation
(In thousands)
Period December 1, Ten Months
1992 Ended
to December 31, 1992 October 31, 1993(a)
-------------------- ------------------
Statement of Operations Data :
Net revenues $ 253 $ 2,823
Operating expenses 216 3,560
Depreciation and amortization 17 286
------- -------
Operating income (loss) 20 (1,023)
Interest expense, net 72 784
------- -------
Net loss $ (52) $(1,807)
======= =======
Balance Sheet Data :
Working capital $ 921 $ 16
Total assets 6,648 5,354
Long-term debt, including current portion
and deferred interest 4,403 4,631
(a) Comparison of the fiscal year ended December 31 on a pro rata basis to the
ten months ended October 31, 1993 is significantly affected due to
seasonality.
24
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
The Company desires to take advantage of the new "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995. The Company's Report on
Form 10-K contains "forward-looking statements" including statements concerning
projections, plans, objectives, future events or performance and underlying
assumptions and other statements which are other than statements of historical
fact. The Company wishes to caution readers that the following important
factors, among others, may have affected and could in the future affect the
Company's actual results and could cause the Company's actual results for
subsequent periods to differ materially from those expressed in any
forward-looking statement made by or on behalf of the Company: (a) the Company's
ability to meet debt service requirements; (b) the Company's ability to compete
successfully with other radio broadcasters; (c) the possibility of adverse
governmental action or regulatory restrictions from those administering the
Antitrust laws, the FCC or other governmental authorities; (d) the availability
of funds under its credit agreements to fund acquisitions for the foreseeable
future, or, if such funds are inadequate, the ability of the Company to obtain
new or additional debt or equity financing and the potential dilutive effect of
any such equity financing and (e) the Company's ability to successfully operate
existing and any subsequently acquired stations and towers, particularly with
the increasing number and geographic diversity of its operations.
General
The Company's financial results are dependent on a number of factors,
including the general strength of the local and national economies, population
growth, ability to provide popular programming, local market competition,
relative efficiency of radio broadcasting compared to other advertising media,
signal strength and government regulation and policies. The primary operating
expenses involved in owning and operating radio stations are employee salaries,
depreciation and amortization, programming expenses, solicitation of advertising
and promotion expenses.
During the years ended December 31, 1995 and 1994, none of the Company's
markets represented more than 15% of the Company's station operating income
(i.e., net operating revenue less station operating expenses before depreciation
and amortization), other than the Boston market. For the years ended December
31, 1994 and 1995 the Boston market accounted for an aggregate of approximately
27% of the Company's station operating income. As a consequence of the numerous
acquisitions consummated by the Company in 1996, the Boston markets significance
in relation to the Company's consolidated financial results has declined and
other markets, particularly the Hartford market, have emerged as significant
contributors to station operating income. For the year ended December 31, 1996,
both the Boston and Hartford market individually accounted for an aggregate of
approximately 20% of the Company's station operating income. While historically,
radio revenues in the Boston and Hartford markets have remained relatively
stable, an adverse change in the radio market or the station's relative market
position could have a significant impact on the Company's operating results as a
whole. The relative significance of the Boston and Hartford markets is expected
to decline in 1997 and thereafter, as the Company reports the full impact of
operating results of 1996 and subsequent station acquisitions.
The Company's revenues are affected primarily by the advertising rates the
Company's stations are able to charge. These rates are in large part based on a
station's ability to attract audiences in the demographic groups targeted by its
advertisers, as measured principally by quarterly reports by independent
national rating services. Because audience ratings in the local market are
crucial to a station's financial success, the Company endeavors to develop
strong listener loyalty. The Company believes that the diversification of
formats on its radio stations helps the Company to insulate itself from the
effects of changes in musical tastes of the public on any particular format.
25
<PAGE>
General - (continued)
The number of advertisements that can be broadcast without jeopardizing
listening levels (and the resulting ratings) is limited in part by the format of
a particular radio station. The Company's stations strive to maximize revenue by
constantly managing the number of commercials available for sale and adjusting
prices based upon local market conditions. In the broadcasting industry,
stations often utilize trade or barter agreements to generate advertising time
sales in exchange for goods or services used in the operation of the stations,
instead of cash. The Company minimizes its use of trade agreements and
historically has sold over 93% of its advertising time for cash.
Most advertising contracts are short-term and generally run only for a few
weeks. In each of 1994, 1995 and 1996, approximately 77% of the Company's
revenue was generated from local advertising, which is sold primarily by each
station's sales staff. To generate national advertising sales, the Company
engages an independent advertising sales representative that specializes in
national sales for each of its stations.
The Company's first calendar quarter historically produces the lowest
revenues for the year, while each of the other quarters produces roughly
equivalent revenues.
The 1995 major league baseball labor dispute adversely impacted the
Company's 1995 and 1994 financial performance. The Company has contractual
commitments to pay fees in connection with the exclusive rights to broadcast the
games of the Boston Red Sox (1996 and 1997 seasons) and the Boston Celtics
(through the 1998-99 seasons). The fees payable by American under these
arrangements currently aggregate more than $6.0 million annually through 1997;
$2.4 million in 1998 and $2.0 million in 1999 and are payable on a pro rata
basis for games played. During 1994, the major league baseball labor dispute
caused the Company to lose more than $1.5 million of booked advertising business
(plus, the Company believes, an indeterminate amount of other potential
advertising revenue) with a corresponding reduction in expenses of approximately
$1.0 million, representing mostly rights fees. Historically, the majority of a
total season's advertising is placed during the six months prior to the start of
the regular season. With respect to the 1995 Boston Red Sox season, the Company
continued to place advertising in anticipation of a resolution of the dispute in
time for the start of the regular season. However, in light of the uncertainties
as to the timing and nature of such resolution, and despite an aggressive
effort, placed advertising in 1995 was approximately $3.0 million less than
placed 1994 advertising (not giving effect to a $1.5 million loss in 1994 caused
by the labor dispute). The Company, over a period of several months, discussed
with the Boston Red Sox a reduction in the approximately $4.0 million of rights
fees payable for the full 1995 season (which would have been $3.5 million based
on the shortened season). Those discussions resulted in an amendment to the
agreement providing for a reduction in the 1995 fees to approximately $2.9
million, an extension of the agreement for one year to include the 1997 season
and a prepayment by American for such extension and of such season's fees of
$0.7 million. Due to the absence of a collective bargaining agreement between
the owners and the players, there can be no assurance that there may not be
future labor disputes that could adversely affect the Company's subsequent
financial performance.
26
<PAGE>
Results of Operations
Year Ended December 31, 1996 Compared to Year Ended December 31, 1995
As of December 31, 1996, the Company owned and/or operated forty-eight FM and
twenty-three AM stations. As of December 31, 1995, the Company owned and/or
operated fifteen FM and nine AM stations. The Company also entered into LMA's as
follows: September 1995 - KKMJ-FM, KAMX-FM and KJCE- FM in Austin; March 1996 -
WBLK-FM in Buffalo; April 1996 - WSJZ-FM in Buffalo, WLQT-FM, WBTT-FM and
WXEG-FM in Dayton and KSTE-AM in Sacramento; May 1996 - KSFM-FM KMJI-FM in
Sacramento, KMXB-FM, KMZQ-FM, KXTE-FM, KXNT-FM in Las Vegas; July - KSSJ-FM in
Sacramento; August 1996 - KNAX-FM, KVSR-FM, KOQO-AM/FM in Fresno, KBAY-FM and
KKSJ- AM in San Jose, KXOA-AM/FM and KQPT-FM in Sacramento, WEAT-AM/FM, WOLL-FM
in West Palm Beach and WAAF-FM and WWTM-AM in the Boston area; and November 1996
- - WWMX-FM and WOCT-FM in Baltimore. The Company sold KGGO-FM, KHKI-FM and
KDMI-AM in Des Moines in January 1995, WHWK-FM and WNBF-AM in Binghamton, New
York in March 1995, and WNEZ-AM in Hartford in December 1996. During 1996, the
Tower Subsidiary also continued to increase the number of tower sites and
management agreements with several acquisitions. These transactions have
significantly affected operations for the year ended December 31, 1996 as
compared to the year ended December 31, 1995. See the Notes to the Consolidated
Financial Statements for a description of the 1996 and 1995 station
acquisitions.
Net revenues were $178.0 million for the year ended December 31, 1996
compared to $97.8 million in 1995, an increase of $80.2 million or 82.0%. This
increase was attributable to revenue growth in certain of the Company's existing
markets and more importantly the impact of the 1996 station acquisitions.
Operating expenses excluding net local marketing agreement expenses,
depreciation and amortization and corporate general and administrative expenses
were $120.0 million for the year ended December 31, 1996 compared to $66.4
million in 1995, an increase of $53.6 million or 80.7%. This increase was due to
the impact of increased costs associated with the Company's revenue growth.
Net local marketing agreement (LMA) expense was $8.1 million for the year
ended December 31, 1996 compared to $0.6 million in 1995, an increase of $7.5
million. The increase is related to the impact of 1996 station acquisitions as
the Company enters into LMA agreements prior to the consummation of many of its
acquisitions and dispositions. Net LMA expenses consist of fees paid or earned
by the Company under agreements which permit an entity to program and market
stations prior to their acquisition. Local marketing agreement expenses for the
year ended December 31, 1996 are presented net of approximately $2.3 million of
revenues earned under such agreements.
Depreciation and amortization was $17.8 million and $12.4 million for the
years ended December 31, 1996 and December 31, 1995, respectively, an increase
of $5.4 million or 43.5%. This increase was primarily attributable to the impact
of increased expenses associated with the increase in depreciable and
amortizable assets resulting from 1996 station acquisitions.
27
<PAGE>
Results of Operations - (continued):
Corporate general and administrative expense increased to $5.0 million for
the year ended December 31, 1996 from $3.9 million for the year ended December
31, 1995, an increase of $1.1 million or 28.2%. This increase was primarily
attributable to the higher personnel costs associated with supporting the
Company's greater number of stations.
Interest expense was $22.3 million for the year ended December 31, 1996
compared to $12.5 million for the 1995 period, an increase of $9.8 million or
78.4%. The increase is related to higher borrowing levels during 1996, including
the Senior Subordinated Notes issued in early 1996, and to a lesser extent
borrowings under the 1995 Credit Agreement.
Interest income was $5.5 million for the year ended December 31, 1996
compared to $2.4 million for the year ended December 31, 1995, an increase of
$3.1 million. The increase is attributable to interest income earned on certain
station investment notes and higher investable cash balances in 1996.
Gain (loss) on the sales of assets and other, net in 1996 was primarily
attributable to the loss of the sale of WNEZ-FM and to a lesser extent losses on
the sales of assets associated with the integration of certain station
facilities. The gain on sale of assets for 1995 represents gains on the sale of
radio broadcasting properties in Binghamton, New York ($3.9 million) and Des
Moines, Iowa ($7.7 million).
Provision for income taxes for the year ended December 31, 1996 was $4.8
million compared to $6.8 million for year ended December 31, 1995. The effective
tax rate for the year ended December 31, 1996 was approximately 48.4% compared
to 42.9% in 1995. The higher rate in 1996 is due to the effect of permanent
differences, principally amortization of non-deductible goodwill on acquisitions
consummated through mergers.
Redeemable common and preferred stock dividends for the year ended December
31, 1996 were $5.0 million as compared to $0.8 million for the year ended
December 31, 1995. The 1996 dividends are attributable to the Convertible
Preferred Stock issued in late June 1996. The 1995 dividends were attributable
to the Series C Common Stock which was retired in June 1995 with proceeds from
the Company's initial public offering.
Net income applicable to common stockholders was $0.2 million for the year
ended December 31, 1996 compared to $7.5 million for the year ended December 31,
1995, a decrease of $7.3 million as a result of the factors discussed above.
Broadcast cash flow (i.e., operating income before net LMA expenses,
depreciation and amortization and corporate general and administrative expense)
was $58.0 million for the year ended December 31, 1996 compared to $31.3 million
for the year ended December 31, 1995, a $26.7 million or 85.3 % increase.
Broadcast cash flow margins were 32.6% in 1996 compared to 32.0% in 1995.
Year Ended December 31, 1995 Compared to Year Ended December 31, 1994
As of December 31, 1995, the Company owned and/or operated fifteen FM and
nine AM stations. The Company acquired WRCH-FM and WNEZ-AM in Hartford in June
1994; WJYE-FM and WECK-AM in Buffalo and WQSR-FM and WBMD-AM in Baltimore in
September 1994; WIRK-FM and WBZT-AM in West Palm Beach in October 1994, WEGQ-FM
in Boston in January 1995, and WKGR-FM in West Palm Beach in July 1995. The
Company also entered into LMA's with KKMJ-FM, KAMX-FM and KJCE-FM in September
1995. The Company sold WDJX-AM/FM in Louisville in May 1994; 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. These transactions have significantly affected
operations for the year ended December 31, 1995 as compared to the year ended
December 31, 1994.
28
<PAGE>
Results of Operations - (continued):
Net Revenues for the year ended December 31, 1995 were $97.8 million
compared to $68.0 million in 1994, a $29.8 million or 43.8% increase. This
increase was principally attributable to acquisitions and also to revenue growth
at substantially all of the Company's radio stations, but was partially reduced
by a loss in revenue of one of American's Boston radio stations attributable to
a labor dispute in major league baseball. See ---General above.
Operating expenses excluding net LMA expense, depreciation and amortization
and corporate general and administrative expenses were $66.5 million for the
year ended December 31, 1995 and $50.1 million in 1994, a $16.4 million or 32.7%
increase. This increase was due to station acquisitions as well as increased
sales commissions resulting from the Company's revenue growth.
Depreciation and amortization was $12.4 million and $9.9 million for 1995
and 1994, respectively, a $2.5 million or 25.3% increase. This increase was
primarily attributable to intangible assets related to 1994 station acquisitions
which occurred primarily in the third and fourth quarters of 1994.
Corporate general and administrative expenses increased $1.7 million to
$3.9 million for 1995 from $2.2 million in 1994 or 77.3%. The increase was due
primarily to the higher costs associated with supporting the Company's increased
number of stations.
Interest expense was $12.5 million for 1995 compared to $7.3 million for
1994, a $5.2 million or 71.2% increase. This increase is related to increased
borrowings used to fund station acquisitions.
Interest income was $2.4 million for the year ended December 31, 1995
compared to $0.2 million for the year ended December 31, 1994, an increase of
$2.2 million. The increase is attributable to interest income earned on certain
station investment notes and higher investable cash balances in 1995.
Gain on sale of assets for 1995 was $11.5 million compared to $2.3 million
for 1994, an increase of $ 9.2 million. The 1995 gain represents two station
sales: Binghamton ($4.0 million) and Des Moines ($7.6 million); only one
station, Louisville, was sold in 1994.
Income tax provision for 1995 was $6.8 million compared to $0.6 million for
1994, a $6.2 million or 1,033.3 % increase. The increase is a result of
significantly improved profitability in 1995. The effective tax rate in 1994 was
approximately 115.1% as compared to 42.9% in 1995. The higher effective rate in
1994 is due to the non-deductibility of amortization of certain intangible
assets in 1994 as a percentage of income before taxes compared to 1995.
Extraordinary loss for 1994 was $1.2 million, net of a $0.6 million tax
benefit compared to $0.8 million, net of a $0.6 million tax benefit for 1995.
Both extraordinary losses were the result of certain deferred financing costs
being written off pursuant to the extinguishment of debt outstanding under the
1993 and 1994 Credit Agreements.
Redeemable common and preferred stock dividends for 1995 were $0.8 million
as compared to $1.9 million for 1994, a 57.9% decrease. The primary reasons for
this decrease were the exchange of Preferred Stock to Common Stock in September
1994 and the retirement of Series C Common Stock in June 1995 which accompanied
the initial public offering of the Company's Class A Common Stock. (See the
Notes to the Consolidated Financial Statements).
Net income applicable to common stockholders was $7.5 million for 1995
compared to a net loss applicable to common stockholders of $3.1 million for
1994, an increase of $10.6 million as a result of the factors discussed above.
Broadcast cash flow (i.e., operating income before net LMA expense,
depreciation and amortization and corporate general and administrative expense)
was $31.3 million for 1995 compared to $17.9 million for 1994, a $13.4 million
or 74.9 % increase. Broadcast cash flow margins were 32.0 % in 1995 compared to
26.3% in 1994.
29
<PAGE>
Liquidity and Capital Resources
The Company's liquidity needs arise from its acquisition-related
activities, debt service, working capital, capital expenditures and dividend
payments. Historically, the Company has met its operational liquidity needs with
internally generated funds and has financed the acquisition of radio
broadcasting properties and tower related properties with a combination of bank
borrowings and proceeds from the sale of the Company's equity and debt
securities. For the year ended December 31, 1996 cash flows provided by
operating activities was $15.7 million, as compared to $9.7 million for the year
ended December 31, 1995 and $2.0 million for the year ended December 31, 1994.
The change is primarily attributable to working capital investments related to
station acquisition and growth.
Cash flows used for investing activities were $421.9 million for the year
ended December 31, 1996 as compared to $81.2 million for the year ended December
31, 1995 and $92.9 million for the year ended December 31, 1994. The variations
from year to year related to varying station acquisition activity.
Cash provided by financing activities was $412.8 million for the year ended
December 31, 1996 as compared to $72.2 million for the year ended December 31,
1995 and $ 89.6 for the year ended December 31, 1994. The increase in 1996 was
due to the equity and debt offerings described below offset by repayment of
borrowings under the 1995 Credit Agreement.
Offerings: In January 1997, the Company consummated a private offering of
2,000,000 shares of 11 3/8% Cumulative Exchangeable Preferred Stock, $100
liquidation preference per share (Exchangeable Preferred Stock). Net proceeds to
the Company from the offering were approximately $192.4 million. Proceeds of the
offering were used initially to repay indebtedness and thereafter to fund
acquisitions. Dividends on the Exchangeable Preferred Stock are cumulative at an
annual rate of 11 3/8% (equivalent to $11.375 per share) and are payable
quarterly in cash, at the Company's election, or on or prior to January 15, 2002
with the issuance of additional shares. The Exchangeable Preferred Stock
possesses mandatory redemption features and will be classified accordingly in
the financial statements. See the Notes to the Consolidated Financial Statements
for a description of the Exchangeable Preferred Stock.
In June 1996, the Company consummated a private offering of 2,750,000
Depositary Shares, each representing a one-twentieth of a share of Convertible
Exchangeable Preferred Stock, $1,000 liquidation preference (Convertible
Preferred Stock). Net proceeds to the Company from the offering were
approximately $132.8 million and were used to fund acquisitions. Dividends on
the Convertible Preferred Stock are cumulative at an annual rate of 7%
(equivalent to $3.50 per depositary share) and are payable quarterly in cash.
Approximately $5.0 million of accrued dividends had been paid as of December 31,
1996. See the Notes to the Consolidated Financial Statements for a description
of the Convertible Preferred Stock.
In February 1996, the Company completed an equity offering and a debt
offering. Pursuant to the equity offering, which consisted of 5,514,707 shares
of its Class A Common Stock at a price of $27 per share, including 4,000,000
shares sold by the Company, 1,013,370 shares sold by selling shareholders, and
an additional 501,337 shares sold by the Company pursuant to the exercise of the
underwriters' over-allotment option. Proceeds to the Company, net of
underwriters' discount and associated costs, were approximately $114.5 million
and were utilized to repay existing debt and fund acquisitions.
Pursuant to the debt offering, the Company sold $175.0 million of 9% Senior
Subordinated Notes at a discount of approximately $1.4 million yielding 9.125%.
Interest on the Senior Subordinated Notes is payable semi-annually on February 1
and August 1 and the Notes mature on February 1, 2006. The Company, may at its
option, redeem, in whole or in part, the Senior Subordinated 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 Senior
Subordinated Notes upon the occurrence of certain events. The Senior
Subordinated Notes are subordinate in right of payment to the prior payment in
full of indebtedness outstanding under the 1997 Credit Agreement and contain
certain covenants including, but not limited to, limitations on sales of assets,
dividend payments, future indebtedness and issuance of preferred stock, and
changes in control (as defined) require an offer to purchase the Senior
Subordinated Notes. The Senior Subordinated Notes are guaranteed by all
Restricted Subsidiaries (as defined). Proceeds
30
<PAGE>
Liquidity and Capital Resources - (continued):
to the Company, net of underwriters' discount and associated costs were
approximately $167.5 million, and were utilized to repay existing debt and fund
acquisitions.
Credit Agreements: As of December 31, 1996, the Company had approximately
$330.7 million of total long-term debt (including the current portion thereof)
outstanding. This included approximately $151.5 million of borrowings
outstanding under the 1995 Credit Agreement. In January 1997, the Company
entered into new credit agreements with a syndicate of banks (the 1997 Credit
Agreement) which replaced the $300.0 million 1995 Credit Agreement. The 1997
Credit Agreement consists of two separate lending agreements, providing for
facilities consisting of a $550.0 million reducing revolver credit facility, a
$200.0 million revolving credit converting to a term loan facility and a $150.0
million term loan facility, available only to repurchase, if required, certain
note obligations of EZ Communications, Inc. (EZ) which will be assumed by the
Company in connection with the merger of EZ into the Company (EZ Merger). The
terms of the 1997 Credit Agreement are described in the Notes to the
Consolidated Financial Statements. In connection with the 1997 Credit Agreement,
in January 1997, the Company recorded an extraordinary loss of approximately
$2.6 million, which will be recorded net of the applicable income tax benefit,
representing the write-off of deferred financing fees associated with the
previous agreement.
In November 1996, the Tower Subsidiary entered into a credit agreement
(Tower Credit Agreement) that provides the Tower Subsidiary with a $70.0 million
loan commitment and an incremental $20.0 million loan, contingent upon Tower
obtaining additional equity. The terms of the Tower Credit Agreement are
described in the Notes to the Consolidated Financial Statements.
In order to finance acquisitions of radio stations, tower related
properties and for general corporate purposes, the Company has borrowed and
expects to continue to borrow under its credit agreements. As part of the EZ
Merger, the Company will assume EZ's obligations with respect to $150.0 million
principal amount of the EZ Senior Subordinated Notes and repay all borrowings
under the EZ credit facility with borrowings from the 1997 Credit Agreement. The
Company will be required to offer to purchase the EZ Senior Subordinated Notes
at 101% of their principal amount and will borrow any funds required to do so
under the 1997 Credit Agreement. A substantial portion of the Company's cash
flow from operations is required for debt service. The Company believes that
cash flow from operations will be sufficient to meet debt service requirements
for interest and scheduled payments of principal under the credit agreements and
the Senior Subordinated Notes and the EZ Senior Subordinated Notes. However, the
Company's leverage could make it vulnerable to a downturn in the operating
performance of its radio stations, tower properties or a downturn in economic
conditions.
The Company believes that its cash flows from operations will be sufficient
to meet any quarterly dividend, debt service requirements for interest and
scheduled payments of principal under the 1997 Credit Agreement and its other
debt obligations. If such cash flow is not sufficient to meet such debt service
requirements, the Company may be required to sell equity securities, refinance
its obligations or dispose of one or more of its properties in order to make
such scheduled payments. There can be no assurance that the Company would be
able to effect any of such transactions on favorable terms.
The Company's working capital needs fluctuate throughout the year due to
industry-wide seasonality and its broadcast of sporting events at different
times during the year. The Company historically has had sufficient cash from its
operations to meet its working capital needs and believes that it has sufficient
financial resources available to it, including borrowing under the credit
agreements, to finance operations for the foreseeable future.
The Company has entered into numerous station and tower acquisition and
related agreements (see the Notes to the Consolidated Financial Statements). The
consummation of each of these agreements is subject to, among other things, FCC
approval and in some cases expiration or earlier termination of the Hart-Scott
Rodino Act waiting period and the negotiation of definitive agreements. Unless
otherwise noted, the Company intends to effect all of the transactions as soon
as the necessary approvals are obtained. The Company intends to finance the
acquisitions with available cash, borrowings under the 1997 Credit Agreement,
and, in certain cases, issuance of equity securities.
31
<PAGE>
Liquidity and Capital Resources - (continued):
The Company expects capital expenditures in 1997 to be approximately $20.0
million, consisting principally of tower construction, office consolidations and
ongoing technical improvements. To the extent that funds generated from
operations, or available cash, are insufficient to finance non-recurring capital
expenditures, the Company would seek to borrow the necessary funds under the
1997 Credit Agreement.
Inflation
The impact of inflation on the Company's operations has not been
significant to date. However, there can be no assurance that a high rate of
inflation in the future would not have an adverse effect on the Company's
operating results.
Recent Accounting Pronouncement
In March 1997, the Financial Accounting Standards Board released Statement
of Financial Accounting Standards No. 128 "Earnings Per Share" (FAS 128), which
will be effective for fiscal 1997. FAS 128 will require the Company to restate
amounts previously reported as earnings per share to comply with the
requirements of the new standard; while the Company is in the process of
evaluating the impact of FAS 128, it does not expect that adoption will have a
dilutive effect on previously reported earnings per share.
32
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The following financial statements of American Radio Systems
Corporation are filed herein.
American Radio Systems Corporation and Subsidiaries
Independent Auditors' Report
Consolidated Balance Sheets as of December 31, 1995 and 1996
Consolidated Statements of Operations for each of the three years in
the period ended December 31, 1996
Consolidated Statements of Stockholders' Equity (Deficiency) for each
of the three years in the period ended December 31, 1996
Consolidated Statements of Cash Flows for each of the three years in
the period ended December 31, 1996
Notes to Consolidated Financial Statements
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
The information called for by this Item is not applicable.
33
<PAGE>
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
"Election of Directors" and "Additional Information" in the Company's
Proxy Statement for the 1996 Annual Meeting of Stockholders to be filed with the
Securities and Exchange Commission on or before April 30, 1997 are hereby
incorporated by reference herein.
ITEM 11. EXECUTIVE COMPENSATION
"Election of Directors" and "Executive Compensation" in the Company's
Proxy Statement for the 1996 Annual Meeting of Stockholders to be filed with the
Securities and Exchange Commission on or before April 30, 1997 are hereby
incorporated by reference herein. Such incorporation by reference shall not be
deemed to specifically incorporate by reference the information referred to in
Item 402(a)(8) of Regulation S-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
"Principal Stockholders" in the Company's Proxy Statement for the 1996
Annual Meeting of Stockholders to be filed with the Securities and Exchange
Commission on or before April 30, 1997 is hereby incorporated by reference
herein.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
"Other Transactions" in the Company's Proxy Statement for the 1996
Annual Meeting of Stockholders to be filed with the Securities and Exchange
Commission on or before April 30, 1997 is hereby incorporated by reference
herein.
34
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K.
(a) Documents filed as part of this report
(1) Financial Statements
The consolidated financial statements of the Company are filed as part of
this Form 10-K and are set forth on pages F-1 to F-49 as detailed in Item 8.
(b) Reports on Form 8-K filed in the fourth quarter of 1996.
Form 8-K/A (Amendment 2) on October 2, 1996:
Item 7 - Financial Statements and Pro Forma Financial
Information for the Company and The Ten Eighty Corporation.
(c) Exhibits - See Exhibit Index beginning on page (i).
(d) Consolidated financial statement schedule
Schedule II - Valuation and Qualifying Accounts - see page S-1.
All other schedules have been omitted because the required information
either is not applicable or is shown in or determinable from the
financial statements or notes thereto.
35
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 on the 28th day of
March, 1997.
AMERICAN RADIO SYSTEMS CORPORATION
By: /s/ STEVEN B. DODGE
Steven B. Dodge
Chief Executive Officer, Director,
President and Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
/s/ STEVEN B. DODGE Chairman of the Board, Chief Executive
Officer, President and Director
/s/ JOSEPH L. WINN Chief Financial Officer and Director
/s/ JUSTIN D. BENINCASA Vice President and Corporate Controller
/S/ THOMAS H. STONER Director
/S/ ARNOLD L. CHAVKIN Director
/S/ JAMES H. DUNCAN, JR. Director
/S/ CHARLES D. PEEBLER, JR. Director
/S/ DONALD B. HEBB, JR. Director
/S/ CHARLTON H. BUCKLEY Director
36
<PAGE>
INDEPENDENT AUDITORS' REPORT
Stockholders and Board of Directors of
American Radio Systems Corporation:
We have audited the accompanying conso1idated balance sheets of American Radio
Systems Corporation and subsidiaries as of December 31, 1995 and 1996, and the
related consolidated statements of operations, stockholders' equity (deficiency)
and cash flows for each of the three years in the period ended December 31,
1996. Our audits also included the financial statement schedule listed in the
index at Item 14. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of American Radio Systems Corporation and
subsidiaries as of December 31, 1995 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996 in conformity with generally accepted accounting principles.
Also, in our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 25, 1997
F-1
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 31,
--------------------
1995 1996
------ ------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,889 $ 10,447
Accounts receivable (less allowance for doubtful
accounts of $2,532 and $4,560 in 1995 and 1996,
respectively) 24,389 51,897
Employee and other related-party receivables 151 249
Prepaid expenses and other assets 2,130 3,354
Note receivable--other 1,108
Deferred income taxes 1,162 3,370
-------- --------
Total current assets 32,829 69,317
-------- --------
PROPERTY AND EQUIPMENT--Net 31,786 90,247
-------- --------
OTHER ASSETS:
Station investment note receivable--related party
(less valuation allowance of $500 in 1995 and
1996) 500 743
Station investment notes receivable 48,597 69,177
Intangible assets--net:
Goodwill 66,464 232,149
FCC licenses 45,023 233,558
Other intangible assets 15,864 27,553
Deposits and other long-term assets 7,733 26,064
Net assets held under exchange agreement 47,495
-------- --------
Total other assets 184,181 636,739
-------- --------
TOTAL $248,796 $796,303
======== ========
See notes to consolidated financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 31,
-----------------------
1995 1996
-------- -------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 355 $ 561
Accounts payable 3,004 7,085
Accrued compensation 1,318 3,027
Accrued expenses 5,593 16,355
Accrued interest 514 7,303
--------- ---------
Total current liabilities 10,784 34,331
--------- ---------
DEFERRED INCOME TAXES 7,899 33,205
--------- ---------
OTHER LONG-TERM LIABILITIES 1,929 2,149
--------- ---------
LONG-TERM DEBT 152,149 330,111
--------- ---------
MINORITY INTEREST 344
--------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred Stock; $0.01 par value; 10,000,000 shares authorized;
Convertible Exchangeable Preferred Stock; 137,500 shares issued
and outstanding (represented by 2,750,000 depositary shares);
liquidation preference $1,000 per share 1
Class A Common Stock; $.01 par value; 100,000,000 shares authorized;
6,645,862 and 15,101,022 shares issued and outstanding,
respectively 66 151
Class B Common Stock; $.01 par value; 15,000,000 shares authorized,
5,919,601 and 4,658,096 shares issued and outstanding,
respectively 59 47
Class C Common Stock; $.01 par value; 6,000,000 shares authorized;
1,795,518 and 1,295,518 shares issued and outstanding,
respectively 18 13
Additional paid-in capital 70,928 390,731
Unearned compensation (391) (297)
Retained earnings 5,793 5,955
--------- ---------
Total 76,473 396,601
Less:
Treasury stock, at cost, 18,449 shares at December 31, 1995
and 1996 (438) (438)
--------- ---------
Total stockholders' equity 76,035 396,163
--------- ---------
TOTAL $ 248,796 $ 796,303
========= =========
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Years Ended
December 31,
---------------------------------
1994 1995 1996
-------- -------- ---------
<S> <C> <C> <C>
NET REVENUES $ 68,034 $ 97,772 $178,019
-------- -------- --------
OPERATING EXPENSES:
Operating expenses excluding depreciation and
amortization, net local marketing agreement and
corporate general and administrative expenses 50,129 66,448 120,004
Net local marketing agreement expenses 600 8,128
Depreciation and amortization 9,920 12,364 17,810
Corporate general and administrative 2,229 3,908 5,046
-------- -------- --------
Total expenses 62,278 83,320 150,988
-------- -------- --------
OPERATING INCOME 5,756 14,452 27,031
-------- -------- --------
OTHER INCOME (EXPENSE):
Interest expense (7,276) (12,497) (22,287)
Interest income and other, net 225 2,435 5,525
Gains (losses) on sale of assets and other, net 2,278 11,544 (308)
Provision for loss on station investment note
receivable (500)
-------- -------- --------
Total other income (expense) (5,273) 1,482 (17,070)
-------- -------- --------
INCOME FROM OPERATIONS BEFORE
EXTRAORDINARY ITEMS AND INCOME TAXES 483 15,934 9,961
INCOME TAX PROVISION (556) (6,829) (4,826)
-------- -------- --------
INCOME (LOSS) BEFORE EXTRAORDINARY
LOSSES (73) 9,105 5,135
EXTRAORDINARY LOSSES ON EXTINGUISHMENT
OF DEBT, NET OF INCOME TAX BENEFIT OF
$597 IN 1994 AND $614 IN 1995 (1,160) (817)
-------- -------- --------
NET INCOME (LOSS) (1,233) 8,288 5,135
REDEEMABLE COMMON AND PREFERRED
STOCK DIVIDENDS (1,887) (815) (4,973)
-------- -------- --------
NET INCOME (LOSS) APPLICABLE TO COMMON
STOCKHOLDERS $ (3,120) $ 7,473 $ 162
======== ======= =======
PRIMARY AND FULLY DILUTED PER COMMON
SHARE AMOUNTS:
Income (loss) before extraordinary losses $ (.21) .65 $ .01
Extraordinary losses (.12) (.06)
-------- ------- -------
Net income (loss) $ (.33) .59 $ .01
======== ======= =======
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 9,338 12,646 20,510
======== ======= =======
See notes to consolidated financial statements.
</TABLE>
F-4
<PAGE>
<TABLE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
(In thousands)
Convertible
Exchangeable Series A Series B Series D Class A Class B
Preferred Stock Common Stock Common Stock Common Stock Common Stock Common Stock
--------------- ---------------- ---------------- --------------- ---------------- ---------------
Shares Shares Shares Shares Shares Shares
Out- Out- Out- Out- Out- Out-
standing Amount standing Amount standing Amount standing Amount standing Amount standing Amount
-------- ------ --------- ------ -------- ------ --------- ------ --------- ------ -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, January 1, 1994 2,992 $ 30 152 $ 2
Issuance of Common Stock,
net of issuance costs
of $129................ 473 4 222 2 317 $ 3
Conversion of long-term
debt to Series A Common
Stock.................. 75 1
Issuance of stock in
exchange for note
receivable............. 28
Conversion of preferred
stock to Series A
Common Stock........... 63 1
Dividends payable.......
Distributions on
redeemable stock.......
Distributions paid......
Acquisition of treasury
stock................
Issuance of warrants....
Accretion of Series A
redeemable stock to
fair value.............
Net loss................
--------- ------ --------- ------ --------- ------
BALANCE,
DECEMBER 31, 1994....... 3,631 36 374 4 317 3
Repayment of note
receivable.............
Stock options granted
below fair market
value..................
Reclassification of
Series A, B and C
redeemable stock.......
Two-for-one stock
exchange............... 3,631 36 374 4 317 3
Distributions on
redeemable stock.......
Reversal of dividends
payable................
Conversion to Class A
Common Stock.......... (1,275) (13) (539) (5) 1,813 $ 18
Conversion to Class B
Common Stock.......... (5,637) (56) (95) (1) 5,731 $ 57
Conversion to Class C
Common Stock.......... (298) (3) (748) (8)
Shares allocated to
treasury............... (52)
Issuance of Class A
Common Stock, net of
issuance costs of
$8,303................. 4,770 47
Exercise of Common Stock
Option and Warrant..... 1
Conversion of Senior
Series C Common Stock
to Class B and Class
C Common Stock......... 268 3
Acquisition of
treasury stock......... (18)
Amortization of unearned
compensation..........
Conversion of Class B
Common Stock to Class A
Common Stock........... 61 1 (61) (1)
Retirement of treasury
stock..................
Net income..............
Reclassification of
capital deficiency
account................
--------- ------ --------- ------ --------- ------ --------- ------ --------- ------
BALANCE,
DECEMBER 31, 1995..... 0 0 0 0 0 0 6,645 66 5,920 59
Dividends payable.......
Distributions paid......
Issuance of Class A
Common Stock, net of
issuance cost of
$7,034................. 4,501 45
Shareholder conversion
in conjunction with
issuance of Class A
Common Stock........... 838 8 (338) (3)
Issuance of Preferred
Stock, net of issuance
cost of $4,725........ 138 $ 1
Issuance of Class A
Common Stock for
Skyline, Bridan Tower,
and Henry Mergers...... 2,165 22
Conversion of Class B
Common Stock to Class
A Common Stock......... 952 10 (952) (10)
Exercise of common
stock options.......... 28 1
Amortization of
unearned compensation..
Net income..............
--------- ------ --------- ------ --------- ------ --------- ------ --------- ------ --------- ------
BALANCE,
DECEMBER 31, 1996....... 138 $ 1 0 $ 0 0 $ 0 0 $ 0 15,101 $ 151 4,658 $ 47
========= ====== ========= ====== ========= ====== ========= ====== ========= ====== ========= ======
<FN>
See notes to consolidated financial statements.
</FN>
F-5
<PAGE>
Class C
Common Stock Note Treasury Stock Capital
- ------------------ Receivable -------------- Additional Deficiency Retained Redeemable
Shares from Unearned Paid-in Upon Earnings Stock Dividends
Outstanding Amount Stockholder Shares Amount Compensation Capital Combination (Deficit) Dividends Payable Total
- ----------- ------ ----------- ------ ------ ------------ --------- ----------- --------- --------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ (21,709) $ (447) $ (255) $ (22,379)
$ 18,046 18,055
1,349 25 1,375
$ (500) 500
1,138 1,139
(265) $ 265
(1,536) 230 (1,306)
(351) (351)
(26)$ (340) 340
523 523
(1,387) (1,387)
(1,233) (1,233)
----------- ------ ------ --------- ----------- --------- --------- ------- -------------
(500) (26) (340) 18,357 (21,709) (1,680) $ 0 265 (5,564)
=========
500 500
$ (473) 473
3,121 3,121
(26) (43)
(815) (815)
265 (265)
1,046 $ 11
70,355 70,402
79 1 11 12
671 6 9
(18) (438) 438
82 82
52 340 (340)
8,288 8,288
(21,709) 21,709
- ----------- ------ ----------- ------ ------ ------------ --------- ----------- --------- ------- -------------
1,796 18 0 (18) (438) (391) 70,928 $ 0 5,793 0 76,035
===========
(4,973) 4,973
(4,973) (4,973)
114,457 114,502
(500) (5)
132,774 132,775
72,131 72,153
441 442
94 94
5,135 5,135
- ----------- ------ ----------- ------ ------ ------------ --------- --------- ------- -------------
1,296 $ 13 $ 0 $ (18)$ (438) $ (297) $ 390,731 $ 5,955 $ 0 $ 396,163
=========== ====== =========== ====== ====== ============ ========= ========= ======= =============
See notes to consolidated financial statements.
</TABLE>
F-6
<PAGE>
<TABLE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended
December 31,
-----------------------------------
1994 1995 1996
---------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (1,233) $ 8,288 $ 5,135
Adjustments to reconcile net income (loss) to cash
provided by operating activities:
Barter revenues (4,369) (4,678) (7,989)
Barter expenses 4,011 4,626 6,973
Depreciation and amortization 9,920 12,364 17,810
Amortization of deferred financing costs 265 278 868
Amortization of debt discount 84
Provision for losses on accounts receivable 721 1,387 2,977
Provision for loss on station investment note receivable 500
Extraordinary losses, net 1,160 817
Deferred taxes 388 3,490 940
Accretion of note discount (34) (53) (42)
(Gain) loss on sale of station and other, net (2,278) (11,544) 248
Unearned compensation 82 94
Change in assets and liabilities, net of effects
of mergers and acquisitions:
Accounts receivable (8,142) (6,030) (27,872)
Prepaid expenses and other assets (399) (919) (1,202)
Accounts payable and accrued expenses 1,989 2,609 10,846
Accrued interest (333) (993) 6,789
--------- --------- ---------
Cash provided by operating activities 2,166 9,724 15,659
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for purchase of property and equipment and
intangible assets (5,754) (5,926) (25,109)
Proceeds from asset and radio station sales 5,620 15,302 1,087
Proceeds from repayment of station investment notes receivable 3,000 1,350
Payments for purchase of tower properties (7,300) (9,797)
Payments for purchase of radio stations (87,291) (31,013) (312,591)
Payments for station investment notes receivable and related
intangible assets (5,000) (48,597) (56,522)
Deposits and other long-term assets (484) (6,649) (20,303)
--------- --------- ---------
Cash used for investing activities (92,909) (81,183) (421,885)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under the Credit Agreements 83,500 225,000 154,000
Repayment under the Credit Agreements (7,000) (202,500) (151,500)
Repayment of other obligations (2,448) (1,288) (454)
Net proceeds from debt offering - net of discount 173,581
Additions to deferred financing costs (1,742) (3,896) (5,344)
Redemption of Series C Senior Common Stock (14,580)
Dividends paid (351) (4,973)
Purchase of treasury stock (438)
Net proceeds from stock offerings and exercise of
options 17,560 69,882 247,474
--------- --------- ---------
Cash provided by financing activities 89,519 72,180 412,784
--------- --------- ---------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (1,224) 721 6,558
CASH AND CASH EQUIVALENTS, BEGINNING OF
YEAR 4,392 3,168 3,889
--------- --------- ---------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 3,168 $ 3,889 $ 10,447
========= ========= =========
</TABLE>
See notes to consolidated financial statements.
F-7
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Business and Summary of Significant Accounting Policies
American Radio Systems Corporation and subsidiaries (collectively, American
or the Company) is a national broadcasting company formed in 1993 to acquire,
develop and operate radio stations and communications towers throughout the
United States. In July 1995, the Company organized American Tower Systems, Inc.
(the Tower Subsidiary or Tower) for the purpose of acquiring, developing, and
operating communications towers throughout the United States, for use by
American's radio stations, other radio operators and other communication related
businesses. As of December 31, 1996 the Company owned and/or operated 71
stations in 14 markets (23 AM and 48 FM) and owned and operated over 200 towers
and rooftop towers.
The Company commenced operations on November 1, 1993, following the
tax-free combination of four parties (the Combination); Stoner Broadcasting
System Holding, Inc. (Stoner), Atlantic Radio, L.P. (Atlantic), Multi Market
Communications, Inc. (Multi Market) and Boston AM Radio Corporation (Boston AM)
(collectively, the Predecessor Entities). The Combination was accounted for as a
purchase, and the Company has recorded the net assets of each of the Predecessor
Entities at their historical carrying values.
In order to simplify its corporate structure, in December 1995, American
merged American Radio Systems, Inc. (ARSI), its wholly owned subsidiary which
had owned all of the radio stations, with and into American. American Radio
Systems License Corp. (ARSLC) is a wholly owned subsidiary of the Company
which holds substantially all of the FCC licenses utilized by the Company's
broadcasting properties. Pursuant to a management agreement between ARSLC and
American, American pays a management fee to ARSLC equal to its operating
expenses (primarily amortization and taxes).
Concurrent with the initial public offering discussed in Note 8, the
Company amended its Articles of Incorporation, which provided for, among other
things, a two-for-one exchange of each share Series A, B and D Common Stock for
two shares of Class A, B, or C Common Stock (the 1995 Recapitalization). The
accompanying financial statements give retroactive effect to the two-for-one
stock exchange.
Principles of Consolidation--The accompanying consolidated financial
statements include the accounts of the Company and its subsidiaries. All
significant intercompany accounts and transactions have been eliminated.
Investments in affiliates, owned more than 20 percent but not in excess of 50
percent, are accounted for using the equity method, when less than a controlling
interest is held. The Company also consolidates its 50.1% interest in a
communications tower partnership, with the other partner's investment reflected
as minority interest in the accompanying balance sheet. Equity in earnings
(loss) of affiliates not consolidated and the minority interest in earnings
(loss) of consolidated affiliates is reported as a component of gains on sales
of assets and other, net in the accompanying statement of operations. There were
no such amounts for the years ended December 31, 1994 and 1995, and such amounts
were not material in 1996.
Revenue Recognition--Revenues are recognized when advertisements are
broadcast and transmitting services are provided. Revenues under lease and
management contracts are recognized when earned. The Company's revenues vary
throughout the year. The Company's first calendar quarter historically produces
the lowest revenues for the year, while each of the other quarters produces
roughly equivalent revenues.
Corporate General and Administrative Expense--Corporate general and
administrative expense consists of corporate overhead costs not specifically
allocable to any of the Company's individual business properties.
F-8
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
1. Business and Summary of Significant Accounting Policies--(Continued)
Barter Transactions--Revenue from the stations' exchange of advertising
time for goods and services is recorded as the advertising is broadcast at the
fair market value of goods or services received or to be received. The value of
the goods and services is charged to expense when used. Net barter receivables
are included in accounts receivable.
Barter transactions were approximately as follows for the years ended
December 31 (in thousands):
1994 1995 1996
---- ---- ----
Barter revenues $4,369 $4,678 $7,989
Barter expenses 4,011 4,626 6,973
Net barter receivables 327 248 811
Barter fixed asset additions 89 131 22
Net barter liability assumed in
acquisitions 431
Net Local Marketing Agreement Expense--Net local marketing agreement (LMA)
expenses consist of fees paid by or earned by American under agreements which
permit an entity to program and market stations prior to their acquisition. The
Company enters into such agreements prior to the consummation of many of its
acquisitions or dispositions. LMA expenses for the year ended December 31, 1996
are presented net of approximately $2,333,000 of revenue earned under such
agreements with third parties.
Concentration of Credit Risk--The Company extends credit to customers on an
unsecured basis in the normal course of business. No individual industry or
industry segment is significant to the Company's customer base. The Company has
policies governing the extension of credit and collection of amounts due from
customers.
Derivative Financial Instruments--The Company uses derivative financial
instruments as a means of managing interest-rate risk associated with current
debt or anticipated debt transactions that have a high probability of being
executed. Derivative financial instruments used include interest rate swap
agreements and interest rate cap agreements. These instruments are matched with
either fixed or variable rate debt and, when matched, are recorded on a
settlement basis as an adjustment to interest expense. Premiums paid to purchase
interest rate cap agreements are amortized as an adjustment of interest expense
over the life of the contract. Gains and losses on terminated contracts are
deferred and recognized over the shorter of the remaining term of the terminated
contract or the term of the related liability. Derivative financial instruments
are not held for trading purposes. (See Notes 3 and 13).
Impairment of Long-Lived Assets--During 1996, the Company adopted FAS No.
121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of" (FAS 121), which addresses the accounting for the
impairment of long-lived assets, certain identifiable intangibles and goodwill.
Management reviews long-lived assets and the related intangibles whenever events
or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. Long-lived assets to be held and used are recorded at cost.
Recoverability of these assets is determined by comparing the forecasted
undiscounted net cash flows of the operations to which the assets relate, to the
carrying amount including associated intangible assets of such operations. If it
is determined that the Company will be unable to recover the carrying amount of
such assets, then intangible assets are written down first, followed by the
other long-lived assets, to fair value. Fair value is determined based on
appraised values or discounted cash flows, depending upon the nature of the
assets. The impact of the adoption of FAS 121 on the Company's results of
operations, liquidity and financial position was not material.
F-9
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
1. Business and Summary of Significant Accounting Policies--(Continued)
Stock-Based Compensation--During 1996, the Company adopted the disclosure
only provisions of FAS No. 123 "Accounting for Stock-Based Compensation" (FAS
123). FAS 123 addresses the financial accounting and reporting standards for
stock-based employee compensation plans. FAS 123 gives an entity the choice of
recognizing related compensation expense by either applying the new fair value
method or the intrinsic value approach described in Accounting Principles Board
(APB) Opinion No. 25, the former standard. The Company has continued to use the
measurement prescribed by APB No. 25, and, accordingly, the impact of the
adoption had no effect on the Company's results of operations, liquidity or
financial position. The Company has provided supplemental disclosure of the
impact of applying the fair value method. (See Note 8).
Property and Equipment and Intangible Assets--Property and equipment are
recorded at cost and depreciation is provided using the straight-line method
over estimated useful lives ranging from three to thirty-two years. The
consolidated financial statements reflect the preliminary allocation of certain
purchase prices as the appraisals for certain acquisitions have not yet been
finalized.
Non-competition and consulting agreements, Federal Communications
Commission (FCC) licenses, favorable transmitter sites, goodwill, and various
other intangibles, acquired in connection with the Company's acquisitions of the
various radio stations, are being amortized over their estimated useful lives,
ranging from one to forty years, using the straight-line method. Other
intangible assets consist principally of deferred financing costs, broadcast
affiliation agreements, favorable studio and office space leases and costs
incurred on pending acquisitions. Accumulated amortization of goodwill
aggregated approximately $2,176,000 and $6,369,000 at December 31, 1995 and
1996, respectively. Accumulated amortization of FCC licenses aggregated
approximately $2,390,000 and $7,628,000 at December 31, 1995 and 1996,
respectively. Accumulated amortization of other intangible assets aggregated
approximately $14,696,000 and $14,112,000 at December 31, 1995 and 1996,
respectively,
Property and equipment and intangible assets include approximately
$61,123,000 of assets related to radio stations held for sale as of December 31,
1996, excluding the net assets held under exchange agreement. (See Notes 10, 11
and 14).
Note Receivable--Other--In connection with the sale of a Syracuse, New
York radio station, the Company held a note receivable. The note had a face
amount of $1,000,000 and was collected in full along with interest in October
1996.
Station Investment Note Receivable--Related Party-- At December 31, 1994,
the Company held a $5,000,000 note (the Acquisition Note) from a related party,
Back Bay Broadcasters, Inc. (Back Bay), pursuant to transactions discussed in
Notes 8 and 12. The Acquisition Note had a stated interest rate of 10% but was
discounted to reflect a market interest rate of 16% and was due in 2001.
Further, during 1994, the Company provided a $500,000 valuation allowance to
reflect management's estimate of the value of the underlying collateral for the
Acquisition Note.
In May 1995, American sold the Acquisition Note, and its related rights and
privileges (the Back Bay Note Sale) for (a) $3,000,000 in cash, (b) 4.99% of the
common stock of Back Bay, and (c) a 10% Convertible Subordinated Debenture of
Back Bay in the principal amount of $1,000,000 which is convertible into 20% of
the common stock of Back Bay. This note matures in 2002 and is carried at its
expected net realizable value of $500,000. There is no readily determinable
market value for the common stock of Back Bay; therefore, the Company is unable
to assign any value to this asset or its related rights
F-10
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
1. Business and Summary of Significant Accounting Policies--(Continued)
and privileges. As part of the agreement, the Company also obtained an
assignable right of first refusal with respect to the sale of assets or stock
(or other equity securities) of Back Bay and an assignable option, exercisable
at any time after August 31, 1998, to purchase all of the assets of Back Bay. As
of December 31, 1996, Back Bay owned three radio stations: WBNW-AM, Boston (sale
pending), and certain other Rhode Island stations. As part of American's
arrangement to purchase KBBT-FM in Portland, Oregon, the Company granted the
seller of such station the right to exercise its purchase option to acquire
WBNW- AM. In December 1996, such seller and Back Bay entered into a purchase and
sale agreement with respect to WBNW-AM. In August 1996, American advanced an
additional $243,000 to Back Bay in exchange for a note bearing interest at 10%
per annum and maturing in 2002. (See Note 14).
Station Investment Notes Receivable--In connection with certain
transactions discussed in Notes 10, 11 and 12, the Company has loaned funds at
varying rates of interest to certain entities which own radio stations the
Company is obligated, or has options, to purchase. These notes, as amended, have
varying interest rates ranging from 6% to 12% and are collateralized by
substantially all of the assets of the related radio stations.
Significant Estimates--In the process of preparing its consolidated
financial statements, the Company estimates the appropriate carrying value of
certain assets and liabilities which are not readily apparent from other
sources. The primary estimates underlying the Company's financial statements
include allowances for potential bad debts on accounts and notes receivable, the
useful lives of its assets such as property and intangibles, fair values of
financial instruments, the realizable value of its tax assets and accruals for
health insurance and other matters. Management bases its estimates on certain
assumptions, which they believe are reasonable in the circumstances, and while
actual results could differ from those estimates, management does not believe
that any change in those assumptions in the near term would have a material
effect on its financial position, results of operations or liquidity.
Income Taxes--Deferred taxes are provided to reflect temporary differences
in bases between book and tax assets and liabilities, and net operating loss
carryforwards. Deferred tax assets and liabilities are measured using currently
enacted tax rates.
Cash Flow Information--For purposes of the statements of cash flows, the
Company considers all highly liquid, short-term investments with remaining
maturities of three months or less when purchased to be cash equivalents.
Cash payments for interest expense aggregated approximately $7,018,000,
$9,890,000 and $14,329,000 for the years ended December 31, 1994, 1995, and
1996, respectively.
Cash payments for income taxes aggregated approximately $1,600,000,
$1,808,000 and $3,086,000 for the years ended December 31, 1994, 1995, and 1996,
respectively.
Significant noncash investing and financing transactions, apart from the
barter transactions discussed above, are as follows:
For the year ended December 31, 1994:
o Capital lease obligations of approximately $550,000 were incurred
when the Company entered into leases for new office furniture and
equipment.
o The Company issued warrants to acquire approximately 79,000
shares of common stock with a cost aggregating $523,000 in
exchange for the acquisition of certain intangible assets. (See
Notes 8 and 12).
F-11
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
1. Business and Summary of Significant Accounting Policies--(Continued)
o Additional Series A Common Stock was issued upon the conversion
of $1,350,000 of long-term debt, $1,138,000 of Preferred Stock
(of which $138,000 represented Deferred Yield Distributions), and
receipt of a $500,000 note receivable. (See Notes 7, 8 and 12).
o Leasehold improvements totaling approximately $937,000 were
provided to the Company in connection with certain building lease
incentives.
For the years ended December 31, 1994 and 1995:
o Accrued and unpaid Common Deferred Yield Distributions on the
Series C Common Stock aggregated $1,536,000 and $815,000,
respectively. (See Note 7).
For the year ended December 31, 1995:
o In connection with the WEGQ-FM acquisition (see Note 10), the
Company issued a $500,000 note to the previous owner.
o Capital lease obligations of approximately $201,000 were incurred
for office furniture and equipment.
o In connection with the Company's initial public offering of its
Class A Common Stock (the Initial Public Offering), the Company
exchanged approximately 939,000 shares of Senior Series Common
Stock for approximately 268,000 shares of Class B Common Stock
and approximately 671,000 shares of Class C Common Stock. (See
Note 7).
o The Company's obligation to repurchase the shares of the
beneficiaries of a Predecessor Entity's Employee Stock Ownership
Plan was canceled as a result of the Initial Public Offering and
pursuant to a vote by the Board of Directors effective September
30, 1995. (See Note 7).
For the year ended December 31, 1996:
o In connection with radio station and tower acquisitions, the
Company assumed approximately $4,437,000 in liabilities and
issued shares of Class A Common Stock with an agreed upon value
of approximately $72,153,000. (See Note 10).
o Capital lease obligations of approximately $390,000 were incurred
for office furniture and equipment. (See Note 3).
F-12
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
1. Business and Summary of Significant Accounting Policies--(Continued)
Retirement Plans--The Company has a 401(k) plan covering substantially all
employees, subject to certain minimum age and length-of-employment requirements.
Under the plan, the Company matches 30% of participants' contributions up to 5%
of compensation. The Company contributed approximately $164,000, $225,000 and
$299,000 to the plan for the years ended December 31, 1994, 1995, and 1996,
respectively.
Income (Loss) Per Common Share--For the periods prior to the initial public
offering, income (loss) per common share was based on the weighted average
number of common shares outstanding during each period adjusted for stock
options and warrants issued at prices below the initial public offering price,
without regard to the anti-dilutive effect of such options and warrants. Such
stock options and warrants have been included in the calculation of income
(loss) per common share as if they were outstanding for the entire period prior
to the offering (using the treasury stock method and the initial public offering
price). For the years ended December 31, 1995 and 1996, income per common share
is based on the number of common shares outstanding as adjusted for dilutive
stock options and warrants. Fully diluted earnings (loss) per share amounts are
not reported separately as the effects are not dilutive.
Reclassifications--Certain reclassifications have been made to the prior
year financial statements to conform with the 1996 presentation.
2. Property and Equipment
Property and equipment consisted of the following as of December 31 (in
thousands):
1995 1996
------- -------
Land and improvements $ 4,731 $14,835
Buildings and improvements 12,036 28,733
Broadcast equipment 11,452 37,256
Office equipment, furniture, fixtures and other
equipment 2,974 8,635
Assets under capital lease obligations 849 1,259
Construction in progress 1,982 8,903
------- -------
Total 34,024 99,621
Less accumulated depreciation and amortization 2,238 9,374
------- -------
Property and equipment--net $31,786 $90,247
======= =======
Accumulated amortization for the assets under capital leases aggregated
approximately $511,000 and $659,000 at December 31, 1995 and 1996, respectively.
F-13
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
3. Long-Term Debt
Outstanding amounts under the Company's long-term debt arrangements
consisted of the following as of December 31 (in thousands):
1995 1996
-------- --------
Credit Agreements $151,500 $151,500
Tower Credit Agreement 2,500
Senior Subordinated Notes 173,665
Tower Note Payable-Other 1,558
Other obligations 1,004 1,449
-------- --------
Total 152,504 330,672
Less current maturities 355 561
-------- --------
Long-term debt $152,149 $330,111
======== ========
Credit Agreements--In January 1997, the Company entered into two new credit
agreements with a syndicate of banks (the 1997 Credit Agreement), which replaced
the previously existing credit agreement. All amounts outstanding under the
previous agreement were repaid with proceeds from the 1997 Credit Agreement; the
following discussion, with the exception of information regarding interest
rates, is based upon the terms and conditions of the 1997 Credit Agreement.
Collectively, the previous credit agreement and the 1997 Credit Agreement are
referred to as the Credit Agreements.
The 1997 Credit Agreement consists of two separate lending agreements,
providing for facilities consisting of a $550.0 million reducing revolver credit
facility which is available through December 31, 2004, a $200.0 million
revolving credit converting to a term loan facility maturing December 31, 2004,
and a $150.0 million term loan facility, maturing December 31, 2004, available
only to repurchase, if required, certain note obligations of EZ Communications,
Inc. which will be assumed by the Company in connection with the merger
discussed in Note 11.
Amounts outstanding under the Credit Agreements bear interest based upon a
variable base rate adjusted for a margin which is determined by reference to
certain financial ratios of the Company, generally related to leverage. Until
such time as the Company requests that rates be fixed or capped, rates are
determined, at the option of the Company, by reference to either the Eurodollar
rate plus certain percentages, or an alternate base rate (as defined) plus
certain percentages. The weighted average interest rates under the Credit
Agreements were approximately 9.4 % and 8.0% for the years ended December 31,
1995 and 1996, respectively.
In connection with the Credit Agreements, the Company is obligated to pay
commitment fees based on a percentage of the unused portion of the available
commitments (the fee varies depending upon which facility is affected and the
Company's leverage ratio). Commitment fees paid related to the Credit Agreements
were approximately $24,500 and $1,113,000 in 1995 and 1996, respectively.
The 1997 Credit Agreement contains certain financial and operational
covenants and other restrictions with which the Company must comply, including,
among others, limitations on certain acquisitions, additional indebtedness,
capital expenditures, and payment of cash dividends and stock repurchases. In
addition, restrictions are placed upon the use of borrowings under the 1997
Credit Agreement and the Company must maintain certain financial ratios,
principally related to leverage. Borrowings under the 1997 Credit Agreement are
collateralized by a first security interest in the capital stock of the
Company's Restricted Subsidiaries (as defined in the 1997 Credit Agreement), and
all financial instruments (including the station investment note receivables)
and material agreements. The Company's Restricted Subsidiaries have guaranteed
the obligations of the Company under the 1997 Credit Agreement.
F-14
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
3. Long-Term Debt--(Continued)
Extraordinary Losses--In 1994, the Company replaced its then existing
credit facility and, in connection with repayment of borrowings under that
facility, recognized an extraordinary loss of $1,160,000, net of a tax benefit
of $597,000, representing the write-off of deferred financing fees for the old
facility. In 1995, the Company again replaced its then existing credit facility,
and, in connection with repayment of borrowings under that facility, recognized
an extraordinary loss of $817,000, net of a tax benefit of $614,000,
representing the write-off of deferred financing fees for the old facility.
Following closing of the 1997 Credit Agreement in January 1997 and repayment of
amounts outstanding under the previous agreement, the Company recognized an
extraordinary loss of approximately $2.6 million, which will be recorded net of
the applicable tax benefit, representing the write-off of deferred financing
fees associated with the previous agreement.
1996 Tower Credit Agreement--During November 1996, the Tower Subsidiary
entered into a credit agreement (the 1996 Tower Credit Agreement), that provides
the Tower Subsidiary with a $70.0 million loan commitment based on Tower
maintaining certain financial ratios and an incremental $20.0 million loan,
contingent on Tower obtaining additional equity from the Company. There was
$67.5 million available under the 1996 Tower Credit Agreement at December 31,
1996. The facility may be borrowed, repaid (up to a minimum $2.5 million
balance) and re-borrowed until April 15, 2000; thereafter, availability
decreases in an amount equal to 50% of the Excess Cash Flow (as defined in the
1996 Tower Credit Agreement) for the fiscal year immediately preceding the
calculation date. In addition, the 1996 Tower Credit Agreement requires certain
commitment reductions in the event of sale of the Tower Subsidiary's capital
stock or debt instruments, and/or permitted asset sales as defined in the 1996
Tower Credit Agreement.
Outstanding amounts under the 1996 Tower Credit Agreement bear interest at a
variable base rate plus a variable margin based on certain of Tower's financial
ratios. Interest rates under the 1996 Tower Credit Agreement are determined, at
the option of Tower, at either the LIBOR Rate plus certain percentages or the
Base Rate (as defined in the 1996 Tower Credit Agreement) plus certain
percentages. The spread over the LIBOR Rate and the Base Rate varies from time
to time, depending upon Tower's financial leverage. For the year ended December
31, 1996, the weighted average interest rate of the 1996 Tower Credit Agreement
was 8.75%.
The Tower Subsidiary pays quarterly commitment fees which vary, depending
on the Tower Subsidiary's financial leverage, and on the aggregate unused
portion of the total commitment. Commitment fees paid for the 1996 Tower Credit
Agreement aggregated approximately $24,000 during 1996.
The 1996 Tower Credit Agreement contains certain financial and operational
covenants and other restrictions with which the Tower Subsidiary must comply,
whether or not any borrowings are outstanding thereunder, including, among
others, limitations on certain acquisitions, additional indebtedness, capital
expenditures, and cash distributions, unless certain financial tests are met, as
well as restrictions on the use of borrowings and requirements to maintain
certain financial ratios. The obligations of the Tower Subsidiary under the 1996
Tower Credit Agreement are collateralized by a first priority security interest
in substantially all the assets of the Tower Subsidiary.
F-15
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
3. Long-Term Debt--(Continued)
Senior Subordinated Notes--In February 1996, the Company sold $175,000,000
of 9% Senior Subordinated Notes due 2006 (the Subordinated Notes) at a discount
of $1,419,000 to yield 9.125% (the Debt Offering). Proceeds to the Company, net
of underwriters' discount and associated costs, were approximately $167.5
million. As of December 31, 1996, the Subordinated Notes aggregated
approximately $173,665,000 net of an unamortized discount of approximately
$1,335,000. 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 indenture) 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 1997 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 from the Debt Offering and the equity
offering discussed in Note 8, were used to repay outstanding borrowings under
the Credit Agreements.
Tower Note Payable-Other--A corporation which is under majority control of
the Tower Subsidiary has a note secured by the minority shareholder's interest
in the corporation. Interest rates under this note are determined, at the option
of the corporation, at either the greater of a floating rate (as defined in the
note agreement), the Federal Home Loan Bank of Boston rate plus 2.35%, or the
Treasury Fixed Rate plus 3%. As of December 31, 1996, the effective interest
rate on borrowings under this note was 8.02%. The note is payable in monthly
principal and interest payments through 2008.
Other obligations--In connection with various transactions, the Company
assumed or incurred certain other obligations. These obligations, as well as
lease obligations, bear interest at rates ranging from 8% to 13% and are payable
in various monthly or annual installments through 2007.
Future principal payments required under the Company's long-term debt
arrangements at December 31, 1996 are as follows (in thousands):
Year Ending December 31,
1997 .................................. $ 561
1998 .................................. 442
1999 .................................. 248
2000 .................................. 247
2001 ..................... ............ 36,659
Thereafter through 2008 ............... 292,515
-------
Total ................................. $330,672
========
F-16
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
1 Long-Term Debt--(Continued)
Derivative Positions--Under the terms of the Credit Agreements, the Company
is required, under certain conditions, to enter into interest rate protection
agreements. At December 31, 1995, the Company had entered into nine swap
agreements under which the interest rate was fixed with respect to $75 million
of notional principal amount at rates between 4.5% and 8.1% and five cap
agreements pursuant to which it had capped another $41.0 million of notional
principal amount at rates between 5% and 10%. These swap and cap agreements were
to expire at varying dates between March 1996 and May 2000. During 1996, the
Company amended and or canceled certain of these agreements. At December 31,
1996, the Company maintains two swap agreements, expiring in September 2000,
under which the interest rate is fixed with respect to $35.5 million of notional
principal amount at approximately 7% and 10%. The Company intends to enter into
new agreements, at least to the extent necessary to comply with the requirements
of the 1997 Credit Agreement (50% of the total indebtedness of the Company must
bear fixed interest). The Company's exposure under these agreements is limited
to the impact of variable interest rate fluctuations and the periodic settlement
of amounts due under these agreements if the other parties fail to perform. (See
Note 13).
4. Commitments and Contingencies
Broadcast Rights--At December 31, 1996, the Company was committed to the
purchase of broadcast rights for various sports events, and other programming,
including on-air talent, aggregating approximately $8,775,000. This programming
is not yet available for broadcast. As of December 31, 1996, aggregate payments
related to these commitments during the next five years and thereafter are as
follows (in thousands):
Year Ending December 31
1997...........................................................$ 2,829
1998........................................................... 2,736
1999........................................................... 2,287
2000........................................................... 423
2001........................................................... 405
Thereafter through 2004........................................ 95
-------
Total..........................................................$ 8,775
=======
Leases--The Company leases various offices, studios, and broadcast and
other equipment under operating leases that expire over various terms. Most
leases contain renewal options with specified increases in lease payments in the
event of renewal by the Company.
Future minimum rental payments required under non-cancelable operating
leases in effect at December 31, 1996 are approximately as follows (in
thousands):
Year Ending December 31
1997...........................................................$ 4,762
1998........................................................... 4,267
1999........................................................... 3,843
2000........................................................... 3,425
2001........................................................... 3,521
Thereafter through 2019........................................ 9,412
-------
Total..........................................................$29,230
=======
Aggregate rent expense under operating leases for the years ended December
31, 1994, 1995 and 1996 approximated $1,314,000, $1,769,000 and $4,374,000,
respectively.
F-17
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
4. Commitments and Contingencies--(Continued)
The Company and the Tower Subsidiary obtain a portion of their revenues
from leasing tower and transmitting facilities and sub-carrier rights to other
broadcasters and communications companies under various operating leases. The
Tower Subsidiary sub-leases rented space on communications towers to its
customers, under substantially the same terms and conditions, including
cancellation rights, as those found in its own lease contracts. Most leases
allow cancellation at will or under certain technical circumstances. The leases
expire over various terms and provide for renewal options and increases in lease
payments in the event such leases are renewed.
Future minimum lease revenues for non-cancelable operating leases in effect
at December 31, 1996 are approximately as follows (in thousands):
Year Ending December 31
1997...........................................................$ 2,027
1998........................................................... 1,574
1999........................................................... 1,235
2000........................................................... 960
2001........................................................... 564
Thereafter through 2006........................................ 4,670
--------
Total..........................................................$ 11,030
========
Total rental revenues under these leases approximated $199,000, $448,000
and $676,000 for the years ended December 31, 1994, 1995 and 1996, respectively.
Total rental revenues under the Company's sub-leases approximated $468,000 for
the year ended December 31, 1996.
Audience Rating and Other Service and Employment Contracts--The Company has
entered into various non-cancelable audience rating and other service and
employment contracts that expire over the next five years. Most of these
audience rating and other service agreements are subject to escalation clauses
and may be renewed for successive periods ranging from one to five years on
terms similar to current agreements, except for specified increases in payments.
Management believes that, in the normal course of business, these contracts will
be renewed or replaced by similar contracts.
Future minimum payments required under these contracts at December 31, 1996
are as follows (in thousands):
Year Ending December 31
1997...........................................................$ 3,579
1998........................................................... 3,365
1999........................................................... 865
2000........................................................... 308
2001........................................................... 66
--------
Total..........................................................$ 8,183
========
Total expense under these contracts for the years ended December 31, 1994,
1995 and 1996 approximated $1,577,000, $2,426,000 and $ 4,117,000, respectively.
See Notes 11 and 12 for information with respect to station acquisition and
Tower Subsidiary acquisition commitments.
F-18
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
4. Commitments and Contingencies--(Continued)
Litigation--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 the Company's financial position, results of
operations or liquidity.
5. Related-Party Transactions
An individual, who is a stockholder of the Company and was a limited
partner and creditor of two of the Predecessor Entities, is a partner in a law
firm which represents the Company, and certain associates of this firm serve as
assistant secretaries to the Company. Legal fees and other expenses incurred for
services rendered by this firm to the Company approximated $473,000, $772,000
and $2,038,000 for the years ended December 31, 1994, 1995 and 1996,
respectively.
An affiliate of Chase Equity Associates (CEA), a stockholder of the
Company, is a co-syndication agent and an approximate 14%, 9% and 9% participant
under prior credit agreements in 1994, 1995 and 1996, respectively. A company
director is also a general partner of CEA. For the years ended December 31,
1994, 1995 and 1996, the stockholder affiliate's share of interest and fees paid
by the Company pursuant to the provisions of the Credit Agreements were
$1,200,000, $1,688,500 and $553,000, respectively.
See Notes 8 and 12 for other related-party transactions.
6. Income Taxes
The income tax provision was comprised of the following for the years ended
December 31 (in thousands):
1994 1995 1996
---- ---- ----
Current:
Federal $1,851 $2,910
State 612 854
Deferred:
Federal $ 169 4,023 905
State 387 343 157
------ ------ ------
Income tax provision $ 556 $6,829 $4,826
====== ====== ======
The income tax provision for the year ended December 31, 1996 includes
approximately $244,000 relating to the exercise of certain options, the tax
benefit of which was recorded as a component of additional paid-in capital.
F-19
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
6. Income Taxes --(Continued)
A reconciliation between the U.S. statutory rate and the effective rate is
as follows for the years ended December 31:
1994 1995 1996
---- ---- ----
Statutory tax rate 34% 34% 34%
State taxes, net of federal benefit 35 6 6
Goodwill amortization 17 1 6
Amortization of intangibles 13 1
Meals and entertainment 15 1 3
Other--net 1 1 (2)
--- -- --
Effective tax rate 115% 43% 48%
=== == ==
Significant components of the Company's deferred tax assets and
liabilities, computed using currently enacted tax rates, are as follows at
December 31 (in thousands):
<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C>
Current Assets:
Allowances and accruals made for financial reporting purposes
which are currently nondeductible $ 1,162 $ 3,370
======== ========
Long-term items:
Assets:
Allowances made for financial reporting purposes which are
currently nondeductible $ 200 $ 277
Net operating loss carry-forwards 1,507 1,010
Valuation allowance (1,267) (1,010)
Liabilities:
Property and equipment and intangible assets-principally due to tax
basis differences and the use of accelerated depreciation and
amortization methods for tax purposes (8,339) (33,482)
-------- --------
Net long-term deferred tax liabilities $ (7,899) $(33,205)
======== ========
</TABLE>
At December 31, 1996 the Company has net operating loss carry-forwards
available to reduce future taxable income of $2,886,000 for federal and state
purposes. These loss carry-forwards expire through 2009. Because of uncertainty
regarding eventual recovery of these assets, a valuation allowance was provided
against the carrying amount. During 1996, as a result of increases in taxable
income and certain tax planning strategies, certain of these assets were
realized and approximately $257,000 of the valuation allowance was removed.
F-20
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
7. Redeemable Stock
Activity related to the classes of redeemable stock for the years ended
December 31, 1994 and 1995 is as follows, after giving retroactive adjustment
for the two-for-one stock exchange (in thousands):
<TABLE>
<CAPTION>
Preferred Series C Series A
Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1994 71 $ 1,025 1,714 $ 12,230 434 $ 2,532
Distributions accrued in kind 113 1,886
Conversion of preferred
stock (71) (1,138)
Treasury share repurchases (52) (340)
Accretion to fair value 1,240
Distributions paid (351)
-------- -------- ------ -------- ----- -------
Balance, December 31, 1994 $ 0 0 1,714 13,765 382 3,432
======== ========
Reclassification against
additional paid-in capital (382) (3,432)
Distributions accrued in kind 815
Distributions paid (2,580)
Conversion to Common Stock (939)
Share redemption (775) (12,000)
------ ------- ----- -------
Balance, December 31, 1995 0 $ 0 0 $ 0
====== ======= ===== =======
</TABLE>
Preferred Stock-- The holder of the Preferred Stock was entitled to
quarterly cash distributions (the Yield Distributions) equal to 10% of the
stock's initial "preferred distribution amount" compounded on a daily basis. All
of the outstanding Preferred Stock, including approximately $138,000 of deferred
yield that was not distributed to the holder, was converted to approximately
126,000 shares of Series A Common Stock in September 1994.
Senior Common Stock--Holders of the Senior Series C Common Stock (the
Senior Common Stock) were entitled to quarterly cash distributions (the Common
Yield Distributions) equal to 10% of the stock's initial "preferred distribution
amount", compounded on a daily basis. The Company paid out distributions
aggregating approximately $351,000 in December 1994.
Upon consummation of the Initial Public Offering, the Company paid the
liquidation preference of the Senior Common Stock of $7.00 per share plus
accrued and unpaid Common Yield Distributions (approximately $14.6 million). As
part of such transaction, the Company exchanged 0.54789 shares of Series B
Common Stock for each outstanding share of Senior Common Stock.
Series A Common Stock--Repurchase Obligation to ESOP Stockholders--The
Company was obligated to repurchase shares of Class A Common Stock held by an
employee stock ownership plan (ESOP) of a Predecessor Entity. During 1994 and
1995, the Company repurchased at fair market value approximately 52,000 and
18,000 shares, respectively.
As a result of the Initial Public Offering, the Board of Directors of the
Company voted effective September 30, 1995 to amend the ESOP to eliminate the
right of beneficiaries to require the Company to purchase their shares. Pursuant
to this amendment, the Company reclassified the long-term portion of its
obligation of approximately $3.4 million to additional paid-in capital. The
Board of Directors also voted effective December 31, 1995 to terminate the ESOP.
During 1996, the Company applied for a favorable determination letter from the
IRS with respect to termination of the plan, which was received in March 1997.
F-21
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
8. Stockholders' Equity (Deficiency)
Authorized Shares--In December 1996, the American stockholders voted to
approve an increase in the authorized share amounts for certain classes of
capital stock. Such amounts are reflected on the accompanying consolidated
balance sheet. The number of shares that were authorized prior to this increase
consisted of 1,000,000 shares of Preferred Stock, 25,000,000 shares of Class A
Common Stock, 10,000,000 shares of Class B Common Stock and 6,000,000 shares of
Class C Common Stock.
Convertible Exchangeable Preferred Stock Offering--The outstanding
Convertible Exchangeable Preferred Stock (Convertible Preferred Stock) of the
Company at December 31, 1996 consisted of 137,500 shares (2,750,000 Depositary
Shares, each Depositary Share represents ownership of one-twentieth of a share
of Convertible Preferred Stock). Proceeds to the Company of the sale in June
1996, net of underwriters' discount and associated costs, were approximately
$132.8 million. Proceeds from the offering were used to fund acquisitions.
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.
The Convertible Preferred Stock is redeemable, in whole or in part, at the
option of the Company, for cash at any time after July 15, 1999, initially at
$1,049 per share ($52.45 per Depositary Share), declining ratably immediately
after July 15 of each year thereafter to a redemption price of $1,000 per share
($50 per Depositary Share) after July 15, 2006, plus in each case accrued and
unpaid dividends. The Convertible Preferred Stock will be exchangeable, subject
to certain conditions, at the option of the Company, in whole but not in part,
on any dividend payment date commencing June 30, 1997 for the Company's 7%
Convertible Subordinated Debentures due 2011 (the Exchange Debentures) at a rate
of $1,000 principal amount of Exchange Debentures for each share of Convertible
Preferred Stock ($50 principal amount for each Depositary Share).
Dividends on the Convertible Preferred Stock are cumulative at an annual
rate of 7% (equivalent to $3.50 per Depositary Share), accruing from the date of
original issuance (June 25, 1996) and are payable quarterly in arrears on March
31, June 30, September 30, and December 31, commencing September 30, 1996. The
Company's ability to pay dividends is restricted under the terms of the
Subordinated Notes (see Note 3) and is prohibited during the existence of a
default under the Company's Credit Agreements or the Subordinated Notes. The
Company met all tests and approximately $5.0 million of accrued dividends had
been paid through December 31, 1996.
Common Stock Offerings--In February 1996, the Company consummated an
offering of approximately 5,515,000 shares of Class A Common Stock at an
offering price of $27 per share, consisting of 4,000,000 shares initially sold
by the Company, approximately 1,013,000 shares sold by selling shareholders and
approximately 501,000 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 $114.5 million
and were utilized to repay existing debt and fund acquisitions.
F-22
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
8. Stockholders' Equity (Deficiency) --(Continued)
In June 1995, the Company consummated the Initial Public Offering of
5,500,000 shares of the Company's Class A Common Stock ($.01 par value) at a
price of $16.50 per share. The total shares issued pursuant to the Initial
Public Offering consisted of 4,270,000 shares initially sold by the Company,
730,000 shares by selling shareholders and an additional 500,000 shares sold by
the Company pursuant to the underwriters' over-allotment option. Proceeds to the
Company, net of underwriters' discount and associated costs, were approximately
$70.4 million. The Company used the proceeds to pay the liquidation preference
of the Senior Common Stock as discussed in Note 7 ($14.6 million), to reduce
indebtedness under the then existing credit agreement ($54.0 million) and to
repay certain stockholder notes ($1.0 million). The remaining proceeds were used
to fund current working capital needs. Concurrent with the Initial Public
Offering, the Company effected the 1995 Recapitalization pursuant to which each
share of Series A, B, and D Common Stock outstanding was exchanged for two
shares of Class A, Class B or Class C Common Stock. The Class A Common Stock and
Class B Common Stock entitle the holder to one and ten votes, respectively, per
share. The Class C Common Stock is nonvoting. The accompanying financial
statements give retroactive effect to the two-for-one stock exchange.
Capital Deficiency Upon Combination--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
capital deficiency account. The Company has reclassified the balance of the
capital deficiency upon combination against additional paid-in capital in the
accompanying financial statements.
Stock Option Plan--The Company has a stock option plan which provides for
the granting of options to employees to acquire up to 2,000,000 shares of Class
A and B Common Stock. Exercise prices in the case of incentive stock options are
not less than the fair value of the underlying Class A Common Stock on the date
of grant. Exercise prices in the case of non-qualified stock options are set at
the discretion of the Board of Directors. Options vest ratably over various
periods, generally five years, commencing one year from the date of grant.
The following table summarizes the option activity for the periods presented
after considering the effect of the two-for-one stock exchange:
Weighted Average
Exercise Prices
Options Per Share
Outstanding as of December 31, 1993 ... 580,000 $ 6.38
Granted ................................ 322,000 $ 7.79
Canceled ............................... (8,000) $ 6.38
Exercised .............................. (2,000) $ 6.38
--------- ---------
Outstanding as of December 31, 1994 ... 892,000 $ 6.88
Granted ................................ 362,000 $ 12.58
Canceled ............................... (4,800) $ 6.38
Exercised .............................. (1,200) $ 6.38
--------- ---------
Outstanding as of December 31, 1995 .... 1,248,000 $ 8.54
Granted/issued(1) ...................... 740,500 $ 29.40
Canceled(1) ............................ (260,600) $ 7.11
Exercised .............................. (28,800) $ 6.84
--------- ---------
Outstanding as of December 31, 1996 .... 1,699,100 $ 14.56
========= =========
(1) Includes 253,000 options which were canceled and reissued at the December
31, 1996 fair market value of $27.25.
F-23
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
8. Stockholders' Equity (Deficiency) --(Continued)
Options exercisable: Weighted Average
Exercise Prices
Per Share
December 31, 1994............ 114,000 shares $6.38
December 31, 1995............ 271,200 shares $6.61
December 31, 1996............ 520,800 shares $7.58
In February 1995, the Board granted options to employees to acquire 282,000
shares of Class B Common Stock with exercise prices below the fair market value
at the date of grant ($11.50 per share). In addition, the Board, in June 1995,
granted options to an employee to acquire 10,000 shares of Class B Common Stock
at an exercise price below fair market value. Fair market value at date of grant
was determined based on advice from the Company's investment banker. Unearned
compensation with respect to these options aggregated $473,000 and is being
amortized over the period that the options vest (five years). Amortization
aggregating $82,000 and $94,000 was recorded for the years ended December 31,
1995 and 1996, respectively.
The following table sets forth information regarding options outstanding at
December 31, 1996:
<TABLE>
<CAPTION>
Weighted Average
Range of Weighted Average Weighted Average Exercise Price for
Exercise Price Number Currently Exercise Price Remaining Currently
Number of Options Per Share Exercisable Per Share Life Exercisable
- ----------------- ----------- ------------ ----------- ---- -----------
<S> <C> <C> <C> <C> <C>
538,000 $6.38 322,800 $6.38 2 $ 6.38
316,400 $6.38 - $9.90 126,560 $7.80 3 $ 7.80
357,200 $9.88 - 23.75 71,440 $12.61 4 $12.61
487,500 $25.00 - 39.13 $29.40 5
---------- -------------- -------- --------- -- ------
1,699,100 $6.38 - $39.13 520,800 $14.56 4 $ 7.58
========== ============== ======== ========= == ======
</TABLE>
Tower Stock Option Plan--The Tower Subsidiary has a stock option plan which
provides for the granting of options to employees to acquire up to 1,000,000
shares of the Tower Subsidiary's common stock. During 1996, 550,000 options were
granted at an exercise price of $5.00 per share. The vesting terms are similar
to the Company's plan, and options to acquire the Tower Subsidiary's stock are
not convertible to options or stock of the Company. When determining earnings
per share (as discussed in Note 1), the potential dilutive impact of these
options on the Company's share of Tower's net income is taken into account.
Pro Forma Disclosure--As described in Note 1, the Company uses the
intrinsic value method to measure compensation expense associated with grants of
stock options or awards to employees. Had the Company used the fair value method
to measure compensation for grants made in 1995 and 1996, reported net income
(loss) applicable to common stockholders and net income (loss) per share would
have been $7,257,000 or $0.57 per share in 1995 and $(858,000) or $(0.04) in
1996. The impact of the Tower options were not material to the pro forma
disclosures.
For purposes of determining the above disclosure required by FAS 123, the fair
value of options on their grant date was measured using the Black/Scholes option
pricing model. Key assumptions used to apply this pricing model are as follows:
1995 1996
---- ----
Approximate risk-free interest rate 6.0% 6.0%
Expected life of option grants 5 years 5 years
Expected volatility of underlying stock 35.0% 35.0%
The estimated weighted average fair value of option grants made during 1995
and 1996 was $5.47 and $11.88, respectively, per option.
F-24
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
8. Stockholders' Equity (Deficiency) --(Continued)
Warrants--In connection with the financing necessary to complete the
acquisition of radio station WEEI-AM discussed in Note 12 by Back Bay, the
Company granted CEA, a stockholder, warrants to acquire 79,000 shares of the
Company's Series B Common Stock (which became the right to acquire Class C
Common Stock as part of the 1995 Recapitalization) at an exercise price of $0.05
per share in exchange for providing the initial financing (the Back Bay Note)
and granting the Company certain rights with respect to the agreements between
Back Bay and CEA (including the right to purchase from CEA the Back Bay Note).
The warrants represented approximately 1% of the Company's Common Stock at the
time of issuance. The cost of the warrants was measured as the difference
between the fair value of the Series B Common Stock on the date the warrants
were granted and the exercise price, and was recorded as a cost associated with
acquiring certain assets from Back Bay after Back Bay's acquisition of WEEI-AM
(see Note 12). In connection with the Initial Public Offering , CEA exercised
its warrants.
Reserved Shares--The Company has reserved 400,000 shares of Class A Common
Stock and 1,600,000 shares of Class B Common Stock for issuance under the
Company's stock option plan (the Plan). In February 1997, the Board of Directors
adopted, subject to stockholder approval at the Company's annual meeting on May
29, 1997, an amendment to the Plan which will increase the number of shares
available for future grant to 3,000,000, the additional 1,000,000 shares being
shares of Class A Common Stock.
F-25
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
9. Station Dispositions
Dispositions-- In December 1996, the Company sold WNEZ-AM serving New
Britain, Connecticut for approximately $710,000, and a loss of approximately
$140,000 was recorded upon disposition.
In January 1995, the Company sold three stations, KGGO-FM, KHKI-FM and
KDMI-AM, serving Des Moines, Iowa. In March 1995, the Company sold two stations,
WHWK-FM and WNBF-AM, serving Binghamton, New York. Gains of approximately $7.6
million and $4.0 million were realized during the year ended December 31, 1995
on the Des Moines and Binghamton dispositions, respectively.
In May 1994, the Company sold two stations, WDJX-AM/FM in Louisville,
Kentucky. Net proceeds from the sale approximated $5,300,000, and a gain of
approximately $2,300,000 was recorded upon disposition.
Summarized financial data related to these dispositions for the three
years ended December 31, 1996 are as follows (in thousands):
<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Net revenues..................................................... $ 7,143 $ 665 $ 58
Operating expenses excluding depreciation and amortization and
corporate general and administrative expenses................. 5,333 4,531 193
</TABLE>
10. Acquisitions
General: The following acquisitions have all been accounted for by the
purchase method of accounting, and accordingly, the operating results of the
acquired entities, to the extent that an LMA agreement did not exist, have been
included in consolidated operating results since the date of acquisition. 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
dates of acquisition. The excess of purchase price over the estimated fair value
of the net assets acquired has been recorded as goodwill. The financial
statements reflect the preliminary allocation of certain purchase prices as the
appraisals for certain acquisitions have not yet been finalized.
1995 Station Acquisitions:
Boston: In January 1995, the Company acquired the assets of WEGQ-FM
(formerly WCGY-FM) for approximately $12.0 million and a $500,000 note payable
to the prior owner. American had begun programming and marketing the station
pursuant to an LMA beginning in September 1994.
West Palm Beach : In July 1995, the Company acquired the assets of WKGR-FM
for approximately $19.0 million and also acquired the right to purchase WPBZ-FM
from the prior owner. As part of that transaction, the Company assigned this
purchase right to Palm Beach Radio Broadcasting, Inc. (PBRB) and loaned PBRB
approximately $9.75 million to purchase WPBZ-FM. The loan, as amended, bears
interest at approximately 7% and is payable over seven years. (See Note 11 for
information with respect to the purchase of WPBZ-FM)
F-26
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
10. Acquisitions --(Continued)
1996 Station Acquisitions:
Baltimore: In October 1996, American acquired the assets of WBGR-AM for
approximately $2.8 million.
Buffalo: In August 1996, the Company acquired the assets of WSJZ-FM for
approximately $12.5 million. The Company had been programming and marketing the
station pursuant to an LMA beginning in April 1996.
Fresno: In December 1996, the Company acquired the assets of KNAX-FM and
KVSR-FM (formerly KRBT-FM) for approximately $11.0 million. American had been
programming and marketing the stations pursuant to an LMA beginning in August
1996.
Fresno, Omaha, Portland and Sacramento: In July 1996, the transactions
contemplated by a merger agreement by and between the Company and Henry
Broadcasting Company (HBC) were consummated. Pursuant thereto, the Company
acquired KUFO-FM and KUPL-AM (formerly KBBT-AM) in Portland, Oregon, KYMX-FM and
KCTC-AM in Sacramento, California, KGOR-FM and KFAB-AM in Omaha, Nebraska (See
Note 11 for information with respect to the sale of the Omaha stations), and
KSKS-FM, KKDJ-FM, and KMJ-AM in Fresno, California, for an aggregate purchase
price of approximately $110.4 million. The acquisition was financed through a
$5.0 million escrow deposit, the issuance of 1,879,034 shares of Class A Common
Stock valued at approximately $64.0 million, approximately $4.1 million in
available cash, together with the assumption of approximately $37.3 million in
long term debt, which was paid by the Company at closing. As part of a related
transaction with the principal stockholder of HBC, the Company acquired certain
real estate used in the business of HBC for approximately $2.0 million in cash
and obtained a five-year option to acquire certain other real estate for a
purchase price of approximately $1.0 million.
Hartford: In May 1996, the Company consummated the acquisitions of WTIC-AM
and WTIC-FM. 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. The Company also paid $1.0 million for a two-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 . Upon receipt of FCC approval in May,
1996, the escrow deposit of $2.0 million, the loans and $1.1 million of
available cash were used to finance the acquisition. The Company also paid $3.5
million to purchase the tower of one of the stations in October 1995.
Las Vegas: In October 1996, the Company acquired KMZQ-FM and KXTE-FM
(formerly KFBI-FM) for approximately $28.0 million. American had been
programming and marketing the stations pursuant to an LMA beginning in May 1996.
As part of such transaction, American paid an additional $0.2 million to acquire
the seller's right (and obligation) to purchase KXNT-AM (formerly KVEG-AM) for
approximately $1.9 million which purchase, as noted below, was consummated in
September 1996.
In September, 1996, the Company acquired the assets of KXNT-AM for
approximately $1.9 million. The Company had been programming and marketing the
station pursuant to an LMA beginning in May 1996.
F-27
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
10. Acquisitions --(Continued)
In July 1996, the Company acquired the assets of KMXB-FM (formerly KJMZ-FM)
for approximately $8.0 million. The Company had been programming and marketing
the station pursuant to an LMA beginning in May 1996.
In July 1996, the Company acquired the assets of KLUC-FM and KXNO-AM for
approximately $11.0 million.
Philadelphia and Detroit: In May 1996, the Company consummated the
transactions contemplated by a merger agreement with Marlin Broadcasting, Inc.
(Marlin). American acquired WFLN-FM in Philadelphia, Pennsylvania, WQRS-FM in
Detroit, Michigan and WTMI-FM in Miami, Florida for an aggregate purchase price
of approximately $58.5 million, together with the assumption of approximately
$9.0 million of long-term debt which was paid in full at closing. The principal
stockholder of Marlin immediately thereafter acquired WTMI-FM from the Company
for approximately $18.0 million in cash. Proceeds from the sale of WTMI-FM were
held in an escrow account pursuant to a like-kind exchange agreement and were
utilized to partially fund the Portland and Jose transaction discussed below.
The Company retained certain Philadelphia real estate and tower assets valued at
approximately $1.5 million. In June 1996, the Company entered into an agreement
with an unaffiliated party pursuant to which it will exchange the assets of the
Philadelphia station for two stations in Sacramento and sell the Detroit station
for approximately $20.0 million in cash. This party began programming the
Philadelphia and Detroit stations under an LMA beginning in June 1996. (See Note
14 - Sacramento). The net assets and liabilities of the Detroit and Philadelphia
stations included in this exchange agreement are carried on the consolidated
balance sheet as net assets held under exchange agreement.
Portland: In July 1996, the Company acquired the assets of KBBT-FM
(formerly KDBX-FM) for approximately $14.0 million. The Company also granted the
seller the right to exercise American's option to acquire the assets of WBNW-AM.
(See Notes 1 and 14).
Portland and San Jose: In August 1996, the Company acquired the assets of
KUPL-FM and KKJZ- FM in Portland, Oregon and KSJO-FM and KUFX-FM in San Jose,
California for approximately $103.0 million. The acquisition was partly financed
through $18.0 million in restricted cash (see Philadelphia and Detroit
transaction discussed above).
Sacramento: In September 1996, the Company acquired the assets of KSSJ-FM
for approximately $14.0 million. The Company had been programming and marketing
the station pursuant to an LMA beginning in July 1996. (See Note 11 for
information with respect to the exchange of the station).
In July 1996, the Company acquired the assets of KSTE-AM serving Rancho
Cordova, California for approximately $7.25 million. The Company began
programming and marketing the station pursuant to an LMA beginning in April
1996. (See Note 14 - West Palm Beach for information with respect to the
exchange of the station).
Tower Acquisitions:
In November 1996, the Tower Subsidiary acquired a 32.5 percent interest in
a partnership for approximately $325,000. The partnership owns and operates a
tower site in Los Angeles, California and was formed by the minority partner in
the Needham venture discussed below.
In October 1996, the Tower Subsidiary acquired the assets of tower sites
located in Hampton, Virginia and North Stonington, Connecticut for approximately
$1.4 million and 1.0 million, respectively.
F-28
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
10. Acquisitions --(Continued)
In July 1996, the Tower Subsidiary entered into a limited liability
corporation agreement with an unaffiliated party to operate a tower site in
Needham, Massachusetts. In connection therewith, the Tower Subsidiary advanced
approximately $3.8 million to the corporation. The Tower Subsidiary has a 50.1%
interest in the corporation. The accounts of the corporation are included in the
consolidated financial statements, with the other shareholder's investment
reflected as minority interest in subsidiary on the consolidated balance sheet.
In April 1996, 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 owns
three towers in Pennsylvania and BRIDAN Communications manages or has sublease
agreements with respect to approximately forty tower sites located throughout
the Mid-Atlantic region.
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 the Company's 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 at closing. Skyline Antenna Management manages
or has sublease agreements on approximately 200 antenna sites, primarily in the
northeast region of the United States.
Pro Forma Information:
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 any 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.
Years ended December 31;
(In thousands, except per share data-unaudited):
1995 1996
---- ----
Net revenues........................................ $ 168,663 $ 211,850
Income before extraordinary items................... 8,584 4,693
Net income.......................................... 7,767 4,693
Net income (loss) applicable to common stockholders. 6,952 (281)
Net income (loss) per common share.................. $ .47 $ (.01)
Pending station acquisitions are discussed in Notes 11 and 12.
F-29
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
11. Pending Transactions
Charlotte, Kansas City, Philadelphia, Pittsburgh, New Orleans, Sacramento,
Seattle, and St. Louis: In August 1996, the Company entered into a merger
agreement (as amended in September 1996) with EZ Communications, Inc. (EZ)
pursuant to which EZ will be merged directly with and into the Company (the EZ
Merger). Pursuant to the merger agreement, each holder of EZ Common Stock will
receive (i) $11.75 in cash and (ii) 0.9 shares of the Company's Class A Common
Stock. Based on the number of shares of EZ Common Stock outstanding at December
31, 1996, the Company will pay approximately $107.4 million in cash and issue
approximately 8,228,400 shares of the Company's Class A Common Stock (excluding
options to purchase an aggregate of 514,400 shares of the Company's Class A
Common Stock which will be assumed pursuant to the EZ Merger). EZ currently owns
and/or operates twenty-six radio stations in eight markets as follows: WSOC-FM
and WSSS-FM in Charlotte, North Carolina; KFKF- FM, KBEQ-FM and KOWW-AM 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, KBKS-FM, KRPM-AM and KYCW-FM in Seattle, Washington and
KYKY-FM, KEZK-FM, KFNS-AM and KSD-AM/FM in St. Louis, Missouri. As a result of
existing FCC regulations and the Sacramento stations either owned by the Company
or under agreement to purchase or sell by the Company, upon consummation of the
EZ Merger, the Company will be required to sell one radio station in Sacramento,
KSSJ-FM, (in addition to KXOA-FM and KSTE-AM). See West Palm Beach and
Sacramento below. Termination of the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 (HSR Act) waiting period with respect to the EZ Merger has been
received. Subject to the receipt of FCC approval, the Company expects to
consummate the EZ Merger in the second quarter of 1997.
EZ is a party to several pending transactions which are expected to be
consummated subsequent to the EZ Merger and the applicable regulatory approvals.
EZ is a party to an asset exchange agreement, pursuant to which EZ will exchange
the New Orleans stations for KBKS-FM and KRPM-AM in Seattle and $7.5 million. In
December 1996, EZ entered into an agreement pursuant to which it will exchange
its Philadelphia stations for stations in Charlotte, North Carolina, (WRFX-FM,
WPEG-FM, WBAV-AM/FM and WFNZ-AM) and purchase WNKS-FM in Charlotte for $10.0
million. Pursuant to FCC and HSR Act requirements, EZ then entered into an
exchange agreement pursuant to which it will exchange WRFX-FM for WDSY-AM/FM in
Pittsburgh and $20.0 million. In December 1996, EZ entered into an agreement to
sell KMPS-AM in Seattle for approximately $2.0 million. In November 1996, the
Company entered into an agreement to sell the assets of KSD-AM in St. Louis for
approximately $10.0 million and the buyer began programming and marketing the
station pursuant to an LMA in January 1997. All of such transactions are subject
to receipt of FCC approval and in certain cases the expiration or earlier
termination of the HSR Act waiting period, and will be consummated in the second
or third quarter of 1997.
Austin: In February 1997, the Company executed its option to acquire the
assets of KKMJ-FM, KAMX-FM (formerly KPTY-FM) and KJCE-AM for approximately
$28.7 million. In August 1995, the Company paid a deposit of $3.0 million for a
two-year option to acquire the assets of these stations which will be credited
toward the purchase price. The Company has been programming and marketing the
stations pursuant to an LMA beginning in September 1995. The HSR Act waiting
period was terminated early and subject to the receipt of FCC approval, the
acquisition is expected to be consummated in the first half of 1997.
F-30
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
11. Pending Transactions --(Continued)
Buffalo: In August 1995, the Company entered into an agreement to acquire
the assets of WBLK-FM for approximately $8.0 million and then assigned its
purchase right and agreed to make loans to finance the purchase to PBRB. PBRB
consummated the acquisition in March 1996 utilizing the proceeds of the loan and
the Company began programming and marketing the station pursuant to an LMA
beginning in March 1996. The Company intends to exercise its option to acquire
WBLK-FM (which acquisition may take the form of a merger with PBRB). Subject to
the receipt of FCC approval, and the expiration or earlier termination of the
HSR Act waiting period, the acquisition or merger is expected to be consummated
in the second or third quarter of 1997.
Cincinnati : In January 1997, the Company entered into and consummated a
merger agreement to pursuant to which it become a party to an agreement to
acquire the assets of WGRR-FM for approximately $30.0 million. The Company began
programming and marketing the station pursuant to an LMA beginning in March
1997. American issued approximately 18,300 shares of Class A Common Stock
pursuant to such merger. The HSR Act waiting period was terminated early and
subject to the receipt of FCC approval, the acquisition is expected to be
consummated in the second quarter of 1997.
Fresno: In July 1996, the Company entered into an agreement to purchase the
assets of KOQO-AM/FM for approximately $6.0 million. The Company began
programming and marketing the stations pursuant to an LMA beginning in August
1996. A petition to deny the assignment of the FCC licenses of these stations
was filed with the FCC in September 1996. American and the seller have filed
oppositions to the petition to deny and believe that it is without merit and
will not further affect or substantially delay consummation. Subject to the
receipt of FCC approvals, the Company expects to consummate this acquisition in
the second quarter of 1997.
Omaha: In October 1996, the Company entered into an agreement, as amended,
to sell KGOR-FM and KFAB-AM and Business Music Service for approximately $38.0
million. The carrying values of these assets have been adjusted from the
original purchase price allocation to reflect the anticipated net proceeds from
the sale and accordingly, no gain or loss will be recognized on the transaction.
Omaha net revenues of $3,504,000 and operating expenses of approximately
$2,486,000 are included in the accompanying consolidated statement of operations
for the year ended December 31, 1996. FCC approval has been received and the HSR
Act waiting period was terminated early. The Company expects to consummate the
sale in the first half of 1997.
Rochester: In February 1997, the Company entered into an agreement to sell
WCMF-AM for approximately $650,000. Net revenues and operating expenses included
in the accompanying consolidated statement of operations for the years ended
December 31, 1994, 1995 and 1996 were not material. Subject to the receipt of
FCC approval, the Company expects to consummate the sale in the second quarter
of 1997.
In October 1995, American entered into a joint sales agreement with the
owner of an FM station in Rochester under which the Company, in exchange for a
fixed payment, had the right to sell advertising for the station and to retain
all such advertising revenues. American also acquired an assignable option to
purchase the station for approximately $5.0 million. In connection with the
consent decree described in Note 12, American assigned this purchase option to a
third party and the joint sales agreement was canceled in February 1997.
In February 1997, the Company entered into an agreement to acquire the
assets of WAQB-FM, a newly licensed Class A FM radio station, for approximately
$3.5 million. FCC approval has been received and the Company expects to
consummate the acquisition in the first half of 1997.
F-31
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
11. Pending Transactions --(Continued)
Rochester and Cincinnati: In December 1996, the Company entered into an
agreement to exchange the assets of WHAM-AM, WVOR-FM and WHTK-AM, together with
$16.0 million for the assets of WKRQ-FM in Cincinnati, Ohio. (See Note 12 -
Rochester). In connection therewith, the party to this agreement began
programming and marketing the Rochester stations pursuant to an LMA beginning in
February 1997. The Company began programming and marketing WKRQ-FM pursuant to
an LMA beginning in March 1997. FCC approval has been received and pursuant to
certain consent decrees entered into by both parties, the Antitrust Division of
the U.S. Department of Justice has approved this transaction. The Company
expects to consummate the exchange in the first half of 1997.
Sacramento: In October 1996, the Company entered into an agreement to sell
KXOA-FM for approximately $27.5 million in cash. The Company began programming
and marketing the stations pursuant to an LMA beginning in August 1996, which
was terminated in January 1997 when the party to the agreement began programming
and marketing the station pursuant to an LMA. The HSR Act waiting period was
terminated early and subject to the receipt of FCC approval, the Company expects
to consummate the sale in the first half of 1997. (See Note 14).
In December 1996, the Company entered into an agreement to sell KMJI-AM for
approximately $1.5 million. FCC approval has been received and the Company
expects to consummate the sale in the first half of 1997. (See Note 14).
West Palm Beach: In March 1996, the Company loaned PBRB $7.2 million to
finance the acquisition of WMBX-FM (formerly WHLG-FM) and WSTU-AM. The Company
has an option to acquire, and a right of first refusal with respect to, the
stations. In November 1996, PBRB sold WSTU-AM to a third party. The Company
intends to exercise its option to acquire WMBX-FM and WPBZ-FM (which
acquisitions may take the form of a merger of PBRB into the Company). Subject to
the receipt of FCC approval and the expiration or earlier termination of the HSR
Act waiting periods, such acquisitions are expected to occur in the third
quarter of 1997 utilizing proceeds from the WMBX-FM and WPBZ-FM loans in the
aggregate principal amount of approximately $17.3 million and $2.75 million in
cash.
In December 1996, the Company acquired an option to purchase another FM
station for approximately $11.0 million. The Company also agreed to loan up to
$150,000 to the party to this option agreement. Subject to certain conditions,
including the receipt of FCC approval, the Company expects to exercise its
option and consummate the acquisition in the third quarter of 1997.
Tower Subsidiary: In February 1997, the Tower Subsidiary entered into
agreements with three entities which are affiliated with one another to acquire
tower sites and a tower site management business in Southern California for
approximately $32.1 million. Consummation of the transaction is conditioned on,
among other things, the expiration or earlier termination of the HSR Act waiting
period. Subject to such expiration or termination, the acquisitions are expected
to be consummated in the second quarter of 1997.
In December 1996, the Tower Subsidiary entered into a letter of intent to
acquire certain tower sites and tower site management agreements, located
primarily in Northern California, for approximately $42.0 million. The Tower
Subsidiary also agreed to advance the sellers amounts not to exceed $1.35
million. The advances will be unsecured and due in full at the earlier of
thirty-six months from the date at which the Tower subsidiary terminates
acquisition discussions or June 30, 2000. Consummation of the transaction is
conditioned on, among other things, negotiation and execution of definitive
purchase and sale agreements and the expiration or earlier termination of the
HSR Act waiting period. Subject to such expiration or termination, the
acquisition is expected to be consummated in the second quarter of 1997.
F-32
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
12. Other Transactions
Cumulative Exchangeable Preferred Stock: In January 1997, the Company
consummated a private offering of 2,000,000 shares of its 11 3/8% Cumulative
Exchangeable Preferred Stock (Exchangeable Preferred Stock) to a group of
qualified institutional investors. The Company utilized the net proceeds, which
approximated $192.4 million, to repay amounts outstanding under the 1997 Credit
Agreement and to fund acquisitions. Shares of Exchangeable Preferred Stock are
exchangeable, at the Company's option, in whole but not in part, on any dividend
payment date commencing April 15, 1997 into the Company's 11 3/8% Subordinated
Exchange Debentures due 2009 (Exchange Debentures). As discussed below, the
Exchangeable Preferred Stock possesses mandatory redemption features and will be
classified as such in the Company's consolidated financial statements.
Dividends on the Exchangeable Preferred Stock are cumulative at an annual
rate of 11 3/8% (equivalent to $11.375 per share), accruing from the date of
original issuance (January 30, 1997) and are payable quarterly in arrears on
April 15, July 15, October 15, and January 15, commencing April 15, 1997. The
Company's ability to pay dividends is restricted under the terms of the
Subordinated Notes and is prohibited during the existence of a default under the
Company's 1997 Credit Agreement or the Subordinated Note Indenture. The Company
has the right, on or prior to January 15, 2002, to pay dividends through the
issuance of additional shares of Exchangeable Preferred Stock.
The Exchangeable Preferred Stock is redeemable at the option of the
Company, for cash at any time after January 15, 2002, initially at 105.688% of
the liquidation preference, declining ratably immediately after January 15,
2007, plus accrued and unpaid dividends of the date of the redemption. In
addition, prior to January 15, 2000, the Company may, at its option, use the net
cash proceeds of an offering to redeem up to 35% of the outstanding Exchangeable
Preferred Stock at 111.375% of the liquidation preference, plus accumulated and
unpaid dividends to the date of redemption; provided that, any such redemption,
there must be at least $130.0 million aggregate liquidation preference of the
Exchangeable Preferred Stock outstanding. The Company is required, subject to
certain conditions, to redeem all Exchangeable Preferred Stock outstanding on
January 15, 2009, at a redemption price to 100% of the liquidation preference,
plus accumulated and unpaid dividends to the date of redemption. Upon the
occurrence of a change in control, the Company, will be required to, subject to
certain conditions, offer to purchase all of the then outstanding shares at a
price equal to 101% of the liquidation preference, plus accumulated and unpaid
dividends to the date of redemption.
1997 Station Acquisitions:
Baltimore: In February 1997, the Company acquired the assets of WWMX-FM and
WOCT-FM for approximately $60.0 million and $30.0 million, respectively. The
Company had been programming and marketing the stations pursuant to an LMA
beginning in November 1996.
Boston, Worcester: In January 1997, the Company acquired the assets of
WAAF-FM and WWTM- AM in Worcester, Massachusetts for approximately $24.8
million. The Company had been programming and marketing the stations pursuant to
an LMA beginning in August 1996.
F-33
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
12. Other Transactions --(Continued)
Dayton: In February 1997, the Company acquired the assets of WXEG-FM for
approximately $3.6 million. The Company had previously loaned approximately $3.6
million to the owner of the station. In December 1995, the Company entered into
an agreement with Steven B. Dodge, Chairman of the Board and Chief Executive
Officer of the Company, relating to this station pursuant to which Mr. Dodge had
agreed to provide financing to a newly organized company which acquired the
station in December 1995. Pursuant to the agreement, the Company acquired Mr.
Dodge's approximately $2.2 million loan (including accrued interest) which had
been assumed by the new owner, along with his right to acquire the station. The
Company also loaned an additional approximately $1.4 million to the new owner to
finance the acquisition of the station. The acquisition was financed with
proceeds from the loans. The Company had been programming and marketing the
station pursuant to an LMA beginning in April 1996.
In February 1997, the Company acquired the assets of WLQT-FM and WBTT-FM
(formerly WDOL- FM) for approximately $12.0 million. The Company had previously
loaned approximately $12.0 million to the owner of the stations. The acquisition
was financed with proceeds from the loan. The Company had been programming and
marketing the stations pursuant to an LMA beginning in April 1996.
Rochester: In February 1997, the Company consummated the transactions
contemplated by a series of agreements pursuant to which the Company acquired
the assets of WVOR-FM, WPXY-FM, WHAM- AM and WHTK-AM for approximately $31.5
million, including working capital. The Company had previously loaned
approximately $28.5 million to the owner of the stations. The acquisition was
financed with proceeds from the loan, a $2.0 million escrow deposit and
available cash. In accordance with a October 1996 consent decree with the
Antitrust Division of the U.S. Department of Justice and the Attorney General of
the State of New York, the Company is required to divest WHAM-AM and WVOR- FM,
within a certain period of time. See Note 11 - Rochester and Cincinnati.
San Jose: In February 1997, the Company acquired the assets of KBAY-FM and
KKSJ-AM for approximately $31.0 million. (See Note 14). The Company had been
programming and marketing the stations pursuant to an LMA beginning in August
1996.
Back Bay Transactions: During 1994, the Company entered into a series of
agreements (the Back Bay Transaction) with Back Bay and CEA, as a result of
which, among other things, (a) Back Bay acquired the radio station then
operating under the call letters WEEI-AM from Boston Celtics Communications
Limited Partnership (BCCLP), (b) the Company acquired the rights to broadcast
all of the Boston Celtics basketball games through the 1998-99 season, and (c)
Back Bay assigned all of its sports and other programming agreements, including
those relating to syndicated personalities, to the Company's WHDH-AM station,
which assumed the obligations under those agreements and changed its call
letters to WEEI-AM.
Back Bay purchased WEEI-AM on June 30, 1994, financing for which was
provided by CEA in the form of a $5,000,000 loan (see Note 1). CEA received a
16% Secured Note due 2001 (the Acquisition Note) together with rights
representing a 75% share in the appreciation in the value of Back Bay (the
"Acquisition Appreciation Right"). The Acquisition Appreciation Right is
exercisable upon the earliest of February 28, 1999, or certain defined
circumstances.
As part of those arrangements, the Company had the right, but not the
obligation, to purchase from CEA the Acquisition Note and the Acquisition
Appreciation Right for a purchase price equal to the sum of (i) principal and
accrued and unpaid interest on the Acquisition Note, and (ii) the value of the
Acquisition Appreciation Right, except that during the first year of its
existence, the Acquisition Appreciation Right was deemed to have no value. The
Company also issued to CEA the warrants described in Note 8.
F-34
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
12. Other Transactions --(Continued)
In September 1994, (a) the Company exercised its right to purchase from CEA
the Acquisition Note and the Acquisition Appreciation Right for an aggregate of
$5,000,000 in cash; (b) the interest rate on the Acquisition Note was reduced by
the Company to 10% per annum; (c) the Company and Back Bay entered into certain
collateral arrangements including a sublease of the Company's office space, a
service agreement and certain arrangements with respect to broadcasts of certain
sporting events; and (d) Back Bay purchased 55,556 shares of Series A Common
Stock in exchange for a 10% Secured Note due 2001 in the principal amount of
$500,000 (the New Back Bay Note) and rights representing an additional 10%
participation in any increase in the value of Back Bay (the New Appreciation
Right).
For financial reporting purposes, the Company has determined that the costs
associated with acquiring the sports and other programming agreements as well as
the radio call letters "WEEI" consists of the warrants to CEA to provide the
initial financing to Back Bay and the present value of the reduction in the Back
Bay Note's annual interest rate from 16% to 10%. Such costs have been allocated
to various intangible assets based upon an independent appraiser's report and
are being amortized on a basis consistent with the Company's other intangible
assets.
The Company and the stockholders of Back Bay also entered into a put/call
agreement (the Put/Call Agreement') pursuant to which the Company was granted
the assignable right to purchase at any time prior to January 1, 2005, and the
Back Bay stockholders have the right to any time after March 15, 1997 and prior
to January 1, 2005 to require the Company to purchase all , but not less than
all, of the capital stock of Back Bay. Exercise by either the Company or the
Back Bay stockholders of their respective rights under the Put/Call Agreement
is, however, conditioned upon the Company being legally entitled to own Back
Bay's radio stations. At December 31, 1995 then existing FCC regulations
prohibited the Company from purchasing the stations. This prohibition was
eliminated pursuant to the passing of the Telecommunications Act in February
1996. The purchase price for the stock of Back Bay under Put/Call Agreement is
based on a formula similar to that relating to the Acquisition Appreciation
Right. (See Notes 1 and 14 for information concerning the purchase by Back Bay
of the Acquisition Note and the New Back Bay Note).
F-35
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
13. Fair Value of Financial Instruments
The estimated fair value of financial instruments has been determined by
the Company using available market information and appropriate valuation
methodologies. However, considerable judgment is required in interpreting data
to develop the estimates of fair value. Accordingly, the estimates presented
herein are not necessarily indicative of the amounts that the Company could
realize in a current market exchange. The fair value estimates presented herein
are based on pertinent information available to management as of December 31,
1995 and 1996. Although management is not aware of any factors that would
significantly affect the estimated fair value amounts, such amounts have not
been comprehensively revalued for purposes of these financial statements since
that date, and current estimates of fair value may differ significantly from the
amounts presented herein. (See Note 1).
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments:
Cash, cash equivalents, accounts receivable, accounts payable, accrued
expenses and other short-term obligations--These carrying amounts
approximate fair value because of the short-term nature of these financial
instruments.
Notes receivable--The fair value of notes receivable is estimated
based on discounted cash flows using current interest rates at which
similar loans to borrowers with similar credit ratings would be made or if
the loan is collateral dependent, management's estimate of the fair value
of the collateral. The carrying amount of these notes aggregated
$50,205,000 and $69,920,000 at December 31, 1995 and 1996, respectively,
and approximate their fair value.
Deposits on station purchases--The fair value is not practicable to
estimate.
Long-term debt--The fair values of long-term debt are estimated based
on current market rates and instruments with the same risk and maturities.
The fair value of long-term debt approximated the carrying value at
December 31, 1995 and 1996.
Interest rate protection agreements--The fair values of these
agreements are obtained from dealer quotes. These values represent the
estimated amount the Company would receive or pay to terminate the
agreements taking into consideration the current interest rates. The
Company would expect to pay the fair value of these agreements of
approximately $1.9 million and $1.5 million as of December 31, 1995 and
1996, respectively. (See Note 3).
F-36
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
14. Events Subsequent to Independent Auditors' Report (Unaudited)
Subsequent to February 25, 1997, the Company has agreed to acquire (or
is in the process of negotiating agreements to acquire) the following additional
radio properties:
Sacramento: In February 1997, the Company consummated an agreement to
exchange the Philadelphia station which it acquired as part of the Marlin
Transaction for KSFM-FM and KMJI-AM serving Sacramento, California. The Company
also sold the Detroit station acquired as part of the Marlin transaction to the
owner of the Sacramento stations for approximately $20.0 million. (See Notes 10
and 11).
In March 1997, the Company acquired the assets of KXOA-AM/FM and KQPT-FM
in Sacramento, California for approximately $50.0 million. The Company began
programming and marketing the stations pursuant to an LMA beginning in August
1996. (See Note 11-Sacramento).
San Jose: In March 1997, the Company entered into a merger agreement
pursuant to which the Company will acquire the assets of KEZR-FM and KLUE-FM
serving Monterey, California in exchange for approximately 723,000 shares of
Class A Common Stock valued at approximately $20.0 million and $4.0 million in
cash. Subject to the receipt of FCC approval and the expiration or earlier
termination of the HSR Act waiting period, the Company expects to consummate the
merger in the first half of 1997.
In March 1997, the Company entered into an agreement to sell KKSJ-AM for
approximately $3.2 million. Subject to the receipt of FCC approval, the Company
expects to consummate the sale in the second quarter of 1997.
West Palm Beach: In March 1997, the Company consummated an agreement to
exchange the assets of KSTE-AM in Sacramento, California plus approximately
$33.0 million in cash for the assets of WEAT-FM, WEAT-AM and WOLL-FM in West
Palm Beach, Florida. The party to the exchange agreement began programming and
marketing KSTE-AM pursuant to an LMA and the Company began programming and
marketing the West Palm stations pursuant to an LMA beginning in August 1996.
Under current FCC regulations, the Company is permitted to own five FM stations
in West Palm Beach; accordingly, it will be required to dispose of one station
in West Palm Beach.
Back Bay Transactions: In March 1997, Back Bay consummated the sale of
WBNW-AM and utilized a portion of the proceeds to repay the Company all amounts,
including accrued interest, that were outstanding under the note agreements
described in Notes 1 and 12.
The Company is also pursuing the acquisitions of tower properties and
additional radio stations in new and existing markets, none of which have
definitive purchase agreements.
F-37
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
15. Quarterly Financial Data (Unaudited)
<TABLE>
<CAPTION>
First Second Third Fourth
In thousands, except per share data: Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C>
1996
Net revenues (2) $ 23,315 $ 37,777 $ 52,490 $ 64,437
Operating income 1,793 6,757 7,403 11,078
Net income (loss) before dividends (456) 2,210 934 2,447
Income (loss) per share (1) $ (.03) $ .10 $ (.07) $ .00
<CAPTION>
1995
<S> <C> <C> <C> <C>
Net revenues $ 19,842 $ 24,672 $ 25,109 $ 28,149
Operating income 672 3,698 4,637 5,445
Income before extraordinary item 5,207 675 1,435 1,788
Net income before dividends 5,207 675 1,435 971
Income per share before
extraordinary item (1) $.50 $.03 $.09 $.11
<FN>
(1) The sum of the quarter's earnings per share does not equal the
year-to-date earnings per share due to changes in average share
calculations. (See Note 1).
(2) 1996 second quarter revenues from LMA agreements aggregating $.3
million were subsequently reclassified to net LMA expense in the third
quarter. The reclassification had no effect on other reported amounts
presented herein.
</FN>
</TABLE>
F-38
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
16. 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 all of its present
and any future Restricted Subsidiaries (collectively "Restricted Guarantors").
The Restricted Subsidiaries have also unconditionally guaranteed, and any future
Restricted Subsidiaries will be required to guarantee, on a joint and several
basis (collectively, the "Senior Subsidiary Guarantees"), all obligations of the
Company under the Credit Agreements. The Tower Subsidiary has not guaranteed
obligations under the Credit Agreements or the Subordinated Notes. (See Note 1).
The Subordinated Notes and the Subsidiary Guarantees are subordinated to
all Senior Debt of the Company including indebtedness under the Credit
Agreements and the Senior Subsidiary Guarantees. The indenture governing the
Subordinated Notes contains limitations on the amount of indebtedness (including
Senior Debt) which the Company may incur.
With the intent that the Subsidiary Guarantees not constitute fraudulent
transfers or conveyances under applicable state or federal law, the obligation
of each guarantor under its Subsidiary Guarantee is also limited to the maximum
amount as will, after giving effect to any rights to contribution of such
guarantor pursuant to any agreement providing for an equitable contribution
among such guarantor and other affiliates of the Company of payments made by
guarantees by such parties, result in the obligations of such guarantor in
respect of such maximum amount not constituting a fraudulent conveyance.
The following condensed consolidating financial data illustrates the
composition of the combined guarantors. The Company believes that separate
complete financial statements of the respective guarantors would not provide
additional material information which would be useful in assessing the financial
composition of the guarantors. No single guarantor has any significant legal
restrictions on the ability of investors or creditors to obtain access to its
assets in event of default on the Subsidiary Guarantee other than its
subordination to senior indebtedness described above.
Investments in subsidiaries are accounted for by the parent on the equity
method for purposes of the supplemental consolidating presentation. Earnings
(losses) 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.
F-39
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
16. Subsidiary Guarantees --(Continued)
<TABLE>
<CAPTION>
Condensed Consolidating Balance Sheet
December 31, 1996
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiaries Subsidiary Eliminations Totals
------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 8,074 $ 2,373 $ 10,447
Accounts receivable, net 49,565 $ 2,095 237 51,897
Prepaid expenses and other current assets 3,509 14 80 3,603
Deferred income taxes 3,202 168 3,370
---------- --------- ---------- ---------- ----------
Total current assets 64,350 2,277 2,690 69,317
PROPERTY AND EQUIPMENT, NET 67,267 3,271 19,709 90,247
OTHER ASSETS:
Investment in and advances to subsidiaries 314,983 $ (314,983) 0
Station investment notes receivable 69,920 69,920
Goodwill - net 200,449 20,457 11,243 232,149
FCC licenses - net 233,558 233,558
Other intangible assets - net 24,178 327 3,048 27,553
Deposits and other long-term assets 25,589 48 427 26,064
Net assets held under exchange agreement 47,495 47,495
---------- --------- ---------- ---------- ----------
Total other assets 635,119 301,885 14,718 (314,983) 636,739
---------- --------- ---------- ---------- ----------
TOTAL ASSETS $ 766,736 $ 307,433 $ 37,117 $ (314,983) $ 796,303
========== ========= ========== ========== ==========
F-40
<PAGE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
16. Subsidiary Guarantees --(Continued)
Condensed Consolidating Balance Sheet
December 31, 1996
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiaries Subsidiary Eliminations Totals
------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 444 $ 117 $ 561
Accounts payable and accrued expenses 31,087 656 2,027 33,770
---------- --------- ---------- ---------- ----------
Total current liabilities 31,531 656 2,144 34,331
NON-CURRENT LIABILITIES
Deferred income taxes 11,405 21,521 279 33,205
Other long-term liabilities 2,129 20 2,149
Long-term debt 325,693 4,418 330,111
---------- --------- --------- ---------- ----------
Total non-current liabilities 339,227 21,521 4,717 365,465
MINORITY INTEREST IN SUBSIDIARY (185) 529 344
STOCKHOLDERS' EQUITY
Preferred Stock 1 1
Common Stock 211 500 $ (500) 211
Additional paid-in capital 390,731 284,649 29,817 (314,466) 390,731
Unearned compensation (297) (297)
Retained earnings 5,955 607 (590) (17) 5,955
Treasury stock (438) (438)
---------- --------- --------- ---------- ----------
Total stockholders' equity 396,163 285,256 29,727 (314,983) 396,163
---------- --------- --------- ---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 766,736 $ 307,433 $ 37,117 $ (314,983) $ 796,303
========== ========= ========= ========== ==========
F-41
<PAGE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
16. Subsidiary Guarantees --(Continued)
Condensed Consolidating Statement of Operations
For the Year Ended December 31, 1996
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiaries Subsidiary Eliminations Totals
------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net broadcast revenues $ 170,322 $ 4,252 $ 174,574
Tower revenues 618 $ 2,897 $ (70) 3,445
License fees charged to Parent (7,655) 7,655 0
---------- --------- --------- ---------- ----------
Total net revenues 163,285 11,907 2,897 (70) 178,019
Operating expenses excluding
depreciation and amortization, net
local marketing agreement and
corporate general and administrative
expenses 115,219 2,662 2,193 (70) 120,004
Net local marketing agreement expense 10,461 (2,333) 8,128
Depreciation and amortization 9,873 6,947 990 17,810
Corporate general and administrative 5,046 5,046
---------- --------- --------- ---------- ----------
Operating income (loss) 22,686 4,631 (286) 0 27,031
Other income (expense):
Interest expense (22,287) (22,287)
Interest income and other, net 5,489 36 5,525
Gains (losses) on sale of assets and
other, net (123) (185) (308)
Equity in income (loss) of subsidiaries, net of
income taxes recorded at the
subsidiary level 127 (127) 0
---------- --------- --------- ---------- ----------
Income (loss) before income taxes 5,892 4,631 (435) (127) 9,961
Provision for income taxes 757 4,024 45 4,826
---------- --------- --------- ---------- ----------
Net income (loss) $ 5,135 $ 607 $ (480) $ (127) $ 5,135
========== ========= ========= ========== ==========
F-42
<PAGE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
16. Subsidiary Guarantees --(Continued)
Condensed Consolidating Statement of Cash Flows
For the Year Ended December 31, 1996
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiaries Subsidiary Eliminations Totals
------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash flows provided from
operating activities $ 8,138 $ 5,292 $ 2,229 $ 15,659
---------- --------- --------- ---------- ----------
Investing Activities:
Payments for purchase of property and
equipment and intangible assets (15,782) (9,327) (25,109)
Proceeds from asset and radio station sales 1,087 1,087
Proceeds for repayment of station
investment notes receivables 1,350 1,350
Payments for purchase of tower properties (9,797) (9,797)
Payments for purchase of radio stations (312,591) (312,591)
Payments for station investment notes
receivable and related intangible assets (56,522) (56,522)
Deposits and other long-term assets (20,303) (20,303)
---------- --------- --------- ---------- ----------
Cash flows used by investing activities (402,761) (19,124) (421,885)
---------- --------- --------- ---------- ----------
Financing Activities:
Borrowings under the Credit Agreements 151,500 2,500 154,000
Repayment of the Credit Agreements (151,500) (151,500)
Repayment of other obligations (403) (51) (454)
Net proceeds from debt offering - net of
discount 173,581 173,581
Additions to deferred financing costs (5,344) (5,344)
Dividends paid (4,973) (4,973)
Net proceeds from equity offerings and
exercise of options 247,474 247,474
Investment in and advances to subsidiaries (11,515) (5,292) 16,807 0
---------- --------- --------- ---------- ----------
Cash flows from financing activities 398,820 (5,292) 19,256 412,784
---------- --------- --------- ---------- ----------
Increase in cash and cash equivalents 4,197 2,361 6,558
Cash and cash equivalents at beginning
of year 3,877 12 3,889
---------- --------- --------- ---------- ----------
Cash and cash equivalents at end of year $ 8,074 $ 0 $ 2,373 $ 0 $ 10,447
========== ========= ========= ========== ==========
F-43
<PAGE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
16. Subsidiary Guarantees --(Continued)
Condensed Consolidating Balance Sheet
December 31, 1995
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiaries Subsidiary Eliminations Totals
------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,877 $ 12 $ 3,889
Accounts receivable, net 24,352 37 24,389
Prepaid expenses and other current assets 2,277 4 2,281
Note receivable-other 1,108 1,108
Deferred income taxes 1,162 1,162
---------- --------- --------- ---------- ----------
Total current assets 32,776 53 32,829
PROPERTY AND EQUIPMENT, NET 28,027 3,759 31,786
OTHER ASSETS:
Investment in and advances to
subsidiaries 48,792 $ (48,792) 0
Station investment notes receivable 49,097 49,097
Goodwill 66,464 66,464
FCC licenses $45,023 45,023
Other intangible assets, net 15,831 33 15,864
Deposits and other long-term assets 7,715 18 7,733
---------- --------- --------- ---------- ----------
Total other assets 187,899 45,023 51 (48,792) 184,181
---------- --------- --------- ---------- ----------
TOTAL ASSETS $ 248,702 $ 45,023 $ 3,863 $ (48,792) $ 248,796
========== ========= ========= ========== ==========
F-44
<PAGE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
16. Subsidiary Guarantees --(Continued)
Condensed Consolidating Balance Sheet
December 31, 1995
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiaries 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 9,821 $ 94 9,915
Accrued interest 514 514
---------- --------- --------- ---------- ----------
Total current liabilities 10,690 94 10,784
NON-CURRENT LIABILITIES
Deferred income taxes 7,899 7,899
Other long-term liabilities 1,929 1,929
Long-term debt 152,149 152,149
---------- --------- --------- ---------- ----------
Total non-current liabilities 161,977 161,977
STOCKHOLDERS' EQUITY
Common Stock 143 143
Additional paid-in capital 70,928 $45,023 3,879 $ (48,902) 70,928
Retained earnings 5,793 (110) 110 5,793
Unearned compensation (391) (391)
Treasury stock (438) (438)
---------- --------- --------- ---------- ----------
Total stockholders' equity 76,035 45,023 3,769 (48,792) 76,035
---------- --------- --------- ---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS'
EQUITY $ 248,702 $ 45,023 $ 3,863 $ (48,792) $ 248,796
========== ========= ========= ========== ==========
F-45
<PAGE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
16. Subsidiary Guarantees --(Continued)
Condensed Consolidating Statement of Operations
For the year ended December 31, 1995
Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiaries Subsidiary Eliminations Totals
------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net broadcast revenues $ 97,609 $ 97,609
Tower revenues $ 163 163
License fees charged to Parent $ (484) $ 484 0
---------- --------- --------- ---------- ----------
Total net revenues 97,125 484 163 97,772
Operating expenses excluding depreciation and
amortization, net local marketing agreement
and corporate general and
administrative expenses 66,148 10 290 66,448
Net local marketing agreement expense 600 600
Depreciation and amortization 11,833 474 57 12,364
Corporate general and administrative 3,908 3,908
---------- --------- --------- ---------- ----------
Operating income (loss) 14,636 0 (184) 14,452
Other income (expense):
Interest expense (12,497) (12,497)
Interest income and other, net 2,435 2,435
Gains on sale of assets and other, net 11,544 11,544
Equity in (loss) of subsidiaries, net of income
taxes recorded at the subsidiary level (110) $ 110 0
---------- --------- --------- ---------- ----------
Income (loss) before extraordinary item and 16,008 (184) 110 15,934
income taxes
Benefit (provision) for income taxes (6,903) 74 (6,829)
---------- --------- --------- ---------- ----------
Income (loss) before extraordinary item 9,105 (110) 110 9,105
Extraordinary loss on extinguishment of debt, net
of income tax benefit of $614 (817) (817)
---------- --------- --------- ---------- ----------
Net income (loss) $ 8,288 $ 0 $ (110) $ 110 $ 8,288
========== ========= ========= ========== ==========
F-46
<PAGE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
16. Subsidiary Guarantees --(Continued)
Condensed Consolidating Statement of Cash Flows
For the year ended December 31, 1995
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiaries Subsidiary Eliminations Totals
------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash flows provided from operating activities $ 9,577 $ - $ 147 $ 9,724
---------- --------- ---------- ----------
Investing Activities:
Payments for purchase of property and (5,926) (5,926)
equipment and intangible assets
Proceeds from asset and radio station sales 15,302 15,302
Payments for purchase of tower
properties (3,218) (4,082) (7,300)
Payments for purchase of radio stations (31,013) (31,013)
Payment for station investment
notes receivable and related intangible
assets (48,597) (48,597)
Proceeds from repayments of
notes receivable 3,000 3,000
Deposits and other long-term assets (6,649) (6,649)
---------- --------- --------- ---------- ----------
Cash flows used by investing activities (77,101) (4,082) (81,183)
---------- --------- ----------
Financing Activities
Borrowings under the Credit Agreements 225,000 225,000
Repayment under the Credit Agreements (202,500) (202,500)
Repayment of other obligations (1,288) (1,288)
Additions to deferred financing costs (3,896) (3,896)
Redemption of Series C Common Stock (14,580) (14,580)
Purchase of treasury stock (438) (438)
Net proceeds from equity offering and
exercise of options 69,882 69,882
Investment in and advances to subsidiaries (3,947) 3,947
---------- -------- ----------
Cash flows from financing activities 68,233 3,947 72,180
---------- -------- ----------
Increase in cash and cash equivalents 709 12 721
Cash and cash equivalents at beginning of
year 3,168 3,168
---------- --------- --------- ---------- ----------
Cash and cash equivalents at end of year $ 3,877 $ 0 $ 12 $ 0 $ 3,889
========== ========= ========= ========== ==========
F-47
<PAGE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
16. Subsidiary Guarantees --(Continued)
Condensed Consolidating Statement of Operations
For the Year Ended December 31, 1994
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiaries Subsidiary(a) Eliminations Totals
------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net broadcast revenues $ 68,034 $ 68,034
License fees charged to Parent $ 858 (858) 0
---------- --------- --------- ---------- ----------
Total net revenues 858 67,176 68,034
Operating expenses excluding
depreciation and amortization and
corporate general and administrative
expenses 3 50,126 50,129
Depreciation and amortization 855 9,065 9,920
Corporate general and administrative 2,229 2,229
---------- --------- --------- ---------- ----------
Operating income 5,756 5,756
Other income (expense):
Interest expense $ (100) 0 (7,176) (7,276)
Interest income and other, net 225 225
Gains on sale of assets and other 2,278 2,278
Provision for loss on station
investment note receivable (500) (500)
Equity in (loss) of subsidiaries, net of
income taxes recorded at the
subsidiary level (1,133) $ 1,133 0
---------- --------- --------- ---------- ----------
Income (loss) before income taxes and
extraordinary item (1,233) 583 1,133 483
Provision for income taxes (556) (556)
---------- --------- --------- ---------- ----------
Income (loss) before extraordinary item (1,233) 27 1,133 (73)
Extraordinary loss on extinguishment
of debt, net of income tax
benefit of $597 (1,160) (1,160)
---------- --------- --------- ---------- ----------
Net income (loss) $ (1,233) $ 0 $ (1,133) $ 1,133 $ (1,233)
========== ========= ========= ========== ==========
(a) Includes American Radio Systems, Inc. (ARSI), a wholly owned subsidiary of
the Company until December 1995, which was the borrower.
F-48
<PAGE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
16. Subsidiary Guarantees --(Continued)
Condensed Consolidating Statement of Cash Flows
For the Year Ended December 31, 1994
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiaries Subsidiary(a) Eliminations Totals
------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash flows provided from operating activities $ 2,166 $ 2,166
---------- --------- --------- ---------- ----------
Investing Activities:
Payments for purchase of property and
equipment and intangible assets (5,754) (5,754)
Proceeds from asset and radio station sales 5,620 5,620
Payments for purchase of radio stations (87,291) (87,291)
Payments for station investment notes
receivable and related intangible assets (5,000) (5,000)
Deposits and other long-term assets (484) (484)
---------- --------- --------- ---------- ----------
Cash flows used by investing activities (92,909) (92,909)
---------- --------- --------- ---------- ----------
Financing Activities:
Borrowings under the Credit Agreements 83,500 83,500
Repayment under the Credit Agreements (7,000) (7,000)
Repayment of other obligations (2,448) (2,448)
Addition to deferred financing costs (1,742) (1,742)
Dividends paid (351) (351)
Net Proceeds from stock offerings 17,560 17,560
---------- --------- --------- ---------- ----------
Cash flows from financing activities 89,519 89,519
---------- --------- --------- ---------- ----------
Decrease in cash and cash equivalents (1,224) (1,224)
Cash and cash equivalents at beginning of year 4,392 4,392
---------- --------- --------- ---------- ----------
Cash and cash equivalents at end of year $ 0 $ 0 $ 3,168 $ 0 $ 3,168
========== ========= ========= ========== ==========
(a) Includes American Radio Systems, Inc. (ARSI), a wholly owned subsidiary
of the Company until December 1995, which was the borrower.
</TABLE>
F-49
<PAGE>
<TABLE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
SCHEDULE II
For the Years Ended December 31, 1994, 1995 and 1996
(In thousands)
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Description Balance at Charged to Costs Deductions (1) Balance at End of
Beginning of Period and Expenses Period
Allowance for
Doubtful Accounts
<S> <C> <C> <C> <C> <C>
1994 $ 1,180 $ 721 $ 398 $ 1,503
========= ======== ======= =========
1995 $ 1,503 $ 1,387 $ 358 $ 2,532
========= ======== ======= =========
1996 $ 2,532 $ 2,977 $ 949 $ 4,560
========= ======== ======= =========
<CAPTION>
Note Receivable
Valuation Allowance
<S> <C> <C> <C> <C> <C>
1994 $ 0 $ 500 $ 0 $ 500
========= ========= ====== =========
1995 $ 500 $ 0 $ 0 $ 500
========= ========= ====== =========
1996 $ 500 $ 0 $ 0 $ 500
========= ========= ====== =========
</TABLE>
(1) Uncollectible accounts written off, net of recoveries
S-1
<PAGE>
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
Exhibit
No. Description of Document
<S> <C> <C>
2.1 Amended and Restated Merger Agreement, by and among the
Company, American Merger Corporation and EZ
Communications, Inc. dated as of August 5, 1996 and as
amended and restated as of September 27, 1996.............. Incorporated herein by reference to Appendix I of
the Prospectus which is a part of the Company's
Registration Statement on Form S-4 filed with the
SEC on October 31, 1996 (File No. 333-15231)
10.93 Asset Purchase Agreement, dated November 19, 1996 by the
Company and New Generation Broadcasting, Inc............... Filed herewith as Exhibit 10.93
10.94 Construction Loan Agreement, dated December 11, 1996 by
the Company and Jupiter Radio Partners..................... Filed herewith as Exhibit 10.94
10.95 Security Agreement, dated December 11, 1996 by the
Company and Jupiter Radio Partners......................... Filed herewith as Exhibit 10.95
10.96 Assignment and Pledge Agreement, dated December 11, 1996
by the Company and Jupiter Radio Partners.................. Filed herewith as Exhibit 10.96
10.97 Asset Purchase Agreement, dated December 12, 1996 by Radio
Systems of Philadelphia, Inc. and Vista Broadcasting, Inc.. Filed herewith as Exhibit 10.97
10.98 Asset Purchase Agreement, dated December 17, 1996 by the
Company and Brighton Broadcasting, Inc..................... Filed herewith as Exhibit 10.98
10.99 Asset Exchange Agreement, dated December 23, 1996 by the
Company and Citicasters Co................................ Filed herewith as Exhibit 10.99
10.100 Assignment, Assumption and Consent, dated December 24,
1996 by the Company, Brown Organization, and
Entertainment Communications, Inc. ........................ Filed herewith as Exhibit 10.100
10.101 Time Brokerage Agreement, dated December 24, 1996, by
the Company and Entertainment Communications, Inc.......... Filed herewith as Exhibit 10.101
10.102 Agreement and Plan of Merger, dated January 2, 1997 by the
Company and Tsunami Communications of Cincinnati,
Inc........................................................ Filed herewith as Exhibit 10.102
10.103 Agreement to Amend, dated January 10, 1997 by the Company,
Tsunami Communications of Cincinnati, Inc., WGRR
Limited Partnership and the Dalton Group, Inc.............. Filed herewith as Exhibit 10.103
10.104 Asset Purchase Agreement, dated January 22, 1997 by the
Company WGRR Limited Partnership and The Dalton
Group, Inc................................................. Filed herewith as Exhibit 10.104
10.105 Asset Purchase Agreement, dated February 3, 1997 by the
Company and Amaturo Group of Texas, Ltd.................... Filed herewith as Exhibit 10.105
10.106 Time Brokerage Agreement, dated February 14, 1996 by the
Company and Citicasters Co................................. Filed herewith as Exhibit 10.106
(i)
<PAGE>
<CAPTION>
INDEX TO EXHIBITS
Exhibit
No. Description of Document
<S> <C> <C>
10.107 Agreement of Sale, dated February 14, 1997 by the Company,
American Radio Systems License Corp. and Kimtron, Inc...... Filed herewith as Exhibit 10.107
10.108 Time Brokerage Agreement, dated February 28, 1997 by the
Company and Citicasters Co................................. Filed herewith as Exhibit 10.108
10.109 Agreement and Plan of Merger, dated March 3, 1997 by the
Company and Alta Broadcasting Company, Inc................. Filed herewith as Exhibit 10.109
10.110 Assignment of Option to Purchase Radio Station WNVE(FM)
and Consent, dated December 23, 1996, by the Company,
Citicasters Co., and The Great Lakes Wireless Talking
Machine Limited Liability Company.......................... Filed herewith as Exhibit 10.110
10.111 Credit Agreements dated January 24 , 1997 by and among the
Company, the Bank of new York and the Lenders named
therein.................................................... Incorporated by reference to Exhibit 99.1 and 99.2
from the Form 8-K filed on February 10, 1997
10.112 Option Agreement, dated September 20, 1996 by the
Company and Jupiter Radio Partners......................... Filed herewith as Exhibit 10.112
10.113 Loan Agreement dated as of November 22, 1996
among American Tower Systems, Inc., Toronto Dominion
(Texas), Inc., as Administrative Agent and the Banks
parties thereto............................................ Filed herewith as Exhibit 10.113
10.114 Asset Purchase Agreement, dated February 5, 1997 by the
Company and Meridian Sales and Services Company............ Filed herewith as Exhibit 10.114
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
21 Subsidiaries of Registrant..................................... Filed herewith as Exhibit 21
23 Independent Auditors' Consent.................................. Filed herewith as Exhibit 23
27 Financial Data schedule........................................ Filed herewith.as Exhibit 27
</TABLE>
Exhibits 2.1 through 10.114 do not contain schedules and exhibits noted
within the agreements. This additional information is available upon
request from the Company.
(ii)
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated November 19, 1996, by and
between American Radio Systems Corporation, a Delaware corporation ("Buyer"),
and New Generation Broadcasting, Inc., a Delaware corporation ("Seller").
P R E M I S E S:
A. Seller is the licensee of and operates radio stations WXEG(FM),
Beavercreek, Ohio (the "Station") pursuant to licenses issued by the Federal
Communications Commission (the "FCC").
B. Buyer has been programming the Stations pursuant to a Time Brokerage
Agreement dated as of April 1, 1996 (the "TBA").
C. 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:
<PAGE>
1.1 "Assets" means the tangible and intangible assets of Seller being
sold, transferred, or otherwise conveyed to Buyer hereunder, as specified in
detail in Section 2.1.
1.2 "Assumed Contracts" means (i) all Contracts listed in Schedule 3.7,
(ii) any Contracts entered into by Seller in the ordinary course of business
between the date hereof and the Closing Date which would have been listed on
Schedule 3.7 had they been in existence on the date hereof and which Buyer
agrees in writing to assume, (iii) all Contracts, in existence on the Closing
Date which meet the criteria set forth in Section 3.7 (i) - (iii) for exclusion
from Schedule 3.7, and (iv) all Contracts with advertisers for the sale of time
on one or both of the Stations for cash entered into in the ordinary course of
business.
1.3 "Closing" means the consummation of the transaction contemplated by
this Agreement in accordance with the provisions of Section 8.
1.4 "Closing Date" means the date of the Closing specified in Section
8.1.
1.5 "Consents" means all of the consents, permits or approvals of
government authorities and other third parties necessary to transfer the Assets
to Buyer or otherwise to consummate the transaction contemplated hereby,
including without limitation the consents of the parties to those Contracts
designated in Schedule 3.7 with an asterisk.
1.6 "Contracts" means all agreements and leases, written or oral
(including any amendments and other modifications thereto) to which Seller is a
party or which are binding upon Seller and, in each case, affect the assets or
the business or operations of one or both of the the Stations, and (i) which are
in effect on the date hereof and remain in effect on the Closing Date or (ii)
which are entered into by Seller in the ordinary course of business between the
date hereto and the Closing Date.
2
<PAGE>
1.7 "Excluded Assets" shall mean those assets described or set forth in
Section 2.2 herein or on Schedule 2.2 hereto.
1.8 "FCC Consent" means action by the FCC granting its consent to the
assignment of the FCC Licenses to Buyer as contemplated by this Agreement.
1.9 "FCC Licenses" means all of the licenses, permits and other
authorizations issued by the FCC to Seller in connection with the conduct of the
business or operations of the Stations.
1.10 "Licenses" means all of the licenses, permits and other
authorizations, including the FCC Licenses, issued by the FCC, the Federal
Aviation Administration ("FAA"), and any other federal, state or local
governmental authorities to Seller in connection with the conduct of the
business or operations of the Stations.
1.11 "Personal Property" means all of the machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, spare
parts, and other tangible personal property which are owned or leased by Seller
and used or useful as of the date hereof in the conduct of the business or
operations of one or both of the Stations, subject to change in the ordinary
course of business between the date hereof and the Closing Date.
1.12 "Purchase Price" means the purchase price specified in Section
2.3.
1.13 "Real Property" means all of the fee estates and buildings and
other improvements thereon, leasehold interests, easements, licenses, rights to
access, rights-of-way, and other real property interest owned by Seller and
identified on Schedule 3.5 hereto.
3
<PAGE>
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 2.4, 3.5 or 3.6 below), more specifically described as
follows:
(a) The Personal Property;
(b) The Real Property;
(c) The Licenses;
(d) The Assumed Contracts;
(e) All trademarks, trade names, service marks, copyrights and
all other intellectual property and similar intangible assets relating
to either of the Stations, including those listed in Schedule 3.9
hereto;
(f) All of the Seller's proprietary information that relates
to either 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, without limitation, filings with the FCC which relate to
either of the Stations, if any;
(g) All choses in action and rights under warranties of Seller
relating to the Assets, if any;
4
<PAGE>
(h) All books and records relating exclusively to the business
or operations of either or both 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 Station
not specifically described above.
2.2 Excluded Assets. The Assets shall exclude all other assets of
Seller, including, without limitation the following assets, and the assets
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) 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;
(c) 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 (subject to
funding under the Note Purchase Agreement discribed in Section 2.3
below);
(d) Any pension, profit-sharing or employee benefit plans, and
any employment or collective bargaining agreement.
5
<PAGE>
2.3 Purchase Price. The Purchase Price shall be equal to the amount of
principal outstanding and interest accrued and outstanding as of the Closing
Date under that the 12% Secured Note Due 2006 dated December 20, 1995, made by
Seller in the principal amount of $2,206,633 and the 12% Convertible
Subordinated Notes due 2003 dated December 20, 1995 made by Seller in the
principal amount of $1,140,705 issued pursuant to that certain Note Purchase
Agreement dated as of December 20, 1996 by and between Buyer and Seller (the
"Notes").
2.4 Assumption of Liabilities and Obligations. As of the Closing Date,
Buyer shall pay, discharge and perform (i) all of the obligations and
liabilities of Seller under the Licenses and the Assumed Contracts insofar as
they relate to the time period on and after the Closing Date, and arising out of
events occurring on or after the Closing Date, (ii) all obligations and
liabilities arising out of events occurring on or after the Closing Date related
to Buyer's ownership of the Assets or its conduct of the business or operations
of the Stations, and (iii) all obligations and liabilities for which Buyer
receives a proration adjustment hereunder. Except to the extent otherwise
provided for in the TBA, 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 either of the Stations prior to the
Closing Date, and (iv) those related to Seller's employees who do not become
employees of Buyer upon the Closing shall remain and be the obligations and
liabilities solely of Seller.
6
<PAGE>
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 the State of Ohio,
which is the only jurisdiction where the conduct of the businesses and
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.
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
7
<PAGE>
contemplated hereby (with or without the giving of notice, the lapse of time, or
both): (i) will not conflict with any provision of the Certificate of
Incorporation or By Laws of Seller; (ii) will not conflict with, result in a
material breach of, or constitute a material default under, any law, judgment,
order, ordinance, decree, rule, regulation or ruling of any court or
governmental instrumentality, which is applicable to Seller; (iii) 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 (iv) 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). Seller is
the authorized legal holder of the Licenses. 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
each of the Stations as presently operated.
3.5 Title to and Condition of Real Property. Schedule 3.5 contains
descriptions of all the Real Property (including the location of all
improvements thereon), which comprises all real property interest necessary to
conduct the business or operations of one or both 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, mortgages,
8
<PAGE>
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 (iii) liens in favor of Seller's lenders set forth in
Schedule 3.5, and 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 anchors,
and buildings and other improvements, included in the owned Assets are located
entirely on the Real Property listed in Schedule 3.5 or easement rights set
forth at Schedule 3.5. Seller has delivered to Buyer true and complete copies of
all deeds, leases, Title Insurance Policies or other material instruments
pertaining to the Real Property (including any and all amendments and other
modifications of such instruments), all of which instruments are valid, binding
and enforceable in accordance with their terms. Seller is not in material
breach, nor to Seller's knowledge is any other party in material breach, of the
terms of any of such deeds, leases, or other instruments.
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
9
<PAGE>
encumbrances which are described in Schedule 3.6 and annotated to indicate that
such claims or encumbrances shall be removed prior to or at Closing.
3.7 Contracts. Schedule 3.7 contains descriptions of all the Contracts
except for: (i) contracts with advertisers for the sale of time on one or both
the Stations for cash, entered into in the ordinary course of business, (ii)
those employment contracts and miscellaneous service contracts which are
terminable on 60 days notice or less, without penalty, and (iii) other contracts
not involving either aggregate liabilities under all such contacts exceeding
Five Thousand Dollars ($5,000) or any material nonmonetary obligation. Seller
has delivered to Buyer true and complete copies of all written Contracts, and
true and complete memoranda of all oral Contracts (including any and all
amendments and other modifications to such Contracts). All of the Assumed
Contracts are in full force and effect, and are valid, binding and enforceable
in accordance with their terms, except as the enforceability thereof may be
affected by bankruptcy, insolvency or similar laws affecting creditors' rights
generally, or by court-applied equitable remedies. Seller is not in material
breach, nor to Seller's knowledge is any other party in material breach, of the
terms of any such Contracts.
3.8 Consents. Except for the FCC Consent provided for in Section 6.1
and the 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 or (ii) to permit Seller
to assign or transfer the Assets to Buyer. .
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,
10
<PAGE>
jingles, privileges and other similar intangible property rights and interests
(exclusive of the FCC Licenses 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 one or both of the Stations,
3.10 Insurance. In Seller's reasonable judgment, all of the tangible
property included in the Assets is insured under policies covering risks
customarily insured by business similar to the Stations. Seller has heretofore
provided to Buyer a true and complete list of all insurance policies of Seller
which insure any part of the Assets.
3.11 Reports. Except where failure to do so would not have a material
adverse effect on the ownership of the FCC Licenses or operation of the
Stations: (a) 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 (b) 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.
The public inspection file of each Station is located within its principal
community contour and is maintained, in each case in compliance with the FCC's
rules and regulations.
3.12 Labor Relations. Seller is not a party to or subject to any
collective bargaining agreements with respect to the Stations except as
described in Schedule 3.12 hereto. Seller has no written or oral contracts of
employment with any employee of the Station, other than those listed in Schedule
3.12.
3.13 Claims, Legal Actions. Except as set forth in Schedule 3.16, and
except for any investigations and rule-making proceedings generally affecting
the broadcasting
11
<PAGE>
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 of a material nature.. Seller knows of no claim or
litigation pending or threatened which seeks to prevent the transaction
contemplated by this Agreement.
3.14 Compliance with Laws. To the 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
knowledge of Seller, neither the ownership or use, nor the conduct of the
business or operations, of the Station conflicts with rights of any other
person, firm or corporation.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization, Standing and Authority. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware, and is qualified to conduct business in the State of Ohio. Buyer has
all requisite corporate power and authority to execute and deliver this
Agreement and the documents contemplated hereby, to perform and comply with all
of the terms, covenants, and conditions to be performed and complied with by
Buyer hereunder and thereunder, and to operate the Stations and to own the
Assets, subject to obtaining the Consents at or prior to Closing.
12
<PAGE>
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) will not conflict with any provision of the Certificate
of Incorporation or Bylaws of Buyer; (ii) will not conflict with, result in
material breach of, or constitute a material default under any laws, judgment,
order, ordinance, decree, rule, regulation or ruling of any court or
governmental instrumentality, which is applicable to Buyer; and (iii) will not
conflict with, constitute grounds for termination of, result in a material
breach of, 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 listed on Schedule 3.4 hereto, or as an owner of the
Assets and/or the operator of either of the Stations
4.5 Consents. Except for the FCC Consent provided for in Section 6.1,
and the Consents indicated in Schedule 4.5, no consent, approval, permit or
authorization of, or declaration to or filing with any governmental or
regulatory authority, or any other third party is required to consummate this
Agreement and the transactions contemplated hereby.
4.6 Litigation. Buyer knows of no claim or litigation pending or
threatened which seeks to prevent the transaction contemplated by this
Agreement.
13
<PAGE>
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 or
delayed, between the date hereof and the Closing Date, and subject to the
provisions of the TBA, Seller shall operate the Station in the ordinary course
of business in accordance with its past practices (except where such would
conflict with the following covenants or with Seller's other obligations
hereunder), and abide by the following negative and affirmative covenants:
A. Negative Covenants. Seller shall not do any of the
following:
(1) Disposition of Assets. Sell, assign, lease, or otherwise
transfer or dispose of any of the Assets, except for assets consumed or
disposed of in the ordinary course of business, where no longer used or
useful in the business or operations of the Station or in connection
with the acquisition of replacement property of equivalent kind and
value;
(2) Encumbrances. Create, assume or permit to exist any claim,
liability, mortgage, lien, pledge, condition, charge, or encumbrance of
any nature 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 2.4, 3.5 or 3.6 and (ii) mechanics' liens
and other similar liens which will be removed prior to the Closing
Date;
(3) No Inconsistent Action. Knowingly take any action which is
inconsistent with its obligations hereunder or which could hinder or
delay the consummation of the transaction contemplated by this
Agreement.
B. Affirmative Covenants. Seller shall do the following:
(1) Access to Information. Upon prior notice, allow
Buyer and its authorized representatives reasonable access at mutually
agreeable times at Buyer's expense during normal business hours to the
Assets and to all other
14
<PAGE>
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. Subject to Buyer's
obligations under the TBA, 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 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 provided they can be so
maintained on a reasonable cost basis;
(4) Consents. Subject to Section 6.1, use its
reasonable efforts to obtain the Consents;
(5) Notification. Promptly notify Buyer in writing of
any unusual or material developments with respect to the assets of the
Station, and of any material change in any of the information contained
in Seller's representations and warranties contained in Section 3
hereof or in the schedules hereto, provided that such notification
shall not relieve Seller of any obligations hereunder;
(6) Compliance with Laws. Comply in all material
respects with all rules and regulations of the FCC, and all other laws,
rules and regulations to which Seller, the Station and the Assets are
subject.
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 purposes
of obtaining the FCC Consent. The parties shall prosecute said application with
all reasonable diligence and otherwise use their best efforts to obtain the
grant of such application as expeditiously as practicable. If the FCC Consent
imposes any condition on any party hereto, such party shall use its best efforts
to comply with such condition unless compliance would be unduly burdensome or
would have a material adverse effect upon it. If reconsideration or judicial
review is sought with respect to the FCC Consent, Buyer and Seller shall oppose
such efforts to obtain reconsideration or judicial review (but nothing herein
shall be construed to limit any party's right to terminate this Agreement
pursuant to Section 9 of this Agreement).
B. The transfer of the Assets hereunder is expressly
conditioned upon (i) the grant of the FCC Consent without any materially adverse
conditions on Buyer, and (ii) compliance by the parties hereto with the
conditions (if any) imposed in the FCC Consent.
6.2 Control of the Station. Subject to Buyer's obligations under the
TBA, Buyer shall not, directly or indirectly, control, supervise, direct, or
attempt to control, supervise or direct, the operations of either of the
Stations prior to the Closing. Such
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<PAGE>
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, subject to Buyer's rights under
the TBA.
6.3 Taxes, Fees and Expenses. Buyer shall pay all sales, transfer and
similar taxes and fees, if any, arising out of the transfer of the Assets
pursuant to this Agreement. Except as otherwise provided in this Agreement, each
party shall pay its own expenses incurred in connection with the authorization,
preparation, execution, and performance of this Agreement, including all fees
and expenses of counsel, accountants, agents, and other representatives.
6.4 Brokers. Buyer and Seller each represents and warrants that neither
it nor any person or entity acting on its behalf has incurred any liability for
any finders' or brokers' fees or commissions in connection with the transaction
contemplated by this Agreement.
6.5 Confidentiality. Except as necessary for the consummation of the
transaction contemplated hereby, including Buyer's obtaining financing in any
form or means of its choosing related hereto, each party hereto will keep
confidential any information which is obtained from the other party in
connection with the transaction contemplated hereby and which is not readily
available to members of the general public, and will not use such information
for any purpose other than in furtherance of the transactions contemplated
hereby. In the event this Agreement is terminated and the purchase and sale
contemplated hereby abandoned, each party will return to the other party
originals and all copies of all documents, work papers and other written
material obtained by it in connection with the transaction contemplated hereby.
17
<PAGE>
6.6 Cooperation. Buyer and Seller shall cooperate fully with each other
and their respective counsel and accountants in connection with any actions
required to be taken as part of their respective obligations under this
Agreement, and Buyer and Seller shall execute such other documents as may be
necessary or reasonably 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 (other than with respect
to the filing and pursuance of the application to obtain the FCC Consent), or
(ii) to agree to any adverse change in any License or Assumed Contract to obtain
a Consent required with respect thereto.
6.7 Risk of Loss.
A. The risk of loss, damage or impairment, confiscation or
condemnation of any of the Assets from any cause whatsoever shall be borne by
Seller at all times prior to the completion of the Closing.
B. If any damage or destruction of the Assets or any other
event occurs which prevents signal transmission by the Station in the normal and
usual manner and Seller cannot restore or replace the Assets so that the
conditions are cured and normal and usual transmission is resumed before the
date on which the Closing would otherwise have to take place pursuant to Section
8.1 hereof, the Closing 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.
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<PAGE>
C. In the event of any damage or destruction of the Assets
described above, if such Assets have not been restored or replaced and the
Station's normal and usual transmission resumed within the one hundred and
twenty (120) day period specified above, Buyer may terminate this Agreement
forthwith without any further obligation hereunder by written notice to Seller.
Alternatively, Buyer may, at its option, proceed to close this Agreement and
complete the restoration and replacement of such damaged Assets after the
Closing Date, in which event Seller shall deliver to Buyer all insurance
proceeds received in connection with such damage or destruction of the Assets to
the extent not already expended by Seller arising in connection with such
restoration and replacement.
D. Notwithstanding any of the foregoing, Buyer may terminate
this Agreement forthwith without any further obligation hereunder by written
notice to Seller if any event occurs which prevents signal transmission by the
Station in a manner generally equivalent to its current operations for a
consecutive period of five (5) or a cumulative period of fourteen (14) days
after the date hereof.
6.8 Audit Cooperation. Seller agrees to fully cooperate, and use
reasonable efforts to cause 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.
6.9 Disqualification. Buyer will not take, or unreasonably fail to
take, any action which Buyer knows or has reason to know would cause its
disqualification as an assignee of the Licenses listed on Schedule 3.4 or as an
owner of the Assets and/or the
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<PAGE>
operator of either of the Stations (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.
SECTION 7
CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
7.1 Conditions of Obligations to Buyer. All obligations of Buyer at the
Closing hereunder are subject to the fulfillment prior to and at the Closing
Date of each of the following conditions, any or all of which may be waived 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 correct 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 date.
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 by an asterisk on
Schedule 3.7 and the FCC Consent 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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<PAGE>
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 relevant 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 or all of which may be waived by
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 correct 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 date
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. FCC Consent. The FCC Consent shall have been obtained.
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<PAGE>
SECTION 8
CLOSING AND CLOSING DELIVERIES
8.1 Closing. The Closing shall take place at 10:00am on a date, to be
set by Buyer, upon five (5) days written notice to Seller, no later than ten
(10) days following the date upon which the FCC Consent has been issued (the
"Closing Date"), subject to Section 6.7 hereof. Closing shall be held at the
offices of Buyer in Boston, Massachusetts or such other place as shall be
mutually agreed to by Buyer and Seller.
8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller shall
deliver to Buyer the following, in form and substance reasonably satisfactory to
Buyer and its counsel:
(a) Transfer Documents. Duly executed warranty deeds, bills of
sale, motor vehicle titles, assignments and other transfer documents
which shall be sufficient to vest good and marketable title to the
Assets in the name of Buyer or its permitted assignees, free and clear
of any claims, liabilities, mortgages, liens, pledges, conditions,
charges, or encumbrances of any nature whatsoever (except for those
permitted in accordance with Sections 2.5, 3.5 or 3.6 hereof);
(b) Consents. The original of each Consent marked 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;
22
<PAGE>
(d) Secretary's Certificate. A certificate, dated as of the
Closing Date, executed by Seller's Secretary: (i) certifying that the
resolutions, as attached to such certificate, were duly adopted by such
Seller's Board of Directors, authorizing and approving the execution of
this Agreement by Seller and the consummation of the transaction
contemplated hereby and that such resolutions remain in full force and
effect; and (ii) providing, as attachments thereto, a certificate of
legal existence certified by appropriate state officials; as of a date
not more than fifteen (15) days before the Closing Date and by Seller's
Secretary as of the Closing Date, and a copy of Seller's Certificate of
Incorporation and By Laws as in effect on the date hereof, certified by
Seller's Secretary as of the Closing Date;
(e) Opinions of Counsel. Opinions of Seller's counsel and
communications counsel dated as of the Closing Date, and addressed to
Buyer 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 Buyer shall deliver to Seller the
Notes marked "Paid -- Satisfied in Full";
(b) Assumption Agreements. Appropriate assumption agreements
pursuant to which Buyer shall assume and undertake to perform Seller's
obligations as provided in Section 2.4;
(c) Officer's Certificate. A certificate, dated as of the
Closing Date, executed by the President or Vice President of Buyer,
certifying (i) that the representations and warranties of Buyer
contained in this Agreement are true and complete in all material
respects as of the Closing Date, except for changes contemplated by
this Agreement, as though made on and as of that date, and (ii) that
Buyer has, in all material respects, performed its obligations and
complied with its covenants set forth in this Agreement to be performed
or complied with on or prior to the Closing Date;
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<PAGE>
(d) Secretary's Certificate. A certificate, dated as of the
Closing Date, executed by Buyer's Secretary: (i) certifying that the
resolutions, as attached to such certificate, were duly adopted by
Buyer's Board of Directors, authorizing and approving the execution of
this Agreement and the consummation of the transaction contemplated
hereby and that such resolutions remain in full force and effect; and
(ii) a copy of the corporate charter, articles of incorporation and
Bylaws of Buyer as in effect on the Closing date, certified by Buyer's
secretary as of the Closing Date;
(e) Opinion of Counsel. An opinion of Buyer's General Counsel
dated as of the Closing Date, substantially in the form of Schedule 8.3
hereto.
SECTION 9
RIGHTS OF BUYER AND SELLER
ON TERMINATION OR BREACH
9.1 Termination Rights. This Agreement may be terminated by either
Buyer or Seller if the terminating party is not then in breach of any material
provision of this Agreement, upon written notice to the other party, upon the
occurrence of any of the following:
(a) If on the Closing Date (i) any of the conditions precedent
to the obligations of the terminating party set forth in Section 7 of
this Agreement shall not have been materially satisfied, and (ii)
satisfaction of such condition shall not have been waived by the
terminating party;
(b) If the application for FCC Consent shall be set for
hearing by the FCC for any reason;
(c) If the Closing shall not have occurred on or before
December 31, 1997; or.
(d) As provided in Section 6.7(c) and Section 6.7(d) hereof.
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Upon termination: (i) if neither party hereto is in breach of any material
provision of this Agreement, the parties hereto shall not have any further
liability to each other; (ii) if Seller shall be in breach of any material
provision of this Agreement, Buyer shall have only the rights and remedies
provided in Section 9.3 or (iii) if Buyer shall be in breach of any material
provision of this Agreement, Seller shall be entitled only to actual damages
incurred as a result of such breach.
9.2 Specific Performance. The parties recognize that in the event
Seller should refuse to perform under the provisions of this Agreement, monetary
damages alone will not be adequate. Buyer shall therefore be entitled to obtain
specific performance of the terms of this Agreement. In the event specific
performance is not available or granted to Buyer, Buyer shall be entitled to
seek, in the alternative, money damages.
9.3 Expenses Upon Default. In the event of any action to enforce this
Agreement, Seller hereby waives the defense that there is an adequate remedy at
law. In the event of a default by a party hereto (the "Defaulting Party") which
results in the filing of a lawsuit for damages, specific performance, or other
remedy the other party (the "Nondefaulting Party") shall be entitled to
reimbursement by the Defaulting Party of reasonable legal fees and expenses
incurred by the Nondefaulting Party in the event the Nondefaulting Party
prevails.
SECTION 10
SURVIVAL OF REPRESENTATIONS AND WARRANTS,
AND INDEMNIFICATION
10.1 Representations and Warranties. All representations and warranties
contained in this Agreement shall be deemed continuing representations and
warranties. Any investigations by or on behalf of any party hereto shall not
constitute a waiver as to enforcement of any representation or warranty
contained herein, except that insofar as any party has knowledge of any
misrepresentation or breach of warranty at Closing and such knowledge is
documented in writing at Closing, such party shall be deemed to have waived such
misrepresentation or breach.
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<PAGE>
10.2 Indemnification by Seller. Subject to the terms and understandings
provided for in the TBA, 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, without limitation, 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 obligations assumed by Buyer pursuant to the
terms hereof;
(c) Any and all losses, liabilities or damages resulting from
Buyer's operation or ownership of the Station on or after the Closing
Date, including, without limitation, 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
(d) 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:
27
<PAGE>
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 in reasonable detail, to the extent known (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.
Notwithstanding the foregoing, any delay in providing such notice shall not
affect the Claimant's rights hereunder except to the extent the Indemnifying
Party is actually prejudiced by such delay.
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.
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<PAGE>
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.
10.5 Effect of the TBA. Notwithstanding anything in this Agreement to
the contrary, Seller shall not be obligated to indemnify and hold harmless Buyer
and its shareholders, directors, officers, partners, employees and
representatives from and against, or to reimburse Buyer and its shareholders,
directors, officers, partners, employees and representatives for, any losses,
liabilities or damages arising out of, based
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<PAGE>
upon, or resulting from (I) the inaccuracy of any representation or warrant of
Seller which is contained herein or made pursuant to the terms hereof, if Buyer
has or obtains Knowledge (as hereinafter defined) of such inaccuracy (a) as of
the date hereof or (b) between the date hereof and the Closing Date or (ii)
Seller's breach of or failure to perform any of its covenants or agreements
contained herein or made pursuant to the terms hereof, if Buyer's obligations
under the TBA require Buyer to take the action which would serve as a basis for
a claim by Buyer that Seller had breached or failed to perform any of such
covenants or agreements. In addition to the foregoing, and not in limitation
thereof, to the extent that the TBA and this Agreement are inconsistent with
each other as to the liability and obligations of Buyer and Seller with respect
to the business and operation of the Stations and the Assets, the terms of the
TBA shall govern. As used in this section, Buyer shall be deemed to have
"Knowledge" of a particular fact or other matter if any individual who is
serving as a director, officer or employee of Buyer is actually aware or
reasonably should be aware of such fact or other matter by virtue of the
performance of his duties for Buyer in connection with the TBA.
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)
30
<PAGE>
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: New Generation Broadcasting, Inc.
Attn:
with a copy David R. Bart, Co., LPA
(which shall not 6776 Loop Road
constitute notice) to: Centerville, OH 45459
Fax: (513) 438-1207
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,. 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.
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11.4 Headings. The headings herein are included for ease of reference
only and shall not control or affect the meaning or construction of the
provisions of this Agreement.
11.5 Gender and Number. Words used herein, regardless of the gender and
number specifically used, shall be deemed and construed to include any other
gender, masculine, feminine or neuter, and any other number, singular or plural,
as the context required.
11.6 Entire Agreement. This Agreement, all schedules hereto, and all
documents and certificates to be delivered by the parties pursuant hereto
collectively represent the entire understanding and agreement between Buyer and
Seller with respect to the subject matter hereof. All schedules attached to this
Agreement shall be deemed part of this Agreement and incorporated herein, where
applicable, as if fully set forth herein. This Agreement supersedes all prior
negotiations between Buyer and Seller, and all letters of intent and other
writings related to such negotiations, and cannot be amended, supplemented or
modified except by an agreement in writing which makes specific reference to
this Agreement or an agreement delivered pursuant hereto, as the case may be,
and which is signed by the party against which enforcement of any such
amendment, supplement or modification is sought.
11.7 Waiver of Compliance; Consents. Except as otherwise provided in
this Agreement, any failure of any of the parties to comply with any obligation,
representation, warranty, covenant, agreement or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with
32
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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: NEW GENERATION BROADCASTING, INC.
By: ________________________________
BUYER: AMERICAN RADIO SYSTEMS CORPORATION
By: ________________________________
Title:
ASSTWXEG.DOC
33
<PAGE>
SCHEDULES TO ASSET PURCHASE AGREEMENT
2.2 Excluded Assets
3.4 Licenses
3.5 Real Property
3.6 Personal property
3.7 Assumed Contracts
3.9 Trademarks; trade names; copyrights
3.16 Claims; legal actions
8.2 Opinion of Seller's General and FCC Counsels
8.3 Opinion of Buyer's General Counsel
34
CONSTRUCTION LOAN AGREEMENT
BETWEEN
AMERICAN RADIO SYSTEMS CORPORATION
AND
JUPITER RADIO PARTNERS
As of December 11, 1996
<PAGE>
CONSTRUCTION LOAN AGREEMENT
CONSTRUCTION LOAN AGREEMENT ("Agreement"), dated as of December 11,
1996, between American Radio Systems Corporation, a Delaware corporation
("Lender") and Jupiter Radio Partners, a Florida partnership ("Partnership").
W I T N E S S E T H:
WHEREAS, Partnership has obtained from the Federal Communications
Commission (the "FCC") a construction permit to operate radio station WTPX(FM)
(the "Station"), and has obtained or will apply for certain other licenses,
permits and authorizations relating to the operation of the Station;
WHEREAS, the parties hereto have entered into that certain Option
Agreement dated as of September 20, 1996 (the "Option Agreement"), pursuant to
which Partnership granted to Lender an exclusive and irrevocable option to
purchase substantially all of the tangible and intangible assets owned or used
by Partnership in connection with the business of the Station (the "Assets");
WHEREAS, Partnership has requested that Lender provide Partnership with
financing for the purchase, construction and installation of the Station's
antenna on the Tower (as defined in the Tower Lease (as hereinafter defined))
and related costs (collectively, the "Project"); and
WHEREAS, Lender is willing to make such financing available to
Partnership, subject to the terms and conditions of this Agreement;
NOW THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings:
"Business Day" means any day other than a Saturday, Sunday or day on
which commercial banks are authorized or required to be closed in Boston,
Massachusetts.
"Commitment Period" means the period from the date hereof to and
including the earliest to occur of (a) the termination of the Option Agreement
or the expiration of the "Option Period" thereunder without the "Option"
thereunder having been exercised or (b) the date on which the Option is
exercised.
"Default" means an event which, with notice, lapse of time, or both,
would constitute an Event of Default.
"Event of Default" has the meaning set forth in Section 6.1.
<PAGE>
"Loan Documents" means this Agreement, the Note, and the Security
Documents.
"Maturity Date" means the earlier to occur of (a) 30 days after the
"Option" described in the Option Agreement expires or terminates unexercised,
(b) 30 days after the date by which an asset purchase agreement should be
executed under the Option Agreement, if such asset purchase agreement is not
executed within such period, (c) 30 days after the termination of the asset
purchase agreement pursuant to which Partnership is to sell to Lender the Assets
(the "Purchase Agreement"), (d) the closing date under the Purchase Agreement
and (e) December 31, 1997.
"Note" has the meaning set forth in Section 2 5.
"Request for Loan" means a Request for Loan, substantially in the form
of Exhibit A hereto, duly completed by Partnership.
"Security Documents" means the Security Agreement of even date herewith
by Partnership and the Assignment and Pledge Agreement of even date herewith by
all of the individual partners of Partnership in favor of Lender.
"Tower Lease" means the Lease Agreement, dated as of December __, l996,
between American Tower Systems, Inc., as Lessor and the Partnership as Lessee.
ARTICLE II. THE LOANS.
Section 2.1 The Loans.
(a) Subject to the terms and conditions of this Agreement, Lender
agrees to make loans to Partnership (each a "Loan" and collectively, the
"Loans"), during the Commitment Period, in an aggregate principal amount at any
one time outstanding not to exceed One Hundred Fifty Thousand Dollars
($150,000.00) (the "Commitment"), and during the Commitment Period, Partnership
may borrow, repay and reborrow up to the amount of the Commitment.
(b) To obtain each Loan, Partnership shall submit to Lender a Request
for Loan, which shall be delivered to Lender at least five Business Days prior
to the date of the requested Loan and shall be accompanied by items referred to
in said Request for Loan.
(c) The proceeds of each Loan shall be used for the purpose set forth
in each Request for Loan.
(d) Notwithstanding anything to the contrary, all Loans shall be in
such amounts as Lender in its reasonable judgment shall deem acceptable based
upon the information contained in the relevant
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Request for Loan and the items and other information accompanying such Request
for Loan. If Lender is unwilling to disburse all or any portion of the amount
requested by Partnership, Lender shall promptly advise Partnership.
Section 2.2 Disbursement. Subject to the satisfaction of conditions
contained in Article III hereof, not later than 1:00 P.M. (Boston time) on the
funding date specified in the relevant Request for Loan, Lender shall deposit
into account number 2090000766828 maintained by Partnership with First Union
National Bank, Punta Gorda, Florida (or such other account or accounts as
Partnership may from time to time designate) in immediately available funds, the
amount of such Loan.
Section 2.3 Repayment of Loans. Partnership hereby promises to repay
the entire outstanding amount of the Loans, and the Loans shall mature on, the
Maturity Date.
Section 2.4 Interest.
(a) Partnership agrees to pay interest on the unpaid principal amount
of each Loan for the period outstanding (computed on the basis of actual number
of days elapsed over a year of 360 days) at a rate per annum equal to 9.00%.
Interest accrued on each Loan shall be payable on the date such Loan is prepaid
or repaid.
(b) In the event that any amount payable hereunder or under the Note is
not paid or repaid when due (whether at maturity, by acceleration or otherwise),
then to the extent permitted by applicable law, such overdue amount shall bear
interest, payable on demand, for each day until paid or repaid at a rate per
annum equal to 11.00%.
Section 2.5 Promissory Note. The Loans shall be evidenced by a single
Promissory Note of Partnership, substantially in the form of Exhibit B hereto,
dated the date hereof, payable to Lender, and otherwise duly completed (the
"Note"). Lender is authorized to enter on the grid attached to the Note all
information specified therein relating to each Loan, all of which entries, in
the absence of manifest error, shall be conclusive and binding on Partnership;
provided, however, that the failure of Lender to make any such entries shall not
relieve Partnership of its obligations to pay any amount due thereunder or
hereunder.
Section 2.6 Prepayments. Partnership may prepay the Loans, in whole or
in part, without premium or penalty, at any time and from time to time prior to
the Maturity Date.
Section 2.7 Payments.
(a) All payments under this Agreement and the Note shall be made in
U.S. Dollars, in immediately available funds, without
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<PAGE>
deduction, set-off or counterclaim, to Lender at account number 05-0126-6026 ABA
#011000206 maintained by Lender with Shawmut Bank, Boston, Massachusetts (or
such other account or accounts as Lender may from time to time designate) no
later than 1:00 P.M. (Boston time) on the relevant due date.
(b) If the due date for any payment under this Agreement or the Note
falls due on a date which is not a Business Day, such date shall be extended to
the next succeeding Business Day, and interest shall be payable on any payment
for the period of such extension.
ARTICLE III. CONDITIONS PRECEDENT.
Section 3.1 Conditions Precedent to Initial Loan. The obligation of
Lender to make the initial Loan hereunder is subject to the conditions precedent
that Lender shall have received the following, all of which must be satisfactory
in form and content to Lender in its sole discretion:
(a) all of the Loan Documents shall have been duly executed and
delivered by each party thereto;
(b) a copy of the Partnership Agreement in respect of Partnership,
certified, as of the date of such Loan, as true, correct and complete by a duly
authorized partner on behalf of the Partnership;
(c) a certificate of Partnership, certified, as of the date of such
Loan, by a duly authorized partner of Partnership (x) authorizing the execution,
delivery and performance of the Loan Documents by Partnership, and (y)
certifying the incumbency and authenticity of the signatures of the authorized
partners executing the Loan Documents on behalf of Partnership;
(d) a copy of Partnership's Certificate of Partnership and a
Certificate of Good Standing, each certified by the Secretary of State of the
State of Florida as of a date no more than five Business Days prior to the date
on which the initial Loan is made;
(e) evidence of the issuance and effectiveness of all necessary
licenses and/or approvals by the FCC and any other governmental authority having
jurisdiction over radio broadcast stations and/or their facilities to construct
the Station; provided, however, that the foregoing shall not require that FCC
approval shall have been granted for Partnership's pending application to
relocate the Station's transmitter to Hobe Sound, Florida.
(f) a list of the names of all contractors, subcontractors and
suppliers for the Project, to the extent that they have been designated (such
contractors, subcontractors and suppliers to be
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<PAGE>
reasonably acceptable to Lender), which shall be updated by Partnership from
time to time at the request of Lender, and, at the request of Lender, copies of
executed contracts with such contractors, subcontractors and suppliers which
shall be in form and substance satisfactory to Lender;
(g) as soon as available copies of full building permits as required
for completion of the Project;
(h) as soon as available, copies of any and all construction,
engineering or similar contracts executed in connection with the Project; and
(i) evidence of the endorsement to the pertinent insurance policies
naming Lender (x) as loss payee with respect to all casualty coverages and
containing customary loss payable provisions and (y) as additional insured for
all general liability.
Section 3.2 Conditions Precedent to all Loans. Lender's obligation to
make all Loans, including the Initial Loan, is subject to the further conditions
precedent that both before and after giving effect to such Loan,
(a) Lender shall have received a duly completed Request for Loan.
(b) There shall exist no Default or Event of Default.
(c) Each of the representations and warranties of Partnership contained
in the Loan Documents shall be true and correct in all material respects as of
the date of such Loan.
Each Request for Loan submitted by Partnership in respect of a Loan
shall constitute a certification by Partnership to the effect set forth above
both as of the date of such Request for Loan and as of the date of such Loan.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES.
Section 4.1 Representations and Warranties.
(a) For purposes of this Section 4.1, the provisions of Article II of
the Option Agreement, together with related definitions, as in effect on the
date hereof are hereby incorporated herein by reference (mutatis mutandis) for
the benefit of Lender and shall continue in effect for purposes of this Section
4.1 after giving effect to all amendments, waivers, and modifications thereof,
but without giving effect to the termination of the Option Agreement (in which
event, the provisions of the Option Agreement immediately prior to such
termination, shall be incorporated into this Agreement); provided, however, that
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<PAGE>
for purposes of this Section 4.1, references in Article II of the Option
Agreement to (i) "Seller" shall be deemed to mean Partnership, (ii) "Buyer"
shall be deemed to mean Lender, (iii) "this Agreement" or use of the terms
"hereunder", "herein", "hereinafter", "hereto" or the like shall be deemed to
refer to this Construction Loan Agreement, and (iv) "Option Period" shall be
deemed to mean the period from the date hereof until the Loans are indefeasibly
paid in full; and provided, further, that all references to a "Schedule" shall
be deemed to be the relevant Schedule to the Option Agreement.
(b) Partnership hereby represents and warrants that the representations
and warranties contained in said Article II of the Option Agreement (as
incorporated into this Agreement pursuant to clause (a) above), are true and
correct on and as of the date hereof and after giving effect to the transactions
contemplated hereby and by the other Loan Documents.
ARTICLE V. COVENANTS.
Section 5.1 Covenants from Option Agreement.
Partnership agrees to be bound by and comply with the provisions of
Sections 4.01, 4.02 and 4.04 (to the extent applicable to Partnership) of the
Option Agreement, which provisions are hereby incorporated herein by reference
(mutatis mutandis) pursuant to Section 4.1 hereof.
Section 5.2 Covenants from Tower Lease. Partnership agrees to be bound
by, and comply with the provisions of Sections 7, 8, 9, 10, 11, 12, 13 and 14 of
the Tower Lease, which provisions, together with related definitions, as in
effect on the date hereof are hereby incorporated herein by reference (mutatis
mutandis) for the benefit of Lender (and as if the parties hereto were the
parties thereto) and shall continue in effect for purposes of this Section 5.2
after giving effect to all amendments, waivers, and modifications thereof, but
without giving effect to the termination of the Tower Lease (in which event, the
provisions of the Tower Lease immediately prior to such termination shall be
incorporated into this Agreement); provided, however, that for purposes of this
Section 5.2 all references in Sections 7, 8, 9, 10, 11, 12, 13 and 14 of the
Tower Lease to (i) "Lessee" shall be deemed to mean Partnership, (ii) "Lessor"
shall be deemed to mean Lender (iii) "this Lease" or use of the terms
"hereunder", "herein", "hereof" "hereinafter", "hereto" or the like shall be
deemed to refer to this Agreement, (iv) "Leased Premises" and "Leased Property"
shall be deemed to include the Project, and (v) "Tower Site", "Tower" and
"Antenna Site" shall be deemed to encompass the construction of the antenna
pursuant to this Agreement; and provided, further, that all references to a
"Schedule" shall be deemed to be Schedules to the Tower Lease.
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<PAGE>
ARTICLE VI. EVENTS OF DEFAULT.
Section 6.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default" under this Agreement and
the Note:
(a) Partnership shall fail to pay, within 10 days of when due, the
principal of, or, interest on the Loans or any other sum payable hereunder or
under any other Loan Document.
(b) Any representation or warranty made herein, in any other Loan
Document or in any Request for Loan shall prove to have been incorrect in any
material respect on or as of the date made or deemed made.
(c) Partnership shall at any time fail to observe, satisfy or perform
any other term, covenant or agreement under this Agreement, and such failure
shall continue unremedied for a period of 10 days after notice of such failure.
(d) Partnership shall at any time fail to observe, satisfy or perform
any other term, covenant or agreement, contained in the Tower Lease, the Option
Agreement, the Purchase Agreement or the Security Documents, and such failure
shall continue unremedied for a period, if any, specified in such agreement, or
such other cure period as provided in such agreement.
(e) Partnership shall default in the payment of any other indebtedness,
including but not limited to indebtedness for borrowed money, capital
obligations or purchase money obligations, or any interest or premium thereon,
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise), and such default shall continue unremedied for a period of 10 days.
(f) Partnership (i) shall make an assignment for the benefit of
creditors, petition or apply to any tribunal for the appointment of a custodian,
receiver or trustee for it or a substantial part of its assets; or (ii) shall
commence any proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect; or (iii) shall have had any
such petition or application filed or any such proceeding shall have been
commenced, against it, in which an adjudication or appointment is made or order
for relief is entered, or which petition, application or proceeding remains
undismissed for a period of 60 days or more; or (iv) shall be the subject of any
proceeding under which its assets may be subject to seizure, forfeiture or
divestiture; or (v) by any act or omission shall indicate its consent to
approval of or acquiescence in any such petition, application or proceeding or
order for relief or the appointment of a custodian, receiver or trustee for all
or any substantial part of its property.
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<PAGE>
(g) A material adverse change in the financial condition or business
prospects of Partnership shall have occurred since the date hereof.
Section 6.2 Remedies. (a) If any Event of Default shall occur and be
continuing, Lender may, by written notice to Partnership specifying such Event
of Default (except in the case of an Event of Default under Section 6.1(f) for
which no notice shall be required), terminate the Commitment and/or (at the sole
election of Lender) declare the outstanding principal of the Loans, all interest
thereon and all other amounts payable under this Agreement and the Note to be
forthwith due and payable, whereupon outstanding Loans, all such interest and
all such amounts shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by Partnership.
Notwithstanding anything to the contrary, in the case of an Event of Default
referred to in Section 6.1(f), the Commitment shall immediately and
automatically terminate, and the outstanding Loans, all interest thereon and all
other amounts payable under this Agreement and the Note shall be immediately due
and payable without notice, presentment, demand, protest or other formalities of
any kind, all of which are hereby expressly waived by Partnership.
(b) If a Default or an Event of Default has occurred and is continuing,
in addition to any other rights and remedies that Lender shall have under
applicable law, Lender shall be permitted to exercise any and all of its rights
and remedies under the Loan Documents.
ARTICLE VII. MISCELLANEOUS.
Section 7.1 Notices. All notices and other communications hereunder and
under the Note shall be in writing, including by facsimile, and shall be deemed
to have been duly delivered and received (i) on the date of personal delivery;
(ii) on the fifth day after deposit in the U.S. mail if mailed by registered or
certified mail, postage prepaid and return receipt requested; (iii) on the day
after delivery to a nationally recognized overnight courier service if sent for
next morning delivery; or (iv) when dispatched by facsimile transmission (with
the facsimile transmission confirmation being deemed conclusive evidence of such
dispatch);
if intended for Lender, shall be addressed as follows:
American Radio Systems Corporation
116 Huntington Avenue
Boston, Massachusetts 02116
Attn: Michael B. Milsom, Esq.
Vice President & General Counsel
Facsimile: (617) 375-7575
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<PAGE>
with a copy to:
Howard J. Braun, Esq.
Rosenman & Colin LLP
1300 l9th Street, NW
Washington, DC 20036
Facsimile: (202) 429-0046
or at such other address of which Lender shall have given notice to
Partnership in the manner herein provided;
if intended for Partnership, shall be addressed as follows:
Jupiter Radio Partners
c/o Ms. Patricia S. Dahlin
Vice President/Controller
InterMart Broadcasting
4810 Deltona Drive
Punta Gorda, FL 33950
Facsimile: (941) 639-6742
with a copy to:
Howard A. Topel, Esq.
Mullin, Rhyne, Emmons & Topel, P.C.
1225 Connecticut Avenue, NW
Suite 300
Washington, DC 20036
Facsimile: (202) 872-0604
or at such other address of which Partnership shall have given notice to Lender
in the manner herein provided.
Section 7.2 Usury. Anything to the contrary notwithstanding, the
obligations of Partnership under this Agreement and the Note shall be subject to
the limitation that they not exceed the maximum nonusurious interest rate, if
any, that at any time, or from time to time, may be contracted for, taken,
reserved, charged, or received on the indebtedness evidenced by this Agreement
or the Note under applicable law.
Section 7.3 Expenses, Indemnification, Etc. (a) Partnership shall
indemnify Lender for all reasonable costs, expenses, and charges (including,
without limitation, reasonable fees and charges of legal counsel for Lender)
incurred by Lender in connection with the enforcement of this Agreement, the
Note or the other Loan Documents resulting from Partnership's breach thereof.
(b) Partnership agrees to indemnify Lender and its directors, officers,
employees and agents from, and hold each of them harmless against, any and all
losses, liabilities, claims damages or expenses incurred by any of them arising
out of or by reason of any investigation or litigation or other proceedings
(including any threatened investigation or litigation or other proceedings)
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<PAGE>
relating to any actual or proposed use by Partnership of the proceeds of any
Loan, including without limitation, the reasonable fees and disbursements of
counsel incurred in connection with any such investigation or litigation or
other proceedings (but excluding any such losses, liabilities, claims, damages
or expenses incurred (i) by reason of the gross negligence or willful misconduct
of the person to be indemnified, (ii) in FCC proceedings, wherein each party
shall be responsible for its own expenses and (iii) in connection with the
preparation of this Agreement).
(c) Partnership agrees to reimburse Lender on demand for any
documentary stamp taxes which may be imposed by the State of Florida or other
pertinent Taxing authority in connection with the transactions contemplated by
this Agreement, the Note or the other Loan Documents.
Section 7.4 Survival. The provisions of Section 7.3 shall survive the
repayment of the Loans.
Section 7.5 Complete Agreement: Waivers and Modification.
(a) This Agreement, together with the other Loan Documents and the
schedules hereto and thereto, constitutes the complete and entire agreement
between the parties hereto regarding the subject matter hereof. All agreements,
contracts, promises, representations and statements, if any, between the parties
hereto or their representative, with respect to the subject matter hereof are
merged into this Agreement.
(b) No waiver or modification of the terms hereof shall be valid unless
in a writing signed by Partnership and Lender.
(c) No failure or delay on the part of Lender in insisting upon the
strict performance of any term, condition or covenant of, or in exercising any
power, right or privilege under, this Agreement or any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or privilege preclude any other or further exercise thereof,
or the exercise of any other power, right or privilege under this Agreement or
under any other Loan Document.
Section 7.6 Binding Effect. This Agreement and the other Loan Documents
shall be binding upon and shall inure to the benefit of the parties hereto and
thereto and their respective successors and assigns. Lender may assign its
rights and interest under this Agreement and the other Loan Documents without
the prior written consent of Partnership. Partnership shall not be permitted to
assign it rights or delegate its duties under this Agreement or the Note without
the prior written consent of Lender.
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Section 7.7 Construction, Headings. All pronouns and any variations
thereof shall be deemed to refer to the masculine, feminine, neuter, singular or
plural as the identity of the persons, entity or entities may require. Article
and Section headings and the table of contents contained in this Agreement are
inserted for convenience of reference only, shall not be deemed to be a part of
this Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.
Section 7.8 Severability. The provisions of this Agreement are intended
to be severable. If for any reason any provision of this Agreement shall be held
invalid or unenforceable in whole or in part in any jurisdiction, such provision
shall, as to such jurisdiction, be ineffective to the extent of such invalidity
or unenforceability without in any manner affecting the validity or
enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.
Section 7.9 Governing of Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Florida
without giving effect to conflict of laws principles thereof.
Section 7.10 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original and all of which
taken together shall constitute a single agreement.
Section 7.11 Inconsistencies. In the event of any inconsistency between
any provision hereof and a provision of the Option Agreement, the Tower Lease or
the Purchase Agreement, the provision of such other agreement shall govern.
IN WITNESS WHEREOF, each of the undersigned has duly executed this
Agreement, or has caused this Agreement to be duly executed on his behalf, on
the date first above written.
AMERICAN RADIO SYSTEMS CORPORATION
By: /s/ Steven B. Dodge
Name: Steven B. Dodge
Title: Chief Executive Officer
JUPITER RADIO PARTNERS
By: InterMart Broadcasting, General
Managing Partner
By: /s/ Patricia S. Dahlin
Patricia S. Dahlin
Vice President
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EXHIBIT A
[FORM OF REQUEST FOR LOAN]
REQUEST FOR LOAN
TO: American Radio Systems Corporation
116 Huntington Avenue
Boston, Massachusetts 02116
Attn: Michael B. Milsom, Esq.
Vice President & General Counsel
Facsimile: (617) 375-7575
FROM: Jupiter Radio Partners
c/o Ms. Patricia S. Dahlin
Vice President/Controller
InterMart Broadcasting
4810 Deltona Drive
Punta Gorda, FL 33950
Facsimile: (941) 639-6742
DATE: _____________________
Reference is hereby made to that certain Construction Loan
Agreement dated as of December __, 1996 (as the same may be amended, modified or
supplemented from time to time, the "Agreement"), between American Radio Systems
Corporation, a Delaware corporation (the "Lender"), and Jupiter Radio Partners,
a Florida partnership (the "Partnership"). Terms which are defined in the
Agreement are used herein as therein defined.
This constitutes a Request for Loan pursuant to the Agreement.
Partnership hereby requests a Loan under the Agreement, based
upon the following information:
(a) Amount of Requested Loan: ___________________________________
(b) Proposed Funding Date of Requested Loan: ___________________
(c) Partnership has incurred the following expenses in connection with the
construction of the Project, and requests reimbursement for the
amount(s) of such expenses.
Architect: ___________________________________________________
Contractor: ________________________________________________
Description: _______________________________________________
Amount: ____________________________________________________
<PAGE>
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Date Incurred: _____________________________________________
[Other Items of Information] _______________________________
(d) Attached to this Request for Loan are copies of the invoices relating
to the above referenced expenses and for which reimbursement/the Loan
is being requested.
(e) As of the date hereof, no Default or Event of Default exists.
IN WITNESS WHEREOF, this Request for Loan has been duly
completed as of the date first above written.
JUPITER RADIO PARTNERS
By: InterMart Broadcasting,
General Managing Partner
By:__________________________
Patricia S. Dahlin
Vice President
ii
<PAGE>
EXHIBIT B
PROMISSORY NOTE
U.S. $150,000.00 Punta Gorda, Florida
December 11, 1996
FOR VALUE RECEIVED, the undersigned, JUPITER RADIO PARTNERS, a
Florida partnership (the "Partnership"), hereby promises to pay to the order of
AMERICAN RADIO SYSTEMS CORPORATION, a Delaware corporation (the "Lender"), in
lawful money of the United States of America in immediately available funds, at
the location and in the manner designated in the Construction Loan Agreement (as
hereinafter defined), the principal sum of ONE HUNDRED FIFTY THOUSAND U.S.
DOLLARS ($150,000.00) or the aggregate unpaid principal amount of all Loans made
by the Lender to the Partnership, pursuant to the Construction Loan Agreement,
whichever is less. The Partnership promises to pay interest on the unpaid
principal amount hereof at the rate of nine percent (9.00%) per annum from the
date hereof until paid in immediately available funds. Subject to mandatory or
voluntary prepayment under the Construction Loan Agreement, all amounts due
under this Note are payable on the earlier to occur of (a) 30 days after the
"Option" described in the Option Agreement, dated as of September 20, 1996
between the Partnership and the Lender (the "Option Agreement"), expires or
terminates unexercised, (b) 30 days after the date by which an asset purchase
agreement should be executed under the Option Agreement, if such asset purchase
agreement is not executed by such date, (c) 30 days after the termination of the
Purchase Agreement pursuant to which the Partnership is to sell to the Lender
the Assets (the "Purchase Agreement"), (d) the closing date under the Purchase
Agreement and (e) December 31, 1997.
In case that any payments under this Note are not paid when
due (whether at stated maturity, by acceleration or otherwise), such payments
shall bear interest at the rate of eleven percent (11.00%) per annum for each
day until paid or repaid. Upon the occurrence of an Event of Default, the
principal amount of and accrued interest on this Note may be declared due and
payable in the manner and with the effect provided in the Construction Loan
Agreement.
All borrowings evidenced by this Note and all payments and
prepayments of the principal hereof and interest hereon and the respective dates
thereof shall be endorsed by the holder hereof on the grid schedule attached
hereto and made a part hereof, or on a continuation thereof which shall be
attached hereto and made a part hereof; provided, however, that the failure of
the holder hereof to make such a notation or any error in such a notation shall
not affect the obligations of the Partnership under this Note.
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This Note is the promissory note referred to in, and evidences
indebtedness incurred under, the Construction Loan Agreement, dated as of
December __, 1996, between the Partnership and the Lender (as amended or
modified in accordance with its terms, the "Construction Loan Agreement"), to
which reference is made for a description of the security for this Note and for
a statement of the terms and conditions on which the Partnership is permitted
and required to make prepayments and repayments of principal of the indebtedness
evidenced by this Note and on which such indebtedness may be declared to be
immediately due and payable. This Note is also entitled to the benefits of the
Loan Documents, including, without limitation, the provisions regarding security
interests contained therein. As provided in the Construction Loan Agreement,
this Note is subject to mandatory and voluntary prepayment, in whole or in part.
The Partnership hereby waives all requirements as to
diligence, presentment, demand of payment, protest and notice of any kind in
connection with this Note. All amounts owing hereunder are payable by the
Partnership without relief from any valuation or appraisal laws.
The Partnership agrees to pay the reasonable costs and
expenses of collection, including, without limitation, reasonable attorney's
fees and disbursements in the event that any action, suit or proceeding is
brought by the holder hereof to collect this Note.
This Note may not be changed, modified or terminated orally.
Capitalized terms used herein but not otherwise defined have
the meaning ascribed to such terms in the Construction Loan Agreement.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA WITHOUT REGARD TO
ANY PRINCIPLES OF CONFLICTS OF LAW.
JUPITER RADIO PARTNERS
By: InterMart Broadcasting,
General Managing Partner
By: /s/ Patricia S. Dahlin
Patricia S. Dahlin
Vice President, Intermart Broadcasting
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Schedule to Promissory Note
TRANSACTIONS
ON
NOTE
Amount of Outstanding
Principal or Principal
Amount of Loan Interest Paid Balance This Notation
Date Made This Date This Date Date Made by
SECURITY AGREEMENT
SECURITY AGREEMENT (this "Agreement"), dated as of December 11, 1996,
made by JUPITER RADIO PARTNERS, a Florida partnership ("Partnership"), in favor
of AMERICAN RADIO SYSTEMS CORPORATION, a Delaware corporation ("Lender").
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this
Agreement, Partnership and Lender have entered into a certain Construction Loan
Agreement dated as of the date hereof (said Construction Loan Agreement, as it
may hereafter be amended, supplemented, restated, replaced or otherwise modified
from time to time, being the "Loan Agreement"; the terms defined therein and not
otherwise defined herein being used herein as therein defined); and
WHEREAS, it is a condition precedent to the making of the Loans by
Lender under the Loan Agreement that Partnership shall have granted the security
interest in the Collateral (as hereinafter defined) contemplated by this
Agreement;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and in order to induce Lender to make Loans under the Loan
Agreement, Partnership hereby agrees as follows:
ARTICLE 1. THE COLLATERAL.
Section 1.1 Grant of Security. As security for the Obligations (as
defined in Section 1.2 hereof), Partnership hereby assigns and pledges to
Lender, a security interest in all of Partnership's right, title and interest in
and to the following (the "Collateral"):
(a) All equipment in all of its forms, wherever located, now held
or hereafter acquired by Partnership and all parts thereof and all accessions
thereto (any and all such equipment, parts and accessions being the
"Equipment").
(b) All inventory in all of its forms, wherever located, now held
or hereafter acquired by Partnership (including, but not limited to (i) all
types of inventory and raw materials and work in process therefor, finished
goods thereof, and materials used consumed in the manufacture or production
thereof, (ii) goods in which Partnership has an interest in mass or a joint or
other interest or right of any kind and (iii) goods which are returned to or
repossessed by Partnership, and all accessions thereto and products thereof (any
and all such inventory, accessions and products being the "Inventory")).
<PAGE>
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(c) All accounts, contract rights (to the fullest extent
assignable), chattel paper, instruments, general intangibles and other
obligations of any kind of Partnership now or hereafter existing arising out of
or in connection with the sale or lease of goods or the rendering of services,
and all rights now or hereafter existing in and to all security agreements,
leases and other contracts (in each case to the fullest extent assignable)
securing or otherwise relating to any such accounts, contract rights, chattel
paper, instruments, general intangibles or obligations (any and all such
accounts, contract rights, chattel paper, instruments, general intangibles and
obligations being the "Receivables", and any and all such leases, security
agreements and other contracts being the "Related Contracts").
(d) All documents and documents of title of Partnership now or
hereafter existing, including without limitation, all bills of lading, warehouse
receipts, air bills, truck bills, dock warrants, dock receipts, barge receipts
or any other document which in the regular course of business or financing is
treated as adequately evidencing that the person in possession of it is entitled
to receive, hold and dispose of the document and the goods it covers
("Documents").
(e) All proceeds to be derived from the sale of any and all
governmental licenses, permits and authorizations, issued to the Partnership,
including all proceeds from the sale of any and all licenses, permits and
authorizations issued by the Federal Communications Commission ("FCC Permits")
to the Partnership, as distinguished from the FCC Permits themselves. If
applicable FCC law should be changed at any time during the term of this
Agreement to allow a security interest to be held in the FCC Permits, the
Collateral shall include the FCC Permits immediately upon the effective date of
the change in applicable FCC law.
(f) All proceeds of any and all of the Collateral and, to the
extent not otherwise included, all payments under insurance (whether or not
Lender is the loss payee thereof), or any indemnity, warranty or guaranty,
payable by reason of loss or damage to or otherwise with respect to any of the
foregoing Collateral.
Section 1.2 Security for Obligations. This Agreement secures the prompt
payment when due (whether at maturity, by acceleration or otherwise) of all
obligations of Partnership now or hereafter existing under the Loan Agreement,
the Note and the other Loan Documents, whether for principal, interest, fees,
expenses or otherwise (all such obligations being the "Obligations").
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Section 1.3 Partnership Remains Liable. Anything herein to the contrary
notwithstanding, (a) Partnership shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (b) the exercise by Lender of any of the rights
hereunder shall not release Partnership from any of its duties or obligations
under the contracts and agreements included in the Collateral, and (c) Lender
shall not have any obligation or liability under any of the contracts and
agreements included in the Collateral by reason of this Agreement, nor shall
Lender be obligated to perform any of the obligations or duties of Partnership
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.
Section 1.4 Continuing Agreement. This Agreement shall create a
continuing security interest in the Collateral and shall remain in full force
and effect until indefeasible payment in full of the Obligations. Upon the
indefeasible payment in full of the Obligations, the security interest granted
hereby shall terminate and all rights to the Collateral shall revert to
Partnership. Upon any such termination, Lender shall, at Partnership's expense,
execute and deliver to Partnership such documents as Partnership shall
reasonably request to evidence such termination.
Section 1.5 Security Interest Absolute. All rights of Lender and
security interests hereunder, and all obligations of Partnership hereunder,
shall be absolute and unconditional irrespective of any defenses whatsoever
available to Partnership, including, but not limited, to the following:
(a) any extension of credit by Lender to or for the account of
Partnership other than under the Loan Agreement, the Note or any other
Loan Document;
(b) any lack of validity or enforceability of any Loan
Document;
(c) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to any departure from any Loan
Document;
(d) any exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the obligations; or
(e) any law, regulation or order of any jurisdiction affecting
or purporting to affect any term of any Obligation or any Loan Document
or Lender's rights with respect thereto.
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ARTICLE 2. REPRESENTATIONS AND WARRANTIES.
Partnership hereby represents and warrants as follows:
Section 2.1 Location of Collateral. The chief place of business and
chief executive office of Partnership and the office where Partnership keeps its
records concerning the Receivables are located at 4810 Deltona Drive, Punta
Gorda, Florida 33950. None of the Receivables is evidenced by a promissory note
or other instrument.
Section 2.2 Ownership and Liens. Partnership owns the Collateral free
and clear of any lien (statutory or otherwise), security interest, mortgage,
deed of trust, priority, pledge, charge, conditional sale, title retention
agreement, financing lease or other encumbrance or similar right of others, or
any agreement to give any of the foregoing (collectively, a "Lien"), except for
the Lien created by this Agreement. No effective financing statement or other
instrument similar in effect covering all or any part of the Collateral is on
file in any recording office, except such as may have been filed in favor of
Lender.
Section 2.3 Perfection. This Agreement creates a valid and perfected
first priority security interest in the Collateral, securing the payment of the
Obligations, subject to no prior Lien that can be perfected under the Uniform
Commercial Code.
Section 2.4 No Authorization Required. No authorization, approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required either (a) for the grant by Partnership of the Lien
granted hereby or for the execution, delivery or performance of this Agreement
by Partnership, or (b) for the perfection of or the exercise by Lender of its
rights and remedies hereunder, other than filings pursuant to the Uniform
Commercial Code, actions which are required to perfect the Lien granted herein
(which have been made or taken) and authorizations or filings that might be
required under the Communications Act of 1934, as amended, with respect to the
FCC Permits.
ARTICLE 3. COVENANTS.
Section 3.1 Further Assurances.
(a) Partnership agrees that at any time and from time to time, at
the expense of Partnership, Partnership shall promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that Lender may reasonably
<PAGE>
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request, in order to perfect and protect any Lien granted or purported to be
granted hereby or to enable Lender to exercise and enforce its rights and
remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, Partnership shall: (i) if any Receivable shall be
evidenced by a promissory note or other instrument or chattel paper, deliver to
Lender hereunder such note, instrument or chattel paper duly indorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
ans substance satisfactory to Lender; and (ii) execute and file such financing
or continuation statements, or amendments thereto, and such other instruments or
notices as may be necessary or reasonably desirable, or as Lender may request,
in order to perfect and preserve the Lien granted or purported to be granted
hereby.
(b) Partnership hereby authorizes Lender, in its discretion, to
file one or more financing or continuation statements, and amendments thereto,
relative to all or any part of the Collateral without the signature of
Partnership where permitted by law.
(c) Partnership shall furnish to Lender from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Lender may reasonably
request, all in reasonable detail.
Section 3.2 As to Equipment and Inventory. Partnership shall:
(a) Keep the Equipment and Inventory (other than Inventory sold in
the ordinary course of business) at Partnership's chief executive offices or,
upon 30 days' prior written notice to Lender, at such other places in
jurisdictions where all action required by Section 3.1 shall have been taken
with respect to the Equipment and Inventory.
(b) Pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all claims
(including claims for labor, materials and supplies) against, the Equipment and
Inventory except to the extent the validity thereof is being contested in good
faith and for which adequate reserves have been established.
(c) Maintain and operate the Equipment in compliance with all
applicable FCC rules, regulations and policies.
Section 3.3 Insurance. Partnership shall, at its own expense maintain
insurance with respect to the Equipment and Inventory to such amounts against
such risks, in such form and with such insurers, as is customary for entities
engaged in the same businesses and within the same jurisdictions as Partnership
conducts its business.
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Section 3.4 As to Receivables.
(a) Partnership shall keep its chief place of business and chief
executive office and the office where it keeps its records concerning the
Receivables, and all originals of all chattel paper which evidence Receivables,
at the location therefor specified in Section 2.1 or, upon 30 days prior written
notice to Lender, at such other locations in a jurisdiction where all action
required by Section 3.1 shall have been taken with respect to the Receivables.
Partnership shall hold and preserve such records and chattel paper and shall
permit representatives of any Bank at any time during normal business hours to
inspect and make abstracts from such records and chattel paper.
(b) Except as otherwise provided in this subsection (b),
Partnership shall continue to collect, at its own expense, all amounts due or to
become due Partnership under the Receivables. In connection with such
collections, Partnership may take (and, at Lender's direction, shall take) such
action as Lender may deem necessary or advisable to enforce collection of the
Receivables; provided, however, that Lender shall have the right at any time,
upon the occurrence and during the continuance of an Event of Default and upon
written notice to Partnership of its intention to do so, to notify the account
debtors or obligors under any Receivables of the assignment of such Receivables
to Lender and to direct such account debtors or obligors to make payment of all
amounts due or to become due to Partnership thereunder directly to Lender and,
upon such notification and at the expense of Partnership, to enforce collection
of any such Receivables, and to adjust, settle or compromise the amount or
payment thereof, in the same manner and to the same extent as Partnership might
have done. After receipt by Partnership of the notice from Lender referred to in
the proviso to the preceding sentence, (i) all amounts and proceeds (including
instruments) received by Partnership in respect of the Receivables shall be
received in trust for the benefit of Lender hereunder shall be segregated from
other funds of Partnership and shall be forthwith paid over to Lender in the
same form as so received (with any necessary endorsement) to be held as cash
collateral and either (A) released to Partnership so long as no Event of Default
shall have occurred and be continuing or (B) if any Event of Default shall have
occurred and be continuing, applied as provided by Section 5.1(b), and (ii)
Partnership shall not, without the prior written consent of Lender, adjust,
settle or compromise the amount or payment of any Receivable, or release wholly
or partly any account debtor or obligor thereof, or allow any credit or discount
thereon.
(c) In the event that any of the Receivables is evidenced by a
promissory note or other written instrument, Partnership shall provide notice to
Lender to such effect,
<PAGE>
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and Partnership shall, at Partnership's expense, deliver such instruments and
documents, and take such actions, as Lender shall reasonably request in order to
perfect and protect Lender's Lien on such promissory note or other written
instrument.
Section 3.5 Transfers and Other Liens. Partnership shall not:
(a) Sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except Inventory in the ordinary course of
business.
(b) Create or suffer to exist any Lien upon or with respect to any
of the Collateral to secure any indebtedness of Partnership, except for the Lien
created by this Agreement.
Section 3.6 As to Documents. Partnership will promptly deliver to
Lender all Documents (endorsed to Lender) in its possession or which may from
time to time come into its possession.
Section 3.7 As to Permits. Partnership shall file and, as necessary,
prosecute, all applications, reports, statements, filing fees and regulatory
fees required to be filed with the FCC or any other governmental body, and shall
maintain the FCC Permits in full force and effect during the term of this
Security Agreement. Partnership shall oppose any proposed adverse modification
of any FCC Permit. Partnership shall comply with the Communications Act of 1934,
as amended, and all rules, regulations and policies of the FCC and all federal,
state and local laws, including health, zoning and police regulations.
ARTICLE 4. RIGHTS OF LENDER.
Section 4.1 Lender Appointed Attorney-in-Fact. Partnership hereby
irrevocably appoints Lender as Partnership's attorney-in-fact, with full
authority in the place and stead of Partnership and in the name of Partnership
or otherwise, from time to time in Lender's discretion, to take any and all
action and to execute any and all instrument(s) which Lender may reasonably deem
necessary or advisable to accomplish the purposes of this Agreement (subject to
the rights of Partnership under Section 3.4), including without limitation:
(a) to obtain and adjust insurance required to be paid to Lender
pursuant to Section 3.3,
(b) if an Event of Default shall have occurred and be continuing,
to ask, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any of the Collateral,
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-8-
(c) if an Event of Default shall have occurred and be continuing,
to receive, indorse and collect any drafts or other instruments, documents and
chattel paper, in connection with clause (a) or (b) above, and
(d) to file any claims or take any action or institute any
proceedings which Lender may deem necessary or desirable for the collection of
any of the Collateral or otherwise to enforce the rights of Lender with respect
to any of the Collateral. Lender shall notify Partnership with reasonable
promptness in the circumstances of any action taken by Lender pursuant to this
Section 4.1 and Section 4.2 below.
Section 4.2 Lender May Perform. If Partnership fails to perform any
agreement contained herein, Lender may itself perform, or cause performance of,
such agreement, and the expenses of Lender incurred in connection therewith
shall be payable by Partnership under Section 6.3 hereof.
Section 4.3 Lender's Duties. The powers conferred on Lender hereunder
are solely to protect Lender's interest in the Collateral and shall not impose
any duty upon it to exercise any such powers. Except for the safe custody of any
Collateral in its possession and the accounting for moneys actually received by
it hereunder, Lender shall have no duty as to any Collateral or as to the taking
of any necessary steps to preserve rights against prior parties or any other
rights pertaining to any Collateral.
ARTICLE 5. DEFAULT.
Section 5.1 Remedies. If any Event of Default shall have occurred and
be continuing:
(a) Lender may exercise in respect of the Collateral, in addition
to other rights and remedies provided for herein or otherwise available to it,
all the rights and remedies of a secured party on default under the Uniform
Commercial Code (the "UCC") in effect in the State of Florida at that time
(whether or not the UCC applies to the affected Collateral) and also may (i)
require Partnership to, and Partnership hereby agrees that it shall at its
expense and upon request of Lender forthwith, assemble all or part of the
Collateral as directed by Lender and make it available to Lender at a place to
be designated by Lender which is reasonably convenient to both parties and (ii)
without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any of Lender's
offices or elsewhere, for cash, on credit or for future delivery, and at such
price or prices and upon such other terms as Lender may deem commercially
reasonable. Partnership agrees that, to the extent notice of sale shall be
required by law, at least 10 days' prior notice to
<PAGE>
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Partnership of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. Lender
shall not be obligated to make any sale of Collateral regardless of notice of
sale having been given. Lender may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor, and such sale may
without further notice, be made at the time and place to which it was so
adjourned.
(b) All cash proceeds received by Lender in respect of any sale
of, collection from, or other realization upon all or any part of the Collateral
may, in the discretion of Lender, be held by Lender as collateral for, and/or
then or at any time thereafter applied (after payment of any amounts payable to
Lender pursuant to Section 6.2) in whole or in part by Lender against, all or
any part of the Obligations in such order as Lender shall elect. Any surplus of
such cash or cash proceeds held by Lender and remaining after payment in full of
all the Obligations shall be paid over to Partnership or to whomsoever may be
lawfully entitled to receive such surplus.
ARTICLE 6. MISCELLANEOUS.
Section 6.1 Amendments; Etc. No amendment or waiver of any provision of
this Agreement nor consent to any departure by Partnership here from, shall in
any event be effective unless the same shall be in writing and signed by Lender,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
Section 6.2 Expenses, Indemnification. Etc. Partnership shall indemnify
Lender for all reasonable costs, expenses, and charges (including without
limitation, reasonable fees and charges of legal counsel for Lender) incurred by
Lender in connection with the enforcement of this Agreement, including without
limitation, any expenses incurred in connection with assembling, collecting,
maintaining, preserving or protecting the Collateral. Subject to the limitations
set forth in Section 7.3(b) of the Loan Agreement, Partnership agrees to
indemnify Lender from and against any and all claims, losses and liabilities
growing out of or resulting from this Agreement (including, without limitation,
enforcement of this Agreement), except claims, losses or liabilities resulting
from Lender's gross negligence or willful misconduct. The obligations of
Partnership under this Section shall survive the termination of this Agreement.
Section 6.3 Notices. Unless the party to be notified otherwise notifies
the other party in writing, notices shall be given in the manner set forth in
the Loan Agreement.
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Section 6.4 Transfer of Loan Documents. This Agreement shall (a) be
binding upon Partnership, its successors and assigns and (b) inure together with
the rights and remedies of Lender hereunder, to the benefit of Lender and its
successors, transferees and assigns; provided, however, that Partnership may not
assign or transfer its rights or obligations under this Agreement. Without
limiting the generality sf the foregoing clause (b), Lender may assign or
otherwise transfer the Loan Documents held by it, or grant participations
therein, to any other person or entity, and such other person or entity shall
thereupon become vested with all the benefits in respect thereof granted to
Lender herein or otherwise.
Section 6.5 No Impairment of Rights. The grant of a Lien hereunder
shall not be deemed to apply to any Related Contract to the extent (but only to
the extent) the grant of such security interest would violate, cause a
termination of or otherwise substantially impair Partnership's rights under such
Related Contract.
Section 6.6 GOVERNING LAW JURISDICTION; TERMS. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA,
EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE LIEN HEREUNDER, OR
REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE
LAWS OF A JURISDICTION OTHER THAN THE STATE OF FLORIDA. UNLESS OTHERWISE DEFINED
HEREIN OR IN THE AGREEMENT, TERMS USED IN ARTICLE 9 OF THE UNIFORM COMMERCIAL
CODE IN THE STATE OF FLORIDA ARE USED HEREIN AS THEREIN DEFINED.
IN WITNESS WHEREOF, Partnership has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
JUPITER RADIO PARTNERS
By: InterMart Broadcasting
of Palm Beach, Inc.,
Managing General Partner
By: /s/ Patricia S. Dahlin
Patricia S. Dahlin
Vice President
ASSIGNMENT AND PLEDGE AGREEMENT
ASSIGNMENT AND PLEDGE AGREEMENT, dated as of December 11, 1996, made by
each of the undersigned partners (hereinafter referred to individually as an
"Assignor" and collectively as "Assignors") of JUPITER RADIO PARTNERS, a Florida
general partnership ("Borrower") in favor of AMERICAN RADIO SYSTEMS CORPORATION,
a Delaware corporation ("Lender").
W I T N E S S E T H:
WHEREAS, Assignors are all of the general partners of Borrower pursuant
to that certain Partnership Agreement of Jupiter Radio Partners dated as of
March 30, 1994 by and between Assignors (said Partnership Agreement as amended,
supplemented or modified from time to time, the "Partnership Agreement");
WHEREAS, Lender and Borrower have entered into that certain
Construction Loan Agreement dated as of the date hereof (as the same may be
amended, supplemented or modified from time to time, the "Loan Agreement";
capitalized terms which are defined in the Loan Agreement and not otherwise
defined herein shall have the meanings ascribed to them in the Loan Agreement),
which provides for, among other things, the extending of credit and other
financial accommodation by Lender to Borrower pursuant to the terms and
conditions of the Loan Agreement and the other agreements or arrangements
entered into in connection therewith (any extension of credit or other financial
condition being referred to herein as a "Loan" and any writing evidencing,
supporting or securing a Loan being a "Loan Document");
WHEREAS, as the partners of Borrower, the making of Loans accrues to
the benefit of Assignors;
WHEREAS, it is a condition precedent to the Loan Agreement that
Borrower secure the obligations of Borrower under the Loan Agreement pursuant to
the terms and conditions of that certain Security Agreement dated as of the date
hereof in favor of Lender (as the same may be amended, supplemented or modified
from time to time, the "Security Agreement"); and
WHEREAS, it is a further condition precedent to the Loan Agreement that
Assignors secure the obligations of Borrower under the Loan Agreement pursuant
to the terms and conditions set forth herein in this Agreement (as the same may
be amended, supplemented or modified from time to time);
NOW, THEREFORE, in order to secure the obligations of Borrower to
Lender under the Loan Agreement and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Assignors hereby
agree as follows:
<PAGE>
ARTICLE 1 THE PLEDGE.
Section 1.01 Pledge. Subject to the terms and conditions of this
Agreement, Assignors hereby pledge, assign and transfer to Lender and grant to
Lender a Lien (as hereinafter defined) on, the following (the "Pledged
Collateral"):
(a) all of Assignors' right, title and interest as the
partners in and to Borrower, and all rights, title and interest of
Assignors or Borrower in, to and under the Partnership Agreement, and
all distributions, dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of Assignors' interest in and to
Borrower and the Partnership Agreement; and
(b) all additional interest(s) in Borrower which may from time
to time be acquired by Assignors in any manner, and the certificates
representing such additional interest(s), if any, and all
distributions, dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such interest(s).
Section 1.02 Security for Obligations. This Agreement secures the
prompt payment when due (whether at maturity, by acceleration or otherwise) of
all obligations of Borrower now or hereafter existing under the Loan Agreement
and the other Loan Documents, whether for principal, interest, fees, expenses or
otherwise (all such obligations being referred to herein as the "Obligations").
Section 1.03 Continuing Agreement. This Agreement shall create a
continuing Lien on the Pledged Collateral and shall remain in full force and
effect until indefeasible payment in full of the Obligations. Upon the
indefeasible payment in full of the Obligations, Assignors shall be entitled to
the return, upon their request and at their expense, of such of the Pledged
Collateral as shall not have been sold or otherwise applied pursuant to the
terms hereof.
Section 1.04 Borrower Remains Liable. Anything herein to the contrary
notwithstanding, (a) Assignors shall remain liable under the Partnership
Agreement to the extent set forth therein to perform all of their duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by Lender of any of the rights hereunder shall not
release Assignors from any of their duties or obligations under the Partnership
Agreement, and (c) except as expressly provided herein, Lender shall not have
any obligation or liability under the Partnership Agreement by reason of this
Agreement, nor shall Lender be obligated to perform any of the obligations or
duties of Assignor or Borrower thereunder or to take any action to collect or
enforce any claim for payment assigned hereunder.
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<PAGE>
Section 1.05 Security Interest Absolute. All rights and Liens of Lender
hereunder, and all obligations of Assignors hereunder, shall be absolute and
unconditional irrespective of any defenses whatsoever available to Borrower or
Assignors, including, but not limited to, the following:
(a) any extension of credit by Lender to or for the account of
Borrower other than under the Loan Agreement, the Note or any other
Loan Document;
(b) any lack of validity or enforceability of any Loan
Document;
(c) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to any departure from any Loan
Document;
(d) any exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Obligations; or
(e) any law, regulation or order of any jurisdiction affecting
or purporting to affect any term of any Obligation or any Loan Document
or Lender's rights with respect thereto.
ARTICLE 2 REPRESENTATIONS AND WARRANTIES.
Assignors, jointly and severally, represent and warrant to Lender as
follows:
Section 2.01 Interest. Etc. (a) Assignors' interests, as set forth on
Schedule 2.01 hereof, in and to the Pledged Collateral is fully vested. Borrower
is a partnership, duly organized, validly existing and in good standing under
the laws of the State of Florida. Assignors are all general partners of Borrower
and there are no partners of Borrower other than Assignors. Each Assignor to the
Partnership Agreement is a corporation duly organized, validly existing, and in
good standing under the laws of its state of incorporation, as set forth in
Schedule 2.01 herein. Each Assignor to the Partnership Agreement has the
corporate power and authority to conduct all of the activities conducted by it
and to own or lease all of the assets owned or leased by it.
(b) Each Assignor to the Partnership Agreement has the corporate
power, authority and legal capacity to execute and deliver this Agreement, to
consummate the transactions contemplated hereby and to take all other actions
required to be taken by it pursuant to the provisions hereof.
(c) The execution, delivery and performance of the Agreement and
the other Loan Documents executed and delivered by
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<PAGE>
each Assignor have been duly authorized by all necessary corporate action on the
part of each Assignor. This Agreement and the other Loan Documents executed and
delivered by each Assignor have been duly executed and delivered by each
Assignor and constitute the legal, valid and binding obligation of each
Assignor, enforceable against each Assignor in accordance with its terms.
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby by each Assignor will (with
or without the giving of notice thereof, the lapse of time or both): (i)
conflict with any provision of such Assignor's Certificate of Incorporation or
By-Laws; (ii) 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 any
Assignor; (iii) conflict with, constitute grounds for termination of, result in
a breach of, constitute a default under, or accelerate or permit the
acceleration of any performance required by the terms of, any material
agreement, instrument, license or permit to which any Assignor is a party or by
which it may be bound; or (iv) create any Lien upon the Pledged Collateral,
except for the Lien created by this Agreement.
Section 2.02 Ownership and Liens. Assignors are the legal and
beneficial owners of the Pledged Collateral free and clear of any lien
(statutory or otherwise), security interest, mortgage, deed of trust, priority,
pledge, charge, conditional sale, title retention agreement, financing lease or
other encumbrance or similar right of others, or any agreement to give any of
the of the foregoing (collectively a "Lien"), except for the Lien created by
this Agreement.
Section 2.03 Perfection. The pledge of the Pledged Collateral pursuant
to this Agreement creates a valid and perfected first priority Lien on the
Pledged Collateral, securing the payment of the Obligations.
Section 2.04 No Authorization Required. Except for any necessary prior
consent of, and filing with, the Federal Communications Commission ("FCC"), no
other authorization, approval, or other action by, and no notice to or filing
with, any other governmental authority or any other regulatory body is required,
either (a) for the pledge by Assignors of the Pledged Collateral pursuant to
this Agreement or for the execution, delivery or performance of this Agreement
by Assignors, or (b) for the exercise by Lender of the voting or other rights
provided for in this Agreement or the remedies in respect of the Pledged
Collateral pursuant to this Agreement (except as may be required in connection
with such disposition by laws affecting the offering and sale of securities
generally). Notwithstanding anything to the contrary, including, without
limitation, the provisions of Article VI of the Partnership Agreement, no other
consent of the partners of Borrower is required for the execution, delivery and
performance by Assignors of this Agreement.
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ARTICLE 3 COVENANTS.
Section 3.01 Further Assurances. Assignors agree that at any time and
from time to time, at the expense of Assignors, Assignors will promptly execute
and deliver all further instruments and documents, including, without
limitation, the execution and delivery of any applications or related documents
necessary to obtain FCC authorization, and take all further action, that may be
necessary or that Lender may reasonably request, in order to perfect and protect
any Lien granted or purported to be granted hereby or to enable Lender to
exercise and enforce its rights and remedies hereunder with respect to any
Pledged Collateral.
Section 3.02 Transfers and Other Liens. Assignors agree that they will
not (i) sell or otherwise dispose of, or grant any option with respect to, any
of the Pledged Collateral, or (ii) create or permit to exist any Lien upon or
with respect to any of the Pledged Collateral, except for the Lien in favor of
Lender under this Agreement.
ARTICLE 4 LENDER.
Section 4.01 Lender Appointed Attorney-in-Fact. Assignors hereby
irrevocably appoint Lender as Assignors' attorney-in-fact, with full authority
in the place and stead of Assignors (and each of them) and in the name of
Assignors (and each of them) or otherwise, from time to time in Lender's
discretion to take any action and to execute any instrument which Lender may
reasonably deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation, to receive, indorse and collect all
instruments made payable to Assignors (or any of them) representing any
dividend, interest payment or other distribution in respect of the Pledged
Collateral or any part thereof and to give full discharge for the same.
Section 4.02 Lender May Perform. If Assignors fail to perform any
agreement contained herein, Lender may itself perform, or cause performance of,
such agreement, and the expenses of Lender incurred in connection therewith
shall be payable by Assignors under Section 6.02 hereof.
Section 4.03 Reasonable Care. Lender shall be deemed to have exercised
reasonable care in the custody and preservation of the Pledged Collateral in its
possession, if any, if the Pledged Collateral is accorded treatment
substantially equal to that which Lender accords its own similar property, it
being understood that Lender shall not have responsibility for (a) ascertaining
or taking action with respect to calls, conversions, exchanges, maturities,
tenders or other matters relative to any
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Pledged Collateral, whether or not Lender has or is deemed to have knowledge of
such matters, or (b) taking any necessary steps to preserve rights against any
parties with respect to any Pledged Collateral.
ARTICLE 5 DEFAULT.
Section 5.01 Voting Rights; Dividends; Etc. (a) So long as no Default
or Event of Default shall have occurred and be continuing:
(i) Assignors shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Pledged Collateral or any
part thereof for any purpose not inconsistent with the terms of this
Agreement or the Loan Agreement; provided, however, that Assignors
shall not exercise or shall refrain from exercising any such right if,
in Lender's judgment, such action would have a material adverse effect
on the value of the Pledged Collateral or any part thereof, and,
provided, further, that Assignors shall give Lender at least 10 days'
written notice of the manner in which it intends to exercise, or the
reasons for refraining from exercising, any such right.
(ii) Assignors shall be entitled to receive and retain any and
all dividends and interest paid in respect of the Pledged Collateral;
provided, however, that any and all (A) distributions, dividends and
interest paid or payable other than in cash in respect of, and
instruments and other property received, receivable or otherwise
distributed in respect of, or in exchange for, any Pledged Collateral,
(B) distributions paid or payable in cash in respect of any Pledged
Collateral in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital, capital
surplus or paid-in-surplus, and (C) cash paid, payable or otherwise
distributed in respect of principal of, or in redemption of, or in
exchange for, any Pledged Collateral, shall be, and shall be forthwith
delivered to Lender to hold as, Pledged Collateral and shall, if
received by Assignors, be received in trust for the benefit of Lender,
be segregated from the other property or funds of Assignors, and be
forthwith delivered to Lender as Pledged Collateral in the same form as
so received (with any necessary indorsement).
(b) Upon the occurrence and during the continuance of a
Default or Event of Default, subject to and following any required FCC consent:
(i) All rights of Assignors to exercise the voting and other
consensual rights which they would otherwise be entitled to exercise
pursuant to Section 5.01(a)(i) and to receive the dividends and
interest payments which they would otherwise be authorized to receive
and retain pursuant to
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Section 5.01(a)(ii) shall cease, and all such rights shall thereupon
become vested in Lender which shall thereupon have the sole right to
exercise such voting and other consensual rights and to receive and
hold as Pledged Collateral such dividends and interest payments.
(ii) All distributions and other payments which are received
by Assignors contrary to the provisions of paragraph (i) of this
Section 5.01(b) shall be received in trust for the benefit of Lender,
shall be segregated from other funds of Assignors and shall be
forthwith paid over to Lender as Pledged Collateral in the same form as
so received (with any necessary indorsement).
Section 5.02 Remedies upon Default. If any Event of Default shall have
occurred and be continuing, subject to the grant of any required FCC consents:
(a) Lender may exercise in respect of the Pledged Collateral,
in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured
party on default under the Uniform Commercial Code (the "UCC") in
effect in the State of Florida at that time, and Lender may also,
without notice except as specified below, but subject to the provisions
of Article VI of the Partnership Agreement, sell the Pledged Collateral
or any part thereof in one or more parcels at public or private sale,
at any exchange, broker's board or at any of Lender's offices or
elsewhere, for cash, on credit or for future delivery, and at such
price or prices and upon such other terms as Lender may deem
commercially reasonable. Assignors agree that, to the extent notice of
sale shall be required by law and that the provisions of Article VI of
the Partnership Agreement are waived, then at least 10 days' prior
notice to Assignors of the time and place of any public sale or the
time after which any private sale is to be made shall constitute
reasonable notification. Lender shall not be obligated to make any sale
of Pledged Collateral regardless of notice of sale having been given.
Lender may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was
so adjourned.
(b) Any cash held by Lender as Pledged Collateral and all cash
proceeds received by Lender in respect of any sale or collection from
or other realization upon all or any part of the Pledged Collateral
may, in the discretion of Lender, be held by Lender as collateral for,
and/or then or at any time thereafter applied (after payment of any
amounts payable to Lender pursuant to Section 6.02) in whole or in part
by Lender against, all or any part of the Obligations in such order as
Lender shall elect. Any surplus of such cash or cash proceeds held by
Lender and remaining after payment in full of all the Obligations shall
be paid over to
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Assignors or to whomsoever may be lawfully entitled to receive such
surplus.
(c) Assignors and Borrower agree to execute any application
and all related documents as Lender may reasonably request to obtain
authorization for the assignment of any licenses, or transfer of
control of the Borrower pursuant to the rules and regulations of the
FCC upon the occurrence of an Event of Default.
ARTICLE 6 MISCELLANEOUS.
Section 6.01 Amendments. Etc. No amendment or waiver of any provision
of this Agreement nor consent to any departure by Assignors herefrom, shall in
any event be effective unless the same shall be in writing and signed by Lender,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
Section 6.02 Expenses Indemnification Etc. Assignors shall indemnify
Lender for all reasonable costs, expenses, and charges (including without
limitation, reasonable fees and charges of legal counsel for Lender) incurred by
Lender in connection with the enforcement of this Agreement, including without
limitation, any expenses incurred in connection with assembling, collecting,
maintaining, preserving or protecting the Pledged Collateral. Subject to the
limitations set forth in Section 7.3(b) of the Loan Agreement, Assignors and
Borrower agree to indemnify Lender from and against any and all claims, losses
and liabilities growing out of or resulting from this Agreement (including,
without limitation, enforcement of this Agreement), except claims, losses or
liabilities resulting from Lender's gross negligence or willful misconduct. The
obligations of Assignors and Borrower under this Section shall survive the
termination of this Agreement.
Section 6.03 Notices. Unless the party to be notified otherwise
notifies the other party in writing, notices shall be given in accordance with
the provisions of the Loan Agreement. All notices to an individual Assignor
shall be sent in accordance with the notice provisions in the Loan Agreement for
Borrower.
Section 6.04 Transfer of Loan Documents. This Agreement shall (a) be
binding upon Assignors, their successors and permitted assigns, and (b) inure,
together with the rights and remedies of Lender hereunder, to the benefit of
Lender and its successors, transferees and assigns. Without limiting the
generality of the foregoing clause (b), Lender may assign or otherwise transfer
the Loan Documents, or grant participations therein held by any other person or
entity, and such other person or entity shall thereupon become vested with all
the benefits in respect thereof granted to Lender herein or otherwise. Assignors
shall have no right whatsoever to assign or otherwise transfer the Loan
Documents.
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Section 6.05 GOVERNING LAW JURISDICTION; TERMS. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA,
EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE LIEN HEREUNDER, OR
REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR PLEDGED COLLATERAL ARE GOVERNED
BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF FLORIDA. UNLESS OTHERWISE
DEFINED HEREIN OR IN THE LOAN AGREEMENT, TERMS DEFINED IN ARTICLE 9 OF THE
UNIFORM COMMERCIAL CODE IN THE STATE OF FLORIDA ARE USED HEREIN AS THEREIN
DEFINED.
Section 6.06 No Partnership Relationship. Notwithstanding anything to
the contrary, until such time, if any, as Lender shall exercise its rights and
remedies under Article 5 hereof, nothing contained herein or elsewhere shall (a)
be construed as creating any partnership or joint venture or other like
arrangement or relationship between Lender on the one hand and Assignors on the
other hand, and (b) Lender shall have no obligations or duties whatsoever under
the Partnership Agreement or as a general partner of Borrower by virtue of the
execution and delivery of this Agreement.
Section 6.07 Partnership Agreement. For so long as this Agreement shall
remain in effect, Assignors agree that they shall not amend, waive or modify, or
cause to be amended, waived or modified, any term, condition or provision of the
Partnership Agreement without the consent of Lender, which consent shall not be
unreasonably withheld or delayed.
Section 6.08 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original and all of which
taken together shall constitute a single agreement.
IN WITNESS WHEREOF, Each Assignor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
INTERMART BROADCASTING OF
PALM BEACH, INC.
By: /s/ Patricia S. Dahlin
Name: Patricia S. Dahlin
Title: Vice President
JUPITER RADIO BROADCASTING, INC.
By: /s/ Michael M. Tuchman
Name: Michael M. Tuchman
Title: President
SUN OVER JUPITER BROADCASTING, INC.
By: /s/ George Edward Pine
Name: George Edward Pine
Title: President
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Schedule 2.01
Jupiter Radio Partners
State of Percentage
Name of Partner Incorporation Interest
- --------------- ------------- ----------
1. Jupiter Radio
Broadcasting, Inc. Florida 33.3333%
2. Sun Over Jupiter
Broadcasting, Inc. Delaware 33.3333%
3. *InterMart Broadcasting
of Palm Beach, Inc. Florida 33.3333%
* Serves as the Managing General Partner of the Partnership.
11
ASSET PURCHASE AGREEMENT
(KMJI-AM, Sacramento, California)
This AGREEMENT (the "Agreement") is dated as of December 12, 1996 by
and between RADIO SYSTEMS OF PHILADELPHIA, INC. ("Seller") and VISTA
BROADCASTING, INC. ("Buyer").
RECITALS:
1. Seller owns and operates radio station KMJI(AM) licensed to
Sacramento, California (the "Station"), and holds the licenses and
authorizations issued by the FCC for the operation of the Station.
2. Buyer desires to acquire certain assets of the Station, and Seller
is willing to convey such assets to Buyer.
3. The acquisition of the Station is subject to prior approval of the
FCC.
NOW THEREFORE, in consideration of the mutual covenants contained
herein, Seller and Buyer hereby agree as follows:
ARTICLE 1
TERMINOLOGY
1.1 Act. The Communications Act of 1934, as amended.
1.2 Adjustment Amount. As provided in Section 2.7(b), the amount by
which Buyer's account is to be credited or charged, as reflected on the
Adjustment List.
1.3 Adjustment List. As provided in Section 2.7 (b), an itemized list
of all sums to be credited or charged against the account of Buyer, with a brief
explanation in reasonable detail of the credits or charges.
1.4 Assumed Obligations. Such term shall have the meaning defined in
Section 2.3.
1.5 Business Day. Any calendar day, excluding Saturdays and Sundays, on
which federally chartered banks in the city of Camarillo, California, are
regularly open for business.
1.6 Buyer's Threshold Limitation. As provided in Section 9.3 (b), the
threshold dollar amount for the aggregate of claims, liabilities, damages,
losses, costs and
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expenses that must be incurred by Buyer before Seller shall be obligated to
indemnify Buyer. The Buyer's Threshold Limitation shall be Ten Thousand Dollars
($10,000).
1.7 Closing. The closing with respect to the transactions contemplated
by this Agreement.
1.8 Closing Date. The date determined as the Closing Date as provided
in Section 8.1.
1.9 Documents. This Agreement and all Exhibits and Schedules hereto,
and each other agreement, certificate, or instrument delivered pursuant to or in
connection with this Agreement, including amendments thereto that are expressly
permitted under the terms of this Agreement.
1.10 Earnest Money. The amount of Seventy Five Thousand Dollars
($75,000).
1.11 Environmental Assessment. Such term shall have the meaning defined
in Section 5.10.
1.12 Environmental Laws. The Comprehensive Environmental Response
Compensation and Liability Act, the Resource Conservation and Recovery Act, the
Clean Water Act, the Clean Air Act and the Toxic Substances Control Act, each as
amended, and any other applicable federal, state and local laws, statutes, rules
or regulations concerning the treating, producing, handling, storing, releasing,
spilling, leaking, pumping, pouring, emitting or dumping of Hazardous Materials.
1.13 Escrow Agent. Gary Stevens & Co., Incorporated.
1.14 Escrow Agreement. The Escrow Agreement in the form attached as
Exhibit A which Seller, Buyer and the Escrow Agent have entered into
concurrently with the execution of this Agreement relating to the deposit,
holding, investment and disbursement of the Earnest Money.
1.15 Excluded Assets. Such term shall have the meaning defined in
Section 2.2.
1.16 FCC. Federal Communications Commission.
1.17 FCC Licenses. The licenses, permits and authorizations of the FCC
for the operation of the Station as listed on Schedule 3.8.
1.18 FCC Order. An action, order or decision of the FCC granting its
consent to the assignment of the FCC Licenses to Buyer.
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1.19 Final Action. An action of the FCC that has not been reversed,
stayed, enjoined, set aside, annulled or suspended; with respect to which no
timely petition for reconsideration or administrative or judicial appeal or sua
sponte action of the FCC with comparable effect is pending and as to which the
time for filing any such petition or appeal (administrative or judicial) or for
the taking of any such sua sponte action of the FCC has expired.
1.20 Hazardous Materials. Toxic materials, hazardous wastes, hazardous
substances, pollutants or contaminants, asbestos or asbestos-related products,
polychlorinated biphenyls ("PCBs"), petroleum, crude oil or any fraction or
distillate thereof (as such terms are defined in any applicable federal, state
or local laws, ordinances, rules and regulations, and including any other terms
which are or may be used in any applicable environmental laws to define
prohibited or regulated substances).
1.21 Indemnified Party. Any party described in Section 9.3(a) or 9.4(a)
against which any claim or liability may be asserted by a third party which
would give rise to a claim for indemnification under the provisions of this
Agreement by such party.
1.22 Indemnifying Party. The party to the Agreement (not the
Indemnified Party) that, in the event of a claim or liability asserted by a
third party against the Indemnified Party which would give rise to a claim for
indemnification under the provisions of this Agreement, may at its own expense,
and upon written notice to the Indemnified Party, compromise or defend such
claim.
1.23 Lien. Any mortgage, deed of trust, pledge, hypothecation, security
interest, encumbrance, lien, lease or charge of any kind, whether voluntarily
incurred or arising by operation of law or otherwise, affecting any assets or
property, including any written or oral agreement to give or grant any of the
foregoing, any conditional sale or other title retention agreement, and the
filing of or agreement to give any financing statement with respect to any
assets or property under the Uniform Commercial Code or comparable law of any
jurisdiction.
1.24 Material Adverse Condition. A condition which would materially
restrict, limit, increase the cost or burden of or otherwise adversely affect or
materially impair the right of Buyer to the ownership, use, control, enjoyment
or operation of the Station or the proceeds therefrom; provided, however, that
any condition which requires that the Station be operated in accordance with a
condition similar to those contained in the present FCC licenses issued for
operation of the Station shall not be deemed a Material Adverse Condition.
1.25 OSHA Laws. The Occupational Safety and Health Act of 1970, as
amended, and all other federal, state or local laws or ordinances, including
orders, rules
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and regulations thereunder, regulating or otherwise affecting health and safety
of the workplace.
1.26 Permitted Encumbrances. For purposes hereof, "Permitted
Encumbrances" shall mean (i) easements, restrictions, and other similar matters
which will not adversely affect the use of the Real Property in the ordinary
course of business; (ii) liens for taxes not due and payable or, that are being
contested in good faith by appropriate proceedings; (iii) mechanics,
materialmen's, carriers', warehousemen's, landlords' or other similar liens in
the ordinary course of business for sums not yet due or being contested in good
faith by appropriate proceedings; (iv) deposits or pledges to secure the
performance of bids, tenders, contracts (other than for borrowed money), leases,
statutory obligations, surety or appeal bonds or other deposits or pledges for
purposes of a like general nature made or given in the ordinary course of
business: and (v) liens or mortgages that will be released at Closing; (vi)
zoning ordinances and regulations, including statutes and ordinances relating to
the liens of streets and to other municipal improvements, which will not
adversely affect the use of the Real Property in the ordinary course of
business.
1.27 Permitted Lien. Any statutory lien which secures a payment not yet
due that arises, and is customarily discharged, in the ordinary course of
Seller's business; any easement, right-of-way or similar imperfection in the
Seller's title to its assets or properties that, individually and in the
aggregate, are not material in character or amount and do not and are not
reasonably expected to materially impair the value or materially interfere with
the use of any asset or property of the Seller material to the operation of its
business as it has been and is now conducted.
1.28 Purchase Price. The consideration to be paid by Buyer to Seller
for purchase of the Sale Assets in an amount equal to One Million Five Hundred
Thousand Dollars ($1,500,000).
1.29 Real Property. Such term shall have the meaning defined in Section
3.7.
1.30 Rules and Regulations. The rules of the FCC as set forth in Volume
47 of the Code of Federal Regulations, as well as such other policies of the
Commission, whether contained in the Code of Federal Regulations, or not, that
apply to the Station.
1.31 Sale Assets. All of the tangible and intangible assets to be
transferred by Seller to Buyer as set forth in Section 2.1.
1.32 Station Agreements. The agreements, commitments, contracts, leases
and other items described in Section 2.1(d) which relate to operation of the
Station.
1.33 Seller's Threshold Limitation. As provided in Section 9.4(b), the
threshold dollar amount for the aggregate of claims, liabilities, damages,
losses, costs and
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expenses that must be incurred by Seller before Buyer shall be obligated to
indemnify Seller. The Seller's Threshold Limitation shall be Ten Thousand
Dollars ($10,000).
1.34 Survival Period. The term following the Closing Date during which
all representations, warranties, covenants and agreements of the parties under
this Agreement shall survive. The term shall be twelve (12) months.
1.35 Tangible Personal Property. The personal property described in
Section 2.1(a).
ARTICLE II
PURCHASE AND SALE
2.1 Sale Assets. On the Closing Date, Seller will sell, transfer,
assign and convey to Buyer, and Buyer will purchase from Seller, free and clear
of all Liens, except Permitted Liens, all of Seller's right, title and interest,
legal and equitable, in and to the tangible and intangible assets (except
Excluded Assets) used in the operation of the Station as specifically set forth
in the following:
(a) Tangible Personal Property. The tangible personal property
listed on Schedules 3.6, together with such modifications, replacements,
improvements and additional items, and subject to such deletions therefrom, made
or acquired between the date hereof and the Closing Date in accordance with the
terms and provisions of this Agreement;
(b) Real Property. Except as provided on Schedule 3.7,
Seller's interests in the Real Property including, without limitation, all
right, title and interest of Seller in and to the Station's transmitting
facilities;
(c) Licenses and Permits. The FCC Licenses and all other
assignable or transferable governmental permits, licenses and authorizations
(and any renewals, extensions, amendments or modifications thereof) now held by
Seller or hereafter obtained by Seller between the date hereof and the Closing
Date, to the extent such other permits, licenses and authorizations pertain to
or are used in the operation of the Station;
(d) Station Agreements. All agreements which are listed on
Schedule 3.9 as agreements which Buyer is electing to assume; any renewals,
extensions, amendments or modifications of those agreements being assumed which
are made in the ordinary course of Seller's operation of the Station and in
accordance with the terms and provisions of this Agreement;
(e) Records. True and complete copies of all of the books,
records, accounts, files, logs, ledgers, reports of engineers and other
consultants or independent
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contractors, pertaining to or used in the operation of the Station (other than
corporate records);
2.2 Excluded Assets. Notwithstanding any provision of this Agreement to
the contrary, Seller shall not transfer, convey or assign to Buyer, but shall
retain all of its right, title and interest in and to, the following assets
owned or held by it on the Closing Date ("Excluded Assets"):
(a) Any and all cash, cash equivalents, cash deposits to
secure contract obligations (except to the extent Seller receives a credit
therefor under Section 2.7, in which event the deposit shall be included as part
of the Sale Assets), all inter-company receivables from any affiliate of Seller
and all other accounts receivable, bank deposits and securities held by Seller
in respect of the Station at the Closing Date.
(b) Any and all claims of Seller with respect to transactions
prior to the Closing including, without limitation, claims for tax refunds and
refunds of fees paid to the FCC.
(c) All prepaid expenses (except to the extent Seller receives
a credit therefor under Section 2.7, in which event the prepaid expense shall be
included as part of the Sale Assets).
(d) All contracts of insurance and claims against insurers.
(e) All employee benefit plans and the assets thereof and all
employment contracts.
(f) All contracts that are terminated in accordance with the
terms and provisions of this Agreement or have expired prior to the Closing Date
in the ordinary course of business; and all loans and loan agreements.
(g) All tangible personal property disposed of or consumed
between the date hereof and the Closing Date in accordance with the terms and
provisions of this Agreement; all tangible personal property not specifically
assumed by Buyer pursuant to Section 2.1(a) above.
(h) Seller's corporate records except to the extent such
records pertain to or are used in the operation of the Station, in which case
Seller shall deliver accurate copies thereof to Buyer.
(i) All commitments, contracts and agreements not specifically
assumed by Buyer pursuant to Section 2.1(d), above.
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(j) All real property not specifically assumed by Buyer
pursuant to Station 2.1(b) above.
2.3 Assumption of Liabilities.
(a) At the Closing, Buyer shall assume and agree to perform,
without duplication of Seller's performance, the following liabilities and
obligations of Seller (the "Assumed Obligations"):
(i) Current liabilities of Seller for which Buyer
receives a credit pursuant to Section 2.7, but not in excess of the amount of
such credit.
(ii) Liabilities and obligations arising under the
Station Agreements, if any, assumed by and transferred to Buyer in accordance
with this Agreement, but only to the extent such liabilities and obligations
relate to any period of time after the Closing Date.
(b) Except for the Assumed Obligations, Buyer shall not assume
or in any manner be liable for any duties, responsibilities, obligations or
liabilities of Seller of any kind or nature, whether express or implied, known
or unknown, contingent or absolute, including, without limitation, any
liabilities to or in connection with Seller's employees whether arising in
connection with the transaction contemplated hereunder or otherwise.
2.4 Earnest Money.
(a) Concurrently with the execution of this Agreement, Buyer
has deposited with Escrow Agent under the Escrow Agreement, in immediately
available funds, the Earnest Money. The Escrow Agent shall hold the Earnest
Money under the terms of the Escrow Agreement in trust for the benefit of the
parties hereto. Interest and other earnings on the Earnest Money shall be
distributed by the Escrow Agent to Buyer from time to time upon the request of
Buyer.
(b) If Closing does not occur, the Earnest Money shall be
delivered to Seller or returned to Buyer in accordance with Section 10.2, and if
Closing does occur, the Earnest Money shall be applied to payment of the
Purchase Price at Closing as provided in Section 2.5.
2.5 Payments.
(a) The Purchase Price shall be paid by Buyer as follows:
(i) At the Closing, the Earnest Money shall, subject
to execution and delivery of the closing documents described in Section 8.2,
become the
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property of Seller and shall, pursuant to the Escrow Agreement, be disbursed to
Seller by cashier's check or wire transfer of immediately available funds.
(ii) At the Closing the Purchase Price, less the
amount of the Earnest Money disbursed to Seller, shall be paid to Seller at
Closing by wire transfer of immediately available funds.
(b) Buyer shall pay to Seller, or Seller shall pay to Buyer,
the Adjustment Amount in accordance with Section 2.7.
2.6 Allocation of the Purchase Price. Prior to Closing, Buyer and
Seller shall agree to an allocation of the Purchase Price. Buyer and Seller
shall use such allocation for all reporting purposes in connection with federal,
state and local income and, to the extent permitted under applicable law,
franchise taxes. Buyer and Seller agree to report such allocation to the
Internal Revenue Service in the form required by Treasury Regulation ss.
1.1060-1T. Seller and Buyer acknowledge that the allocation will be the result
of arms length bargaining regarding the fair value of the Sale Assets; not
materially different in result from the results of an independent appraisal
undertaken by Seller at its expense.
2.7 Adjustment of Purchase Price.
(a) All operating income and operating expenses of the Station
shall be adjusted and allocated between Seller and Buyer, and an adjustment in
the Purchase Price shall be made as provided in this Section, to the extent
necessary to reflect the principle that all such income and expenses
attributable to the operation of the Station on or before the Closing Date shall
be for the account of Seller, and all income and expenses attributable to the
operation of the Station after the closing Date shall be for the account of
Buyer.
(b) To the extent not inconsistent with the express provisions
of this Agreement, the allocations made pursuant to this Section 2.7 shall be
made in accordance with generally accepted accounting principles.
(c) For purposes of making the adjustments pursuant to this
Section, Buyer shall prepare and deliver the Adjustment List to Seller within
thirty (30) days following the Closing Date, or such earlier or later date as
shall be mutually agreed to by Seller and Buyer. The Adjustment List shall set
forth the Adjustment Amount. If the Adjustment Amount is a credit to the account
of Buyer, Seller shall pay such amount to Buyer, and if the Adjustment Amount is
a charge to the account of Buyer, Buyer shall pay such amount to Seller. In the
event Seller disagrees with the Adjustment Amount determined by Buyer or with
any other matter arising out of this subsection, and Buyer
and Seller cannot within sixty (60) days resolve the disagreement themselves,
the parties will refer the disagreement to a firm of independent certified
public accountants,
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mutually acceptable to Seller and Buyer, whose decision shall be final and whose
fees and expenses shall be allocated between and paid by Seller and Buyer,
respectively, to the extent that such party does not prevail on the disputed
matters decided by the accountants.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
3.1 Organization and Good Standing. Seller is a corporation, validly
existing and in good standing under the laws of the State of Pennsylvania, and
is qualified to do business and in good standing under the laws of the State of
California and all other jurisdictions where the failure to be qualified to do
business and in good standing would have a material adverse effect on the
Station. Seller has all requisite power to own, operate and lease its properties
and carry on its business as it is now being conducted and as the same will be
conducted until the Closing.
3.2 Authorization and Binding Effect of Documents. The execution and
delivery of, and the performance of its obligations under, this Agreement and
each of the other Documents by Seller, and the consummation by Seller of the
transactions contemplated hereby and thereby, have been duly authorized and
approved by all necessary corporate action on the part of Seller. Seller has the
power and authority to execute, deliver and perform its obligations under this
Agreement and each of the other Documents and to consummate the transactions
hereby and thereby contemplated. This Agreement and each of the other Documents
have been, or at or prior to the Closing will be, duly executed by Seller. This
Agreement constitutes (and each of the other Documents, when so executed and
delivered, will constitute) legal and valid obligations of Seller enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting the
enforcement of creditors' rights or remedies generally, and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
3.3 Absence of Conflicts. The execution and delivery of, and the
performance of its obligations under, this Agreement and each of the other
Documents by Seller, and the consummation by Seller of the transactions
contemplated hereby and thereby:
(a) do not in any material respect (with or without the giving
of notice or the passage of time or both) violate (or result in the creation of
any Lien other than a Permitted Lien on any of the Sale Assets under), any
provision of law, rule or regulation or any order, judgment, injunction, decree
or ruling applicable to Seller;
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(b) do not (with or without the giving of notice or the
passage of time or both) conflict with or result in a breach or termination of,
or constitute a default or give rise to a right of termination or acceleration
under the Articles of Incorporation or Bylaws of Seller or pursuant to any
lease, agreement, commitment or other instrument which Seller is a party to, or
bound by, or by which any of the Sale Assets may be bound, or result in the
creation of any Lien, other than a Permitted Lien, upon any of the Sale Assets.
3.4 Governmental Consents and Consents of Third Parties. Except as set
forth on Schedule 3.4, Schedule 3.8 and Schedule 3.9, and to Seller's actual
knowledge, the execution and delivery of, and the performance of its obligations
under, this Agreement and each of the other Documents by Seller, and the
consummation by Seller of the transactions contemplated hereby and thereby, do
not require the consent, waiver, approval, permit, license, clearance or
authorization of, or any declaration of filing with, any court or public agency
or other authority, or the consent of any person under any agreement,
arrangement or commitment of a nature to which Seller is a party or by which
it is bound or by which the Sale Assets are bound or to which they are subject
to, the failure of which to obtain would have a material adverse effect on the
Sale Assets or the operation of the Station.
3.5 Intentionally Omitted
3.6 Tangible Personal Property. Except as set forth on Schedule 3.6:
(a) Seller has good, marketable and valid title to all of the
items of Tangible Personal Property free and clear of all Liens except Permitted
Liens, and including the right to transfer same.
(b) The Tangible Personal Property has been maintained in
accordance with industry practices and is in good operating condition subject to
ordinary wear and tear.
(c) The Tangible Personal Property complies with applicable
rules and regulations of the FCC and the terms of the FCC Licenses.
(d) Seller has no knowledge of any defect in the condition or
operation of any item of the Tangible Personal Property which is reasonably
likely to have a material adverse effect on the operation of the Station.
3.7 Real Property.
(a) The real property described on Schedule 3.7 constitutes a
complete and correct summary description in all material respects of all of the
interests in real
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estate (other than any real property leased by Seller pursuant to a lease
described in Schedule 3.9) used to any extent in the operation of the Station in
the manner in which it has been and is now operated. Said real property,
together with all improvements affixed thereto, is herein defined as the "Real
Property."
(b) Seller does not owe any money to any architect,
contractor, subcontractor or materialman for labor or materials performed,
rendered or supplied to or in connection with the Real Property within the past
four (4) months which shall not be paid in full on or before Closing. Except as
set forth on Schedule 3.7, there is no work being done at or materials being
supplied to the Real Property at the date hereof other than routine maintenance
projects having an aggregate cost through completion thereof of no more than Ten
Thousand Dollars ($10,000).
(c) To the best of Seller's knowledge the present use of the
Real Property is in compliance with all applicable zoning codes in effect as of
the date hereof, and Seller has not received any notices of uncorrected
violations of the applicable housing, building, safety or fire ordinances. The
Real Property is served by electricity and water in capacities adequate for the
present use of the Real Property and improvements thereon. Except as set forth
on Section 3.7, Seller has not made any other agreement for the sale or lease
of, or given any other person an option to purchase or lease or a right of first
refusal to purchase or lease, all or any part of the Real Property, and except
as set forth on Schedule 3.7, Seller has not subjected the Real Property to any
liens (other than Permitted Liens), easements, rights, duties, obligations,
convenants, conditions, restrictions, limitations or agreements not of record.
3.8 FCC Licenses. Seller is the holder of the FCC Licenses listed on
Schedule 3.8, and except as set forth on such Schedule, the FCC Licenses (i) are
valid, in good standing and in full force and effect and constitute all of the
licenses, permits and authorizations required by the Act, the Rules and
Regulations or the FCC for, or used in, the operation of the Station in all
material respects as now operated, and (ii) constitute all the current licenses
and authorizations issued by the FCC to Seller for or in connection with the
current operation of the Station. Seller has no knowledge of any condition
imposed by the FCC as part of any FCC License which is neither set forth on the
face thereof as issued by the FCC nor contained in the Rules and Regulations
applicable generally to stations of the type, nature, class or location of the
Station. Except as disclosed on Schedule 3.8, the Station is being operated at
full authorized power, in accordance with the terms and conditions of the FCC
Licenses applicable to it and in accordance with the Rules and Regulations.
Except as set forth on Schedule 3.8, no proceedings are pending or, to the
knowledge of the Seller, are threatened which may result in the revocation,
modification, non-renewal or suspension of any of the FCC Licenses, the denial
of any pending applications, the issuance of any cease and desist order or the
imposition of any fines, forfeitures or other administrative actions by the FCC
with respect to the Station or its operation, other than proceedings affecting
the radio broadcasting industry in general. Seller has complied in all material
respects with
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all requirements to file reports, applications and other documents with the FCC
with respect to the Station, and all such reports, applications and documents
are complete and correct in all material respects. Seller has no knowledge of
any matters (i) which could reasonably be expected to result in the suspension
or revocation of or the refusal to renew any of the FCC Licenses or the
imposition of any fines or forfeitures by the FCC, or (ii) against Seller which
could reasonably be expected to result in the FCC's refusal to grant approval of
the assignment to Buyer of the FCC Licenses or the imposition of any Material
Adverse Condition in connection with approval of such assignment. There are not
any unsatisfied or otherwise outstanding citations issued by the FCC with
respect to the Station or its operation. Complete and accurate copies of all FCC
Licenses are attached as a part of Schedule 3.8. The "Public Inspection File" of
the Station is complete and in substantial and material compliance with Section
73.3526 of the Rules and Regulations.
3.9 Station Agreements.
(a) Schedule 3.9 sets forth an accurate and complete list of
the station agreements. Complete and correct copies of all such agreements,
contracts, arrangements or commitments that are in writing, including all
amendments, modifications and supplements thereto, have been delivered to Buyer.
(b) Except as set forth in the Schedules, and with respect to
all Station Agreements being assumed by Buyer, (i) all Station Agreements are
legal, valid and enforceable in accordance with their terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights generally, and subject, as to enforceability, to
general principles of equity regardless of whether enforcement is sought in any
proceeding at law or in equity; (ii) neither Seller nor, to the knowledge of
Seller, any other party thereto, is in material breach of or in material default
under any Station Agreements; (iii) to the knowledge of Seller, there has not
occurred any event which, after the giving of notice or the lapse of time or
both, would constitute a material default under, or result in the material
breach of, any Station Agreements which are, individually or in the aggregate,
material to the operation of the Station; and (iv) Seller holds the right to
enforce and receive the benefits under all of the Station Agreements, free and
clear of all Liens (other than Permitted Liens) but subject to the terms and
provision of each such agreement.
(c) Schedule 3.9 indicates, for each Station Agreement listed
thereon which is being assumed by Buyer, whether consent or approval by any
party thereto is required thereunder for consummation of the transactions
contemplated hereby.
3.10 Litigation. There are no claims, investigations or administrative,
arbitration or other proceedings pending or, to the actual knowledge of Seller,
threatened against Seller which would, individually or in the aggregate if
adversely determined, have a material adverse effect on the Sale Assets or the
operation of the Station, or which
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would give any third party the right to enjoin the transactions contemplated by
this Agreement. To the actual knowledge of Seller, there is no basis for any
such claim, investigation, action, suit or proceeding which would, individually
or in the aggregate if adversely determined, have a material adverse effect on
the Sale Assets or operation of the Station. There are no existing or, to the
actual knowledge of Seller, pending orders, judgments or decrees of any court or
governmental agency affecting Seller, the Station or any of the Sale Assets.
3.11 Labor Matters.
(a) Seller is not a party to any collective bargaining
agreement, and there is no collective bargaining agreement that determines the
terms and conditions of employment of any employees of Seller.
(b) Except as disclosed on Schedule 3.11:
(i) There is no labor strike, dispute, slow-down or
stoppage pending or, to the knowledge of Seller, threatened against the Station;
(ii) There are neither pending nor, to the actual
knowledge of Seller threatened, any suits, actions, administrative proceedings,
union organizing activities, arbitrations, grievances or other proceedings
between Seller and any employees of the Station or any union representing such
employees; and there are no existing labor or employment or other controversies
or grievances involving employees of the Station which have had or are
reasonably likely to have a material adverse effect on the operation of the
Station;
(iii) With respect to the Station, (A) Seller is in
compliance in all material respects with all laws, rules and regulations
relating to the employment of labor and all employment contractual obligations,
including those relating to wages, hours, collective bargaining, affirmative
action, discrimination, sexual harassment, wrongful discharge and the
withholding and payment of taxes and contributions except for such
non-compliance which individually or in the aggregate would not have a material
adverse effect on the business or financial condition of the Station; (B) Seller
has withheld all amounts required by law or agreement to be withheld from the
wages or salaries of its employees; and (C) Seller is not liable to any present
or former employees or any governmental authority for damages, arrears of wages
or any tax or penalty for failure to comply with the foregoing except for such
liability which individually or in the aggregate would not have a material
adverse effect on the business or financial condition of the Station;
(iv) Buyer's consummation of the transactions
contemplated by this Agreement in accordance with the terms hereof shall not, as
a result of or in connection with the transactions contemplated hereby, impose
upon Buyer the obligation
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to pay any severance or termination pay under any agreement, plan or arrangement
binding upon Seller.
3.12 Employee Benefit Plans. Buyer's consummation of the transactions
contemplated by this Agreement in accordance with the terms hereof shall not, as
a result of or in connection with the transactions contemplated hereby, impose
upon Buyer any obligation under any benefit plan, contract or arrangement
(regardless of whether they are written or unwritten and funded or unfunded)
covering employees or former employees of Seller in connection with their
employment by Seller. For purposes of the Agreement, "benefit plans" shall
include without limitation employee benefit plans within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended,
vacation benefits, employment and severance contracts, stock option plans, bonus
programs and plans of deferred compensation.
3.13 Compliance with Law. Except as set forth on Schedule 3.13, the
operation of the Station complies in all material respects with the applicable
rules and regulations of the FCC and all federal, state, local or other laws,
statutes, ordinances, regulations, and any applicable order, writ, injunction or
decree of any court, commission, board, agency or other instrumentality.
3.14 Environmental Matters; OSHA.
(a) Except as set forth on Schedule 3.14, Seller has obtained
all material, environmental, health and safety permits necessary or required for
either the operation of the Station as currently operated or the ownership of
the Real Property and all such permits are in full force and effect and Seller
is in compliance with all material terms and conditions of such permits.
(b) There is no proceeding pending or, to Seller's actual
knowledge, threatened which may result in the reversal, rescission, termination,
modification or suspension of any environmental or health or safety permits
necessary for the operation of the Station as currently conducted or the
ownership of the Real Property.
(c) With respect to the Station and the lease of the Real
Property, Seller is in compliance in all material respects with the provisions
of Environmental Laws.
(d) During Seller's occupancy of the Real Property, Seller has
not, and to Seller's actual knowledge, no other person or entity has caused or
permitted materials to be generated, released, stored, treated, recycled,
disposed of on, under or at such parcels, which materials, if known to be
present, would require clean up, removal or other remedial or responsive action
under Environmental Laws (other than normal office, cleaning and maintenance
supplies in reasonable quantities used and /or stored appropriately in the
buildings or improvements on the Real Property). Seller has not caused the
migration of any materials from the Real Property onto or under any property
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adjacent to the Real Property which materials, if known to be present, would
require cleanup, removal or other remedial or responsive action under
Environmental Laws. There are no underground storage tanks and no PCBs or
friable asbestos on such property.
(e) Except as set forth on Schedule 3.14, Seller is not
subject to any judgment, decree, order or citation with respect to the Station
or the Real Property related to or arising out of Environmental Laws, and Seller
has not received notice that it has been named or listed as a potentially
responsible party by any person or governmental body or agency in any matter
arising under Environmental Laws.
(f) Seller has not discharged or disposed of any petroleum
product or solid waste on the Real Property or on the property adjacent to the
Real Property owned by third parties, which, to the best of Seller's knowledge,
may form the basis for any present or future claim based upon the Environmental
Laws in existence on the date hereof or as of the Closing, or any demand or
action seeking clean-up of any site, location, body of water, surface or
subsurface, under any Environmental Laws or otherwise, or which may subject the
owner of the Real Property to claims by third parties (except to the extent
third party liability can be established) for damages.
(g) No portion of the Real Property has ever been used by
Seller, nor, to the best of Seller's knowledge, by any previous occupant of the
Real Property, in material violation of Environmental Laws or as a landfill,
dump site or any other use which involves the disposal or storage of Hazardous
Materials on-site or in any manner which may materially adversely affect the
value of the Real Property.
(h) No pesticides, herbicides, fertilizers or other materials
have been used on, applied to or disposed of by Seller on the Real Property in
material violation of any Environmental Laws (other than normal office, cleaning
and maintenance supplies in reasonable quantities used and/or stored
appropriately in the buildings or improvements on the Real Property).
(i) With respect to the Station or the Real Property, Seller
has disposed of all waste in full compliance with all Environmental Laws and, to
the best of Seller's knowledge, there is no existing condition that may form the
basis of any present or future claim, demand or action seeking clean up of any
facility, site, location or body of water, surface or subsurface, for which the
Buyer could be liable or responsible solely as a result of the disposal of waste
at such site by a prior owner of the Real Property.
(j) Seller is in material compliance with all OSHA Laws
applicable to the Real Property and the operations of the Station.
3.15 Tower Coordinates. The current vertical elevation and geographical
coordinates of the Station's towers ("the Tower Coordinates") are as set forth
on
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Schedule 3.15 hereto. Seller further represents and warrants that (i) the Tower
Coordinates are accurate within one (1) foot vertically and one (1) second
geographically; and (ii) the Tower Coordinates comply with and correspond to the
current vertical elevation an geographical coordinates authorized by the FAA,
FCC and any other governmental authority, including any federal, state or local
authority having jurisdiction over the Station or said towers.
3.16 Filing of Tax Returns. Seller has filed all Federal, State and
local tax returns which are required to be filed, and has paid all taxes and all
assessments to the extent that such taxes and assessments have become due, other
than such returns, taxes and assessments, the failure to file or pay would not,
individually or in the aggregate, have a material adverse effect on Buyer.
3.17 Absence of Insolvency. No insolvency proceedings of any character
including without limitation, bankruptcy, receivership, reorganization,
composition or arrangement with creditors, voluntary or involuntary, affecting
the Seller or any of the Sale Assets, are pending or, to the best knowledge of
Seller, threatened, and Seller has made no assignment for the benefit of
creditors, nor taken any action with a view to, or which would constitute the
basis for the institution of, any such insolvency proceedings.
3.18 Broker's or Finder's Fees. Except as set forth in Schedule 3.18,
no agent, broker, investment banker or other person or firm acting on behalf of
or under the authority of Seller or any affiliate of Seller is or will be
entitled to any broker's or finder's fee or any other commission or similar fee,
directly or indirectly, in connection with the transactions contemplated by this
Agreement.
3.19 Insurance. There is now in full force and effect with reputable
insurance companies fire and extended coverage insurance with respect to all
material tangible Sale Assets and public liability insurance, all in
commercially reasonable amounts.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization and Good Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California. Buyer has all requisite corporate power to own, operate and lease
its properties and carry on its business as it is now being conducted and as the
same will be conducted following the Closing.
4.2 Authorization and Binding Effect of Documents. Buyer's execution
and delivery of, and the performance of its obligations under, this Agreement
and each of
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the other Documents, and the consummation by Buyer of the transactions
contemplated hereby and thereby, have been duly authorized and approved by all
necessary corporate action on the part of Buyer. This Agreement and each of the
other Documents to be executed by Buyer have been, or at or prior to the Closing
will be, duly executed by Buyer. The Documents, when executed and delivered by
the parties hereto, will constitute the valid and legally binding agreement of
Buyer, enforceable against Buyer in accordance with their terms, except as may
be limited by bankruptcy, insolvency, or other similar laws affecting the
enforcement of creditors' rights generally, and except as may be limited by
general principles of equity (regardless of whether such enforceability is
sought in a proceeding in equity or at law).
4.3 Absence of Conflicts. Buyer's execution and delivery of, and the
performance of its obligations under, this Agreement and each of the other
Documents and the consummation by Buyer of the transaction contemplated hereby
and thereby:
(a) Do not in any material respect (with or without the giving
of notice or the passage of time or both) violate (or result in the creation of
any claim, lien, charge or
encumbrance on any of the assets or properties of Buyer under) any provision of
law, rule or regulation or any order, judgment, injunction, decree or ruling
applicable to Buyer in any manner which would have a material adverse effect on
the assets, business, operation or financial condition or results of operations
of Buyer;
(b) Do not (with or without the giving of notice or the
passage of time or both) conflict with or result in a breach or termination of,
or constitute a default or give rise to a right of termination or acceleration
under, the articles of incorporation or bylaws of Buyer or any lease, agreement,
commitment, or other instrument which Buyer is a party to, bound by, or by which
any of its assets or properties may be bound.
4.4 Governmental Consents and Consents of Third Parties. Except for the
required consent of the FCC, Buyer's execution and delivery of, and the
performance of its obligations under, this Agreement and each of the other
Documents and the consummation by Buyer of the transaction contemplated hereby
and thereby, do not require the consent, waiver, approval, permit, license,
clearance or authorization of, or any declaration or filing with, any court or
public agency or other authority, or the consent of any person under any
agreement, arrangement or commitment of any nature to which Buyer is a party or
by which it is bound, the failure of which to obtain would have a material
adverse effect on the assets, business, operation or financial condition or
results of operations of Buyer.
4.5 Qualification.
(a) Buyer has no knowledge after due inquiry of any facts
concerning Buyer or any other person with an attributable interest in Buyer (as
such term is defined under the Rules and Regulations) which, under present law
(including the Act) and the
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Rules and Regulations, would (i) disqualify Buyer from being the holder of the
FCC Licenses, the owner of the Sale Assets or the operator of the Station upon
consummation of the transactions contemplated by this Agreement, or (ii) raise a
substantial and material question of fact (within the meaning of Section 309(e)
of the Act) respecting Buyer's qualifications.
(b) Without limiting the foregoing Subsection (a), Buyer shall
make the affirmative certifications provided in Section III of FCC Form 314 at
the time of filing of such form with the FCC as contemplated by Section 5.2.
4.6 Broker's or Finder's Fees. Except as set forth in Schedule 3.18, no
agent, broker, investment banker, or other person or firm acting on behalf of or
under the authority or Buyer or any affiliate of Buyer is or will be entitled to
any broker's or finder's fee or any other commission or similar fee, directly or
indirectly, in connection with transactions contemplated by this Agreement.
4.7 Litigation. There are no legal, administrative, arbitration or
other proceedings or governmental investigations pending or, to the knowledge of
Buyer, threatened against Buyer that would give any third party the right to
enjoin the transactions contemplated by this Agreement.
ARTICLE V
TRANSACTIONS PRIOR TO THE CLOSING DATE
5.1 Conduct of the Station's Business Prior to the Closing Date. Seller
covenants and agrees with Buyer that between the date hereof and the Closing
Date, unless the Buyer otherwise agrees in writing (which agreement shall not be
unreasonably withheld), Seller shall:
(a) Use reasonable commercial efforts to maintain insurance
upon all of the tangible Sale Assets in such amounts and of such kind comparable
to that in effect on the date hereof with respect to such Sale Assets and with
respect to the operation of the Station, with insurers of substantially the same
or better financial condition;
(b) Operate the Station and otherwise conduct its business in
all material respects in accordance with the terms or conditions of its FCC
Licenses, the Rules and
Regulations, the Act and all other rules and regulations, statutes, ordinances
and orders of all governmental authorities having jurisdiction over any aspect
of the operation of the Station, except where the failure to so operate the
Station would not have a material adverse effect on the Sale Assets or the
operation of the Station or on the ability of Seller to consummate the
transactions contemplated hereby;
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(c) Comply in all material respects with all Station
Agreements now or hereafter existing which are material, individually or in the
aggregate, to the operation of the Station;
(d) Promptly notify Buyer of any material default by, or claim
of default against, any party under any Station Agreements which are material,
individually or in the aggregate, to the operation of the Station, and any event
or condition which, with notice or lapse of time or both, would constitute an
event of default under such Station Agreements;
(e) Not mortgage, pledge or subject to any Lien other than a
Permitted Lien (except in the ordinary course of business) any of the Sale
Assets;
(f) Not sell, lease or otherwise dispose of, nor agree to
sell, lease or otherwise dispose of, any of the Sale Assets, except for
dispositions in the ordinary course of business;
(g) Not amend or terminate any Station Agreement, other than
in the ordinary course of business;
(h) Not introduce any material change with respect to the
operation of the Station including, without limitation, any material changes in
the broadcast hours of the Station or any other material change in the Station's
programming policies, except such changes as in the sole discretion of Seller,
exercised in good faith after consultation with Buyer, are required by the
public interest;
(i) Notify Buyer of any material litigation pending or
threatened against Station or Seller or any material damage to or destruction of
any assets included or to be included in the Sale Assets of which Seller
receives actual knowledge.
5.2 Governmental Consents. Seller and Buyer shall file with the FCC,
within five (5) business days after the execution of this Agreement, such
applications and other documents in the name of Seller or Buyer, as appropriate,
as may be necessary or advisable to obtain the FCC Order. Seller and Buyer shall
take all commercially reasonable steps necessary to prosecute such filings with
diligence and shall diligently oppose any objections to, appeals from or
petitions to reconsider such approval of the FCC, to the end that the FCC Order
and a Final Action with respect thereto may be obtained as soon as practicable;
provided, however, that in the event the application for assignment of the FCC
Licenses has been designated for hearing, either Buyer or Seller may elect to
terminate this Agreement pursuant to Section 10.1(c). Buyer shall not knowingly
take, and Seller covenants that Seller shall not knowingly take, any action that
party knows or has reason to know would materially and adversely affect or
materially delay issuance of the FCC Order or materially and adversely affect or
materially delay its becoming a Final Action without a Material Adverse
Condition, unless such action is
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requested or required by the FCC, its staff or the Rules and Regulations. Should
Buyer or Seller become aware of any facts which could reasonably be expected to
materially and adversely affect or materially delay issuance of the FCC Order
without a Material Adverse Condition (including but not limited to, in the case
of Buyer, any facts which would reasonably be expected to disqualify Buyer from
controlling the Station), such party shall promptly notify the other party
thereof in writing and both parties shall cooperate to take all steps necessary
or desirable to resolve the matter expeditiously and to obtain the FCC's
approval of matters pending before it.
5.3 Other Consents. Seller shall use its reasonable best efforts to
obtain the consent or waivers to the transactions contemplated by this Agreement
required under any assumed Station Agreements; provided that Seller shall not be
required to pay or grant any material consideration in order to obtain any such
consent or waiver.
5.4 Tax Returns and Payments.
(a) All taxes pertaining to ownership of the Sale Assets or
operation of the Station prior to the Closing Date will be timely paid; provided
that Seller shall not be required to pay any such tax so long as the validity
thereof shall be contested in good faith by appropriate proceedings and Seller
shall have set aside adequate reserves with respect to any such tax.
5.5 Access Prior to the Closing Date. Prior to the Closing, Buyer and
its representatives may make such reasonable investigation of the assets and
business of Seller as it may desire; and Seller shall give to Buyer, its
engineers, counsel, accountants and other representatives reasonable access
during normal business hours throughout the period prior to the Closing to
personnel and all of the assets, books, records and files of or pertaining to
the Station, provided that (i) Buyer shall give Seller reasonable advance notice
of each date on which Buyer or any such other person or entity desires such
access, (ii) each person (other than an officer of Buyer) shall, if requested by
Seller, be accompanied by an officer or their representative of Buyer approved
by Seller, which approval shall not be unreasonably withheld, (iii) the
investigations at the offices of Seller shall be reasonable in number and
frequency, and (iv) all investigations shall be conducted in such a manner as
not to physically damage any property or constitute a disruption of the
operation of the Station or Seller. Seller shall furnish to Buyer during such
period all documents and copies of documents and information concerning the
business and affairs of Seller and the Station as Buyer may reasonably request.
5.6 Confidentiality; Press Release. All information, data and materials
furnished or to be furnished to either party with respect to the other party in
connection with this transaction or pursuant to this Agreement are confidential.
Each party agrees that prior to Closing (a) it shall not disclose or otherwise
make available, at any time, any such information, data or material to any
person who does not have a confidential relationship with such party; (b) it
shall protect such information, data and material with
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a high degree of care to prevent the disclosure thereof; and (c) if, for any
reason, this transaction is not consummated, all information, data or material
concerning the other party obtained by such party, and all copies thereof, will
be returned to the other party. After Closing, neither party will disclose or
otherwise make available to any person any of such information, data or material
concerning the other party, except as may be necessary or appropriate in
connection with the operation of the Station by Buyer. Each party shall use its
reasonable efforts to prevent the violation of any of the foregoing
confidentiality provisions by its respective representatives. Notwithstanding
the foregoing, nothing contained herein shall prohibit Buyer or Seller from:
(i) using such information, data and materials in
connection with any action or proceeding brought or any claim asserted by Buyer
or Seller in respect of any breach by the other of any representation, warranty
or covenant made in or pursuant to this Agreement; or
(ii) supplying or filing such information, data or
materials to or with the FCC or any other valid governmental or court authority
to the extent reasonably necessary to obtain any consent, waiver, amendment,
modification, approval, authorization, permit or license which may be necessary
to effectuate this Agreement, and to consummate the transaction contemplated
herein.
In the event that either party determines in good faith that a press release or
other public announcement is desirable under any circumstances, the parties
shall consult with each other to determine the appropriate timing, form and
content of such release or announcement and thereafter may make such release or
announcement.
5.7 Reasonable Best Efforts. Subject to the terms and conditions of
this Agreement, each of the parties hereto will use its reasonable best efforts
to take all action and to do all things necessary, proper or advisable to
satisfy any condition to the parties' obligations hereunder in its power to
satisfy and to consummate and make effective as soon as practicable the
transactions contemplated by this Agreement.
5.8 FCC Reports. Seller shall continue to file, on a current basis
until the Closing Date, all reports and documents required to be filed with the
FCC with respect to the Station. Seller shall provide Buyer with copies of all
such filings within five business days of the filing with the FCC.
5.9 Conveyance Free and Clear of Liens. At or prior to the Closing,
Seller shall obtain executed releases, in suitable form for filing and otherwise
in form and substance reasonably satisfactory to Buyer, of any security
interests granted in the Sale Assets and properties as security for payment of
loans and other obligations or judgments and of any other Liens on the Sale
Assets. At the closing, Seller shall transfer and convey to Buyer all of the
Sale Assets free and clear of all Liens except Permitted Liens.
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5.10 Environmental Assessment. Not later than forty-five (45) days
after execution of this Agreement, Buyer may obtain a Phase I ("the Phase I")
environmental assessment of the Real Property by an environmental engineer
selected by Buyer. Within fourteen (14) days after Buyer's receipt of the Phase
I, if the Phase I indicates environmental conditions may exist on, under or
affect such properties that may constitute a violation or breach of Seller's
representations and warranties contained in Section 3.14 of this Agreement or
cause the condition contained in Section 6.9 to not be satisfied, then Buyer
shall be entitled to obtain a Phase II ("the Phase II") environmental assessment
of the Real Property, or any portion thereof. (The Phase I and the Phase II, if
obtained, shall be referred to herein as the "Environmental Assessment"). Buyer
shall commission and pay the cost of such Environmental Assessment and shall
provide a copy to Seller. The Environmental Assessment shall be subject to the
confidentiality provisions of Section 5.6. If after appropriate inquiry into the
previous ownership of and uses of the Real Property consistent with good
commercial or customary practice, the engineer concludes that environmental
conditions exist on, under or affecting such properties that would constitute a
violation or breach of Seller's representations and warranties contained in
Section 3.14 of this Agreement or cause the condition contained in Section 6.9
to not be satisfied, then notwithstanding any other provisions of this Agreement
to the contrary Seller shall reimburse Buyer for the cost of the Phase II, and,
subject to the following sentence, Seller shall at its sole cost and expense (up
to a maximum amount of Twenty-Five Thousand Dollars ($25,000)) remove, correct
or remedy any condition or conditions which constitute a violation or breach of
Seller's representations and warranties contained in Section 3.14 prior to the
Closing Date and provide to Buyer at Closing a certificate from an environmental
abatement firm reasonably acceptable to Buyer that such removal, correction or
remedy has been completed so that Seller's representations and warranties
contained in Section 3.14 will be true as of the Closing Date and the condition
contained in Section 6.9 will be satisfied as of the Closing Date. In the event
the cost of removal, correction or remedy of the environmental conditions
exceeds Twenty-Five Thousand Dollars ($25,000), Buyer may elect to proceed with
the Closing but shall not be obligated to close under any circumstances which
would require Buyer to assume ownership of the Station under conditions where
there exist any uncured violations of warranties, representations or covenants
with respect to environmental matters.
If Seller is required under this Section 5.10 to remedy any violation
at a site for which a person other than Seller, such as the tenant or any other
occupant of any real property is primarily responsible under applicable law,
Buyer and Seller shall cooperate in seeking to enforce any right of contribution
or other remedy they may have against such person. Seller shall not be obligated
under this Section 5.10 to undertake any remediation unless Buyer shall have
notified Seller of the existence of the condition requiring remediation within
30 days after Buyer's receipt of the Environmental Assessment in its final form.
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ARTICLE VI
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF BUYER TO CLOSE
Buyer's obligation to close the transaction contemplated by this
Agreement is subject to the satisfaction, on or prior to the Closing Date, of
each of the following conditions, unless waived by Buyer in writing:
6.1 Accuracy of Representations and Warranties; Closing Certificate.
(a) The representations and warranties of Seller contained in
this Agreement or in any other Document shall be complete and correct in all
material respects on the date hereof and at the Closing Date with same effect as
though made at such time except for changes that are not materially adverse to
the Station or the Sale Assets taken as a whole, and except as follows:
(i) as to Section 3.14(d), (f), (g), (h) or (i) the
accuracy or inaccuracy of this representation as of the date of this Agreement
or as of the Closing Date shall not be a condition to Closing if (A) the item is
removed on or before Closing, all costs associated with such removal, clean up
or other action have been paid in full by Seller and all required certificates
of removal or completion or other certificates demonstrating that all required
action under Section 5.10 has been completed have been received from applicable
regulatory authorities, or (B) to the extent removal, clean up or other action
cannot be completed and/or governmental or regulatory certificates obtained
prior to Closing (which Closing may be delayed by Seller by not more than thirty
(30) days if Seller reasonably determines that any necessary action can be
completed during such delay period), a portion of the Purchase Price equal to
the estimated costs of completion and/or certification (to be determined by an
independent consulting engineer) is escrowed under an agreement negotiated in
good faith by the parties and the amount so escrowed is used to pay all costs of
completion; provided, however, that in no event shall Buyer be required to
consummate the Agreement if the removal, clean up or other action would likely
result in a disruption of Buyer's ability to broadcast at substantially full
power from its transmitter site for material periods of time;
(ii) as to Section 3.14(j), the accuracy or
inaccuracy of this representation shall not be a condition to Closing if the
noncompliance is cured on or before Closing or if the Seller remains liable for
the noncompliance after the Closing; and
(iii) as to Sections 3.6 and 3.7, the accuracy or
inaccuracy of the representations(s) shall not be a condition to Closing if the
amount to cure or repair the matter is reasonably estimated at less than Fifty
Thousand Dollars ($50,000) in the aggregate and the Purchase Price is reduced
accordingly (if the amount can be accurately
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determined) or a reasonable reserve is placed into escrow pending cure or repair
or Buyer and Seller make other arrangements which are reasonable under the
circumstances. In addition, Seller may elect to delay Closing for a period not
to exceed thirty (30) days if Seller reasonably determines that any action
necessary to cure or repair can be completed during such delay period; provided
that the reduction or escrow described in the preceding sentence shall apply to
the extent any cure or repair is not completed within such delay period.
(b) Seller shall have delivered to Buyer on the Closing Date a
certificate that (i) the condition specified in Section 6.1(a) is satisfied as
of the Closing Date, and (ii) except as set forth in such certificate (none of
which exceptions shall be materially adverse to the Station, the Sale Assets or
Seller's ability to consummate the transaction contemplated hereby), the
condition specified in Section 6.2 is satisfied as of the Closing Date, and
further except that as to Section 6.2, non-satisfaction of the condition(s)
shall not be a condition to Closing if the amount to cure or repair the matter
is reasonably estimated at less than Fifty Thousand Dollars ($50,000) in the
aggregate and the Purchase Price is reduced accordingly (if the amount can be
accurately determined) or a reasonable reserve is placed into escrow pending
cure or repair or Buyer and Seller make other arrangements which are reasonable
under the circumstances. In addition, Seller may elect to delay Closing for a
period not to exceed thirty (30) days if Seller reasonably determines that any
action necessary to cure or repair can be completed during such delay period;
provided that the reduction or escrow described in the preceding sentence shall
apply to the extent any cure or repair is not completed within such delay
period.
6.2 Performance of Agreements. Seller shall have performed in all
material respects all of its covenants, agreements and obligations required by
this Agreement and each of the other Documents to be performed or complied with
by it prior to or upon the Closing Date.
6.3 FCC and Other Consents.
(a) The FCC Order shall have been issued by the FCC and shall
have become a Final Action without any Material Adverse Condition.
(b) Conditions which the FCC Order or any order, ruling or
decree of any judicial or administrative body relating thereto or in connection
therewith specifies and requires to be satisfied by Seller prior to transfer of
the FCC Licenses to Buyer shall have been satisfied by Seller.
(c) All other authorizations, consents, approvals and
clearances of federal, state or local governmental agencies required to permit
the consummation by Buyer of the transactions contemplated by this Agreement
including, without limitation, the assignment of any FCC Authorization requested
by Buyer, shall have been obtained; all statutory and regulatory requirements
for such consummation shall have been fulfilled;
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and no such authorizations, consents, approvals or clearances shall contain any
conditions that individually or in the aggregate would have a material adverse
effect on the operations of the Station.
6.4 Adverse Proceedings. Neither Buyer nor any affiliate of Buyer shall
be subject to any ruling, decree, order or injunction restraining, imposing
material limitations on or prohibiting (i) the consummation of the transactions
contemplated hereby or (ii) its participation in the operation, management,
ownership or control of the Station; and no litigation, proceeding or other
action seeking to obtain any such ruling, decree, order or injunction shall be
pending or shall have been threatened in writing. No governmental authority
having jurisdiction shall have notified any party to this Agreement that
consummation of the transaction contemplated hereby would constitute a violation
of the laws of the United States or of any state or political subdivision or
that it intends to commence proceedings to restrain such consummation or to
force divestiture, unless such governmental authority shall have withdrawn such
notice. No governmental authority having jurisdiction shall have commenced any
such proceeding.
6.5 Opinion of Seller's FCC Counsel. Buyer shall have received from
Seller's FCC counsel an opinion, dated the Closing Date, in form and substance
reasonably satisfactory to Buyer's FCC counsel, to the effect that:
(a) The FCC Licenses listed on Schedule 3.8 are valid, in good
standing and in full force and effect and include all licenses, permits and
authorizations which are necessary under the Rules and Regulations for Seller to
operate the Station in the manner in which the Station is currently being
operated.
(b) To counsel's knowledge, no condition has been imposed by
the FCC as part of any FCC License which is not set forth on the face thereof as
issued by the FCC or contained in the Rules and Regulations applicable generally
to stations of the type, nature, class or location of the Station.
(c) No proceedings are pending or, to counsel's knowledge, are
threatened which may result in the revocation, modification, non-renewal of,
suspension of, or the imposition of a Material Adverse Condition upon, any of
the FCC Licenses, the denial of any pending applications, the issuance of any
cease and desist order or the imposition of any fines, forfeitures or other
administrative actions by the FCC with respect to the Station or its operation,
other than proceedings affecting the radio broadcasting industry in general.
In rendering such opinion, counsel shall be entitled to rely upon
Seller's representations and warranties in this Agreement and to limit its
inquiry to its files and such FCC files and records as are available to it as of
10:00 o'clock A.M. Eastern time the business day immediately preceding the
Closing Date. Counsel may state that, as to
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any factual matters embodied in, or forming a basis for any legal opinion
expressed in, such opinion, counsel's knowledge is based solely on such inquiry.
6.6 Other Consents. Seller shall have obtained in writing and provided
to Buyer on or before the Closing Date, without any condition materially adverse
to Buyer or the Station, the consents or waivers to the transactions
contemplated by this Agreement required under those Station Agreements which
Buyer has elected to assume.
6.7 Delivery of Closing Documents. Seller shall have delivered or
caused to be delivered to Buyer on the Closing Date each of the Documents
required to be delivered pursuant to Section 8.2.
6.8 No Cessation of Broadcasting.
(a) Between the date hereof and the Closing Date, the Station
shall not have for a period of more than ten (10) days in the aggregate (i)
ceased broadcasting on its authorized frequency, (ii) lost substantially all of
its normal broadcasting capability or (iii) been broadcasting at a power level
of 50% or less of its FCC authorized level. Seller shall promptly notify Buyer
of the occurrence of any one or more of the foregoing events or conditions, and
the non-fulfillment of the condition precedent set forth in this Subsection
caused by the occurrence of the events specified in Seller's notice shall be
deemed waived by Buyer unless, within fifteen (15) days after Buyer's receipt of
Seller's written notice, Buyer notifies Seller in writing to the contrary.
(b) In addition, during the five (5) days immediately
preceding the Closing Date, the Station shall have been operating continuously
with substantially all of its normal broadcasting capability except for
cessation or reductions for insignificant periods of time resulting from
occurrences (such as lightning strikes) over which Seller has no control. Seller
shall have the right to delay Closing for a period not to exceed thirty (30)
days if Seller reasonably determines that any action to restore the Station
substantially all of its normal broadcasting capability can be completed during
such delay period.
6.9 Environmental Conditions. The Environmental Assessment obtained by
Buyer pursuant to Section 5.10 hereof shall not have disclosed any material
violation of any Environmental Law at the Real Property which is not removed or
cured by Seller prior to Closing.
ARTICLE VII
CONDITIONS PRECEDENT OF THE
OBLIGATION OF SELLER TO CLOSE
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The obligation of Seller to close the transaction contemplated by this Agreement
is subject to the satisfaction, on or prior to the closing Date, of each of the
following conditions, unless waived by Seller in writing:
7.1 Accuracy of Representations and Warranties.
(a) The representations and warranties of Buyer contained in
this Agreement shall be complete and correct in all material respects on the
date hereof and at the Closing Date with the same effect as though made at such
time except for changes that are not materially adverse to Seller.
(b) Buyer shall have delivered to Seller on the Closing Date a
certificate that (i) the condition specified in Section 7.1(a) is satisfied as
of the Closing Date, and (ii) except as set forth in such certificate (none of
which exceptions shall be materially adverse to Buyer's ability to consummate
the transaction contemplated hereby), the conditions specified in Section 7.2
are satisfied as of the Closing Date.
7.2 Performance of Agreements. Buyer shall have performed in all
material respects all of its covenants, agreements and obligations required by
this Agreement and each of the other Documents to be performed or complied with
by it prior to or upon the Closing Date.
7.3. FCC and Other Consents.
(a) The FCC Order shall have been issued by the FCC and shall
have become effective under the rules of the FCC.
(b) Conditions which the FCC Order or any order, ruling or
decree of any judicial or administrative body relating thereto or in connection
therewith specifies and requires to be satisfied by Buyer prior to transfer of
the FCC Licenses to Buyer shall have been satisfied by Buyer.
(c) All other authorizations, consents, approvals and
clearances of all federal, state and local governmental agencies required to
permit the consummation by Seller of the transactions contemplated by this
Agreement shall have been obtained; all statutory and regulatory requirements
for such consummation shall have been fulfilled; and no such authorizations,
consents, approvals or clearances shall contain any conditions that individually
or in the aggregate would have any material adverse effect on Seller.
7.4 Adverse Proceedings. Seller shall not be subject to any ruling,
decree, order or injunction restraining, imposing material limitations on or
prohibiting the consummation of the transactions contemplated hereby. No
governmental authority having jurisdiction shall have notified any party to this
Agreement that consummation of the transactions contemplated hereby would
constitute a violation of the laws of the
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United States or of any state or political subdivision or that it intends to
commence proceedings to restrain such consummation or to force divestiture,
unless such governmental authority shall have withdrawn such notice. No
governmental authority having jurisdiction shall have commenced any such
proceeding.
7.5 Delivery of Closing Documents and Purchase Price. Buyer shall have
delivered or caused to be delivered to Seller on the Closing Date each of the
Documents required to be delivered pursuant to Section 8.3, and Seller shall
have received payment of the Purchase Price with the form of payment set forth
in Section 2.5.
ARTICLE VIII
CLOSING
8.1 Time and Place. Unless otherwise agreed to in advance by the
parties, Closing shall take place in person or via facsimile at the offices of
Buyer's counsel in Camarillo, California, or at such other place as the parties
agree, at 10:00 A.M. Pacific Time on the date (the "Closing Date") that is the
later of (i) the fifth Business Day after the Applicable Date or (ii) the date
as soon as practicable following satisfaction or waiver of the conditions
precedent hereunder. The "Applicable Date" shall be the date on which issuance
of the FCC Order without any Material Adverse Condition has become a Final
Action.
8.2 Documents to be Delivered to Buyer by Seller. At the Closing,
Seller shall deliver or cause to be delivered to Buyer the following:
(a) Certified resolutions of Seller's Board of Directors (and
shareholders, if required by applicable law) approving the execution and
delivery of this Agreement and each of the other documents and authorizing the
consummation of the transactions contemplated hereby and thereby.
(b) The certificate required by Section 6.1(b).
(c) A bill of sale and other instruments of transfer and
conveyance transferring to Buyer the Tangible Personal Property.
(d) Executed releases, in suitable form for filing and
otherwise in form and substance reasonably satisfactory to Buyer, of any
security interests granted in the Sale Assets as security for payment of loans
and other obligations and of any other Liens (other than Permitted Liens).
(e) Required instruments of transfer and conveyance
transferring to Buyer the Real Property.
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(f) An instrument or instruments assigning to Buyer all right,
title and interest of Seller in and to all Station Agreements being assumed by
Buyer.
(g) An instrument assigning to Buyer all right, title and
interest of Seller in the FCC Licenses, all pending applications relating to the
station before the FCC, and any remaining Sale Assets not otherwise conveyed.
(h) The opinion of Seller's FCC counsel, dated the Closing
Date, to the effect set forth in Section 6.5.
(i) Such additional information and materials as Buyer shall
have reasonably requested, including without limitation, evidence that all
consents and approvals required as a condition to Buyer's obligation to close
hereunder have been obtained.
8.3 Documents to be Delivered to Seller by Buyer. At the Closing, Buyer
shall deliver or cause to be delivered to Seller the following:
(a) Certified resolutions of Buyer's Board of Directors
approving the execution and delivery of this Agreement and each of the other
Documents and authorizing the consummation of the transaction contemplated
hereby and thereby.
(b) The Purchase Price as set forth in Section 2.5.
(c) The agreement of Buyer assuming the obligations under any
Station Agreements being assumed by Buyer.
(d) The certificate required under Section 7.1(b).
Such additional information and materials as Seller shall have
reasonably requested.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION
9.1 Survival of Representation and Warranties. All representations,
warranties, covenants and agreements contained in this Agreement or in any other
Document shall survive the Closing for the Survival Period and the Closing shall
not be deemed a waiver by either party of the representations, warranties,
covenants or agreements of the other party contained herein or in any other
Document. No claim may be brought under this Agreement or any other Document
unless written notice describing in reasonable detail the nature and basis of
such claim is given on or prior to the last day
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of the Survival Period; except for claims by Buyer for any amounts owed by
Seller to Buyer under Section 9.3(a)(v), which claims may be made at any time.
In the event such a notice is so given, the right to indemnification with
respect thereto under this Article shall survive the Survival Period until such
claim is finally resolved and any obligations with respect thereto are fully
satisfied. Notwithstanding the foregoing, the provisions for survival and the
making of claims shall not apply to the agreements whereby Buyer assumes the
obligations under Subsection 8.3(c), each of which agreements shall be governed
by its own terms.
9.2 Indemnification in General. Buyer and Seller agree that the rights
to indemnification and to be held harmless set forth in this Agreement shall, as
between the parties hereto and their respective successors and assigns, be
exclusive of all rights to indemnification and to be held harmless that such
party (or its successors or assigns) would otherwise have by statute, common law
or otherwise.
9.3 Indemnification by Seller.
(a) Subject to the provisions of Subsection (b) below and
Section 10.2 below, Seller shall indemnify and hold harmless Buyer and any
officer, director, agent, employee and affiliate thereof with respect to any and
all demands, claims, actions, suits, proceedings, assessments, judgments, costs,
losses, damages, liabilities and expenses (including reasonable attorneys' fees)
relating to or arising out of:
(i) Any breach or non-performance by Seller of any of
its representations, warranties, covenants or agreements set forth in this
Agreement or any other Documents; or
(ii) The ownership or operation by Seller of the
Station or the Sale Assets on or prior to the Closing Date; or
(iii) All other liabilities and obligations of Seller
other than the Assumed Obligations; or
(iv) Noncompliance by Seller with the provisions of
the Bulk Sales Act, if applicable, in connection with the transaction
contemplated hereby; or
(v) Any violation of any Environmental Laws by Seller
or the existence of any Hazardous Materials on the Real Property on or before
Closing.
(b) Except for any amounts owed by Seller to Buyer under
Section 9.3(a) (iv), Section 9.3(a)(v) and Section 2.7, if Closing occurs,
Seller shall not be obligated (a) until the aggregate amount of such claims,
liabilities, damages, losses, costs and expenses exceeds Buyer's Threshold
Limitation, in which case Buyer shall then be entitled to
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indemnification of the entire aggregate amount, or (b) for any amounts in excess
of the Purchase Price.
9.4 Indemnification by Buyer.
(a) Subject to the provisions of Subsection (b) below and
Section 10.2 below, Buyer shall indemnify and hold harmless Seller and any
officer, director, agent, employee and affiliate thereof with respect to any and
all demands, claims, actions, suits, proceedings, assessments, judgments, costs,
losses, damages, liabilities and expenses (including reasonable attorneys' fees)
relating to or arising out of:
(i) Any breach or non-performance by Buyer of any of
its representations, warranties, covenants or agreements set forth in this
Agreement or any other Document; or
(ii) The ownership or operation of the Station after
the Closing Date; or
(iii) All other liabilities or obligations of Buyer.
(b) Except for any amounts owed by Buyer to Seller under
Section 2.7, if Closing occurs, Buyer shall not be obligated (a) until the
aggregate amount of such claims, liabilities, damages, losses, costs and
expenses exceeds Seller's Threshold Limitation, in which case Seller shall then
be entitled to indemnification of the entire aggregate amount, or (b) for any
amount in excess of the Purchase Price.
9.5 Indemnification Procedures. In the event that an Indemnified Party
may be entitled to indemnification hereunder with respect to any asserted claim
of, or obligation or liability to, any third party, such party shall notify the
Indemnifying Party thereof, describing the matters involved in reasonable
detail, and the Indemnifying Party shall be entitled to assume the defense
thereof upon written notice to the Indemnified Party with counsel reasonably
satisfactory to the Indemnified Party; provided, that once the defense thereof
is assumed by the Indemnifying Party, the Indemnifying Party shall keep the
Indemnified Party advised of all developments in the defense thereof and any
related litigation, and the Indemnified Party shall be entitled at all times to
participate in the defense thereof at its own expense. If the Indemnifying Party
fails to notify the Indemnified Party of its election to defend or contest its
obligation to indemnify under this Article IX, the Indemnified Party may pay,
compromise, or defend such a claim without prejudice to any right it may have
hereunder.
ARTICLE X
TERMINATION; LIQUIDATED DAMAGES
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10.1 Termination. If Closing shall not have previously occurred, this
Agreement shall terminate upon the earliest of:
(a) the giving of written notice from Seller to Buyer, or from
Buyer to Seller, if:
(i) Seller gives such termination notice and is not
at such time in material default hereunder, or Buyer gives such termination
notice and Buyer is not at such time in material default hereunder; and
(ii) Either:
(A) any of the representations or warranties
contained herein of Buyer (if such termination notice is given by Seller), or of
Seller (if such termination notice is given by Buyer), are inaccurate in any
respect and materially adverse to the party giving such termination notice
unless the inaccuracy has been induced by or is the result of actions or
omissions of the party giving such termination notice; or
(B) Any material obligation to be performed
by Buyer (if such termination notice is given by Seller) or by Seller (if such
termination notice is given by Buyer) is not timely performed in any material
respect unless the lack of timely performance has been induced by or is the
result of actions or omissions of the party giving such termination notice; or
(C) Any condition (other than those referred
to in foregoing Clauses (A) and (B)) to the obligation to close the transaction
contemplated herein of the party giving such termination notice has not been
timely satisfied; and any such inaccuracy, failure to perform or
non-satisfaction of a condition neither has been cured nor satisfied within
twenty (20) days after written notice thereof from the party giving such
termination notice nor waived in writing by the party giving such termination
notice.
(b) Written notice from Seller to Buyer, or from Buyer to
Seller, at any time after June 30, 1997 provided that termination shall not
occur upon the giving of such termination notice by Seller if Seller is at such
time in material default hereunder or upon the giving of such termination notice
by Buyer if Buyer is at such time in material default hereunder.
(c) Written notice from Seller to Buyer, or from Buyer to
Seller, at any time following a determination by the FCC that the application
for consent to assignment of the FCC Licenses has been designated for hearing;
provided that the party which is the subject of the hearing (or whose alleged
actions or omissions resulted in the designation for hearing) may not elect to
terminate under this subsection (c).
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(d) The written election by Buyer under Article XI.
10.2 Obligations Upon Termination.
(a) In the event this Agreement is terminated pursuant to
Section 10.1(a)(ii)(A) or (B), the aggregate liability of Buyer for breach
hereunder shall be limited as provided in Subsections (c) and (e), below and the
aggregate liability for Seller for breach hereunder shall be limited as provided
in Subsections (d) and (e), below. In the event this Agreement is terminated for
any other reason, neither party shall have any liability hereunder.
(b) Upon termination of this Agreement, Buyer shall be
entitled to the return of the Earnest Money from the Escrow Agent under the
Escrow Agreement (i) if such termination is effected by Buyer's giving of valid
written notice to Seller pursuant to Subsections 10.1(a), (b) (c) or (d) , or
(ii) if such termination is effected by Seller's giving of valid written notice
to Buyer pursuant to Subsections 10.1(a)(ii)(C), 10.1(b) or 10.1(c). If Buyer is
entitled to the return of the Earnest Money, Seller shall cooperate with Buyer
in taking such action as is required under the Escrow Agreement in order to
effect such return from the Escrow Agent.
(c) If this Agreement is terminated by Seller's giving of
valid written notice to Buyer pursuant to Subsection 10.1(a)(ii)(A) or (B),
Buyer agrees that Seller shall be entitled to receive upon such termination, as
liquidated damages and not as a penalty, the Earnest Money ("Liquidated Damages
Amount"). SELLER'S RECEIPT OF THE EARNEST MONEY SHALL CONSTITUTE PAYMENT OF
LIQUIDATED DAMAGES HEREUNDER AND NOT A PENALTY, AND SHALL BE SELLER'S SOLE
REMEDY AT LAW OR IN EQUITY FOR BUYER'S BREACH HEREUNDER IF CLOSING DOES NOT
OCCUR. BUYER AND SELLER EACH ACKNOWLEDGE AND AGREE THAT THE LIQUIDATED DAMAGE
AMOUNT IS REASONABLE IN LIGHT OF THE ANTICIPATED HARM WHICH WILL BE CAUSED BY
BUYER'S BREACH OF THIS AGREEMENT, THE DIFFICULTY OF PROOF OF LOSS, THE
INCONVENIENCE AND NON-FEASIBILITY OF OTHERWISE OBTAINING AN ADEQUATE REMEDY, AND
THE VALUE OF THE TRANSACTION TO BE CONSUMMATED HEREUNDER.
(d) Notwithstanding any provision of this Agreement to the
contrary, but subject to the provisions of the following sentences, if this
Agreement is terminated by Buyer's giving of written notice to Seller pursuant
to Subsection 10.1(a), Buyer shall not be entitled to damages or indemnification
from Seller. Subject to the following sentence, if Seller attempts to terminate
this Agreement under circumstances where it is not entitled to do so, or if
Seller, by its own action, causes a breach of warranty or fails to satisfy a
condition (including without limitation a refusal to consummate the transaction
after Buyer has satisfied all conditions to Seller's obligation to close and
Buyer has
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demonstrated its willingness and ability to close on the terms set forth in this
Agreement and Buyer is not in default hereunder) with the intent of creating a
situation whereby Buyer elects to terminate under Section 10.1(a) and Buyer does
so elect to terminate, the monetary damages, if any, to which Buyer shall be
entitled shall be limited to direct and actual damages and shall in no event
exceed Seventy Five Thousand Dollars ($75,000) in the aggregate. If a
circumstance described in the preceding sentence should arise and if Buyer
establishes that the action of Seller described therein was taken intentionally
in order to allow Seller to sell or enter into negotiations to sell the Station
to another party, the damages to which Buyer shall be entitled shall not be
limited to direct and actual damages.
(e) In any dispute between Buyer and Seller as to which party
is entitled to all or a portion of the Earnest Money, the prevailing party shall
receive, in addition to that portion of the Earnest Money to which it is
entitled, an amount equal to interest on that portion at the rate of 10% per
annum, calculated from the date the prevailing party's demand for all or a
portion of the Earnest Money is received by the Escrow Agent.
10.3 Termination Notice. Each notice given by a party pursuant to
Section 10.1 to terminate this Agreement shall specify the Subsection (and
clause or clauses thereof) of Section 10.1 pursuant to which such notice is
given.
ARTICLE XI
CASUALTY
Upon the occurrence of any casualty loss, damage or destruction
material to the operation of the Station prior to the Closing, Seller shall
promptly give Buyer written notice setting forth in detail the extent of such
loss, damage or destruction and the cause thereof if known. Seller shall use its
reasonable efforts to promptly commence and thereafter to diligently proceed to
repair or replace any such lost, damaged or destroyed property. In the event
that such repair or replacement is not fully completed prior to the Closing
Date, Buyer may elect to postpone the Closing until Seller's repairs have been
fully completed or to consummate the transactions contemplated hereby on the
Closing Date, in which event Seller shall assign to Buyer the portion of the
insurance proceeds (less all reasonable costs and expenses, including without
limitation attorney's fees, expenses and court costs incurred by Seller to
collect such amounts), if any, not previously expended by Seller to repair or
replace the damaged or destroyed property (such assignment of proceeds to take
place regardless of whether the parties close on the scheduled or deferred
Closing Date) and Buyer shall accept the damaged Sale Assets in their damaged
condition. In the event the loss, damage or destruction causes or will cause the
Station to be off the air for more than seven (7) consecutive days or fifteen
(15) total days, whether or not consecutive, then Buyer may elect either (i) to
consummate the transactions contemplated hereby on the Closing Date, in which
event Seller shall assign to Buyer the portion of the insurance proceeds (less
all reasonable costs and expenses,
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including without limitation attorney's fees, expenses and court costs, incurred
by Seller to collect such amounts), if any, not previously expended by Seller to
repair or replace the damaged or destroyed property, and Buyer shall accept the
damaged Sale Assets in their damaged condition, or (ii) to terminate this
Agreement.
ARTICLE XII
CONTROL OF STATION
Between the date of this Agreement and the Closing Date, Buyer shall
not control, manage or supervise the operation of the Station or conduct of its
business, all of which shall remain the sole responsibility and under the
control of Seller, subject to Seller's compliance with this Agreement.
ARTICLE XIII
MISCELLANEOUS
13.1 Further Actions. From time to time before, at and after the
Closing, each party, at its expense and without further consideration, will
execute and deliver such documents to the other party as the other party may
reasonably request in order more effectively to consummate the transactions
contemplated hereby.
13.2 Access After the Closing Date. After the Closing and for a period
of twelve (12) months, Buyer shall provide Seller, Seller's counsel, accountants
and other representatives with reasonable access during normal business hours to
the books, records, property, personnel, contracts, commitments and documents of
the Station pertaining to transactions occurring prior to the Closing Date when
requested by Seller, and Buyer shall retain such books and records for the
normal document retention period of Buyer. At the request and expense of Seller,
Buyer shall deliver copies of any such books and records to Seller.
13.3 Payment of Expenses.
(a) Any fees assessed by the FCC in connection with the
filings contemplated by Section 5.2(a) or consummation of the transactions
contemplated hereby shall be shared equally between Seller and Buyer.
(b) All state or local sales or use, stamp or transfer, grant
and other similar taxes payable in connection with consummation of the
transactions contemplated hereby shall be paid by the party primarily liable
under applicable law to pay such tax.
(c) Except as otherwise expressly provided in this Agreement,
each of the parties shall bear its own expenses, including the fees of any
attorneys and accountants
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engaged by such party, in connection with this Agreement and the consummation of
the transactions contemplated herein.
13.4 Specific Performance. Seller acknowledges that the Station is of a
special, unique, and extraordinary character, and that any breach of this
Agreement by Seller could not be compensated for by damages. Accordingly, if
Seller shall breach its obligations under this Agreement, Buyer shall be
entitled, in addition to any of the remedies that it may have, to enforcement of
this Agreement (subject to obtaining any required approval of the FCC) by decree
of specific performance or injunctive relief requiring Seller to fulfill its
obligations under this Agreement. In any action by Buyer to equitably enforce
the provisions of this Agreement, Seller shall waive the defense that there is
an adequate remedy at law or equity and agrees that Buyer shall have the right
to obtain specific performance of the terms of this Agreement without being
required to prove actual damages, post bond or furnish other security.
13.5 Notices. All notices, demands or other communications given
hereunder shall be in writing and shall be sufficiently given if delivered by
courier or sent by registered or certified mail, first class, postage prepaid,
or by telex, cable, telegram, facsimile machine or similar written means of
communication, addressed as follows:
(a) if to Seller, to:
Radio Systems of Philadelphia, Inc.
c/o American Radio Systems
116 Huntington Avenue
Boston, Massachusetts 02116
Attn: Steven B. Dodge, President
Facsimile: (617) 375-7575
Copy (which shall not constitute notice) to:
Radio Systems of Philadelphia, Inc.
c/o American Radio Systems Corporation
116 Huntington Avenue
Boston, Massachusetts 02116
Attn: Michael Milsom, Vice President/General Counsel
Facsimile: (617) 375-7575
(b) if to Buyer, to:
Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Facsimile No.: (805) 482-7290
Attention: Jonathan L. Block, Esq.
Corporate Counsel
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or such other address with respect to any party hereto as such party may from
time to time notify (as provided above) to the other party hereto. Any such
notice, demand or communication shall be deemed to have been given (i) if so
mailed, as of the close of the third (3rd) business day following the date
mailed, and (ii) if personally delivered or otherwise sent as provided above, on
the date received.
13.6 Entire Agreement. This Agreement, the Schedules and Exhibits
hereto, and the other Documents constitute the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersede any prior negotiations, agreements, understandings or
arrangements between the parties with respect to the subject matter hereof.
13.7 Binding Effect; Benefits. Except as otherwise provided herein,
this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors or assigns. Except to the extent
specified herein, nothing in this Agreement, express or implied, shall confer on
any person other than the parties hereto and their respective successors or
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
13.8 Assignment. This Agreement and any rights hereunder shall not be
assignable by either party hereto without the prior written consent of the other
party.
13.9 Governing Law. This Agreement shall in all respects be governed by
and construed in accordance with the laws of the State of California, including
all matters of construction, validity and performance.
13.10 Bulk Sales. Buyer hereby waives compliance by Seller with the
provisions of the Bulk Sales Act and similar laws of any state or jurisdiction,
if applicable. Seller shall, in accordance with Article IX, indemnify and hold
Buyer harmless from and against any and all claims made against Buyer by reason
of such non-compliance.
13.11 Amendments and Waivers. No term or provision of this Agreement
may be amended, waived, discharged or terminated orally but only by an
instrument in writing signed by the party against whom the enforcement of such
amendment, waiver, discharge or termination is sought. Any waiver shall be
effective only in accordance with its express terms and conditions.
13.12 Severability. Any provision of this Agreement which is
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such unenforceability without invalidating the remaining
provisions hereof, and any such
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unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto hereby waive any provision of law now or
hereafter in effect which renders any provision hereof unenforceable in any
respect.
13.13 Headings. The captions in this Agreement are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
13.14 Counterparts. This Agreement may be executed in any number of
counterparts, and by either party on separate counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
13.15 References. All references in this Agreement to Articles and
Sections are to Articles and Sections contained in this Agreement unless a
different document is expressly specified.
13.16 Schedules and Exhibits. Unless otherwise specified herein, each
Schedule and Exhibit referred to in this Agreement is attached hereto, and each
such Schedule and Exhibit is hereby incorporated by reference and made a part
hereof as if fully set forth herein.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written.
"SELLER" "BUYER "
RADIO SYSTEMS OF VISTA BROADCASTING, INC.
PHILADELPHIA, INC.
By:/s/Steven B. Dodge By:/s/Eric H. Halvorson
------------------------------ ---------------------------
Steven B. Dodge Eric H. Halvorson
President Executive Vice President
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LIST OF SCHEDULES
Schedule 3.4 Required Consents
Schedule 3.6 Tangible Personal Property.
Schedule 3.7 Description of Real Property.
Schedule 3.8 FCC Licenses.
Schedule 3.9 Station Agreements.
Schedule 3.11 Labor Matters.
Schedule 3.13 Legal Matters.
Schedule 3.14 Environmental Matters.
Schedule 3.15 Tower Coordinates
39
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated December 17, 1996, by and
between American Radio Systems Corporation, a Delaware corporation ("Buyer"),
and Brighton Broadcasting, L.P. New York limited partnership ("Seller").
P R E M I S E S:
A. Seller is the permittee/licensee of and operates radio station
WAQB(FM) Brighton, New York (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.
<PAGE>
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.
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.
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1.8 "Escrow Deposit" shall mean the sum of Three Hundred and Fifty
Thousand Dollars ($350,000) held by Blackburn & Company, Inc. as Escrow Agent
pursuant to an Escrow Agreement of even date, by and among Buyer, Seller, and
Escrow Agent in the form set forth in 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.
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
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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;
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(e) Goodwill and all trademarks, trade names, service marks
and all other information and similar intangible assets relating to the Station,
including those listed in Schedule 3.9 hereto;
(f) All of the Seller's proprietary information, which relate
to the Station, including without limitation, technical information and data,
machinery and equipment warranties, maps, computer discs and tapes, plans,
diagrams, blueprints, and schematics, including filings with the FCC which
relate to the Station, if any;
(g) All 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;
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(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 Three Million Five
Hundred ($3,500,000). 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
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
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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
James Smisloff 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 regional or local branch of a
nationally known independent public accounting firm to be retained to review the
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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. 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
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Seller represents and warrants to Buyer as follows:
3.1 Organization, Standing and Authority. Seller is a partnership duly
formed, validly existing and in good standing under the laws of the State of New
York and is duly qualified to conduct its business in the such state, which is
the only jurisdiction where the conduct of the business or operations of the
Station requires such qualification. Each Seller has all requisite partnership
power and authority (i) to own, lease, and use the Assets as presently owned,
leased, and used, and (ii) to conduct the business or operations of the Stations
as presently conducted. Seller has all requisite partnership power and authority
to execute and deliver this Agreement and the documents contemplated hereby, and
to perform and comply with all of the terms, covenants and conditions to be
performed and complied with by Seller, hereunder and thereunder. Seller is not a
participant in any joint venture or partnership with any other person or entity
with respect to any part of the Stations' operations or the Assets.
3.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement by Seller have been duly authorized by all
necessary partnership action on the part of Seller. This Agreement has been duly
executed and delivered by Seller and constitutes the legal, valid, and binding
obligation of Seller, enforceable against Seller in accordance with its terms
except as the enforceability hereof may be affected by bankruptcy, insolvency,
or similar laws affecting creditors' rights generally, or by court-applied
equitable remedies.
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 Partnership
Agreement of Seller; (iii) will not
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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, 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.
To Seller's knowledge, Seller is not in material breach, nor is any other party
in material breach, of the terms of any of such leases or other instruments. All
Real Property (i) is available for immediate use in the
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conduct of the business or operations of the Station, and (ii) 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
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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 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.
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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 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.
3.11 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
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.
3.12 Employee Benefit Plans. There are no employee benefit plans or
arrangements applicable to the employees of Seller employed at the Stations.
Seller has
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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.
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.
3.13 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
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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3.14 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.
3.15 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.
3.16 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,
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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.
3.17 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 any such
predecessor 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 at, in, on, from or under the
Real Property which in any event is in material violation of environmental law.
The operations of Seller and, to Seller's best knowledge, those of its
predecessor, are and have been conducted, as the case may be, in material
compliance with all applicable Environmental Laws.
3.18 Conduct of Business in Ordinary Course. Since October 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;
(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.
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3.19 Full Disclosure. No representation or warranty made by Seller
herein nor any certificate, document or other instrument furnished or to be
furnished by Seller pursuant hereto contains or will contain any untrue
statement of a material fact made intentionally or in bad faith, or
intentionally or in bad faith omits or will omit to state any material fact
known to Seller and required to make the statements herein or therein not
misleading.
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SECTION 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization, Standing and Authority. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware, and shall be, at Closing, qualified to conduct business in the State
of New York. 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;
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(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;
(5) Programming. Reduce the Station's programming hours below
the minimum required by the FCC, 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
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authorized representatives all information with respect to the affairs
and business of the Station (but not relating to Seller's other
operations 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;
(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;
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(10) Financial Information. As may be requested,
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.
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
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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, transfer and similar taxes and fees, if any, arising out of the
transfer of the Assets pursuant to this Agreement, provided, however, that
Seller's share of sales tax on tangible personal property shall not exceed Four
Thousand Dollars ($4,000). All filing
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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 Blackburn and Company, Inc., whose
fee shall be solely the responsibility of Seller.
6.5 Confidentiality. Except as necessary for the consummation of the
transaction contemplated hereby, including Buyer's obtaining financing in any
form or means of its choosing related hereto, each party hereto will keep
confidential any information which is obtained from the other party in
connection with the transaction contemplated hereby and which is not readily
available to members of the general public, and will not use such information
for any purpose other than in furtherance of the 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.
6.6 Cooperation. Buyer and Seller shall cooperate fully with each other
and their respective counsel and accountants in connection with any actions
required to be taken as part of their respective obligations under this
Agreement, and Buyer and Seller
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shall execute such other documents as may be necessary and desirable to the
implementation and consummation of this Agreement, and otherwise use their best
efforts to consummate the transaction contemplated hereby and to fulfill their
obligations hereunder. Notwithstanding the foregoing, except as otherwise set
forth herein, Buyer shall have no obligation (i) to expend funds to obtain the
Consents, or (ii) to agree to any adverse change in any License or Assumed
Contract to obtain a Consent required with respect thereto.
6.7 Risk of Loss.
A. The risk of loss, damage or impairment, confiscation or
condemnation of any of the Assets from any cause whatsoever shall be borne by
Seller at all times prior to the completion of the Closing.
B. If any damage or destruction of the Assets or any other
event occurs which prevents signal transmission by the Station in the normal and
usual manner and Seller cannot restore or replace the Assets so that the
conditions are cured and normal and usual transmission is resumed before the
Closing Date, the Closing Date shall 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
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of such damaged Assets after the Closing Date, in which event Seller shall
deliver to Buyer all insurance proceeds received in connection with such damage
or destruction of the Assets to the extent not already expended by Seller
arising in connection with such restoration and replacement.
D. Notwithstanding any of the foregoing, Buyer may terminate
this Agreement forthwith without any further obligation hereunder by written
notice to Seller if any event occurs which prevents signal transmission by the
Station in a manner generally equivalent to its current operations for a
consecutive period of five (5) or a cumulative period of fourteen (14) days
after the date hereof.
6.8 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.
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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.
6.9 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 has commenced legal action specifically
disputing an outstanding balance and so directs in writing with the accompanying
payment. 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
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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 on 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 Account Receivable for collection purposes except for Accounts retained by
seller after the Collection Period.
6.10 Tower Lease. Seller shall provide Buyer with a lease for the
Station's tower site in substantially the form set forth in Schedule 6.10
hereto. Which, once executed and delivered by buyer and Seller, shall be an
Assumed Contract.
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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 change to the terms of the License or Assumed Contract with
respect to which such Consent is obtained.
D. Licenses. Seller shall be the holder of the Licenses, and
there shall not have been any modification of any of such Licenses which has an
adverse effect on the Station or the conduct of its business or operations. No
proceeding shall be pending the effect of which would be to revoke, cancel, fail
to renew, suspend or modify adversely any of the Licenses.
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E. Deliveries. Seller shall have made or stand willing and
able to make all the deliveries to Buyer set forth in Section 8.2
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.
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 ten
(10) days following the date upon which the FCC Consent has become a Final Order
(the "Closing Date"),
30
<PAGE>
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 Seller or such other place as shall be mutually agreed to by Buyer and
Seller, or by mail, facsimile and/or overnight delivery.
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 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) Seller's Certificate. A certificate, dated as of the
Closing Date, executed by the General Partner 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) General Partner's Certificate. A certificate, dated as of
the Closing Date, executed by Seller's General Partner: (i) certifying
that the execution and delivery of this Agreement by Seller and the
consummation of the transaction contemplated hereby have been
authorized and ratified; and (ii) providing, as attachments thereto, a
certificate of legal existence certified by an appropriate New York
state official; as of a date not more than fifteen (15) days before the
Closing Date and a copy of Seller's limited Partnership Agreement
certified by Seller's General Partner as of the Closing Date;
(e) Licenses, Contracts, Business Records, Etc. Copies, if
available, of all licenses, Assumed Contracts, blueprints, schematics,
working drawings,
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plans, projections, statistics, engineering records, and all files and
records used by Seller in connection with its operations of the
Station;
(f) Opinions of Counsel. Opinions of Seller's counsel and
communications counsel dated as of the Closing Date, and addressed to
Buyer and at Buyer's directions, to Buyer's lenders, substantially in
the form of Schedule 8.2 hereto.
8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer shall
deliver to Seller the following, in form and substance reasonably satisfactory
to Seller and its counsel:
(a) Purchase Price. The Purchase Price paid to Seller or
Seller's designee 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.
SECTION 9
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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, 1998
Upon termination: (i) if neither party hereto is in breach of any material
provision of this Agreement, the parties hereto shall not have any further
liability to each other; (ii) if Seller shall be in breach of any material
provision of this Agreement, Buyer shall have only the rights and remedies
provided in Section 9.3 or (iii) if Buyer shall be in breach of any material
provision of this Agreement, Seller shall be entitled only to liquidated damages
as provided in Section 9.2 hereof. If, upon termination, Buyer shall not be in
breach of any material provision of this Agreement, the Escrow Deposit, plus all
interest or other proceeds from the investment thereof, less any compensation
due the Escrow Agent, shall be paid to Buyer.
9.2 Liquidated Damages. In the event this Agreement is terminated by
Seller due to a material breach by Buyer of its representations, warranties,
covenants and other obligations under this Agreement, then the Escrow Deposit
shall be paid to Seller as liquidated damages, it being agreed that the Escrow
Deposit shall constitute full payment for any and all damages suffered by Seller
by reason of Buyer's failure to
33
<PAGE>
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 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.
9.4 Defaults. 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
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<PAGE>
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
(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
35
<PAGE>
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
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<PAGE>
not agree within said period (or any mutually agreed upon extension thereof),
the Claimant may seek appropriate legal remedy.
C. With respect to any claim by a third party as to which the
Claimant is entitled to indemnification hereunder, the Indemnifying Party shall
have the right at its own expense, to participate in or assume control of the
defense of such claim, and the Claimant shall cooperate fully with the
Indemnifying Party, subject to reimbursement for reasonable actual out-of-pocket
expenses incurred by the Claimant as the result of a request by the Indemnifying
Party. If the Indemnifying Party elects to assume control of the defense of any
third-party claim, the Claimant shall have the right to participate in the
defense of such claim at its own expense.
D. If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make all reasonable efforts
to reach a decision with respect thereto as expeditiously as possible.
E. If the Indemnifying Party does not elect to assume control
or otherwise participate in the defense of any third party claim, it shall be
bound by the results obtained in good faith by the Claimant with respect to such
claim.
F. The indemnification rights provided in Sections 10.2 and
10.3 shall extend to the shareholders, directors, officers, partners employees
and representatives of the Claimant although for the purpose of the procedures
set forth in this Section 10.4, any indemnification claims by such parties shall
be made by and through the Claimant.
SECTION 11
MISCELLANEOUS
11.1 Notices. All notices, demands, and requests required or permitted
to be given under the provisions of this Agreement shall be (i) in writing, (ii)
delivered by
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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: Brighton Broadcasting, L.P.
680 Clover Street
Rochester, NY 14610
Attn: James Smisloff
and
Craig Fox
4853 Manor Hill Drive
Syracuse, NY 13215
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
38
<PAGE>
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
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<PAGE>
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: BRIGHTON BROADCASTING, L.P.
By: __________________________
Craig Fox, Limited Partner
By: __________________________
James J. Smisloff, General Partner
BUYER: AMERICAN RADIO SYSTEMS CORPORATION
By: __________________________
40
<PAGE>
Title:
ASSETWAQB(FM)
41
<PAGE>
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
3.16 Claims; legal actions
6.10 Tower lease
8.2 Opinion of Seller's General and FCC Counsels
8.3 Opinion of Buyer's General Counsel
42
ASSET EXCHANGE AGREEMENT
By and Among
AMERICAN RADIO SYSTEMS CORPORATION
AMERICAN RADIO SYSTEMS LICENSE CORP.
and
CITICASTERS CO.
Dated as of
December 23, 1996
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
ARTICLE 1 DEFINED TERMS...................................................................................2
ARTICLE 2 EXCHANGE OF LICENSES AND STATIONS...............................................................2
2.1 Agreement to Exchange Licenses and Stations.....................................................2
2.2 Appraisals; Tax Reporting.......................................................................2
2.3 Assumption of Liabilities and Obligations. .....................................................3
2.4 Closing Date....................................................................................6
2.5 Accounts Receivable. ..........................................................................6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF CITICASTERS.................................................. 7
3.1 Organization and Business; Power and Authority; Effect of Transaction..........................8
3.2 Financial and Other Information. ............................................................. 8
3.3 Material Statements and Omissions; Absence of Events............................................9
3.4 Changes in Condition............................................................................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..............................................................................11
3.9 Related Transactions.......................................................................... 11
3.10 Tax Matters....................................................................................12
3.11 Employee Benefit Plans; Citicasters Station Employees..........................................12
3.12 Material Agreements............................................................................13
3.13 Ordinary Course of Business....................................................................13
3.14 Broker or Finder...............................................................................14
3.15 Environmental Matters..........................................................................14
3.16 Trade or Barter................................................................................15
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE AMERICAN.................................................15
4.1 Organization and Business; Power and Authority; Effect of Transaction.........................15
4.2 Financial and Other Information. .............................................................16
4.3 Material Statements and Omissions; Absence of Events...........................................16
4.4 Changes in Condition...........................................................................17
4.5 Title to Properties; Leases....................................................................17
4.6 Compliance with Private Authorizations.........................................................18
4.7 Compliance with Governmental Authorizations and Applicable Law.................................19
4.8 Intangible Assets..............................................................................20
4.9 Related Transactions...........................................................................20
4.10 Tax Matters....................................................................................21
4.11 Employee Benefit Plans; American Station Employees.............................................21
4.12 Material Agreements............................................................................22
4.13 Ordinary Course of Business....................................................................22
4.14 Broker or Finder...............................................................................23
4.15 Environmental Matters..........................................................................23
4.16 Trade or Barter................................................................................24
<PAGE>
ARTICLE 5 COVENANTS......................................................................................24
5.1 Access to Information; Confidentiality.........................................................24
5.2 Agreement to Cooperate.........................................................................25
5.3 Public Announcements...........................................................................30
5.4 Notification of Certain Matters................................................................30
5.5 No Solicitation................................................................................30
5.6 Conduct of Business by Citicasters Pending the Closing.........................................30
5.7 Conduct of Business by American Pending the Closing............................................32
5.8 Risk of Loss...................................................................................33
ARTICLE 6 CLOSING CONDITIONS.............................................................................34
6.1 Conditions to Obligations of Each Party to Effect the Exchange.................................34
6.2 Conditions to Obligations of the American Parties..............................................35
6.3 Conditions to Obligations of Citicasters.......................................................37
ARTICLE 7 TERMINATION, AMENDMENT AND WAIVER..............................................................38
7.1 Termination....................................................................................38
7.2 Effect of Termination..........................................................................39
ARTICLE 8 INDEMNIFICATION................................................................................40
8.1 Survival. .....................................................................................40
8.2 Indemnification................................................................................40
8.3 Limitation of Liability........................................................................41
8.4 Notice of Claims...............................................................................41
8.5 Defense of Third Party Claims..................................................................41
8.6 Exclusive Remedy...............................................................................42
ARTICLE 9 GENERAL PROVISIONS.............................................................................42
9.1 Amendment......................................................................................42
9.2 Waiver.........................................................................................42
9.3 Fees, Expenses and Other Payments..............................................................42
9.4 Notices........................................................................................42
9.5 Specific Performance; Other Rights and Remedies................................................43
9.6 Severability...................................................................................44
9.7 Counterparts...................................................................................44
9.8 Section Headings...............................................................................44
9.9 Governing Law..................................................................................44
9.10 Further Acts...................................................................................44
9.11 Entire Agreement...............................................................................45
9.12 Assignment.....................................................................................45
9.13 Parties in Interest............................................................................45
9.14 Mutual Drafting................................................................................45
9.15 American Agent for American License............................................................45
</TABLE>
APPENDIX A: Definitions
-ii-
<PAGE>
ASSET EXCHANGE AGREEMENT
This ASSET EXCHANGE AGREEMENT (this "Agreement") is dated as of
December 23, 1996, by and among American Radio Systems Corporation, a Delaware
corporation ("American"), American Radio Systems License Corp, a Delaware
corporation ("American License" and, collectively with American, the "American
Parties") and Citicasters Co., an Ohio corporation ("Citicasters").
WHEREAS, Citicasters is the licensee of and operates radio station
WKRQ(FM), Cincinnati, Ohio (the "Citicasters Station") pursuant to licenses
issued by the FCC (the "Citicasters FCC Licenses");
WHEREAS, upon the consummation of the transactions contemplated by the
Asset Purchase Agreement (the "Lincoln Agreement"), dated as of February 23,
1996, as heretofore amended, by and between American and The Lincoln Group, L.
P. ("Lincoln"), American and American License, respectively, will own and
operate, and become the licensee of, radio stations WVOR(FM), WHAM(AM) and
WHTK(AM), Rochester New York (the "American Stations") pursuant to licenses
issued by the FCC (the "American FCC Licenses");
WHEREAS, American has consented to the entry of a Final Judgment with
the United States Department of Justice, dated October 24, 1996, with respect to
the disposition of the American Stations (the "American Consent Decree") and an
Affiliate of Citicasters has consented to the entry of a Final Judgment with the
United States Department of Justice, dated September 11, 1996, with respect to
the disposition of the Citicasters Station (the "Citicasters Consent Decree");
WHEREAS, American License and Citicasters desire to exchange the
American FCC Licenses for the Citicasters FCC Licenses and American and
Citicasters desire to exchange the American Assets (other than the American FCC
Licenses) for the Citicasters Assets (other than the Citicasters FCC Licenses)
on the terms and conditions hereinafter set forth (collectively, the
"Exchange"); and
WHEREAS, the parties hereto intend the Exchange to qualify as a
Like-Kind Exchange;
NOW, THEREFORE, in consideration of the above premises and the
covenants and agreements contained herein, American and Citicasters, intending
to be legally bound, do hereby covenant and agree as follows:
<PAGE>
ARTICLE 1
DEFINED TERMS
As used herein, 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. References to "hereof", "herein" or similar terms are
intended to refer to this 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. The term "either party" shall refer to
Citicasters and the American Parties.
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, Citicasters and American hereby
agree to exchange, transfer and deliver to each other, as applicable, on the
Closing Date, the Citicasters Assets (other than the Citicasters Licenses) and
the American Assets (other than the American Licenses) and Citicasters and
American License hereby agree to exchange, transfer and deliver to each other,
as applicable, the Citicasters FCC Licenses and the American FCC Licenses, in
each case, free and clear of any Liens of any nature whatsoever except Permitted
Liens, on the terms and conditions of this Agreement.
2.2 Appraisals; Tax Reporting.
(a) Citicasters and American and American License agree that the fair
market value of each asset included in the Citicasters Assets and the American
Assets will be determined on the basis of the appraisals (the "Appraisals"),
prepared by the firm of Bond & Pecaro, whose fee and expenses shall be equally
borne by Citicasters and American. The parties shall direct Bond & Pecaro to
deliver Appraisals within sixty (60) days from the date hereof and to set forth
in the Appraisals the fair market value of each asset included in the
Citicasters Assets and the American Assets.
(b) Promptly after delivery of the Appraisals, and in any event prior
to the Closing Date, the parties shall prepare and agree upon the appraised
value of each asset included in the Citicasters Assets and the American Assets
(which values shall be based upon the Appraisals) and shall set forth those
values on a schedule (the "Valuation Schedule"). The parties shall not take any
position inconsistent with the valuations set forth on the Valuation Schedule
and will prepare and file all Tax Returns and reports related to the Exchange,
including without limitation those required under Section 1060 of the Code and
all original and amended federal, state and local income Tax Returns, on a basis
consistent with such valuations. Each asset included in the Citicasters Assets
and each
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asset included in the American Assets shall be set forth in the appropriate
"exchange group" and "residual group" (each within the meaning of Treas. Reg.
section 1.1031(j)-1) on the basis set forth in the Valuation Schedule.
(c) Each of Citicasters and American intend to report the transactions
contemplated hereby as a "like-kind exchange" to the maximum extent permissible
under Section 1031 of the Code, consistent with the Appraisals and the Valuation
Schedule. Each of Citicasters and American shall cooperate with the other in any
and all respects necessary to achieve like-kind exchange treatment to the
maximum extent permissible under Section 1031 of the Code and shall endeavor to
give the other notice of any disallowance of or challenge to such reporting by
any Taxing Authority; provided, however, that the failure to give such notice
shall not result in any liability of the party failing to give the notice.
Without limiting the generality of the foregoing, in order to effectuate the
transactions contemplated hereby as a like-kind exchange to the maximum extent
possible under Section 1031 of the Code, Citicasters may at any time at or prior
to Closing assign its rights, in whole or in part, under this Agreement (but
such assignment shall not relieve it of its obligations under this Agreement) to
a "qualified intermediary" (as defined in Treas. Reg. ss.1.1031(k)-1(g)(4)),
subject to all rights and obligations hereunder of American and (B) shall
promptly provide written notice of such assignment to American and American
License. If Citicasters shall have given notice of such assignment to a
qualified intermediary, American and American License shall (i) promptly provide
Citicasters with written acknowledgment of such notice and (ii) at the Closing,
convey the American Assets (or such portion of them as shall have been
designated in writing by Citicasters) to the "qualified intermediary" rather
than to Citicasters (which conveyance shall, to such extent, discharge the
obligation of American and American License to deliver the American Assets and
the American Stations hereunder).
(d) Notwithstanding the provisions of this Section 2.2, 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. Notwithstanding anything in this
Agreement to the contrary, the obligations of the parties set forth in this
Section 2.2 shall survive the Closing.
2.3 Assumption of Liabilities and Obligations.
(a) The American Parties agree to assume the Citicasters Assumable
Agreements at the Closing or, to the extent provided in the Citicasters Station
TBA, upon the TBA Date of the Citicasters Station TBA. Except as expressly
provided in this Agreement, including without limitation Section 2.3(d), or in
the Citicasters Station TBA, the American Parties shall not assume or become
obligated to perform any debt, liability or obligation of Citicasters or
relating to the ownership or operation of the Citicasters Assets or the conduct
of the business of the Citicasters Station prior to the Closing whatsoever,
other than to the extent set forth in the assumption of the Citicasters
Assumable Agreements. The parties acknowledge and agree that the assumption of
the Citicasters Assumable Agreements shall not, except to the extent of any
proration pursuant to the provisions of Section 2.3(d), entail the assumption by
the American Parties of any obligation or liability of Citicasters with respect
to (i) any obligations or liabilities under the Citicasters
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Assumable Agreements relating to the period prior to the Cut-off Date; (ii) any
Claims to which Citicasters is a party or to which any of the Citicasters Assets
or the Citicasters Station is subject relating to the ownership or operation of
the Citicasters Assets or the conduct of the business of the Citicasters Station
prior to the Closing (other than as provided in the Citicasters Station TBA); or
(iii) any liability for any Taxes attributable to the ownership or operation of
the Citicasters Assets or the Citicasters Station on or prior to the Closing
Date. All such obligations and liabilities (the "Citicasters Nonassumed
Liabilities") shall remain and be the obligations and liabilities solely of
Citicasters.
(b) Citicasters agrees to assume the American Assumable Agreements at
the Closing or, to the extent provided in the American Station TBA, upon the TBA
Date of the American Stations TBA. Except as expressly provided in this
Agreement, including without limitation Section 2.3(e), or in the American
Stations TBA, Citicasters shall not assume or become obligated to perform any
debt, liability or obligation of either American Party or relating to the
ownership or operation of the American Assets or the conduct of the business of
the American Stations prior to the Closing whatsoever, other than to the extent
set forth in the assumption of the American Assumable Agreements. The parties
acknowledge and agree that the assumption of the American Assumable Agreements
shall not, except to the extent of any proration pursuant to the provisions of
Section 2.3(e), entail the assumption by Citicasters of any obligation or
liability of either American Party with respect to (i) any obligations or
liabilities under the American Assumable Agreements relating to the period prior
to the Cut-off Date; (ii) any Claims to which either American Party is a party
or to which any of the American Assets or any of the American Stations is
subject relating to the ownership or operation of the American Assets or the
conduct of the business of the American Stations prior to the Closing (other
than as provided in the American Stations TBA); or (iii) any liability for any
Taxes attributable to the ownership or operation of the American Assets or the
American Stations on or prior to the Closing Date. All such obligations and
liabilities (the "American Nonassumed Liabilities") shall remain and be the
obligations and liabilities solely of the American Parties.
(c) Notwithstanding anything contained in this Agreement to the
contrary and except as otherwise provided in the Citicasters Station TBA or the
American Stations TBA, as the case may be, all items of income and expense
(including without limitation with respect to rent, utilities, Pro Ratable Taxes
and wages, salaries and accrued but unused vacation for employees) arising from
the conduct of the business of the Citicasters Station and American Stations
shall be prorated between American and Citicasters as of 12:01 a.m., Eastern
time, on the Cut-Off Date, with the transferring party responsible for any such
items prior to the Cut-off Date and the transferee party responsible for any
such items subsequent to the Cut-off Date.
(d) Within sixty (60) days after the Cut-Off Date, American shall
deliver to Citicasters a schedule of its proposed prorations with respect to the
American Assets and the American Stations which shall set forth in reasonable
detail the basis for those determinations, and which shall account for any
amount owed by American to Citicasters pursuant to the provisions of Section
2.3(g) (the "Rochester Proration Schedule"). The Rochester Proration Schedule
shall be conclusive and binding upon Citicasters unless Citicasters provides
American with written notice of objection (the "Notice of Disagreement") within
thirty (30) days after Citicasters' receipt of the Rochester Proration Schedule,
which notice shall state the prorations proposed by Citicasters (the
"Citicasters Proration
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Schedule"). American shall have fifteen (15) days from receipt of a Notice of
Disagreement to accept or reject the Citicasters Proration Schedule. If American
rejects the Citicasters Proration Schedule, and the amount in dispute exceeds
Five Thousand Dollars ($5,000), the dispute shall be submitted within ten (10)
days of such rejection to the Chicago, Illinois office of Arthur Andersen & Co.,
LLP (the "Referee") for resolution, such resolution to be made within thirty
(30) days after submission to the Referee and to be final, conclusive and
binding on American and Citicasters. American and Citicasters agree to share
equally the cost and expenses of the Referee, but each party shall bear its own
legal and other expenses, if any. If the amount in dispute is equal to or less
than Five Thousand Dollars ($5,000), such amount shall be divided equally
between Citicasters and American. Payment by Citicasters or American, as the
case may be, of the proration amounts determined pursuant to this Section 2.3(d)
shall be due fifteen (15) days after the last to occur of (i) Citicasters'
acceptance of the Rochester Proration Schedule or failure to give American a
timely Notice of Disagreement; (ii) American's acceptance of the Citicasters
Proration Schedule or failure to reject the Citicasters Proration Schedule
within fifteen (15) days of receipt of a timely Notice of Disagreement; (iii)
American's rejection of the Citicasters Proration Schedule in the event the
amount in dispute equals or is less than Five Thousand Dollars ($5,000); and
(iv) notice to American and Citicasters of the resolution of the disputed amount
by the Referee in the event that the amount in dispute exceeds Five Thousand
Dollars ($5,000).
(e) Within sixty (60) days after the Cut-Off Date, Citicasters shall
deliver to American a schedule of its proposed prorations with respect to the
Citicasters Assets and the Citicasters Station which shall set forth in
reasonable detail the basis for those determinations, and which shall account
for any amount owed by Citicasters to American pursuant to the provisions of
Section 2.3(g) (the "Cincinnati Proration Schedule"). The Cincinnati Proration
Schedule shall be conclusive and binding upon American unless American provides
Citicasters with a Notice of Disagreement within thirty (30) days after
American's receipt of the Cincinnati Proration Schedule, which notice shall
state the prorations proposed by American (the "American Proration Schedule").
Citicasters shall have fifteen (15) days from receipt of a Notice of
Disagreement to accept or reject the American Proration Schedule. If Citicasters
rejects the American Proration Schedule and the amount in dispute exceeds Five
Thousand Dollars ($5,000), the dispute shall be submitted within ten (10) days
of such rejection to the Referee for resolution, such resolution to be made
within thirty (30) days after submission to the Referee and to be final,
conclusive and binding on Citicasters and American. American and Citicasters
agree to share equally the cost and expenses of the Referee, but each party
shall bear its own legal and other expenses, if any. If the amount in dispute is
equal to or less than Five Thousand Dollars ($5,000), such amount shall be
divided equally between American and Citicasters. Payment by American or
Citicasters, as the case may be, of the proration amounts determined pursuant to
this Section 2.3(e) shall be due fifteen (15) days after the last to occur of
(i) American's acceptance of the Cincinnati Proration Schedule or failure to
give Citicasters a timely Notice of Disagreement; (ii) Citicasters' acceptance
of the American Proration Schedule or failure to reject the American Proration
Schedule within fifteen (15) days of receipt of a timely Notice of Disagreement;
(iii) Citicasters' rejection of the American Proration Schedule in the event the
amount in dispute equals or is less than Five Thousand Dollars ($5,000); and
(iv) notice to Citicasters and American of the resolution of the disputed amount
by the Referee in the event that the amount in dispute exceeds Five Thousand
Dollars ($5,000).
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(f) Any payment required by American to Citicasters or by Citicasters
to American, as the case may be, under Section 2.3(d) or 2.3(e) shall be paid by
wire transfer of immediately available funds to the account of the payee with a
financial institution in the United States as designated by such party in the
Cincinnati Proration Schedule or the Rochester Proration Schedule, as the case
may be, or the Notice of Disagreement (or by separate notice in the event a
Notice of Disagreement is not sent). If either American or Citicasters fails to
pay when due any amount under Section 2.3(d) or 2.3(e), interest on such amount
will accrue from the date payment was due to the date such payment is made at a
per annum rate equal to the "prime rate" as published daily in the Money Rates
column of the Wall Street Journal (or the average of such rates if more than one
rate indicated) plus two percent (2%), and such interest shall be payable upon
demand.
(g) With respect to Trade Agreements the assigning party shall be
required to pay to the party assuming the same an amount, if any, by which the
aggregate obligations and liabilities (determined in accordance with GAAP) for
unperformed air time under all such Trade Agreements as of 12:01 a.m. on the
applicable Cut-off Date exceeds by $20,000, the fair market value of the
services or property (determined in accordance with GAAP) to be received by the
assuming party under such Trade Agreements after 12:01 a.m. on the applicable
Cut-off Date under all such Trade Agreements. There shall be no payment required
by the assuming party to the assigning party with respect to the Trade
Agreements, notwithstanding that the excess, if any, of the obligations and
liabilities under the Trade Agreements over the fair market value of the
services and property to be received under such Trade Agreements after 12:01
a.m. on the applicable Cut-off Date is less than the amount specified in the
first sentence of this paragraph.
(h) Nothing contained in this Section 2.3 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 therein.
2.4 Closing Date. The closing of the Exchange (the "Closing") shall
take place at a mutually convenient location to be agreed upon by the parties,
at 10:00 a.m., local time, within ten (10) business days after the satisfaction
or waiver of each of the conditions specified in Article 6 (other than those to
be satisfied at the Closing) or such other date, prior to the Termination Date,
as the parties may agree (the "Closing Date"). At the Closing, (a) each of the
parties shall deliver such deeds (in recordable form and warrantying against
matters not covered by title insurance other than Permitted Liens and Permitted
Title Exceptions), bills of sale, assignments, assumptions of liabilities 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 and
the legal opinions described in Sections 6.2(b) and 6.3(b), and (b) as part of
the American Assets, American shall pay to Citicasters Sixteen Million Dollars
($16,000,000) by wire transfer of immediately available funds to such account as
is designated by Citicasters in written instructions to American not later than
two (2) business days prior to the Closing.
2.5 Accounts Receivable. Effective, if at all, upon the earlier to
occur of Closing or the commencement of the effectiveness of the applicable TBA,
Citicasters hereby appoints American its agent and American hereby appoints
Citicasters its agent for the purpose of collecting all Accounts Receivable
relating to the Citicasters Station and the American Stations, respectively.
Each party shall deliver to the other on or as soon as practicable after the
earlier to occur of the
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applicable TBA Date or the Closing Date (but, in any event, within ten (10) days
after such earlier date) a complete and detailed statement showing the name,
amount and age of each Account Receivable of its Stations. Subject to and
limited by the following, revenues relating to the Citicasters Accounts
Receivable and the American Accounts Receivable will be for the account of
Citicasters and American, respectively. Each agent shall use the same collection
procedures as it uses with respect to its own accounts receivable to collect the
Accounts Receivable with respect to which it is acting as agent for a period of
ninety (90) days after the applicable Cut-off Date (the "Collection Period").
Any payment received by either party during the Collection Period from any
customer with an account which is an Account Receivable with respect to which it
is acting as agent shall first be applied in reduction of such Account
Receivable, unless the customer indicates otherwise in writing. During the
Collection Period, each agent shall furnish the other with a list of, and pay
over to the other, the amounts collected with respect to the Accounts Receivable
with respect to which it is acting as agent within five (5) days after the end
of each month during the Collection Period. Each agent shall provide the other
with a final accounting on or before the fifteenth (15th) day following the end
of the Collection Period. Upon the request of either agent at and after such
time, the parties shall meet to mutually and in good faith analyze any
uncollected Accounts Receivable to determine if the same, in their reasonable
business judgment, are deemed to be collectable and if the party which acted as
agent with respect thereto desires to retain such Accounts Receivable in the
interest of maintaining an advertising relationship. As to each such Accounts
Receivable, the parties shall in good faith attempt to negotiate the value of
such Accounts Receivable, which the purchasing party shall pay to the other if
the purchasing party, in its sole discretion, chooses to retain such Accounts
Receivable. Each party shall retain the right to collect any of its Accounts
Receivable as to which the parties are unable to reach agreement as to such
value, and each party agrees to turn over to the other any payments received
against any such Accounts Receivable. Neither agent shall be obligated to use
any extraordinary efforts 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 neither party shall
make any such referral or compromise, nor settle or adjust the amount of any
such Accounts Receivable, except with the approval of the other party. Neither
agent shall incur any liability to any other party for any uncollected Accounts
Receivable unless such agent shall have engaged in willful misconduct or gross
negligence in the performance of its obligations set forth in this Section.
During and after the Collection Period, without specific agreement with the
agent with respect thereto to the contrary, none of the assigning parties nor
its agents shall make any direct solicitation of the Accounts Receivable for
collection purposes, except for Accounts Receivable retained by the assigning
party after the Collection Period.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF CITICASTERS
Citicasters hereby represents and warrants to American and American
License as follows:
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3.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) Each of Citicasters and Jacor is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization, has all requisite corporate power and authority to own or hold
under lease its properties and to conduct its business as now conducted.
(b) Each of Citicasters and Jacor has all requisite corporate power and
authority necessary to enable it to execute and deliver, and to perform its
obligations under, this Agreement and/or each Collateral Document executed or
required to be executed by it 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 Citicasters or Jacor, as the case may
be. This Agreement has been duly executed and delivered by Citicasters 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 Citicasters or Jacor will
constitute, legal, valid and binding obligations of Citicasters or Jacor, as the
case may be, enforceable in accordance with their respective terms, except as
such enforceability may be limited by bankruptcy, moratorium, insolvency and
similar laws affecting the rights and remedies of creditors and the obligations
of debtors generally and by general principles of equity.
(c) Except as set forth in Section 3.1(c) of the Citicasters Disclosure
Schedule, neither the execution and delivery by Citicasters of this Agreement or
any Collateral Document executed or required to be executed by it or Jacor
pursuant hereto or thereto, nor the consummation by Citicasters of the Exchange
and the other Transactions, nor compliance with the terms, conditions and
provisions hereof or thereof by Citicasters or Jacor:
(i) will conflict with, or result in a breach or violation of,
or constitute a default under, any Organic Document of Citicasters or
Jacor or any Applicable Law on the part of Citicasters or Jacor, or,
subject to obtaining any required consents, 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 Citicasters Material
Agreement; or
(ii) will require Citicasters or Jacor to make or obtain any
Governmental Authorization, Governmental Filing or Private
Authorization, except for the FCC Consents, filings, if required, under
the Hart-Scott-Rodino Act and Private Authorizations, the failure of
which to be obtained or maintained would not, individually or in the
aggregate, have an adverse effect on Citicasters.
(d) Citicasters does not have any direct or indirect Subsidiaries or
other Affiliates which own or have any interest in the Citicasters Station or
any of the Citicasters Assets.
3.2 Financial and Other Information.
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(a) Citicasters has heretofore furnished to American copies of the
unaudited financial statements of the Citicasters Station for the year ended
December 31, 1995 and the nine months ended September 30, 1996 (the "Citicasters
Financial Statements"). The Citicasters Financial Statements have been prepared
on a consistent basis throughout the periods covered thereby, and fairly present
the financial condition, results of operations and cash flow of the Citicasters
Station, as of the respective dates thereof and for the respective periods
covered thereby.
(b) Except solely for the obligations and liabilities to be assumed by
the American Parties pursuant to the Citicasters Assumable Agreements, there
will, at the time of Closing, be no obligations or liabilities of any nature,
whether accrued, absolute, contingent or otherwise, relating to Citicasters, the
Citicasters Assets or the Citicasters Station which could, after the Closing,
result in any form of transferee liability against either American Party or
subject any of the Citicasters Assets or the Citicasters Station to any Lien or
otherwise affect the full, free and unencumbered use of the Citicasters Assets
and the ownership and operation of the Citicasters Station by the American
Parties.
3.3 Material Statements and Omissions; Absence of Events. No
representation or warranty made by Citicasters contained in this Agreement, the
Citicasters Disclosure Schedule or any certificate, document or other instrument
furnished or to be furnished by Citicasters pursuant to the provisions hereof
contains or will contain any untrue statement of a material fact or omits or
will omit to state any material fact required to make any statement contained
herein or therein not misleading. Citicasters is not aware of any impending or
contemplated Event that would cause any of the representations and warranties
made by it in this Article not to be true, correct and complete on the date of
such Event as if made on that date.
3.4 Changes in Condition. Since September 30, 1996, except to the
extent specifically described in Section 3.4 of the Citicasters Disclosure
Schedule, there has been no adverse change in the Citicasters Assets or the
Citicasters Station. There is no Event known to Citicasters which adversely
affects, or (so far as Citicasters can now reasonably foresee) is likely to
adversely affect, the Citicasters Assets or the Citicasters Station, except (a)
to the extent specifically described in Section 3.4 of the Citicasters
Disclosure Schedule and (b) for general business and economic conditions and
matters affecting the radio broadcasting industry generally.
3.5 Title to Properties; Leases.
(a) Citicasters does not own any Real Property which is part of the
Citicasters Assets or used in the operations of the Citicasters Station, other
than the Real Property that will be leased by Citicasters to American pursuant
to the Studio Lease and the Tower Lease (the "Citicasters Real Property").
Citicasters has good and marketable title in fee simple to the Citicaster Real
Property.
(b) Section 3.5(b) of the Citicasters Disclosure Schedule contains a
true, accurate and complete description of all material items of Citicasters
Personal Property. Citicasters owns and has good and merchantable title to all
of the Citicasters Personal Property, free and clear of all Liens, except (i)
Permitted Liens and (ii) Liens set forth on Section 3.5(b) of the Citicasters
Disclosure Schedule (which Liens shall be released prior to Closing). Except as
set forth in Section 3.5(b) of the Citicasters Disclosure Schedule, all of the
Citicasters Personal Property is in a state of good
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repair and maintenance and is in good operating condition, normal wear and tear
excepted, has been maintained in a manner consistent with generally accepted
standards of good engineering practice and currently permits the Citicasters
Station to be operated in accordance with the terms and conditions of the
Citicasters FCC Licenses and all Applicable Laws.
3.6 Compliance with Private Authorizations. Section 3.6 of the
Citicasters Disclosure Schedule sets forth a true, accurate and complete list
and description of each Citicasters Private Authorization which, individually or
when taken together with other substantially similar Citicasters Private
Authorizations, is material to the Citicasters Assets or the Citicasters
Station, all of which are in full force and effect. Citicasters is not in breach
or violation of, or in default in the performance, observance or fulfillment of,
any Citicasters 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
Citicasters Private Authorization, except for as set forth in Section 3.6 of the
Citicasters Disclosure Schedule. No such Private Authorization is the subject of
any pending or, to Citicasters' knowledge, threatened attack, revocation or
termination.
3.7 Compliance with Governmental Authorizations and Applicable Law.
(a) Section 3.7(a) of the Citicasters Disclosure Schedule contains a
description of:
(i) all Claims pending or, to Citicasters' knowledge,
threatened against Citicasters with respect to the business, operation
or ownership of any of the Citicasters Assets or the Citicasters
Station, including without limitation all Claims which, individually or
in the aggregate, are reasonably likely to result in the revocation or
termination of any of the Citicasters FCC Licenses or the imposition of
any restriction of such a nature as would adversely affect the
ownership or operations of the Citicasters Station; in particular, but
without limiting the generality of the foregoing, there are no Claims
pending or, to Citicasters' knowledge, threatened (x) before the FCC
relating to the business or operations of the Citicasters Station other
than Claims which affect the radio broadcasting industry generally, or
(y) before any Authority involving charges of illegal discrimination by
the Citicasters Station under any federal or state employment Laws; and
(ii) each Governmental Authorization (including without
limitation all FCC Licenses) required under Applicable Laws to own and
operate the Citicasters Station, as currently conducted or proposed to
be conducted on or prior to the Closing Date, all of which are in full
force and effect (the "Citicasters Governmental Authorizations").
Attached to the Citicasters Disclosure Schedule are true, correct and complete
copies of the Citicasters Governmental Authorizations (including without
limitation any and all amendments and other modifications thereto).
(b) Citicasters is the authorized legal holder of the FCC Licenses
listed in Section 3.7(a) of the Citicasters Disclosure Schedule, none of which
is subject to any restriction or condition which would limit in any respect the
operations of the Citicasters Station as currently conducted. The Citicasters
FCC Licenses are valid and in good standing, are in full force and effect and
are not
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impaired in any respect by any act or omission of Citicasters or its officers,
directors, employees or agents. The Citicasters Station is operating in
accordance with the Citicasters FCC Licenses, all underlying construction
permits and the FCA. Except as disclosed in Section 3.7(b) of the Citicasters
Disclosure Schedule, no application, action or proceeding is pending for the
renewal or modification of any Citicasters FCC Licenses and, to Citicasters'
knowledge, there is not as of the date of this Agreement issued or outstanding
any investigation or complaint against Citicasters at the FCC relating to the
Citicasters Station. Except as disclosed in Section 3.7(b) of the Citicasters
Disclosure Schedule, as of the date of this Agreement, there is no proceeding
pending at, or outstanding notice of violation from, the FCC relating to the
Citicasters Station. All fees payable to Authorities pursuant to the Citicasters
FCC Licenses, including FCC annual regulatory fees, have been paid and no event
has occurred which, individually or in the aggregate, and without the giving of
notice or the lapse of time or both, would constitute grounds for revocation
thereof or would have an adverse effect on Citicasters. Except (i) as set forth
in Section 3.7(b) of the Citicasters Disclosure Schedule and (ii) for such
reports, forms and statements the failure of which to file would not,
individually or in the aggregate, have an adverse effect on the Citicasters
Station, all reports, forms and statements required to be filed by Citicasters
with the FCC with respect to the Citicasters Station have been filed and are
true, complete and accurate in all respects. To Citicasters' knowledge, under
the FCA, there are no facts that would disqualify it as the transferee of the
control of the American Stations.
The Citicasters Governmental Authorizations comprise all Governmental
Authorizations which are necessary for the lawful ownership or operation of the
Citicasters Assets or the lawful conduct of the business of the Citicasters
Station as now conducted, except for Governmental Authorizations, the failure of
which to obtain and maintain, would not, individually or in the aggregate, have
any adverse effect on the Citicasters Assets or Citicasters Station. No
Citicasters Governmental Authorization is the subject of any pending or, to
Citicasters' knowledge, threatened challenge or proceeding to revoke or
terminate any Citicasters Governmental Authorization. To Citicasters' knowledge,
except as set forth in Section 3.7(b) of the Citicasters Disclosure Schedule,
Citicasters has no reason to believe that, except for the consummation of the
Exchange, any Citicasters Governmental Authorization would not be renewed in the
name of Citicasters by the granting Authority in the ordinary course.
3.8 Intangible Assets. Section 3.8 of the Citicasters Disclosure
Schedule sets forth a true, accurate and complete description of all material
Intangible Assets held or used by Citicasters (other than the Citicasters
Governmental Authorizations and the Citicasters Private Authorizations) relating
to the ownership and operation of the Citicasters Assets or the conduct of the
business of the Citicasters Station (the "Citicasters Intangible Assets"),
including without limitation the nature of Citicasters' interest in each and the
extent to which the same have been duly registered in the offices as indicated
therein. Citicasters owns or possesses or otherwise has the right to use the
Citicasters Intangible Assets.
3.9 Related Transactions. Citicasters is not a party or subject to any
Contractual Obligation relating to the ownership and operation of the
Citicasters Assets or the conduct of the business of the Citicasters Station
between Citicasters and any of its officers, directors, stockholders or
employees or, to the knowledge, of Citicasters, any Affiliate of any thereof,
including without limitation any Contractual Obligation providing for the
furnishing of services to or by, providing
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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) the Citicasters Employee Plans or
Citicasters Material Agreements constituting employment agreements and (ii)
Contracts between Citicasters and its officers which constitute Citicasters
Excluded Assets and Citicasters Nonassumed Obligations.
3.10 Tax Matters. Citicasters has in respect of the Citicasters Assets
and the Citicasters Station 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. There are no unpaid Taxes which are due and
payable, or alleged to be due and payable by any Taxing Authority, the
non-payment of which is or could become a Lien on any of the Citicasters Assets
or the Citicasters Station or result in any transferee liability against either
of the American Parties. All Taxes in respect of the Citicasters Assets and the
Citicasters Station which Citicasters is required by law to withhold and collect
have, to Citicasters' knowledge, been duly withheld and collected, and have been
paid over, in a timely manner, to the proper Authorities to the extent due and
payable.
3.11 Employee Benefit Plans; Citicasters Station Employees..
(a) Section 3.11(a) of the Citicasters Disclosure Schedule contains a
true, accurate and complete list (and brief description) as of the date of this
Agreement of all employee benefit plans applicable to the Citicasters Station
Employees ("Citicasters Employee Plans"). Neither Citicasters nor its Affiliates
maintains any other employee benefit plan, as that term is defined in Section 3
of ERISA, applicable to the Citicasters Station Employees.
(b) Section 3.11(b) of the Citicasters Disclosure Schedule contains a
true, accurate and complete list of all persons employed in the ownership or
operation of any of the Citicasters Assets or the conduct of the business of the
Citicasters Station (the "Citicasters Station Employees"), together with each
such employee's date of hire, the title or capacity in which such person is
employed, and a description of material compensation arrangements (other than
any Citicasters Employee Plans).
(c) Citicasters has received no notice that, and Citicasters is not
aware of, any Citicasters Station Employee who shall or is likely to terminate
his or her employment relationship with the Citicasters Station upon the
execution of this Agreement or after the Closing, except as set forth in Section
3.11(c) of the Citicasters Disclosure Schedule.
(d) Except as described in Section 3.11(d) of the Citicasters
Disclosure Schedule, with respect to the Citicasters Station, (i) none of the
Citicasters Station Employees is now or, to Citicasters' knowledge, has been
represented by any labor union or other employee collective bargaining
organization, and Citicasters is not and never has been a party to any labor or
other collective bargaining agreement with respect to any Citicasters Station
Employee, (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)
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neither Citicasters nor any of such employees is now or, to Citicasters'
knowledge, has been subject to, involved in or threatened with, any union
elections, petitions therefore or other organizational or recruiting activities,
in each case with respect to any Citicasters Station Employee.
3.12 Material Agreements. Listed on Section 3.12 of the Citicasters
Disclosure Schedule are all Material Agreements relating to the ownership or
operation of the Citicasters Assets or the conduct of the business of the
Citicasters Station or to which Citicasters is a party or to which it is bound
or to which any of the Citicasters Assets is subject (the "Citicasters Material
Agreements"). True, accurate and complete copies of each of such Material
Agreements have been made available by Citicasters to American and Citicasters
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 3.12 of the Citicasters Disclosure Schedule, if any such
Material Agreements are oral). All of the Citicasters Material Agreements are
valid, binding and legally enforceable obligations of Citicasters and, to
Citicasters' knowledge, all other parties thereto, and Citicasters is validly
and lawfully conducting the business of the Citicasters Station and owning and
operating the Citicasters Assets under each of the Citicasters Material
Agreements. Citicasters has duly complied with all of the terms and conditions
of each Material Agreement and has not done or performed, or failed to do or
perform (and, to Citicasters' knowledge, there is no pending or threatened Claim
that Citicasters 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) any of
the Citicasters Material Agreements or impair the rights or benefits, or
increase the costs, of Citicasters under any of Citicasters Material Agreement.
Citicasters has not expressly granted any waivers or forbearance under any
Citicasters Material Agreement and, to Citicasters' knowledge, no third party is
in material default in the performance of any of its obligations under any
Citicasters Material Agreement. Except for those consents or approvals listed in
Section 3.12 of the Citicasters Disclosure Schedule, no consents or approvals of
any third party are necessary to permit the assignment by the Citicasters
Parties of the Citicasters Material Agreements to American and such assignment
will not affect the validity or enforceability of any Citicasters Material
Agreement or cause any material change in the substantive terms of any of them.
3.13 Ordinary Course of Business. Citicasters, from September 30, 1996
to the date hereof, except (i) as may be described on Section 3.13 of the
Citicasters Disclosure Schedule, or (ii) as may be required or expressly
contemplated by the terms of this Agreement, with respect to the Citicasters
Assets and the Citicasters Station, has operated its business in the normal,
usual and customary manner in the ordinary and regular course of business,
consistent with prior practice and
(a) has not sold or otherwise disposed of or contracted to
sell or otherwise dispose of any of the Citicasters Assets;
(b) other than in the ordinary course of business, consistent
with prior practice:
(i) has not made or committed to make any additions
to its property or any purchases of equipment, except for
normal maintenance and replacements; and
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(ii) 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;
(c) 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; and
(d) has not experienced any work stoppage.
3.14 Broker or Finder. No Person assisted in or brought about the
negotiation of this Agreement, the Exchange or the subject matter of any other
Transaction in the capacity of broker, agent or finder or in any similar
capacity on behalf of Citicasters.
3.15 Environmental Matters. Except as set forth in Section 3.15 of the
Citicasters Disclosure Schedule, solely with respect to the Citicasters Assets
and the Citicasters Real Property, Citicasters:
(a) to Citicasters' knowledge, has not been notified in
writing that it is potentially liable under, has not received any
written 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;
(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;
(d) is, to Citicasters' knowledge, in substantial compliance
with all Environmental Laws, has, to Citicasters' knowledge, obtained
all Environmental Permits required under Environmental Laws, and is not
the subject of or, to Citicasters' knowledge, threatened with any Legal
Action involving a demand for damages or other potential liability
including any Lien with respect to violations or breaches of any
Environmental Law;
(e) has no knowledge of any past or present Event which,
individually or in the aggregate, will interfere with or prevent
continued compliance with all Environmental Laws, or which,
individually or in the aggregate, will form the basis of any Claim for
the release or threatened release into the environment, of any
Hazardous Material; and
(f) has no knowledge that any Hazardous Material is or has
been located at, on, in or under, or has been released or transported
from, the Citicasters Assets or the Citicasters Real Property in such
manner so as to require remediation, removal or cleanup or other
liability under, any Environmental Laws.
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Notwithstanding anything to the contrary contained in this Agreement,
Citicasters makes no representation or warranty with respect to its compliance
with Environmental Laws or environmental matters generally, except as
specifically set forth in this Section, the Studio Lease or the Tower Lease
3.16 Trade or Barter. Section 3.16 of the Citicasters Disclosure
Schedule sets forth a true, complete and accurate description (including
obligations and liabilities remaining thereunder) of all Citicasters Trade
Agreements that individually involve or may involve, valued in accordance with
GAAP, more than $500 in obligations remaining thereunder as of the date of this
Agreement in money, property or services or a remaining term in excess of two
months.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE AMERICAN PARTIES
The American Parties, jointly and severally, represent and warrant to
Citicasters as follows:
4.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) Each of the American Parties is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization, has all requisite corporate power and authority to own or hold
under lease its properties and to conduct its business as now conducted.
(b) Each of the American Parties has all requisite corporate power and
authority 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 by it 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 the American Parties. This Agreement
has been duly executed and delivered by the American Parties 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 an American Party will constitute, legal, valid and
binding obligations of such American Parties, enforceable in accordance with
their respective terms, except as such enforceability may be limited by
bankruptcy, moratorium, insolvency and similar laws affecting the rights and
remedies of creditors and obligations of debtors generally and by general
principles of equity.
(c) Except as set forth in Section 4.1(c) of the American Disclosure
Schedule, neither the execution and delivery by the American Parties of this
Agreement or any Collateral Document executed or required to be executed by
either of them pursuant hereto or thereto, nor the consummation by the American
Parties of the Exchange and the other Transactions, nor compliance with the
terms, conditions and provisions hereof or thereof by the American Parties:
(i) will conflict with, or result in a breach or violation of,
or constitute a default under, any Organic Document of the American
Parties or any Applicable Law on the part
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of the American Parties, or subject to obtaining any required consents,
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 American Material Agreement; or
(ii) will require American to make or obtain any Governmental
Authorization, Governmental Filing or Private Authorization, except for
the FCC Consents, filings, if required, under the Hart-Scott-Rodino Act
and Private Authorizations, the failure of which to be obtained or
maintained would not, individually or in the aggregate, have an adverse
effect on American.
(d) Neither of the American Parties has any direct or indirect
Subsidiaries or other Affiliates which own or have any interest in the American
Stations or any of the American Assets. American owns all of the outstanding
capital stock of American License, all of which stock is duly authorized,
validly issued, fully paid and nonassessable.
4.2 Financial and Other Information.
(a) American has heretofore furnished to Citicasters copies of the
unaudited financial statements of the American Stations for the year ended
December 31, 1995 and the nine months ended September 30, 1996 (the "American
Financial Statements"). The American Financial Statements have been prepared on
a consistent basis throughout the periods covered thereby, and fairly present
the financial condition, results of operations and cash flow of the American
Stations, as of the respective dates thereof and for the respective periods
covered thereby.
(b) Except solely for the obligations and liabilities to be assumed by
the Citicasters Parties pursuant to the American Assumable Agreements, there
will, at the time of Closing, be no obligations or liabilities of any nature,
whether accrued, absolute, contingent or otherwise, relating to the American
Parties, the American Assets or the American Stations which could, after the
Closing, result in any form of transferee liability against either Citicasters
Party or subject any of the American Assets or the American Stations to any Lien
or otherwise affect the full, free and unencumbered use of the American Assets
and the ownership and operation of the American Stations by Citicasters.
4.3 Material Statements and Omissions; Absence of Events. No
representation or warranty made by the American Parties contained in this
Agreement, the American Disclosure Schedule or any certificate, document or
other instrument furnished or to be furnished by the American Parties pursuant
to the provisions hereof contains or will contain any untrue statement of a
material fact or omits or will omit to state any material fact required to make
any statement contained herein or therein not misleading. Neither American nor
American License is aware of any impending or contemplated Event that would
cause any of the representations and warranties made by it in this Article not
to be true, correct and complete on the date of such Event as if made on that
date.
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4.4 Changes in Condition. Since September 30, 1996, except to the
extent specifically described in Section 4.4 of the American Disclosure
Schedule, there has been no adverse change in the American Assets or the
American Stations. There is no Event known to the American Parties which
adversely affects, or (so far as the American Parties can now reasonably
foresee) is likely to adversely affect, the American Assets or the American
Stations, except (a) to the extent specifically described in Section 4.4 of the
American Disclosure Schedule and (b) for general business and economic
conditions and matters affecting the radio broadcasting industry generally.
4.5 Title to Properties; Leases.
(a) Section 4.5(a) of the American Disclosure Schedule lists all Real
Property owned by Lincoln or the American Parties (the "American Owned Real
Property") and describes all Leases of Real Property (the "American Leases")
which is used or held for use in the operation of the American Stations (the
American Owned Real Property and the real property subject to the American
Leases, being hereinafter collectively referred to as the "American Real
Property"). American will, as of the time of the consummation of the
transactions contemplated by the Lincoln Agreement, have (and Citicasters will
upon Closing obtain) good and marketable title to the Owned Real Property and
valid and subsisting leasehold interests in the American Leases (as shown on
Section 4.5(a) of the American Disclosure Schedule), 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 (which Liens shall be released prior
to Closing). Lincoln has and, as of the time of the consummation of the
transactions contemplated by the Lincoln Agreement, American will have, full
legal and practical access to all of the American Real Property, and all
easements, rights of way, and real property licenses relating thereto have been
properly recorded in the appropriate public recording offices, except to the
extent, if any, set forth in Section 4.5(a) of the American Disclosure Schedule.
The American Owned Real Property, together with the real property that is
subject to the American Leases, includes all the real property, easements,
rights of way, and other real property interests necessary to conduct the
business and operations of the American Stations as they are now conducted. None
of the buildings, structures, improvements or fixtures constructed on any
American Owned Real Property and real property that is subject to the American
Leases, including without limitation all towers, guy wires and guy anchors and
ground radials, encroach upon adjoining real property, and all such buildings,
structures, improvements and fixtures, are constructed and are operated and used
in conformance in all material respects with all "set back" lines, easements,
covenants, restrictions and all applicable building, fire, zoning, health and
safety laws and codes, except to the extent, if any, set forth in Section 4.5(a)
of the American Disclosure Schedule. No utility lines serving such real property
pass over the lands of a third party except where appropriate easements have
been obtained or except as set forth in Section 4.5(a) of the American
Disclosure Schedule. All buildings, structures, towers, antennae, improvements
and fixtures comprising the American Owned Real Property or real property that
is subject to the American Leases are in good and technically sound operating
condition, have no latent structural mechanical or other defects of material
significance, are reasonably suited for the purposes for which they are being
used and each has adequate rights of ingress and egress, utility service for
water and sewer, telephone, electric and/or gas, and sanitary service for the
conduct of the business and operations of the American Stations as presently
conducted, except to the extent, if any, set forth in Section 4.5(a) of the
American Disclosure Schedule. There is no pending or, to American's
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knowledge, threatened condemnation or other legal proceeding or action of any
kind relating to such real property and/or title thereto.
Except as otherwise set forth in Schedule 4.5(a) of the American
Disclosure Schedule, each American Lease included in the American Real Property
has been duly authorized, executed and delivered by Lincoln and, to American's
knowledge, each of the other parties thereto, and, as of the time of the
consummation of the transactions contemplated by the Lincoln Agreement and the
concurrent assignment of the American Leases by Lincoln to American, will be a
legally valid and binding obligation of American, and, to American's knowledge,
each of the other parties thereto, enforceable in accordance with its terms.
American will, as of the time of the consummation of the transactions
contemplated by the Lincoln Agreement, enjoy peaceful and undisturbed possession
under all American Leases pursuant to which it will hold any American Real
Property. All of the American Leases are valid and subsisting and in full force
and effect; neither Lincoln is (nor American, as of the time of the consummation
of the transactions contemplated by the Lincoln Agreement and the concurrent
assignment of the American Leases by Lincoln to American, will be) nor, to
American's knowledge, any other party thereto, is in default in the performance,
observance or fulfillment of any obligation, covenant or condition contained in
any American Lease.
(b) Section 4.5(b) of the American Disclosure Schedule contains a true,
accurate and complete description of all material items of American Personal
Property. American, as of the time of the consummation of the transactions
contemplated by the Lincoln Agreement, will own and have good and merchantable
title to all of the American Personal Property, free and clear of all Liens,
except (i) Permitted Liens and (ii) Liens set forth on Section 4.5(b) of the
American Disclosure Schedule (which Liens shall be released prior to Closing).
Except as set forth in Section 4.5(b) of the American Disclosure Schedule, all
of the American Personal Property is in a state of good repair and maintenance
and in good operating condition, normal wear and tear excepted, has been
maintained in a manner consistent with generally accepted standards of good
engineering practice and currently permits the American Stations to be operated
in accordance with the terms and conditions of the American FCC Licenses and all
Applicable Laws.
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 American Private Authorization which, individually or when
taken together with other substantially similar American Private Authorizations,
is material to the American Assets or the American Stations, all of which are in
full force and effect. There does not exist any breach or violation of, or in
default in the performance, observance or fulfillment of, any American 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 American Private
Authorization, except for as set forth in Section 4.6 of the American Disclosure
Schedule. No such Private Authorization is the subject of any pending or, to
American's knowledge, threatened attack, revocation or termination.
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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 Claims pending or, to American's knowledge,,
threatened against either of the American Parties or Lincoln with
respect to the business, operation or ownership of any of the American
Assets or any of the American Stations, including without limitation
all Claims which, individually or in the aggregate, are reasonably
likely to result in the revocation or termination of any of the
American FCC Licenses or the imposition of any restriction of such a
nature as would adversely affect the ownership or operations of the
American Stations; in particular, but without limiting the generality
of the foregoing, there are no Claims pending or, to American's
knowledge, threatened (x) before the FCC relating to the business or
operations of the American Stations other than Claims which affect the
radio broadcasting industry generally, or (y) before any Authority
involving charges of illegal discrimination by the American Stations
under any federal or state employment Laws; and
(ii) each Governmental Authorization (including without
limitation all FCC Licenses) required under Applicable Laws to own and
operate the American Stations, as currently conducted or proposed to be
conducted on or prior to the Closing Date, all of which are (except
such, if any, that are conditioned on consummation of the transactions
contemplated by the Lincoln Agreement which will, upon such
consummation, be) in full force and effect (the "American Governmental
Authorizations").
Attached to the American Disclosure Schedule are true and complete copies of the
American Governmental Authorizations (including without limitation any and all
amendments and other modifications thereto).
(b) American License will, as of the time of the consummation of the
transactions contemplated by the Lincoln 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, at such time, be subject to any restriction or
condition which would limit in any respect the operations of the American
Stations as proposed to be conducted by American on or prior to the Closing
Date. The American FCC Licenses are valid and in good standing, in full force
and effect and are not impaired in any respect by any act or omission of the
American Parties, Lincoln or their respective officers, directors, employees or
agents. The American Stations are operating in accordance with the American FCC
Licenses, all underlying construction permits and the FCA. Except (i) as
disclosed in Section 4.7(b) of the American Disclosure Schedule and (ii) for
those relating to the transfer of the American FCC Licenses from Lincoln to
American License, no application, action or proceeding is pending for the
renewal or modification of any American FCC Licenses and, to American's
knowledge, there is not as of the date of this Agreement issued or outstanding
any investigation or complaint against either American Party or Lincoln at the
FCC relating to any of the American Stations. Except as disclosed in Section
4.7(b) of the American Disclosure Schedule, as of the date of this Agreement,
there is no proceeding pending at, or outstanding notice of violation from, the
FCC relating to any of the American Stations. All fees payable to Authorities
pursuant to the American FCC Licenses, including FCC annual regulatory fees have
been paid and no event has occurred which, individually or in the aggregate, and
without the giving of notice or the lapse of
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time or both, would constitute grounds for revocation thereof or would have an
adverse effect on American. Except (i) as set forth in Section 4.7(b) of the
American Disclosure Schedule and (ii) for such reports, forms and statements the
failure of which to file would not, individually or in the aggregate, have an
adverse effect on the American Stations, all reports, forms and statements
required to be filed by the American Parties or Lincoln with the FCC with
respect to the American Stations have been filed and are true, complete and
accurate in all respects. To American's knowledge, under the FCA, there are no
facts that would disqualify it as the transferee of the control of the
Citicasters Station.
The American Governmental Authorizations comprise all Governmental
Authorizations which are necessary for the lawful ownership or operation of the
American Assets or the lawful conduct of the business of the American Stations
as presently conducted or as proposed to be conducted by the American Parties
prior to the Closing Date, except for Governmental Authorizations, the failure
of which to obtain and maintain, would not, individually or in the aggregate,
have any adverse effect on the American Assets or the American Stations. No
American Governmental Authorization is the subject of any pending or, to
American's knowledge, threatened challenge or proceeding to revoke or terminate
any American Governmental Authorization. To American's knowledge, except as set
forth in Section 4.7(b) of the American Disclosure Schedule, American has no
reason to believe that, except for the consummation of the transactions
contemplated by the Lincoln Agreement or the Exchange, any American Governmental
Authorization would not be renewed by the granting Authority in the ordinary
course.
4.8 Intangible Assets. Section 4.8 of the American Disclosure Schedule
sets forth a true, accurate and complete description of all material Intangible
Assets held or used by Lincoln (other than the American Governmental
Authorizations and the American Private Authorizations) relating to the
ownership and operation of the American Assets or the conduct of the business of
the American Stations (the "American Intangible Assets"), including without
limitation the nature of Lincoln's interest in each and the extent to which the
same have been duly registered in the offices as indicated therein. American
will, as of the time of the consummation of the transactions contemplated by the
Lincoln Agreement, own or possess or otherwise have the right to use the
American Intangible Assets.
4.9 Related Transactions. Neither of the American Parties nor Lincoln
is 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 the
American Stations between Lincoln or either of the American Parties and any of
their respective officers, directors, stockholders or employees or, to
American's knowledge, 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) the American
Employee Plans and American Material Agreements constituting employment
agreements, (ii) Contracts between American and its officers which constitute
American Excluded Assets and American Nonassumed Obligations, (iii) Contracts
between Lincoln and any of its Affiliates or any of their officers, directors,
partners, stockholders or employees which will not be part of the American
Assets and will constitute American Excluded Assets and American Nonassumed
Obligations, and (iv) a management agreement between American and American
License.
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4.10 Tax Matters. Lincoln has, and as of the consummation of the
transactions contemplated by the Lincoln Agreement American will have, 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. There are no
unpaid Taxes which are due and payable, or alleged to be due and payable by any
Taxing Authority, the non-payment of which is or could become a Lien on any of
the American Assets or the American Stations or result in any transferee
liability against Citicasters. All Taxes in respect of the American Assets and
the American Stations which Lincoln is required by law to withhold and collect
have, to American's knowledge, been duly withheld and collected, and have been
paid over, in a timely manner, to the proper Authorities to the extent due and
payable.
4.11 Employee Benefit Plans; American Station Employees.
(a) Section 4.11(a) of the American Disclosure Schedule contains a
true, accurate and complete list (and brief description) as of the date of this
Agreement of all employee benefit plans which will be applicable to the American
Station Employees ("American Employee Plans"). Neither American nor its
Affiliates maintains any other employee benefit plan, as that term is defined in
Section 3 or ERISA, applicable to the American Station Employees.
(b) Section 4.11(b) of the American Disclosure Schedule contains a
true, accurate and complete list, to American's knowledge, of all persons
employed by Lincoln in the ownership or operation of any of the American Assets
or the conduct of the business of the American Stations (the "American Station
Employees"), together with each such employee's date of hire, the title or
capacity in which such person is employed, and a description of material
compensation arrangements (other than any American Employee Plans).
(c) American has received no notice that, and American is not aware of,
any American Station Employee who shall or is likely to terminate his or her
employment relationship with the American Stations upon the consummation of the
transactions contemplated by the Lincoln Agreement, the execution of this
Agreement or after the Closing, except as set forth in Schedule 4.11(c) of the
American Disclosure Schedule.
(d) Except as described in Section 4.11(d) of the American Disclosure
Schedule, with respect to the American Stations, (i) none of the American
Station Employees is now or, to American's knowledge, has been represented by
any labor union or other employee collective bargaining organization, and
neither Lincoln nor the American Parties is or has been a party to any labor or
other collective bargaining agreement with respect to any American Station
Employee, (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 Lincoln nor the American Parties nor any of such employees is now
or, to American's knowledge, has been subject to, involved in or threatened
with, any union elections, petitions therefore or other organizational or
recruiting activities, in each case with respect to any American Station
Employee.
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4.12 Material Agreements. Listed on Section 4.12 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 the American
Stations or to which American will, as of the time of the consummation of the
transactions contemplated by the Lincoln Agreement, be a party or to which any
of the American Assets will, at such time, be subject (the "American Material
Agreements"). True, accurate and complete copies of each of such Material
Agreements have been made available by American to Citicasters and American has
provided Citicasters with photocopies of all such Material Agreements requested
by Citicasters (or true, accurate and complete descriptions thereof have been
set forth in Section 4.12 of the American Disclosure Schedule, if any such
Material Agreements are oral). As of the time of the consummation of the
transactions contemplated by the Lincoln Agreement and the concurrent assignment
of the American Material Agreements by Lincoln to American, all of the American
Material Agreements will be valid, binding and legally enforceable obligations
of American and, to American's knowledge, all other parties thereto, and as of
such time American will be lawfully conducting the business of the American
Stations and owning and operating the American Assets under each of the American
Material Agreements. Lincoln has, and as of the time of the consummation of the
transactions contemplated by the Lincoln Agreement each of the American Parties
will have, duly complied with all of the terms and conditions of each Material
Agreement and Lincoln has not, and as of such time the American Parties will not
have, done or performed, or failed to do or perform (and, to American's
knowledge, there is no pending or threatened Claim that Lincoln 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) any of the American Material Agreements
or impair the rights or benefits, or increase the costs, American under any of
American Material Agreement. Neither Lincoln nor either of the American Parties
has expressly granted any waivers or forbearance under any American Material
Agreement and, to American's knowledge, no third party is in material default in
the performance of any of its obligations under any American Material Agreement.
Except for those consents or approvals listed in Section 4.12 of the American
Disclosure Schedule, no consents or approvals of any third party are necessary
to permit the assignment by American of the American Material Agreements to
Citicasters and such assignment will not affect the validity or enforceability
of any American Material Agreement or cause any material change in the
substantive terms of any of them. American has delivered to Citicasters a true,
complete and correct copy of the Lincoln Agreement, including all schedules,
exhibits and disclosure schedules thereto.
The Lincoln Agreement is in full force and effect.
4.13 Ordinary Course of Business. Lincoln, from September 30, 1996 to
the date hereof, except (i) as may be described on Section 4.13 of the American
Disclosure Schedule, or (ii) as may be required or expressly contemplated by the
terms of this Agreement or the Lincoln Agreement, with respect to the American
Assets and the American Stations, has operated its business in the normal, usual
and customary manner in the ordinary and regular course of business, consistent
with prior practice and
(a) has not sold or otherwise disposed of or contracted to
sell or otherwise dispose of any of the American Assets;
(b) other than in the ordinary course of business, consistent
with prior practice:
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(i) has not made or committed to make any additions
to its property or any purchases of equipment, except for
normal maintenance and replacements; and
(ii) 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;
(c) 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; and
(d) has not experienced any work stoppage.
4.14 Broker or Finder. No Person assisted in or brought about the
negotiation of this Agreement, the Exchange or the subject matter of any other
Transaction in the capacity of broker, agent or finder or in any similar
capacity on behalf of the American Parties, other than Blackburn & Company,
Inc., whose fees and expenses shall be the sole responsibility of the American
Parties.
4.15 Environmental Matters. Except as set forth in Section 4.15 of the
American Disclosure Schedule, solely with respect to the American Assets,
neither the American Parties nor Lincoln:
(a) to American's knowledge, has been notified in writing that
any of them is potentially liable under, has received any written
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;
(b) has entered into or received any consent decree,
compliance order or administrative order issued pursuant to any
Environmental Law;
(c) is 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;
(d) is not, to American's knowledge, in substantial compliance
with all Environmental Laws, has not, to American's knowledge, obtained
all Environmental Permits required under Environmental Laws, or is the
subject of or, to American's knowledge, threatened with any Legal
Action involving a demand for damages or other potential liability
including any Lien with respect to violations or breaches of any
Environmental Law;
(e) has knowledge of any past or present Event which,
individually or in the aggregate, will interfere with or prevent
continued compliance with all Environmental Laws, or which,
individually or in the aggregate, will form the basis of any Claim for
the release or threatened release into the environment, of any
Hazardous Material; and
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(f) has no knowledge that any Hazardous Material is or has
been located at, on, in or under, or has been released or transported
from, the American Assets or the American Real Property in such manner
so as to require remediation, removal or cleanup or other liability
under, any Environmental Laws.
Notwithstanding anything to the contrary contained in this Agreement,
the American Parties make no representation or warranty with respect to their
compliance with Environmental Laws or environmental matters generally, except as
specifically set forth in this Section.
4.16 Trade or Barter. Section 4.16 of the American Disclosure Schedule
sets forth a true, complete and accurate description (including obligations and
liabilities remaining thereunder) of all American Trade Agreements that
individually involve or may involve, valued in accordance with GAAP, more than
$500 in obligations remaining thereunder as of the date of this Agreement in
money, property or services or a remaining term in excess of two months.
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 Lincoln Agreement American will use its
reasonable business efforts to cause Lincoln 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 any other report, schedule or documents which may have a
material effect on the businesses, operations, properties, prospects, personnel,
condition, (financial or other), or results of operations of their respective
Assets or Stations, (ii) to the extent not provided for pursuant to the
preceding clause, all financial records, ledgers, work papers and other sources
of financial information possessed or controlled by (x) Citicasters or its
accountants deemed by American or its Representatives necessary or useful for
the purpose of performing an audit of the business of the Citicasters Station
and certifying financial statements and financial information pursuant to the
provisions of Section 6.2(d), and (y) American or its accountants deemed by
Citicasters or its Representatives necessary or useful for the purpose of
performing an audit of the business of the American Stations and certifying
financial statements and financial information pursuant to the provisions of
Section 6.3(d), and (iii) such other information concerning any of the foregoing
as American or Citicasters 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
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whatsoever, in whole or in part, and, except as required by Applicable Law
(including without limitation in connection with any registration statement or
similar document filed pursuant to any federal or state securities Law) shall
not be used for any purposes, other than in connection with the Exchange and the
other Transactions. Except as otherwise herein provided, 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 and
consummating the Exchange and the other Transactions who are informed of the
confidential nature of such information. From and after the Closing, each of the
parties shall not, without the prior written consent of the other party,
disclose any information remaining in its possession with respect to the Assets
and Stations conveyed by it pursuant to the Exchange and no such information
shall be used for any purposes, other than in connection with the Exchange and
the other Transactions or to the extent required by Applicable Law.
(b) Notwithstanding the provisions of Section 5.1(a), each party may
disclose such information as it may reasonably determine to be necessary in
connection with seeking all Governmental and Private Authorizations or that is
required by Applicable Law to be disclosed, including without limitation in any
registration statement or other document required to be filed under any federal
or state securities Law. 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 Orders 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, if required, filings within ten (10) business days of the date of
this Agreement under the Hart-Scott-Rodino Act and all filings necessary for
American and Citicasters to own and operate the Citicasters Station 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
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Transactions as expeditiously as possible), and (v) to obtain the satisfaction
of the conditions specified in Article 6, 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. 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 execution of
this Agreement, Citicasters 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, such party shall use reasonable business efforts to comply
with such condition unless compliance would have a material adverse effect upon
it. If reconsideration or judicial review is sought with respect to any FCC
Consent, Citicasters 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). Notwithstanding anything in this Agreement to the contrary, the
Exchange is expressly conditioned upon the grant of the Final Order as to the
FCC Consents for the assignment of the FCC Licenses for the Stations without any
condition which would have a materially adverse effect upon the party acquiring
such Stations.
(b) The parties shall cooperate with one another in the preparation of
all Returns, questionnaires, applications or other documents regarding any Taxes
or transfer, recording, registration or other fees which become payable in
connection with the Exchange and the other Transactions that are required to be
filed on or before the Closing Date.
(c) Citicasters 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 Citicasters and
Citicasters' or American's independent accountants prepare audited financial
statements for the Citicasters Station described in Section 6.2(d). Citicasters
represents and warrants that such financial statements will have been prepared
in accordance with GAAP applied on a basis consistent with past practices and
will present fairly the financial condition and results of operation of the
Citicasters Station. Without limiting the generality of the foregoing,
Citicasters 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 Affiliates under the Securities Act or the Exchange Act and (ii)
execute and deliver, and cause its officers to execute and deliver, such
"representation" letters as are customarily delivered in connection with audits
and as American's or Citicasters' independent accountants may reasonably request
under the circumstances. American shall cooperate and use its reasonable
business efforts to cause its independent accountants to reasonably cooperate
with Citicasters, and at Citicasters' expense, in order to enable Citicasters to
have American and American's or Citicasters' independent accountants prepare
audited and unaudited financial statements for the American Stations described
in Section 6.3(d). American represents and warrants that such financial
statements will have been prepared in accordance with GAAP applied on a basis
consistent with past practices and will present fairly the financial condition
and results of operation of the American Stations. Without limiting the
generality of the foregoing, American agrees that it will (i) consent to the use
of such financial
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statements in any registration statement or other document filed by Citicasters
(or any of its Affiliates) under the Securities Act or the Exchange Act and (ii)
execute and deliver, and cause its officers to execute and deliver, such
"representation" letters as are customarily delivered in connection with audits
and as Citicasters' or American's independent accountants may reasonably request
under the circumstances.
(d) The parties acknowledge and agree that they will in good faith
continue discussions with regard to the negotiation, execution and delivery of a
time brokerage agreement pursuant to which American would time broker the
Citicasters Station (the "Citicasters Station TBA"), and a time brokerage
agreement pursuant to which Citicasters would time broker each of the American
Stations (the "American Stations TBA"). 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, (i) Citicasters 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
operation of the other party under the Citicasters Station TBA and the American
Stations TBA, respectively, (ii) Citicasters and American shall not be liable in
any respect to the extent any of its covenants contained in Article 5 are
breached in any material respect on and as of the Closing Date due solely to the
operation of the other party under the Citicasters Station TBA and the American
Stations TBA, respectively, (iii) the conditions set forth in Sections 6.2(f)
and 6.3(f) 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 Citicasters Station
TBA and of Citicasters pursuant to the provisions of the American Stations TBA,
respectively, and (iv) the certificates to be delivered to American and
Citicasters 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 or any of such
covenants that are breached in any material respect on and as of the Closing
Date due to the operation of the other party under the TBA Agreements.
(e) Within thirty (30) days after the execution of this Agreement,
American shall, at its expense, (i) commission a qualified title company to
prepare and provide to Citicasters a preliminary title report with respect to
the American Real Property (the "Preliminary Title Report"), and promptly
provide a copy of the Preliminary Title Report to Citicasters, together with
complete copies of all documents relating to the title exceptions referred to in
the Preliminary Title Report and (ii) commission a qualified surveyor (licensed
in New York) to prepare and provide to Citicasters hereto a survey ("Survey") of
the American Real Property depicting the location of all title exceptions.
Citicasters shall have the right to disapprove of any title exceptions or survey
exceptions (whether nor not disclosed on the Preliminary Title Report) which in
its reasonable business judgment have a material adverse impact on the title to
the American Real Property or its intended use and shall notify American of any
such disapproval within ten (10) business days after its receipt of both the
Preliminary Title Report and the Survey. All title exceptions set forth in the
Preliminary Title Report and any supplemental reports or updates to the
Preliminary Title Report and not disapproved within the time periods provided
herein shall constitute "Permitted Title Exceptions". Prior to the Closing,
American shall, at its expense, remove or cause to be removed all disapproved
exceptions relating to the American Real Property (the "Disapproved Matters")
or, in the alternative, obtain title insurance in a form reasonably satisfactory
to Citicasters insuring against the effect of
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such Disapproved Matters; provided, however, that American shall not be
obligated to spend more than $150,000 in its attempt to remove or insure over
any such Disapproved Matters (other than monetary Liens which shall be required
to be removed regardless of the amount thereof). American shall notify
Citicasters within ten (10) days after receipt of the notice of Disapproved
Matters whether it intends to remove the same. If American is unable to remove
or endorse over any such Disapproved Matters, or if American exercises its right
not to remove one or more Disapproved Matters, Citicasters may elect (i) to
terminate this Agreement or (ii) to waive such Disapproved Matters (such
Disapproved Matters shall then be deemed to be Permitted Title Exceptions), in
which event Citicasters shall receive a credit at the Closing in the amount (up
to the positive difference, if any, between (x) $150,000 and (y) the amount
theretofore expended by American pursuant to the provisions of this Section
5.2(e) ) reasonably necessary to remove or endorse over the Disapproved Matters
or, if the Disapproved Matters cannot be removed or endorsed over, to compensate
it for the reduction in value of such American Real Property resulting from such
Disapproved Matters.
(f) Within thirty (30) days after the execution of this Agreement, each
of American and Citicasters may, at its sole expense, commission a qualified
engineering firm to conduct a Phase I environmental study of the Citicasters
Real Property or the American Real Property, respectively (the study done by
American on such Citicasters Real Property is hereinafter called the "American
Study"; and the study done by Citicasters on the American Real Property is
hereinafter called the "Citicasters Study"). If American promptly notifies
Citicasters in writing that the American Study discloses a material
environmental liability constituting a breach of the representations and
warranties of Citicasters contained in Section 3.15 without regard to any
knowledge qualifiers contained therein, Citicasters shall promptly commence
remedial action at its expense to cure the condition giving rise to such
liability and shall use its reasonable business efforts to cure such condition
prior to the Closing. If Citicasters promptly notifies American in writing that
the Citicasters Study discloses a material environmental liability constituting
a breach of the representations and warranties of American contained in Section
4.15 without regard to any knowledge qualifiers contained therein, American
shall promptly commence remedial action at its expense to cure the condition
giving rise to such liability and shall use its reasonable business efforts to
cure such condition prior to the Closing. Notwithstanding the foregoing, neither
American nor Citicasters shall not obligated to spend more than $150,000 in its
attempt to cure such condition. If, notwithstanding the use of its reasonable
business efforts, American or Citicasters is unable prior to the Closing to cure
any such condition, the party to whom the Real Property with such material
environmental liability is to be conveyed may elect (i) to terminate this
Agreement or (ii) to waive such environmental liability, in which event the
waiving party shall receive a credit at the Closing in the amount (up to the
positive difference, if any, between (x) $150,000 and (y) the amount theretofore
expended by the other party pursuant to the provisions of this Section 5.2(f) )
reasonably necessary to cure such environmental liability or, if such
environmental liability cannot be cured, to compensate it for the reduction in
value of such Real Property resulting from such environmental liability.
(g) Within thirty (30) days after the execution of this Agreement, each
of American and Citicasters may, at its sole expense, do a study to determine,
to such party's reasonable satisfaction, that services for utilities including,
without limitation, water and sewer service, telephone service, electric and/or
gas service and sanitary services are sufficient to service the Citicasters Real
Property or the American Real Property, as the case may be, and any Real
Property subject to the American
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Leases. If either party notifies the other within such thirty-day period that
the utility service is not sufficient for its reasonable needs, then the party
receiving such notice shall promptly commence remedial action at its expense to
cure such insufficiency and shall use its reasonable business efforts to cure
such insufficiency prior to the Closing. Notwithstanding the foregoing, neither
American nor Citicasters shall not obligated to spend more than $150,000 in its
attempt to cure such insufficiency. If, notwithstanding the use of its
reasonable business efforts, American or Citicasters is unable prior to the
Closing to cure any such insufficiency, the party to whom the Real Property with
such insufficiency is to be conveyed may elect to waive such insufficiency in
which event the waiving party shall receive a credit at the Closing in the
amount (up to the positive difference, if any, between (x) $150,000 and (y) the
amount theretofore expended by the other party pursuant to the provisions of
this Section 5.2(g)) reasonably necessary to cure such insufficiency or, if such
insufficiency cannot be cured, to compensate it for the reduction in value of
such Real Property resulting from such insufficiency.
(h) Within thirty (30) days after the execution of this Agreement, each
of American and Citicasters may, at its sole expense, commission a reputable
engineer to conduct an inspection of the Citicasters Assets and or the American
Assets, as the case may be (the inspection done by American on the Citicasters
Assets is hereinafter called the "American Inspection"; and the inspection done
by Citicasters on the American Assets is hereinafter called the "Citicasters
Inspection"). If American notifies Citicasters in writing within such thirty-day
period that the American Inspection discloses a condition that constitutes a
breach of the representations of Citicasters contained in Section 3.5(b) or 3.7,
Citicasters shall promptly commence remedial action at its expense to cure the
condition and shall use its reasonable business efforts to cure such condition
prior to the Closing. If Citicasters notifies American in writing within such
thirty-day period that the Citicasters inspection discloses a condition that
constitutes a breach of the representations of American contained in Section
4.5(b) or 4.7, American shall promptly commence remedial action at its expense
to cure the condition and, use its reasonable business efforts to cure such
condition prior to the Closing. Notwithstanding the foregoing, neither American
nor Citicasters shall not obligated to spend more than $150,000 in its attempt
to cure such condition. If, notwithstanding the use of its reasonable business
efforts, American or Citicasters is unable prior to the Closing to cure any such
condition, the party to whom the Assets with such condition are to be conveyed
may elect (i) to terminate this Agreement or (ii) to waive such condition, in
which event the waiving party shall receive a credit at the Closing in the
amount (up to the positive difference, if any, between (x) $150,000 and (y) the
amount theretofore expended by the other party pursuant to the provisions of
this Section 5.2(h) ) reasonably necessary to cure such condition or, if such
condition cannot be cured, to compensate it for the reduction in value of such
Real Property resulting from such condition.
(i) Anything in Sections 5.2(e) through (h) to the contrary
notwithstanding, in the event (a) the amount required to remove or insure over
any Disapproved Matters or cure any condition or insufficiency referred to in
those sections would be more than $150,000, (b) the party required to remove or
insure over any such Disapproved Matters or cure any such condition or
insufficiency is not willing to spend the additional amounts required to do so,
and (c) the other party is not willing to waive such matters, the parties shall
negotiate in good faith in an effort to resolve the issues prior to terminating
this Agreement.
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5.3 Public Announcements. 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, which consent shall not be unreasonably withheld, or
delayed or conditioned. Notwithstanding the foregoing, each party acknowledges
and agrees that the other party may, without the prior consent of the other,
issue such press releases or make such public statements as may be required by
Applicable Law, in which case, to the extent practicable, the party proposing to
make such press release or public statement will consult in advance with the
other 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
addition in the case of American, of Lincoln in the Lincoln 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 (and, in addition in the case of
American, of Lincoln in the Lincoln Agreement) not to be complied with or
satisfied, or (iii) any change to be made in the Citicasters 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 addition in the case of American, of Lincoln in the
Lincoln 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. Neither party shall, nor shall it permit any
Affiliate 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 Affiliate 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. The provisions
of this Section shall apply to each of American's Subsidiaries and Citicasters'
Subsidiaries.
5.6 Conduct of Business by Citicasters Pending the Closing. Except as
otherwise contemplated by this Agreement, and subject to American's time
brokering of the Citicasters Station pursuant to the provisions of the
Citicasters Station TBA, after the date hereof and prior to the Closing Date or
earlier termination of this Agreement, unless American shall otherwise agree in
writing, Citicasters shall, and shall cause its Subsidiaries, to the extent
relating to the Citicasters Station or the Citicasters Assets, to:
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(a) conduct their respective businesses in the ordinary and
usual course of business and consistent with past practice;
(b) use all reasonable business efforts to preserve intact
their respective business organizations and goodwill, keep available
the services of their respective present general managers, on-air
personalities and other 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;
(c) 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;
(d) maintain levels of advertising, marketing and promotion
efforts and expenditures consistent with past practices;
(e) (i) operate the Citicasters Station in conformity with the
Citicasters FCC Licenses on a basis consistent with past practice and
any special temporary authority or program test authority issued
thereunder, the FCA and the rules and regulations of any other
Authority with jurisdiction over the Citicasters Station, and (ii) take
all actions necessary to maintain the Citicasters FCC Licenses;
(f) refrain from changing the frequency or format of the
Citicasters Station or making any material changes in the Citicasters
Station's studio or other structures, except to the extent required by
the FCA or the rules and regulation of the FCC;
(g) not make any material changes in the broadcast hours or in
the percentage or types of programming broadcast by the Citicasters
Station, or make any other material changes in the Citicasters
Station's programming policies, except such changes as in the good
faith judgment of Citicasters are required by the public interest;
(h) not (i) dispose of any of the Citicasters Assets owned by
Citicasters or used in the operation of the Citicasters Station (other
than for the disposition in the ordinary course of business of
immaterial assets that are of no further use to the Citicasters Station
or assets that are replaced with assets of like kind and quality); (ii)
modify, change in any material respect or enter into any Material
Agreement relating to the business of the Citicasters Station; or (iii)
fail to maintain the Citicasters Personal Property in a manner
consistent with generally accepted standards of good engineering
practice and in a state of good repair and maintenance and operating
condition;
(i) notify American promptly if the Citicasters Station's
normal broadcast transmissions are interrupted or impaired for (i)
thirty (30) minutes or more daily for a period of five (5) consecutive
days or during any seven (7) days within any period of thirty (30)
consecutive days (except for normal maintenance) or (ii) a period of
six (6) continuous hours or more and promptly take any actions
reasonably requested to remedy promptly the same;
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(j) not create, assume or permit to exist any Lien upon any of
the Citicasters Assets or the Citicasters Station, except for (i)
Permitted Liens and (ii) other Liens, if any, set forth on Section
3.5(b) of the Citicasters Disclosure Schedule (which Liens shall be
released prior to Closing); and
(k) not waive any material right relating to the Citicasters
Station.
5.7 Conduct of Business by American Pending the Closing. Except as
otherwise contemplated by this Agreement, and subject to Citicasters' time
brokering of the American Stations pursuant to the American Stations TBA, unless
Citicasters shall otherwise agree in writing, (i) after the date hereof and
prior to the consummation of the transactions contemplated by the Lincoln
Agreement or the earlier termination of this Agreement, American shall, to the
extent permitted by the Lincoln Agreement, cause Lincoln, and (ii) from and
after the date American acquires the American Stations and prior to the Closing
Date or earlier termination of this Agreement, American shall, and shall cause
its Subsidiaries, to the extent relating to any of the American Stations or the
American Assets, to:
(a) conduct their respective businesses in the ordinary and
usual course of business and consistent with past practice;
(b) use all reasonable business efforts to preserve intact
their respective business organizations and goodwill, keep available
the services of their respective present general managers, on-air
personalities and other 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;
(c) 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;
(d) maintain levels of advertising, marketing and promotion
efforts and expenditures consistent with past practices;
(e) (i) operate each of the American Stations in conformity
with the American FCC Licenses on a basis consistent with past practice
and any special temporary authority or program test authority issued
thereunder, the FCA and the rules and regulations of any other
Authority with jurisdiction over any of the American Stations and (ii)
take all actions necessary to maintain the American FCC Licenses;
(f) refrain from changing the frequency or format of any
American Station or making any material changes in any American
Station's studio or other structures, except to the extent required by
the FCA or the rules and regulation of the FCC;
(g) not make any material changes in the broadcast hours or in
the percentage or types of programming broadcast by the American
Stations, or make any other material
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changes in any of the American Stations's programming policies, except
such changes as in the good faith judgment of American are required by
the public interest;
(h) not (i) dispose of any of the American Assets owned by
American or used in the operation of any of the American Stations
(other than for the disposition in the ordinary course of business of
immaterial assets that are of no further use to such Station or assets
that are replaced with assets of like kind and quality); (ii) modify,
change in any material respect or enter into any Material Agreement
relating to the business of any of the American Stations; or (iii) fail
to maintain the American Personal Property in a manner consistent with
generally accepted standards of good engineering practice and in a
state of good repair and maintenance and operating condition;
(i) notify Citicasters promptly if any American Station's
normal broadcast transmissions are interrupted or impaired for (i)
thirty (30) minutes or more daily for a period of five (5) consecutive
days or during any seven (7) days within any period of thirty (30)
consecutive days (except for normal maintenance) or (ii) a period of
six (6) continuous hours or more and promptly take any actions
reasonably requested to remedy promptly the same;
(j) not create, assume or permit to exist any Lien upon any of
the American Assets or any of the American Stations, except for (i)
Permitted Liens and (ii) other Liens, if any, set forth on Section
4.5(a) or 4.5(b) of the American Disclosure Schedule (which Liens shall
be released prior to Closing); and
(k) not waive any material rights relating to the American
Stations.
5.8 Risk of Loss. The risk of loss or damage to any of the Assets prior
to the Closing Date, which is not the responsibility at the time of such loss or
damage of the acquiring party under the express terms of the applicable TBA,
shall be upon the transferring party. In the event of any such loss or damage
for which a transferring party is responsible, it shall repair, replace and
restore any such damaged or lost Asset substantially to its prior condition as
soon as possible and in no event later than forty-five (45) days (or such longer
period as is reasonable under the circumstances) following the loss or damage;
provided, however, that in the event any such loss or damage of the Assets
exists on the Closing Date, then, notwithstanding any other provision of this
Agreement, the acquiring party at is option may extend the Closing Date for a
period of up to sixty (60) days until such time as the transferring party shall
have repaired, replaced and restored any such damaged or lost Asset
substantially to its prior condition; alternatively, at the request of the
acquiring party, the parties shall negotiate in good faith to determine an
equitable adjustment in the terms of the Exchange (including the payment of cash
by the transferring party) to cover any such loss or damage and consummate the
Exchange on the Closing Date.
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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 by written agreement of the parties hereto, 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 Lincoln 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
Citicasters with respect to the consequences of such waiver on terms
reasonably satisfactory to American and Citicasters, or (ii) in the
event the subject matter of such waiver is such that indemnification is
not capable of providing Citicasters 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;
(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 Citicasters, 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 in itself
be deemed to be a threat of any such Legal Action; and
(c) All authorizations, consents, waivers, orders or approvals
required to be obtained from all Authorities, and all Governmental
Filings required to be made by American and Citicasters 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, (i) 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
without any materially adverse effect upon the party acquiring such
Stations, and (ii) (A) Final Judgments shall have been entered with
respect to each of the American Consent Decree and the Citicasters
Consent Decree and
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(B) the U.S. Department of Justice shall have approved the Exchange
pursuant to such Final Judgments.
Anything in this Section or elsewhere in this Agreement to the contrary
notwithstanding,
(i) In the event American is unwilling to consummate the
acquisition of the American Stations pursuant to the Lincoln Agreement
because of a breach of warranty or misrepresentation on the part of
Lincoln or the failure of Lincoln to perform any of its obligations or
agreements thereunder or to satisfy one or more of the conditions to
American's obligations to consummate such acquisition (any such breach,
misrepresentation or failure being herein referred to as a "Lincoln
Breach"), and Citicasters desires American to waive such Lincoln
Breach, whether or not the same could have a material adverse effect on
American, American shall be obligated to waive such Lincoln Breach and
to consummate such acquisition in the event Citicasters 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) (i) to indemnify and hold harmless
American with respect to the consequences of such waiver on terms
reasonably satisfactory to American and Citicasters or (ii) 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, the
parties shall have agreed to a monetary or other payment by Citicasters
to American, which they agree to negotiate in good faith.; and
(ii) American shall not consent to the termination of the
Lincoln Agreement without the prior written consent of Citicasters
which consent shall not unreasonably be withheld, delayed or
conditioned.
6.2 Conditions to Obligations of the American Parties. The obligation
of the American Parties to effect the Exchange shall be subject to the
satisfaction of the following conditions, any or all of which may be waived by
American in writing, in whole or in part, to the extent permitted by Applicable
Law:
(a) Citicasters shall have delivered or cause to be delivered
to American all of the Collateral Documents required to be delivered by
Citicasters to the American Parties at or prior to the Closing pursuant
to the terms of this Agreement; such Collateral 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 without limitation
lien searches and records of corporate proceedings, which they may
reasonably request in connection therewith, such documents where
appropriate to be certified by proper corporate officers;
(b) Citicasters shall have furnished American and, at
American's request, any bank or other financial institution providing
credit to American, with favorable opinions, dated the Closing Date of
Graydon, Head & Ritchey, counsel for Citicasters, and of Hogan &
Hartson, L.L.P., FCC counsel for Citicasters, in each case, in form,
scope and substance reasonably satisfactory to the parties;
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(c) The representations and warranties of Citicasters
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 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; each and all of the covenants, agreements and
conditions to be performed or satisfied by Citicasters hereunder at or
prior to the Closing Date shall have been duly performed or satisfied
in all material respects; and Citicasters shall have furnished American
with such certificates and other documents evidencing the truth of such
representations and warranties and the performance or satisfaction of
the covenants, agreements and conditions as American or its counsel
shall have reasonably requested;
(d) To the extent required of American by Rule 3-05 of
Regulation S-X under the Securities Act, American shall have received
(i) from its or Citicasters' 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, 1995 and 1996 and statements of operations and cash
flow for each of the three years in the period ended December 31, 1996)
of the Citicasters Station, which financial statements shall have been
prepared in conformity with GAAP and Regulation S-X under the
Securities Act, or (ii) from Citicasters such documentation as shall
enable American's independent accountants to advise American in writing
that they could issue such an unqualified report;
(e) All authorizations, consents, waivers, orders or approvals
required to be obtained pursuant to the provisions of this Agreement
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 Citicasters Assets and the Citicasters
Station 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 the
Citicasters Assets or the Citicasters Station; provided, however, that
with respect to Citicasters Assumable Agreements the parties agree that
they will in good faith discuss and determine which of the Citicasters
Assumable Agreements are so material to the operation of the
Citicasters Station and therefore with respect to which a third party
consent to the assignment thereof will be required as a condition to
Closing, and the same shall be identified on Schedule 6.2(e) of the
Citicasters Disclosure Schedule (with respect to any Citicasters
Assumable Agreement not so identified on Schedule 6.2(e) of the
Citicasters Disclosure Schedule, Citicasters shall use reasonable
efforts to obtain any required third party consents to the assignment
thereof as requested by American, but obtaining such consent shall not
be a condition to Closing);
(f) Between the date of this Agreement and the Closing Date,
there shall not have occurred and be continuing any material adverse
change in the Citicasters Assets or the Citicasters Station; as of the
Closing Date, the FCC Licenses with respect to the Citicasters Station
shall not have been materially and adversely affected by any act, or
failure to act, of Citicasters; and
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(g) Citicasters and American shall have entered into (i) a
real estate lease with respect to the Citicasters Station current
studio site at 1906 Highland Avenue, Cincinnati, Ohio (the "Studio
Lease"), and (ii) a real estate lease with respect to space on the
Citicasters tower site (the "Tower Lease"), and Jacor and American
shall have entered into a right of first refusal agreement with respect
to certain real property located on McFarland Avenue, Cincinnati, Ohio
(the "First Refusal Agreement"), in each case, in form, scope and
substance reasonably satisfactory to the parties, including without
limitation embodying the terms and conditions set forth in the Letter
of Intent with respect thereto.
6.3 Conditions to Obligations of Citicasters. The obligation of
Citicasters to effect the Exchange shall be subject to the satisfaction of the
following conditions, any or all of which may be waived by Citicasters in
writing, in whole or in part, to the extent permitted by Applicable Law:
(a) The American Parties shall have delivered or cause to be
delivered to Citicasters all of the Collateral Documents required to be
delivered by the American Parties to Citicasters at or prior to the
Closing pursuant to the terms of this Agreement; such Collateral
Documents shall be reasonably satisfactory in form, scope and substance
to Citicasters and its counsel; and Citicasters and its counsel shall
have received all information and copies of all documents, including
without limitation lien searches and records of corporate proceedings,
which they may reasonably request in connection therewith, such
documents where appropriate to be certified by proper corporate
officers;
(b) The American Parties shall have furnished Citicasters and,
at Citicasters' request, any bank of other financial institution
providing credit to Citicasters or any Subsidiary, with favorable
opinions, dated the Closing Date of Sullivan & Worcester LLP, counsel
for the American Parties, and of Dow, Lohnes & Albertson, FCC counsel
for the American Parties, in each case, in form, scope and substance
reasonably satisfactory to the parties;
(c) The representations and warranties of the American Parties
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 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 (it being
acknowledged that any representation or warranty of the American
Parties which is qualified by or includes the phrase "as of the time of
the consummation of the transactions contemplated by the Lincoln
Agreement" or similar phrase does not speak as of a certain date, and
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); each and all of the covenants, agreements and conditions to
be performed or satisfied by the American Parties hereunder at or prior
to the Closing Date shall have been duly performed or satisfied in all
material respects; and the American Parties shall have furnished
Citicasters with such certificates and other documents evidencing the
truth of such representations and warranties and the performance or
satisfaction of the covenants, agreements and conditions as Citicasters
or its counsel shall have reasonably requested;
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(d) To the extent required of American by Rule 3-05 of
Regulation S-X under the Securities Act, Citicasters shall have
received (i) from its or American's 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, 1995 and 1996 and statements of operations and cash
flow for each of the three years in the period ended December 31, 1996)
of the American Stations, which financial statements shall have been
prepared in conformity with GAAP and Regulation S-X under the
Securities Act, or (ii) from the American Parties such documentation as
shall enable Citicasters' independent accountants to advise Citicasters
in writing that they could issue such an unqualified report;
(e) All authorizations, consents, waivers, orders or approvals
required to be obtained pursuant to the provisions of this Agreement
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 Citicasters all right, title
and interest in and to all of the Americans Assets and the American
Stations 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 the
Americans Assets and the American Stations; provided, however, that
with respect to Americans Assumable Agreements the parties agree that
they will in good faith discuss and determine which of the Americans
Assumable Agreements are so material to the operation of the Americans
Stations and therefore with respect to which a third party consent to
the assignment thereof will be required as a condition to Closing, and
the same shall be identified on Schedule 6.3(e) of the American
Disclosure Schedule (with respect to any American Assumable Agreement
not so identified on Schedule 6.3(e) of the American Disclosure
Schedule, American shall use reasonable efforts to obtain any required
third party consents to the assignment thereof as requested by
Citicasters, but obtaining such consent shall not be a condition to
Closing);
(f) Between the date of this Agreement and the Closing Date,
there shall not have occurred and be continuing any material adverse
change in the American Assets or the American Stations; as of the
Closing Date, the FCC Licenses with respect to the American Stations
shall not have been materially and adversely affected by any act, or
failure to act, of Lincoln or the American Parties.
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 Citicasters and American; or
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(b) by either American or Citicasters 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 Lincoln Agreement is terminated; or
(c) by Citicasters in the event Citicasters is not in material
breach of its agreements and covenants set forth in this Agreement and
none of its representations or warranties shall have become and
continue to be untrue in any material respect, and either (i) the
Exchange has not been consummated prior to the Termination Date or (ii)
either of the American Parties is in material breach of its agreements
or covenants set forth in this Agreement or any of its representations
or warranties shall have become and continue to be untrue in any
material respect and such breach or untruth exists and is not cured
within the cure period specified in this Section; or
(d) by American in the event neither of the American Parties
is in material breach of its agreements and covenants set forth in this
Agreement and none of their representations or warranties shall have
become and continue to be untrue in any material respect, and either
(i) the Exchange has not been consummated prior to the Termination Date
or (ii) Citicasters is in material breach of its agreements or
covenants set forth in this Agreement or any of its representations or
warranties shall have become and continue to be untrue in any material
respect and such breach or untruth exists and is not cured within the
cure period specified in this Section; or
(e) by Citicasters pursuant to the provisions of Section
5.2(e) or by American or Citicasters pursuant to the provisions of
Section 5.2(f) or (h); or
(f) by American pursuant to the provisions of Section 9.16(a)
or Citicasters pursuant to the provisions of Section 9.16(b).
Neither party shall have the right to terminate this Agreement as a result of
the other party's breach or default unless the terminating party shall have
given the defaulting party thirty (30) business days to cure the default (or
such longer period not in excess of an additional thirty (30) business days as
is, in the reasonable business judgment of the parties, reasonably necessary to
effect such cure so long as the defaulting party is proceeding with due
diligence and best efforts to effect such cure); provided, however, that such
cure period shall not extend the Termination Date.
The term "Termination Date" shall mean December 31, 1997 or such other
date as the parties may, from time to time, mutually agree.
The right of American or Citicasters 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. Except as provided in Sections 5.1 (with
respect to confidentiality), 5.3 and 9.3 and this Section, 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
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the part of either party, or any of their respective Affiliates (including
stockholders, officers, directors or Representatives ), to the other and all
rights and obligations of either party shall cease; provided, however, that such
termination shall not relieve (a) either party from liability for any
misrepresentation or breach of any of its warranties, covenants or agreements
set forth in this Agreement or (b) American from liability to Citicasters in the
event the Lincoln Agreement is terminated because of any misrepresentation or
breach by American of any of its representations, warranties, covenants or
agreements set forth in the Lincoln Agreement.
ARTICLE 8
INDEMNIFICATION
8.1 Survival. Except as otherwise provided in Section 2.2(d) and the
last sentence of Section 5.1(a) to the effect that the provisions of Section 2.2
and of such sentence, respectively, shall survive the Closing without
limitation, and except with respect to obligations and liabilities assumed
pursuant to the American Assumable Agreements and the Citicasters Assumable
Agreements, 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 arising out of any
breach referred to in Sections 2.3(a), 2.3(b), 3.1(a), 3.1(b), 3.10, 3.15,
4.1(a), 4.1(b), 4.10, 4.15 and 5.2(c) (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.
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
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a breach of representation or warranty by the indemnifying party
pursuant to this Agreement or any Collateral Document; or
(c) the American Nonassumed Liabilities (in the case of
American being the indemnifying party) and the Citicasters Nonassumed
Liabilities (in the case of Citicasters being the indemnifying party),
including without limitation any Legal Action or other Claim brought or
asserted by any third party; or
(d) the failure to comply with the Bulk Sales Law, if any, of
the State of New York (in the case of American being the indemnifying
party) or the State of Ohio (in the case of Citicasters being the
indemnifying party).
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, $150,000, 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 $2,000,000, except for any Loss or Expense arising out of
matters of a nature referred to in Sections 3.1(b) and 4.1(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 8.1, 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 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 materially 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 (a) the
indemnifying party shall fail to defend any such Legal Action or other Claim or
(b) the indemnified party shall have been advised by counsel that there may be
one or more legal defenses available to it which are different from or in
addition to those available to the indemnifying party, then the indemnified
party may defend, through counsel of its own choosing, reasonably acceptable to
the indemnifying party, 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
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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, which consent shall not be
unreasonably withheld, delayed or conditioned.
8.6 Exclusive Remedy. Except for fraud or as otherwise provided in
Section 9.5, 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 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.
9.2 Waiver. At any time prior to the Closing Date, except to the extent
not permitted by Applicable Law, American or Citicasters may extend the time for
the performance of any of the obligations or other acts of the other, 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 transfer taxes, sales taxes, document stamps or other
charges levied by any Authority in connection with this Agreement, the Exchange
and the other Transactions, shall be borne by American insofar as they related
to the American Stations and the American Assets and by Citicasters insofar as
they relate to the Citicasters Station and the Citicasters Assets. All filing
and similar fees (including without limitation Hart-Scott-Rodino filings and FCC
filing fees) shall be borne equally by American and Citicasters. All other costs
and expenses incurred in connection with this Agreement, the Exchange and the
other Transactions, and in compliance with Applicable Law and Contracts 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.
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, 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:
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(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 Citicasters:
201 East 5th Street, Suite 1300
Cincinnati, OH 45202
Attention: Randy Michaels, President
Telecopier No.: (513) 621-1300
with a copy to:
Graydon, Head & Ritchey
1900 Fifth Third Center
511 Walnut Street
Cincinnati, OH 45202
Attention: John Kropp, Esq.
Telecopier No.: (513) 651-3836
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, 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.
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9.6 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
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; provided, however, that in the event
the parties are unable to reach agreement within a reasonable period of time,
under the circumstances, with respect to such modification, this Agreement shall
terminate and be of no further force and effect.
9.7 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.
9.8 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.
9.9 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.
9.10 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.
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9.11 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, except as otherwise provided in
Section 6.2(g), without limitation that certain letter of intent, dated November
5, 1996, between the parties (the "Letter of Intent").
9.12 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 any 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. Without limiting the generality of the immediately
preceding sentence, in the event that either party finds it necessary or is
required to provide to a third party a collateral assignment of their or its
interest in this Agreement and/or any Collateral Documents, the other party will
cooperate with either the party requesting such assignment and any third party,
including but not limited to signing a consent and acknowledgment of such
assignment.
9.13 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 9.12.
9.14 Mutual Drafting. This Agreement is the result of the joint efforts
of the American Parties and Citicasters, and each provision hereof has been
subject to the mutual consultation, negotiation and agreement of the parties and
there shall be no construction against any party based on any presumption of
that party's involvement in the drafting thereof.
9.15 American Agent for American License. Anything in this Agreement to
the contrary notwithstanding, American License hereby grants American an
irrevocable power of attorney and hereby irrevocably appoints American its agent
for all purposes of this Agreement, including without limitation for the purpose
of executing and delivering extensions of the time for the performance of any of
the obligations or other acts of Citicasters, waivers, terminations or
amendments, and any action taken by American pursuant to such power of attorney
and agency, and any such extension, waiver, termination or amendment executed
and delivered by American, shall be binding upon American License whether or not
it has specifically approved such action or executed such extension, waiver,
termination or amendment.
9.16 Disclosure Schedules.
(a) Citicaster will deliver to American, on or before January 10, 1997,
the Citicasters Disclosure Schedule and all related documents required to be
delivered by Citicasters pursuant to Article 3 of this Agreement. American shall
be permitted, for a period commencing upon its receipt of the completed
Citicasters Disclosure Schedule and related documents and terminating at 11:59
p.m. on January 27, 1997, to terminate this Agreement, if (i) the Citicasters
Disclosure Schedule reveals any condition of which the American Parties are
unaware as of the date of this Agreement
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and/or any breaches of Citicasters' representations, warranties and/or covenants
hereunder (without regard to matters set forth in the Citicasters Disclosure
Schedule), which unknown conditions and/or breaches in the aggregate would have
a material adverse effect on the value of the Citicasters Assets or the
Citicasters Station or on the American Parties' ability to operate the
Citicasters Station as it is currently being operated, or (ii) the parties are
unable to agree upon which Citicasters Material Agreements with respect to which
a third-party consent to the assignment thereof will be a condition to Closing
pursuant to the provisions of Section 6.2(e).
(b) American will deliver to Citicasters on or before January 10, 1997,
the American Disclosure Schedule and all related documents required to be
delivered by American pursuant to Article 4 of this Agreement. Citicasters shall
be permitted, for a period commencing upon its receipt of the completed American
Disclosure Schedule and related documents and terminating at 11:59 p.m. on
January 27, 1997, to terminate this Agreement, if (i) the American Disclosure
Schedule reveals any condition of which Citicasters is unaware as of the date of
this Agreement and/or any breaches of the American Parties' representations,
warranties and/or covenants hereunder (without regard to matters set forth in
the American Disclosure Schedule), which unknown conditions and/or breaches in
the aggregate would have a material adverse effect on the value of the American
Assets or the American Stations or on Citicasters' ability to operate the
American Stations as they are currently being operated, or (ii) the parties are
unable to agree upon which American Material Agreements with respect to which a
third-party consent to the assignment thereof will be a condition to Closing
pursuant to the provisions of Section 6.3(e).
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IN WITNESS WHEREOF, American, American License and Citicasters 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:
American Radio Systems License Corp.
By:_____________________________________
Name:
Title:
Citicasters Co.
By:______________________________________
Name:
Title:
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APPENDIX A
DEFINITIONS
Accounts Receivable shall mean 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 Citicasters, 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).
adverse, adversely, shall mean any Event which has, or is reasonably
likely to, (a) adversely affect the validity or enforceability of this Agreement
or the likelihood of consummation of the Exchange, or (b) adversely affect the
ownership or operation of the Citicasters Assets or the American Assets or the
conduct of the business of the Citicasters Station or the American Stations, as
the case may be, or (c) impair Citicasters' 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 Citicasters,
as the case may be, under this Agreement. Notwithstanding the foregoing, and
anything in this Agreement to the contrary notwithstanding, neither any general
business or economic factor nor any Event affecting the radio broadcasting
industry generally shall 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, any other
Person at the time directly or indirectly controlling, controlled by or under
direct or indirect common control with such Person.
Agreement shall mean this Agreement as originally in effect, including
this Appendix A, the American Disclosure Schedule, the Citicasters 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.
Alternative Transaction shall mean a transaction or series of related
transactions (other than the Exchange and the other Transactions) resulting in
(a) any merger or consolidation of either party, 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 (b) 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.
American shall have the meaning given to it in the Preamble.
American Accounts Receivable shall mean the Accounts Receivables of
American arising in connection with the ownership or operation of any of the
American Assets or the conduct of the business of any of the American Stations
prior to the applicable Cut-off Date.
American Assets shall mean (a) all assets used or held for use in the
ownership or operation of or the conduct of the business of any of the American
Stations, including without limitation the American Real Property, the American
Personal Property, the American Private Authorizations, the
<PAGE>
American Governmental Authorizations (including without limitation the American
FCC Licenses), the American Intangible Assets and the American Assumable
Agreements, and the logs, public files and other books, records, files and
documents relating to any of the American Stations, but excluding the American
Excluded Assets, and (b) the sum of Sixteen Million Dollars ($16,000,000).
American Assumable Agreements shall mean the American Private
Authorizations, the American Trade Agreements, the American Leases and the
American Other Contracts.
American Consent Decree shall have the meaning given to it in the third
Whereas paragraph.
American Disclosure Schedule shall mean the American Disclosure
Schedule dated as of the date of this Agreement delivered by American and
American License to Citicasters.
American Employee Plans shall have the meaning given to it in Section
4.11(a).
American Excluded Assets shall mean (i) all cash and cash equivalents
of American (ii) all American Accounts Receivable, (iii) the corporate names of
American, and its books, records and other documents relating to its corporate
existence, organization and capitalization, (iv) all books and records of
American relating to any of the American Stations and which American 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)
the American Employee Plans, (vi) all insurance policies relating to the
American Assets, (vii) software programs and other assets used to provide
certain financial and accounting services for any of the American Stations, and
(viii) any and all products, profits and proceeds of, and including without
limitation any Claims with respect to, any of the foregoing.
American FCC Licenses shall have the meaning given to it in the second
Whereas paragraph.
American Financial Statements shall have the meaning given to it in
Section 4.2(a).
American Governmental Authorizations shall have the meaning given to it
in Section 4.7(a).
American Inspection shall have the meaning given to it in Section
5.2(h).
American Intangible Assets shall have the meaning given to it in
Section 4.8.
American Leases shall have the meaning given to it in Section 4.5(a).
American License shall have the meaning given to it in the Preamble.
American Material Agreements shall have the meaning given to it in
Section 4.12.
American Nonassumed Liabilities shall have the meaning given to it in
Section 2.3(b).
American Other Contracts shall mean (a) all American Material
Agreements set forth on Section 4.12 of the American Disclosure Schedule, (b)
all Contracts of American for the sale of time
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on any American Station or on WNVE-AM (for which American sells on time pursuant
to a Joint Sales Agreement) for cash entered into in the ordinary course of
business consistent with prior practice, and (c) Contracts not required to be
listed on Section 4.12 of the American Disclosure Schedule that have been
entered into in the ordinary course of business.
American Owned Real Property shall have the meaning given to it in
Section 4.5(e).
American Parties shall have the meaning given to it in the Preamble.
American Personal Property shall mean all items of Personal Property,
used or held for use in the ownership or operation or the conduct of the
business of any of the American Stations.
American Private Authorizations shall mean all Private Authorizations
obtained or held for use in the ownership or operation or the conduct of the
business of any of the American Stations.
American Proration Schedule shall have the meaning given to it in
Section 2.3(e).
American Real Property shall have the meaning given to it in Section
4.5(a).
American Station Employees shall have the meaning given to it in
Section 4.11(b).
American Stations shall have the meaning given to it in the second
Whereas paragraph.
American Stations TBA shall have the meaning given to it in Section
5.2(d).
American Study shall have the meaning given to it in Section 5.2(f).
American Trade Agreements shall mean all Trade Agreements in effect on
the date hereof or entered into on or prior to the Cut-Off Date that relate to
the ownership or operation of or the conduct of the business of any of the
American Stations.
American's knowledge (including the term "to the knowledge, information
and belief of American") means the actual knowledge of any executive officer of
either of the American Parties or any General Manager of any American Station.
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 legally
bound.
Appraisals shall have the meaning given to it in Section 2.2(a).
Assets shall mean the American Assets in the case of American and the
Citicasters Assets in the case of Citicasters.
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Authority shall mean any 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 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.
Citicasters shall have the meaning given to it in the Preamble.
Citicasters Accounts Receivable shall mean the Accounts Receivables of
Citicasters arising in connection with the ownership or operation of any of the
Citicasters Assets or the conduct of the business of the Citicasters Station
prior to the applicable Cut-off Date.
Citicasters Assets shall mean all assets used or held for use in the
ownership or operation of or the conduct of the business of the Citicasters
Station by Citicasters or any Entity Affiliated with Citicasters, including
without limitation the Citicasters Personal Property, the Citicasters Private
Authorizations, the Citicasters Governmental Authorizations (including without
limitation the Citicasters FCC Licenses), the Citicasters Intangible Assets and
the Citicasters Assumable Agreements, and the logs, public files and other
books, records, files and documents relating to the Citicasters Station, but
excluding the Citicasters Excluded Assets.
Citicasters Assumable Agreements shall mean the Citicasters Private
Authorizations, the Citicasters Trade Agreements, the Citicasters Leases and the
Citicasters Other Contracts.
Citicasters Consent Decree shall have the meaning given to it in the
third Whereas paragraph.
Citicasters Disclosure Schedule shall mean the Citicasters Disclosure
Schedule dated as of the date of this Agreement delivered by Citicasters to
American.
Citicasters Employee Plans shall have the meaning given to it in
Section 3.11(a).
Citicasters Excluded Assets shall mean (i) all cash and cash
equivalents of Citicasters (ii) all Citicasters Accounts Receivable, (iii) the
corporate names of Citicasters, and its books, records and other documents
relating to its corporate existence, organization and capitalization, (iv) all
books and records of Citicasters relating to the Citicasters Station and which
Citicasters 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) the Citicasters Employee Plans, (vi) all insurance policies
relating to the Citicasters Assets, (vii) assets comprising the traffic and
accounting computer systems), (viii) software programs and other assets used to
provide certain financial and accounting services for any of the Citicasters
Stations, and (ix) any and all products, profits and proceeds of, and including
without limitation any Claims with respect to, any of the foregoing.
Citicasters FCC Licenses shall have the meaning given to it in the
first Whereas paragraph.
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Citicasters Financial Statements shall have the meaning given to it in
Section 3.2(a).
Citicasters Governmental Authorizations shall have the meaning given to
it in Section 3.7(a).
Citicasters Inspection shall have the meaning given to it in Section
5.2(h).
Citicasters Intangible Assets shall have the meaning given to it in
Section 3.8.
Citicasters Material Agreements shall have the meaning given to it in
Section 3.12.
Citicasters Nonassumed Liabilities shall have the meaning given to it
in Section 2.3(a).
Citicasters Other Contracts shall mean (a) all Citicasters Material
Agreements set forth on Section 3.12 of the Citicasters Disclosure Schedule, (b)
all Contracts for the sale of time on the Citicasters Station for cash entered
into in the ordinary course of business consistent with prior practice, and (c)
Contracts not required to be listed on Section 3.12 of the Citicasters
Disclosure Schedule that have been entered into in the ordinary course of
business.
Citicasters Personal Property shall mean all items of Personal
Property, used or held for use in the ownership or operation or the conduct of
the business of the Citicasters Station.
Citicasters Private Authorizations shall mean all Private
Authorizations obtained or held for use in the ownership or operation or the
conduct of the business of the Citicasters Station.
Citicasters Proration Schedule shall have the meaning given to it in
Section 2.3(d).
Citicasters Real Property shall have the meaning given to it in Section
3.5(a).
Citicasters Station shall have the meaning given to it in the first
Whereas paragraph.
Citicasters Station Employees shall have the meaning given to it in
Section 3.11(b).
Citicasters Station TBA shall have the meaning given to it in Section
5.2(d).
Citicasters Study shall have the meaning given to it in Section 5.2(f).
Citicasters Trade Agreements shall mean all Trade Agreements in effect
on the date hereof or entered into on or prior to the Cut-Off Date that relate
to the ownership or operation of or the conduct of the business of the
Citicasters Station.
Citicasters' knowledge (including the term "to the knowledge,
information and belief of Citicasters") means the actual knowledge of any
Citicasters executive officer or any General Manager of the Citicasters Station.
Cincinnati Proration Schedule shall have the meaning given to it in
Section 2.3(e).
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Claims shall mean any and all Legal Actions and claims, pending or
threatened, and judgments of whatever kind and nature relating debts,
liabilities, obligations, losses, damages, deficiencies, assessments and
penalties, together with 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.
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 the American Stations TBA, the First
Refusal Agreement, the Citicasters Station TBA, the Studio Lease, the Tower
Lease, the conveyancing documents required to vest in the acquiring party the
Assets and Stations to be acquired by it pursuant to the Exchange (including
without limitation a General Conveyance, Bill of Sale, Assignment and
Assumption, assignments and assumptions of the Citicasters Assumable Agreements
and American Assumable Agreements, assignments and assumptions of Intangible
Assets), and any agreement, certificate, contract, instrument, notice, opinion
or other document required to be delivered or delivered pursuant to the
provisions of this Agreement or any of the foregoing.
Collection Period shall have the meaning given to it in Section 2.5.
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 American Assets or
the Citicasters Assets or the conduct of the business of any of the American
Stations or the Citicasters Station.
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.
Cut-off Date shall mean (i) with respect to any Contract to be assigned
and the rights and obligations to be assumed pursuant to either TBA (including
all items of revenue and expense relating to such Contract), the applicable TBA
Date for such TBA and (ii) in all other cases, the Closing Date.
Disapproved Matters shall have the meaning given to it in Section
5.2(e).
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Disclosure Schedule shall mean the American Disclosure Schedule or the
Citicasters Disclosure Schedule, as the case may be.
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 into the
environment (including, without limitation, ambient air, surface water, ground
water, 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 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 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.
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 the fourth Whereas
paragraph.
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
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<PAGE>
reference to any statutory or regulatory provision shall be deemed to be a
reference to any successor statutory or regulatory provision.
FCA shall mean the Communications 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 written actions of the FCC (including
without limitation written actions of the FCC's Mass Media Bureau acting
pursuant to delegated authority) granting its consents to the assignment of the
Citicasters FCC Licenses to American License and the American FCC Licenses to
Citicasters.
FCC Licenses shall mean all Governmental Authorizations issued by the
FCC in connection with the ownership, operation and conduct of the business of
the Citicasters Station and the American Stations, as the case may be.
Final Order shall mean, with respect to any consent, order or other
action of any Authority, including without limitation the FCC, one with respect
to which no appeal, no stay, no review, no petition or application for
rehearing, reconsideration, review or stay, whether on motion of the applicable
Authority or other Person or otherwise, is in effect or pending and as to which
the time or deadline for filing or taking any such stay, review, appeal,
petition or application has expired or, if filed, has been denied, dismissed or
withdrawn, and the time or deadline for instituting any further Legal Action has
expired.
First Refusal Agreement shall have the meaning given to it in Section
6.2(g).
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, registrations and other authorizations
of all Authorities (including without limitation the FCC Licenses) issued by the
FCC, the Federal Aviation Administration and any other Authority in connection
with the ownership or operation of any of the Assets or conduct of the business
of any of the Stations.
Governmental Filings shall mean all filings, including franchise and
similar Tax filings, submissions, registrations, notices or declarations 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
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<PAGE>
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" "solid waste", "pollutant", "contaminant" 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) that poses or threatens to pose a hazard to the health
of persons; or (e) 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 or other
radioactive elements, ionizing radiation, radio frequency radiation, 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 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 any Person,
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, permits and all Intellectual Property.
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,
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<PAGE>
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.
Jacor shall mean Jacor Broadcasting Corporation, an Ohio corporation.
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 (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.
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 or equity.
Letter of Intent shall have the meaning given to it in Section 9.11.
Lien shall mean any 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 or capital lease involving substantially the same
economic effect as any of the foregoing; 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.
Lincoln shall have the meaning given to it in the second Whereas
paragraph.
Lincoln Agreement shall have the meaning given to it in the second
Whereas paragraph
Lincoln Breach shall have the meaning given to it in Section 6.1.
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<PAGE>
Loss and Expense shall have the meaning given to it in Section 8.2.
material 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 is in effect on the date hereof and (a) was not
entered into in the ordinary course of business, (b) was entered into in the
ordinary course of business which (i) involved annual consideration of 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 continuing financial
obligation, (c) involves Indebtedness for Money Borrowed, (d) is an employment
agreement, (e) is or otherwise constitutes a written agency, broker, dealer,
license, distributorship, sales representative or similar written agreement, or
(f) accounted for more than three percent (3%) of the revenues of the American
Stations or the Citicasters Station 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 Citicasters Station during the current fiscal year.
Notice of Disagreement shall have the meaning given to it in Section
2.3(d).
Organic Document shall mean, with respect to a Person which is a
corporation, its certificate or articles of incorporation or organization, its
by-laws and all stockholder agreements, voting trusts and similar arrangements
applicable to any of its capital stock.
Permitted Liens shall mean (a) any mechanic's or materialmen's Lien or
similar Lien with respect to amounts not yet due and payable or which are being
contested in good faith by appropriate proceedings and for which appropriate
reserves have been established, (b) Liens for taxes not yet due and payable or
which are being contested in good faith by appropriate proceeding, for which
appropriate reserves have been established, and (c) easements, licenses,
covenants, rights of way and similar Liens which, individually or in the
aggregate, would not materially and adversely affect the marketability or value
of the property encumbered thereby or materially interfere with the operations
of the Stations, it being understood that any Permitted Liens of a nature
referred to in clause (a) or (b) shall, to the extent they may involve the
payment of money, be taken into account in preparing the Cincinnati Proration
Schedule and the Rochester Proration Schedule.
Person shall mean any natural individual or any Entity.
Permitted Title Exceptions shall have the meaning given to it in
Section 5.2(e).
Personal Property shall mean all of the machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office and studio equipment, spare
parts and other tangible personal property, plus such additions thereto and
deletions therefrom arising in the ordinary course of business between the date
hereof and the Closing Date.
Preliminary Title Report shall have the meaning given to it in Section
5.2(e).
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<PAGE>
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.
Pro Ratable Taxes shall mean real estate and other property Taxes, ad
valorem Taxes, gross receipts Taxes and similar Taxes, but shall not include
federal, state or local income Taxes, franchise Taxes or other Taxes measured by
or based upon income or gain on sale or other disposition of property or assets.
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 (including without limitation
any of the foregoing relating to the towers, transmitters, studio sites and
offices of the respective Stations).
Referee shall have the meaning given to it in Section 2.3(d).
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).
Rochester Proration Schedule shall have the meaning given to it in
Section 2.3(d).
SEC shall mean the United States Securities and Exchange Commission, or
any successor Authority.
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 Citicasters Station and the
American Stations.
Studio Lease shall have the meaning given to it in Section 6.2(g).
Survey shall have the meaning given to it in Section 5.2(e).
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.
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Tax and Taxes (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.
Tax Claim shall mean any Claim which relates to Taxes, including
without limitation any Claim arising out of any breach of the representations
and warranties set forth in Section 3.10 or 4.10.
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.
TBA Date shall mean the date when operations under the TBAs shall
become effective (or in the event such date is not the same for all of the TBAs,
the applicable date of such effectiveness).
TBAs shall mean the American Stations TBA and the Citicasters Station
TBA, or the applicable one of such agreements.
Termination Date shall have the meaning given to it in Section 7.1.
Tower Lease shall have the meaning given to it in Section 6.2(g).
Trade Agreements shall mean any Contract relating to any of the
Stations pursuant to which American or Citicasters is required to provide air
time in exchange for property or services other than cash.
Transactions shall mean the Exchange and all of the other transactions
contemplated by this Agreement to be consummated on or prior to the Closing
Date, including without limitation the execution, delivery and performance of
the Collateral Documents.
Valuation Schedule shall have the meaning given to it in Section
2.2(b).
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ASSIGNMENT, ASSUMPTION AND CONSENT
THIS ASSIGNMENT, ASSUMPTION AND CONSENT is entered into as of the 24th
day of December, 1996 by and among American Radio Systems Corporation, a
Delaware corporation ("ARS"), The Brown Organization, a California corporation
("Brown"), and Entertainment Communications, Inc., a Pennsylvania corporation
("Entercom")
WHEREAS, Brown and ARS entered into an Asset Purchase Agreement dated
July 24, 1996 (the "Brown Agreement") regarding the acquisition by ARS of
specified assets of Brown comprising radio stations KQPT(FM), KXOA-FM and
KXOA(AM), Sacramento, California (the "Stations"); and
WHEREAS, Brown and ARS have entered into, and are operating under, a
certain Time Brokerage Agreement dated July 24, 1996 pursuant to which ARS has
agreed to provide programming and certain other services to Brown with respect
to the operation of the Stations (the "TBA"); and
WHEREAS, ARS and Entercom entered into an Asset Purchase Agreement
dated October 18, 1996 (the "Entercom Agreement") pursuant to which ARS has
agreed to convey, subsequent to the consummation of its acquisition of the
Stations under the Brown Agreement, certain assets comprising radio station
KXOA-FM; and
WHEREAS, ARS desires to assign to Entercom its rights under the TBA as
to KXOA-FM in the period prior to the consummation of its acquisition of the
Stations under the Brown Agreement, and effective upon the Effective Date (as
defined therein) of the Time Brokerage Agreement to be entered into by and
between Entercom and ARS (the "Entercom TBA").
NOW THEREFORE, in consideration of the mutual covenants herein
contained, the undersigned parties hereby agree as follows:
1. ARS assigns to Entercom, as of the Effective Date, its rights and
obligations under the TBA with respect only to KXOA-FM.
2. Entercom accepts, as of the Effective Date, the foregoing assignment
and assumes all such obligations, and agrees to indemnify and hold ARS harmless
from any loss, cost, liability or expense (including attorney's fees) resulting
from Entercom's failure to discharge such obligations.
3. Notwithstanding the foregoing, ARS is not assigning, and Entercom is
not assuming, the rights and obligations of ARS under Section 1.4 and 2.3 of the
TBA.
<PAGE>
Entercom shall pay to ARS a monthly fee for the rights and obligations hereby
assigned in the amount and manner set forth in Schedule A to the Entercom TBA.
4. Brown consents to the assignment by ARS of its rights under the TBA
as to KXOA-FM to Entercom.
5. ARS agrees and confirms that it retains all liabilities and
obligations under the TBA as to Brown, including, without limitation, its
obligation to pay Brown the monthly fee set forth in Section 1.4 of the TBA. ARS
agrees to indemnify and hold Entercom harmless from and against any loss, cost,
liability or expense (including attorneys' fees) resulting from any act or
omission resulting from ARS's failure to discharge the obligations of
"Programmer," as set forth in the TBA, prior to the Effective Date. ARS further
agrees to indemnify and hold Brown harmless from and against any loss, cost,
liability or expense (including attorney's fees) resulting from any act or
omission resulting from ARS's or Entercom's failure to discharge the obligations
of "Programmer" as set forth in the TBA.
6. The TBA shall remain unmodified in all respects other than as set
forth in this Assignment, Assumption and Consent.
IN WITNESS WHEREOF, the parties hereto have executed this ASSIGNMENT,
ASSUMPTION AND CONSENT as of the date first above written.
AMERICAN RADIO SYSTEMS CORPORATION
By:_______________________________________
THE BROWN ORGANIZATION
By:________________________________________
ENTERTAINMENT COMMUNICATIONS, INC.
By:________________________________________
2
TIME BROKERAGE AGREEMENT
This TIME BROKERAGE AGREEMENT (this "Agreement"), made this 24th day of
December, 1996 by and between ENTERTAINMENT COMMUNICATIONS, INC., a Pennsylvania
corporation (the "Programmer") and AMERICAN RADIO SYSTEMS CORPORATION, a
Delaware corporation ("ARS").
RECITALS
A. ARS has entered into an Asset Purchase Agreement under which ARS has
agreed to purchase Station KXOA-FM, Sacramento, California (the "Station") from
The Brown Organization ("Brown") (the "Brown APA") and is currently supplying
programming and other services to the Station under that certain Time Brokerage
Agreement by and between ARS and Brown, dated July 24, 1996 (the "Brown TBA").
B. ARS wishes to retain Programmer 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 rules and
regulations of the Federal Communications Commission (the "Commission")
concerning such arrangements.
C. Programmer will supply such programming and sell advertising that is
in conformance with the Station's policies and all Commission rules and
regulations, including the requirement that the ultimate control of the Station
be maintained by the authorized licensee of the Station.
D. Programmer and ARS have entered into that certain Asset Purchase
Agreement dated as of October 18, 1996 (the "Purchase Agreement"), pursuant to
which ARS has agreed to
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transfer to Programmer, and Programmer has agreed to acquire from ARS,
substantially all of the assets and businesses of the Station, subject to the
terms and conditions therein. All capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in the Purchase Agreement.
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 January 1,
1997 (the "Effective 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 supply
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 or Brown may broadcast
up to two (2) hours of programming for the Station which is aimed at serving the
needs and interests of the community of license of the Station during the
morning(s) of Saturday and/or Sunday subject to Section 12 hereto.
(b) To facilitate delivery of programming by Programmer
hereunder, ARS hereby grants to Programmer the right (which shall be
nonexclusive as to Programmer) for the term of this Agreement to use
substantially all of the equipment located in the Station's studio and offices
currently used by ARS for sales and broadcasting programs on the Station. In
addition, Programmer shall have, and ARS hereby grants to Programmer, a license
(which shall
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be nonexclusive as to Programmer) to enter on the premises currently occupied by
the Station for the purpose of fulfilling its rights and responsibilities
hereunder; provided, however, that 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 (excluding
ordinary wear and tear) 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. During the term of this Agreement, Programmer shall
pay ARS the payments set forth on Schedule A hereto.
5. Collection of Accounts Receivable. All cash accounts receivable for
broadcasts on the Station which occur prior to the Effective Date (the "ARS's
Accounts Receivable") shall
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belong to ARS and for broadcasts which occur thereafter shall belong to
Programmer. Within ten (10) days following the Effective Date, ARS shall deliver
to Programmer a Schedule of Cash Accounts Receivable for the Station as of the
Effective date (the "Schedule"). Programmer agrees to collect for ARS the ARS's
Accounts Receivable as shown on the Schedule for a period of one hundred twenty
(120) days following the Effective Date (the "Collection Period"). ARS will
provide Programmer a power of attorney or other required authorization for the
limited purpose of allowing Programmer to endorse and deposit checks and other
instruments received in payment of ARS's Accounts Receivable. All payments
received by Programmer from any customer whose name appears in the Schedule and
who is also a customer of Programmer shall be credited as payment of the account
or invoice designated by such customer. In the absence of any such designation
by the customer, payments shall be first credited to the oldest invoice which is
not disputed by said customer. Programmer shall keep accurate records of the
payment received by it on ARS's Accounts Receivable and ARS shall have access at
reasonable times to Programmer's records to verify such status of ARS's Accounts
Receivable. Within thirty (30) days of the end of each month, Programmer shall
remit to ARS amounts previously collected by Programmer on ARS's Accounts
Receivable, along with a written accounting of same, including without
limitation a detailed open ARS's Accounts Receivable report reflecting payments
remitted therewith, if available using ARS's systems currently maintained at the
Station. Any of ARS's Accounts Receivable that have not been collected as of the
end of the Collection Period shall be returned to ARS, together with all records
in connection therewith, if available using ARS's systems currently maintained
at the Station, including without limitation a detailed open
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ARS's Accounts Receivable report reflecting payments remitted therewith,
whereupon ARS may pursue collection thereof in such manner as it, in its sole
discretion, may determine. Programmer shall not have the right to compromise,
settle or adjust the amounts of any such ARS's Accounts Receivable without ARS's
prior written consent. Programmer's obligation and authority hereunder shall not
extend to the institution of litigation, employment of counsel or a collection
agency or any other extraordinary means of collection. Except to remit collected
ARS's Accounts Receivable in accordance herewith, Programmer shall have no
liability or obligation to ARS with respect to the collection of its accounts.
6. ARS Control of the Station.
(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 Commission 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 judgement 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 Commission rules and regulations.
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(b) ARS retains ultimate control over the Station and its
premises. Accordingly, all employees of Programmer present at the Station or on
its 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.
(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 Commission, subject to reimbursement
by Programmer as set forth on Schedule A hereto. All capital expenditures
reasonably required to maintain the technical quality of the transmission and
studio equipment and the compliance of such equipment with applicable laws and
regulations shall be made at the sole expense of ARS in a timely fashion.
(d) ARS shall, at its expense, employ at the Station at least
one management- level employee as ARS's Station Manager and such other person(s)
as necessary to fulfill ARS's duties hereunder and its obligations under the
Commission's rules. The Station Manager shall direct the day-to-day operations
of the 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.
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7. ARS's Representations and Warranties. ARS shall not knowingly take
any action or omit to take any action which would have a material adverse impact
upon the Authorizations, ARS's assets utilized in the operation of the Station,
or upon ARS's ability to perform this Agreement. All reports, annual regulatory
fees and applications required to be filed with the Commission 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
Station's local public records file will be maintained in all material respects
in accordance with the rules and regulations of the Commission and such
applications, records, lists and other documents as are required to be placed in
said file shall be filed there in a timely manner. The facilities of the Station
are and will continue to be in compliance in all material respects with the
engineering requirements set forth in the Authorizations of the respective
station. ARS shall not, during the term of this Agreement, dispose of, transfer
or assign any of such assets and properties which will materially interfere with
the operation of the Station or materially adversely impact Programmer except
with the prior written consent of Programmer.
8. 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), excluding those expenses for which ARS is making direct payments as
set forth in Section 6 of this Agreement (the "Other Expenses"), subject to the
ultimate authority and control of ARS. Subject to ARS's obligations under
Section 8.6 of the Purchase Agreement, Programmer shall be responsible for the
routine maintenance of
<PAGE>
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the studio equipment and shall keep such equipment in good operating order,
reasonable wear and tear excepted.
(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) and shall maintain insurance covering
Programmer's activities in connection with the operations and business of the
Station.
(c) Programmer shall cause the Station to transmit any
required tests of the Emergency Broadcast System or successor Emergency Action
Notification System at such times as are directed by ARS.
(d) Programmer shall maintain and deliver to ARS all records
and information required by the Commission to be placed in the public inspection
file 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 Commission's rules, and agrees to broadcast sponsored programming
addressing political issues, in accordance with the provisions of Section
73.1212 of the Commission's rules. Programmer also shall consult with ARS and
adhere strictly to all applicable statutes and the rules, regulations and
policies of the Commission, as announced from time to time, with respect to the
carriage of political advertisements and programming (including, without
limitation, the rights of candidates and, as appropriate, others to "equal
opportunities") and the charges permitted therefor. Programmer shall furnish
within its programming, on behalf of ARS, all station identification
announcements required by the Commission's rules.
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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 Commission or other local, state or federal
governmental agencies.
(e) 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.
9. Contracts. Programmer shall assume, from and after the Effective
Date, the rights and obligations of ARS from and after the Effective Date under
the Contracts listed on Schedule 4.1.7 of the Purchase Agreement. In addition,
subject to proration under Section 8.2 of the Purchase Agreement, Programmer
shall succeed to all receivables under all of the Station's trade and barter
agreements and shall assume all obligations of the Station thereunder.
Programmer shall assume all of ARS's rights and obligations under the Contracts
and the trade and barter agreements that are freely assignable, or, if consent
is required from the other contracting party, ARS shall use reasonable efforts
to obtain such consent as promptly as practicable. If ARS is unable to obtain
any necessary consent for the assignment of any Material Contract, as identified
in the Purchase Agreement, to be assigned to Programmer, ARS shall act as
Programmer's agent
<PAGE>
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and the parties shall cooperate to allow Programmer to receive the benefit of
such contract in exchange for Programmer's performance of ARS's rights and
obligations thereunder (including the payment to ARS of all amounts due under
any contract other than trade and barter agreements on or after the Effective
Date for services provided by ARS).
10. Employees. Schedule 4.1.19 of the Purchase Agreement contains a
listing of the name, salary or compensation, job title and original employment
date of all current employees of the Station.
11. Prorations.
(a) Except as otherwise provided herein, all prepaid and
deferred income and expenses relating to the Station, the Assets (as defined
under the Purchase Agreement) or the Contracts assumed by Entercom under this
Agreement pursuant to Section 9, and arising from the conduct of the business
and operations of the Station, but excluding any proration of such matters
relating to the Leases (as defined in the Purchase Agreement), shall be prorated
between Programmer and ARS in accordance with generally accepted accounting
principles as of 12:00 a.m. on the Effective Date. Such prorations shall not
include any items paid by ARS under Section 6 hereof, but shall include, without
limitation, business and license fees, music and other license fees (including
any retroactive adjustments thereof, which retroactive adjustments shall not be
subject to the ninety-day limitation set forth in Section 11(c) herein), wages,
salaries, commissions and bonuses, accrued vacation days, sick days and personal
days (and associated payroll taxes) of such of ARS's employees who become
employees of Programmer upon the Effective Date, utility expenses, time sales
agreements, trade and barter agreements in excess of
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Twenty Thousand Dollars ($20,000.00), amounts due or to become due under the
Contracts listed on Schedule 4.1.7 of the Purchase Agreement, and all similar
prepaid and deferred items and other items of income and expense attributable to
the ownership and operation of the Station.
(b) Except as otherwise provided herein, the prorations and
adjustments contemplated by this Section 11, to the extent practicable, shall be
made not later than three business days after the Effective Date. As to those
prorations and adjustments not then capable of being ascertained, an adjustment
and proration shall be made within ninety (90) calendar days of the Effective
Date.
12. 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 communities of
license for the Station. ARS 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 ARS to discharge its obligations to the
public and to comply with the law, rules and policies of the Commission 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 a.m.
to 9 a.m. on Saturday and/or Sunday.
13. Additional ARS 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
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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 accord with Commission rules. ARS
shall continue to maintain a main studio for each station, as that term is
defined by the Commission, within the principal community contour of each
station and shall staff the main studio as required by the Commission. ARS shall
be responsible for the salaries, taxes, insurance and related costs for all
personnel it employs at the Station. In addition, ARS shall pay any federal
regulatory fees, maintain the local public inspection file within the community
of license of each station and shall prepare and place in such 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
inquires 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.
14. License Renewal. Unless this Agreement is terminated prior to the
required filing date of the application for the renewal of the Authorizations,
ARS shall timely file all necessary applications and pay all requisite fees in
connection with obtaining renewal of the Authorizations from the Commission and
shall thereafter prosecute such renewal applications with all reasonable
diligence and otherwise use its commercially reasonable efforts to obtain the
grant of such renewal applications as expeditiously as possible. Furthermore,
ARS shall be responsible for broadcasting those announcements required by the
Commission of broadcast radio stations filing for license renewal. Programmer
shall cooperate fully in ARS's efforts to obtain renewal of the Authorizations.
<PAGE>
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15. 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 Commission. If ARS reasonably determines that a program, commercial or
other material supplied by Programmer does not comply with the Policy Statement,
or 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 Commission 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.
16. Compliance with Copyright Act. Programmer represents and warrants
to ARS 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. Programmer and ARS will each maintain
as appropriate their own ASCAP, BMI and SESAC licenses for the performance of
Programmer's programs and Programmer shall reimburse ARS for the costs of
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such licenses as provided in Schedule A. The right to use the programming and to
authorize its use in any manner shall be and remain solely vested in Programmer,
except as provided herein.
17. 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, service 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 Commission
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.
18. Sale of Advertising. ARS grants Programmer the sole and exclusive
right to sell advertising on the Station during the term of this Agreement,
except as provided in this Section 18. Programmer shall retain all revenues from
the sales 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 Statement, on the Station in
combination with any other broadcast station of its choosing, subject to
compliance with applicable law. 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
<PAGE>
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carried during the programming it provides to ARS. ARS may retain all revenues
from the sale of the Station's advertising during the hours each week in which
ARS airs its own non- entertainment programming as provided in Section 12
hereof.
19. Time Brokerage Challenge. If this Agreement is challenged at the
Commission, counsel for ARS and counsel for the Programmer shall defend the
Agreement and the parties' performance thereunder throughout all Commission
proceedings with the Programmer and ARS each being responsible for its own
costs. If portions of this Agreement do not receive the approval of the
Commission staff, then the parties shall reform the Agreement subject to their
respective reasonable business judgment and advice of counsel or, at ARS's or
Programmer's option, seek reversal of the staff decision and approval from the
full Commission on appeal.
20. 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, Commission 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 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.
<PAGE>
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21. Major Defaults; Termination.
21.1 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 Schedule A hereof 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;
or (c) any termination of this Agreement by Programmer other than as permitted
in Sections 1, 21.4 or 21.5.
21.2. 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, or (b) any
termination of this Agreement by ARS other than as permitted in Sections 1, 21.4
or 21.5.
21.3. Cure Periods. The cure periods before any event listed in
Sections 21.1 or 21.2 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) business 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 21.1(c), or (ii) a termination by
ARS described in Section 21.2(b) hereof.
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(c) Programs and Broadcast Matters. With respect to
Programmer's failure to provide programs referred to in Section 21.1(b) hereof
or ARS's failure to broadcast programs referred to in Section 21.2(a) hereof,
the period allowed for cure shall be three (3) business days from the giving of
written notice of such failure to the defaulting party by the non-defaulting
party.
21.4. 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 an effective date of termination 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.
21.5. Termination Upon Termination of Purchase Agreement.
Notwithstanding any other provision hereof, this Agreement may be terminated
upon not less than seven (7) days' prior written notice by either party at any
time following termination of the Purchase Agreement pursuant to its terms.
22. All Other Defaults. The remedy of the non-defaulting party for any
uncured defaults hereunder shall be indemnification as provided herein.
<PAGE>
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23. Liabilities Upon Termination. 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 ARS's federal, state, and local
tax liabilities associated with Programmer's payments to ARS as provided herein.
Upon termination pursuant to Sections 21.4 or 21.5 hereto, ARS shall be under no
further obligation to make available to Programmer any broadcast time or
broadcast transmission facilities, provided that, if termination is not due to a
Major Default by Programmer, 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 effective date
of termination. 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
Effective Date of this Agreement, shall restore ARS's technical facilities to
substantially the same condition as such facilities existed on the Effective
Date of this Agreement, ordinary wear and tear excepted, shall reassign to ARS
all of the Contracts relating to the Station which were assumed by Programmer
upon the Effective Date and any new contracts entered into by Programmer
relating to the Station, and shall otherwise take such actions, including the
payment of prorations in the manner set forth in Section 11 hereof, to restore
to the extent then practicable the parties hereto to their respective positions
prior to the Effective Date of this Agreement. Notwithstanding anything in the
foregoing to the contrary, termination shall not extinguish any rights of either
party as may be provided by Sections 24 and 25 hereof.
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24. ARS's Indemnification. ARS shall indemnify, defend, hold and save
Programmer and its stockholders, directors, partners, officers, agents,
employees, successors and assigns, harmless from and against any and all claims,
losses, costs, liabilities, damages, Commission forfeitures, and expenses,
including reasonable counsel fees (at trial and on appeal), or 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
(i) ARS's operation of the Station (not including the operation of the Station
by Programmer) under this Agreement and (ii) breach of any material warranty,
representation, covenant, agreement or obligation of ARS contained in this
Agreement.
25. Programmer's Indemnification. Programmer shall indemnify, defend,
hold and save ARS and its stockholders, directors, partners, officers, agents,
employees, successors and assigns, harmless from and against any and all claims,
losses, costs, liabilities, damages, Commission forfeitures, and expenses,
including reasonable counsel fees (at trial and on appeal), of every kind,
nature, and description including libel, slander, illegal competition or trade
practices, or infringement of trade marks or program titles, violations of
rights of privacy, and infringement of copyrights and proprietary rights arising
out of (i) the programming furnished by Programmer under this Agreement, (ii)
the actions or failure to act of Programmer's employees or agents under this
Agreement, (iii) breach of any material warranty, representation, covenant,
agreement or obligation of Programmer contained in this Agreement, (iv) any and
all promotions, contests and on-air "give-aways" relating to the Station
conducted by Programmer during the terms of this Agreement, (v) any liability
resulting from Programmer's default under
<PAGE>
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the Contracts assumed in accordance with Section 9 hereof, and (vi) all other
matters arising out of or relating to Programmer's activities involving the
Station or use of ARS's facilities or relating to the obligations assumed by
Programmer under this Agreement.
26. Procedure for Indemnification. Any party seeking indemnification
under this Agreement (the "Indemnified Party") shall give the party from whom
indemnification is sought (the "Indemnifying Party") written notice of any claim
or the commencement of any action or proceeding for which the Indemnified Party
seeks indemnification, and the Indemnified Party shall permit the Indemnifying
Party to assume the defense of any such claim or any litigation resulting from
such claim, unless injunctive relief is sought against the Indemnified Party in
which case the Indemnified Party shall have the right to join in any defense.
The Indemnified Party's failure to give the Indemnifying Party notice under this
clause shall not preclude the Indemnified Party from seeking indemnification
from the Indemnifying Party except to the extent that the Indemnified Party's
failure has materially prejudiced the Indemnifying Party's ability to defend the
claim or litigation. The Indemnifying Party shall not settle any claim for which
the Indemnified Party seeks indemnification or consent to entry of any judgment
in litigation arising from such a claim without obtaining a release of the
Indemnified Party from all liability in respect of such claim or litigation. If
the Indemnifying Party shall not assume the defense of any such claim or
litigation resulting therefrom, the Indemnified Party may defend against or
settle such claim or litigation in such manner as it may deem appropriate, and
the Indemnifying Party shall promptly reimburse the Indemnified Party for the
amount of all expenses, legal or otherwise, incurred by the Indemnified Party in
connection with the defense
<PAGE>
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against or settlement of such claim or litigation; if no settlement of the claim
or litigation is made, the Indemnifying Party shall promptly reimburse the
Indemnified Party for the amount of any judgment rendered with respect to such
claim or in such litigation and for all expenses, legal or otherwise, incurred
by the Indemnified Party in the defense against such claim or litigation.
27. Dispute Over Indemnification. If upon presentation of a claim for
indemnity hereunder, the Indemnifying Party 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 Indemnified Party.
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.
28. Programmer's Remedies for Operational Deficiencies. Except as set
forth in Section 29, and except for scheduled reductions in power or
interruptions occurring between the hours of 1:00 a.m. and 5:00 a.m. as a result
of maintenance or repairs, if any of the normal broadcast transmissions of the
Station is interrupted, interfered with, or in any way impaired with so that the
Station is not operating at full licensed power and antenna height or is off the
air, 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 or the Station is off the air.
<PAGE>
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29. Force Majeure. Any failure or impairment of the facilities of the
Station 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 ARS (including any obligation of ARS to reduce power or suspend
operation to avoid occupational exposure to harmful RF radiation), shall not
constitute a breach of this Agreement and ARS will not be liable to Programmer.
30. Special Provisions Relating to Brown TBA.
ARS and Programmer acknowledge that ARS is a party to the Brown TBA,
pursuant to which Brown has retained ARS to supply programming and other
services for Stations KQPT(FM), KXOA-FM and KXOA(AM), Sacramento, California.
During the period from the Effective Date of this Agreement until the
termination of the Brown TBA upon consummation of the Brown APA, the parties
hereto covenant and agree as follows:
(a) Programmer shall undertake to provide to ARS all of the programming
for which it has the right and/or obligation to Brown for the broadcast on the
Station under the terms of the Brown TBA.
(b) ARS will obtain the express written consent of Brown to enter into
this Agreement prior to the Effective Date.
(c) Notwithstanding any provisions set forth in the Brown TBA to the
contrary, ARS will not assign and Programmer will not assume the obligations set
forth in the Brown TBA relating to the employees of the Station, including but
not limited to the obligations set forth in
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Section 2.3 of the Brown TBA. The rights and obligations of Programmer relating
to the employees of the Station will be governed by the provisions of the
Purchase Agreement.
(d) Notwithstanding any provisions set forth in the Brown TBA to the
contrary, ARS will not assign and Programmer will not assume the obligations set
forth in the Brown TBA relating to the payment of consideration for the air time
made available, including but not limited to the obligations set forth in
Section 1.4 of the Brown TBA. Programmer will pay ARS the consideration set
forth in Schedule A hereto.
(e) ARS shall at all times have the right to accept or reject any or
all of said programming which it believes in its sole discretion is or may not
be in compliance with its obligations under the Brown TBA, the Communications
Act of 1934, as amended, the rules, regulations and policies of the Commission
or its established corporate policies with respect to public interest standards
and to substitute programming of its own for broadcast on the Station.
(f) In exercising its right to reject programming provided by
Programmer or to substitute programming for broadcast on the Station, ARS shall
be guided by consideration of compliance with federal and state laws, rules and
regulations of the Commission, contractual obligations under the Brown TBA and
established corporate policies with respect to public interest standards, and
not for the commercial advantage of ARS or in any arbitrary manner.
(g) Programmer shall serve as ARS's exclusive agent for the sale of
commercial time on the Station, and shall have and be entitled to exercise as
agent for ARS all of the rights which ARS has under the terms of the Brown TBA,
shall comply with all obligations of ARS with respect to the sale of commercial
time on the Station as set forth in the Brown TBA, and in
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exchange for the obligations undertaken by Programmer hereunder shall be
entitled to keep for its own account any revenues which it may realize from its
activities with respect to the Station.
(h) Programmer shall be liable for and to the extent reasonably
possible will perform all of the obligations and requirements imposed on ARS
under the Brown TBA to the extent that they are attributable to the period
during which this Agreement is in effect, and to the extent that Programmer
cannot reasonably perform any such obligations it shall reimburse ARS for the
actual cost of doing so.
(i) ARS shall use its best efforts to assist Programmer in performing
those obligations under the Brown TBA which cannot reasonably be performed by
Programmer or which are required by the terms of the Brown TBA to be performed
by ARS rather than by an agent or delegate of ARS.
(j) ARS shall use its best efforts to perform all of its obligations
under and to preserve and enforce its rights under the Brown TBA in consultation
and cooperation with Programmer.
31. Other Agreements. During the term of this Agreement, ARS will not
enter into any other time brokerage, program provision, local management or
similar agreement with any third party with respect to the Station.
32. 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 ARS. No party to this Agreement
may assign its rights or delegate its obligations under this Agreement to any
other person or entity without the express prior written consent of
<PAGE>
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the other parties, except that (a) Programmer may assign its rights and delegate
its obligations to one or more subsidiary or affiliated entities of Programmer
and (b) in the event that Programmer finds it necessary or is required to
provide to a third party a collateral assignment of Programmer's interest in
this Agreement or any related documents, ARS will cooperate with Programmer and
any third party requesting such assignment, including but not limited to signing
a consent and acknowledgment of such assignment, provided, however, that
Programmer shall remain fully liable as to all of its obligations and agreements
hereunder whether or not delegated or assigned.
33. Entire Agreement. The Purchase Agreement, this Agreement, and the
attachments hereto and thereto embody the entire agreement and understanding of
the parties and supersede any and all prior agreements, arrangements or
understandings relating to the matters provided 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.
34. 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.
35. Headings. The headings are for convenience only and will not
control or affect the meaning or construction of the provisions of this
Agreement.
<PAGE>
- 26 -
36. Governing Law. 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 Commission. The
construction and performance of the Agreement will be governed by the laws of
the State of California, without reference to that State's principles of
conflicts of law, with venue to be in California.
37. 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
given by hand delivery, by prepaid registered or certified mail, with return
receipt requested, by an established overnight courier providing proof of
delivery for next business day delivery or by telecopy addressed as follows:
To ARS: American Radio Systems Corporation
116 Huntington Avenue, 11th Floor
Boston, Massachusetts 02116
Attn: Steven B. Dodge, President
Telecopy Number: 617-375-7575
with a copy to: Dow, Lohnes and Albertson
1200 New Hampshire Ave., NW, Suite 800
Washington, DC 20036
Attn: John R. Feore, Jr., Esq.
Telecopy Number: 202-857-2900
If to Programmer: Entertainment Communications, Inc.
401 City Avenue, Suite 409
Bala Cynwyd, PA 19004
Attn: Joseph M. Field, President
Telecopy Number: 610-660-5641
<PAGE>
- 27 -
with a copy to: Entertainment Communications, Inc.
401 City Avenue, Suite 409
Bala Cynwyd, PA 19004
Attn: John C. Donlevie, Esq.
Telecopy Number: 610-660-5620
and a copy to: Leventhal, Senter & Lerman
2000 K Street, NW, Suite 600
Washington, DC 20006
Attn: Brian M. Madden, Esq.
Telecopier number: 202-293-7783
The date of any such notice and service thereof shall be deemed to be:
(i) the day of delivery if hand delivered or delivered by overnight courier;
(ii) the day of delivery as indicated on the return receipt if dispatched by
mail; or (iii) the date of telecopy transmission as indicated on the telecopier
transmission report provided that any telecopy transmission shall not be
effective unless a paper copy 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.
38. 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.
39. Certifications.
(a) Control of Station. Subject to, and consistent with the
rights of Brown under the Brown TBA during the term of that agreement, ARS
hereby verifies that it will
<PAGE>
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maintain control of the Station and its 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 Commission.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
ENTERTAINMENT COMMUNICATIONS, INC.
By:
------------------------------------
Name: John C. Donlevie
Title: Executive Vice President
AMERICAN RADIO SYSTEMS CORPORATION
By: /s/Steven B. Dodge
------------------------------------
Name: Steven B. Dodge
Title: Chief Executive Officer
<PAGE>
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SCHEDULE A
PAYMENT SCHEDULE
In exchange for the air time supplied to Programmer pursuant to this
Agreement, Programmer shall pay ARS the following monthly fee (the "Monthly
Fee") during each of the specified calendar months:
January, 1997 $100,000
February, 1997 $100,000
March, 1997 $200,000
April, 1997 $200,000
May, 1997 $200,000
June, 1997 $200,000
The first Monthly Fee is due and payable on Effective Date and each
successive payment is due on the first day of each month thereafter. The Monthly
Fee shall be reduced pro rata for any partial month at the beginning or end of
the term of this Agreement.
In addition to the Monthly Fee, Programmer shall promptly reimburse ARS
the amount of Station expenses for which ARS is making direct payments as set
forth in Section 6 hereof, and for all other payments related to the continued
operation of the Station incurred by ARS which are not paid directly by
Programmer, as they are incurred during the term of this Agreement, exclusive of
any payments of any nature (a) made with respect to capital expenditures made to
continue the operation of the Station as provided in Section 6 and under Section
6.1.6 of the Purchase Agreement or (b) made to, with respect of, or on behalf of
any of ARS's employees at the Station after the Effective Date. ARS shall
deliver a statement in reasonable detail with back-up documentation for such
expenses evidencing payment thereof, and Programmer shall pay ARS such expenses
within ten (10) business days of receipt of such statement.
<PAGE>
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ATTACHMENT I
Programmer agrees to cooperate with ARS in the broadcasting of programs
in a manner consistent with the standards of ARS, as set forth below:
1. Election Procedures. At least 90 days before the start of any
primary or regular election campaign, Programmer will coordinate with ARS's
Station Manager the rate Programmer will charge for time to be sold to
candidates for public office and/or their supporters to make certain that the
rate charged conforms to all applicable laws and the Station's policy.
Throughout a campaign, Programmer will comply with all applicable laws and rules
concerning political candidacy broadcasts and will promptly notify ARS's Station
Manager of any disputes concerning either the treatment of or rate charged a
candidate or supporter.
2. Required Announcements. Programmer shall broadcast an announcement
in a form satisfactory to ARS at the beginning of each hour to identify the
Station, and any other announcement that may be required by law, regulation, or
the Station's policy.
3. Commercial Recordkeeping. Programmer shall maintain such records of
the receipt of, and provide such disclosure to ARS of, any consideration,
whether in money, goods, services, or otherwise, which is paid or promised to be
paid, either directly or indirectly, by any person or company for the
presentation of any programming over the Station as are required by Sections 317
and 507 of the Communications Act and the rules and regulations of the FCC.
4. No Illegal Announcements. No announcements or promotion prohibited
by federal or state law or regulation of any lottery, game or contest shall be
made over the Station.
5. Indecency, Hoaxes. No programming violative of applicable laws and
rules concerning indecency or hoaxes will be broadcast over the Station.
6. Controversial Issues. Any broadcast over the Station concerning
controversial issues of public importance shall comply with the then current FCC
rules and policies.
7. Respectful of Faiths. The subject of religion and particular faiths,
tenets and customs shall be treated with respect at all times.
8. ARS's Discretion Paramount. In accordance with ARS's responsibility
under the Communications Act of 1934, as amended, and the rules and regulations
of the
<PAGE>
- 31 -
Federal Communications Commission, ARS reserves the right to reject or terminate
any advertising proposed to be presented or being presented over the Station
which is in conflict with the Station's policy or which in the judgment of ARS
or its Station Manager would not serve the public interest.
ARS may waive any of the foregoing regulations in specific instances
if, in its reasonable opinion, good broadcasting in the public interest will be
served thereby.
AGREEMENT AND PLAN OF MERGER
By and Between
AMERICAN RADIO SYSTEMS CORPORATION
and
TSUNAMI COMMUNICATIONS OF CINCINNATI, INC.
Dated as of
January 2, 1997
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
ARTICLE 1 THE MERGER......................................................................................2
SECTION 1.1 The Merger..................................................................................2
SECTION 1.2 Closing.....................................................................................2
SECTION 1.3 Effective Time..............................................................................2
SECTION 1.4 Effect of the Merger........................................................................2
SECTION 1.5 Certificate of Incorporation................................................................2
SECTION 1.6 Bylaws......................................................................................2
SECTION 1.7 Directors and Officers......................................................................2
ARTICLE 2 CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES..................................................3
SECTION 2.1 Conversion of Capital Stock.................................................................3
SECTION 2.2 Exchange of Certificates....................................................................4
SECTION 2.3 Stock Transfer Books........................................................................4
SECTION 2.4 Option Securities and Convertible Securities; Payment Rights................................4
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................................................4
SECTION 3.1 Organization and Business; Power and Authority; Effect of Transaction.......................4
SECTION 3.2 Business, Assets and Liabilities............................................................6
SECTION 3.3 Authorized and Outstanding Capital Stock....................................................7
SECTION 3.4 Broker or Finder............................................................................7
SECTION 3.5 Continuing Representation and Warranty......................................................7
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF AMERICAN......................................................7
SECTION 4.1 Organization and Business; Power and Authority; Effect of Transaction.......................7
SECTION 4.2 Financial and Other Information.............................................................8
SECTION 4.3 Broker or Finder............................................................................8
SECTION 4.4 Continuing Representation and Warranty......................................................8
ARTICLE 5 COVENANTS.......................................................................................9
SECTION 5.1 Access to Information; Confidentiality; Cooperation.........................................9
SECTION 5.2 Public Announcements........................................................................9
SECTION 5.3 Notification of Certain Matters............................................................10
ARTICLE 6 CLOSING CONDITIONS.............................................................................10
SECTION 6.1 Conditions to Obligations of Each Party to Effect the Merger...............................10
SECTION 6.2 Conditions to Obligations of American......................................................11
SECTION 6.3 Conditions to Obligations of the Company...................................................12
ARTICLE 7 TERMINATION, AMENDMENT AND WAIVER..............................................................13
SECTION 7.1 Termination................................................................................13
ARTICLE 8 INDEMNIFICATION................................................................................14
SECTION 8.1 Survival...................................................................................14
SECTION 8.2 Indemnification............................................................................14
SECTION 8.3 Limitation of Liability; Disposition of Escrow Indemnity Funds.............................15
<PAGE>
SECTION 8.4 Notice of Claims...........................................................................15
SECTION 8.5 Defense of Third Party Claims..............................................................15
SECTION 8.6 Exclusive Remedy...........................................................................15
ARTICLE 9 GENERAL PROVISIONS.............................................................................16
SECTION 9.1 Amendment..................................................................................16
SECTION 9.2 Waiver.....................................................................................16
SECTION 9.3 Fees, Expenses and Other Payments..........................................................16
SECTION 9.4 Notices....................................................................................16
SECTION 9.5 Specific Performance; Other Rights and Remedies............................................17
SECTION 9.6 Severability...............................................................................18
SECTION 9.7 Counterparts...............................................................................18
SECTION 9.8 Section Headings...........................................................................18
SECTION 9.9 Governing Law..............................................................................18
SECTION 9.10 Further Acts..............................................................................18
SECTION 9.11 Entire Agreement..........................................................................18
SECTION 9.12 Assignment................................................................................19
SECTION 9.13 Parties in Interest.......................................................................19
SECTION 9.14 Mutual Drafting...........................................................................19
</TABLE>
APPENDIX A Definitions
EXHIBITS:
EXHIBIT A: Terms of WGRR Amendments (Section 6.2(e))
EXHIBIT B: Form of Investment Letter (Section 6.2(f))
EXHIBIT C: Form of Registration Rights Agreement (Section 6.2(g))
-ii-
<PAGE>
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement"), dated as of
January 2, 1997, is made by and between American Radio Systems Corporation, a
Delaware corporation ("American"), and Tsunami Communications of Cincinnati,
Inc., an Ohio corporation (the "Company" and, together with American, the
"parties").
RECITALS
WHEREAS, upon the terms and subject to the conditions of this
Agreement, in accordance with the general corporation laws of the State of
Delaware (the "DGCL") and of the State of Ohio (the "OGCL"), the Company and
American will carry out a business combination transaction pursuant to which the
Company will merge with and into American (the "Merger") and Anthony A.
Galluzzo, the sole stockholder of the Company (the "Company Stockholder"), will
receive shares (the "American Shares") of Class A Common Stock, par value $.01
per share, of American (the "American Class A Stock") with a Current Market
Price (as hereinafter defined) of $500,000; and
WHEREAS, the Board of Directors of each of the Company and American (a)
has unanimously determined that the Merger is advisable and fair to, and in the
best interests of, it and its respective stockholders and has approved and
adopted this Agreement as a plan of reorganization within the provisions of
Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended, and (b)
has approved this Agreement and the Merger; and
WHEREAS, the Company Stockholder has approved and adopted this
Agreement, the Merger and the Transactions; and
WHEREAS, (i) Tsunami Communications, Inc., a Colorado corporation
("Tsunami"), WGRR Limited Partnership, a Delaware limited partnership ("WGRR"),
and The Dalton Group, Inc., a Delaware corporation and the general partner of
WGRR ("Dalton"), are parties to an Asset Purchase Agreement dated August 27,
1996 (the "WGRR Agreement"); (ii) Tsunami, WGRR and Media Ventures Partners,
Ltd. are parties to an Escrow Agreement dated August 29, 1996 (the "WGRR Escrow
Agreement"); and (iii) the Company and Tsunami are parties to an Assignment and
Assumption Agreement, dated September 30, 1996, relating to the WGRR Agreement
and the WGRR Escrow Agreement (the "WGRR Assignment" and, collectively with the
WGRR Agreement and the WGRR Escrow Agreement, the "WGRR Documents" or, any of
the foregoing, individually, a "WGRR Document"); and
WHEREAS, capitalized terms used in this Agreement without definition
shall have the meanings given to such terms in Appendix A attached hereto and
made a part hereof;
NOW, THEREFORE, in consideration of the foregoing Recitals and the
mutual representations, warranties, covenants and agreements set forth herein,
the parties hereto, intending to be legally bound, do hereby covenant and agree
as follows:
<PAGE>
ARTICLE 1
THE MERGER
SECTION 1.1 The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the DGCL and the OGCL, at
the Effective Time the Company shall be merged with and into American. As a
result of the Merger, the separate existence of the Company shall cease and
American shall continue as the surviving corporation of the Merger (the
"Surviving Corporation").
SECTION 1.2 Closing. Unless this Agreement shall have been terminated
pursuant to Section 8.1 and the Merger and the Transactions shall have been
abandoned, the closing of the Merger (the "Closing") will take place at the
offices of Sullivan & Worcester LLP, One Post Office Square, Boston,
Massachusetts, on such date, not later than the Termination Date, within ten
(10) days following the satisfaction or, if permissible, waiver of the
conditions set forth in Article 6, other than those conditions which can be
satisfied only at the Closing, unless another date, time or place is agreed to
in writing by the parties (the "Closing Date").
SECTION 1.3 Effective Time. As promptly as practicable after the
satisfaction or, if permissible, waiver of the conditions set forth in Article 6
(but subject to the provisions of Section 1.2), the parties hereto shall cause
the Merger to be consummated by filing a Certificate of Merger and any related
filings required under the DGCL with the Secretary of State of Delaware and a
Certificate of Merger and any related filings required under the OGCL with the
Secretary of State of Ohio. 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 Delaware and the Secretary of State of Ohio or at such
later time as is specified in such documents (the "Effective Time").
SECTION 1.4 Effect of the Merger. From and after the Effective Time,
the Surviving Corporation shall possess all the rights, privileges, powers and
franchises and be subject to all of the restrictions, disabilities and duties of
the Company and American, and the Merger shall otherwise have the effects
provided for under the DGCL and the OGCL.
SECTION 1.5 Certificate of Incorporation. The 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.
SECTION 1.6 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.
SECTION 1.7 Directors and Officers. From and after the Effective Time,
until successors are duly elected or appointed and qualified (or 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, and (b) the officers of American at the Effective Time shall be the
officers of the Surviving Corporation.
-2-
<PAGE>
ARTICLE 2
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES
SECTION 2.1 Conversion of Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of the Company, American
or the holders of any of the following securities:
(a) Each share of American Class A Stock, each share of Class B Common
Stock, par value $.01 per share, of American and each share of Class C Common
Stock, par value $.01 per share, of American, and all Convertible Securities and
Option Securities of American issued and outstanding immediately prior to the
Effective Time shall remain outstanding.
(b) Each share of Common Stock, with no par value, of the Company (the
"Company Common Stock") issued and outstanding immediately prior to the
Effective Time (other than shares held in the treasury of the Company or by any
of its Subsidiaries) shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted into the right to receive its
pro-rata share of 18,341 shares of American Shares (being a number of American
Shares with a Current Market Price of $500,000) (the "Merger Consideration").
The term "Per Share Merger Consideration" shall mean an amount equal to the
Merger Consideration divided by the aggregate number of shares of Company Common
Stock (the "Company Shares") issued and outstanding at the Effective Time.
At the Effective Time, all Company Shares shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and certificates previously evidencing any such Company Shares (each, a
"Certificate") shall thereafter represent the right to receive, upon the
surrender of such Certificate in accordance with the provisions of Section 3.2,
the Per Share Merger Consideration multiplied by the number of Company Shares
represented by such Certificate, together with cash in lieu of fractional shares
in accordance with the provisions of Section 2.1(d). A holder of more than one
Certificate shall have the right to receive the Per Share Merger Consideration
multiplied by the number of Company Shares represented by all such Certificates.
The holders of such Certificates previously evidencing Company Shares
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such Company Shares except as otherwise provided herein
or by Applicable Law.
For purposes of this Agreement, the term "Current Market Price" shall
mean, with respect to the American Shares on any date specified herein, the
average of the daily Fair Market Value for each of the most recent five (5)
trading days prior to the date of this Agreement, determined by (a) multiplying
each such daily Fair Market Value by the number of shares of American Class A
Stock traded each such day, (b) adding the products of the foregoing
multiplications, and (c) dividing the sum by the total number of shares of
American Class A Stock traded during such period, and the term "Fair Market
Value" shall mean, with respect to the American Class A Stock, the last reported
sales price, regular way, or, in the event that no sale takes place on such day,
the average of the reported closing bid and asked prices, regular way, in either
case as reported on the Nasdaq National Market System.
-3-
<PAGE>
(c) Each Company Share held in the treasury of the Company or by any of
its Subsidiaries and each Company Share 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.
(d) In lieu of issuing fractional shares, American shall convert the
holder's right to receive American Shares pursuant to Section 2.1(b) into a
right to receive the highest whole number of American Shares constituting the
Per Share Merger Consideration plus cash equal to the fraction of a share of
American Class A Stock to which the holder would otherwise be entitled
multiplied by the Current Market Price.
SECTION 2.2 Exchange of Certificates. At and after the Effective Time,
each Company Stockholder, upon surrender of each of his Certificates, shall be
issued a certificate of American Class A Stock and cash representing the Per
Share Merger Consideration with respect to the Company Shares represented by
such Certificate, plus cash in amount sufficient to make payment for fractional
shares.
SECTION 2.3 Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed, and there shall be no further
transfer of shares of Company Common Stock thereafter on the records of the
Company. Any Certificates presented after the Effective Time for transfer shall
be canceled and exchanged for the amount to which the Shares represented thereby
shall be entitled pursuant to Sections 2.1 and 2.2.
SECTION 2.4 Option Securities and Convertible Securities; Payment
Rights. At the Effective Time, each outstanding Option Security and each
Convertible Security, whether or not then exercisable for or convertible into
Company Shares, outstanding immediately prior to the Effective Time, shall be
canceled and retired and shall cease to exist, and the holder thereof shall not
be entitled to receive any consideration therefor.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents, warrants and covenants to, and agrees
with, American as follows:
SECTION 3.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) Each of the Company and Tsunami is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation; and the Company 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.
(b) The Company has all requisite power and authority (corporate and
other), and has in full force and effect all Governmental Authorizations and
Private Authorizations in order to enable it
-4-
<PAGE>
to execute and deliver, and to perform its obligations under, this Agreement and
each Collateral Document executed or required to be executed by the Company
pursuant hereto or thereto and to consummate the Merger; and the execution,
delivery and performance of this Agreement and each Collateral Document executed
or required to be executed by the Company pursuant hereto or thereto have been
duly authorized by all requisite corporate or other action on the part of the
Company, including without limitation the approval of the Company Stockholder.
This Agreement has been duly executed and delivered by the Company 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 the Company, will constitute, legal, valid and binding obligations
of the Company, enforceable in accordance with their respective terms, except as
such enforceability may be limited by bankruptcy, moratorium, insolvency and
similar laws affecting the rights and remedies of creditors and the obligations
of debtors generally and by general principles of equity.
(c) Except as set forth in Schedule 3.1 to the Company Disclosure
Schedule, neither the execution and delivery of this Agreement nor any
Collateral Document executed or required to be executed pursuant hereto or
thereto, 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 under, any Applicable Law on the part of the
Company 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 under, 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 under, any Contractual Obligation of the Company; or
(ii) will require the Company to make or obtain any
Governmental Authorization, Governmental Filing or Private
Authorization, except for the filing requirements under Applicable Law
in connection with the Merger.
(d) The Company does not have any direct or indirect Subsidiaries.
(e) Each of the Company and Tsunami had, as of the date of execution of
each of the WGRR Documents to which it is a party, all requisite power and
authority (corporate and other) in order to enable it to execute and deliver,
and to perform its obligations under, each of the WGRR Documents to which it is
a party or by which it is bound, and the execution, delivery and performance of
each of the WGRR Documents to which it is a party by the Company and Tsunami
have been duly authorized by all requisite corporate or other action on the part
of the Company and Tsunami, including without limitation its stockholders to the
extent required. Each of the WGRR Documents to which it is a party has been duly
executed and delivered by the Company and each constitutes the legal, valid and
binding obligation of the Company and Tsunami, enforceable in accordance with
their respective terms, except as such enforceability may be limited by
bankruptcy, moratorium, insolvency and similar laws affecting the rights and
remedies of creditors and the obligations of debtors generally and by general
principles of equity.
(f) To the Company's knowledge:
-5-
<PAGE>
(i) as of the date of execution of the WGRR Agreement, WGRR
was a limited partnership duly organized and existing under the laws of
the jurisdiction of its organization, had all requisite power and
authority (partnership and other) in order to enable it to execute and
deliver, and to perform its obligations under, the WGRR Agreement;
(ii) the execution, delivery and performance of the WGRR
Agreement by WGRR had been duly authorized by all requisite partnership
or other action on the part of WGRR, including without limitation its
partners to the extent required; and
(iii) The WGRR Agreement has been duly executed and delivered
by WGRR and constitutes the legal, valid and binding obligation of
WGRR, enforceable in accordance with its respective terms, except as
such enforceability may be limited by bankruptcy, moratorium,
insolvency and similar laws affecting the rights and remedies of
creditors and the obligations of debtors generally and by general
principles of equity.
SECTION 3.2 Business, Assets and Liabilities. The Company is a newly
organized corporation, has not conducted and prior to the Closing Date will not
conduct any business and does not have any assets or property or any obligations
or liabilities, past, present or deferred, accrued or unaccrued, fixed,
absolute, contingent or other, except pursuant to the WGRR Documents and the
Financing Documents to which it is a party or by which it is bound and for
nonmaterial obligations and liabilities arising in connection with its
organization and the WGRR Documents. Other than as set forth on Schedule 3.2 to
the Company 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 asset or property of the Company 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 agreement
authorizing any secured party thereunder to file any such financing statement or
filing. The Company is solvent within the meaning of applicable bankruptcy and
fraudulent conveyance Laws. There is no Event known to the Company which
Materially Adversely Affects, or (so far as the Company can now reasonably
foresee) in the future is likely to Materially Adversely Affect, the Company,
except for matters applicable to the economy or the radio broadcast industry
generally.
Without limiting the generality of the foregoing, except as set forth
on Schedule 3.2, (a) the Company is not a party to or bound by, nor are any of
its assets or property subject to, any Governmental Authorization, Private
Authorization, Lease or other Contractual Obligation, other than the WGRR
Documents; (b) there is not pending or, to the Company's knowledge, threatened
any Legal Action or other Claim against the Company or which otherwise involves
the Company; (c) the Company is not a party to any transaction with any of its
officers, directors or employees, the Company Stockholder, or any Affiliate of
any thereof (other than the WGRR Assignment); (d) the Company does not have any
Plans, Benefit Arrangements or Employment Arrangements; and (e) except as set
forth on the Company Disclosure Schedule, there are not, and on or prior to the
Closing there will not be, (i) any banks, trust companies, savings and loan
associations and brokerage firms in which the Company has an account or a safe
deposit box or (ii) Persons authorized to draw thereon, to have access thereto,
or to authorize transactions therein, or (iii) any powers of attorney from the
Company.
-6-
<PAGE>
SECTION 3.3 Authorized and Outstanding Capital Stock. The authorized
and outstanding capital stock of the Company is as set forth in the Company
Disclosure Schedule. 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. Except as set forth in the Company
Disclosure Schedule, (a) there is not currently, and on the Closing Date there
will not be, outstanding (nor has the Company agreed to grant or issue nor will
the Company on or prior to the Closing Date agree to grant or issue) any other
shares of its capital stock or any Option Security or Convertible Security, and
(b) the Company is not (and on or prior to the Closing Date will not be) a party
to or bound by any agreement, put or commitment pursuant to which it is or will
be obligated to purchase, redeem or otherwise acquire any shares of capital
stock or any Option Security or Convertible Security. All of the outstanding
capital stock of the Company is owned as of the date of this Agreement by the
Company Stockholder, free and clear of all Liens.
SECTION 3.4 Broker or Finder. No Person assisted in or brought about
the negotiation of this Agreement or the Merger or the subject matter of this
Agreement in the capacity of broker, agent or finder or in any similar capacity
on behalf of the Company.
SECTION 3.5 Continuing Representation and Warranty. Except for those
representations and warranties which speak as of a specific date, all of the
representations and warranties of the Company set forth in this Article shall be
true and correct on the Closing Date with the same force and effect as though
made on and as of that date and those, if any, which speak as of a specific date
shall be true and correct on the Closing Date.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF AMERICAN
American represents, warrants and covenants to, and agrees with, the
Company as follows:
SECTION 4.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) American (i) is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation; and (ii)
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.
(b) American has all requisite power and authority (corporate and
other), and has in full force and effect all Governmental Authorizations and
Private Authorizations in order 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 and to consummate
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 by American have been duly authorized by all requisite corporate or
other action on the part of American. No action or approval on the part of the
American stockholders is required in connection with the execution, delivery and
performance of this Agreement or any Collateral Document or the consummation of
the Merger. This Agreement has been duly executed and delivered by American and
constitutes,
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and each Collateral Document executed or required to be executed pursuant hereto
or thereto by American 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, except as such
enforceability may be limited by bankruptcy, moratorium, insolvency and similar
laws affecting the rights and remedies of creditors and the obligations of
debtors generally and by general principles of equity.
(c) Neither the execution and delivery of this Agreement or any
Collateral Document executed or required to be executed pursuant hereto or
thereto, 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 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
(ii) will require American to make or obtain any Governmental
Authorization, Governmental Filing or Private Authorization, except for
the filing requirements under Applicable Law in connection with the
Merger.
SECTION 4.2 Financial and Other Information. The documents
(collectively, the "American SEC Documents") that American has filed pursuant to
the provisions of the Securities Act or the Exchange Act, as of the date of the
filing thereof, did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated herein or necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. Since the date of the most recent financial
statements forming part of the American SEC Documents, there has been no
Material Adverse Change in American. Except as set forth in the SEC Documents,
there is no Event known to American which Materially Adversely Affects, or (so
far as American can now reasonably foresee) in the future is likely to
Materially Adversely Affect, American, except for matters applicable to the
economy or the radio broadcast industry generally.
SECTION 4.3 Broker or Finder. No Person assisted in or brought about
the negotiation of this Agreement or the Merger or the subject matter of this
Agreement in the capacity of broker, agent or finder or in any similar capacity
on behalf of American.
SECTION 4.4 Continuing Representation and Warranty. Except for those
representations and warranties which speak as of a specific date, all of the
representations and warranties of American set forth in this Article shall be
true and correct on the Closing Date with the same force and effect as though
made on and as of that date and those, if any, which speak as of a specific date
shall be true and correct on the Closing Date.
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ARTICLE 5
COVENANTS
SECTION 5.1 Access to Information; Confidentiality; Cooperation.
(a) Each party shall 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
Effective Time to all of its (and its Subsidiaries') properties, books,
contracts, commitments and records. 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 who need to know such information for the purpose of evaluating
the Merger, 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. From and after the Closing, the Company Stockholder shall not,
without the prior written consent of American, disclose any information
remaining in his possession with respect to the Company, and no such information
shall be used for any purposes, other than in connection with the Merger or to
the extent required by Applicable Law.
(b) Notwithstanding the provisions of Section 5.1(a), each party may
disclose such information as may be 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.
(d) Each of the parties hereto shall use reasonable business efforts 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.
SECTION 5.2 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 Merger or any 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, the Company acknowledges and agrees that
American may, without the prior consent of the Company, issue such press
releases or make such public statements as may be required by Applicable Law, in
which case, to the extent practicable, American
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will consult with, and exercise in good faith, all reasonable business efforts
to agree with the Company regarding the nature, extent and form of such press
release or public statement, and, in any event, with prior notice to the
Company.
SECTION 5.3 Notification of Certain Matters. Each party shall give
prompt notice to the other, of (a) 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) in
the case of the Company, any change to be made in the Company Disclosure
Schedule or in the case of American, any change to be made in 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 (b) 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;
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, except as provided in paragraph (b) below.
ARTICLE 6
CLOSING CONDITIONS
SECTION 6.1 Conditions to Obligations of Each Party to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time 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 American Shares constituting the Merger Consideration
shall have been approved for trading on the Nasdaq National Market,
subject to official notice of issuance;
(b) As of the Closing Date, no Legal Action shall be pending
before or threatened in writing by any Authority or other Person
seeking to restrain, prohibit or make illegal the consummation of the
Merger, it being understood and agreed that one or more written
requests by any Authority for information or additional information
with respect to the Merger, which information could be used in
connection with such Legal Action, may not be deemed to be a threat of
Legal Action; and
(c) Other than the filing of merger documents in accordance
with the DGCL and the OGCL, 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 the Company with any Authority,
prior to the consummation of the Merger shall have been obtained from,
and made with, the all 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
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reasonable business judgment of American, assuming consummation of the
Merger, have a Material Adverse Effect on the Company.
SECTION 6.2 Conditions to Obligations of American. The obligation of
American to effect the Merger shall be subject to the satisfaction at or prior
to the Effective Time 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 Company shall have delivered or cause to be delivered
to American all of the Collateral Documents required to be delivered by
the Company to American at or prior to the Closing pursuant to the
terms of this Agreement; such Collateral 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 without limitation lien searches and
records of corporate proceedings, which they may reasonably request in
connection therewith, such documents where appropriate to be certified
by proper corporate officers;
(b) The Company 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 Holme, Roberts & Owen, counsel for the Company and
Tsunami, with respect to the matters set forth in Sections 3.1(a), (b),
(c) (other than as to Private Authorizations and as to the Company's
and Tsunami's Contractual Obligations, limited to such counsel's
knowledge) and (e) and 3.3 and with respect to such other matters
arising after the date of this Agreement incident to the Merger, as
American or its counsel or 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 the Company 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 respects Material to
the Company 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 the
Company or American); each and all of the agreements and conditions to
be performed or satisfied by the Company hereunder at or prior to the
Closing Date shall have been duly performed or satisfied in all
material respects; and the Company 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 consents and approvals of all Persons (other than
Authorities) having a relationship with the Company and whose consents
and approvals are required in order to vest in American all of the
Company's right, title and interest in and to the WGRR Agreement and
the WGRR Escrow Agreement and its other assets and property (including
without limitation the unqualified consent of WGRR) without the
imposition, individually
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or in the aggregate, of any condition or requirement which could
Materially Adversely Affect the Company shall have been delivered to
American;
(e) The WGRR Agreement shall be in full force and effect,
shall not have been amended, modified or changed, except with respect
to the matters set forth in Exhibit A attached hereto and made a part
hereof (the "WGRR Amendments"); neither Tsunami nor the Company nor
WGRR shall have given notice of any breach or alleged breach of any
warranty, covenant or agreement or any misrepresentation or alleged
misrepresentation therein, and neither Tsunami or the Company shall
have waived any of its rights or remedies thereunder;
(f) The Company Stockholder shall have executed and delivered
an investment letter substantially in the form of Exhibit B attached
hereto and made a part hereof (the "Investment Letter");
(g) The Company Stockholder shall have executed and delivered
a registration rights agreement substantially in the form of Exhibit C
attached hereto and made a part hereof (the "Registration Rights
Agreement");
(h) No Legal Action (other than the investigation of the
Department of Justice referred to in Schedule 3.1 of the Company
Disclosure Schedule) shall have been instituted or threatened by any
Authority or by any other Person that could materially and adversely
affect the Company or WGRR-FM (the radio station which is the subject
of the WGRR Agreement); and
(i) The Financing Documents shall have been terminated,
effective prior to or as of the Closing, and the lender pursuant to the
Financing Documents shall have delivered UCC-3 Termination Statements
and any other instruments necessary to release and record the release
of the security interests granted under the Financing Documents and to
terminate all of the filings set forth on Schedule 3.2.
SECTION 6.3 Conditions to Obligations of the Company. The obligation of
the Company to effect the Merger shall be subject to the satisfaction at or
prior to the Effective Time 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) American shall have delivered or cause to be delivered to
the Company all of the Collateral Documents required to be delivered by
American to the Company at or prior to the Closing pursuant to the
terms of this Agreement; such Collateral Documents shall be reasonably
satisfactory in form, scope and substance to the Company and its
counsel, and the Company 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;
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(b) American shall have furnished the Company with favorable
opinions, dated the Closing Date of Sullivan & Worcester LLP, counsel
for American, with respect to the matters set forth in Sections 4.1(a),
(b) and (c) (other than as to Private Authorizations and as to
American's Contractual Obligations, limited to such counsel's
knowledge) and with respect to such other matters arising after the
date of this Agreement incident to the Merger, as the Company 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 as of such date on the
Closing Date (including without limitation giving effect to any later
obtained knowledge, information or belief of American or the Company);
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 the Company 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 the Company or its counsel shall have
reasonably requested; and
(d) American shall have executed and delivered the
Registration Rights Agreement; and
(e) American shall have paid, or made arrangements to pay on
the Closing Date, the outstanding principal and interest due under the
Note comprising part of the Financing Documents, up to an amount not to
exceed $3,050,000 plus accrued interest thereon through the Closing
Date to the lender thereunder.
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1 Termination. This Agreement shall terminate if the Merger
is not effective on or prior to the Termination Date and may be terminated at
any time prior to the Effective Time:
(a) by mutual consent of the Company and American;
(b) by either American or the Company if any Legal Action
(other than the investigation of the Department of Justice referred to
on Schedule 3.1 of the Company Disclosure Schedule) has been instituted
or threatened by any Authority or by any other Person seeking to enjoin
or otherwise prohibit the consummation of the Merger (it being
understood and agreed that one or more written requests by any
Authority for information
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or additional information with respect to the Merger, which could be
used in connection with any Legal Action, shall not be deemed a threat
of Legal Action); or
(c) by the Company in the event the Company 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 either (i) the Merger has not been consummated prior to the
Termination Date; or (ii) 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, and such breach or
untruth is not capable of being cured by the Termination Date; or
(d) by American in the event (i) the WGRR Agreement shall have
been terminated, whether by WGRR or Tsunami or the Company, (ii)
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 either (A) the Merger has not been
consummated prior to the Termination Date or (B) the Company 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, and such breach or untruth is not capable of being cured by
the Termination Date, or (iii) if any Legal Action has been instituted
or threatened by any Authority or by any other Person seeking to enjoin
or otherwise prohibit the acquisition by American of WGRR-FM pursuant
to the provisions of the WGRR Agreement (it being understood and agreed
that one or more written requests by any Authority for information or
additional information with respect to such acquisition, which could be
used in connection with any Legal Action, shall not be deemed a threat
of Legal Action).
The term "Termination Date" shall mean June 30, 1997 or such other date
as the parties may, from time to time, mutually agree.
The right of either party 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.
SECTION 7.2 Effect of Termination. Except as provided in Sections 5.1
(with respect to confidentiality), Section 5.2, this Section and Section 9.3, 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 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.
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ARTICLE 8
INDEMNIFICATION
SECTION 8.1 Survival. The representations and warranties of the Company
and American 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 two (2) years after the Closing Date, regardless of
any investigation or statement as to the results thereof made by or on behalf of
any party hereto, except that, representations and warranties referred to in
Sections 3.1, 3.8 and 4.1 shall extend until the expiration of any applicable
statute of limitations (the "Indemnity Period"). No claim for indemnification
may be asserted after the expiration of the Indemnity Period. Notwithstanding
anything herein to the contrary, any representation or warranty that 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.
SECTION 8.2 Indemnification. Subject to the provisions of Section 8.3,
the Company Stockholder agrees that on and after the Closing he shall indemnify
American and hold American harmless 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 American by reason of, or arising out of:
(a) any breach of representation or warranty made by the Company
pursuant to this Agreement or any Collateral Document or any
failure by the Company to perform or fulfill any of its
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 Company to the extent such Legal Action or other Claim has
also resulted in a breach of representation or warranty by the
Company pursuant to this Agreement or any Collateral Document.
SECTION 8.3 Limitation of Liability; Disposition of Escrow Indemnity
Funds. Notwithstanding the provisions of Section 8.2, after the Closing,
American shall be entitled to recover its Loss and Expense in respect of any
Claim only to the extent that the aggregate Loss and Expense for all Claims (i)
exceeds, in the aggregate, $5,000 at which time it shall be entitled to recover
such $5,000 and any amounts in excess thereof and (ii) does not exceed, in the
aggregate, $500,000.
SECTION 8.4 Notice of Claims. If American believes that it has suffered
or incurred any Loss and Expense, it shall notify the Company Stockholder
promptly in writing, and in any event within the applicable time period
specified in Section 8.1, 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 American intends to claim
any liability or expense as Loss and
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Expense under this Article, American shall promptly notify the indemnifying
party of such Legal Action, but the failure to so notify the indemnifying party
shall not relieve it of its obligations under this Article, except to the extent
such failure to notify prejudices its ability to defend against such Claim.
SECTION 8.5 Defense of Third Party Claims. The Company Stockholder
shall have the right to conduct and control, through counsel of its own
choosing, reasonably acceptable to American, any third party Legal Action or
other Claim, but American may, at its election, participate in the defense
thereof at its sole cost and expense; provided, however, that if the Company
Stockholder shall fail to defend any such Legal Action or other Claim, then
American may defend, through counsel of its own choosing, such Legal Action or
other Claim, and (so long as it gives the Company Stockholder at least fifteen
(15) days' notice of the terms of the proposed settlement thereof and permits
the Company Stockholder 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 costs and expenses of such defense. The Company Stockholder
shall not compromise or settle any such Legal Action or other Claim without the
prior written consent of American.
SECTION 8.6 Exclusive Remedy. The indemnification provided in this
Article shall be the sole and exclusive post-Closing remedy available to
American against the Company Stockholder for any Claim under this Agreement
absent a showing of fraud on the part of the Company or any of the Company
Stockholder.
ARTICLE 9
GENERAL PROVISIONS
SECTION 9.1 Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that, no amendment,
which under Applicable Law may not be made without the approval of the Company
Stockholder, may be made without such approval. This Agreement may not be
amended except by an instrument in writing signed by the parties hereto.
SECTION 9.2 Waiver. At any time prior to the Effective Time, except to
the extent not permitted by Applicable Law, American or the Company may (a)
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, (b) waive any
inaccuracies in the representations and warranties of the other contained herein
or in any document delivered pursuant hereto, and (c) 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.
SECTION 9.3 Fees, Expenses and Other Payments. All costs and expenses
incurred in connection with any filing fees, transfer taxes, sales taxes,
document stamps or other charges levied by any Governmental Authority in
connection with this Agreement and the Merger shall be borne by American. All
other costs and expenses incurred in connection with this Agreement and the
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Merger, 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, except that, in the case of the Company, all
such costs and expenses shall be borne by the Company Stockholder.
SECTION 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, 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
with a copy to:
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attention: Susan F. Barrett, Esq.
Telecopier No.: (617) 338-2880
(b) If to the Company:
17337 Rimrock Drive
Golden, Colorado 80401
Attention: Anthony A. Galluzzo, Chief Executive Officer
Telecopier No.: (303) 215-9842
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with a copy to:
Holme, Roberts & Owen
1700 Lincoln Street
Denver, Colorado 80203
Attention: Charles A. Ramunno
Telecopier No.: (303) 866-0200
Wiley, Rein & Fielding
1776 K Street N.W.
Washington, D.C. 20006
Attention: Nathaniel F. Emmons, Esq.
Telecopier No.: (202) 429-7049
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.
SECTION 9.5 Specific Performance; Other Rights and Remedies. Each party
recognizes and agrees that in the event the Company should refuse to perform any
of its obligations under this Agreement or any Collateral Document, American's
remedy at law would be inadequate and agrees that for breach of such provisions,
American 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 any 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, including without limitation the recovery of damages.
SECTION 9.6 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
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
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<PAGE>
fullest extent permitted by Applicable Law in an acceptable manner to the end
that the Merger is consummated to the maximum extent possible.
SECTION 9.7 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.
SECTION 9.8 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.
SECTION 9.9 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 Commonwealth of Massachusetts 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 that
the provisions of the DGCL and the OGCL apply to the Merger.
SECTION 9.10 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.
SECTION 9.11 Entire Agreement. This Agreement (together with the
Company Disclosure Schedule 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.
SECTION 9.12 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 American by
operation of law, including by way of merger, consolidation or sale of all or
substantially all of its assets and may be assigned by American as security to
its senior lending banks and other financial institutions without relieving
American of any of its obligations hereunder.
SECTION 9.13 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 (other than the provisions of Article 8, which are intended
to be binding upon the Company Stockholder), 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.
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<PAGE>
SECTION 9.14 Mutual Drafting. This Agreement is the result of the joint
efforts of American and the Company, 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.
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<PAGE>
IN WITNESS WHEREOF, American and the Company 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:
Tsunami Communications of Cincinnati, Inc.
By:______________________________________
Name:
Title:
NOW, THEREFORE, in consideration of the benefits that are intended to
accrue to the undersigned as a result of the consummation of the Merger (as
defined in the above Agreement), and intending to be legally bound, Anthony A.
Galluzzo, the sole stockholder of the Company, does hereby covenant and agree,
on behalf of himself and his heirs, executives, legal representatives, assigns
and designees, to be bound by the provisions of the above Agreement that relate
to him, including without limitation the provisions of Section 8.2 and those
other provisions which are referenced or encompassed by such Section.
IN WITNESS WHEREOF, Anthony A. Galluzzo has executed this Agreement as
of the date first written above.
--------------------------------------
Anthony A. Galluzzo
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<PAGE>
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 the Company 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 this
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.
Adverse, Adversely, when used alone or in conjunction with other terms
(including without limitation "Affect," "Change" and "Effect") shall mean any
Event of which American or the Company, as the case may be, becomes aware after
the date hereof which is reasonably likely, in the reasonable business judgment
of American or the Company, as the case may be, 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, operation,
management or properties of the Company and its Subsidiaries taken as a whole or
American and its Subsidiaries taken as a whole, as the case may be, or (c)
impair the Company'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 the Company, as the case may be,
under this Agreement. Notwithstanding the foregoing, neither an Event affecting
the radio broadcasting industry generally nor a decline in the financial
condition or results of operations of the Company and its Subsidiaries taken as
a whole or American and its Subsidiaries taken as a whole, as the case may be,
shall 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
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, all
schedules, including the Company 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.
<PAGE>
American shall have the meaning given to it in the Preamble.
American SEC Documents shall have the meaning given to it in Section
5.2(b).
American Shares shall have the meaning given to it in the First
Recital.
American Class A Stock shall have the meaning given to it in the First
Recital.
American's Knowledge (including the term "to the knowledge 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
Merger, 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.
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 maintained by the Company with respect to employees or
directors of the Company or the beneficiaries of any such Persons.
Certificate shall have the meaning given to it in Section 3.1(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 1.2.
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<PAGE>
Closing Date shall mean the date on which the transactions contemplated
by this Agreement are consummated and the Merger becomes effective.
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 Investment Letter, the Registration Rights Agreement and the WGRR
Amendments.
Common Stock shall have the meaning given to it in the First Recital.
Company shall have the meaning given to it in the Preamble.
Company Common Stock shall have the meaning given to it in Section
2.1(b).
Company Disclosure Schedule shall mean the Company Disclosure Schedule
dated as of the date of this Agreement heretofore delivered by the Company to
American.
the Company's knowledge (including the term "to the knowledge of the
Company") means the knowledge of any Company director or executive officer, and
that such director or executive officer, after reasonable inquiry of appropriate
Company executives and reasonable review of appropriate Company 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.
Company Shares shall have the meaning given to it in Section 2.1(b).
Company Stockholder shall have the meaning given to it in the First
Recital.
Contract, Contractual Obligation shall mean any agreement, arrangement,
commitment, contract, covenant, indemnity, undertaking or other obligation or
liability which involves the ownership or operation of any of the assets or
properties of the Company or the conduct of the business of the Company,
including without limitation the prospective ownership or operation of WGRR-FM.
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
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<PAGE>
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.
Current Market Price shall have the meaning given to it in Section
2.1(b).
Dalton shall have the meaning given to it in the Fourth Recital.
DGCL shall have the meaning given to it in the First Recital.
Effective Time shall have the meaning given to it in Section 1.3.
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), 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.
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.
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 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.
Fair Market Value shall have the meaning given to it in Section 2.1(b).
Financing Documents shall mean the WGRR Loan and Security Agreement
entered into on September 5, 1996 by and between Tsunami and Broadcast Finance,
Inc. and the WGRR Acquisition Revolving Note dated September 5, 1996 in the
amount of $3,050,000 made by Tsunami to Broadcast Finance, Inc. and all the
financing statements filed or recorded in connection therewith and any other
related documents, instruments, and agreements
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<PAGE>
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 the business or the operations 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.
Indemnity Period shall have the meaning given to it in Section 8.1.
Investment Letter shall have the meaning given to it in Section 6.2(f).
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.
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 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.
Loss and Expense shall have the meaning given to it in Section 8.2(a).
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<PAGE>
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.
Merger shall have the meaning given to it in the First Recital.
Merger Consideration shall have the meaning given to it in Section
2.1(b).
OGCL shall have the meaning given to it in the First Recital.
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 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).
parties shall have the meaning given to it in the Preamble.
Per Share Merger Consideration shall have the meaning given to it in
Section 2.1(b).
Person shall mean any natural individual or any Entity.
Plan shall mean, with respect to the Company and at a particular time,
any employee benefit plan which is covered by ERISA and in respect of which the
Company 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.
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.
Registration Rights Agreement shall have the meaning given to it in
Section 6.2(g).
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.
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<PAGE>
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.
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 1.1
Tax (and "Taxable", which shall mean subject to Tax), shall mean, with
respect to the Company, (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 the Company or
any of its Subsidiaries, 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 the Company or any of its Subsidiaries with any
other Person for the payment of any amounts of the type described in (a) and (c)
any liability of the Company 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.
Termination Date shall have the meaning given to it in Section 7.1.
Tsunami shall have the meaning given to it in the Fourth Recital.
WGRR shall have the meaning given to it in the Fourth Recital.
WGRR Agreement shall have the meaning given to it in the Fourth
Recital.
WGRR Assignment shall have the meaning given to it in the Fourth
Recital.
WGRR Amendments shall have the meaning given to it in Section 6.2(e).
WGRR Escrow Agreement shall have the meaning given to it in the Fourth
Recital.
WGRR Documents and WGRR Documents shall have the meaning given to them
in the Fourth Recital.
-7-
AGREEMENT TO AMEND
THIS AGREEMENT TO AMEND is made and entered into this 10th day of
January, 1997 by and among Tsunami Communications of Cincinnati, Inc., an Ohio
corporation ("Buyer"), WGRR Limited Partnership, a Delaware limited partnership
("Seller"), The Dalton Group, Inc., a Delaware corporation and general partner
of Seller ("DGI"), and American Radio Systems Corporation, a Delaware
corporation ("ARS").
RECITALS
WHEREAS, Buyer (as assignee of Tsunami Communications, Inc.), Seller
and DGI have entered into an Asset Purchase Agreement dated August 29, 1996 (the
"Agreement"), pursuant to which Seller has agreed to sell and Buyer has agreed
to purchase, certain assets and assume certain obligations associated with the
ownership and operation of radio station WGRR(FM), Hamilton, Ohio (the
"Station");
WHEREAS, Buyer and ARS have agreed that Buyer shall merge with and into
ARS pursuant to an agreement and Plan of Merger dated as of __________, 199__
(the "Merger"); and
WEREAS, ARS, Seller and DGI desire to amend the Agreement as of the
consummation of the Merger as set forth herein, and to acknowledge and approve
the Merger with respect to the Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements hereinafter set forth, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. Seller and DGI hereby (i) consent to the assignment of the Agreement
by Tsunami Communications, Inc. to Buyer, and (ii) acknowledge and assent to the
Merger insofar as ARS shall thereby assume and succeed to all of the rights and
obligations of Buyer thereunder.
<PAGE>
2. Seller, DGI and ARS hereby agree that forthwith upon consummation of
the Merger, they shall join in to amend and restate the Agreement substantially
in accordance with the following terms:
a). ARS shall be the "Buyer", as defined in the Agreement, the
Escrow Agreement (as defined in the Agreement), and all other ancillary
agreements and documents;
b). The last sentence of Section 4.1 of the Agreement shall be
amended to read in its entirety as follows:
"The Closing shall be held in the offices of Buyer or at such
place and in such manner as the parties hereto may agree."
c). The date of September 15, 1996 as set forth in the first line
of Section 5.2 of the Agreement shall be changed to January 10, 1997. In
addition, a provision shall be added acknowledging that the parties shall
withdraw the FCC License assignment application previously filed pursuant to the
terms of the Agreement and given File No. BALH-960904GF prior to the filing
provided for in Section 5.2.
d). Section 6.1 of the Agreement shall be amended to the effect
that the Buyer is a corporation formed under the laws of the State of Delaware
and is qualified to do business in the State of Ohio.
e). Section 10.1 of the Agreement shall be amended by adding a
subsection (e) to the second sentence thereof to the effect that an additional
exception to the general confidentiality provisions shall be when and in the
event disclosure is required by applicable securities laws.
f). Section 13.3 of the Agreement shall be amended to the effect
that Buyer shall be solely responsible for FCC and Hart-Scott-Rodino ("HSR")
Pre-Merger Notification filing fees in connection with the transaction, and that
Buyer shall reimburse Seller or DGI for all expenses, including reasonable
attorneys' fees, incurred by Seller in connection with the preparation of, or
requests for information in response to, the HSR Pre-Merger Notification filed
with respect to the Agreement.
g). In Section 17.9 of the Agreement, the address for notices to
Buyer shall be amended as follows:
"To Buyer: American Radio Systems Corporation
Attention: Steven B. Dodge
116 Huntington Avenue
Boston, Massachusetts 02116
Fax: (617) 375-7575
Copy to: Michael B. Milsom, Esq.
American Radio Systems Corporation
2
<PAGE>
116 Huntington Avenue
Boston, MA 02116
Fax: (617) 375-7575
The Agreement shall remain unmodified in all other respects.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
TSUNAMI COMMUNICATIONS OF
CINCINNATI, INC.
By: _____________________________
Anthony A Galluzzo
President
WGRR LIMITED PARTNERSHIP
By: ___________________________
William Lee Dalton
President, The Dalton Group, Inc.
General Partner
THE DALTON GROUP, INC.
By: ____________________________
William Lee Dalton
President
AMERICAN RADIO SYSTEMS
CORPORATION
By: ___________________________
Steven B. Dodge
President
ak/agreement to amend WGRR
3
ASSETS PURCHASE AGREEMENT
by and among
AMERICAN RADIO SYSTEMS CORPORATION
WGRR LIMITED PARTNERSHIP,
and
THE DALTON GROUP, INC.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 PURCHASE OF ASSETS 1
1.1 Transfer of Assets 1
1.2 Excluded Assets 3
ARTICLE 2 ASSUMPTION OF OBLIGATIONS 3
2.1 Assumption of Obligations 3
2.2 Retained Liabilities 4
ARTICLE 3 CONSIDERATION 4
3.1 Delivery of Consideration 4
3.2 Escrow Deposit 4
3.3 Proration of Income and Expenses; Trade Agreements
Adjustment 5
3.4 Allocation of Purchase Price 5
ARTICLE 4 CLOSING 6
4.1 Closing 6
ARTICLE 5 GOVERNMENTAL CONSENTS 6
5.1 FCC Consent 6
5.2 FCC Application 6
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF BUYER 7
6.1 Organization and Standing 7
6.2 Authorization and Binding Obligation 7
6.3 Qualification 7
6.4 Financial Capability; No Financing Condition 7
6.5 Absence of Conflicting Agreements or Required Consents 7
6.6 Commissions or Finder's Fees 8
ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF SELLER 8
7.1 Organization and Standing 8
7.2 Authorization and Binding Obligation 8
7.3 Absence of Conflicting Agreements or Required Consents 8
7.4 Government Authorizations 8
7.5 Compliance with FCC Regulations 10
7.6 Taxes 10
7.7 Personal Property 10
7.8 Contracts 10
7.9 Status of Contracts 10
7.10 Environmental 11
7.11 Intellectual Property 11
7.12 Financial Statements 11
7.13 Personnel Information 12
<PAGE>
7.14 Litigation 12
7.15 Compliance With Laws 12
7.16 Employee Benefit Plans 13
7.17 Commissions or Finder's Fees 13
7.18 Material Adverse Change 13
7.19 Instruments of Conveyance; Good Title 13
7.20 Special Arrangements 13
7.21 Undisclosed Liabilities 13
7.22 Full Disclosure 14
ARTICLE 8 COVENANTS OF BUYER 14
8.1 Closing 14
8.2 Notification 14
8.3 No Inconsistent Action 14
8.4 Accounts Receivable 14
8.5 Pre-Closing Obligations 15
ARTICLE 9 COVENANTS OF SELLER 15
9.1 Seller's Pre-Closing Covenants 15
9.2 Notification 17
9.3 No Inconsistent Action 17
9.4 Closing 17
9.5 Other Items 17
9.6 Exclusivity 17
ARTICLE 10 JOINT COVENANTS 18
10.1 Confidentiality 18
10.2 Cooperation 18
10.3 Control of Station 18
10.4 Consents to Assignment 18
10.5 Filings 19
10.6 Bulk Sales Laws 19
10.7 Employee Matters 19
ARTICLE 11 CONDITIONS OF CLOSING BY BUYER 20
11.1 Representations, Warranties and Covenants 20
11.2 Governmental Consents 20
11.3 Station License Renewal Application 20
11.4 Governmental Authorizations 20
11.5 Adverse Proceedings 20
11.6 Third-Party Consents 21
11.7 Closing Documents 21
11.8 Pre-Merger Notification 21
11.9 Noncompetition Agreement 21
11.10 No Material Adverse Change 21
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ARTICLE 12 CONDITIONS OF CLOSING BY SELLER 21
12.1 Representations, Warranties and Covenants 21
12.2 Governmental Consents 22
12.3 Adverse Proceedings 22
12.4 Closing Documents 22
12.5 Noncompetition Agreement 22
ARTICLE 13 TRANSFER TAXES; FEES AND EXPENSES 22
13.1 Expenses 22
13.2 Transfer Taxes and Similar Charges 22
13.3 Governmental Filing or Grant Fees 22
ARTICLE 14 DOCUMENTS TO BE DELIVERED AT CLOSING 23
14.1 Seller's Documents 23
14.2 Buyer's Documents 23
ARTICLE 15 SURVIVAL; INDEMNIFICATION; ETC. 24
15.1 Survival of Representations, Etc 24
15.2 Indemnification 25
15.3 Procedures: Third Party and Direct Indemnification Claims 25
15.4 Limitations 26
15.5 Indemnification Procedures Agreement 26
ARTICLE 16 TERMINATION RIGHTS 26
16.1 Termination 26
16.2 Liability 27
16.3 Monetary Damages, Specific Performance and Other Remedies 27
16.4 Disbursement of Escrow Deposit; Seller's Liquidated
Damages 27
ARTICLE 17 MISCELLANEOUS PROVISIONS 28
17.1 Risk of Loss 28
17.2 Certain Interpretive Matters and Definitions 28
17.3 Further Assurances 28
17.4 Benefit and Assignment 29
17.5 Amendments 29
17.6 Headings 29
17.7 Arbitration 29
17.8 Governing Law 30
17.9 Notices 30
17.10 Counterparts 31
17.11 No Third Party Beneficiaries 31
17.12 Severability 31
17.13 Entire Agreement 31
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LIST OF SCHEDULES AND EXHIBITS
Schedule 1.2.8 Miscellaneous Excluded Assets
3.3.2 Trade Agreements
7.4 Station Licenses
7.7 Tangible Personal Property
7.8 Contracts
7.10 Environmental Matters
7.11 Intellectual Property
7.12 Financial Statements
7.13 Personnel Information
7.14 Litigation
7.15 Compliance With Laws
7.16 Employee Benefit Plans
Exhibit A Escrow Agreement
B Reversal Agreement
C Noncompetition Agreement
D Assignment and Assumption Agreement
E Opinion of Seller's Counsel
F Opinion of Buyer's Counsel
G Indemnification Procedures Agreement
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AMENDED AND RESTATED
ASSETS PURCHASE AGREEMENT
THIS ASSETS PURCHASE AGREEMENT (this "Agreement") is made and entered
this 22nd day of January, 1997 by and among AMERICAN RADIO SYSTEMS CORPORATION.,
a Delaware corporation ("Buyer"), WGRR LIMITED PARTNERSHIP, a limited
partnership organized under the laws of Delaware ("Seller"), and THE DALTON
GROUP, INC, a Delaware corporation and the general partner of Seller ("DGI").
RECITALS
WHEREAS, Seller owns and operates Radio Station WGRR(FM) in Hamilton,
Ohio (the "Station") pursuant to authorizations issued by the Federal
Communications Commission ("FCC");
WHEREAS, Seller desires to sell, and Buyer desires to purchase, certain
assets and assume certain obligations associated with the ownership and
operations of the Station, all on the terms and subject to the conditions set
forth herein; and
WHEREAS, in order to induce Buyer to enter into this Agreement, the
Seller and DGI are willing to make certain representations and warranties to,
and covenants and agreements with, Buyer; and
WHEREAS, Seller, DGI and Buyer's predecessor by merger, Tsunami
Communications Inc. had entered into an Assets Purchase Agreement dated August
29, 1996 which is hereby amended and restated by this agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements hereinafter set forth, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE 1
PURCHASE OF ASSETS
1.1 Transfer of Assets. On the terms and subject to the conditions
hereof and subject to Section 1.2, on the Closing Date (as hereinafter defined),
Seller shall sell, assign, transfer, convey and deliver to Buyer, and Buyer
shall purchase and assume from Seller, all of the right, title and interest of
Seller in and to those assets, properties, interests and rights of Seller of
whatsoever kind and nature, real and personal, tangible and intangible, owned by
Seller as the case may be, wherever situated, which are used or held for use in
the operation of the Station (the "Station Assets"), including Seller's right,
title and interest in and to the assets, properties, interests and rights
described in this Section 1.1:
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1.1.1 the licenses, permits and other authorizations issued to
Seller by any governmental or regulatory authority including those issued by the
FCC (the licenses, permits and authorizations issued by the FCC are hereafter
referred to as the "Station Licenses") used in connection with the operation of
the Station, as described in Schedule 7.4, along with renewals of such items
between the date hereof and the Closing Date;
1.1.2 the equipment, office furniture and fixtures, office
materials and supplies, spare parts, if any, and all other tangible personal
property of every kind and description, and Seller's rights therein, owned or
held by Seller and used in connection with the operations of the Station, as
described or listed in Schedule 7.7, together with any replacements thereof and
additions thereto, made between the date hereof and the Closing Date, and less
any retirements or dispositions thereof made between the date hereof and the
Closing Date in the ordinary course of business and consistent with past
practices of Seller; provided, however, Seller agrees that the value of all such
assets retired or disposed of in the ordinary course of business and not
replaced with an asset of like kind and quality shall not exceed $20,000 in the
aggregate without the written consent of Buyer;
1.1.3(a) all Time Sales Agreements (as defined in Section
2.1), all Trade Agreements (as defined in Section 2.1), and all other contracts,
agreements, leases and legally binding contractual rights of any kind, written
or oral, relating to the operation of the Station and which are listed in
Schedule 7.8, and (b) all contracts, agreements, leases and legal binding
contractual rights entered into or acquired by Seller between the date hereof
and the Closing Date in the ordinary course of business relating to the
operation of the Station, consistent with past practices of Seller and in
accordance with this Agreement and with respect to which Buyer specifically
agrees, in the exercise of its sole discretion, in writing to assume
(collectively, the "Contracts");
1.1.4(a) all of Seller's rights in and to the call letters
"WGRR" and all trademarks, trade names, service marks, franchises, copyrights,
including registrations and applications for registration of any of them,
computer software, programs and programming material of whatever form or nature
which are used in connection with the operation of the Station, (b) licenses to
use all jingles, slogans, and logos which are used in connection with the
operation of the Station, and (c) all other intangible property rights of Seller
which are used in connection with the operation of the Station, all as listed in
Schedule 7.11 (collectively, the "Intellectual Property"), together with any
associated goodwill and any additions thereto between the date hereof and the
Closing Date;
1.1.5 all of Seller's rights in and to the Station's local
public files, programming information and studies, technical information and
engineering data, news and advertising studies or consulting reports, marketing
and demographic data, sales correspondence, lists of advertisers, promotional
materials, credit and sales reports and filings with the FCC, all written
Contracts to be assigned hereunder, logs,
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software programs and books and records relating to employees, financial,
accounting and operation matters; but excluding records relating solely to any
Excluded Assets (as hereinafter defined);
1.1.6 all of Seller's rights, if any, under manufacturers' and
vendors' warranties relating to items included in the Station Assets and all
similar rights, if any, against third parties relating to items included in the
Station Assets; and
1.1.7 except for Excluded Assets, such other assets,
properties, interests and rights owned by Seller that are used in connection
with the operation of the Station.
The Station Assets shall be transferred to Buyer free
and clear of all debts, security interests, mortgages, trusts, claims, pledges
or other liens, liabilities, encumbrances or rights of third parties
whatsoever, other than those disclosed in this Agreement and the Schedules
attached hereto, and except for liens for taxes not yet due and payable and
statutory liens of landlords (collectively, the "Permitted Liens").
1.2 Excluded Assets. Notwithstanding anything to the contrary contained
herein, it is expressly understood and agreed that the Station Assets shall not
include the following assets along with all rights, title and interest therein
(the "Excluded Assets"):
1.2.1 all cash and cash equivalents of Seller on hand and/or
in banks;
1.2.2 all accounts receivable or notes receivable for services
performed by Seller in connection with the operation of the Station prior to the
Closing Date;
1.2.3 subject to the limitation set forth in Section 1.1.2 of
this Agreement, all tangible and intangible personal property of Seller disposed
of or consumed in the ordinary course of business consistent with the past
practices of Seller between the date of this Agreement and the Closing Date;
1.2.4 all Time Sales Agreements, Trade Agreements and
Contracts that have terminated or expired prior to the Closing Date in the
ordinary course of business consistent with the past practices of Seller;
1.2.5 Seller's internal documents relating to the organization
and structure of the company and the business of the Station, record books and
such other books and records as pertain to the organization, existence or
capitalization of Seller and duplicate copies of such records as are necessary
to enable Seller to file its tax returns and reports as well as any other
records or materials relating to Seller generally and not involving or relating
to the Station Assets or the operation or operations of the Station;
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1.2.6 contracts of insurance, and all insurance proceeds or
claims made by Seller relating to property or equipment repaired, replaced or
restored by Seller prior to the Closing Date;
1.2.7 all pension, profit sharing or cash or deferred (Section
401(k)) plans and trusts and the assets thereof and any other employee benefit
plan or arrangement and the assets thereof, if any, maintained by Seller; and
1.2.8 any right, property or asset described in Schedule 1.2.8
(including without limitation any assets personally owned by the stockholders or
employees of Seller and listed on said Schedule).
ARTICLE 2
ASSUMPTIONS OF OBLIGATIONS
2.1 Assumption of Obligations. Subject to the provisions of this
Section 2.1, Section 2.2 and Section 3.3, on the Closing Date, Buyer shall
assume and perform in a timely manner the obligations of Seller arising or to be
performed on or after the Closing Date under: (a) the Contracts; (b) all
agreements for the sale of advertising time on the Station for cash which do not
have more than twelve (12) months remaining in their term ("Time Sales
Agreements"); and (c) subject to the limitations of Section 3.3 hereof, all
contracts (i) which are for consideration other than cash, such as merchandise,
services or promotional consideration ("Trade Agreements"), (ii) which arise in
the ordinary course of business consistent with the past practices of Seller,
and (iii) the consideration for which is for the benefit of the Station. All of
the foregoing liabilities and obligations shall be referred to herein
collectively as the "Assumed Liabilities."
2.2 Retained Liabilities. Notwithstanding anything contained in this
Agreement to the contrary, Buyer 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 or any agreement, instrument or
document delivered pursuant to or in connection with this Agreement or otherwise
by reason of or in connection with the consummation of the transactions
contemplated hereby or thereby, to have assumed or to have agreed to pay,
satisfy, discharge or perform, any liabilities, obligations or commitments of
Seller of any nature whatsoever whether accrued, absolute, contingent or
otherwise and whether or not disclosed to Buyer, other than the Assumed
Liabilities. All of such liabilities, obligations and commitments of Seller
described in this Section 2.2 shall be referred to herein collectively as the
"Retained Liabilities."
ARTICLE 3
CONSIDERATION
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3.1 Delivery of Consideration. In consideration for the sale of the
Station Assets to Buyer and the assumption of certain obligations of Seller
pursuant to Section 2.1 above, Buyer shall, at the Closing (as hereinafter
defined) deliver to Seller Thirty Million Dollars ($30,000,000) by wire transfer
of immediately available funds, subject to adjustment pursuant to the provisions
of Sections 3.2 and 3.3 below (the "Purchase Price").
3.2 Escrow Deposit. (a) Concurrently with the execution and delivery of
this Agreement, Buyer, Seller and Media Venture Partners, Ltd., as Escrow Agent
(the "Escrow Agent"), shall enter into an Escrow Agreement in the form of
Exhibit A hereto (the "Escrow Agreement") pursuant to which Buyer shall deposit
the amount described below as a deposit on the amount of the Purchase Price.
Such amounts held in escrow shall be applied as set forth herein and in the
Escrow Agreement.
(b) Pursuant to the terms of the Escrow Agreement, Buyer shall
wire transfer Three Million Dollars ($3,000,000) to an escrow account
established pursuant to the Escrow Agreement (the "Escrow Deposit"). At the
Closing, the Escrow Deposit shall be applied to the Purchase Price to be paid to
Seller and the interest accrued thereon shall be paid to Buyer. If this
Agreement is not consummated, the Escrow Deposit shall be paid as provided in
Section 16.4 hereof.
3.3 Proration of Income and Expenses; Trade Agreements Adjustment.
3.3.1 Except as otherwise provided herein, all prepaid and
deferred income and expenses relating to the Station Assets or the Assumed
Liabilities and arising from the conduct of the business and operations of the
Station shall be prorated between Buyer and Seller in accordance with generally
accepted accounting principles as of 11:59 pm. Eastern time, on the date
immediately preceding the Closing Date. Such prorations shall include, without
limitation, all ad valorem, real estate and other property taxes (but excluding
taxes arising by reason of the transfer of the Station Assets as contemplated
hereby which shall be paid as set forth in Section 13.2), business and license
fees, music and other license fees (including any retroactive adjustments
thereof, which retroactive adjustments shall not be subject to the ninety-day
limitation set forth in Section 3.3.3), utility expenses, Time Sales Agreements,
amounts due under Contracts, Trade Agreements to the extent provided in Section
3.3.2 hereof, rents and similar prepaid and deferred items. Real estate taxes
shall be apportioned on the basis of taxes assessed for the preceding year, with
a reapportionment as soon as the new tax rate and valuation can be ascertained.
3.3.2 Schedule 3.3.2 lists all Trade Agreements included in
the Station Assets and the contract end date for each Trade Agreement together
with an itemized statement of the aggregate value of time owed ("Barter
Payable") pursuant to each of the Trade Agreements and the aggregate value of
goods and services to be received ("Barter Receivable") pursuant to each of the
Trade Agreements, in each case as of the end of the month immediately preceding
the date hereof. Within ten (10) calendar days after the Closing Date, Seller
shall deliver to Buyer a report, dated as of the
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Closing Date (the "Closing Date Trade Report"), which report lists all Trade
Agreements included in the Station Assets and the contract end date for each
Trade Agreement together with an itemized statement of the aggregate value of
the Barter Payable and Barter Receivable pursuant to each of the Trade
Agreements. To the extent that the aggregate value as reflected on the Closing
Date Trade Report of the Station's Barter Payable is greater than the aggregate
value as reflected on the Closing Date Trade Report of the Barter Receivable by
an amount in excess of Ten Thousand Dollars ($10,000), Buyer shall be entitled
to receive the difference and Seller shall pay such difference to Buyer upon
delivery of the Closing Date Trade Report.
3.3.3 Except as otherwise provided herein, the prorations and
adjustments contemplated by this Section 3.3, to the extent practicable, shall
be made on the Closing Date. As to those prorations and adjustments not capable
of being ascertained on the Closing Date, an adjustment and proration shall be
made within ninety (90) calendar days of the Closing Date.
3.3.4 In the event of any disputes between the parties as to
such adjustments contemplated by this Section 3.3, the amounts not in dispute
shall nonetheless be paid at the time provided in Section 3.3.3 and such
disputes shall be determined by an independent certified public accountant
mutually acceptable to the parties, and the fees and expenses of such accountant
shall be paid one-half by Seller and one-half by Buyer.
3.4 Allocation of Purchase Price. The Purchase Price shall be allocated
among the Station Assets in a manner mutually agreeable to both Buyer and
Seller, and such allocation shall be completed prior to Closing unless otherwise
agreed to by the parties. Seller and Buyer agree to use the allocations
determined by Buyer for all tax purposes, including without limitation, those
matters subject to Section 1060 of the Internal Revenue Code of 1986, as
amended.
ARTICLE 4
CLOSING
4.1. Closing. Except as otherwise mutually agreed upon by Buyer and
Seller, the consummation of the transactions contemplated herein (the "Closing")
shall occur within ten (10) business days after the later to occur of (a) the
satisfaction or waiver of each condition to closing contained herein, and (b)
the date that grant of the FCC Consent as defined in Section 5.1 has become a
Final Order (as defined below) (the "Closing Date"); provided, that Buyer (upon
not less than five (5) business days' notice to Seller of its intention to so
proceed) may in its sole discretion waive the requirement that the FCC Consent
be a Final Order and elect (subject to clause (a) above) to close at any time on
or after the date on which the grant of the FCC Consent becomes effective under
the FCC's rules; provided further, however, that the Closing shall not occur
prior to January 2, 1997, unless the Seller so consents in writing. In the event
that the Closing Date occurs before the FCC Consent has become a Final Order,
the parties shall on the Closing Date enter into a "Reversal Agreement" in the
form of
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Exhibit B hereto. For purposes of this Agreement, "Final Order" (and "Final")
means an FCC Consent which is no longer subject to reconsideration or review by
the FCC or a court of competent jurisdiction. The Closing shall be held in the
offices of Buyer, or at such place and in such manner as the parties hereto may
agree.
ARTICLE 5
GOVERNMENTAL CONSENTS
5.1 FCC Consent. It is specifically understood and agreed by Buyer and
Seller that the Closing and the assignment of the Station Licenses and the
transfer of the Station Assets is expressly conditioned on and is subject to the
prior consent and approval of the FCC of the transaction contemplated hereby
without the imposition of any conditions materially adverse to Buyer or any
Affiliate of Buyer (an Affiliate being a company or entity owned by Buyer, or
which has a majority of its ownership held by the same individuals who own a
majority of the ownership interest in Buyer, as such ownership has been reported
to the FCC) (the "FCC Consent").
5.2 FCC Application. On or before January 17, 1997 Buyer and Seller
shall withdraw the assignment application filed with the FCC and given File No.
BALH-960904GF, and shall file an application with the FCC for the FCC Consent
(the "FCC Application"). Buyer and Seller shall prosecute the FCC Application
with all reasonable diligence and otherwise use all reasonable efforts to obtain
the FCC Consent as expeditiously as practicable (but neither Buyer nor Seller
shall have any obligation to satisfy complainants or the FCC by taking any steps
which would have a material adverse effect upon Buyer or Seller or upon any of
their Affiliates). If the FCC Consent imposes any condition on Buyer or Seller
or any of their respective Affiliates, such party shall use all reasonable
efforts to comply with such condition; provided, however, that neither Buyer nor
Seller 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
or judicial review is sought with respect to the FCC Consent, the party affected
shall oppose such efforts for reconsideration or judicial review so long as this
Agreement is in effect; provided, however, that nothing herein shall be
construed to limit either party's right to terminate this Agreement pursuant to
Article 16 hereof.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby makes the following representations and warranties to
Seller, each of which is true and correct on the date hereof, shall survive the
Closing and shall be unaffected by any investigation heretofore or hereafter
made by Seller:
6.1 Organization and Standing. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and is qualified to do business in the State of Ohio.
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6.2 Authorization and Binding Obligation. Buyer has all necessary
corporate power and authority to enter into and perform this Agreement and the
transactions contemplated hereby, and to own or lease the Station Assets and to
carry on the business of the Station upon the consummation of the transactions
contemplated by this Agreement. Buyer's execution, delivery and performance of
this Agreement and the transactions contemplated hereby have been duly and
validly authorized by all necessary action on its part and, assuming the due
authorization, execution and delivery of this Agreement by Seller, this
Agreement will constitute the valid and binding obligation of Buyer, enforceable
against it in accordance with its terms, except as limited by laws affecting
creditors' rights or equitable principles generally.
6.3 Qualification. To the best of Buyer's knowledge, there are no facts
which, under the Communications Act of 1934, as amended, or the existing rules
and regulations of the FCC, would disqualify Buyer as an assignee of the Station
Licenses, and Buyer is otherwise financially qualified under the Communications
Act of 1934, as amended, and all other applicable federal, state and local laws,
rules and regulations, to acquire the Station Assets from Seller.
6.4 Financial Capability; No Financing Condition. The Buyer has
available committed funds sufficient to pay the Purchase Price. The Buyer
understands that its obligations to effect the transactions contemplated hereby
are not subject to the availability to Buyer of financing sufficient to pay the
Purchase Price.
6.5 Absence of Conflicting Agreements or Required Consents. Except as
set forth in Article 5 hereof with respect to governmental consents, the
execution, delivery and performance of this Agreement by Buyer: (a) do not
require the consent of any third party not affiliated with Buyer; (b) will not
violate any applicable law, judgment, order, injunction, decree, rule,
regulation or ruling of any governmental authority to which Buyer is a party or
conflict with the Articles of Incorporation or By-Laws of Buyer; and (c) will
not, either alone, with the giving of notice or the passage of time, or both, or
with the receipt of any necessary consent of a third party as specified in (a)
above, conflict with, constitute grounds for termination of or result in a
breach of the terms, conditions or provisions of, or constitute a default under,
any agreement, instrument, license or permit to which Buyer is now subject.
6.6 Commissions or Finder's Fees. Neither Buyer nor any person or
entity acting on behalf of Buyer has agreed to pay a commission, finder's fee or
similar payment in connection with this Agreement or any matter related hereto
to any person or entity, other than to Media Venture Partners. Ltd., whose fees
will be paid by Buyer. To the extent that Buyer may have engaged any other
person or entity to whom a commission, finder's fee or similar payment may be
due, Buyer agrees to pay any and all such obligations and to hold Seller
harmless.
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ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller makes the following representations and warranties to Buyer,
each of which is true and correct on the date hereof and shall survive the
Closing for the period specified herein:
7.1 Organization and Standing. Seller is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power and authority to own, lease and operate the
Station Assets and to carry on the business of the Station as now being
conducted and as proposed to be conducted between the date hereof and the
Closing Date.
7.2 Authorization and Binding Obligation. Seller has the power and
authority, and has taken all necessary and proper action, corporate and
otherwise, to enter into and perform this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly authorized,
executed and delivered by Seller and, assuming the due authorization, execution
and delivery of this Agreement by Buyer, constitutes the valid and binding
obligation of Seller enforceable against it in accordance with its terms, except
as limited by laws affecting the enforcement of creditor's rights or equitable
principles generally.
7.3 Absence of Conflicting Agreements or Required Consents. Except as
set forth in Article 5 with respect to governmental consents and in Schedule 7.8
with respect to consents required in connection with the assignment of certain
Contracts, the execution, delivery and performance of this Agreement by Seller:
(a) do not require the consent of any third party (including, without
limitation, the consent of any governmental, regulatory, administrative or
similar authority); (b) will not conflict with, result in a breach of, or
constitute a violation of or default under, the provisions of Seller's articles
of organization, by-laws or other governance documents or any applicable law,
judgment, order, injunction, decree, rule, regulation or ruling of any
governmental authority to which Seller or any owner of Seller is a party or by
which Seller, any owner of Seller or any of the Station Assets are bound; (c)
will not, either alone or with the giving of notice or the passage of time, or
both, conflict with, constitute grounds for termination of or result in a breach
of the terms, conditions or provisions of, or constitute a default under, any
Contract, Trade Agreement, Time Sales Agreement, agreement, instrument, license
or permit to which Seller or any of the Station Assets is now subject; and (d)
will not result in the creation of any lien, charge or encumbrance on any of the
Station Assets.
7.4 Government Authorizations.
7.4.1 Schedule 7.4 hereto contains a true and complete list of
the Station Licenses and other licenses, permits or other authorizations from
governmental and regulatory authorities which are required for the lawful
conduct of the business and operations of the Station in the manner and to the
full extent they are presently
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conducted. Seller has delivered to Buyer true and complete copies of the Station
Licenses and the other licenses, permits and authorizations listed in Schedule
7.4, including any and all amendments and other modifications thereto.
7.4.2 Seller is the authorized legal holder of the Station
Licenses and other licenses, permits and authorizations listed in Schedule 7.4,
none of which is subject to any restrictions or conditions which would limit in
any respect the full operation of the Station as now operated.
7.4.3 Except as set forth in Schedule 7.4, there are no
applications, and to the best of Seller's knowledge, complaints, petitions or
proceedings pending or threatened before the FCC or any other governmental or
regulatory authority relating to the business or operations of the Station. The
Station Licenses and the other licenses, permits and authorizations listed in
Schedule 7.4 are in good standing, are in full force and effect and, to the best
of Seller's knowledge, and are unimpaired by any act or omission of Seller or
its owners, officers, directors or employees. The operations of the Station are
in accordance with the Station Licenses and the underlying construction permits
and the other licenses, permits and authorizations listed in Schedule 7.4 in all
material respects. No proceedings are pending or, to the best of Seller's
knowledge, threatened, and there has not been any act or omission of Seller or
any of it owners, officers, directors or employees, which may result in the
revocation, modification, non-renewal or suspension of any of the Station
Licenses or the other licenses, permits and authorizations listed in Schedule
7.4, the denial of any pending applications, the issuance of any cease and
desist order, the imposition of any administrative actions by the FCC or any
other governmental or regulatory authority with respect to the Station Licenses
or the other licenses, permits and authorizations listed in Schedule 7.4 or
which may affect Buyer's ability to continue to operate the Station as it is now
being operated.
7.4.4 The Station is licensed by the FCC to operate with the
facilities set forth in its license.
7.4.5 To Seller's knowledge, the Station is not causing
material objectionable interference to the transmissions of any other broadcast
station or communications facility nor has the Station received any complaints
with respect thereto. To Seller's knowledge, no other broadcast station or
communications facility is causing material objectionable interference to
respective transmissions of the Station or the public's reception of such
transmissions.
7.4.6 Seller has no reason to believe that the Station
Licenses and the other licenses, permits authorizations listed in Schedule 7.4
will not be renewed in their ordinary course.
7.4.7 All reports, forms and statements required to be filed
by Seller with the FCC with respect to the Station during Seller's ownership
have been timely
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filed and are substantially complete and accurate, unless a failure to timely
file would have no material adverse effect on the assets to be conveyed
hereunder.
7.4.8 To the best knowledge of Seller, there are no facts
which, under the Communications Act of 1934, as amended, or the existing rules
and regulations of the FCC, would disqualify Seller as assignor of the Station
Licenses.
7.5 Compliance with FCC Regulations. The operation of the Station and
all of the Station Assets are in compliance in all material respects with: (a)
all applicable FCC rules; and (b) all other applicable federal, state and local
rules, regulations, requirements and policies, including, but not limited to,
equal employment opportunity policies of the FCC, all applicable painting and
lighting requirements of the FCC and the Federal Aviation Administration and
ANSI Radiation Standards C95.1 - 1992 to the extent required to be met under
applicable FCC rules and regulations, and to the best of Seller's knowledge,
there are no existing claims to the contrary.
7.6 Taxes. There are no present disputes as to taxes of any nature
payable by Seller which in any event could adversely affect any of the Station
Assets or the operation of the Station by Buyer. Seller does not and will not in
the future have any liability, fixed or contingent, for any unpaid federal,
state or local taxes or other governmental or regulatory charges whatsoever
(including without limitation withholding and payroll taxes) which could result
in a lien on the Station Assets after conveyance thereof to Buyer or, except for
Permitted Liens, in any other form of transferee liability to Buyer.
7.7 Personal Property Schedule 7.7 hereto contains a list of all
material items of tangible personal property owned by Seller and used or useful
in the conduct of the business and operations of the Station. Schedule 7.7 also
separately lists any material tangible personal property leased by Seller
pursuant to leases included within the Contracts. Except as disclosed in
Schedule 7.7, Seller has, and following the Closing, Buyer will have, good and
marketable title to all of the Station Assets (other than those subject to
lease) and, except for Permitted Liens, none of the Station Assets owned by
Seller at the Closing will be, subject to any security interest, mortgage,
pledge, lease, license, lien, encumbrance, title defect or other charge. The
properties listed in Schedule 7.7, including those properties subject to lease
and included among the Contracts, list all material tangible personal property
necessary to operate the Station as it is now being operated. All material items
of tangible personal property included in the Station Assets are in good
operating condition and repair (ordinary wear and tear excepted), are suitable
for the purposes for which they are now being used.
7.8 Contracts. Schedule 7.8 lists all Contracts to which Seller is a
party, or which are binding on Seller, as of the date of this Agreement. Those
Contracts requiring the consent of a third party to assignment to Buyer are
identified by an asterisk in Schedule 7.8. Those Contracts that Seller and Buyer
have agreed are material to the operation of the Station Assets and the valid
assignment of which to Buyer is a condition to the consummation of the
transactions contemplated hereby
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(the "Material Contracts") are listed on Schedule 7.8 under the heading
"Material Contracts."
7.9 Status of Contracts. Seller has made available to Buyer for
inspection true and complete copies of all written Contracts and true and
complete memoranda or other description of the terms of all oral Contracts,
including any and all amendments and other modifications to such Contracts. All
of the Contracts are in full force and effect and are valid, binding and
enforceable in accordance with their respective terms, except as limited by laws
affecting creditors' rights or equitable principles generally. Seller has
complied in all respects with all such Contracts and is not in default under any
of such Contracts, and, to its knowledge, no other contracting party is in
default under any of such Contracts.
7.10 Environmental. Except as set forth in Schedule 7.10, Seller has
complied with all federal, state and local environmental laws, rules and
regulations as in effect on the date hereof applicable to the Station and its
operations, including but not limited to the FCC's guidelines regarding RF
radiation. To the best of Seller's knowledge, the technical equipment included
in the Station Assets does not contain any PCBs. To the best of Seller's
knowledge, no hazardous or toxic waste, substance, material or pollutant (as
those or similar terms are defined under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. ss.ss.
9601 et seq., Toxic Substances Control Act, 15 U.S.C. ss.ss. 2601 et seq., the
Resource Conservation and Recovery Act of 1976, 42 U.S.C. ss.ss. 6901 et seq. or
any other applicable federal, state and local environmental law, statute,
ordinance, order, judgment, rule or regulation relating to the environment or
the protection of human health ("Environmental Laws")), including but not
limited to, any asbestos or asbestos related products, oils or petroleum-derived
compounds, CFCs, PCBs, or underground storage tanks, have been released, emitted
or discharged or are currently located in, on, under, or about the real property
on which the Station Assets are situated including the transmitter sites or
contained in the tangible personal property included in the Station Assets. To
the best of Seller's knowledge, the Station Assets and Seller's use thereof are
not in violation of any Environmental Laws or any occupational, safety and
health or other applicable law now in effect. Seller shall be, as of the Closing
Date and thereafter, solely responsible for all environmental liabilities, of
whatsoever kind and nature, arising out of or attributable to the operation or
ownership of the Station Assets prior to the Closing Date.
7.11 Intellectual Property. Schedule 7.11 hereto is a list of all
Intellectual Property to be assigned to Buyer which is applied for, issued to or
owned by Seller or under which Seller is a licensee and used in the conduct of
the business and operations of the Station. Except as set forth in Schedule
7.11: (a) all of the Intellectual Property is issued or licensed to or owned by
Seller; (b) all computer software located at the Station or used in the
operation of the Station is properly licensed and authorized; and (c) all of
Seller's right, title and interest in and to the Intellectual Property shall be
assignable to Buyer on the Closing Date. To the extent any of the Intellectual
Property is licensed to Seller, such interest is valid and uncontested. Seller
has not
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received written notice of any infringements or unlawful use of such
Intellectual Property in connection with the operation of the Station.
7.12 Financial Statements. Seller has provided to Buyer complete copies
of the balance sheets, income statements and statements of cash flow of the
Seller as of and for the fiscal year ended December 31, 1995, together with the
balance sheets, income statements and statements of cash flow of the Seller as
of and for the end of the month immediately preceding the date hereof
(collectively, the "Financial Statements"). The Financial Statements are (and
the Interim Financial Statements (as hereinafter defined in Section 9.1.8)
provided pursuant to the terms hereof will be) true, correct and complete in all
material respects and have been (and in the case of the Interim Financial
Statements, will be) prepared in accordance with the books and records of Seller
and in accordance with generally accepted accounting principles consistently
applied and maintained throughout the periods indicated, except as has been
disclosed in Schedule 7.12. The Financial Statements present (and the Interim
Financial Statements will present) fairly the financial condition, results of
operations and cash flow of the Seller (and particularly the Station) for the
periods indicated. The financial information within the Financial Statements
does not include (and the financial information to be within the Interim
Financial Statements will not include) financial information unrelated to the
operations of the Station. None of the Financial Statements understates (and
none of the Interim Financial Statements will understate) the true costs and
expenses of conducting the business and operations of the Station, fails (or
will fail) to disclose any material liability, or inflates (or will inflate) the
revenues of the Station for any reason. December 31, 1995 is hereinafter
referred to as the "Financial Statement Date."
7.13 Personnel Information.
7.13.14 Schedule 7.13 contains a true and complete list of all
persons employed at the Station, including date of hire, a description of
material compensation arrangements (other than employee benefit plans set forth
in Schedule 7.16) and a list of other terms of any and all agreements affecting
such persons and their employment by Seller.
7.13.15 Seller is not a party to any contract or agreement
with any labor organization, nor has Seller agreed to recognize any union or
other collective bargaining unit, nor has, any union or other collective
bargaining unit been certified as representing any of employees of Seller.
Seller has no knowledge of any organizational effort currently being made by or
on behalf of any labor union with respect to employees of Seller.
7.13.16 Except as disclosed in Schedule 7.13, Seller, to its
knowledge, has complied in all material respects with all laws relating to the
employment of labor, including, without limitation, the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and those laws relating to
wages, hours, collective bargaining,
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unemployment insurance, workers' compensation, equal employment opportunity and
payment and withholding of taxes.
7.14 Litigation. Except as set forth in Schedule 7.14, Seller is not
subject to any judgment, award, order, writ, injunction, arbitration decision or
decree relating to the conduct of the business or the operation of the Station
or any of the Station Assets, and there is no litigation, administrative action,
arbitration, proceeding or investigation pending or, to Seller's knowledge,
threatened against Seller or the Station in any federal, state or local court,
or before any administrative agency or arbitrator (including, without
limitation, any proceeding which seeks the forfeiture of, or opposes the renewal
of, any of the Station Licenses), or before any other tribunal duly authorized
to resolve disputes. In particular, but without limiting the generality of the
foregoing, there are no applications, complaints or proceedings pending or, to
Seller's knowledge, threatened before the FCC or any other governmental
organization with respect to the business or operations of the Station.
7.15 Compliance With Laws. Except as set forth in Schedule 7.15, Seller
is not in violation of, and has not received any notice asserting any
non-compliance by it in connection with the operation of the Station or use or
ownership of any of the Station Assets with, any applicable statute, rule or
regulation, whether federal, state or local, in any material respect. Seller is
not in default in any material respect with respect to any judgment, order,
injunction or decree of any court, administrative agency or other governmental
authority or any other tribunal duly authorized to resolve disputes which
relates to the transactions contemplated hereby. Seller is in full compliance in
all material respects with all laws, regulations and governmental orders
applicable to the conduct of the business and operations of the Station, and its
present use of the Station Assets does not violate any of such laws, regulations
or orders in any material respect. The provisions of Section 7.10 shall prevail
over the provisions of this Section 7.15 to the extent of any inconsistency
between them.
7.16 Employee Benefit Plans. Schedule 7.16 contains a true and complete
list as of the date of this Agreement of all employee benefit plans applicable
to the employees of Seller employed at the Station, and a brief description
thereof. Seller does not maintain any other employee benefit plan as the term is
defined in Section 3 of the Employee Retirement Income Security Act of 1974, as
amended, applicable to the employees of Seller employed at the Station.
7.17 Commissions or Finder's Fees. Neither Seller, its owners nor any
person or entity acting on behalf of Seller has agreed to pay a commission,
finder's fee or similar payment in connection with this Agreement or any matter
related hereto to any person. To the extent that Seller may have engaged any
person or entity to whom a commission, finder's fee or similar payment may be
due, Seller agrees to pay any and all such obligations and to hold Buyer
harmless.
7.18 Material Adverse Change. Since the Financial Statement Date there
has been no Material Adverse Change, which shall mean that: (a) Seller has
conducted
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the business of the Station only in the ordinary course consistent with past
practices; (b) Seller has continued all practices, policies, procedures and
operations relating to the Station in substantially the same manner as
previously, including without limitation, sales, promotions, advertising,
bookkeeping and record keeping practices and policies, consistent with the
Station's budget provided to Buyer by Seller; (c) there has been no damage,
destruction, or loss affecting any of the Station Assets not repaired pursuant
to the provisions of Section 17.1 hereof; and (d) Seller has not created,
assumed, or suffered any default in any debt of the Station.
7.19 Instruments of Conveyance; Good Title. The instruments to be
executed by Seller and delivered to Buyer at the Closing, conveying the Station
Assets to Buyer, will transfer good and marketable title to the Assets free and
clear of all liabilities (absolute or contingent), security interests,
mortgages, pledges, liens, obligations and encumbrances, except those
obligations disclosed in this Agreement or in the schedules attached hereto.
7.20 Special Arrangements. Seller has disclosed to Buyer any and all
arrangements with ASCAP, BMI, radio representatives, vendors of goods and
services and all other entities under which Seller enjoys a discount or other
benefit.
7.21 Undisclosed Liabilities. To Seller's knowledge, no liability or
obligation of any nature, whether accrued, absolute, contingent or otherwise,
relating to Seller, the Station or the Station Assets exists which is not
otherwise disclosed herein and which could, after the Closing result in any form
of transferee liability against Buyer or subject the Station Assets to any lien,
encumbrance, claim, charge, security interest or imposition whatsoever or
otherwise affect the full, free and unencumbered use of the Station Assets by
Buyer.
7.22 Full Disclosure. No representation or warranty made by Seller
contained in this Agreement 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, or omits or will omit to state any
material fact required to make any statement contained herein or therein not
misleading. Seller is not aware of any impending or contemplated event or
occurrence that would cause any of the foregoing representations not to be true
and complete on the date of such event or occurrence as if made on that date.
********
Whenever in this Article 7 a warranty or representation is qualified by
a word or phrase referring to Seller's knowledge, it shall mean to the best of
such party's actual knowledge after having made due inquiry of the directors,
officers, owners, attorneys, accountants and agents of Seller who would be
expected to have knowledge of the matter, and with respect to the condition of
any Station Assets, records or other objects, after having inspected it.
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ARTICLE 8
COVENANTS OF BUYER
8.1 Closing. Subject to Article 11 hereof, on the Closing Date, Buyer
shall purchase the Station Assets from Seller as provided in Article 1 hereof
and shall assume the Assumed Liabilities of Seller as provided in Article 2
hereof.
8.2 Notification. Buyer shall notify Seller of any litigation,
arbitration or administrative proceeding pending or, to its knowledge,
threatened against Buyer which challenges the transactions contemplated hereby.
8.3 No Inconsistent Action. Buyer shall not take any other action which
is materially inconsistent with its obligations under this Agreement or take any
action which would cause any representation or warranty of Buyer contained
herein to be or become false or invalid or which could hinder or delay the
consummation of the transactions contemplated by this Agreement.
8.4 Accounts Receivable. Buyer acknowledges that all accounts
receivable arising prior to the Closing Date in connection with the operation of
the Station, including but not limited to accounts receivable for advertising
revenues for programs and announcements performed prior to the Closing Date and
other broadcast revenues for services performed prior to the Closing Date, shall
remain the property of Seller (the "Seller Accounts Receivable") and that Buyer
shall not acquire any beneficial right or interest therein or responsibility
therefor. For a period of ninety (90) days from the Closing Date ("Collection
Period"), Buyer agrees to use reasonable efforts, as Seller's agent, to collect
on behalf of Seller in accordance with Buyer's business practices the Seller
Accounts Receivable in the normal and ordinary course of business and will apply
all such amounts collected by Buyer to the debtor's oldest account receivable
first, except that any such accounts collected by Buyer from persons who are
also indebted to Buyer may be applied to Buyer's account if under circumstances
in which there is a bona fide dispute between Seller and such account debtor
with respect to such account and Buyer reassigns to Seller such account for
resolution. Buyer's obligation and authority shall not extend to the institution
of litigation, employment of counsel or a collection agency or any other
extraordinary means of collection. Provided Buyer is in compliance with its
obligations hereunder, during the Collection Period, neither Seller nor any of
its agents shall make any direct solicitation of any account debtor for
collection purposes or institute litigation for the collection of amounts due.
Any amounts relating to the Seller Accounts Receivable that are paid directly to
the Seller shall be retained by the Seller, but Seller shall provide Buyer with
prompt notice of any such payment. Every thirty (30) days during the Collection
Period, Buyer shall make a payment to Seller, without set off of any kind, equal
to the amount of all collections by Buyer of Seller Accounts Receivable during
such thirty (30) day period less any commissions due thereon and furnish Seller
with a collections report.
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8.5 Pre-Closing Obligations. Buyer covenants and agrees that, between
the date hereof and the Closing Date, except as expressly permitted by this
Agreement or with the prior written consent of Seller, Buyer shall act in
accordance with the following:
8.5.1 Buyer will provide Seller prompt written notice of any
material change in any of the information contained in the representations and
warranties made in Article 6 or in any Schedule
8.5.2 Buyer will cooperate with Seller and provide any
information reasonably necessary to assist Seller in obtaining third party
consents to the assignment of any Contract.
8.5.3 Buyer will notify Seller of any litigation, arbitration
or administrative proceeding pending or, to the best of its knowledge,
threatened, which challenges the transaction contemplated by the Agreement.
ARTICLE 9
COVENANTS OF SELLER
9.1 Seller's Pre-Closing Covenants. Seller covenants and agrees that,
between the date hereof and the Closing Date, except as expressly permitted by
this Agreement or with the prior written consent of Buyer, Seller shall act in
accordance with the following:
9.1.1 Seller shall conduct the business and operations of the
Station in the ordinary and prudent course of business consistent with past
practice and with the intent of preserving the ongoing operations and assets of
the Station, including but not limited to maintaining the independent identity
of the Station.
9.1.2 Seller shall use its best efforts to preserve the
operation of the Station intact and preserve the business of the Station's
advertisers, customers, suppliers and others having business relations with the
Station and continue to conduct financial operations of the Station, including
its credit and collection and pricing policies and practices, in the ordinary
course of business consistent with past practices.
9.1.3 Seller shall operate the Station in all material
respects in accordance with FCC rules and regulations and the Station Licenses
and with all other laws, regulations, rules and orders, and shall not cause or
permit by any act, or failure to act, any of the Station Licenses or other
licenses, permits or authorizations listed in Schedule 7.4 to expire, be
surrendered, adversely modified, or otherwise terminated, or the FCC to
institute any proceedings for the suspension, revocation or adverse modification
of any of the Station Licenses, or fail to prosecute with due diligence any
pending applications to the FCC.
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9.1.4 Seller shall not: (a) sell, lease or dispose of or
commit to sell, lease or dispose of any of the Station Assets except in the
ordinary course of business and subject to the provisions of Section 1.1.2
hereof; (b) sell broadcast time on a prepaid basis (other than in the course of
existing credit practices); (c) grant or agree to grant any increases in the
rates of salaries or compensation payable to employees of the Station other than
scheduled salary increases; (d) grant or agree to grant any bonus to any
employee of the Station which will not be paid in full by Seller prior to the
Closing; (e) provide for any new pension, retirement or other employment
benefits for employees of the Station or any increases in any existing benefits;
(f) modify, change or terminate any Contract without prior written permission of
the Buyer; (g) change the advertising rates in effect as of the date hereof
except in accordance with ordinary course of business pricing policies; (h)
create, assume or permit to exist any mortgage, pledge, lien, or other charge or
encumbrance or rights affecting any of the Station Assets, except for those in
existence on the date of this Agreement and disclosed herein or in the Schedules
attached hereto; (i) change the call letters of the Station; or (j) take any
action which would cause any representation or warranty contained herein to be
or become false or invalid or which could hinder or delay the consummation of
the transactions contemplated by this Agreement.
9.1.5 Seller will provide Buyer prompt written notice of any
material change in any of the information contained in the representations and
warranties made in Article 7 or any Schedule.
9.1.6 In order that Buyer may have full opportunity to make
such investigation as it desires of the affairs of the Station, Seller shall
give or cause the Station to give Buyer and Buyer's counsel, accountants and
engineers reasonable access to all of Seller's properties, books, Contracts,
Trade Agreements, Time Sales Agreements, reports and records (including, without
limitation, financial information and tax returns relating to the Station), real
estate, buildings and equipment relating to the Station and to the Station's
employees, and to furnish Buyer with information and copies of all documents and
agreements relating to the Station and the operation thereof (including but not
limited to financial and operating data and other information concerning the
financial condition, results of operations and business of the Station) that
Buyer may reasonably request. The rights of Buyer under this Section 9.1 shall
not be exercised in such a manner as to interfere directly or indirectly with
the business of the Station.
9.1.7 Within twenty-five (25) days of the end of each month,
Seller shall deliver to Buyer an unaudited statement of revenue and expenses of
Seller and a balance sheet for the month then ended (collectively, the "Interim
Financial Statements"). Seller shall also furnish to Buyer any and all
information customarily prepared by Seller concerning the financial condition
and results of operations of the Station that Buyer may request.
9.1.8 Seller shall use all reasonable efforts to obtain any
third party consents necessary for the assignment of any Contract.
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9.1.9 Seller shall use all reasonable efforts to transfer to
Buyer any discounts or other benefits which it enjoys under any arrangement as
described in Section 7.20 of this Agreement.
9.2 Notification. Seller agrees to notify Buyer of any litigation,
arbitration or administrative proceeding pending or, to the best of its
knowledge, threatened, which challenges the transactions contemplated hereby.
Seller shall promptly notify Buyer if any of the normal broadcast transmissions
of the Station are interrupted, interfered with or in any way impaired, and
shall provide Buyer with prompt written notice of the problem and the measures
being taken to correct such problem. If the Station is not restored so that
operation is resumed within five (5) days, or restored to full licensed power
and antenna height within fifteen (15) days of such event, or if more than five
(5) such events occur within any thirty (30) day period, then Buyer shall have
the right to terminate this Agreement.
9.3 No Inconsistent Action. Seller shall not take any action which is
materially inconsistent with their obligations under this Agreement.
9.4 Closing. Subject to Article 12 hereof, on the Closing Date, Seller
shall transfer, convey, assign and deliver to Buyer the Station Assets and the
Assumed Liabilities as provided in Articles 1 and 2 of this Agreement.
9.5 Other Items. Except as otherwise specifically contemplated by this
Agreement, until the Closing Date, Seller shall not: (a) cancel or compromise
any debt or claim or waive or release any right relating to the business or
operations of the Station, except for adjustments or settlements made in the
ordinary course of business consistent with past practices; (b) transfer or
grant any material rights under any of the Station Licenses; (c) enter into any
commitment for capital expenditures for which Buyer would become liable after
the Closing Date; (d) introduce any material changes in the broadcast hours or
in the format of the Station or any other material change in the Station's
programming policies and (e) enter into any transaction or make or enter into
any contract or commitment with respect to either the Station or the Station
Assets which by reason of its size or otherwise is not in the ordinary course of
business consistent with past practices.
9.6 Exclusivity. Seller agrees that, commencing on the date hereof
through the Closing or earlier termination of this Agreement, Buyer shall have
the exclusive right to consummate the transactions contemplated herein, and
during such exclusive period, Seller agrees that neither Seller, any owner, the
Station Manager, or any representative acting with Seller's authorization: (a)
will initiate, solicit or encourage, directly or indirectly, any inquiries, or
the making or implementation of any proposal or offer with respect to a merger,
acquisition, consolidation or similar transaction involving, or any purchase of,
all or any portion of the Station Assets or any securities of Seller (any such
inquiry, proposal or offer being hereinafter referred to as an "Acquisition
Proposal" and any such transaction being hereinafter referred to as an
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"Acquisition"); (b) will engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions with, any person
relating to an Acquisition Proposal, or otherwise facilitate any effort or
attempt to make or implement an Acquisition Proposal or Acquisition; or (c) will
continue any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any Acquisition Proposal or Acquisition and
will take the necessary steps to inform the individuals or entities referred to
above of the obligations undertaken by them in this Section 9.6.
ARTICLE 10
JOINT COVENANTS
Buyer and Seller covenant and agree that between the date hereof and
the Closing Date, they shall act in accordance with the following:
10.1 Confidentiality. Subject to the requirements of applicable law,
Buyer and Seller shall each keep confidential all information obtained by them
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 each 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.
Notwithstanding the foregoing, no party shall be required to keep confidential
or return any information which: (a) is known or available through other lawful
sources, not bound by a confidentiality agreement with the disclosing party; (b)
is or becomes publicly known through no fault of the receiving party or its
agents; (c) is required to be disclosed pursuant to an order or request of a
judicial or governmental authority (provided the disclosing party is given
reasonable prior notice of the order or request and the purpose of the
disclosure); or (d) is developed by the receiving party independently of the
disclosure by the disclosing party; or (e) is required to be disclosed by
applicable securities laws. Neither party hereto nor any of their respective
agents shall make any public announcement with respect to the transactions
contemplated by this Agreement before the filing of the FCC Application, without
the prior written consent of the other party hereto.
10.2 Cooperation. Subject to express limitations contained elsewhere
herein, Buyer and Seller agree to 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, including but not limited to the
satisfaction of any condition to closing set forth herein.
10.3 Control of Station. Buyer shall not, directly or indirectly,
control, supervise or direct the operations of the Station prior to the Closing.
Such operations,
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including complete control and supervision of all Station programs, employees
and policies, shall be the sole responsibility of Seller.
10.4 Consents to Assignment. To the extent that any Contract identified
in the Schedules is not capable of being sold, assigned, transferred, delivered
or subleased without the waiver or consent of any third person (including a
government or governmental unit), or if such sale, assignment, transfer,
delivery or sublease or attempted sale, assignment, transfer, delivery or
sublease would constitute a breach thereof or a violation of any law or
regulation, this Agreement and any assignment executed pursuant hereto shall not
constitute a sale, assignment, transfer, delivery or sublease or an attempted
sale, assignment, transfer, delivery or sublease thereof. Subject to the
provisions of Section 11.6, in those cases where consents, assignments, releases
and/or waivers have not been obtained at or prior to the Closing Date to the
transfer and assignment to Buyer of the Contracts, this Agreement and any
assignment executed pursuant hereto, to the extent permitted by law, shall
constitute an equitable assignment by Seller to Buyer of all of Seller's rights,
benefits, title and interest in and to and all liabilities under the Contracts,
and where necessary or appropriate, Buyer shall be deemed to be Seller's agent
for the purpose of completing, fulfilling and discharging all of Seller's rights
and liabilities arising after the Closing Date under such Contracts. Seller
shall use all reasonable efforts to provide Buyer with the financial and
business benefits of such Contracts (including, without limitation, permitting
Buyer to enforce any rights of Seller arising under such Contracts), and Buyer
shall, to the extent Buyer is provided with the benefits of such Contracts,
assume, perform and in due course pay and discharge all debts, obligations and
liabilities of Seller under such Contracts to the extent that Buyer was to
assume those obligations pursuant to the terms hereof.
10.5 Filings. In addition to the covenants of the parties set forth in
Article 5 hereto, as promptly as practicable after the execution of this
Agreement, Buyer and Seller shall use their 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, including without limitation, any reports or
notifications that may be required to be filed by it 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, and each
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.
10.6 Bulk Sales Laws. Seller agrees to indemnify Buyer and hold it
harmless from any and all loss, cost, damage and expense (including but not
limited to, reasonable attorney's fees) sustained by Buyer as a result of any
failure of Seller to comply with any "bulk sales" or similar laws.
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10.7 Employee Matters. Seller shall be responsible for the payment of
all compensation and accrued employee benefits payable to all employees through
the Closing Date. Seller acknowledges and agrees that it, and not Buyer, is and
shall after the Closing remain solely responsible for any and all insurance,
supplemental pension, deferred compensation, retirement and any other benefits,
and related costs, premiums and claims, due, to become due, committed or
otherwise promised to any person who, as of the Closing Date, is a retiree,
former employee, or current employee of Seller, relating to the period up to and
including the Closing Date. Buyer, as a purchaser of the Station Assets, shall
assume no employee benefit plans, programs or practices, whether or not set
forth in writing, maintained by Seller at any time. Seller agrees to cooperate
with Buyer in the prompt rollover of any pension, profit sharing or cash or
deferred (Section 401(K)) plans and trusts and any other employee benefit plan
or arrangement, provided that any such rollovers are permitted and made in
accordance with the applicable provisions of Buyer's benefit plans.
ARTICLE 11
CONDITIONS OF CLOSING BY BUYER
The obligations of Buyer hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
11.1 Representations, Warranties and Covenants All representations and
warranties of Seller 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.
11.1.1 All of the terms, covenants and conditions to be
complied with and performed by Seller on or prior to the Closing Date shall have
been complied with or performed in all material respects.
11.1.2 Buyer shall have received a certificate, dated as of
the Closing Date, from Seller, executed by the president of Seller's general
partner, to the effect that: (a) the representations and warranties of Seller
contained in this Agreement are true and complete in all material respects on
and as of the Closing Date as if made on and as of that date; and (b) Seller has
complied with or performed in all material respects all terms, covenants and
conditions to be complied with or performed by it on or prior to the Closing
Date.
11.2 Governmental Consents. The FCC Consent shall have been obtained.
11.3 Station License Renewal Application. No petition to deny the
Seller's license renewal application (if any) for the Station shall be pending.
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11.4 Governmental Authorizations. Seller shall be the holder of the
Station Licenses and all other material licenses, permits and other
authorizations listed in Schedule 7.4, and there shall not have been any
modification of any of such licenses, permits and other authorizations which has
a material adverse effect on the Station or the operations thereof. No
proceeding shall be pending which seeks or the effect of which reasonably could
be to revoke, cancel, fail to renew, suspend or adversely modify the Station
Licenses or any other licenses, permits or other authorizations listed in
Schedule 7.4.
11.5 Adverse Proceedings. No suit, action, claim or governmental
proceeding shall be pending against, and no order, decree or judgment of any
court, agency or other governmental authority shall have been rendered against,
any party hereto which: (a) would render it unlawful, as of the Closing Date, to
effect the transactions contemplated by this Agreement in accordance with its
terms; (b) questions the validity or legality of any transaction contemplated
hereby; (c) seeks to enjoin any transaction contemplated hereby; (d) seeks
material damages on account of the consummation of any transaction contemplated
hereby; or (e) is a petition of bankruptcy by or against Seller, an assignment
by Seller for the benefit of its creditors, or other similar proceeding.
11.6 Third-Party Consents. All Contracts and Real Estate Contracts
shall be in full force and effect on the Closing Date. Seller shall have
obtained and shall have delivered to Buyer all third-party consents to the
assignment of the Material Contracts and Real Estate Contracts.
11.7 Closing Documents. Seller shall have delivered or caused to be
delivered to Buyer, on the Closing Date, all deeds, bills of sale, endorsements,
assignments and other instruments of conveyance and transfer reasonably
satisfactory in form and substance to Buyer, effecting the sale, transfer,
assignment and conveyance of the Station Assets to Buyer, including, without
limitation, each of the documents required to be delivered by it pursuant to
Article 14.
11.8 Pre-Merger Notification. If applicable, any waiting period under
the HSR Act with respect to the transactions contemplated by this Agreement
shall have elapsed.
11.9 Noncompetition Agreement. The Buyer shall have entered into a
noncompetition agreement with William Dalton and Susan Dalton in the form of
Exhibit C hereto (the "Noncompetition Agreement").
11.10 No Material Adverse Change. No Material Adverse Change as defined
by Section 7.18 hereof shall have occurred.
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ARTICLE 12
CONDITIONS OF CLOSING BY SELLER
The obligations of Seller hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
12.1 Representations, Warranties and Covenants.
12.1.1 All representations and warranties of Buyer made in
this Agreement 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.
12.1.2 All the terms, covenants and conditions to be complied
with and performed by Buyer on or prior to the Closing Date shall have been
complied with or performed in all material respects.
12.1.3 Seller shall have received a certificate, dated as of
the Closing Date, executed by the president of Buyer, to the effect that: (a)
the representations and warranties of Buyer contained in this Agreement are true
and complete in all material respects on and as of the Closing Date as if made
on and as of that date; and (b) that Buyer has complied with or performed in all
material respects all terms, covenants and conditions to be complied with or
performed by it on or prior to the Closing Date.
12.2 Governmental Consents. The FCC Consent shall have been obtained.
12.3 Adverse Proceedings. No suit, action, claim or governmental
proceeding shall be pending against, and no other, decree or judgment of any
court, agency or other governmental authority shall have been rendered against,
any party hereto which would render it unlawful, as of the Closing Date, to
effect the transactions contemplated by this Agreement in accordance with its
terms.
12.4 Closing Documents. Buyer shall have delivered or caused to be
delivered to Buyer, on the Closing Date, each of the documents required to be
delivered by it pursuant to Article 14.
12.5 Noncompetition Agreement. The Buyer shall have entered into the
Noncompetition Agreement.
ARTICLE 13
TRANSFER TAXES; FEES AND EXPENSES
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13.1 Expenses. Except as set forth in Section 13.2 and 13.3 hereof or
otherwise expressly set forth in this Agreement, each party hereto shall be
solely responsible for all costs and expense incurred by it in connection with
the negotiation, preparation and performance of and compliance with the terms of
this Agreement including, but not limited to the costs and expenses incurred
pursuant to Article 5 hereof.
13.2 Transfer Taxes and Similar Charges. All costs of transferring the
Station Assets in accordance with this Agreement, including recordation,
transfer and documentary taxes and fees, and any excise, sales or use taxes,
shall be paid one-half by Buyer and one-half by Seller.
13.3 Governmental Filing or Grant Fees. Any filing or grant fees
imposed by the FCC, the consent of which or the filing with which is required
for the consummation of the transactions contemplated hereby, any fees imposed
in complying with Title II of the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, ("HSR") as amended, and the rules and regulations thereunder shall be
paid by Buyer. Further, Buyer shall reimburse Seller for all expenses, including
reasonable attorneys' fees, incurred by Seller in connection with the
preparation of, or requests for information in response to the HSR Pre-Merger
Notification filed with respect to this Agreement.
ARTICLE 14
DOCUMENTS TO BE DELIVERED AT CLOSING
14.1 Seller's Documents. At the Closing, Seller shall deliver or cause
to be delivered to Buyer the following:
14.1.1 Certified resolutions of the Seller approving the
execution and delivery of this Agreement and authorizing the consummation of the
transactions contemplated hereby;
14.1.2 A certificate of Seller, dated the Closing Date, in the
form described in Section 11.1.3;
14.1.3 Governmental certificates, certified as of a date not
more than thirty (30) business days before the Closing Date, showing that Seller
is duly incorporated and in good standing in the State of Delaware and qualified
to do business and in good standing in the State of Ohio, and;
14.1.4 Such certificates, bills of sale, general warranty
deeds, assignments, documents of title and other instruments of conveyance,
assignment and transfer (including without limitation any necessary consents to
conveyance, assignment or transfer), and lien releases, all in form satisfactory
to Buyer and Buyer's counsel, as shall be effective to vest in Buyer good,
marketable and insurable title in and to the Station Assets, free, clear and
unencumbered;
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14.1.5 An Assignment and Assumption Agreement in the form of
Exhibit D effectuating the assignment and assumption of the Assumed Liabilities
(the "Assignment and Assumption Agreement");
14.1.6 The Noncompetition Agreement;
14.1.7 At the time and place of Closing, originals and all
copies of all program, operations, transmission or maintenance logs and all
other records required to be maintained by the FCC with respect to the Station,
including the public files of the Station, shall be left at the Station and
thereby delivered to Buyer;
14.1.8 A written opinion of Seller's counsel in the form of
Exhibit E, dated as of the Closing Date; and
14.1.9 Such additional information, materials, agreement,
documents and instruments as Buyer and its counsel may reasonably request.
14.2 Buyer's Documents. At the Closing, Buyer shall deliver or cause to
be delivered to Seller the following:
14.2.1 Certified resolutions of the Board of Directors of
Buyer approving the execution and delivery of this Agreement and authorizing the
consummation of the transactions contemplated hereby;
14.2.2 A certificate of Buyer, dated the Closing Date, in the
form described in Section 12.1.3.
14.2.3 The Assignment and Assumption Agreement;
14.2.4 The Noncompetition Agreement;
14.2.5 A written opinion of Buyer's counsel in the form of
Exhibit F, dated as of the Closing Date;
14.2.6 The Purchase Price in accordance with Section 3.1
hereof; and
14.2.7 Such additional information, materials, agreement,
documents and instruments as Seller and its counsel may reasonably request.
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ARTICLE 15
SURVIVAL; INDEMNIFICATION; ETC.
15.1. Survival of Representations, Etc. It is the express intention and
agreement of the parties to this Agreement that all covenants and agreements
(together, "Agreements") and all representations and warranties (together,
"Warranties") made by Buyer and Seller in this Agreement shall survive the
Closing (regardless of any knowledge, investigation, audit or inspection at any
time made by or on behalf of Buyer or Seller) for a period of one (1) year
following Closing:
15.1.1 The Warranties in Section 7.6 or otherwise relating to
the federal, state, local or foreign tax obligations of Seller shall survive the
Closing for the period of the applicable statute of limitations plus any
extensions or waivers granted or imposed with respect thereto.
15.1.2 All other Warranties shall survive for a period of one
(1) year from the Closing Date.
15.1.3 The right of any party to recover Damages (as defined
in Section 15.2.1) pursuant to Section 15.2 shall not be affected by the
expiration of any Warranties as set forth herein, provided that notice of the
existence of any Damages (but not necessarily the fixed amount of any such
Damages) has been given by the indemnified party to the indemnifying party prior
to such expiration.
15.1.4 Notwithstanding any provision hereof to the contrary,
there shall be no contractual time limit in which Buyer or Seller may bring any
action for actual fraud in respect of this Agreement or the transactions
contemplated hereby (a "Fraud Action"), regardless of whether such actual fraud
also included a breach of any Agreement or Warranty; provided, however, that any
Fraud Action must be brought within the period of the applicable statute of
limitations plus any extensions or waivers granted or imposed with respect
thereto.
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15.2 Indemnification.
15.2.1 Seller and DGI shall defend, indemnify and hold
harmless Buyer from and against any and all losses, costs, damages, liabilities
and expenses, including reasonable attorneys' fees and expenses ("Damages")
incurred by Buyer arising out of or related to: (a) any breach of the Agreements
or Warranties given or made by Seller in this Agreement; (b) the Retained
Liabilities; (c) any failure of the parties to comply with any "bulk sales" laws
applicable to the transactions contemplated hereby; and (d) the conduct of the
business and operations of the Station or any portion thereof or the use or
ownership of any of the Station Assets prior to the Closing Date.
15.2.2 Buyer shall defend, indemnify and hold harmless Seller
from and against any and all Damages incurred by the Seller arising out of or
related to: (a) any breach of the Agreements and Warranties given or made by
Buyer in this Agreement; (b) the Assumed Liabilities; and (c) the conduct of the
business and operations of the Station or any portion thereof or the use or
ownership of any of the Station Assets on or after the Closing Date.
15.3 Procedures: Third Party and Direct Indemnification Claims. Any
indemnified party hereunder agrees to give written notice within a reasonable
time to the indemnifying party of any demand, suit, claim or assertion of
liability by third parties or other circumstances that could give rise to an
indemnification obligation hereunder against the indemnifying party (herein
after collectively "Claims," and individually a "Claim"), it being understood
that the failure to give such notice shall not affect the indemnified party's
right to indemnification and the indemnifying party's obligation to indemnify as
set forth in this Agreement, unless the indemnifying party's ability to contest,
defend or settle with respect to such Claim is thereby demonstrably and
materially prejudiced. The parties also agree that any claim for Damages arising
directly between the parties relating to this Agreement may be brought at any
time within the period specified in Section 15.1 and that the only notice
required with respect thereto shall be as specified in Section 15.1.3.
The obligations and liabilities of the parties hereto with respect to
their respective indemnities pursuant to Section 15.2 resulting from any Claim
shall be subject to the following additional terms and conditions:
15.3.1 The indemnifying party shall have the right to
undertake, by counsel or other representatives of its own choosing, the defense
or opposition to such Claim.
15.3.2 In the event that the indemnifying party shall elect
not to undertake such defense or opposition, or within ten (10) days after
notice of any such Claim from the indemnified party shall fail to defend or
oppose, the indemnified party (upon further written notice to the indemnifying
party) shall have the right to undertake the defense, opposition, compromise or
settlement of such Claim, by
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counsel or other representatives of its own choosing, on behalf of and for the
account and risk of the indemnifying party (subject to the right of the
indemnifying party to assume defense of or opposition to such Claim at any time
prior to settlement, compromise or final determination thereof).
15.3.3 Anything in this Section 15.3 to the contrary
notwithstanding: (a) the indemnified party shall have the right, at its own cost
and expense, to participate in the defense, opposition, compromise or settlement
of the Claim; (b) the indemnifying party shall not, without the indemnified
party's written consent, settle or compromise any Claim or consent to entry of
any judgment which does not include as an unconditional term thereof the giving
by the claimant or the plaintiff to the indemnified party of a release from all
liability in respect of such Claim; and (c) in the event that the indemnifying
party undertakes defense of or opposition to any Claim, the indemnified party,
by counsel or other representative of its own choosing and at its sole cost and
expense, shall have the right to consult with the indemnifying party and its
counsel or other representatives concerning such Claim and the indemnifying
party and the indemnified party and their respective counsel or other
representatives shall cooperate in good faith with respect to such Claim.
15.3.4 No undertaking of defense or opposition to a Claim
shall be construed as an acknowledgment by such party that it is liable to the
party claiming indemnification with respect to the Claim at issue or other
similar Claims.
15.4 Limitations. Notwithstanding any other provision of this Article
15, Seller and DGI shall have no liability to Buyer hereunder for breach of any
warranty, representation or covenant under this Agreement or any other agreement
between the parties relating to the subject matter hereof, unless the total
liability of Seller or DGI to Buyer hereunder shall exceed the sum of
Twenty-Five Thousand Dollars ($25,000).
15.5 Indemnification Procedures Agreement. On the Closing Date, Buyer
and DGI shall enter into the indemnification procedures agreement (the
"Indemnification Procedures Agreement") in the form of Exhibit G. Neither the
exercise nor the failure to exercise the rights provided for in the
Indemnification Procedures Agreement will constitute an election of remedies by
Buyer or limit Buyer in any manner in the enforcement of any other remedies that
may be available to it. If Buyer's claims for indemnification exceed the
indemnification fund, if any, created pursuant to the Indemnification Procedures
Agreement, Seller and DGI shall remain liable for any such excess.
ARTICLE 16
TERMINATION RIGHTS
16.1. Termination. This Agreement may be terminated at any time prior
to Closing as follows:
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16.1.1 Upon the mutual written consent of Buyer and Seller,
this Agreement may be terminated on such terms and conditions as so agreed; or
16.1.2 By written notice of Buyer to Seller if Seller 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 Buyer; or
16.1.3 By written notice of Seller to Buyer if Buyer 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 Seller; or
16.1.4 By written notice of Buyer to Seller, or by Seller to
Buyer, if the FCC denies the FCC Application or designates it for a trial-type
hearing; or
16.1.5 By written notice of Buyer to Seller, or by Seller to
Buyer, if any court of competent jurisdiction shall have issued an order, decree
or ruling or taken any other action restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement.
16.1.6 By written notice of Buyer to Seller, or by Seller to
Buyer, if the Closing shall not have been consummated on or before December 31,
1997.
Notwithstanding the foregoing, no party hereto may effect a termination
hereof if such party is at that time in material default or breach of this
Agreement.
16.2 Liability. Except as set forth in Section 17.1 below, the
termination of this Agreement under Section 16.1 shall not relieve any party of
any liability for breach of this Agreement prior to the date of termination.
16.3 Monetary Damages, Specific Performance and Other Remedies. The
parties recognize that if Seller refuses to perform under the provisions of this
Agreement, monetary damages alone will not be adequate to compensate Buyer for
its injury. Buyer shall therefore be entitled to obtain specific performance of
the terms of this Agreement in addition to any other remedies, including but not
limited to monetary damages, that may be available to it. If any action is
brought by Buyer to enforce this Agreement, Seller shall waive the defense that
there is an adequate remedy at law. In the event of the filing of a lawsuit for
damages, specific performance, or other remedy, the prevailing party shall be
entitled to reimbursement for reasonable legal fees and expenses.
16.4 Disbursement of Escrow Deposit; Seller's Liquidated Damages. (a)
If the parties hereto shall fail to consummate this Agreement by August 31,
1997, and Seller
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is not at that time in material breach hereof, the sum of Two Million Dollars
($2,000,000) shall be remitted to Seller from the Escrow Deposit on September 1,
1997. Such sum shall be applied toward the Purchase Price if the parties later
consummate this Agreement.
(b) If the parties hereto shall fail to consummate this Agreement by
December 31, 1997, due solely to Buyer's material breach hereof or Buyer's
failure to satisfy the FCC or other governmental authority of its qualifications
to hold the Station Licenses, and if either party terminates this Agreement
pursuant to Section 16.1.6, the remaining One Million Dollars ($1,000,000) of
the Escrow Deposit, plus accrued interest on the Escrow Deposit, shall be
remitted to Seller upon termination of the Agreement.
(c) If the parties hereto shall fail to consummate this Agreement by
December 31, 1997, for reasons other than those specified in paragraph (b)
above, and if either party terminates this Agreement pursuant to Section 16.1.6,
then the remaining One Million Dollars ($1,000,000) of the Escrow Deposit, plus
accrued interest on the Escrow Deposit, shall be remitted to Buyer upon
termination of the Agreement.
(d) It is understood and agreed that any portion of the Escrow Deposit
remitted to Seller pursuant to paragraph (a) or (b) shall constitute liquidated
damages. Such liquidated damages represent Buyer's and Seller's reasonable
estimate of actual damages and do not constitute a penalty. Recovery of
liquidated damages shall be the sole and exclusive remedy of Seller against
Buyer for failing to consummate this Agreement on the Closing Date and shall be
applicable regardless of the actual amount of damages sustained and all other
remedies are deemed waived by Seller. In the event of the filing of a lawsuit
for damages, specific performance, or other remedy, the prevailing party shall
be entitled to reimbursement for reasonable legal fees and expenses.
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ARTICLE 17
MISCELLANEOUS PROVISIONS
17.1 Risk of Loss. The risk of loss or damage to any of the Station
Assets prior to the Closing Date shall be upon Seller. Seller shall repair,
replace and restore any such damaged or lost Station Asset to its prior
condition as soon as possible and in no event later than thirty (30) days
following the loss or damage; provided, however, that in the event any loss or
damage of the Station Assets exists on the Closing Date, the Buyer at its option
may (a) extend the Closing Date until such time as Seller shall have repaired,
replaced and restored any such damaged or lost Station Asset to its prior
condition, or (b) terminate the Agreement if repairs sufficient to restore the
Station Asset to its prior condition are not completed within thirty (30) days
of the damage or loss.
17.2 Certain Interpretive Matters and Definitions. Unless the context
otherwise requires: (a) all references to Sections, Articles, Schedules or
Exhibits are to Sections, Articles, Schedules or Exhibits of or to this
Agreement; (b) each term defined in this Agreement has the meaning assigned to
it; (c) each accounting term not otherwise defined in this Agreement has the
meaning assigned to it in accordance with generally accepted accounting
principles as in effect on the date hereof; (d) "or" is disjunctive but not
necessarily exclusive; (e) words in the singular include the plural and vice
versa; and (f) all references to "$" or dollar amounts will be to lawful
currency of the United States of America.
17.3 Further Assurances. After the Closing, Seller shall from time to
time, at the request of and without further cost or expense to Buyer, execute
and deliver such other instruments of conveyance and transfer and take such
other actions as may reasonably be requested in order to more effectively
consummate the transactions contemplated hereby to vest in Buyer good and
marketable title to the Station Assets being transferred hereunder, free, clear
and unencumbered, and Buyer shall from time to time, at the request of and
without further cost or expense to Seller, execute and deliver such other
instruments and take such other actions as may reasonably be requested in order
to more effectively relieve Seller of any obligations being assumed by Buyer
hereunder.
17.4 Benefit and Assignment. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns. Seller may not voluntarily or involuntarily assign its
interest under this Agreement without the prior written consent of the Buyer.
Buyer shall have the right to assign and/or delegate its rights and obligations
under this Agreement only upon the written consent of Seller, which shall not be
withheld if the proposed assignee, in the reasonable opinion of Seller, meets
all of the qualifications of the FCC and any other regulatory authority having
jurisdiction over the transaction.
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17.5 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.
17.6 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.
17.7 Arbitration. Except as provided below, any and all disputes
arising under or related to this Agreement which cannot be resolved through
negotiations between the parties shall be submitted to binding arbitration. If
the parties fail to reach a settlement of their dispute within fifteen (15) days
after the earliest date upon which one of the parties notified the other(s) of
its desire to attempt to resolve the dispute, then the dispute shall be promptly
submitted to arbitration by a single arbitrator through the Judicial Arbiter
Group, any successor of the Judicial Arbiter Group, or any similar arbitration
provider who can provide a former judge to conduct such arbitration if JAG is no
longer in existence ("JAG"). The arbiter shall be selected by JAG on the basis,
if possible, of his or her expertise in the subject matter(s) of the dispute.
The decision of the arbitrator shall be final, nonappealable and binding upon
the parties, and it may be entered in any court of competent jurisdiction. The
arbitration shall take place in Cincinnati, Ohio. The arbitrator shall be bound
by the laws of the State of Ohio applicable to the issues involved in the
arbitration and all Ohio rules relating to the admissibility of evidence,
including, without limitation, all relevant privileges and the attorney work
product doctrine. All discovery shall be completed in accordance with the time
limitations prescribed in the Ohio rules of civil procedure, unless otherwise
agreed by the parties or ordered by the arbitrator on the basis of strict
necessity adequately demonstrated by the party requesting an extension of time.
The arbitrator shall have the power to grant equitable relief where applicable
under Ohio law, and shall be entitled to make an award of punitive damages when
applicable under Ohio law. The arbitrator shall issue a written opinion setting
forth his or her decision and the reasons therefor within thirty (30) days after
the arbitration proceeding is concluded. The obligation of the parties to submit
any dispute arising under or related to this Agreement to arbitration as
provided in this Section shall survive the expiration or earlier termination of
this Agreement. Notwithstanding the foregoing, either party may seek and obtain
an injunction or other appropriate relief from a court to preserve or protect
trade names, copyrights, patents, trade secrets or other intellectual property
or proprietary information or to preserve the status quo with respect to any
matter pending conclusion of the arbitration proceeding, but no such application
to a court shall in any way be permitted to stay or otherwise impede the
progress of the arbitration proceeding.
In the event of any arbitration or litigation being filed or instituted
between the parties concerning this Agreement, the prevailing party will be
entitled to receive from the other party or parties its attorneys' fees, witness
fees, costs and expenses, court
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costs and other reasonable expenses, whether or not such controversy, claim or
action is prosecuted to judgment or other form of relief.
17.8 Governing Law. The construction and performance of this Agreement
shall be governed by the laws of the State of Ohio without giving effect to the
choice of law provisions thereof. Subject to the provisions of Section 17.7: (a)
any action, suit or proceeding brought by Buyer relating to or arising out of
this Agreement or any other agreement, instrument, certificate or other document
delivered pursuant hereto (or the enforcement hereof or thereof), shall be
brought and prosecuted as to all parties in, and each of the parties hereby
consent to service of process, personal jurisdiction and venue in, the state and
Federal courts of general jurisdiction located in Hamilton County, Ohio or the
Federal District Court in Cincinnati, Ohio; and (b) any action, suit or
proceeding brought by Seller relating to or arising out of this Agreement or any
other agreement, instrument, certificate or other document delivered pursuant
hereto (or the enforcement hereof or thereof), shall be brought and prosecuted
as to all parties in, and each of the parties hereby consent to service of
process, personal jurisdiction and venue in, the state and Federal courts of
general jurisdiction located in Hamilton County, Ohio or the Federal District
Court in Cincinnati, Ohio.
17.9 Notices. Any notice, demand or request required or permitted to be
given under the provisions of this Agreement shall be in writing, including by
facsimile, 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 or when dispatched by facsimile transmission (with the facsimile
transmission confirmation being deemed conclusive evidence of such dispatch) and
shall be addressed to the following addresses, or to such other address as any
party may request, in the case of Seller, by notifying Buyer, and in the case of
Buyer, by notifying Seller:
To Buyer: American Radio Systems Corporation
Attention: Steven B. Dodge
116 Huntington Avenue
Boston, MA 02116
Fax: (617) 375-7575
Copy to: Michael B. Milsom, Esq.
American Radio Systems Corporation
116 Huntington Avenue
Boston, MA 02116
Fax: (617)375-7575
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To Seller or DGI: WGRR Limited Partnership
10828 Lockland Road
Potomac, Maryland 20854
Attention: William Dalton
Fax: (301) 983-5176
Copy to: Jason L. Shrinsky, Esq.
Kaye, Scholer, Fierman, Hays & Handler, LLP
901 15th Street, N.W.
Washington, D.C. 20005
Fax: (202) 682-3580
17.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument. This Agreement shall become binding
when one or more counterparts hereof, individually or taken together, shall bear
the signatures of all of the parties reflected hereon as the signatories.
17.11 No Third Party Beneficiaries. Nothing herein expressed or implied
is intended or shall be construed to confer upon or give to any person or entity
other than the parties hereto and their successors or permitted assigns, any
rights or remedies under or by reason of this Agreement.
17.12 Severability. The parties agree that if one or more provisions
contained in this Agreement shall be deemed or held to be invalid, illegal or
unenforceable in any respect under any applicable law, this Agreement shall be
construed with the invalid, illegal or unenforceable provision deleted, and the
validity, legality and enforceability of the remaining provisions contained
herein shall not be affected or impaired thereby.
17.13 Entire Agreement. This Agreement and the exhibits hereto embody
the entire agreement and understanding of the parties hereto and supersede any
and all prior agreements, arrangements and understandings relating to the
matters provided for herein.
[The remainder of this page intentionally left blank]
35
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first above written.
AMERICAN RADIO SYSTEMS CORPORATION
By: ___________________________________
John R. Gehron
CO-Chief Operating Officer
WGRR LIMITED PARTNERSHIP
By: ___________________________________
William Lee Dalton
President, The Dalton Group, Inc.
General Partner
THE DALTON GROUP, INC.
By: ___________________________________
William Lee Dalton
President
36
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SCHEDULE 1.2.8
Miscellaneous Excluded Assets
None
37
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SCHEDULE 3.3.2
Trade Agreements
March 1996 report attached hereto
(Updated report to follow execution of Agreement)
38
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SCHEDULE 7.4
Station Licenses
I. FCC Licenses, Permits and Authorizations:
1. FM Broadcast Station License BLH-940718KB (covering Permit No.
BPH-891204ID, as modified by Permit No. BMPH-940204IA).
2. Auxiliary Facilities:
a. WDT-916
b. WLD-901
II. Pending Applications:
1. License Renewal Application BRH-960524ZF
39
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SCHEDULE 7.7
Tangible Personal Property
1. Attached schedule of inventory dated January 1992
2. Attached schedule of equipment from depreciation schedule
dated January 1992
(Updated schedules to follow execution of Agreement)
40
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SCHEDULE 7.8
Contracts
("*" denotes third party consent to assignment of contract required)
* 1. Lease Agreement dated August 30, 1990, with River City
Capital, L.P. (formerly NKA Hyde Park, Inc.) (office/studio
space)
* 2. Lease Agreement dated May 29, 1992, with River City Capital,
L.P. (formerly NKA Hyde Park, Inc.) (first floor space at
Edwards road)
3. Local Station Blanket Radio License dated November 25, 1991,
with American Society of Composers, Authors and Publishers
(expired on December 31, 1995, term extended for negotiation,
negotiation assigned to Radio Music License Committee)
* 4. Station License dated September 23, 1993, with The Arbitron
Company
* 5. Agreement dated November 21, 1990, with The Associated Press
* 6. Broadcast Station Licensing Agreement (Drake 88) dated January
29, 1990, with Axcess Broadcast Services, Inc.
* 7. Broadcast Station Licensing Agreement (Oldies Package) dated
April 7, 1992, with Axcess Broadcast Services, Inc.
8. License Agreement dated January 10, 1994, with Broadcast
Music, Inc.
* 9. Program License and Service Agreement (traffic/billing system)
dated November 12, 1991, with Custom Business Systems, Inc.
10. Lease Agreement (copier) dated March 18, 1996, and Copier
Maintenance Agreement dated June 19, 1996, with Donnellon
McCarthy, Inc.
11. Consulting Agreement dated December 27, 1995, with E. Alvin
Davis & Associates, Inc.
* 12. Interactive Voice Response System Agreement dated January 26,
1996 with Fairwest Direct, Inc.
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* 13. Licensing Agreement dated November 1, 1995, with FirstCom
Broadcast Services
* 14. Consulting Agreement dated November 1, 1995, with Global Sales
Development Company
* 15. Agreement (shared usage of RPU system) dated August 2, 1995,
with Heritage Media Corporation
* 16. Equipment Lease with Imperial Business Credit (equipment for
Fairwest Direct Marketing)
17. National Radio Sales Representation Agreement dated April 25,
1994, with McGavren Guild, Inc.
18. Subscriber Agreement dated April 26, 1995, with International
Demographics, Inc.
19. Membership Agreement dated May 1, 1989, with Radio Advertising
Bureau, Inc.
* 20. License Agreement (Selector) dated January 7, 1988, with Radio
Computing Services, Inc.
* 21. Broadcasting Performance License dated January 4, 1982, with
SESAC, Inc.
* 22. License Agreement (tower space for antenna) dated November 28,
1992, with Cincinnati TV 64 Limited Partnership
23. Emergency Power Generator Agreement dated July 27, 1993, with
Cincinnati TV 64 Limited Partnership
24. Quali-Tap Contract dated January 1, 1993, with Tapscan
Incorporated
25. Network Affiliate Agreement dated December 12, 1988, with
Traffic Watch, Inc.
* 26. Management Employment Agreement dated August 19, 1996, with
James B. Richards
27. Employment Agreement dated March 1, 1995, with James Blommel
28. Employment Agreement dated August 30, 1993, as amended on
December 26, 1994, with Karen Schlichte-Brown
42
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29. Employment Agreement dated June 26, 1995, as amended on
May 31, 1996, with Tracy Gardella
30. Employment Agreement dated June 12, 1995, as amended on
May 31, 1996, with Steven D. Halprin
31. Employment Agreement dated January 1, 1996, with David S.
Heimlich
32. Employment Agreement dated June 13, 1994, as amended on
March 6, 1995, with Nancy Holmes
33. Employment Agreement dated August 24, 1992, as amended on
March 15, 1993, and February 23, 1995, with Rob B. McCracken
34. Employment Agreement dated December 31, 1990, as amended on
March 15, 1993, and February 23, 1995, with Terry D. Moore
35. Employment Agreement dated April 18, 1996, with N. Scott
Vandivier
36. Employment Agreement dated October 1, 1995, with Janeen C.
Moody
37. Employment Agreement dated March 4, 1996, with Terry Creeden
38. Employment Agreement dated March 4, 1996, with James LaBarbara
39. Employment Agreement dated April 1, 1996, with Sankey Alan
Moody
40. Employment Agreement dated March 4, 1996, with Thomas Presutti
41. Employment Agreement dated March 4, 1996, with Roland C.
Schumacher
42. Employment Agreement dated March 4, 1996, with James A. Stolz
Material Contracts
1. Lease Agreement dated August 30, 1990, with River City
Capital, L.P. (formerly NKA Hyde Park, Inc.) (office/studio
space)
2. Lease Agreement dated May 29, 1992, with River City Capital,
L.P. (formerly NKA Hyde Park, Inc.) (first floor space at
Edwards road)
3. Agreement (shared usage of RPU system) dated August 2, 1995,
with Heritage Media Corporation
43
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4. License Agreement (tower space for antenna) dated November 28,
1992, with Cincinnati TV 64 Limited Partnership
5. Emergency Power Generator Agreement dated July 27, 1993, with
Cincinnati TV 64 Limited Partnership
44
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SCHEDULE 7.10
Exceptions to Environmental Compliance
None
45
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SCHEDULE 7.11
Intellectual Property
Ohio Service Marks
(Other items to be supplied after execution of Agreement)
46
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SCHEDULE 7.12
Financial Statements
1. Balance Sheet as of June 30, 1996
2. Income Statement June 1 - June 30, 1996
3. Income Statement December 1 - December 31, 1995
4. Income Statement December 1 - December 31, 1994
47
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SCHEDULE 7.13
Station Personnel
List attached hereto
48
<PAGE>
SCHEDULE 7.14
Litigation
None
49
<PAGE>
SCHEDULE 7.15
Compliance With Laws
None
50
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SCHEDULE 7.16
Employee Benefit Plans
1. 401(k) Plan
The Dalton Group, Inc. Savings Plan with investments handled
by The Guardian Insurance and Annuity Company. Approximately
25 WGRR employees participate. There are no Company
Contributions.
2. Health Insurance/Life Insurance
Health Insurance through Nationwide Health Plans.
Approximately 30 employees participate, eight of which are
family plans. The Company pays approximately 90% of individual
employee health insurance costs, and all of the costs for Life
Insurance.
3. Disability Insurance
Insurance through Mutual of Omaha. Company pays 100% of the
cost for approximately 22 employees.
51
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated February 3, 1997 by and between
American Radio Systems, Inc., a Massachusetts corporation ("Buyer"), and Amaturo
Group of Texas, Ltd., a Florida limited partnership ("Seller") .
P R E M I S E S :
A. Seller is the licensee of and operates radio station KKMJ (FM), Austin,
Texas, KPTY (FM), Luling, Texas, and KJCE (FM), Rollingwood, Texas, (the
"Stationss"), 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.
A G R E E M E N T S :
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.
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1.2 "Assets" means the tangible and intangible assets 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, 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
Stations for cash entered into in the ordinary course of business.
1.4 "Closing" means the consummation of the transaction contemplated by
this Agreement in accordance with the provisions of Section 8 hereof.
1.5 "Closing Date" means the date of the Closing specified in Section
8.1.
1.6 "Consents" means all of the consents, permits or approvals of
government authorities and other third parties necessary to transfer the Assets
to Buyer or otherwise to consummate the transaction contemplated hereby,
including without limitation the consents of the parties to those Contracts
designated in Schedule 3.7 with an asterisk.
1.7 "Contracts" means all agreements and leases, written or oral
(including any amendments and other modifications thereto) to which Seller is a
party or which are binding upon Seller and affect the assets or the business or
operations of the Stations and (i) which are in effect on the date hereof or
(ii) which are entered into by Seller in the ordinary course of business between
the date hereof and the Closing Date.
1.8 "FCC Consent" means action by the FCC granting its consent to the
assignment of the FCC Licenses to Buyer as contemplated by this Agreement.
1.9 "FCC Licenses" means all of the licenses, permits and other
authorizations issued by the FCC to Seller in connection with the conduct of the
business or operations of the Stations.
1.10 "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.
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<PAGE>
1.11 "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.
1.12 "Personal Property" means 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
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.
1.13 "Purchase Price" means the purchase price specified in Section 2.3
hereof.
1.14 "Real Property" means all of the leasehold interests, easements,
licenses, rights to access, rights-of-way and other real property interest which
are used or held by Seller, or owned by Seller and useful, as of the date
hereof, in the business 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 "Option Fee" means the fee paid to Seller by Buyer pursuant to the
Option Agreement between Seller and Buyer dated August____, 1995.
SECTION 2
PURCHASE AND SALE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and conditions set
forth in this Agreement, 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 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 Sections 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;
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(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;
(g) All choses in action and rights under warranties of Seller relating
to the Stations or the Assets;
(h) All books and records relating to the business or operations of the
Stations, including executed copies of the Assumed Contracts, and all records
required by the FCC to be kept, subject to the right of Seller to have such
books and records made available to Seller for a reasonable period, not to
exceed three (3) years; and
(i) All intangible assets of Seller relating to the Stations not
specifically described above.
2.2 Excluded Assets. The Assets shall exclude the following assets, in
addition to those listed on Schedule 2.2:
(a) The Seller's Accounts Receivable;
(b) 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;
(c) Any Contracts other than the Assumed Contracts;
(d) Any books and records which Seller is required by law to retain,
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 lender;
(e) 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; and (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 or 2.5 of this
Agreement.
2.3 Purchase Price. The Purchase Price shall be Twenty Eight Million Five
Hundred Dollars ($28,500,000.00), which amount shall be adjusted and be paid by
Buyer to Seller at Closing, as follows:
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A. The Option Fee and all interest (6% per annum) earned thereon shall
be credited to the Buyer and deducted from the Purchase Price.
B. The Purchase Price shall be adjusted to reflect any adjustments or
prorations made at Closing as provided in Section 2.4 hereof.
C. The balance of the Purchase Price, after the credit set forth in
subsection
2.3 A and the adjustment set forth in subsection 2.3B shall be payable to
Seller by wire transfer of immediately available federal funds to such accounts
as are designated by Seller in written instructions to Buyer.
2.4 Adjustments and Prorations. All revenues arising from the Stations up
until midnight on the day prior to the Closing Date, and all expenses arising
from the Stations 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,
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 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 Stations on the Closing Date and for the
period thereafter. 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 hereof.
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 hereof.
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 determines that the Closing Certificate accurately reflects the
adjustments and prorations to be made pursuant to this Section 2.4, Buyer shall
pay such agreed upon amount to Seller or Seller shall pay such agreed upon
amount to
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Buyer, as appropriate. 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, Chief Financial Officer, on
behalf of Buyer, and Janette Nickel, Comptroller, 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.
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 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.
2.6. Tax Allocation. The Purchase Price shall be allocated among the
Assets being purchased in accordance with an independent appraisal by B I A to
be undertaken by Buyer, in compliance with Section 1060 of the Internal Revenue
Code ("IRC") and the regulations promulgated thereunder and
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reasonably acceptable to Seller. Such allocation shall be set forth on IRC Form
8594 (in a manner mutually agreed to by the parties) and filed with the Internal
Revenue Service following the Closing as required by law; provided, however,
that Seller shall be under no obligation to accept such allocation.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Organization, Standing and Authority. Seller is a limited partnership
duly formed, validly existing and in good standing under the laws of the State
of Florida. Seller has all requisite partnership power and authority (i) to own,
lease and use the Assets as presently owned, leased and used and (ii) to conduct
the business or operations of the Stations as presently conducted. Seller has
all requisite partnership power and authority to execute and deliver this
Agreement and the documents contemplated hereby and to perform and comply with
all of the terms, covenants and conditions to be performed and complied with by
Seller hereunder and thereunder. Seller is not a participant in any joint
venture or partnership with any other person or entity with respect to any part
of the Stations's operations or the Assets.
3.2 Authorization and Binding Obligation. The execution, delivery and
performance of this Agreement by Seller has been duly authorized by all
necessary partnership action on the part of Seller. This Agreement has been duly
executed and delivered by Seller and constitutes the legal, valid and binding
obligation of Seller, enforceable against Seller in accordance with its terms
except as the enforceability hereof may be affected by bankruptcy, insolvency or
similar laws affecting creditors' 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 partnership agreement of Seller; (iii) will
not conflict with, result in a breach of, or constitute a default under, any
law, judgment, order, ordinance, decree, rule, regulation or ruling of any court
or governmental instrumentality, which is applicable to 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
7
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it 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 Seller 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.
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 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 shall deliver to Buyer true
and complete copies of all deeds, leases or other material instruments
pertaining to the Real Property (including any and all amendments and other
modifications of such instruments), all of which instruments are valid, binding
and enforceable in accordance with their terms. Seller is not in material
breach, nor to Seller's knowledge is any other party in material breach, of the
terms of any of such 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 hereof 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 hereof
contains descriptions of all material items of the Personal Property, which
comprises all personal property necessary to conduct the business or operations
of the Stations as now conducted. Except as described in Schedule 3.6, Seller
owns and has good title to all Personal Property. None of the Personal Property
owned by Seller is subject to any security interest, mortgage, pledge,
conditional sales agreement or other lien or encumbrance, except for (i) liens
for current taxes not yet due and payable and (ii) any other claims or
encumbrances which are described in Schedule 3.6 and annotated to indicate that
such claims or encumbrances shall be removed prior to or at Closing. Except as
shown in Schedule 3.6, the Personal Property taken as a whole is in good
operating condition and repair (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 in
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a manner consistent with generally accepted standards of good engineering
practice 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 canceled 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 ($5,000.00) or any material non-monetary 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, 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, Seller is not aware of any intention by any
party to any Assumed Contract (i) to terminate such contract or amend the terms
thereof, (ii) to refuse to renew the same upon expiration of its term or (iii)
to renew the same upon expiration only on terms and conditions which are more
onerous than those pertaining to such existing contract. Except for the
Consents, Seller has full legal power and authority to assign its rights under
the Assumed Contracts to Buyer in accordance with this Agreement, and such
assignment will not affect the validity, enforceability and continuation of any
of the Assumed Contracts.
3.8 Consents. Except for the FCC Consent provided for in Section 6.1
hereof 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.
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3.9 Trademarks, Trade Names and Copyrights. Schedule 3.9 is a true and
complete list of all copyrights, trademarks, tradenames, 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, 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 audited financial
statements of Seller containing balance sheets and statements of income for
Seller's fiscal years ended December 31, 1992 and 1993 (collectively, the
"Financial Statements") shall be supplied promptly to Buyer upon the execution
of this Agreement. 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 Stations as of their respective dates and the results
of operations for the periods then ended. Seller has supplied Buyer with audited
financial statements of the Stations for the year ending December 31, 1994 .
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
(3) year period ending on the date hereof, no insurance policy of Seller on the
Assets or the Stations has been canceled by the insurer and no application of
Seller for insurance has been rejected by any insurer.
3.12 Reports. Except where failure to do so would not have a material
adverse effect on the ownership or operation of the Stations, all returns,
reports and statements which the Stations is currently required to file with the
FCC or with any other governmental agency have been filed, all reporting
requirements of the FCC and other governmental authorities having jurisdiction
thereof have been complied with and all such reports, returns and statements are
substantially complete and correct as filed. The Stations's public inspection
file is located in the Stations's city of license, with a duplicate copy at the
main studio, and is in compliance 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
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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 and termination arrangements or policies, including workers'
compensation policies. Seller has furnished or made available to Buyer true and
complete copies of all employee handbooks, employee rules and regulations, all
applicable plan documents, trust documents, insurance contracts, contracts with
employees and summary plan descriptions of the written plans and arrangements
listed in Schedule 3.13, and with descriptions, in writing, of the unwritten
plans listed in Schedule 3.13. All 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 3.14. 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 Seller's 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
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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.
3.16 Claims; Legal Actions. Except as set forth in Schedule 3.16, and
except for any investigations and rule-making proceedings generally affecting
the broadcasting industry, there is no claim, legal action, counterclaim, suit,
arbitration, governmental investigation or other legal, administrative or tax
proceeding, nor any order, decree or judgment, in progress or pending, or to the
knowledge of Seller, threatened, against or relating to Seller, the Assets or
the business or operations of the Stations, nor does Seller know of any basis
for the same. In particular, except as set forth in Schedule 3.16, but without
limiting the generality of the foregoing, there are no applications, complaints
or proceedings pending or, to the best of its knowledge, threatened (i) before
the FCC relating to the business or operations of the Stations other than
applications, complaints or proceedings which affect the radio industry
generally, (ii) before any federal or state agency involving charges of illegal
discrimination by the Stations under any federal or state employment laws or
regulations or (iii) against Seller or the Stations before any federal, state or
local agency involving environmental or zoning laws or regulations.
3.17 Compliance with Laws. To the best knowledge of Seller, Seller has
complied in all material respects with (i) the Licenses and (ii) all applicable
federal, state and local laws, rules, regulations and ordinances. To the best
knowledge of Seller, neither the ownership or use, nor the conduct of the
business or operations, of the Stations conflicts with rights of any other
person, firm or corporation. To the best of its knowledge, there has been no
production, storage, treatment, recycling, disposal, use, generation, discharge,
release or other handling or disposition of any kind by Seller 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 at, in, on, from or under the Real Property or any
structure or improvement on the Real Property which in any event is in material
violation of environmental law. The operations of Seller are and have been
conducted in material
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compliance with all applicable environmental laws. Seller knows of no notices,
claims or pending or threatened actions or suits of an environmental nature
involving the Real Property or Seller's operation of the Stations.
3.18 Conduct of Business in Ordinary Course. Since January 1, 1995,
Seller has conducted the business and operations of the Stations only in the
ordinary course and has not:
(a) Suffered any damage, destruction or loss affecting the Assets or;
(b) Made any sale, assignment, lease or other transfer of any of Seller's
properties other than in the normal and usual course of business with suitable
replacements being obtained therefor.
3.19 Full Disclosure. No representation or warranty made by Seller herein
nor any certificate, document or other instrument furnished or to be furnished
by Seller pursuant hereto contains or will contain any untrue statement of a
material fact, or 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
Massachusetts, and is and shall be, at Closing, qualified to conduct business in
the State of Texas. 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.
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4.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents, the execution, delivery and performance of this Agreement and the
documents contemplated hereby (with or without the giving of notice, the lapse
of time, or both): (i) does not require the consent of any third party; (ii)
will not conflict with the Articles of Incorporation or Bylaws of Buyer; (iii)
will not conflict with, result in a breach of, or constitute a default under, or
accelerate or permit the acceleration of any performance required by the terms
of, any material agreement, instrument, licenses or permit to which Buyer is a
party or by which Buyer may be bound.
4.4 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 contains or will contain any untrue statement of a
material fact, or omits or will omit to state any material fact known to Buyer
and required to make the statements herein or therein not misleading.
SECTION 5
COVENANTS OF SELLER
5.1 Pre-Closing Covenants. Except as contemplated by this Agreement or
with the prior written consent of Buyer, not to be unreasonably withheld,
between the date hereof and the Closing Date, Seller shall operate the Stations
in the ordinary course of business in accordance with its past 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 trade or barter contracts, modify or
amend any of the Assumed Contracts or enter into any new Contracts, each except
in the ordinary course of business; provided that all new Contracts (other than
Contracts for the sale of broadcast time) shall not involve either aggregate
liabilities exceeding Twenty Thousand Dollars ($20,000.00) or any material
non-monetary obligation;
(3) Disposition of Assets. Sell, assign, lease or otherwise transfer
or dispose of any of the Assets, except for assets consumed or disposed of in
the ordinary course of business, where no longer used or useful in the business
or operations of the Stations or in connection with the acquisition of
replacement property of equivalent kind and value;
(4) Encumbrances. Create, assume or permit to exist any claim,
liability, mortgage, lien, pledge, condition, charge or encumbrance of any
nature whatsoever upon the Assets, except for (i)
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those in existence on the date of this Agreement, disclosed in Schedules 3.5 and
3.6, or permitted by Sections 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 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 Stations;
(7) Rights. Waive any material right relating to the Stations; or
(8) No Inconsistent Action. 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. At Buyer's expense, during normal business
hours and with the prior approval of Seller's home office, allow Buyer and its
authorized representatives reasonable access 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 in any way 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) Books and Records. Maintain its books and records in accordance
with past practices;
(6) Notification. Promptly notify Buyer in writing of any unusual or
material developments with respect to the business or operations 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
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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 Stations and consider for employment all personnel recommended by Buyer for
such vacant positions; provided that the choice of Seller to fill a position at
the Stations with an individual other than one recommend by Buyer shall not
relieve Buyer of any of its obligations hereunder;
(9) 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
(10) 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. As soon as possible, but in no event later than twenty (20) business
days after the execution of this Agreement, Buyer and Seller shall file with the
FCC an appropriate application for FCC Consent. The parties shall prosecute said
application with all reasonable diligence and otherwise use their best efforts
to obtain the grant of such application as expeditiously as practicable. If the
FCC Consent imposes any condition on any party hereto, such party shall use its
best efforts to comply with such condition unless compliance would be unduly
burdensome or would have a material adverse effect upon it. If reconsideration
or judicial review is sought with respect to the FCC Consent, Buyer and Seller
shall oppose such efforts to obtain reconsideration or judicial review (but
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nothing herein shall be construed to limit any party's right to terminate this
Agreement pursuant to Section 9 of this Agreement).
B. The transfer of the Assets hereunder is expressly conditioned upon
(i) the grant of the FCC Consent without any materially adverse conditions on
Buyer, (ii) compliance by the parties hereto with the condition (if any) imposed
in the FCC Consent, (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. 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'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, 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, with the exception of Blackburn & Co., Inc., who
was retained by, and whose fee shall be paid by, Buyer.
6. 5 Noncompetition Agreement. Buyer and Seller and Seller's principals
shall enter into at Closing a Noncompetition Agreement in the form set forth in
Schedule 6.5 attached hereto.
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 transactions contemplated hereby.
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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 and by Buyer at all times following
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 sixty (60) 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's
normal and usual transmission resumed within the sixty (60) day period specified
above, Buyer may terminate this Agreement forthwith without any further
obligation hereunder by written notice to Seller. Alternatively, Buyer may, at
its option, proceed to close this Agreement and complete the restoration and
replacement of such damaged Assets after the Closing Date, in which event Seller
shall deliver to Buyer all insurance proceeds received in connection with such
damage or destruction of the Assets to the extent not already expended by Seller
arising in connection with such restoration and replacement.
D. Notwithstanding any of the foregoing, Buyer may terminate this
Agreement forthwith without any further obligation hereunder by written notice
to Seller if any event occurs which prevents signal transmission by the Stations
in the normal and usual manner for a consecutive period of five (5) or a
cumulative period of fourteen (14) days between the date hereof and the Closing
Date.
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SECTION 7
CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
7.1 Conditions of Obligations of Buyer. All obligations of Buyer at the
Closing thereunder are subject to the fulfillment prior to and at the Closing
Date of each of the following conditions:
A. Representations and Warranties. The representations and warranties
of Seller in this Agreement shall be true and complete in all material respects
at and as of the Closing Date, except for changes contemplated by this
Agreement, as though such representations and warranties were made at and as of
such time.
B. Covenants and Conditions. Seller shall have in all material respects
performed and complied with the covenants, agreements and conditions required by
this Agreement to be performed or complied with by it prior to or on the Closing
Date.
C. Consents. Each of the Consents marked as "material" on Schedule 3.7
shall have been duly obtained and delivered to Buyer with no material adverse
change to the terms of the License or Assumed Contract with respect to which
such Consent is obtained.
D. Licenses. Seller shall be the holder of the Licenses, and there
shall not have been any modification of any of such Licenses which has an
adverse effect on the 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
7.2 Conditions to Obligations of Seller. The obligations of Seller at the
Closing thereunder are subject to the fulfillment prior to and at the Closing
Date of each of the following conditions:
A. Representations and Warranties. The representations and warranties
of Buyer contained in this Agreement shall be true and complete in all material
respects at and as of the Closing Date, except for changes contemplated by this
Agreement, as though such representations and warranties were made at and as of
such time.
B. Covenants and Conditions. Buyer shall have in all material respect
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 hereof.
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SECTION 8
CLOSING AND CLOSING DELIVERIES
8.1 Closing. The closing shall take place at 10:00 am 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, 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 the receipt of FCC Consent. Closing shall be
held at the offices of Buyer at 116 Huntington Avenue, Boston, Massachusetts or
such other place as shall be mutually agreed to by Buyer and Seller.
8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller shall
deliver to Buyer the following, in form and substance reasonably satisfactory to
Buyer and its counsel:
(a) Transfer Documents. Duly executed bills of sale, 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" on
Schedule 3.7;
(c) General Partner's Certificate. A certificate, dated as of the
Closing Date, executed by the General Partner of Seller, certifying that (i) 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)
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) Limited Partner's Consent. A certificate executed by all of the
Limited Partners of Seller authorizing and approving the execution of this
Agreement and the consummation of the transaction contemplated hereby by the
General Partner.
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(e) Certificate of Good Standing. A certificate of good standing for
Amaturo Group of Texas, Ltd. from the State of Florida, as of a date not more
than fifteen (15) days before the Closing Date and by Seller's General Partner
as of the Closing Date and a copy of Seller's Limited Partnership Agreement as
in effect on the date hereof certified by Seller's General Partner.
(f) Tax, Lien and Judgment Searches. A search for Uniform Commercial
Code ("UCC"), lien and judgment filings in the Secretary of State's records of
the State of Florida, 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;
(g) Licenses, Contracts, Business Records, Etc. Copies 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;
(h) Noncompetition Agreement. The Noncompetition Agreement as set forth
in Schedule 6.5; and
(i) Opinions of Counsel. Opinions of Seller's general and
communications counsel, Cara Ebert Cameron, P.A., 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(i) 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
hereof.
(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
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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) certifying a copy of the corporate charter, articles
of incorporation and Bylaws of Buyer as in effect on the date hereof and as of
the Closing Date;
(e) Opinion of Counsel. An opinion of Buyer's General Counsel dated as
of the Closing Date and addressed to Seller, substantially in the form of
Schedule 8.3(e) hereto.
SECTION 9
RIGHTS OF BUYER AND SELLER
ON TERMINATION OR BREACH
9.1 Termination Rights. This Agreement may be terminated by either Buyer
or Seller if the terminating party is not then in breach of any material
provision of this Agreement, upon written notice to the other party, upon the
occurrence of any of the following:
(a) If on the Closing Date (i) any of the conditions precedent to the
obligations of the terminating party set forth in Section 7 of this Agreement
shall not have been materially satisfied and (ii) satisfaction of such condition
shall not have been waived by the terminating party;
(b) If the application for FCC Consent shall be set for hearing by the
FCC for any reason;
(c) If the Closing shall not have occurred on or before January 30,
l998;
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
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in Section 9.3 hereof; 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 Option Fee, 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 Option Fee and
all interest earned thereon shall be retained by Seller as liquidated damages,
it being agreed that the Option Fee shall constitute full payment for any and
all damages suffered by Seller by reason of Buyer's breach of this Agreement.
Buyer and Seller agree in advance that actual damages would be difficult to
ascertain and that the amount of the Option Fee is a fair and equitable amount
to reimburse Seller for damages sustained due to Buyer's failure to consummate
this Agreement. In the event of a material breach by Buyer under this Agreement,
all interest on or other proceeds from the investment of the Option Fee shall be
retained by 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. Therefore, in the event Seller shall refuse
to perform under this Agreement, Buyer shall be entitled 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 Legal Fees and Expense. 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 "Non-defaulting
Party") shall be entitled to reimbursement by the Defaulting Party of reasonable
legal fees and expenses incurred by the Non-defaulting Party in the event the
Non-defaulting 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
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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.
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 non-fulfillment 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 non-fulfillment of any covenants by
Buyer contained herein or in any certificate delivered to Seller hereunder;
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(b) Any and all losses, liabilities or damages resulting from Buyer's
operation or ownership of the Stations on or after the Closing Date, including
any and all liabilities or obligations arising under the Licenses or the Assumed
Contracts which relate to events occurring after the Closing Date or otherwise
assumed by Buyer under this Agreement; and
(c) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments and reasonable costs and expenses, including reasonable
legal fees and expenses, incident to any of the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof.
10.4 Procedures for Indemnification. The procedures for indemnification
shall be as follows:
A. The party claiming the indemnification (the "Claimant") shall
promptly give notice to the party from whom indemnification is claimed (the
"Indemnifying Party") of any claim, whether between the parties or brought by a
third party, specifying (i) the factual basis for such claim and (ii) the amount
of the claim. If the claim relates to an action, suit or proceeding filed by a
third 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 not be entitled to apply any of the Accounts Receivable
collected on behalf of Seller to a claim as to which Buyer may be 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
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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. f 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 hereof 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.
10.5 Deductible. The obligation of each party to pay any amounts on
account of the indemnification provisions of this Agreement (except for (i)
nonperformance by either Buyer or Seller, as the case may be, under any Assumed
Contract, or (ii) any liability associated with any matter set forth in Schedule
3.16 hereto) shall arise only after, and only to the extent that, the aggregate
amount to be paid by the Indemnifying Party on account of all claims for
indemnification hereunder exceeds One Hundred-Thousand Dollars ($100,000.00).
10.6 Exclusive Remedy. No party hereto shall have any liability for any
of the matters set forth in Section 10.2 or 10.3, except pursuant to and in
accordance with the terms and conditions of this Section 10.
SECTION 11
MISCELLANEOUS
26
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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 registered or certified mail, return
receipt requested 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: Amaturo Group, Ltd.
2929 East Commercial Boulevard
Penthouse C
Fort Lauderdale, Florida 33308
with a copy (which shall not constitute notice) to:
Cara Ebert Cameron, Esq.
2929 East Commercial Boulevard
Penthouse C
Fort Lauderdale, Florida 33308
If to Buyer: American Radio Systems, Inc.
116 Huntington Avenue
Boston, Massachusetts 02116
Attention: Mr. Steven B. Dodge, CEO
with a copy (which shall not constitute notice) to:
American Radio Systems, Inc.
116 Huntington Avenue
Boston, Massachusetts 02116
Attention: Michael B. Milsom
Vice President and Counsel
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.
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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 a
subsidiary or affiliated entity, following which assignment Buyer shall remain
responsible for all 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 Florida.
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 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 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.
AMATURO GROUP OF TEXAS, LTD.
By: _____________________________
Joseph C. Amaturo
General Partner
AMERICAN RADIO SYSTEMS, INC.
By: _____________________________
Steven B. Dodge
Chief Executive Officer
29
TIME BROKERAGE AGREEMENT
This time Brokerage Agreement ("Agreement") is dated as of February 14,
1997, by and between American Radio Systems License Corp., a Delaware
corporation ("Licensee"), American Radio Systems Corporation, a Delaware
Corporation ("ARS") and Citicasters Co., an Ohio corporation ("Broker").
WHEREAS, upon the consummation of the transactions contemplated by the
Asset Purchase Agreement (the "Lincoln Agreement"), dated as of February 23,
1996, as amended, by and between ARS and The Lincoln Group, L.P., Licensee will
be the licensee of the radio stations set forth on Attachment A hereto (referred
to herein collectively as the "Stations"); and
WHEREAS, Licensee, ARS and Broker have entered into on December 23,
1996, an Asset Exchange Agreement (the "Exchange Agreement") for the exchange of
certain assets relating to the Stations to Broker; and
WHEREAS, Licensee, while maintaining control over the Stations'
finances, personnel matters and programming desires to accept and broadcast
programming supplied by Broker on the Stations subject to the terms and
conditions set forth herein;
NOW, THEREFORE, for and in consideration of the mutual covenants herein
contained, the parties hereto have agreed and do agree as follows:
1. Air Time and Transmission Services. Licensees and Broker
hereby agree to commence operations pursuant to this Agreement on a date (the
"Effective Date") within three (3) business days following the later of (i)
grant by the Department of Justice of its consent to the transactions
contemplated by the Exchange Agreement and (ii) the consummation of the
transactions contemplated by the Lincoln Agreement. Licensee agrees, beginning
on the Effective Date, to broadcast, or cause to be broadcast, on the Stations,
according to the terms hereof, programming designated and provided by Broker
(the "Programming").
2. Payments. Broker hereby agrees to pay Licensee the amounts
specified in Attachment B for the right, from and after the Effective Date, to
broadcast the Programming on the terms and conditions herein provided. Payments
of the Monthly Fee (as defined in Attachment B) are due and payable in full on
the first day of each calendar month for which such payment is intended to be
applied and shall be prorated for any partial calendar month at the beginning or
end of the term hereof. The failure of Licensee to demand or insist upon prompt
payment in accordance herewith shall not constitute a waiver of its right to do
so. Broker shall receive a payment credit for any Programming not broadcast by
either Station (a "Credit"), such Credit to be determined by multiplying the
monthly payment by the ratio of the amount of time preempted or not accepted to
the total number of hours of Programming each month.
3. Term. The term of this Agreement shall begin on the
Effective Date and end on the earliest of (i) the Closing Date, as defined in
the Exchange Agreement, or (ii) the date which is ten (10) days following any
termination of the Exchange Agreement in accordance with
<PAGE>
the terms thereof (such date hereafter referred to as the "Termination Date,"
and such period of time as the "Term").
4. Programming. Broker shall furnish or cause to be furnished
the Programming, which shall be an entertainment format, and may include,
without limitation, news, promotions (including on-air giveaways), contests,
syndicated programs, barter programs, paid-for programs, locally-produced
programs, advertising commercial matter, including that in both program or spot
announcement forms, and public service information. On a regular basis, Licensee
shall air, or shall require Broker to air, on the Stations programming on issues
of importance to the local community. All actions or activities of Broker under
this Agreement, and all Programming provided by Broker shall be in accordance
with (i) the Communications Act of 1934, as amended; (ii) Federal Communications
Commission (the "FCC") rules, requirements and policies, including, without
limitation, the FCC's rules on plugola/payola, lotteries, station
identification, minimum operating schedule, sponsorship identification,
political programming and political advertising rates; (iii) all applicable
federal, state and local regulations and policies; and (iv) generally accepted
quality standards consistent with Licensee's past practices. Broker agrees that,
if in the sole, good faith judgment of the Licensee or the Stations' General
Manager, Broker does not comply with the standards of this paragraph, Licensee
may suspend or cancel any Programming not in compliance. The right to use the
Programming and to authorize its use in any manner and in any media whatsoever
shall be, and remain, vested solely in Broker, subject in all events to the
rights, if any, of others in such Programming.
5. Special Events. Licensee reserves the right in its
discretion, and without liability, to preempt, delay or delete any of the
broadcasts of the Programming and to substitute programming which in Licensee's
judgment is of greater local, regional or national importance. In all such
cases, Licensee shall use its best efforts to give Broker reasonable notice of
its intention to preempt such Programming, and, in the event of such preemption,
Broker shall receive a payment credit for the Programming so omitted consistent
with the intent and pursuant to the terms of Section 2 hereof.
6. Advertising and Programming Revenues. Broker shall retain
all advertising and other revenues, and all accounts receivable, with respect to
Programming broadcast during the Term, and relating to the Programming it
delivers to the Stations for broadcast during the Term, including without
limitation, promotion-related revenues. Licensee and Broker each shall have the
right, at their own expense, to seek copyright royalty payments for their own
programming. Broker may sell advertising on the stations in combination with the
sale of advertising or other broadcasting stations of its choosing, subject to
compliance with applicable law.
7. Station Facilities
7.1 Station Facilities. Subject to the qualifications
set forth in this Agreement, throughout the term of this Agreement, Licensee
shall make the facilities of the Stations available to Broker for operation and
broadcast with the maximum authorized facilities twenty-four (24) hours a day,
seven (7) days a week, except for downtime occasioned by either (i) emergency
maintenance or (ii) routine maintenance not to exceed two (2) hours each Sunday
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<PAGE>
morning between the hours of 12 Midnight and 5:00 a.m., and except for such
programs and announcements prepared by and put on the air by Licensee in order
to met local needs and issues requirements, said programs and announcements not
to exceed one (1) hour each Sunday morning at a mutually agreed upon time
between the hours of 5:00 a.m. and 7:00 a.m. Broker shall not be entitled to a
Credit for Programming not broadcast over the Stations for periods specified in
this Section 7 hereof. To the extent practicable, any maintenance work affecting
the operation of the Stations at full power shall be scheduled upon a least
forty-eight (48) hours prior notice with the agreement of Broker, such agreement
not to be unreasonably withheld.
8. Right of Access. Broker and Broker's employees or agents
shall at all times be afforded reasonable access to the Stations in order to
perform their duties in connection with the production and transmission of the
Programming over the facilities of the Stations. Broker shall have the right to
install at Licensee's and/or Broker's premises, and to maintain throughout the
term of this Agreement, at Broker's expense, any microwave studio/transmitter
relay equipment, telephone lines, transmitter remote control, monitoring devices
or any other equipment necessary for the proper transmission of the Programming
on the Stations, and Licensee and Broker shall take all steps reasonably
necessary to prepare and file any applications with the FCC to effectuate such
proper transmission.
9. Force Majeure. Any failure or impairment of facilities or
any delay or interruption in broadcasting the Programming, or failure at any
time to furnish facilities, in whole or in part, for broadcasting, due to acts
of God, strikes, or threats thereof, force majeure, or due to causes beyond the
control of Licensee, shall not constitute a breach of this Agreement, and
Licensee shall not be liable to Broker, except to the extent of allowing in each
such case an appropriate Credit for Programming not broadcast by any Station
based upon a pro rata adjustment to amounts due as specified in Section 2 hereof
calculated upon the length of time during which the interruption or failure
exists or continues.
10. Licensee Control of Stations. Notwithstanding anything to
the contrary in this Agreement, Licensee shall have full authority, control and
power over the operation of the Stations during the period of this Agreement.
Licensee shall retain control, said control to be reasonably exercised, over the
policies, programming and operations of the Stations, including, without
limitation, the right to decide whether to accept or reject any Programming or
advertisements, the right to preempt any Programming in order to broadcast a
program deemed by Licensee to be of greater national, regional, or local
interest, and the right to take any other actions necessary for compliance with
the laws of the United States; the laws of the relevant states; the rules,
regulations, and policies of the FCC (including without limitation the
prohibition on unauthorized transfers of control); and the rules, regulations
and policies of other federal governmental authorities, including without
limitation the Federal Trade Commission and the Department of Justice. Licensee
shall be responsible for ensuring that FCC requirements are met with respect to
ascertainment of the problems, needs and interests of the community, public
service programming, main studio staffing, maintenance of public inspection
files and the preparation of quarterly issues/programs lists. Broker shall, upon
request by Licensee, provides Licensee with information with respect to such of
Broker's programs which are responsive to the problems, needs and interests of
the community, so as to assist Licensee in the preparation of required quarterly
issues/programs lists, and shall provide upon request other information enable
Licensee to prepare other records, reports and logs required by the FCC or other
local, state or
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federal governmental agencies. Whenever on the Stations' premises, all Broker
personnel shall be subject to the supervision and the direction of Licensee's
designated personnel.
11. Responsibility for Employees and Expenses. Licensees shall
employ two full time employees at each main studio of the Stations, one of whom
shall be a manager, both of whom shall report to and be accountable to Licensee,
and who shall be ultimately responsible for the day-to-day operation of the
Stations. Licensee shall be directly responsible for paying the salaries, taxes,
insurance and related costs for such employees (the "Licensee Employee
Expenses"). Licensee shall be responsible for paying directly (i) transmitter
site rent/mortgage for the Stations; and (ii) transmitter site utilities for the
Stations ("Licensee Transmitter Expenses"). Licensee shall be responsible for
paying directly all income taxes relating to Licensee's earnings from this
arrangement. Broker shall employ and be responsible for the salaries, taxes,
insurance and related costs for all personnel used in the production of the
Programming (including, without limitation, salespeople, traffic personnel,
administrative and programming staff). Excluding those expenses for which
Licensee is making direct payments as set forth in this Section 11, during the
Term, Broker shall be responsible for paying all other expenses reasonably and
directly related to the continued operation of the Stations subject to the
covenants of the parties to this Agreement (the "Other Expenses"), and further
subject to the ultimate authority, control and power of Licensee.
11.1 Employee Matters. The parties acknowledge and
agree that Broker shall have the right (but not the obligation) to interview and
to elect which of employees of Licensee that it will hire and to set the wages
and any other compensation that any person so hired shall receive. Licensee
shall be responsible for the payment of all compensation and accrued employee
benefits payable to all employees through the Effective Date. For purposes of
employee benefits under the employee benefit plans of Licensee, all employees of
Licensee who accept employment with Broker shall be considered terminated
employees and shall not be entitled to receive from Broker credit for any
accrued vacation days, sick days personal days or other such days. Licensee
acknowledges and agrees that it, and not Broker, is and shall after the
Effective Date remain solely responsible for any and all insurance, supplemental
pension, deferred compensation, retirement and any other benefits, and related
costs, premiums and claims, due, to become due, committed or otherwise promised
to any person who, as of the Effective Date, is a retiree, former employee, or
current employee of Licensee, relating to the period up to and including the
Effective date. Broker shall assume no employee benefit plans, programs or
practices, whether or not set forth in writing, maintained by Licensee at any
time.
12. Station Agreements.
12.1 Assignment and Assumption Station Agreements.
Effective on the Effective date, Licensee hereby assigns to Broker, and Broker
hereby assumes, subject to the provisions of Section 12 hereof, the obligations
of Licensee arising or to be performed on and after the Effective Date (except
to the extent such obligations represent liabilities for activities, events or
transactions occurring, or conditions existing, on or prior to the Effective
Date) under: (a) all of the American Other Contracts (as defined in the Exchange
Agreement), excluding (i) contracts and agreements relating to the Licensee
Employee Expenses and (ii) contracts and agreements relating to the Licensee
Transmitter Expenses; and (b) all contracts entered into by Licensee which are
for consideration other than cash, such as merchandise, services or
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<PAGE>
promotional consideration ("Trade Agreements") arising in the ordinary course of
business consistent with the past practices of Licensee and listed on Attachment
C hereto. All of the foregoing liabilities and obligations under (a) and (b)
hereof shall be referred to herein collectively as the "Station Agreements" or
individually as a "Station Agreement." Licensee represents and warrants that the
Station Agreements are freely assignable, or, if consent of the other
contracting party to the assignment is required, Licensee covenants to use its
reasonable best efforts to obtain such consent as promptly as practicable. As of
the Effective Date, Licensee shall have paid all amounts due on and shall have
performed all obligations due under the Station Agreements as of that date.
Licensees shall not enter into any other Station Agreements with respect to the
Stations without the prior written consent of Broker.
12.2 Consents to Assignment. To the extent that any
Station Agreement is not capable of being sold, assigned, transferred, delivered
or subleased without the waiver or consent of any third person (including a
government or governmental unit), or if such sale, assignment, transfer,
delivery or sublease or attempted sale, assignment, transfer, delivery or
sublease would constitute a breach thereof or a violation of any law or
regulation, this Agreement and any assignment executed pursuant thereto shall
not constitute a sale, assignment, transfer, delivery or sublease or an
attempted sale, assignment, transfer, delivery or sublease thereof. In those
cases where consents, assignments, releases and/or waivers have not been
obtained at or prior to the Effective Date to the transfer and assignment to
Broker of any Station Agreement, this Agreement and any assignment executed
pursuant hereto, to the extent permitted by law, shall constitute an equitable
assignment by Licensee to Broker of all of Licensee's rights, benefits, title
and interest in and to the Station Agreements, and where necessary or
appropriate, Broker shall be deemed to be Licensee's agent for the purpose of
completion, fulfilling and discharging all of Licensee's rights and liabilities
arising after the Effective Date under such Station Agreements (including,
without limitation, permitting Broker to enforce any rights of Licensee arising
under such Station Agreements), and Broker shall, to the extent Broker is
provided with the benefits of such Station Agreements, assume, perform and in
due course pay and discharge all debts, obligations and liabilities of Licensee
under such Station Agreements to the extent that Broker was to assume those
obligations pursuant to the terms hereof.
12.3 Retained Liabilities. Except as set forth in
Section 11 and 12 -------------------- hereof, Broker 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 or any
agreement, instrument or document delivered pursuant to or in connection with
this Agreement or otherwise by reason of or in connection with the consummation
of the transactions contemplated hereby or thereby, to have assumed or to have
agreed to pay, satisfy, discharge or perform, any liabilities, obligations or
commitments of Licensee of any nature whatsoever whether accrued, absolute,
contingent or otherwise and whether or not disclosed by Broker, other than the
Station Agreements. Licensee will retain and pay, satisfy, discharge and perform
in accordance with the terms thereof, all liabilities and obligations of the
Licensee, other than the Station Agreements, including but not limited to, the
obligation to assume, perform, satisfy or pay any liability, obligation,
agreement, debt, charge, claim, judgment or expense incurred by or asserted
against Licensee related to taxes, environmental matters, pension or retirement
plans or trusts, profit-sharing plans, employment contracts, employee benefits,
severance of employees, product liability or warranty, negligence, contract
breach or default, copyright, trademarks,
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<PAGE>
service mark, trade name and other intellectual property, or other obligations,
claims, or judgments asserted against Broker as successor ion interest to
Licensee. All such liabilities, obligations and commitments of Licensee
described in this Section 12.3 shall be referred to herein collectively as the
"Retained Liabilities."
13. Accounts Receivable. Broker and Licensee hereby
acknowledge and agree that all accounts receivable relating to the Stations
shall be collected and apportioned in accordance with Section 2.5 of the
Exchange Agreement.
14. Proration of Income and Expenses. Broker and Licensee
hereby acknowledge and agree that all deposits, reserves and prepaid and
deferred income and expenses relating to the Station Agreements shall be
prorated between Broker and Licensee in accordance with Section 2.3 of the
Exchange Agreement.
15.1 Indemnification. Broker shall indemnify and hold
Licensee and its stockholders, directors, partners, officers, agents, employees,
successors, and assigns harmless from and against any and all claims, expenses,
causes of action and liability resulting from or relating to (i) the broadcast
of Programming during the Term, (ii) any and all promotions, contests and on-air
"give-away" relating to the Stations during the Term, (iii) a breach of Broker's
representations, warranties, covenants or agreements contained herein, (iv) any
liability resulting from Broker's default under the Station Agreements, and (v)
all other matters arising out of or related to Broker's activities involving the
stations or use of the Licensee Station facilities or relating to the
obligations assumed by Broker in connection with this Agreement. Licensee agrees
to indemnify, defend, and hold harmless Broker and its stockholders, directors,
officers, agents, employees, successors and assigns from and against any and all
liability that arises out of (i) material broadcast by Licensee other than the
Programming, (ii) liabilities (but not loss of advertising revenue) that arise
as a result of Licensee's alteration of any and/or all Programming prior to
broadcast by Licensee; and (iii) the Retained Liabilities.
15.2. Procedures; Third Party and Direct
Indemnification Claims. The obligations and liabilities of Licensee and of
Broker hereunder with respect to their respective indemnities pursuant to this
Section 15, resulting from any claim or other assertion of liability by third
parties are subject to the procedures for indemnification set forth in the
Exchange Agreement.
16. Events of Default; Cure periods and Remedies.
16.1 Events of Default. The following shall, after
the expiration of the applicable cure periods, constitute events of Default
under the Agreement:
16.1.1 Non-Payment. Broker's failure to
timely pay the consideration provided for in Section 2 and Attachment B hereof
which is not cured within five (5) business days following notice in accordance
with Section 16.2 hereof;
16.1.2 Default in Covenants or Adverse Legal
Action. The default by any party hereto in the material observance or
performance of any material covenant, condition or agreement contained herein
which is not cured within five (5) business days
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<PAGE>
following notice in accordance with Section 16.2 hereof, or if (a) any party
shall make a general assignment for the benefit of creditors, (b) any party
shall file or have filed against it a petition for bankruptcy, for
reorganization or an arrangement, or for the appointment of a receiver, trustee
or similar creditors' representative for the property or assets of such party
under any federal or state insolvency law, which, if filed against such party,
has not been dismissed or discharged within sixty (60) days thereof, or (c)
specifically and without limitation, if Licensee's successors and assigns,
including without limitation, any assignee of the FCC license for the stations,
except if such successor or assign is Broker or an affiliate of Broker, refuses
to abide by or terminates this Agreement during the term of this Agreement.
16.1.3 Breach of Representation. If any
material representation or warranty herein made by either party hereto, or in
any certificate or document furnished by either party to the other pursuant to
the provisions hereof, shall prove to have been false or misleading in any
material respect as of the time made or furnished and is not cured within thirty
(30) days following notice in accordance with Section 16.2 hereof.
16.1.4 Breach of Exchange Agreement. The
breach by Licensee or Broker in the material observance or performance of any
material representation, warranty, covenant, condition or agreement in the
Exchange Agreement which is not cured within any time period provided for such
cure under the Exchange Agreement provided, that no party may use its own breach
under the Exchange Agreement as grounds to terminate this Agreement. An Event of
Default by either party under this Agreement shall constitute a material default
under the Exchange Agreement and insofar as the cure period specified in this
Agreement has expired with respect to the default, no further cure period shall
be afforded under the Exchange Agreement.
16.2 Cure Periods. An Event of Default shall not be
deemed to have occurred until after the non-defaulting party has provided the
defaulting party with written notices specifying the event or events that if not
cured would constitute an Event of Default and specifying the actions necessary
to cure within the relevant cure period. The Event of Default shall not be
deemed to have occurred if actions necessary to cure are completed during the
relevant cure period.
16.3 Termination Upon Default. Upon the occurrence of
an Event of Default, the non-defaulting party may terminate this Agreement
provided that it is not also in material default hereunder, and may seek such
remedies at law and/or equity as are available, including without limitation
specific performance. If Broker has defaulted in the performance of its
obligations, Licensee shall be under no further obligation to make available to
Broker any further broadcast time or broadcast transmission facilities and,
without limitation of remedies, all amounts accrued or payable to Licensee up to
the date of termination which have not been paid, less any payment credits,
shall immediately become due and payable.
16.4 Liabilities Upon Termination. Upon termination
of this Agreement, Broker shall be responsible for all liabilities, debts and
obligations of Broker accrued from the purchase of air time and transmission
services including, without limitation, accounts payable, barter agreements and
unaired advertisements, but not for Licensee's federal, state, and local tax
liabilities associated with Broker's payments to Licensee as provided for
herein. With respect to Broker's obligations to broadcast material over the
Stations after
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<PAGE>
termination hereunder, Broker may propose compensation to Licensee for meeting
these obligations, but Licensee shall be under no duty to accept such
compensation or to perform such obligations. Upon termination, (i) Broker shall
return to Licensee any equipment or property of the Stations used by Broker, its
employees or agents, in substantially the same condition and location as such
equipment existed on the date of this Agreement, ordinary wear and tear
excepted, (ii) Broker shall assign to License and Licensee shall assume the
still outstanding Station Agreements that were assigned to Broker pursuant to
Section 12 hereof and (iii) Broker shall assign to Licensee any new contracts
entered into by Broker relating to the Stations that Licensee expressly agrees
to assume. Notwithstanding anything in the foregoing to the contrary,
termination shall not extinguish any rights of either party as may be provided
by Section 15 hereof.
17. Broker Termination Option. Broker may elect to terminate
this Agreement at any time during the term hereof in the event that Licensee
preempts or substitutes other programming for that supplied by the Broker during
ten (10) percent or more of the total hours of operation of the Stations during
any calendar month. In the event Broker elects to terminate this Agreement
pursuant to this provision, it shall give Licensee notice of such election at
least ten (10) days prior to the termination date. Upon termination, neither
party shall have any further liability to the other except as may be provided by
Sections 15 and 16.4 hereof.
18. Responsive Programming. Broker and Licensee mutually
acknowledge their interest in ensuring that the Stations serve the needs and
interests of the residents of the Stations' community of license and service
areas and agree to cooperate in doing so. Licensee shall, on a regular basis,
assess the issues of concern to residents of the Stations' community of license
and service areas and address those issues in its public service programming.
Licensee shall describe those issues and responsive programming and place
issues/programs lists in the Stations' public inspection file as required by FCC
rules. Licensee may request, and Broker shall provide, information concerning
such of Broker's Programming that is responsive to community issues so as to
assist Licensee in the satisfaction of its public service programming
obligations. Broker shall also provide to Licensee upon request such other
information necessary to enable Licensee to prepare records and reports required
by the FCC or other local, state or federal government entities.
19. Time Brokerage Challenge. If this Agreement is challenged
in whole or in part at or by a governmental authority or is challenged in whole
or in part in a judicial forum, counsel for the Licensee and counsel for the
Broker shall jointly defend this Agreement and the parties' performance
thereunder throughout all such proceedings. If this Agreement is declared
invalid or illegal in whole or in substantial part by a ruling, order or decree
of a governmental authority or court, and such ruling, order or decree has
become effective, then the parties shall endeavor in good faith to reform the
Agreement as necessary. If the parties are unable to reform this Agreement
within thirty (30) days of the effective date of such ruling, order or decree,
then this Agreement shall terminate, and all sums owning to Licensee shall be
paid and neither party shall have any further liability to the other except as
may be provided by Sections 15 and 16.4 hereof.
20. Additional Representations, Warranties and Covenants.
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<PAGE>
20.1 Mutual Representations, Warranties and
Covenants. Both Licensee and Broker represent that they are legally qualified,
empowered, and able to enter into this Agreement, and that the execution,
delivery and performance hereof shall not constitute a breach or violation of
any agreement, contract or other obligation to which either party is subject or
by which it is bound.
20.2 Additional Licensee Representations, Warranties
and Covenants. Licensee makes the following further representations, warranties
and covenants:
20.2.1 Authorizations. During the term of
this Agreement, Licensee shall own and hold all licenses and other permits and
authorizations necessary for the operation of the Stations as presently
conducted (including licenses, permits and authorizations issued by the FCC),
and such licenses, permits and authorizations shall be in full force and effect
for the entire Term hereunder, unimpaired by any acts or omissions of Licensee,
its principals, employees or agents.
20.2.2 Payment of Obligations. Licensee
shall not incur any debt, obligation or liability without the prior written
consent of Broker if such undertaking would adversely affect Licensee's
performance hereunder or the business and operations of the Broker permitted
hereby. Subject to the provisions of Sections 2 and 11 hereof, Licensee shall
pay in a timely fashion all of its debts, assessments and obligations, including
without limitation tax liabilities and payments in each case attributable to the
operations of the Stations, as they come due during the Term of this Agreement.
20.2.3 Broadcast Obligations. Licensee has
no agreement, contract, commitment or understanding to broadcast on the Stations
on or after the Effective Date, any programs or commercial matter other than the
Stations Agreements. Licensee shall not incur any other programming obligations
without the prior written consent of Broker.
20.2.4 Licensee Control. Licensee hereby
verifies that for the term of this Agreement it shall maintain ultimate control
over the Stations' facilities, including specifically control over the Stations'
finances, personnel and programming, and nothing herein shall be interpreted as
depriving Licensee of the power or right of such ultimate control.
20.2.5 Insurance. Licensee shall maintain in
full force and effect (at Broker's expense) throughout the term of this
Agreement insurance with responsible and reputable insurance companies or
associations covering such risks (including fire and other risks insured against
by extended coverage, public liability insurance, insurance for claims against
personal injury or death or property damage and such other insurance as may be
applicable) and in such amounts and on such terms as is conventionally carried
by broadcasters operating radio stations with facilities in the area comparable
to those of the Stations. Broker shall be listed as an additional insured on
such insurance policies. Any insurance proceeds received by a Licensee in
respect of damaged property shall be used to repair or replace such property so
that the operations of the Stations conform with this Agreement. Licensee shall
present to Broker prior to the execution of this Agreement certificates of
insurance or binders for such insurance policies. If requested by Broker,
Licensee shall maintain, at Broker's expense, business interruption insurance
for Broker's benefit.
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<PAGE>
20.2.6 Compliance with Law. Licensee
covenants that, throughout the term of this Agreement, Licensee shall comply
with all laws and regulations applicable in the conduct of Licensee's business
and Licensee acknowledges that Broker has not urged, counseled, or advised the
use of any unfair business practice.
20.3 Additional Broker Representations, Warranties
and Covenants.
20.3.1 Compliance with 47
C.F.R.ss.73.3555(a). Broker hereby verifies that execution and performance of
this Agreement complies with the Commission's restrictions on local radio
ownership set out in Section 73.3555(a) of the FCC Rules.
20.3.2 Compliance with Applicable Law.
Broker covenants that its performance of its obligations under this Agreement
and its furnishing of Programming shall be in compliance with, and shall not
violate, any applicable laws or any applicable rules, regulations, or orders of
the FCC or any other governmental agency and Broker acknowledges that Licensee
has not urged, counseled, or advised the use of any unfair business practice.
20.3.3 Handling of Complaints. Broker shall
promptly advise Licensee of any public or FCC complaint or inquiry that Broker
receives concerning the Programming on the Stations and shall cooperate with
Licensee and take all actions as may be reasonably requested by Licensee in
responding to any such complaint or inquiry.
20.3.4 Copyright and Licensing. Broker
represents and warrants to Licensee that Broker has and shall have throughout
the term of this Agreement the full authority to broadcast the Programming on
the Stations and that Broker shall not broadcast on the Stations any material in
violation of the Copyright Act. All music supplied by Broker shall be: (i)
licensed by ASCAP, SESAC or BMI; (ii) in the public domain; or (iii) cleared at
the source by Broker.
20.3.5 Information For FCC Reports. Upon
request by Licensee, Broker shall provide in a timely manner any such
information in its possession which shall enable Licensee to prepare, file or
maintain the records and reports required by the FCC.
20.3.6 Payola/Plugola. Broker covenants that
it shall not accept, and shall instruct its employees not to 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, materials, supplies or other merchandise, services or labor, whether or
not pursuant to written contracts or agreements between Broker and merchants or
advertisers, unless the payer is identified in the program as having paid for or
furnished such consideration, in accordance with FCC requirements. Broker agrees
to annually, or more frequently at the request of Licensee, execute and provide
Licensee with an affidavit regarding payola/plugola compliance.
21. Intellectual Property. Effective as of the Effective Date,
Licensee licenses to Broker the exclusive right to use (or, to the extent
Licensee does not hold exclusive rights, the non-exclusive right to use) all
intellectual property owned by or licensed to Licensee and used
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<PAGE>
solely in the operation of the Stations (including, but not limited to, logos,
jingles, promotional materials, call signs, goodwill, trademarks, service marks,
slogans, tradenames, copyrights and any applications and registrations therefor)
(the "IP License"). In the event of termination of this Agreement, the IP
License shall terminate.
22. Subcarrier Rights. Licensee and Broker acknowledge and
agree that any subsidiary communications services transmitted on a subcarrier
within the FM baseband signal of any of the Stations ("Subcarrier"), and any
uses of the Subcarrier authorized by the FCC ("Subcarrier Uses"), are subject to
the terms and conditions of this Agreement. Licensee hereby agrees (a) to apply,
at Broker's expense, for any additional authorization from the FCC or any other
governmental agency or entity that may be necessary in order to make use of any
Subcarrier Uses, and (b) that Broker has the sole and exclusive right, subject
to the terms and conditions hereof, to make use of any Subcarrier Uses and
collect the revenues therefrom. Broker hereby agrees to reimburse Licensee for
Licensee's reasonable expenses incurred in carrying out Licensee's obligations
pursuant to this Section 22, including reasonable attorneys and engineering fees
and expenses.
23. Publicity. Licensee and Broker shall not issue any press
release or otherwise make any public statement with respect to the transactions
contemplated herein except as may be required by law or regulation or as agreed
to by Licensee and Broker.
24. No Waiver; Remedies Cumulative. No failure or delay on the
part of Licensee or Broker in exercising any right or power hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of Licensee and
Broker herein provided are cumulative and are not exclusive of any right or
remedies which it may otherwise have.
25. Construction. This Agreement shall be construed in
accordance with the laws of the State of Ohio, without giving effect to the
choice of law provisions thereunder, and the obligations of the parties hereto
are subject to all federal, state or municipal laws or regulations now or
hereafter in force and to the regulations of the FCC and all other governmental
bodies or authorities presently or hereafter to be constituted.
26. Headings. The headings contained in this Agreement are
included for convenience only and no such heading shall in any way alter the
meaning of any provision.
27. Benefit and Assignment. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Other than assignment to a sole parent, a
wholly-owned subsidiary, or a sister company with a common parent, if such
entity is authorized by the FCC to be the Licensee of the Stations, Licensee may
not voluntarily or involuntarily assign its interest under this Agreement
without the prior written consent of Broker. Broker shall have the right to
assign and/or delegate all or any portion of its rights and obligations under
this Agreement, including without limitation assignments as collateral, provided
that no such assignment and/or delegation shall relieve Broker of its
obligations hereunder in the event that its assignee fails to perform the
obligations
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<PAGE>
delegated. In the event that Broker finds it necessary or is required to provide
to a third party a collateral assignment of Broker's interest in this Agreement
and/or any related documents, Licensee shall cooperate with Broker and any third
party requesting such assignment including but not limited to Licensee signing a
consent and acknowledgment of such assignment. All covenants, agreements,
statements, representations, warranties and indemnities in this Agreement by and
on behalf of any of the parties hereto shall bind and inure to the benefit of
their respective successors and permitted assigns of the parties hereto.
28. Notices. All notices, demands, requests, or other
communications which may be or are required to be given or made by any party to
any other party pursuant to this Agreement shall be in writing and shall be hand
delivered, mailed by first-class registered or certified mail, return receipt
requested, postage prepaid, delivered by overnight air courier, or transmitted
by telegram, telex, or facsimile transmission addressed in accordance with the
listing set forth in Attachment D hereto or such other address as the addressee
may indicate by written notice to the other parties. Each notice, demand,
request, or communication which shall be given or made in the manner described
above shall be deemed sufficiently given or made for all purposes at such time
as it is delivered to the addressee (with the return receipt, the delivery
receipt, the affidavit of messenger or (with respect to a telex or facsimile)
the answerback being deemed conclusive but not exclusive evidence of such
delivery) or at such time as delivery is refused by the addressee upon
presentation.
29. Entire Agreement. This Agreement and the Exchange
Agreement and related documents embody the entire agreement between the parties
and there are no other agreements, representations, warranties, or
understandings, oral or written, between them with respect to the subject matter
hereof. No alterations, modification or change of this Agreement shall be valid
unless made in writing, and signed by like written instrument. No waiver of any
provision hereof shall be valid unless in writing and signed by the party
adversely affected by the waiver, and then such waiver shall be effective only
in the specified instance and for the purpose for which given.
30. Severability. In the event that any of the provisions
contained in this Agreement is held to be invalid, illegal or unenforceable,
such event shall not affect any other provision hereof, and this Agreement shall
be construed as if such invalid, illegal or unenforceable provisions had not
been contained herein.
31. Counterpart Signatures. This Agreement may be signed in
one or more counterparts, each of which shall be deemed a duplicate original,
binding on the parties hereto notwithstanding that the parties are not signatory
to the original or the same counterpart. This Agreement shall be binding and
effective as of the date on which the executed counterparts are exchanged by the
parties.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
AMERICAN RADIO SYSTEMS
LICENSE CORP.
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<PAGE>
By:_______________________________
Title:____________________________
AMERICAN RADIO SYSTEMS
CORPORATION
By:_______________________________
Title:____________________________
CITICASTERS CO.
By:_______________________________
Title:____________________________
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AGREEMENT OF SALE
THIS AGREEMENT, made and entered into this 14th day of February by and
between AMERICAN RADIO SYSTEMS CORPORATION., a Delaware Corporation and AMERICAN
RADIO SYSTEMS LICENSE CORP., a Delaware Corporation ("License Corp.")
(hereinafter referred to as "Seller") and KlMITRON, INC., a New York Corporation
(hereinafter referrer to as "Buyer").
W I N E S S E T H:
WHEREAS, Seller is the owner of and its wholly owned subsidiary,
License Corp., is licensee of Radio Station WCMF-AM, Rochester, New York,
(hereinafter sometimes referred to as the "Station"); and
WHEREAS, Seller desires to sell and Buyer desires to purchase certain
of the real and personal property and assets, both tangible and intangible, of
the Seller used in the operation of the Station, and to obtain assignments of
the licenses, authorizations and permits issued by the Federal Communications
Commission (hereinafter referred to as the "FCC") for the operation of the
Station and of any other licenses, permits or authorizations issued by any
regulatory agency in connection therewith; and
WHEREAS, the licenses issued by the FCC for the operation of the
Station may not be assigned by the Seller to the Buyer without the prior written
consent of the FCC;
NOW THEREFORE, in consideration of the aforesaid and of the mutual
promises and covenants hereinafter to be mutually kept and performed by the
parties hereto, as well as for other good and valuable consideration, the
parties hereto, intending to be legally bound hereby, do hereby agree as
follows:
<PAGE>
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1. ASSETS TO BE CONVEYED.
Subject to the prior approval of the FCC as provided herein, Seller
agrees to sell, assign, transfer, convey and deliver to Buyer and Buyer agrees
to purchase, accept and receive from the Seller on the Closing Date as
hereinafter defined all of Sellers right, title and interest of, in and to the
following listed real property and tangible and intangible personal property and
assets of the Station (Station Assets or Assets):
A. The licenses, authorizations and permits issued by the FCC for the
exclusive use of the Station and used, useful or intended for use in connection
with or related to the Station and the operation thereof, including but not
limited to, those listed on Exhibit "A" attached hereto and made part hereof
free and closer of any and all liens, claims, security interests and/or
encumbrances of any nature or kind whatsoever.
B. The tangible personal property and assets of Station listed on
Exhibit "B" attached hereto and made part hereof, together with any and all
replacements thereof or additions or accessions thereto of similar or like
quality made in the usual and ordinary course of Station's business between the
date hereof and the Closing Date free and clear of any and all liens, claims,
security interests, and/or encumbrances of any nature or kind whatsoever.
C. All that certain real property with the buildings, towers, ground
systems and other improvements thereon erected situate at 7090 Ridge Road,
Clarkson, New York, comprised of sixty (60) +/- acres, and described in Exhibit
"C" attached hereto and made part hereof, together with all and singular the
rights, appurtenances and easements pertaining thereto including any right,
title and interest of Seller in and to adjacent streets, alleys, or rights of
way, (the Real Property), free and clear of any and all liens, mortgages,
easements, encumbrances, claims, and deeds of trust of any nature or kind
whatsoever except as hereafter provided.
<PAGE>
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D. All files, records, logs, and program materials required by the FCC
to be maintained by Seller or on file with the FCC that relate to the operation
of the Station and all other files and records of the Station on the Closing
Date relating exclusively to the business and operation of the Station.
E. All other licenses, permits or authorizations issued by any
regulatory agency which are used, useful, or intended for use in the operation
of the Station.
F. Anything not listed above is not part of the sale. Specifically the
assets of Seller being sold do not include (i) cash on hand or in bank and notes
receivable or accounts receivable (billed or unbilled) (ii) the call letters
"WCMF", or (iii) any item or tangible personal property owned by Seller not
listed on Exhibit "B", whether or not any such property is used or useful in the
operation of the Station, which assets are to remain the property of Seller.
Buyer assumes no liability or obligations for Station personnel or employment or
benefits contracts, or any related contracts, obligations or leases with respect
thereto. There are no other contracts, leases or other agreements to be sold,
assigned or purchased hereunder and Buyer assumes no liability for same or for
any debt or obligation of Seller which may have accumulated or accrued on any
contract, leases or agreements which are specifically excluded herein and are
not part of this sale.
2. PURCHASE PRICE.
The purchase price for the sale and settlement of the assets hereunder
payable from Buyer to Seller is the sum of SIX HUNDRED FIFTY THOUSAND
($650,000.00) DOLLARS payable, apportioned and allocated as follows:
A. The purchase price allocation for the Station Assets purchased is in
accordance with Exhibit "D" attached hereto and made a part hereof
B. Buyer shall pay for the above assets in the following manner:
<PAGE>
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<TABLE>
<S> <C> <C>
(1) Upon execution of this Agreement of Sale, $ 32,500.00
an earnest money deposit of:
(2) Upon filing an assignment application for the
Station with the FCC an additional earnest
money deposit of: $ 32,500.00
(3) At Closing the balance of: $585,000.00
-----------
TOTAL $650,000.00
</TABLE>
C. All payments by Buyer to Seller shall be made either by cash,
certified check, bank check, bank check, cashier's check, or by wire transfer of
immediately available funds.
D. All earnest money deposits shall be held in a federally insured
interest bearing escrow account titled in the names of Seller and Buyer at Union
National Bank & Trust Co., Souderton, PA, which earnest money deposits shall be
retained in escrow until Closing hereunder or termination of this Agreement as
provided herein.
(1) In the event of Closing under this Agreement all interest
earned shall be returned to Buyer and all principal shall be paid to Seller.
(2) In the event of a permitted termination of this Agreement
by the Buyer or the Seller (except due to a material breach of this Agreement by
Buyer) as provided herein then the earnest money deposited with all accrued
interest shall be returned to the Buyer and this Agreement shall then be
declared null and void and neither party shall have any further liability to or
action against the other party hereto except as may be hereinafter provided.
(3) In the event of a material breach of this Agreement by the
Buyer then the earnest money deposited plus accrued interest shall be paid to
the Seller as liquidated damages but only if Seller has not materially breached
this Agreement, and this Agreement shall then be declared null and void and
Seller shall have no further claim or action against the Buyer.
<PAGE>
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In the event of a material breach of this Agreement by the Seller, Buyer shall
at Buyer's option have the right to specific performance in addition to any
other available legal and/or equitable remedies.
3. SELLERS REPRESENTATIONS, COVENANTS AND WARRANTIES.
Seller warrants, covenants and represents to Buyer that now and on the
Closing Date hereunder:
A. Seller or License Corp. is and will be the holder of the
authorizations, licenses and permits issued by the FCC and any other regulatory
agency, if any, for the operation of Station and the same are in full force and
effect and unimpaired by any acts or omissions of Seller, or Sellers employees
or agents or for any other reason.
B. The tower, transmitting and Studio equipment and all other tangible
personal property included as a Station Asset shall be in good operating
condition and shall permit the Station to operate in accordance with the
licenses and permits and the rules and regulations of the FCC. The transmission
facilities of Station, including but not limited to, studios, transmitters,
antennae, control systems, and any and all other such assets normal and
essential to broadcasting, and included in the Station assets are in material
compliance with all applicable licenses, specifications, requirements, rules and
regulations of the FCC, FAA, and any other governmental regulatory agency which
holds authority over the operation of the Station.
C. There will be no more than normal wear and tear of the Station
Assets and any replacements thereof and additions or accessions thereto, being
sold hereunder and used, useful of intended for use in connection with or
related to the Station and the operation thereof. All the aforesaid, and the
Tower site and the use thereof as a radio station, are permitted by and in
material conformity with all applicable building, zoning, Wetlands, or other
laws, ordinances, rules and/or regulations and Seller has not received any
notices of violations of same.
<PAGE>
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D. Seller is and will be at Closing the owner of the Real Property, the
Station Assets and any replacements thereof and additions of accessions thereto
used, use for intended for use in the operation of Station free and clear of any
all liens, claims, security interests, mortgages, deeds of trust, restrictions,
liabilities and encumbrances of any nature or kind whatsoever as hereinbefore
set forth, and shall be lawfully possessed of good, indefeasible and marketable
title thereto.
E. Seller is and will be at Closing fully empowered and authorized
under all applicable laws to execute, perform, deliver and carry out this
agreement according to its terms. Seller is a corporation duly organized,
validly existing and in good standing in the State of Delaware and is duly
qualified to conduct business in the State of New York.
F. Subject to the approval of the Department of Justice pursuant to the
Final Judgment filed January 31, 1997 in United States of America and the State
of New York v. American Radio Systems Corporation. the Lincoln Group, L.P. and
Great Lakes Wireless Talking Machine LLC; United States District Court for the
District of Columbia, No. 96 2459 (the "Final Judgment"), the execution and
performance of this Agreement shall and does not connect with or cause a breach
of any other Agreement, understanding, commitment or arrangement to which the
Seller is a party. G. All information and documents provided or to be provided
to Buyer by Seller and upon which Buyer has relied is/are substantially true and
correct. H. No consent or approval of any third party other than the FCC and the
Department of Justice under the Final Judgment is required before Seller can
perform as required hereunder. I. Upon consummation of the transaction
contemplated herein, the continued operation of the Station by Buyer, in the
same manner as now operated by Seller, will not violate
<PAGE>
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any laws, ordinances, rules, regulations or order which are in effect at the
time of Closing and Seller has not violated same.
J. Seller knows of no patent, latent or invisible defects in any of the
property to be sold and transferred hereunder.
K. No proceedings are pending or threatened which may result in the
revocation, modification, non-renewal, or suspension of any licenses,
authorizations or permits issued by the FCC or others necessary for the
operation of the Station.
L. Seller shall maintain adequate and sufficient public liability and
fire and property damage insurance on all property and assets being sold and
transferred hereunder in full force and effect until Closing.
M. It is understood and agreed by the parties hereto that Buyer will
hire new employees to operate the Station commencing on the Closing Date and,
therefore, Buyer assumes no obligations whatsoever for current Station
employees. No union or other collective bargaining unit represents the employees
of Seller at the Station and there are no employment contracts or any other
agreements or understandings as to employment at Station with such employees and
there are no agreements of any nature which extend beyond thirty (30) days.
Buyer assumes no obligations or liabilities under any such agreements. When the
FCC grants its full and final consent to the assignment to the licenses,
authorizations and permits of the Station, as hereinafter defined, Seller shall
give all employees of Station notice of termination of employment unless Seller
intends to continue employing such person in other operations owned by Seller.
N. Notwithstanding any other provision of this Agreement, Buyer shall
not assume any responsibility or liability for any Pension, Welfare, Health,
Accident, Life Insurance or other benefit plans for Station's employees, funded
or unfunded, if any such exist.
<PAGE>
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O. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
all necessary action on the part of Seller and this Agreement is a valid and
binding obligation of Seller.
P. To the best or Seller's knowledge, it has duly and timely filed all
required federal, state and local tax returns and paid all taxes, interest and
penalties due relating to Sellers interest in the assets being transferred, its
employees, or its operation of the Station, or has sought and obtained
extensions of time to file such and pay same within the time provided therefor.
Between the date hereof and the Closing Date, Seller shall exercise its best
efforts to duly and timely file all such required return and pay all such taxes,
interest and penalties, or to obtain such extensions within the time provided
therefor. Seller shall indemnify, defend, save and hold harmless Buyer from and
against all claims, obligations and liabilities for all taxes, interest and
penalties attributable lo Sellers business, employees, and/or ownership or
operation of the Station and the assets being transferred.
Q. The environmental condition of the Real Properly and the buildings
and improvements thereon erected and being sold hereunder as to "hazardous
and/or Toxic Waste or Substances" or "Pollutants" (including without limitation,
Hydrocarbons, PCB's, Petroleum and the like) as such terms or similar terms are
defined under the laws, rules, regulations or ordinances of the United States,
any State, and/or any local governmental authority is as stated in the Phase I
Environmental Site Assessment ("Assessment") dated November 27, 1996 prepared by
Passero Associates, P.C., a copy of which is attached hereto as Exhibit "E". To
the best of Sellers knowledge there has been no change in such condition since
the date of said Assessment.
R. As to the Real Property, and/or the buildings and Improvements
thereon are being sold hereunder Seller has not received any notice, summons,
citation, directive, letter or other communication, written or oral, from the
United States, any State Environmental Protection
<PAGE>
-9-
Agencies or similar such agencies or anyone else concerning any intentional or
unintentional action or omission on Sellers or any prior owner's or present or
prior occupants part which resulted in the releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping or disposing or the like of such "Hazardous and/or Toxic Waste
or Substances" or "Pollutants" into the waters, into the air, or onto the land
which may or may not have resulted in damage to the lands, waters, fish,
shellfish, wildlife, air and/or other resources owned, managed, held in trust or
otherwise controlled by the United States, any State, Seller, or others.
S. Title to the Station Assets shall be as set forth in this Agreement.
T. The Sellers portion of the assignment application to be filed with
the FCC as of tile date of said filing shall be in a form acceptable for filing
under the FCC rules and sufficient for the FCC's consent as hereafter defined.
U. There is access to the Real Property by right of ingress and egress,
by easement, directly from a public or private road, or otherwise.
V. The Station shall continue to be operated as an ongoing business the
same as it is presently being operated.
W. The Real Property being sold and conveyed hereunder is all of the
real property owned by Seller at the location where the Station is situated and
there is no other real property and the Real Property hereunder is not a
subdivision of and/or from a larger tract of land.
X. To the best of Sellers knowledge, the structural components of all
buildings and/or other improvements are sound and the mechanical systems are in
good operating condition.
Seller's warranties, covenants and representations shall survive the
Closing Date.
4. BUYER'S REPRESENTATIONS, COVENANTS AND WARRANTIES.
<PAGE>
-10-
Buyer warrants, covenants and represents to Seller that now and on the
Closing Date:
A. Buyer knows of no reason why the FCC or any other regulatory
commission would not approve an application for the assignment of licenses,
permits and/or authorizations to Buyer.
B. Buyer has all the necessary powers to execute, deliver and perform
this Agreement and to consummate the transaction provided for herein and to take
such other steps as are necessary for the performance of this Agreement and the
execution, delivery or performance of this Agreement by Buyer will not conflict
with or constitute a default under any other agreement or commitment that is
binding upon Buyer.
C. Buyer at time of Closing and thereafter will be financially
qualified to undertake the performance of the obligations set forth herein and
to meet the FCC's financial qualifications requirements for this transaction.
D. The Buyer's portion of the assignment application to be filed with
the FCC as of the date of said filing shall be in a form acceptable for filing
under the FCC rules and sufficient for the FCC's consent as hereafter defined.
E. Buyer is duly organized, validly existing and in good standing in
all jurisdictions wherein Buyer is incorporated or conducts business, and is, or
shall be at Closing qualified to conduct business in the State of New York.
Buyer's warranties, covenants and representations shall survive the
Closing Date.
5. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER.
The obligations of Buyer to consummate this Agreement are subject to
and conditioned and contingent upon the satisfaction on or prior to the Closing
Date of each of the following conditions by Seller:
<PAGE>
-11-
A. All representations, covenants and warranties of Seller contained in
this Agreement shall be true and correct and in all material respects as of the
date when made and as of the Closing Date.
B. At the Closing Seller shall deliver or cause to be delivered to
Buyer all Closing documents required to be delivered by Seller and all assets,
real, personal, fixed, tangible and intangible to be sold hereunder.
C. All the terms, covenants and conditions to be complied with or
performed by Seller on or before the Closing Date shall have been duly complied
with and performed and all other contingencies herein shall have been met.
D. On the Closing Date Seller will be the owner and holder of all
licenses, authorizations and permits covering the Station to the extent that
same can be owned or held by Station under the Communications Act of 1934 as
amended and same shall be in full force and effect.
E. The FCC shall have granted its full and final consent to the
assignment of licenses, permits and authorizations as contemplated herein and
all other third party consents shall have been obtained, if required.
F. Seller shall have afforded counsel, accountants, engineers, and
other representatives of the Buyer free access during normal business hours upon
reasonable notice to Seller's buildings, offices, studios, equipment,
agreements, records, files and books of accounts, furnish Buyer with all
information, including all tax information, concerning Seller' affairs as Buyer
may reasonably request, so far as such access, information, and materials
pertain to the operation of, assets of, and authorizations pertaining solely to
the Station being conveyed pursuant to this Agreement, and give Buyer a power of
attorney if requested and not otherwise made available by Seller, so that it may
examine all instruments, documents, reports,
<PAGE>
-12-
applications, responses or information, confidential or otherwise, filed with
the FCC for the Station under the FCC's rules, or otherwise, by the Seller; and
permit Buyer's representatives to make extracts from and on request furnish to
Buyer a copy of any and all of Seller's books or accounts, records and files and
the like, so far as they pertain to the Station.
G. There shall not be any proceeding threatened or pending to enjoin
the Closing and there shall not be any judgment or order that would prevent or
make unlawful the Closing.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER.
The obligations of Seller to consummate this Agreement are subject to
and conditioned and contingent upon the satisfaction on or prior to the Closing
Date of each of the following conditions by Buyer.
A. The representations, covenants and warranties of Buyer contained in
this Agreement shall be true and correct in all material respects as of the date
when made and as of the Closing Date.
B. All of the terms, covenants and conditions to be complied with or
performed by Buyer on or before the Closing Date shall have been duly complied
with and performed and all other contingencies herein shall have been met.
C. Buyer shall deliver to Seller on the Closing Date all Closing
documents required to be delivered by Buyer pursuant to this Agreement.
D. The FCC shall have granted its full and final consent to the
assignment of the licenses, permits and authorizations contemplated herein.
E. Payment of the purchase price by Buyer.
F. There shall not be any proceeding threatened or pending to enjoin
the Closing and there shall not be any judgment or order that would prevent or
make unlawful the Closing.
<PAGE>
-13-
G. The Buyer shall have received a copy of a change of call sign notice
from the FCC effective no later than five (5) days following the Closing Date.
7. TITLE TO THE REAL PROPERTY AND COSTS.
The Real Property shall be conveyed free and clear of any and all
liens, mortgages, deeds of trust, claims, encumbrances and easements of any
nature or kind whatsoever, excepting however the following:
Existing building restrictions, ordinances, easements of record and of
roads, privileges or rights of public service companies, if any, otherwise the
title to the aforesaid described Real Property shall be good and marketable and
such as will be insured by a reputable title insurance company at the regular
rates. In the event Seller is unable to give a good and marketable title and
such as will be insured by a reputable title insurance company, subject as
aforesaid, Buyer shall have the option of taking such title as the Seller can
give with an abatement of the purchase price or of being repaid all deposit
monies with accrued interest paid by Buyer. In the latter event there shall be
no further liability or obligation on either of the parties hereto and this
Agreement shall become null and void.
The Seller shall obtain and pay for the cost of the following with
respect to all Station Assets to be sold hereunder:
(1) Fees for a title insurance from a title insurance
company chosen by Buyer and/or fees for cancellation
of same:
(2) State and local UCC search;
(3) Any survey or surveys that may be required by the
title insurance company, or the abstracting attorney.
8. INDEMNITY BY SELLER
<PAGE>
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A. Seller hereby agrees to indemnify, defend, save and hold Buyer
harmless with respect to any and all claims, losses, obligations, liabilities,
costs and expenses, including reasonable counsel fees and/or litigation costs,
threatened, suffered, incurred or sustained by Buyer by reason of any material
misrepresentation by Seller, or any material breach by Seller of this Agreement
or of any of Seller's warranties, covenants or representations contained in this
Agreement, or arising from or by reason of Seller's ownership or operation of
the Station prior to the Closing Date hereunder, or out of any material breach
by Seller of any agreements which might be assigned to Buyer hereunder because
of events occurring prior to the Closing Date hereunder. This Subparagraph 7A
shall survive the Closing.
B. In the event Seller breached or breaches any of the warranties,
covenants or representations to "Hazardous and/or Toxic Waste or Substances", or
"Pollutants" set forth in Paragraph 3 Q and R, then such indemnification,
defense and hold harmless provision from Seller to Buyer set forth in
Subparagraph 7A above shall also include without limitation any and all fines,
damages, penalties, and interest thereon; clean-up, removal, remedial response
or oversight costs; contributions to any Superfund and the like; all liabilities
or natural resource damages, or costs, or settlements amounts of any nature or
kind and the cost of complying with any consent decree under federal, state or
local law, rule, regulation, order or ordinance; the diminution in value of the
Real Property and the cost of replacement equipment and lost business resulting
from the Station going silent to correct the situation; and legal, accounting,
consulting, engineering and other costs related to the aforesaid which are
threatened, suffered, incurred or sustained by Buyer. If such breach should
occur before Closing Buyer shall have the option of requiring Seller to
immediately remedy the breach at Seller's sole cost prior to Closing or, of
escrowing sufficient funds from the Purchase Price to pay for the cost of any of
the above, or of declaring this Agreement null and void and in the latter event
all deposit money with accrued
<PAGE>
-15-
interest shall be returned to the Buyer and neither party shall have any further
obligation or liability to the other. This Subparagraph 7B shall survive
Closing.
9. INDEMNITY BY BUYER.
A. Buyer hereby agrees to indemnify, defend, save and hold Seller
harmless with respect to any claims, losses, obligations, liabilities, costs and
expenses, including reasonable counsel fees, threatened, suffered, incurred or
sustained by Seller by reason of any material misrepresentation by Buyer, or any
material breach by Buyer of this Agreement or of any of Buyer's warranties,
covenants or representations contained in this Agreement, or arising from or by
reason of Buyer's ownership or operation of the Station subsequent to the
Closing Date hereunder. This paragraph 9A shall survive Closing.
10. RISK OF LOSS AND ASSESSMENTS.
The risk of loss or damage to any of the Assets to be transferred
hereunder shall be upon Seller at all times prior to the Closing Date. In the
event of such loss or damage, the proceeds of, or any claim for any loss payable
under, any insurance policy with respect thereto, shall go to the Seller and be
used to repair, replace or restore such lost or damaged assets. In the event
such loss or damage prevents the broadcast transmission by the Station in the
normal and usual manner, Seller shall give prompt written notice to the Buyer.
If Seller cannot restore the facilities so that normal and usual transmission
can be resumed before the Closing Date then the Closing Date shall be postponed
and the exact date and time of such postponed Closing shall be designated by the
Buyer upon five (5) days written notice to the Seller. In the event the
facilities cannot be restored within the effective period of the FCC's consent
then the parties shall join in an application or applications requesting the FCC
to extend the effective period of its consent for a period not to exceed 90
days. If the facilities have not been restored by the Closing Date or any
postponement thereof to a date within the effective period of the FCC's consent
then the
<PAGE>
-16-
Buyer shall have the option to terminate this Agreement without any further
obligation hereunder of either party and the deposit money with interest shall
be refunded to the Buyer and this Agreement shall be declared Null and Void.
Seller shall be responsible for any notice of improvements or
assessments respecting the real property received on or before the Closing Date.
Buyer shall be responsible for any such notice of improvements or assessments
received after the Closing Date if Buyer Closes hereunder.
11. PRESERVATION OF BOOKS AND RECORDS.
For a period of five (5) years after the Closing Date Seller shall
preserve and maintain the books and records not delivered to Buyer and Buyer
similarly shall preserve the books and records of Seller delivered to Buyer and
each party shall make such books and records available to the other party at all
reasonable times and permit the other party to make extracts from or copies of
all such records. 12. INSPECTION BY BUYER.
During the period from the date hereof to the Closing Date Buyer shall
have access during normal business hours and upon reasonable notice to the
Station's offices, studios, transmitter site and equipment, contracts, logs,
records and files and Seller shall furnish Buyer with all information concerning
the Stations' Assets and operations as Buyer may reasonably request. 13.
PRORATIONS AND ADJUSTMENT TO PURCHASE PRICE.
At the Closing, all Real Property and tangible and intangible personal
property taxes and assessments, rent, water, sewer and other utility charges, if
any, and any other lienable municipal services, if any, advertising rebates, and
any other prepaid items respecting the Assets to be sold hereunder, shall be
apportioned and allocated between the Buyer and the Seller as of the Closing
<PAGE>
-17-
Date, on the basis of the period of time to which such items or liabilities
apply. To the extent such items are not determinable at Closing, a final
settlement on such prorations shall be held, if possible, within thirty (30)
days after the Closing Date and an escrow account shall be established with
sufficient estimated funds from the Purchase Price to pay for Seller's portion
of such items once the amount due is determined and Seller shall pay any excess
for same if the escrow account is not sufficient.
If the Closing occurs before the tax rate is fixed for the then current
term, the apportionment of taxes at Closing shall be upon the basis of the tax
rate for the preceding year applied to the latest assessed valuation, provided,
however, that any and all rollback taxes, if any, shall be paid for by Seller.
It is understood and agreed that all transfer, sales, use, or other taxes, or
assessments or documentary stamps imposed by any governmental body or others on
the sale and/or transfer of the Assets herein, if any, shall be paid one-half
(1/2) by Buyer.
14. INSTRUMENTS OF CONVEYANCE AND TRANSFER - CLOSING DOCUMENTS.
A. At the Closing, Seller shall execute and deliver to Buyer the
following Closing documents to transfer and convey title to all Station Assets
being sold hereunder:
(1) Bill of sale, assignments of licenses, a warranty deed,
and a bulk sales affidavit in the forms attached hereto, all required consents,
and any other instruments or documents regarding the transfer of any and all
other assets which may reasonably be required in order to transfer, convey, sell
and assign all of the Assets herein.
(2) All records, logs, books and accounts, public files and
other data relating to the operation of the Station which Buyer may reasonably
request or which may be otherwise required by the terms of this Agreement.
<PAGE>
-18-
(3) Seller shall execute such other documents and do and
perform such other acts as Buyer shall reasonably request in order to place
Buyer in actual possession and operating control of the Station and all of the
Assets, and to consummate the transaction herein.
B. At the Closing, Buyer shall pay to Seller the purchase price as
aforesaid.
15. APPLICATION FOR COMMISSION APPROVAL.
Within fifteen (15) business days from the date of the first deposit of
earnest money Buyer and License Corp. shall join in applications to be filed
with the FCC requesting its written consent to the assignment of the licenses of
Station from Seller to Buyer and Seller and Buyer shall take all necessary steps
to the expeditious prosecution of such application or applications to a
favorable conclusion. Each party shall bear its own expense (including
attorney's fees) in connection with the preparation of the applicable sections
of said application and in connection with the prosecution of said application,
and Buyer and Seller agree to use their best efforts to file and process said
application as diligently as possible. The Commission filing and grant fees, if
any, will be paid one-half by Seller and one-half by Buyer. 16. TIME FOR
COMMISSION CONSENT.
In the event that the FCC does not grant its full and final consent to
the assignment of the licenses, authorizations and permits of the Stations,
within nine (9) months after the application requesting said approval has been
accepted for filing by the FCC, then either the Buyer or the Seller may give
written notice to the other party of the cancellation of this Agreement and upon
said cancellation all parties shall be relieved of all of their obligations and
duties under this Agreement and it shall be declared null land void and all
deposit money with accrued interest shall be returned to the Buyer.
For the purpose of this Agreement, a "full and final consent" shall
mean action by the FCC consenting to the assignments, as aforesaid, which is not
reversed, stayed, enjoined, set
<PAGE>
-19-
aside, annulled or suspended, and with respect to which action no timely request
for stay, petition for rehearing, or appeal or reconsideration by the Commission
on its own motion has expired.
17. CLOSING DATE AND PLACE.
The Closing Date under this Agreement shall be within five (5) business
days after the FCC has granted its full and final consent to the assignment of
the license, permits and authorizations. Unless otherwise agreed, Closing herein
shall take place at the time and in a manner mutually agreed to by the parties.
Possession of all of the Assets to be sold hereunder shall be delivered by
Seller to Buyer on the Closing Date. Time is of the essence of this Agreement.
18. CONTROL OF STATION.
This Agreement shall not be consummated until after the FCC has granted
its full and final consent. Until the Closing Date, the Buyer and Buyer's agents
shall not directly or indirectly control or attempt to control the operations of
the Station, but such control shall remain solely with the Seller. After the
Closing Date, the Seller and Seller's agents shall not directly or indirectly
control or attempt to control the operation of the Station, but such control
shall be solely with the Buyer.
19. REAL ESTATE AGENT OR BROKER'S FEES OR COMMISSIONS.
Seller and Buyer mutually represent and warrant the Blackburn and
Company, Alexandria, Virginia, its agents and employees, especially Mr. Bruce
Houston, is the only and exclusive broker in this transaction and its total
commission due as a result of this sale shall be paid for by the Seller herein
at Closing. The parties hereto represent, covenant and warrant to each other
that no other broker, finder, real estate agent or third party has had any part
in bringing about the transactions contemplated herein and that there are no
brokerage
<PAGE>
-20-
commissions, Realtor's commissions, finder's fees or claims of compensation due
or payable to any other person in connection with the transactions contemplated
herein. Each of the parties hereto agrees to infeminify, defend, save and hold
harmless the other party hereto from any and all claims, damages or expenses,
including reasonable attorneys fees, sustained, threatened or incurred for any
such brokerage commissions or Realtors commissions or finder's fees or third
parties fees arising from any breach of such warranty, representation and
covenant herein by the indemnifying party. This provision shall survive Closing.
20. ASSIGNMENT OR SALE.
This Agreement shall not be transferred or assigned without the prior
written consent of the parties hereto, however buyer has the absolute right to
assign this Agreement to a corporation or other business entity wholly owned by
Buyer or the present shareholders of Buyer without Seller's consent, provided
such assignment does not cause a delay of the Closing hereunder.
21. BENEFIT.
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective parties hereto and their successors and assigns.
22. APPLICABLE LAW.
This Agreement shall be constructed, interpreted, governed and enforced
in accordance with the laws of the State of New York.
23. WAIVER.
No waiver by any party of any breach hereunder or of any term, clause,
condition, or provision of this Agreement shall be deemed a waiver of any other
or subsequent breach, or other term, clause, condition or provision of this
Agreement.
24. OTHER DOCUMENTS.
<PAGE>
-21-
The parties hereto shall execute such other documents and shall perform
such other acts as may be necessary and/or required for the implementation and
consummation of this Agreement.
25. AMENDMENT
This Agreement cannot be altered, amended, changed, waived or modified
in any respect or in any particular unless the same shall be in writing and
signed by all of the parties hereto.
26. SEVERABILITY.
If any term, condition, clause or provision of this Agreement shall be
deemed to be void or invalid in law or otherwise then only that term, condition,
clause or provision shall be stricken from this Agreement as is held to be void
or invalid and in all other respects this Agreement shall be valid and in full
force and operation. 27. ENTIRE AGREEMEMT.
This Agreement contains and constitutes the entire agreement and
understanding between the parties hereto regarding the subject matter hereof and
there are no other covenants, conditions, promises, representations,
understandings or agreements either oral or written of any nature or kind
whatsoever other than those herein contained.
28. NOTICES.
Any written notice or other commmunication required or performed by any
provision of this Agreement shall be deemed to have been sufficiently given for
all purposes if personally delivered or sent by first class mail, or by fax or
by overnight delivery to the parties as follows:
Seller: American Radio Systems Corporation
116 Huntington Avenue
Boston, MA 02116
ATTENTION: Steven B. Dodge,
Chief Executive Officer
Fax #: (617) 375-7575
with copy to: Michael B. Mitson,
Vice-President and General Counsel
<PAGE>
-22-
American Radio Systems Corporation
116 Huntington Avenue
Boston, MA 02116
Telephone #: (617) 375-7500
Fax #: (617) 375-7575
Buyer: Kimtron, Inc.
Donald B. Crawford, President
P.O. Box 3003
Blue Bell, PA 19422-0735
Telephone#: 1-215-628-3500
Fax#: 1-215-628-0818
with copy to: Robert J. Edelmayer, Esquire
28 West Airy Street
Norristown, PA 19401
Telephone#: 1-610-277-3434
Fax#: 1-610-277-7238
29. SUITS.
In any action brought at law and/or in equity in order to enforce the
terms of this Agreement, or such party's rights herein, the successful party
shall be entitled to reimbursement from the other party hereto of all legal
costs and expenses (including attorneys fees) incurred as a result of such
action or actions.
30. GENERAL INTERPRETIVE RULES.
For purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires (1) the terms defined in this Agreement
have the meanings assigned to them in this Agreement and include the plural as
well as the singular and the use of any gender herein shall be deemed to include
the other genders; (2) references hereto to "Paragraphs", "Subparagraphs", and
other subdivisions and to "Exhibits" without reference to a document, are to
Exhibits to this Agreement; (3) reference to a subparagraph without further
reference to a Paragraph is a reference to such subparagraph contained in the
same Paragraph in which the reference appears and this rule shall also apply to
other subdivisions;
<PAGE>
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(4) "including" means "including but not limited to"; (5) the words "herein",
"hereof", "hereunder" and other words of similar import refer to this Agreement
as a whole and not to any particular provision; (6) the words "business day"
shall mean any day other than a Saturday, a Sunday or a day on which commercial
banks in New York City are required or authorized to close; and (7) 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.
31. COUNTERPARTS.
This Agreement may be executed in counterparts, and all counterparts so
executed shall collectively constitute one agreement, binding on all the parties
hereto, notwithstanding that all the parties may not be signatory to the
original or the same counterpart. Faxed signatures shall constitute original
signatures.
NOW IN WITNESS WHEREOF, the parties hereto have hereunto executed this
Agreement the day and year first above written.
SELLER: American Radio Systems Corporation
Attest: By: /s/Justin Benincasa
-------------------------------------
Justin Benincasa, Vice President
- ------------------------
Secretary
AMERICAN RADIO SYSTEMS
License Corp.
By: /s/Justin Benincasa
--------------------------------------
Justin Benincasa, Vice President
BUYER: Kimtron, Inc.
Attest: By:______________________________________
President
- -------------------------
Secretary
TIME BROKERAGE AGREEMENT
This Time Brokerage Agreement ("Agreement") is dated as of February 28,
1997, by and between Citicasters Co., an Ohio corporation ("Licensee"), and
American Radio Systems Corporation, a Delaware Corporation ("Broker").
WHEREAS, Licensee is the licensee of the radio station set forth on
Attachment A hereto (referred to herein as the "Station"); and
WHEREAS, Licensee, Broker and American Radio Systems License Corp., a
Delaware corporation, have entered into an Asset Exchange Agreement dated as of
December 23, 1996 (the "Exchange Agreement") for the exchange of certain assets
relating to the Station to Broker; and
WHEREAS, Licensee, while maintaining control over the Station's
finances, personnel matters and programming desires to accept and broadcast
programming supplied by Broker on the Station subject to the terms and
conditions set forth herein;
NOW, THEREFORE, for and in consideration of the mutual covenants herein
contained, the parties hereto have agreed and do agree as follows:
1. Air Time and Transmission Services. Licensee and Broker hereby agree
to commence operations pursuant to this Agreement on March 1, 1997 (the
"Effective Date"). Licensee agrees, beginning on the Effective Date, to
broadcast, or cause to be broadcast, on the Station, according to the terms
hereof, programming designated and provided by Broker (the "Programming").
2. Payments. Broker hereby agrees to pay Licensee the amounts specified
in Attachment B for the right, from and after the Effective Date, to broadcast
the Programming on the terms and conditions herein provided. Payments of the
Monthly Fee (as defined in Attachment B) are due and payable in full on the
first day of each calendar month for which such payment is intended to be
applied and shall be prorated for any partial calendar month at the beginning or
end of the term hereof. The failure of Licensee to demand or insist upon prompt
payment in accordance herewith shall not constitute a waiver of its right to do
so. Broker shall receive a payment credit for any Programming not broadcast by
either Station (a "Credit"), such Credit to be determined by multiplying the
monthly payment by the ratio of the amount of time preempted or not accepted to
the total number of hours of Programming each month.
<PAGE>
3. T erm. The term of this Agreement shall begin on the Effective Date
and end on the earliest of (i) the Closing Date, as defined in the Exchange
Agreement, or (ii) the date which is ten (10) days following any termination of
the Exchange Agreement in accordance with the terms thereof (such date
hereinafter referred to as the "Termination Date," and such period of time as
the "Term").
4. Programming. Broker shall furnish or cause to be furnished the
Programming, which shall be an entertainment format, and may include, without
limitation, news, promotions (including on-air giveaways), contests, syndicated
programs, barter programs, paid-for programs, locally-produced programs,
advertising commercial matter, including that in both program or spot
announcement forms, and public service information. On a regular basis, Licensee
shall air, or shall require Broker to air, on the Station programming on issues
of importance to the local community. All actions or activities of Broker under
this Agreement, and all Programming provided by Broker shall be in accordance
with (i) the Communications Act of 1934, as amended; (ii) Federal Communications
Commission (the "FCC") rules, requirements and policies, including, without
limitation, the FCC's rules on plugola/payola, lotteries, station
identification, minimum operating schedule, sponsorship identification,
political programming and political advertising rates; (iii) all applicable
federal, state and local regulations and policies; and (iv) generally accepted
quality standards consistent with Licensee's past practices. Broker agrees that,
if in the sole, good faith judgment of the Licensee or the Station's General
Manager, Broker does not comply with the standards of this paragraph, Licensee
may suspend or cancel any Programming not in compliance. The right to use the
Programming and to authorize its use in any manner and in any media whatsoever
shall be, and remain, vested solely in Broker, subject in all events to the
rights, if any, of others in such Programming.
5. Special Events. Licensee reserves the right in its discretion, and
without liability, to preempt, delay or delete any of the broadcasts of the
Programming and to substitute programming which in Licensee's judgment is of
greater local, regional or national importance. In all such cases, Licensee
shall use its best efforts to give Broker reasonable notice of its intention to
preempt such Programming, and, in the event of such preemption, Broker shall
receive a payment credit for the Programming so omitted consistent with the
intent and pursuant to the terms of Section 2 hereof.
6. Advertising and Programming Revenues. Broker shall retain all
advertising and other revenues, and all accounts receivable, with respect to
Programming broadcast during the Term, and relating to the Programming it
delivers to the Station for broadcast during the Term, including without
limitation, promotion-related revenues. Licensee and Broker each shall have the
right, at their own expense, to seek copyright royalty payments for their own
programming. Broker may sell advertising on the Station in combination with the
sale of advertising on other broadcasting stations of its choosing, subject to
compliance with applicable law.
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7. Station Facilities.
7.1 Station Facilities. Subject to the qualifications set forth in
this Agreement, throughout the term of this Agreement, Licensee shall make the
facilities of the Station available to Broker for operation and broadcast with
the maximum authorized facilities twenty-four (24) hours a day, seven (7) days a
week, except for downtime occasioned by either (i) emergency maintenance or (ii)
routine maintenance not to exceed two (2) hours each Sunday morning between the
hours of 12 Midnight and 5:00 a.m., and except for such programs and
announcements prepared by and put on the air by Licensee in order to meet local
needs and issues requirements, said programs and announcements not to exceed one
(1) hour each Sunday morning at a mutually agreed upon time between the hours of
5:00 a.m. and 7:00 a.m. Broker shall not be entitled to a Credit for Programming
not broadcast over the Station for periods specified in this Section 7 hereof.
To the extent practicable, any maintenance work affecting the operation of the
Station at full power shall be scheduled upon at least forty-eight (48) hours
prior notice with the agreement of Broker, such agreement not to be unreasonably
withheld.
8. Right of Access. Broker and Broker's employees or agents shall at
all times be afforded reasonable access to the Station in order to perform their
duties in connection with the production and transmission of the Programming
over the facilities of the Station. Broker shall have the right to install at
Licensee's and/or Broker's premises, and to maintain throughout the term of this
Agreement, at Broker's expense, any microwave studio/transmitter relay
equipment, telephone lines, transmitter remote control, monitoring devices or
any other equipment necessary for the proper transmission of the Programming on
the Station, and Licensee and Broker shall take all steps reasonably necessary
to prepare and file any applications with the FCC to effectuate such proper
transmission.
9. Force Majeure. Any failure or impairment of facilities or any delay
or interruption in broadcasting the Programming, or failure at any time to
furnish facilities, in whole or in part, for broadcasting, due to acts of God,
strikes, or threats thereof, force majeure, or due to causes beyond the control
of Licensee, shall not constitute a breach of this Agreement, and Licensee shall
not be liable to Broker, except to the extent of allowing in each such case an
appropriate Credit for Programming not broadcast by the Station based upon a pro
rata adjustment to amounts due as specified in Section 2 hereof calculated upon
the length of time during which the interruption or failure exists or continues.
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10. Licensee Control of Station. Notwithstanding anything to the
contrary in this Agreement, Licensee shall have full authority, control and
power over the operation of the Station during the period of this Agreement.
Licensee shall retain control, said control to be reasonably exercised, over the
policies, programming and operations of the Station, including, without
limitation, the right to decide whether to accept or reject any Programming or
advertisements, the right to preempt any Programming in order to broadcast a
program deemed by Licensee to be of greater national, regional, or local
interest, and the right to take any other actions necessary for compliance with
the laws of the United States; the laws of the relevant states; the rules,
regulations, and policies of the FCC (including without limitation the
prohibition on unauthorized transfers of control); and the rules, regulations
and policies of other federal governmental authorities, including without
limitation the Federal Trade Commission and the Department of Justice. Licensee
shall be responsible for ensuring that FCC requirements are met with respect to
ascertainment of the problems, needs and interests of the community, public
service programming, main studio staffing, maintenance of public inspection
files and the preparation of quarterly issues/programs lists. Broker shall, upon
request by Licensee, provide Licensee with information with respect to such of
Broker's programs which are responsive to the problems, needs and interests of
the community, so as to assist Licensee in the preparation of required quarterly
issues/programs lists, and shall provide upon request other information to
enable Licensee to prepare other records, reports and logs required by the FCC
or other local, state or federal governmental agencies. Whenever on the
Station's premises, all Broker personnel shall be subject to the supervision and
the direction of Licensee's designated personnel.
11. Responsibility for Employees and Expenses. Licensee shall employ
two full time employees at the main studio of the Station, one of whom shall be
a manager, both of whomshall report to and be accountable to Licensee, and who
shall be ultimately responsible for the day-to-day operation of the Station.
Licensee shall be directly responsible for paying the salaries, taxes, insurance
and related costs for such employees (the "Licensee Employee Expenses").
Licensee shall be responsible for paying directly (i) transmitter site
rent/mortgage for the Station; and (ii) transmitter site utilities for the
Station ("Licensee Transmitter Expenses"). Licensee shall be responsible for
paying directly all income taxes relating to Licensee's earnings from this
arrangement. Broker shall employ and be responsible for the salaries, taxes,
insurance and related costs for all personnel used in the production of the
Programming (including, without limitation, salespeople, traffic personnel,
administrative and programming staff). Excluding those expenses for which
Licensee is making direct payments as set forth in this Section 11, during the
Term, Broker shall be responsible for paying all other expenses reasonably and
directly related to the continued operation of the Station subject to the
covenants of the parties to this Agreement (the "Other Expenses"), and further
subject to the ultimate authority, control and power of Licensee.
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11.1 Employee Matters. The parties acknowledge and agree that
Broker shall have the right (but not the obligation) to interview and to elect
which of employees of Licensee that it will hire and to set the wages and any
other compensation that any person so hired shall receive. Licensee shall be
responsible for the payment of all compensation and accrued employee benefits
payable to all employees through the Effective Date. For purposes of employee
benefits under the employee benefit plans of Licensee, all employees of Licensee
who accept employment with Broker shall be considered terminated employees and
shall not be entitled to receive from Broker credit for any accrued vacation
days, sick days personal days or other such days. Licensee acknowledges and
agrees that it, and not Broker, is and shall after the Effective Date remain
solely responsible for any and all insurance, supplemental pension, deferred
compensation, retirement and any other benefits, and related costs, premiums and
claims, due, to become due, committed or otherwise promised to any person who,
as of the Effective Date, is a retiree, former employee, or current employee of
Licensee, relating to the period up to and including the Effective Date. Broker
shall assume no employee benefit plans, programs or practices, whether or not
set forth in writing, maintained by Licensee at any time.
12. Station Agreements.
12.1 Assignment and Assumption Station Agreements. Effective on
the Effective Date, Licensee hereby assigns to Broker, and Broker hereby
assumes, subject to the provisions of Section 12 hereof, the obligations of
Licensee arising or to be performed on and after the Effective Date (except to
the extent such obligations represent liabilities for activities, events or
transactions occurring, or conditions existing, on or prior to the Effective
Date) under: (a) all of the American Other Contracts (as defined in the Exchange
Agreement), excluding (i) contracts and agreements relating to the Licensee
Employee Expenses and (ii) contracts and agreements relating to the Licensee
Transmitter Expenses; and (b) all contracts entered into by Licensee which are
for consideration other than cash, such as merchandise, services or promotional
consideration ("Trade Agreements") arising in the ordinary course of business
consistent with the past practices of Licensee and listed on Attachment C
hereto. All of the foregoing liabilities and obligations under (a) and (b)
hereof shall be referred to herein collectively as the "Station Agreements" or
individually as a "Station Agreement." Licensee represents and warrants that the
Station Agreements are freely assignable, or, if consent of the other
contracting party to the assignment is required, Licensee covenants to use its
reasonable best efforts to obtain such consent as promptly as practicable. As of
the Effective Date, Licensee shall have paid all amounts due on and shall have
performed all obligations due under the Station Agreements as of that date.
Licensee shall not enter into any other Station Agreements with respect to the
Station without the prior written consent of Broker.
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12.2 Consents to Assignment. To the extent that any Station
Agreement is not capable of being sold, assigned, transferred, delivered or
subleased without the waiver or consent of any third person (including a
government or governmental unit), or if such sale, assignment, transfer,
delivery or sublease or attempted sale, assignment, transfer, delivery or
sublease would constitute a breach thereof or a violation of any law or
regulation, this Agreement and any assignment executed pursuant thereto shall
not constitute a sale, assignment, transfer, delivery or sublease or an
attempted sale, assignment, transfer, delivery or sublease thereof. In those
cases where consents, assignments, releases and/or waivers have not been
obtained at or prior to the Effective Date to the transfer and assignment to
Broker of any Station Agreement, this Agreement and any assignment executed
pursuant hereto, to the extent permitted by law, shall constitute an equitable
assignment by Licensee to Broker of all of Licensee's rights, benefits, title
and interest in and to the Station Agreements, and where necessary or
appropriate, Broker shall be deemed to be Licensee's agent for the purpose of
completion, fulfilling and discharging all of Licensee's rights and liabilities
arising after the Effective Date under such Station Agreements. Licensee shall
use its reasonable best efforts to provide Broker with the financial and
business benefits of such Station Agreements (including, without limitation,
permitting Broker to enforce any rights of Licensee arising under such Station
Agreements), and Broker shall, to the extent Broker is provided with the
benefits of such Station Agreements, assume, perform and in due course pay and
discharge all debts, obligations and liabilities of Licensee under such Station
Agreements to the extent that Broker was to assume those obligations pursuant to
the terms hereof.
12.3 Retained Liabilities. Except as set forth in Sections 11 and
12 hereof, Broker 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 or any agreement, instrument or document
delivered pursuant to or in connection with this Agreement or otherwise by
reason of or in connection with the consummation of the transactions
contemplated hereby or thereby, to have assumed or to have agreed to pay,
satisfy, discharge or perform, any liabilities, obligations or commitments of
Licensee of any nature whatsoever whether accrued, absolute, contingent or
otherwise and whether or not disclosed by Broker, other than the Station
Agreements. Licensee will retain and pay, satisfy, discharge and perform in
accordance with the terms thereof, all liabilities and obligations of the
Licensee, other than the Station Agreements, including but not limited to, the
obligation to assume, perform, satisfy or pay any liability, obligation,
agreement, debt, charge, claim, judgment or expense incurred by or asserted
against Licensee related to taxes, environmental matters, pension or retirement
plans or trusts, profit-sharing plans, employment contracts, employee benefits,
severance of employees, product liability or warranty, negligence, contract
breach or default, copyright, trademarks, service mark, trade name and other
intellectual property, or other obligations, claims or judgments asserted
against Broker as successor in interest to Licensee. All such liabilities,
obligations and commitments of Licensee described in this Section 12.3 shall be
referred to herein collectively as the "Retained Liabilities."
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13. Accounts Receivable. Broker and Licensee hereby acknowledge and
agree that all accounts receivable relating to the Station shall be collected
and apportioned in accordance with Section 2.5 of the Exchange Agreement.
14. Proration of Income and Expenses. Broker and Licensee hereby
acknowledge and agree that all deposits, reserves and prepaid and deferred
income and expenses relating to the Station Agreements shall be prorated between
Broker and Licensee in accordance with Section 2.3 of the Exchange Agreement.
15. Indemnification. Broker shall indemnify and hold Licensee and its
stockholders, directors, partners, officers, agents, employees, successors, and
assigns harmless from and against any and all claims, expenses, causes of action
and liability resulting from or relating to (i) the broadcast of Programming
during the Term, (ii) any and all promotions, contests and on-air "give-aways"
relating to the Station during the Term, (iii) a breach of Broker's
representations, warranties, covenants or agreements contained herein, (iv) any
liability resulting from Broker's default under the Station Agreements, and (v)
all other matters arising out of or related to Broker's activities involving the
Station or use of the Licensee Station facilities or relating to the obligations
assumed by Broker in connection with this Agreement. Licensee agrees to
indemnify, defend, and hold harmless Broker and its stockholders, directors,
officers, agents, employees, successors and assigns from and against any and all
liability that arises out of (i) material broadcast by Licensee other than the
Programming, (ii) liabilities (but not loss of advertising revenue) that arise
as a result of Licensee's alteration of any and/or all Programming prior to
broadcast by Licensee; and (iii) the Retained Liabilities.
15.1 Procedures: Third Party and Direct Indemnification Claims.
The obligations and liabilities of Licensee and of Broker hereunder with respect
to their respective indemnities pursuant to this Section 15, resulting from any
claim or other assertion of liability by third parties are subject to the
procedures for indemnification set forth in the Exchange Agreement.
16. Events of Default: Cure periods and Remedies.
16.1 Events of Default. The following shall, after the expiration
of the applicable cure periods, constitute Events of Default under the
Agreement:
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16.1.1 Non-Payment. Broker's failure to timely pay the
consideration provided for in Section 2 and Attachment B hereof which is not
cured within five (5) business days following notice in accordance with Section
1.2 hereof;
16.1.2 Default in Covenants or Adverse Legal Action. The
default by any party hereto in the material observance or performance of any
material covenant, condition or agreement contained herein which is not cured
within five (5) business days following notice in accordance with Section 16.2
hereof, or if (a) any party shall make a general assignment for the benefit of
creditors, (b) any party shall file or have filed against it a petition for
bankruptcy, for reorganization or an arrangement, or for the appointment of a
receiver, trustee or similar creditors' representative for the property or
assets of such party under any federal or state insolvency law, which, if filed
against such party, has not been dismissed or discharged within sixty (60) days
thereof, or (c) specifically and without limitation, if Licensee's successors
and assigns, including, without limitation, any assignee of the FCC license for
the Station, except if such successor or assign is Broker or an affiliate of
Broker, refuses to abide by or terminates this Agreement during the term of this
Agreement.
16.1.3 Breach of Representation. If any material
representation or warranty herein made by either party hereto, or in any
certificate or document furnished by either party to the other pursuant to the
provisions hereof, shall prove to have been false or misleading in any material
respect as of the time made or furnished and is not cured within thirty (30)
days following notice in accordance with Section 16.2 hereof.
16.1.4 Breach of Exchange Agreement. The breach by Licensee
or Broker in the material observance or performance of any material
representation, warranty, covenant, condition or agreement in the Exchange
Agreement which is not cured within any time period provided for such cure under
the Exchange Agreement provided, that no party may use its own breach under the
Exchange Agreement as grounds to terminate this Agreement. An Event of Default
by either party under this Agreement shall constitute a material default under
the Exchange Agreement and insofar as the cure period specified in this
Agreement has expired with respect to the default, no further cure period shall
be afforded under the Exchange Agreement.
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16.2 Cure Periods. An Event of Default shall not be deemed to have
occurred until after the non-defaulting party has provided the defaulting party
with written notice specifying the event or events that if not cured would
constitute an Event of Default and specifying the actions necessary to cure
within the relevant cure period. The Event of Default shall not be deemed to
have occurred if actions necessary to cure are completed during the relevant
cure period.
16.3 Termination Upon Default. Upon the occurrence of an Event of
Default, the non-defaulting party may terminate this Agreement provided that it
is not also in material default hereunder, and may seek such remedies at law
and/or equity as are available, including without limitation specific
performance. If Broker has defaulted in the performance of its obligations,
Licensee shall be under no further obligation to make available to Broker any
further broadcast time or broadcast transmission facilities and, without
limitation of remedies, all amounts accrued or payable to Licensee up to the
date of termination which have not been paid, less any payment credits, shall
immediately become due and payable.
16.4 Liabilities Upon Termination. Upon termination of this
Agreement, Broker shall be responsible for all liabilities, debts and
obligations of Broker accrued from the purchase of air time and transmission
services including, without limitation, accounts payable, barter agreements and
unaired advertisements, but not for Licensee's federal, state, and local tax
liabilities associated with Broker's payments to Licensee as provided for
herein. With respect to Broker's obligations to broadcast material over the
Station after termination hereunder, Broker may propose compensation to Licensee
for meeting these obligations, but Licensee shall be under no duty to accept
such compensation or to perform such obligations. Upon termination, (i) Broker
shall return to Licensee any equipment or property of the Station used by
Broker, its employees or agents, in substantially the same condition and
location as such equipment existed on the date of this Agreement, ordinary wear
and tear excepted, (ii) Broker shall assign to Licensee and Licensee shall
assume the still outstanding Station Agreements that were assigned to Broker
pursuant to Section 12 hereof and (iii) Broker shall assign to Licensee any new
contracts entered into by Broker relating to the Station that Licensee expressly
agrees to assume. Notwithstanding anything in the foregoing to the contrary,
termination shall not extinguish any rights of either party as may be provided
by Section 15 hereof.
17. Broker Termination Option. Broker may elect to terminate this
Agreement at any time during the term hereof in the event that Licensee preempts
or substitutes other programming for that supplied by the Broker during ten (10)
percent or more of the total hours of operation of the Station during any
calendar month. In the event Broker elects to terminate this Agreement pursuant
to this provision, it shall give Licensee notice of such election at least ten
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(10) days prior to the termination date. Upon termination, neither party shall
have any further liability to the other except as may be provided by Sections 15
and 16.4 hereof.
18. Responsive Programming. Broker and Licensee mutually acknowledge
their interest in ensuring that the Station serve the needs and interests of the
residents of the Station's community of license and service areas and agree to
cooperate in doing so. Licensee shall, on a regular basis, assess the issues of
concern to residents of the Station's community of license and service areas and
address those issues in its public service programming. Licensee shall ascribe
those issues and responsive programming and place issues/programs lists in the
Station's public inspection file as required by FCC rules. Licensee may request,
and Broker shall provide, information concerning such of Broker's Programming
that is responsive to community issues so as to assist Licensee in the
satisfaction of its public service programming obligations. Broker shall also
provide to Licensee upon request such other information necessary to enable
Licensee to prepare records and reports required by the FCC or other local,
state or federal government entities.
19. Time Brokerage Challenge. If this Agreement is challenged in whole
or in part at or by a governmental authority or is challenged in whole or in
part in a judicial forum, counsel for the Licensee and counsel for the Broker
shall jointly defend this Agreement and the parties' performance thereunder
throughout all such proceedings. If this Agreement is declared invalid or
illegal in whole or in substantial part by a ruling, order or decree of a
governmental authority or court, and such ruling, order or decree has become
effective, then the parties shall endeavor in good faith to reform the Agreement
as necessary. If the parties are unable to reform this Agreement within thirty
(30) days of the effective date of such ruling, order or decree, then this
Agreement shall terminate, and all sums owing to Licensee shall be paid and
neither party shall have any further liability to the other except as may be
provided by Sections 15 and 16.4 hereof.
20. Additional Representations. Warranties and Covenants.
20.1 Mutual Representations. Warranties and Covenants. Both
Licensee and Broker represent that they are legally qualified, empowered, and
able to enter into this Agreement, and that the execution, delivery and
performance hereof shall not constitute a breach or violation of any agreement,
contract or other obligation to which either party is subject or by which it is
bound.
20.2 Additional Licensee Representations. Warranties and
Covenants. Licensee makes the following further representations, warranties and
covenants:
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20.2.1 Authorizations. During the term of this Agreement,
Licensee shall own and hold all licenses and other permits and authorizations
necessary for the operation of the Station as presently conducted (including
licenses, permits and authorizations issued by the FCC), and such licenses,
permits and authorizations shall be in full force and effect for the entire Term
hereunder, unimpaired by any acts or omissions of Licensee, its principals,
employees or agents.
20.2.2 Payment of Obligations. Licensee shall not incur any
debt, obligation or liability without the prior written consent of Broker if
such undertaking would adversely affect Licensee's performance hereunder or the
business and operations of the Broker permitted hereby. Subject to the
provisions of Sections 2 and 11 hereof, Licensee shall pay in a timely fashion
all of its debts, assessments and obligations, including without limitation tax
liabilities and payments in each case attributable to the operations of the
Station, as they come due during the Term of this Agreement.
20.2.3 Broadcast Obligations. Licensee has no agreement,
contract, commitment or understanding to broadcast on the Station on or after
the Effective Date, any programs or commercial matter other than the Station
Agreements. Licensee shall not incur any other programming obligations without
the prior written consent of Broker.
20.2.4 Licensee Control. Licensee hereby verifies that for
the term of this Agreement it shall maintain ultimate control over the Station's
facilities, including specifically control over the Station's finances,
personnel and programming, and nothing herein shall be interpreted as depriving
Licensee of the power or right of such ultimate control.
20.2.5 Insurance. Licensee shall maintain in full force and
effect (at Broker's expense) throughout the term of this Agreement insurance
with responsible and reputable insurance companies or associations covering such
risks (including fire and other risks insured against by extended coverage,
public liability insurance, insurance for claims against personal injury or
death or property damage and such other insurance as may be applicable) and in
such amounts and on such terms as is conventionally carried by broadcasters
operating radio stations with facilities in the area comparable to those of the
Station. Broker shall be listed as an additional insured on such insurance
policies. Any insurance proceeds received by Licensee in respect of damaged
property shall be used to repair or replace such property to that the operations
of the Station conform with this Agreement. Licensee shall present to Broker
prior to the execution of this Agreement certificates of insurance or binders
for such insurance policies. If requested by Broker, Licensee shall maintain, at
Broker's expense, business interruption insurance for Broker's benefit.
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20.2.6 Compliance with Law. Licensee covenants that,
throughout the term of this Agreement, Licensee shall comply with all laws and
regulations applicable in the conduct of Licensee's business and Licensee
acknowledges that Broker has not urged, counseled, or advised the use of any
unfair business practice.
20.3 Additional Broker Representations, Warranties and Covenants.
20.3.1 Compliance with 47 C.F.R. ss. 73.3555(a). Broker
hereby verifies that execution and performance of this Agreement complies with
the Commission's restrictions on local radio ownership set out in Section
73.3555(a) of the FCC Rules.
20.3.2 Compliance with Applicable Law. Broker covenants that
its performance of its obligations under this Agreement and its furnishing of
Programming shall be in compliance with, and shall not violate, any applicable
laws or any applicable rules, regulations, or orders of the FCC or any other
governmental agency and Broker acknowledges that Licensee has not urged,
counseled, or advised the use of any unfair business practice.
20.3.3 Handling of Complaints. Broker shall promptly advise
Licensee of any public or FCC complaint or inquiry that Broker receives
concerning the Programming on the Station and shall cooperate with Licensee and
take all actions as may be reasonably requested by Licensee in responding to any
such complaint or inquiry.
20.3.4 Copyright and Licensing. Broker represents and
warrants to Licensee that Broker has and shall have throughout the term of this
Agreement the full authority to broadcast the Programming on the Station and
that Broker shall not broadcast on the Station any material in violation of the
Copyright Act. All music supplied by Broker shall be: (i) licensed by ASCAP,
SESAC or BMI; (ii) in the public domain; or (iii) cleared at the source by
Broker.
20.3.5 Information For FCC Reports. Upon request by Licensee,
Broker shall provide in a timely manner any such information in its possession
which shall enable Licensee to prepare, file or maintain the records and reports
required by the FCC.
20.3.6 Payola/Plugola. Broker covenants that it shall not
accept, and shall instruct its employees not to 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,
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materials, supplies or other merchandise, services or labor, whether or not
pursuant to written contracts or agreements between Broker and merchants or
advertisers, unless the payer is identified in the program as having paid for or
furnished such consideration, in accordance with FCC requirements. Broker agrees
to annually, or more frequently at the request of Licensee, execute and provide
Licensee with an affidavit regarding payola/plugola compliance.
21. Intellectual Property. Effective as of the Effective Date, Licensee
licenses to Broker the exclusive right to use (or, to the extent Licensee does
not hold exclusive rights, the non-exclusive right to use) all intellectual
property owned by or licensed to Licensee and used solely in the operation of
the Station (including, but not limited to, logos, jingles, promotional
materials, call signs, goodwill, trademarks, service marks, slogans, trade
names, copyrights and any applications and registrations therefor) (the "IP
License"). In the event of termination of this Agreement, the IP License shall
terminate.
22. Subcarrier Rights. Licensee and Broker acknowledge and agree that
any subsidiary communications services transmitted on a subcarrier within the FM
baseband signal of any of the Station ("Subcarrier"), and any uses of the
Subcarrier authorized by the FCC ("Subcarrier Uses"), are subject to the terms
and conditions of this Agreement. Licensee hereby agrees (a) to apply, at
Broker's expense, for any additional authorization from the FCC or any other
governmental agency or entity that may be necessary in order to make use of any
Subcarrier Uses, and (b) that Broker has the sole and exclusive right, subject
to the terms and conditions hereof, to make use of any Subcarrier Uses and
collect the revenues therefrom. Broker hereby agrees to reimburse Licensee for
Licensee's reasonable expenses incurred in carrying out Licensee's obligations
pursuant to this Section 22, including reasonable attorneys and engineering fees
and expenses.
23. Publicity. Licensee and Broker shall not issue any press release or
otherwise make any public statement with respect to the transactions
contemplated herein except as may be required by law or regulation or as agreed
to by Licensee and Broker.
24. No Waiver: Remedies Cumulative. No failure or delay on the part of
Licensee or Broker in exercising any right or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of Licensee and Broker herein
provided are cumulative and are not exclusive of any right or remedies which it
may otherwise have.
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25. Construction. This Agreement shall be construed in accordance with
the laws of the State of Ohio, without giving effect to the choice of law
provisions thereunder, and the obligations of the parties hereto are subject to
all federal, state or municipal laws or regulations now or hereafter in force
and to the regulations of the FCC and all other governmental bodies or
authorities presently or hereafter to be constituted.
26. Headings. The headings contained in this Agreement are included for
convenience only and no such heading shall in any way alter the meaning of any
provision.
27. Benefit and Assignment. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns. Other than assignment to a sole parent, a wholly-owned
subsidiary, or a sister company with a common parent, if such entity is
authorized by the FCC to be the licensee of the Station, Licensee may not
voluntarily or involuntarily assign its interest under this Agreement without
the prior written consent of Broker. Broker shall have the right to assign
and/or delegate all or any portion of its rights and obligations under this
Agreement, including without limitation assignments as collateral, provided that
no such assignment and/or delegation shall relieve Broker of its obligations
hereunder in the event that its assignee fails to perform the obligations
delegated. In the event that Broker finds it necessary or is required to provide
to a third party a collateral assignment of Broker's interest in this Agreement
and/or any related documents, Licensee shall cooperate with Broker and any third
party requesting such assignment including but not limited to Licensee signing a
consent and acknowledgment of such assignment. All covenants, agreements,
statements, representations, warranties and indemnities in this Agreement by and
on behalf of any of the parties hereto shall bind and inure to the benefit of
their respective successors and permitted assigns of the parties hereto.
28. Notices. All notices, demands, requests, or other communications
which may be or are required to be given or made by any party to any other party
pursuant to this Agreement shall be in writing and shall be hand delivered,
mailed by first-class registered or certified mail, return receipt requested,
postage prepaid, delivered by overnight air courier, or transmitted by telegram,
telex, or facsimile transmission addressed in accordance with the listing set
forth in Attachment D hereto or such other address as the addressee may indicate
by written notice to the other parties. Each notice, demand, request, or
communication which shall be given or made in the manner described above shall
be deemed sufficiently given or made for all purposes at such time as it is
delivered to the addressee (with the return receipt, the delivery receipt, the
affidavit of messenger or (with respect to a telex or facsimile) the answerback
being deemed conclusive but not exclusive evidence of such delivery) or at such
time as delivery is refused by the addressee upon presentation.
14
<PAGE>
29. Entire Agreement. This Agreement and the Exchange Agreement and
related documents embody the entire agreement between the parties and there are
no other agreements, representations, warranties, or understandings, oral or
written, between them with respect to the subject matter hereof. No alterations,
modification or change of this Agreement shall be valid unless made in writing,
and signed by like written instrument. No waiver of any provision hereof shall
be valid unless in writing and signed by the party adversely affected by the
waiver, and then such waiver shall be effective only in the specified instance
and for the purpose for which given.
30. Severability. In the event that any of the provisions contained in
this Agreement is held to be invalid, illegal or unenforceable, such event shall
not affect any other provision hereof, and this Agreement shall be construed as
if such invalid, illegal or unenforceable provisions had not been contained
herein.
31. Counterpart Signatures. This Agreement may be signed in one or more
counterparts, each of which shall be deemed a duplicate original, binding on the
parties hereto notwithstanding that the parties are not signatory to the
original or the same counterpart. This Agreement shall be binding and effective
as of the date on which the executed counterparts are exchanged by the parties.
15
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
AMERICAN RADIO SYSTEMS
CORPORATION
By: __________________________
Title: __________________________
CITICASTERS CO.
By: __________________________
Title: __________________________
16
<PAGE>
TIME BROKERAGE AGREEMENT
ATTACHMENT A
WKRQ(FM), Cincinnati, Ohio
<PAGE>
ATTACHMENT B
PAYMENT SCHEDULE
Month Fee
1. March, 1997 $179,000
2. April, 1997 $215,000
3. May, 1997 $316,000
4. June, 1997 $353,000
5. July, 1997 $335,000
6. August, 1997 $358,000
7. September, 1997 $242,000
8. October, 1997 $266,000
9. November, 1997 $279,000
10. December, 1997 $261,000
In addition to the Monthly Fee, Broker promptly shall reimburse
Licensee the amount of the reasonable Licensee Employee Expenses and the
reasonable Licensee Transmitter Expenses as they are incurred during the Term.
Licensee shall deliver a statement in reasonable detail with back-up
documentation for such Expenses, and Broker shall pay Licensee such Expenses
within five (5) business days of receipt of such billing.
Licensee and Broker agree to reconcile in good faith, by no later than
the last day of the month following the month to which each Monthly Fee set
forth above pertains, each such Monthly Fee to reflect actual broadcast cash
flow results for the Station during such month. Any such required adjustment may
be taken as an increase to or credit against the subsequent Monthly Fee, or
alternatively shall be paid by the party obligated to make such payment no later
than five (5) business days following such reconciliation.
<PAGE>
ATTACHMENT C
All Citicasters Trade Agreements (as defined in the Exchange Agreement).
<PAGE>
TIME BROKERAGE AGREEMENT
ATTACHMENT D
If the notice is to Licensee:
Citicasters Co.
201 East 5th Street, Suite 1300
Cincinnati, Ohio 45202
Attention: Randy Michaels, President
Telephone No:
Telecopy No: (513)-621-1300
With a copy to (which shall not constitute notice):
Hogan & Hartson L.L.P.
555 Thirteenth Street, N.W.
Washington, DC 20004-1109
Attention: Marissa G. Repp, Esq.
Telephone No: 202-637-6845
Telecopy No: 202-637-5910
If the notice is to Broker:
American Radio Systems Corporation
116 Huntington Avenue
Boston, MA 02116
Attention: Steven B. Dodge, President and Chief Executive Officer
Telephone No:
Telecopy No: (617)-375-7575
With a copy to (which shall not constitute notice):
Sullivan & Worcester LLP
One Post Office Square
Boston, MA 02109
Attention: Norman A. Bikales, Esq.
Telephone No: (617)-338-2800
Telecopy No: (617)-338-2880
AGREEMENT AND PLAN OF MERGER
By and Between
AMERICAN RADIO SYSTEMS CORPORATION
and
ALTA BROADCASTING COMPANY, INC.
Dated as of
March 3, 1997
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
ARTICLE 1: THE MERGER............................................................................................1
SECTION 1.1 The Merger..................................................................................1
SECTION 1.2 Closing.....................................................................................2
SECTION 1.3 Effective Time..............................................................................2
SECTION 1.4 Effect of the Merger........................................................................2
SECTION 1.5 Certificate of Incorporation................................................................2
SECTION 1.6 Bylaws......................................................................................2
SECTION 1.7 Directors and Officers......................................................................2
ARTICLE 2: PRE-MERGER TRANSACTION................................................................................2
SECTION 2.1 Contributions of Assets and Assumption of Liabilities.......................................2
ARTICLE 3: CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES........................................................3
SECTION 3.1 Conversion of Capital Stock.................................................................3
SECTION 3.2 Exchange of Certificates....................................................................4
SECTION 3.3 Stock Transfer Books........................................................................4
SECTION 3.4 Option Securities and Convertible Securities; Payment Rights................................4
ARTICLE 4: REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................................................5
SECTION 4.1 Organization and Business; Power and Authority; Effect of Transaction......................5
SECTION 4.2 Financial and Other Information.......................................................6
SECTION 4.3 Changes in Condition.......................................................................7
SECTION 4.4 Liabilities................................................................................7
SECTION 4.5 Title to Properties; Leases................................................................7
SECTION 4.6 Compliance with Private Authorizations.....................................................8
SECTION 4.7 Compliance with Governmental Authorizations and Applicable Law.............................9
SECTION 4.8 Intangible Assets.........................................................................10
SECTION 4.9 Related Transactions......................................................................10
SECTION 4.10 Insurance.................................................................................11
SECTION 4.11 Tax Matters...............................................................................11
SECTION 4.12 Employee Retirement Income Security Act of 1974...........................................12
SECTION 4.13 Absence of Sensitive Payments.............................................................13
SECTION 4.14 Inapplicability of Specified Statutes.....................................................14
SECTION 4.15 Authorized and Outstanding Capital Stock..................................................14
SECTION 4.16 Employment Arrangements...................................................................14
SECTION 4.17 Material Agreements.......................................................................15
SECTION 4.18 Ordinary Course of Business...............................................................16
SECTION 4.19 Bank Accounts, Etc........................................................................17
SECTION 4.20 Material and Adverse Restrictions.........................................................18
SECTION 4.21 Broker or Finder..........................................................................18
SECTION 4.22 Environmental Matters.....................................................................18
SECTION 4.23 Compliance with Regulations Relating to Securities Credit.................................19
SECTION 4.24 Continuing Representation and Warranty....................................................19
SECTION 4.25 Contribution Assets.......................................................................19
<PAGE>
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF AMERICAN...........................................................19
SECTION 5.1 Organization and Business; Power and Authority; Effect of Transaction......................19
SECTION 5.2 Financial and Other Information.......................................................20
SECTION 5.3 Changes in Condition.......................................................................21
SECTION 5.4 Compliance with Private Authorizations.....................................................21
SECTION 5.5 Compliance with Governmental Authorizations and Applicable Law.............................22
SECTION 5.6 Authorized and Outstanding Capital Stock...................................................22
SECTION 5.7 Broker or Finder...........................................................................22
SECTION 5.8 Continuing Representation and Warranty.....................................................22
ARTICLE 6: COVENANTS............................................................................................23
SECTION 6.1 Access to Information; Confidentiality.....................................................23
SECTION 6.2 Agreement to Cooperate.....................................................................24
SECTION 6.3 Public Announcements.......................................................................25
SECTION 6.4 Notification of Certain Matters............................................................25
SECTION 6.5 No Solicitation............................................................................26
SECTION 6.6 Termination of Option Securities and Convertible Securities................................27
SECTION 6.7 Conduct of Business by the Company Pending the Closing.....................................27
ARTICLE 7: CLOSING CONDITIONS...................................................................................28
SECTION 7.1 Conditions to Obligations of Each Party to Effect the Merger...............................28
SECTION 7.2 Conditions to Obligations of American......................................................29
SECTION 7.3 Conditions to Obligations of the Company...................................................32
ARTICLE 8: TERMINATION, AMENDMENT AND WAIVER....................................................................33
SECTION 8.1 Termination................................................................................33
SECTION 8.2 Effect of Termination......................................................................35
ARTICLE 9: INDEMNIFICATION......................................................................................36
SECTION 9.1 Survival...................................................................................36
SECTION 9.2 Indemnification............................................................................36
SECTION 9.3 Limitation of Liability; Disposition of Escrow Indemnity Funds.............................37
SECTION 9.4 Notice of Claims...........................................................................38
SECTION 9.5 Defense of Third Party Claims..............................................................38
SECTION 9.6 Exclusive Remedy...........................................................................38
ARTICLE 10: GENERAL PROVISIONS..................................................................................38
SECTION 10.1 Amendment................................................................................39
SECTION 10.2 Waiver...................................................................................39
SECTION 10.3 Fees, Expenses and Other Payments........................................................39
SECTION 10.4 Notices..................................................................................39
SECTION 10.5 Specific Performance; Other Rights and Remedies..........................................40
-ii-
<PAGE>
SECTION 10.6 Severability.............................................................................40
SECTION 10.7 Counterparts.............................................................................41
SECTION 10.8 Section Headings.........................................................................41
SECTION 10.9 Governing Law............................................................................41
SECTION 10.10 Further Acts.............................................................................41
SECTION 10.11 Entire Agreement.........................................................................41
SECTION 10.12 Assignment...............................................................................41
SECTION 10.13 Parties in Interest......................................................................41
SECTION 10.14 Mutual Drafting..........................................................................42
SECTION 10.15 Arbitration..............................................................................42
SECTION 10.16 CALIFORNIA SECURITIES LAW MATTERS........................................................42
</TABLE>
APPENDIX A Definitions
EXHIBITS:
EXHIBIT A: Form of Escrow Agreement (Third Recital)
EXHIBIT B: Form of Leasehold Option (Section 7.2(k))
EXHIBIT C: Form of Investment Letter (Section 7.2(b))
EXHIBIT D: Form of Noncompetition Agreement (Section 7.2(m))
EXHIBIT E: Form of Registration Rights Agreement (Section 7.3(e))
-iii-
<PAGE>
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement"), dated as of March
3, 1997, is made by and between American Radio Systems Corporation, a Delaware
corporation ("American"), and Alta Broadcasting Company, Inc., a California
corporation (the "Company" and, together with American, the "parties").
RECITALS
WHEREAS, upon the terms and subject to the conditions of this
Agreement, in accordance with the general corporation laws of the State of
Delaware (the "DGCL") and of the State of California (the "CGCL"), the Company
and American will carry out a business combination transaction pursuant to which
the Company will merge with and into American (the "Merger") and the Company
stockholders (the "Company Stockholders") will receive (a) shares (the "American
Shares") of Class A Common Stock, par value $.01 per share, of American (the
"American Class A Stock") with a Current Market Price (as hereinafter defined)
of $20,000,000, and (b) $4,000,000 in immediately available funds, subject to
adjustment as herein provided; and
WHEREAS, the Board of Directors of each of the Company and American (a)
has unanimously determined that the Merger is advisable and fair to, and in the
best interests of, it and its respective stockholders and has approved and
adopted this Agreement as a plan of reorganization within the provisions of
Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the
"Code") and (b) has approved this Agreement, the Merger and the other
transactions contemplated hereby or thereby or by any Collateral Document
executed or required to be executed in connection herewith or therewith
(collectively the "Transactions"); and
WHEREAS, simultaneously with the execution and delivery of this
Agreement, American, the Company and Sullivan & Worcester LLP and Gibson, Dunn &
Crutcher LLP as Escrow Agents (the "Escrow Agents") have entered into an
agreement (the "Escrow Agreement") dated as of the date hereof in the form of
Exhibit A attached hereto and made a part hereof, and in accordance with the
terms thereof American has made a deposit in the amount of $1,500,000 (the
"Escrow Deposit") pursuant thereto; and
WHEREAS, capitalized terms used in this Agreement without definition
shall have the meanings given to such terms in Appendix A attached hereto and
made a part hereof;
NOW, THEREFORE, in consideration of the foregoing Recitals and the
mutual representations, warranties, covenants and agreements set forth herein,
the parties hereto, intending to be legally bound, do hereby covenant and agree
as follows:
ARTICLE 1
THE MERGER
SECTION 1.1 The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the DGCL and the CGCL, at
the Effective Time the Company shall be merged with and into American. As a
result of the Merger, the separate existence of the Company shall cease and
American shall continue as the surviving corporation of the Merger (the
"Surviving Corporation").
<PAGE>
SECTION 1.2 Closing. Unless this Agreement shall have been terminated
pursuant to Section 8.1 and the Merger and the Transactions shall have been
abandoned, 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 such date, not later than the Termination
Date, within ten (10) days following the satisfaction or, if permissible, waiver
of the conditions set forth in Article 7, other than those conditions which can
be satisfied only at the Closing, unless another date, time or place is agreed
to in writing by the parties.
SECTION 1.3 Effective Time. As promptly as practicable after the
satisfaction or, if permissible, waiver of the conditions set forth in Article 7
(but subject to the provisions of Section 1.2), the parties hereto shall cause
the Merger to be consummated by filing a Certificate of Merger and any related
filings required under the DGCL with the Secretary of State of Delaware and this
Agreement, certified in accordance with the provisions of the CGCL and any
related filings required under the CGCL with the Secretary of State of
California. 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
Delaware and the Secretary of State of California or at such later time as is
specified in such documents (the "Effective Time").
SECTION 1.4 Effect of the Merger. From and after the Effective Time,
the Surviving Corporation shall possess all the rights, privileges, powers and
franchises and be subject to all of the restrictions, disabilities and duties of
the Company and American, and the Merger shall otherwise have the effects
provided for under the DGCL and the CGCL.
SECTION 1.5 Certificate of Incorporation. The 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.
SECTION 1.6 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.
SECTION 1.7 Directors and Officers. From and after the Effective Time,
until successors are duly elected or appointed and qualified (or 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, and (b) the officers of American at the Effective Time shall be the
officers of the Surviving Corporation.
ARTICLE 2
PRE-MERGER TRANSACTION
SECTION 2.1 Contributions of Assets and Assumption of Liabilities.
(a) Prior to the Effective Time, the Company shall make a distribution
(the "Shareholder Distribution") to the Company Stockholders of all of the
Company's right, title and interest in and to any and all of the assets of the
Company described in Section 2.1(a) of the Company Disclosure Schedule.
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<PAGE>
(b) In partial consideration for the Shareholder Distribution,
concurrently therewith the Company Stockholders shall assume any and all
liabilities of the Company, whether fixed, contingent or otherwise, described in
Section 2.1(b) of the Company Disclosure Schedule.
(c) Any Taxes payable in connection with the Shareholder Distribution
pursuant to this Section 2.1 shall be borne by the Company Stockholders.
ARTICLE 3
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES
SECTION 3.1 Conversion of Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of the Company, American
or the holders of any of the following securities:
(a) Each share of American Class A Stock, each share of Class B Common
Stock, par value $.01 per share, of American and each share of Class C Common
Stock, par value $.01 per share, of American, and all Convertible Securities and
Option Securities of American issued and outstanding immediately prior to the
Effective Time shall remain outstanding.
(b) Each share of Common Stock, par value $1.00 per share, of the
Company (the "Company Common Stock") issued and outstanding immediately prior to
the Effective Time (other than shares held in the treasury of the Company or by
any of its Subsidiaries) shall, by virtue of the Merger and without any action
on the part of the holder thereof, be converted into the right to receive its
pro-rata share of the following:
(i) 723,402 shares of American Shares (being a number
of American Shares with a Current Market Price of $20,000,000)
(the "Common Stock Consideration"); and
(ii) $4,000,000 in immediately available funds (the
"Cash Consideration" and collectively, with the Common Stock
Consideration, the "Merger Consideration" which term shall
include any adjustments pursuant to the provisions of this
section).
Notwithstanding the foregoing, the Merger Consideration shall be subject to
adjustment in accordance with the following provisions: any such adjustment
shall be made first to increase or decrease, as the case may be, the Cash
Consideration or, in the event such adjustment is negative and exceeds the Cash
Consideration, to decrease the Common Stock Consideration (valuing the Common
Stock at the Current Market Price for such purpose). The amount of the Merger
Consideration shall be increased by an amount equal to the sum of (A) the
aggregate capital expenditures of the Company incurred subsequent to November
26, 1996 and prior to the Closing Date and described in Section 3.1 of the
Company Disclosure Schedule or hereafter approved in writing by American in its
sole and absolute discretion, and (B) the Net Working Capital of the Company (if
positive) on and as of the Closing Date. The amount of the Merger Consideration
shall be decreased by an amount equal to the sum of (x) the Net Working Capital
of the Company (if negative) on and as of the Closing Date, (y) the principal
amount of the Park Center Note, and (z) the principal amount of the Klue Note.
The term "Exchange Merger Consideration" shall mean an amount equal to the
Merger Consideration divided by the aggregate number of shares of Company Common
Stock (the "Company Shares") issued and outstanding at the Effective Time.
-3-
<PAGE>
At the Effective Time, all Company Shares shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and certificates previously evidencing any such Company Shares (each, a
"Certificate") shall thereafter represent the right to receive, upon the
surrender of such Certificate in accordance with the provisions of Section 3.2,
the Exchange Merger Consideration multiplied by the number of Company Shares
represented by such Certificate, and a holder of more than one Certificate shall
have the right to receive the Exchange Merger Consideration multiplied by the
number of Company Shares represented by all such Certificates. The holders of
such Certificates previously evidencing Company Shares outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to such
Company Shares except as otherwise provided herein or by Applicable Law.
For purposes of this Agreement, the term "Current Market Price" shall
mean, with respect to the American Shares on any date specified herein, $27.647
which is the average of the daily Fair Market Value for the thirty (30) trading
days prior to January 3, 1997, and the term "Fair Market Value" shall mean, with
respect to the American Class A Stock, (a) the last reported sales price,
regular way, or, in the event that no sale takes place on such day, the average
of the reported closing bid and asked prices, regular way, in either case as
reported on the Nasdaq National Market System.
(c) Each Company Share held in the treasury of the Company or by any of
its Subsidiaries and each Company Share 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.
(d) In lieu of issuing fractional shares, American shall convert the
holder's right to receive American Shares pursuant to Section 3.1(b) into a
right to receive the highest whole number of American Shares constituting the
Exchange Merger Consideration plus cash equal to the fraction of a share of
American Class A Stock to which the holder would otherwise be entitled
multiplied by the Current Market Price, and the Exchange Merger Consideration to
which a holder is entitled shall be deemed to be such number of American Shares
and Cash Consideration and such cash.
SECTION 3.2 Exchange of Certificates. At and after the Effective Time,
each Company Stockholder, upon surrender of each of his Certificates, shall be
issued a certificate of American Class A Stock and cash representing the
Exchange Merger Consideration with respect to the Company Shares represented by
such Certificate, plus cash in amount sufficient to make payment for fractional
shares, subject, however, to the provisions of Section 9.3(b).
SECTION 3.3 Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed, and there shall be no further
transfer of shares of Company Common Stock thereafter on the records of the
Company. Any Certificates presented after the Effective Time for transfer shall
be canceled and exchanged for the amount to which the Company Shares represented
thereby shall be entitled pursuant to Sections 3.1 and 3.2.
SECTION 3.4 Option Securities and Convertible Securities; Payment
Rights. At the Effective Time, each outstanding Option Security and each
Convertible Security, whether or not then exercisable for or convertible into
Company Shares, outstanding immediately prior to the Effective Time, shall be
canceled and retired and shall cease to exist, and the holder thereof shall not
be entitled to receive any consideration therefor.
-4-
<PAGE>
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Each Section of this Article is modified to the extent that the Company
Disclosure Schedule contains an item referencing that Section number. For
purposes of this Article, the inclusion of a description of an item on the
Company Disclosure Schedule with one Section reference will be deemed to be
included on the Company Disclosure Schedule for another Section reference where
such disclosure would be appropriate, except to the extent a particular Section
calls for a specific reference to it in the Company Disclosure Schedule. The
Company hereby represents, warrants and covenants to, and agrees with, American
as follows:
SECTION 4.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) The Company: (i) is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation; (ii)
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 (iii) except as set forth in Section
4.1(a) of the Company Disclosure Schedule, is duly qualified and is authorized
to do business and is in good standing as a foreign corporation in each
jurisdiction (a true, accurate and complete list of which is set forth in
Section 4.1(a) of the Company Disclosure Schedule) in which the character of its
property or the nature of its business or operations requires such qualification
or authorization, and in which the failure to be so qualified would have a
Material Adverse Effect on the Company.
(b) The Company 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
Company Disclosure Schedule that must be obtained prior to the Closing Date, in
order 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 and to consummate the Merger and the 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 the Company, except that the Company Stockholders have not
heretofore approved the Merger and the Transactions. This Agreement has been
duly executed and delivered by the Company and constitutes, and each Collateral
Document executed or required to be executed pursuant hereto or thereto or to
consummate the Merger and the Transactions, when executed and delivered by the
Company, will constitute, legal, valid and binding obligations of the Company,
enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, moratorium, insolvency and similar
laws affecting the rights and remedies of creditors and the obligations of
debtors generally and by general principles of equity. The affirmative vote or
action by written consent of a majority of the votes that the holders of the
outstanding shares of Company Common Stock are entitled to cast is the only vote
of the holders of any class or series of the capital stock of the Company
necessary to approve the Merger and the Transactions under Applicable Law and
the Company's Organic Documents. To the knowledge of the Company, the provisions
of Section 1203 of the CGCL will not apply to this Agreement, the Merger or the
Transactions.
(c) Except as set forth in Section 4.1(c) of the Company Disclosure
Schedule, neither the execution and delivery of this Agreement or any Collateral
Document executed or required to be executed pursuant hereto or thereto, nor the
consummation of the Transactions, nor compliance with the terms, conditions and
provisions hereof or thereof by the Company:
-5-
<PAGE>
(i) will conflict with, or result in a breach or violation of,
or constitute a default under, any Applicable Law on the part of the
Company, 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 under, 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 under, any Contractual Obligation of the Company, except
for such conflicts, breaches, violations, defaults or permitted
accelerations as would not, individually or in the aggregate, have an
Adverse Effect on the Company; or
(ii) will require the Company to make or obtain any
Governmental Authorization, Governmental Filing or Private
Authorization, except for (x) the FCC Consents, the California
Proceedings, filings under the Hart-Scott-Rodino Act and Private
Authorizations, and (y) other filing requirements under Applicable Law
in connection with the Merger and the Transactions the failure of which
to be obtained or maintained would not, individually or in the
aggregate, have an Adverse Effect on the Company.
(d) The Company does not have any direct or indirect Subsidiaries.
SECTION 4.2 Financial and Other Information.
(a) The Company has heretofore furnished to American copies of the
financial statements of the Company listed in Section 4.2(a) of the Company
Disclosure Schedule (the "Company Financial Statements"). The Company Financial
Statements, including in each case the notes thereto, if any, 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 Company Disclosure Schedule (which schedule reflects the inclusion
of "barter" transactions and the effects thereof), are true, accurate and
complete in accordance with GAAP, and fairly present the financial condition and
results of operations of the Company, 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) Neither the Company Disclosure Schedule, the Company Financial
Statements or this Agreement nor any Collateral Document, data, information or
statement furnished or to be furnished by or on behalf of the Company pursuant
to this Agreement or any Collateral Document executed or required to be executed
by or on behalf of the Company pursuant hereto or thereto or to consummate the
Merger and the Transactions, 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.
(c) The Company does not own any capital stock or equity or proprietary
interest in any other Entity or enterprise, however organized and however such
interest may be denominated or evidenced, except as set forth in Section 4.2(c)
of the Company Disclosure Schedule. None of the Entities, if any, so set forth
in Section 4.2(c) of the Company Disclosure Schedule is a Subsidiary of the
Company. The Company owns all of the outstanding capital stock or equity or
proprietary interests (as shown on Section 4.2(c) of the Company Disclosure
Schedule) of each such Entity or other enterprise, free and clear of all Liens
(except to the extent set forth in Section 4.2(c) of the Company Disclosure
Schedule), and all such stock or equity or proprietary interests has been duly
authorized and validly issued and is fully paid and
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nonassessable. There are no outstanding Option Securities or Convertible
Securities, or agreements or understandings with respect to any of the
foregoing, of any nature whatsoever.
(d) The Company has no Indebtedness other than (i) the Park Center Note
and the Klue Note, (ii) Long-term Indebtedness (including the current portion
thereof) and (iii) obligations incurred in the ordinary course of business
(other than for money borrowed or of a nature described in clause (b) of the
definition of Indebtedness).
SECTION 4.3 Changes in Condition. Since the date of the most recent
financial statements forming part of the Company Financial Statements, there has
been no Material Adverse Change in the Company. There is no Event known to the
Company which Materially Adversely Affects, or (so far as the Company can now
reasonably foresee) in the future is likely to Materially Adversely Affect, the
Company or the ability of the Company to perform any of the obligations set
forth in this Agreement or any Collateral Document executed or required to be
executed pursuant hereto or thereto or to consummate the Merger and the
Transactions, except (i) to the extent specifically described in Section 4.3 of
the Company Disclosure Schedule and (ii) for matters affecting the economy
(national or local) or the radio broadcasting industry generally.
SECTION 4.4 Liabilities. At the date of the most recent balance sheet
forming part of the Company Financial Statements, the Company did not have any
obligations or liabilities, past, present or deferred, accrued or unaccrued,
fixed, absolute, contingent or other, except as disclosed in such balance sheet,
or the notes thereto and except for obligations incurred in the ordinary course
of business which are not material or are not required under GAAP to be set
forth or reflected on a balance sheet or notes thereto, and since such date the
Company has not incurred any such obligations or liabilities, other than
obligations and liabilities incurred in the ordinary course of business
consistent with past practice of the Company, which do not, in the aggregate,
Materially Adversely Affect the Company, except to the extent specifically set
forth in Section 4.4 of the Company Disclosure Schedule. The Company has not
Guaranteed and is not otherwise primarily or secondarily liable in respect of
any obligation or liability of any other Person, except for endorsements of
negotiable instruments for deposit in the ordinary course of business or as
disclosed in the most recent balance sheet, or the notes thereto, forming part
of the Company Financial Statements or in Section 4.4 of the Company Disclosure
Schedule.
SECTION 4.5 Title to Properties; Leases.
(a) Section 4.5(a) of the Company Disclosure Schedule contains a true,
accurate and complete description of all real estate owned or leased by the
Company (the "Company Real Property") and all Leases and an identification of
all material items of personal property (the "Company Personal Property"). The
Company has good legal, indefeasible, insurable and marketable title in fee
simple to all Company Real Property, if any, owned by it and good indefeasible
and merchantable title to all Company Personal Property, free and clear of all
Liens, except (i) Liens reflected in the Company Financial Statements
(including, but not limited to, the Lien securing the Park Center Note), (ii)
Liens for current taxes not yet due and payable, (iii) Liens set forth on
Section 4.5(a) of the Company Disclosure Schedule, (iv) Liens that will be
released prior to the Closing Date (and which are listed on Section 4.5(a) of
the Company Disclosure Schedule), and (v) 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 business operations. 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
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Company 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 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 agreement authorizing any secured
party thereunder to file any such financing statement or filing. Except as set
forth in Section 4.5(a) of the Company Disclosure Schedule, the Company Real
Property (other than land) and all material items of Company Personal Property
are generally in a state of good repair and maintenance and are generally 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 will permit the Stations to operate in accordance with the terms
and conditions of their respective FCC Licenses and all Applicable Laws.
(b) Except as otherwise set forth in Section 4.5(b) of the Company
Disclosure Schedule, each Lease or other occupancy or other agreement under
which the Company holds real or personal property has been duly authorized,
executed and delivered by the Company and, to the Company's knowledge, each of
the other parties thereto, and is a legal, valid and binding obligation of each
of the Company that are parties thereto, and, to the Company's knowledge, each
of the other parties thereto, enforceable in accordance with its terms. The
Company has a valid leasehold interest in and enjoys peaceful and undisturbed
possession under all Leases pursuant to which it holds any Company Real Property
or Company Personal Property. All of such Leases are valid and subsisting and in
full force and effect; and neither the Company nor, to the Company's knowledge,
any other party thereto, is in default in the performance, observance or
fulfillment of any obligation, covenant or condition contained in any such
Lease.
(c) Except as set forth in Section 4.5(c) of the Company Disclosure
Schedule, all improvements on the Company Real Property are in compliance in all
material respects with, and the Company has not received any notice that any
Company Real Property, or the use thereof violates, any applicable title
covenant, condition, restriction or reservation or any applicable zoning,
wetlands, land use or other Applicable Law.
SECTION 4.6 Compliance with Private Authorizations. Section 4.6 of the
Company Disclosure Schedule sets forth a true, accurate and complete list and
description of each Private Authorization which individually or when taken
together with other substantially similar Private Authorizations is material to
the Company, all of which are in full force and effect. The Company has obtained
all Private Authorizations which are necessary for the ownership by the Company
of its properties and the conduct of its business 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 the Company. The
Company is not in breach or violation of, and is not in default in the
performance, observance or fulfillment of, any 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 Private Authorization, except for such defaults,
breaches or violations, as do not and will not have in the aggregate any
Material Adverse Effect on the Company or the ability of the Company to perform
any of the obligations set forth in this Agreement or any Collateral Document
executed or required to be executed pursuant hereto or thereto or to consummate
the Merger and the Transactions. No Private Authorization is the subject of any
pending or, to the Company's knowledge, information or belief, threatened
attack, revocation or termination.
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SECTION 4.7 Compliance with Governmental Authorizations and Applicable
Law.
(a) Section 4.7(a) of the Company Disclosure Schedule contains a
description of:
(i) all Legal Actions which are pending or in which the
Company or any of its business, operations or properties, or any of its
officers or directors in connection therewith, is, or, to the Company's
knowledge, at any time during the past five (5) years has been,
engaged, or which involves, or, to the Company's knowledge, at any time
during such period involved, the business, operations or properties of
the Company or, to the Company's knowledge, which is threatened or
contemplated against, or in any other manner relating Materially and
Adversely to, the Company or any of its business, operations or
properties, or any of its officers or directors in connection
therewith;
(ii) all Claims and Legal Actions pending or, to the Company's
knowledge, threatened against the Company or the ownership or
operations of any of the 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 any of the Stations, nor does the Company know of any
basis for any of the foregoing; in particular, but without limiting the
generality of the foregoing, there are no applications, complaints or
proceedings pending or, to the best of the Company's knowledge,
threatened (x) before the FCC relating to the business or operations of
any of the Stations other than applications, complaints or proceedings
which affect the radio broadcasting industry generally, or (y) before
any Authority involving charges of illegal discrimination by the
Stations under any federal or state employment Laws; and
(iii) each Governmental Authorization (including without
limitation all FCC Licenses) that is (x) owned or held by the Company
with respect to the ownership and operation of the Stations and the
conduct of the business of the Company, or (y) necessary to permit the
Company to execute and deliver this Agreement and to perform its
obligations hereunder.
The Company has delivered to American, true, correct and complete
copies of each of the Governmental Authorizations described in Section 4.7(a) of
the Company Disclosure Schedule (including without limitation any and all
amendments and other modifications thereto).
(b) The Company is the authorized legal holder of the FCC Licenses
listed in Section 4.7(a) of the Company Disclosure Schedule, none of which is
subject to any restriction or condition which would limit in any material
respect the operations of the Stations as currently conducted or proposed to be
conducted on or prior to the Closing Date. The FCC Licenses listed in Section
4.7(a) of the Company 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 the Company or its officers, directors, employees or agents, and the
operation of the Stations is in accordance in all material respects with the FCC
Licenses. The Stations are operating in accordance with the FCC Licenses, all
underlying construction permits and the FCA. Except as disclosed in Section
4.7(b) of the Company Disclosure Schedule, no application, action or proceeding
is pending for the renewal or modification of any of the FCC Licenses and, to
the Company's knowledge, there is not as of the date of this Agreement issued or
outstanding any investigation or material complaint against the Company at the
FCC relating to any of the Stations. Except as disclosed in Section 4.7(b) of
the Company Disclosure Schedule, as of the date of this Agreement, to the
Company's knowledge, there is no proceeding pending at or outstanding notice of
violation from the FCC relating to the Stations. All fees payable to Authorities
pursuant to the FCC
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Licenses, including FCC annual regulatory fees, have been paid and no event has
occurred which, individually or in the aggregate and without the giving of
notice or the lapse of time or both, would constitute grounds for revocation
thereof or would have an Adverse Effect on the Company. Except as set forth in
Section 4.7(b) of the Company Schedule, all material reports, forms and
statements required to be filed by the Company with the FCC with respect to the
Stations have been filed and are true, complete and accurate in all material
respects. To the best knowledge of the Company, under the FCA, there are no
facts that would disqualify the Company from transferring the Stations to
American.
The Governmental Authorizations listed in Section 4.7(a) of the Company
Disclosure Schedule comprise all Governmental Authorizations which are necessary
for the lawful ownership of operation and the lawful conduct of the business of
each of the Stations as now conducted, except for Governmental Authorizations,
the failure of which to obtain and maintain, would not individually or in the
aggregate have any Adverse Effect on the Company. No Governmental Authorization
is the subject of any pending or, to the Company's knowledge, threatened
challenge or proceeding to revoke or terminate any Governmental Authorization.
The Company has no reason to believe that any Governmental Authorization would
not be renewed in the name of the Company by the granting Authority in the
ordinary course.
(c) With respect to matters, if any, of a nature referred to in Section
4.7(a) or 4.7(b) of the Company Disclosure Schedule, except as otherwise
specifically described in Section 4.7(c) of the Company Disclosure Schedule, all
such information and matters set forth in the Company Disclosure Schedule, if
adversely determined against the Company, will not, in the aggregate, Materially
Adversely Affect the Company, or the ability of the Company to perform its
obligations under this Agreement or any Collateral Documents executed or
required to be executed pursuant hereto or thereto or to consummate the Merger
and the Transactions.
SECTION 4.8 Intangible Assets. Section 4.8 of the Company Disclosure
Schedule sets forth a true, accurate and complete description of all Intangible
Assets (other than Governmental Authorizations and Private Authorizations) held
or used by the Company, including without limitation the nature of the Company's
interest in each and the extent to which the same have been duly registered in
the offices as indicated therein. The Company owns or possesses or otherwise has
the right to use all such Intangible Assets necessary for the present and
planned future conduct of its business. Except as set forth in Section 4.8 of
the Company Disclosure Schedule, no authorizations or intangible assets (except
the Governmental Authorizations and Private Authorizations and such other
Intangible Assets so set forth) are required for the Company to conduct its
business as currently conducted or proposed to be conducted on or prior to the
Closing Date.
SECTION 4.9 Related Transactions. Section 4.9 of the Company Disclosure
Schedule specifically sets forth a true, accurate and complete description of
any Contractual Obligation or transaction between the Company and any of its
officers, directors or employees, any Company Stockholder, or any Affiliate of
any thereof (other than reasonable compensation for services as officers,
directors and employees), which are to continue following the Effective Time,
including without limitation 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 officer, director, Company Stockholder or
employee, or any Affiliate of any thereof. All such Contractual Obligations and
transactions which are to continue after the Effective Time (a) will be on terms
and conditions no less favorable to the Company than would be customary for such
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
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to be entered into, and (b) are specifically designated as so surviving in
Section 4.9 of the Company Disclosure Schedule.
SECTION 4.10 Insurance. Section 4.10 of the Company Disclosure Schedule
includes the insurers' names, policy numbers, expiration dates, amounts of
coverage, the annual premiums, Best policy holder's and financial size ratings
of the insurers, exclusions, deductibles and self-insured retention and
describes in reasonable detail any retrospective rating plan, fronting
arrangement or any other self-insurance or risk assumption agreed to by the
Company or imposed upon the Company by any such insurers, as well as any
self-insurance program that is in effect. The Company is not in breach or
violation of or in default under any such policy, and all premiums due thereon
have been paid.
SECTION 4.11 Tax Matters.
(a) The Company has in accordance with all Applicable Laws filed all
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 for which
adequate provision has been made on the most recent balance sheet forming part
of the Company Financial Statements. The Tax Returns of the Company have been
prepared in accordance with all Applicable Laws and generally accepted
principles applicable to taxation consistently applied. 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. The Company 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 the Company for the fiscal years prior to and
including the most recent fiscal year. Adequate provision has been made on the
most recent balance sheet forming part of the Company Financial Statements for
all Taxes accrued through the date of such balance sheet of any kind, 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 to the Company for which an adequate reserve has not been
provided on such balance sheet. The Company is not a "consenting corporation"
within the meaning of Section 341(f) of the Code. The Company has for the period
indicated in Section 4.1(a) of the Company Disclosure Schedule qualified, and
immediately prior to the Effective Time will qualify, for taxable status as a
Subchapter S corporation under the Code.
(b) The Company has paid all Taxes which have become due pursuant to
its Returns and has paid all installments of estimated Taxes due and payable.
(c) From the end of its most recent fiscal year to the date hereof the
Company 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.
(d) The information shown on the Federal Income Tax Returns of the
Company (true, accurate and complete copies of which have been furnished by the
Company to American to the extent requested by American) is true, accurate and
complete in all material respects and fairly and accurately reflects the
information purported to be shown. To the Company's knowledge, Federal and state
income Tax Returns of the Company have not been examined by the IRS or
applicable state Authority, and the Company has not been notified of any
proposed examination, except as shown in Section 4.11(d) of the Company
Disclosure Schedule.
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(e) The Company is not a party to any tax sharing agreement or
arrangement.
(f) The Company 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.
SECTION 4.12 Employee Retirement Income Security Act of 1974.
(a) The Company (which for purposes of this Section shall include any
ERISA Affiliate) has not made at any time since its organization and is not
making any contribution to any Plan and has not sponsored and is not sponsoring
any Plan or Benefit Arrangement, except as set forth in Section 4.12(a) of the
Company Disclosure Schedule. True, complete and accurate copies of all such
written Plans and Benefit Arrangements (or related insurance policies) to the
extent requested by American have been furnished to American, along with copies
of any employee handbooks or similar documents describing such Plans or Benefit
Arrangements. Section 4.12(a) of the Company Disclosure Schedule also contains a
true, complete and accurate description of any unwritten Plan or Benefit
Arrangement. As to all Plans and Benefit Arrangements listed in Section 4.12(a)
of the Company 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 the Company has not received any notice from
any Authority questioning or challenging such compliance;
(ii) 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 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
described in Section 406 of ERISA or Section 4975 of the Code) with
respect to any such Plan and the Company has not otherwise engaged in
any prohibited transaction;
(v) there have been no acts or omissions by the Company 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 the Company may be liable;
(vi) there are no Claims (other than routine claims for
benefits or actions seeking qualified domestic relations orders)
pending or threatened involving such Plans or the assets of such Plans,
and, to the Company's knowledge, 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 4043 of ERISA), and no steps have been taken to terminate any
such Plan;
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(viii) all group health Plans of the Company have been
operated in compliance in all material respects with the group health
plan continuation coverage requirements of COBRA;
(ix) to the extent required by GAAP, actuarially adequate
accruals for all obligations under the Plans are reflected in the most
recent balance sheet forming part of the Company Financial Statements
and such obligations include a pro rata amount of the Shareholder
Distributions which would otherwise have been made in accordance with
past practices for the Plan years which include the Closing Date;
(x) neither the Company nor, to the Company's knowledge, any
of its respective directors, officers, employees or any other fiduciary
has committed any material breach of fiduciary responsibility imposed
by ERISA that would subject the Company or any of its respective
directors, officers or employees to any material liability under ERISA;
(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 liability to the PBGC has been or is expected by the
Company to be incurred by the Company 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;
(xiii) the Company is not and never has been a party to any
Multiemployer Plan or made contributions to any such Plan;
(xiv) except as set forth in Section 4.12(a)(xiv) of the
Company Disclosure Schedule (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, the Company 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
the Company; and
(xv) the Company has made available to American a copy of the
two most recently filed Federal Form 5500 series and accountant's
opinion, if applicable, for each Plan (and the two most recent
actuarial valuation reports for each Plan, if any, that is subject to
Title IV of ERISA), and all information provided by the Company to any
actuary in connection with the preparation of any such actuarial
valuation report was true, accurate and complete in all material
respects.
(b) The execution, delivery and performance of this Agreement and the
Collateral Documents executed or required to be executed pursuant hereto and
thereto will not involve any prohibited transaction within the meaning of ERISA
or Section 4975 of the Code.
SECTION 4.13 Absence of Sensitive Payments. Neither the Company nor, to
the Company's knowledge, any of its officers, directors, stockholders,
employees, agents or other representatives, has (a) made any contributions,
payments or gifts to or for the private use of any governmental official,
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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, (b) established or maintained any unrecorded fund or
asset for any purpose or made any false or artificial entries on its books, or
(c) made any payments to any person with the intention or understanding that any
part of such payment was to be used for any purpose other than that described in
the documents supporting the payment.
SECTION 4.14 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 section 11301 of Title 49, U.S.C.
SECTION 4.15 Authorized and Outstanding Capital Stock.
(a) The authorized and outstanding capital stock of the Company is as
set forth in Section 4.15(a) of the Company Disclosure Schedule. 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.
There is neither outstanding nor has the Company agreed to grant or issue any
shares of its capital stock or any Option Security or Convertible Security, and
the Company 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, except
as set forth in Schedule 4.15(a) of the Company Disclosure Schedule.
(b) All of the outstanding capital stock of the Company is owned as of
the date of this Agreement by the Company Stockholders as and to the extent set
forth in Section 4.15(b) of the Company Disclosure Schedule, to the Company's
knowledge, free and clear of all Liens.
SECTION 4.16 Employment Arrangements.
(a) Section 4.16(a) of the Company Disclosure Schedule contains a true,
accurate and complete list of all persons employed by the Company, together with
each such employee's date of hire, the title or capacity in which such person is
employed, and an accurate summary description of all Employment Arrangements.
(b) The Company has received no notice that, and the Company is not
aware of, any Company employee (other than the Company Stockholders) who shall
or is likely to terminate his or her employment relationship with the Company
upon the execution of this Agreement or with American after consummation of the
Merger.
(c) Each applicable Employment Arrangement has been administered in
compliance in all material respects with the provisions of ERISA, the Code, the
Age Discrimination in Employment Act and any other Applicable Law. The Company
has performed in all material respects all obligations required to be performed
under each Employment Arrangement and is not in material breach or violation of
or in material default or arrears under any of the terms, provisions or
conditions thereof. There exists no Claim or Legal Action (other than routine
claims for benefits) with respect to any Employment Arrangement pending or, to
the Company's knowledge, threatened against any Employment Arrangement, and the
Company possesses no knowledge of any facts which could give rise to any such
Legal Action or Claim.
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(d) Except as described in Section 4.16(d) of the Company Disclosure
Schedule, (i) none of the employees of the Company is now, or, to the Company's
knowledge, during the past five (5) years has been, represented by any labor
union or other employee collective bargaining organization, or are now, or, to
the Company's knowledge 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 the Company nor any of
its employees is now, or, to the Company's knowledge, during the past five (5)
years has been, subject to or involved in or, to the Company's knowledge,
threatened with, any union elections, petitions therefore or other
organizational or recruiting activities. The Company has performed all
obligations required to be performed under all Employment Arrangements and are
not in breach or violation of or in default or arrears under any of the terms,
provisions or conditions thereof. Section 4.16(a) of the Company Disclosure
Schedule sets forth the basis of funding, and the current status of, any past
service liability with respect to each Employment Arrangement to which the same
is applicable.
(e) Except as set forth on Section 4.16(e) of the Company Disclosure
Schedule, no employee shall accrue or receive additional benefits, service or
accelerated rights to payments of benefits under any Employment Arrangement,
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. Notwithstanding the foregoing, the Company represents and
warrants that each employment, severance, consulting or other similar agreement,
if any, listed in Section 4.16(e) of the Company Disclosure Schedule may be
unconditionally terminated at no cost to the Company or American.
(f) The Company considers its relationships with its employees to be
good.
SECTION 4.17 Material Agreements. Specifically listed on Section 4.17
of the Company Disclosure Schedule are all Material Agreements relating to the
ownership or operation of the business and property of the Company or any
presently held or used by the Company or to which the Company is a party or to
which it or any of its property is subject or bound. True, accurate and complete
copies of each of the Material Agreements have been made available by the
Company to American and the Company 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 4.17 of the Company
Disclosure Schedule, if any such Material Agreements are oral). All of the
Material Agreements are valid, binding and legally enforceable obligations of
the Company and, to the Company's knowledge, all other parties thereto, and the
Company is validly and lawfully operating its business and owning its property
under each of the Material Agreements. The Company has duly complied with all of
the 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 of the Company, 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) such Material Agreement or impair the rights or
benefits, or increase the costs, of the Company, under any of the Material
Agreements. The Company has not expressly granted any waivers of forbearance
under any Material Agreement and, to the Company's knowledge, no third party is
in material default in the performance of any of its obligations under any
Material Agreement. Except for those consents or approvals listed in Section
4.17 of the Company Disclosure Schedule, no consents or approvals of any third
party are necessary to permit the assignment of the Material Agreements to
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American pursuant to the Merger and such assignment will not affect the validity
or enforceability of any Material Agreement or cause any material change in the
substantive terms of any of them.
SECTION 4.18 Ordinary Course of Business. The Company, from the end of
its most recent fiscal quarter to the date hereof, and until the Closing Date,
except (i) as may be described on Section 4.18 of the Company Disclosure
Schedule, (ii) as may result from the consummation of the Shareholder
Distribution, (iii) as may be required or expressly contemplated by the terms of
this Agreement, or (iv) as are reflected in the Company Financial Statements:
(a) has operated, and will continue to operate, 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, and will not sell or otherwise dispose of
or contract to sell or otherwise dispose of, any of its properties or
assets having a value in excess of $10,000 with respect to any Station,
other than in the ordinary course of business;
(c) except in each case in the ordinary course of business:
(i) has not incurred and will not incur any
obligations or liabilities (fixed, contingent or other) having
a value in excess of $10,000 with respect to any Station;
(ii) has not entered and will not enter into any
commitments having a value in excess of $10,000 with respect
to any Station; and
(iii) has not cancelled and will not cancel any debts
or claims;
(d) has not made or committed to make, and will not make or
commit to make, any additions to its property or any purchases of
equipment, except for normal maintenance and replacements;
(e) has not discharged or satisfied and will not discharge or
satisfy any Lien, and has not paid and will not 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 or repaying or prepaying Long-Term Indebtedness or the current
portion thereof;
(f) has not created or permitted to be created, and will not
create or permit to be created, any Lien on any of its tangible
property, except for such Liens, if any, as do not materially detract
from the value of or materially interfere with the use of such
property;
(g) has not transferred or created or permitted to be created,
and will not transfer or create or permit to be created, any Lien on
any Intangible Assets , except for such Liens, if any, as do not
materially detract from the value of or materially interfere with the
use of such property;
(h) has not increased and will not increase the compensation
payable or to become payable to any of its directors, officers,
employees, advisers, consultants, salesmen or agents
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other than in the ordinary course of business which will not, in any
event with respect to any of the foregoing, exceed the applicable rate
of inflation, or otherwise alter, modify or change the terms of their
employment or engagement;
(i) has not suffered and will not suffer 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 material
value without fair and adequate consideration;
(k) has not experienced any work stoppage;
(l) except in the ordinary cause of business as described in
Section 4.18(l) of the Company Disclosure Schedule, has not entered
into, amended or terminated, and will not enter into, amend or
terminate, any Lease, Governmental Authorization, Plan, Benefit,
Arrangement, Private Authorization, Material Agreement, Employment
Arrangement or Contractual Obligation, or any transaction, agreement or
arrangement with any Affiliate;
(m) has not amended or terminated, and will not amend or
terminate, and has kept and will keep in full force and effect
including without limitation renewing to the extent the same would
otherwise expire or terminate, all insurance policies and coverage with
financially responsible companies in such amounts and against such
risks and losses as are consistent with past practice;
(n) has not, and will not have, declared, made or paid, or
agreed to declare, make or pay, any Distribution;
(o) has not amended, and will not amend, any provision of its
Organic Documents;
(p) has not issued, sold, pledged or disposed of and will not
issue, sell, pledge or dispose of any additional shares of capital
stock or any Option Securities or Convertible Securities and has no
entered into, and will not enter into, any agreement or arrangement to
do the same;
(q) has not entered into, and will not enter into, any trade
or barter arrangements (i) which are outside the ordinary course of
business, (ii) otherwise than in accordance with the Company's prior
policies and practices, or (iii) if, together with all trade and barter
arrangements entered into after September 30, 1996, such arrangements
would cause the difference between fair value of the Company's trade
assets and trade liabilities with respect to the Stations to become
more unfavorable to the Company by more than $25,000;
(r) 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 the Company, except in the ordinary course
of business; and
(s) will, on or prior to the Closing, apply the condemnation
fund account balance in the amount and as set forth in Section 4.18(s)
of the Company Disclosure Schedule.
SECTION 4.19 Bank Accounts, Etc. Section 4.19 of the Company Disclosure
Schedule contains a true, accurate and complete list as of the date hereof of
all banks, trust companies, savings and loan
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associations and brokerage firms in which the Company has an account or a safe
deposit box and the names of all Persons authorized to draw thereon, to have
access thereto, or to authorize transactions therein, the names of all Persons,
if any, holding powers of attorney from the Company and a summary statement as
to the terms thereof. The Company agrees that prior to the Closing Date it will
not make or permit to be made any change affecting any bank, trust company,
savings and loan association, brokerage firm or safe deposit box or in the names
of the Persons authorized to draw thereon, to have access thereto or to
authorize transactions therein or in such powers of attorney, or open any
additional accounts or boxes or grant any additional powers of attorney, without
in each case obtaining the prior written consent of American.
SECTION 4.20 Material and Adverse Restrictions. The Company is not a
party to or subject to, nor is any of its property subject to, any Applicable
Law, Governmental Authorization, Contractual Obligation, Employment Arrangement,
Material Agreement or Private Authorization, or any other obligation or
restriction of any kind or character not disclosed by the Company to American on
or prior to the date of this Agreement, which now or, as far as the Company can
now reasonably foresee, individually or in the aggregate is likely to, have any
Material Adverse Effect on the Company, except as specifically set forth in
Section 4.20 of the Company Disclosure Schedule.
SECTION 4.21 Broker or Finder. No Person assisted in or brought about
the negotiation of this Agreement, the Merger or the subject matter of the
Transactions in the capacity of broker, agent or finder or in any similar
capacity on behalf of the Company or to the knowledge of the Company or any
Company Stockholders other than Media Venture Partners, Ltd., which was retained
by, and whose fees and expenses shall be paid equally by, the Company and
American.
SECTION 4.22 Environmental Matters.
(a) Except as set forth in Section 4.22(a) of the Company Disclosure
Schedule, the Company:
(i) to the knowledge of the Company, 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
Environmental Laws;
(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 Environmental Laws;
(iv) is, to the knowledge of the Company, in compliance in all
material respects with all Environmental Laws, has, to Company's
knowledge, obtained all Environmental Permits, and is not the subject
of or, to the Company's knowledge, 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) the Company has no knowledge of any past or present Event
related to the Company or its business, operations or property which
Event, individually or in the aggregate, may
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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 4.22(b) of the Company Disclosure
Schedule:
(i) the Company has not disposed of, released, buried or
placed on any property or facility owned or leased by the Company
during the period that such facilities and properties were owned or
leased by it or on the property of any other Person any Hazardous
Materials which to Company's knowledge could form the basis for a
material Claim; and
(ii) to the knowledge of the Company, the Company has no
above-ground or underground fuel storage tanks on property owned or
leased by it.
SECTION 4.23 Compliance with Regulations Relating to Securities Credit.
None of the borrowings, if any, of the Company were incurred or used for the
purpose of purchasing or carrying any security which at the date of its
acquisition was, or any security which now is, margin stock or other margin
security within the meaning of Regulation T of the Margin Rules or a "security
that is publicly held," within the meaning of the Margin Rules, and the Company
owns no margin stock or other margin security, or a "security that is publicly
held", and the Company has no present intention of acquiring any margin stock or
other margin security, or any "security that is publicly held".
SECTION 4.24 Continuing Representation and Warranty. Except for those
representations and warranties which speak as of a specific date, all of the
representations and warranties of the Company set forth in this Article (as the
same may be updated pursuant to Section 6.4) shall be true and correct on the
Closing Date with the same force and effect as though made on and as of that
date and those, if any, which speak as of a specific date shall be true and
correct on the Closing Date.
SECTION 4.25 Contribution Assets. Notwithstanding anything to the
contrary in the foregoing representations and warranties of the Company, the
Company hereby makes no representations or warranties with respect to the assets
of the Company described in Section 2.1 of the Company Disclosure Schedule to be
contributed and transferred to the Company Stockholders pursuant to the
Shareholder Distribution.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF AMERICAN
American represents, warrants and covenants to, and agrees with, the
Company as follows:
SECTION 5.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) American (i) is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation; (ii) 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 (iii) has duly qualified and is
authorized to do business and is in good standing as a foreign corporation in
each jurisdiction in which the character of its property or the nature
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of its business or operations requires such qualification or authorization, and
in which the failure to be so qualified would have a Material Adverse Effect on
American.
(b) American has all requisite power and authority (corporate and
other), and has in full force and effect all Governmental Authorizations (other
than those referred to in Section 5.2(c)(iii)) and Private Authorizations in
order 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 Merger and the 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. No action or approval on the part of the American stockholders is
required in connection with the execution, delivery and performance of this
Agreement or any Collateral Document or the consummation of the Merger and the
Transactions. 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 and the
Transactions, when executed and delivered by American, will constitute, legal,
valid and binding obligations of American enforceable in accordance with their
respective terms, except as such enforceability may be limited by bankruptcy,
moratorium, insolvency and similar laws affecting the rights and remedies of
creditors and the obligations of debtors generally and by general principles of
equity.
(c) Except as set forth in Section 5.1(c) of the American Disclosure
Schedule, neither the execution and delivery of this Agreement or any Collateral
Document executed or required to be executed pursuant hereto or thereto, nor the
consummation of the 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 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, except for
such conflicts, breaches, violations, defaults or permitted
accelerations as would not, individually or in the aggregate, have an
Adverse Effect on the American; or
(ii) will require American to make or obtain any Governmental
Authorization, Governmental Filing or Private Authorization, except for
(x) the FCC Consents, filings under the Hart-Scott-Rodino Act and
Private Authorizations and (y) other filing requirements under
Applicable Law in connection with the Merger and the Transactions the
failure of which to be obtained or maintained would not, individually
or in the aggregate, have an Adverse Effect on American.
SECTION 5.2 Financial and Other Information.
(a) American has heretofore furnished to the Company copies of the
consolidated financial statements of American and its Subsidiaries listed in
Section 5.2(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 5.2(a) of the American Disclosure
Schedule, are true, accurate and complete in accordance with GAAP, do not
contain
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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 and 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.
(b) Neither the American Disclosure Schedule, the American Financial
Statements or this Agreement nor any Collateral Document, data, information or
statement furnished or to be furnished by or on behalf of the Company pursuant
to this Agreement or any Collateral Document executed or required to be executed
by or on behalf of the Company pursuant hereto or thereto or to consummate the
Merger and the Transactions, 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. The documents (collectively, the "American SEC Documents")
which American has filed pursuant to the provisions of the Securities Act or the
Exchange Act, as of the date of the filing thereof, did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated herein or necessary to make the statements contained therein, in light of
the circumstances under which they were made, not misleading. Section 5.2(b) of
the American Disclosure Schedule contains an update of certain of the
information set forth in the American SEC Documents. No information material to
the Merger and the Transactions contemplated by this Agreement and which is
necessary to make the representations and warranties herein contained not
misleading, to the knowledge of American, has been withheld from, or has not
been delivered to, the Company.
SECTION 5.3 Changes in Condition. Since the date of the most recent
financial statements forming part of the American Financial Statements, there
has been no Material Adverse Change in the Company and its Subsidiaries taken as
a whole. There is no Event known to American which Materially Adversely Affects,
or (so far as American can now reasonably foresee) in the future is likely to
Materially Adversely Affect, American and its Subsidiaries taken as a whole, or
the ability of the Company to perform any of the obligations set forth in this
Agreement or any Collateral Document executed or required to be executed
pursuant hereto or thereto or to consummate the Merger and the Transactions,
except (i) to the extent specifically described in the American Disclosure
Schedule and (ii) for matters affecting the economy (national or local) or the
radio broadcasting industry generally.
SECTION 5.4 Compliance with Private Authorizations. Each of American
and each Subsidiary has obtained all Private Authorizations which are necessary
for the ownership by American or each Subsidiary of its properties and the
conduct of its business 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 and its Subsidiaries taken as a
whole. Neither American nor any Subsidiary is in breach or violation of, or is
in default in the performance, observance or fulfillment of, any 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 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 and its
Subsidiaries taken as a whole or the ability of American to perform any of the
obligations set forth in this Agreement or any Collateral Document executed or
required to be executed pursuant hereto or thereto or to consummate the Merger
and the Transactions. No 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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SECTION 5.5 Compliance with Governmental Authorizations and Applicable
Law.
(a) American or one of its Subsidiaries is the authorized legal holder
of all FCC licenses required to carry on the operation of the radio broadcasting
stations of American, none of which is subject to any restriction or condition
which would limit in any material respect the operations of such stations as
currently conducted or proposed to be conducted. There are no applications,
complaints or other Legal Actions pending or, to the best knowledge of American,
threatened before the FCC which could Materially Adversely Affect the business
or operations of its stations, other than applications, complaints or
proceedings which affect the radio broadcasting industry generally. The FCC
licenses held by American or one of its Subsidiaries 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 any of its Subsidiaries or its or
their officers, directors, employees or agents, and the operation of such
stations is in accordance in all material respects with its FCC licenses. All
material reports, forms and statements required to be filed by American with the
FCC with respect to such stations have been filed and are true, complete and
accurate in all material respects.
(b) Each of American and each of its Subsidiaries has obtained all
Governmental Authorizations which are necessary for the lawful ownership and the
lawful conduct of its business as now conducted or as presently proposed to be
conducted, except for Governmental Authorizations, the failure of which to
obtain and maintain, would not individually or in the aggregate, have any
Material Adverse Effect on American and its Subsidiaries taken as a whole. No
Governmental Authorization is the subject of any pending or, to American's
knowledge, threatened challenge or proceeding to revoke or terminate any
Governmental Authorization. American has no reason to believe that any
Governmental Authorization would not be renewed in the name of American by the
granting Authority in the ordinary course.
SECTION 5.6 Authorized and Outstanding Capital Stock.
(a) The authorized and outstanding capital stock of American is as set
forth in the American SEC Documents, except as otherwise set forth in Section
5.6(a) of the American Disclosure Schedule. 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. There is,
as of the date hereof, neither outstanding nor has the Company agreed to grant
or issue any shares of its capital stock or any Option Security or Convertible
Security, and, as of the date hereof, neither American nor any Subsidiary is a
party to or is 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, except as set forth in the
American Prospectus or Section 5.6(a) of the American Disclosure Schedule.
(b) To American's knowledge, as of the date hereof, no Person, and no
group of Persons acting in concert, owns as much as five percent (5%) of
American's outstanding Common Stock, and American is not controlled by any other
Person, except Baron Capital, Inc. or as set forth in the American SEC Documents
or Section 5.6(b) of the American Disclosure Schedule.
SECTION 5.7 Broker or Finder. No Person assisted in or brought about
the negotiation of this Agreement, the Merger or the subject matter of the
Transactions in the capacity of broker, agent or finder or in any similar
capacity on behalf of American, other than Media Venture Partners, Ltd., which
was retained by, and whose fees and expenses shall be paid equally by, the
Company and American.
SECTION 5.8 Continuing Representation and Warranty. Except for those
representations and warranties which speak as of a specific date, all of the
representations and warranties of American set
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forth in this Article shall be true and correct on the Closing Date (as the same
may be updated pursuant to Section 6.4) with the same force and effect as though
made on and as of that date and those, if any, which speak as of a specific date
shall be true and correct on the Closing Date.
ARTICLE 6
COVENANTS
SECTION 6.1 Access to Information; Confidentiality.
(a) Each party shall 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
Effective Time 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 federal or
state securities laws) or filed by it or any of its Subsidiaries with any
Authority in connection with the Transactions or which may have a material
effect on their respective 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 the Company or its accountants deemed by American or
its Representatives necessary or useful for the purpose of performing an audit
of the Company and its Subsidiaries and certifying financial statements and
financial information, and (iii) such other information concerning any of the
foregoing as American or the Company 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 and
the 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 who need to know
such information for the purpose of evaluating the Merger and the 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. From and after the Closing, each of the Company Stockholders shall
not, without the prior written consent of American, disclose any information
remaining in his possession with respect to the Company, and no such information
shall be used for any purposes, other than in connection with the Merger or to
the extent required by Applicable Law.
(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 the 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.
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(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.
SECTION 6.2 Agreement to Cooperate.
(a) Each of the parties hereto shall use reasonable business efforts 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 make effective the Transactions, including 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 and the 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 8.1(c) hereof, (ii) to obtain all
necessary or appropriate waivers, consents and approvals, (iii) to prepare and
file with the California Commissioner, as promptly as practicable after the
execution of this Agreement, an application for permit to issue securities and a
request for a hearing to determine the fairness of the Merger, to have the
hearing held and the Merger approved by the California Commissioner (the
"California Commissioner Fairness Ruling") , and to take such other actions,
including without limitation the preparation of a proxy statement of the Company
and responding to any comments on such proxy statement made by the California
Commissioner, (iv) 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 Stations), (v)
to lift any injunction or other legal bar to the Merger and the Transactions
(and, in such case, to proceed with the Merger and the Transactions as
expeditiously as possible) and (vi) to obtain the satisfaction of the conditions
specified in Article 7. 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 date of this Agreement, the
Company 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, 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, the Company 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 of this Agreement). The Merger is expressly conditioned upon the
grant of the Final Order as to the FCC Consents for the transfer of control of
the Company to American without any condition Materially Adverse to American or
any of its Subsidiaries.
(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 Transactions that are required or permitted to be filed on
or before the Effective Time.
(c) The Company 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 or the Company's
independent accountants prepare audited financial statements for the Company
described in Section 7.2(d). The Company represents and warrants that such
financial
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statements will have been prepared in accordance with GAAP applied on a basis
consistent with past practices and will present fairly the financial condition
and results of operation of the Company. Without limiting the generality of the
foregoing, the Company 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 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) The parties shall cooperate with one another in making any required
or desired allocations of the Merger Consideration, it being agreed that (i)
there shall be allocated to the land and building located at 190 Park Center
Plaza, San Jose, California, the sum of $3,180,000 (following expenditure of the
condemnation fund account balance in accordance with Section 4.18(s) of the
Company Disclosure Schedule) plus the cost of any capital improvements thereto
made after November 26, 1996, provided that any such capital improvement shall
have been approved in writing in advance by American and shall be completed
prior to Closing, and (ii) no amount shall be allocated to the Noncompetition
Agreement.
(e) The Company shall use its reasonable business efforts to cause
Levitt Property Managers, Inc. ("LPM") to take all necessary steps and to pursue
diligently all Governmental Authorizations and Private Authorizations required
for the development of the Property (as defined in the Leasehold Option
Agreement) as a communications tower site and construction thereon of the
communications tower contemplated by the Leasehold Option Agreement. On or
before the tenth day of each month, commencing with February 1997, the Company
shall provide or shall cause LPM to provide American with a statement setting
forth, in reasonable detail, the amount of Development Costs (as defined in the
Leasehold Option Agreement) incurred as of the last day of the preceding month.
American shall have the right, at any time within twenty (20) business days
after receipt of any such statement, to request additional information or
verification with respect to any Development Costs shown on such statement and
the Company shall provide or shall cause LPM to provide such requested
information as promptly as is reasonably practicable. The failure of American to
request any such additional information or verification within such period shall
be deemed to mean that American has accepted the incurrence and amount of such
Development Costs.
SECTION 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, the Merger or any 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, the Company acknowledges and agrees that
American may, without the prior consent of the Company, 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, and exercise
in good faith, all reasonable business efforts to agree with the Company
regarding the nature, extent and form of such press release or public statement,
and, in any event, with prior notice to the Company.
SECTION 6.4 Notification of Certain Matters. (a) Each party shall give
prompt notice to the other, of (i) the occurrence or non-occurrence of any Event
the occurrence or non-occurrence of which would be likely to cause (A) 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 (B) any covenant, condition or agreement made by it
contained in this Agreement not to be complied with or satisfied, or (C) in the
case of the Company, any change to be made in the Company Disclosure Schedule or
in the case of American, any change to be made in the American Disclosure
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Schedule, as the case may be, in any respect such that one or more of the
conditions of Closing might not be satisfied, and (ii) 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;
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, except as provided in paragraph (b) below.
(b) Each party shall have the right to deliver to the other party a
written disclosure letter which shall contain a specific reference to this
Section 6.4(b) and a request that the other party indicate its position with
respect to the disclosed breach within ten (10) business days after receipt of
such disclosure letter as to any matter which it becomes aware following
execution of this Agreement which would constitute a breach of any
representation, warranty, covenant or agreement set forth in this Agreement by
such party, identifying on such disclosure letter the representation, warranty,
covenant or agreement which would be so breached; provided, however, that each
such disclosure letter shall be delivered as soon as practicable after such
party becomes aware of the matter as disclosed therein. The non-disclosing party
shall have ten (10) business days after its receipt of such disclosure letter to
notify the disclosing party that (i) it will close notwithstanding the new
disclosure, (ii) it will not close based on such new disclosure, or (iii)
further investigation or negotiation is required for it to reach a determination
whether or not to close based on such new disclosure.
SECTION 6.5 No Solicitation.
(a) The Company shall not, nor shall it permit any of the Company's
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 Other Transaction, engage in any discussions or negotiations
concerning, or provide to any other person any information or data relating to,
it 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 Other Transaction, or agree to or endorse any Other Transaction;
provided, however, that nothing contained in this Section shall prohibit the
Company or its Board of Directors from making any disclosure to the Company
Stockholders or taking any other action that, in the reasonable judgment of its
Board of Directors in accordance with, and based upon the written advice of,
outside counsel, is required under Applicable Law. The Company shall promptly
advise American of, and communicate the material terms of, any proposal relating
to any Other Transaction it may receive, or any inquiries it receives which may
reasonably be expected to lead to such a proposal, and the identity of the
Person making it. The Company shall further advise American of the status and
changes in the material terms of any such proposal or inquiry (or of any
amendment to any of them). During the term of this Agreement, the Company shall
not enter into any agreement, oral or written, and whether or not legally
binding, with any Person that provides for, or in any way facilitates, any Other
Transaction, or affects any other obligation of the Company under this
Agreement.
(b) "Other Transaction" means a transaction or series of related
transactions (other than the Merger and the Transactions) resulting in (i) any
change of control of the Company, (ii) any merger or consolidation of the
Company, regardless of whether the Company is the surviving corporation, (ii)
any tender offer or exchange offer for, or any acquisitions of, any securities
of the Company, (iv) any sale or other disposition of assets of the Company not
otherwise permitted under the provisions of Section 4.18 or made pursuant to the
Shareholder Distribution, or (v) so long as this Agreement remains in effect,
any issue or sale, or any agreement to issue or sell, any capital stock,
Convertible Securities or Option Securities by the Company.
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(c) In the event (i) the Company does not, upon American's request,
take such actions as American may require in connection with the filing of an
application with the California Commissioner for the California Commissioner
Fairness Ruling as contemplated by Section 6.2(a) unless the Company has waived
all conditions, rights and remedies set forth in this Agreement which are based
upon obtaining such Ruling, or (ii) in the event a favorable ruling is not
obtained from the California Commissioner because of the existence of an Other
Transaction, or (iii) in the event the California Commissioner Fairness Ruling
has been obtained but the Company Stockholders shall have failed to approve this
Agreement, or (iv) (x) in the event a favorable ruling is not obtained from the
California Commissioner other than by reason of the existence of an Other
Transaction, (y) this Agreement is terminated (I) by American pursuant to the
provisions of Section 8.1(d)(ii), or (II) by either party because the Company
Stockholders shall have failed to approve this Agreement, and (z) within twelve
(12) months of such termination the company (or the Company Stockholders) enter
into an Other Transaction, the Company shall pay to American, as liquidated
damages, the sum of $1,500,000. American and the Company agree in advance that
actual damages would be difficult to ascertain and that such amount is a fair
and equitable amount to reimburse American for damages sustained due to the
Company's failure to consummate the Merger and the Other Transactions for the
above-stated reasons.
SECTION 6.6 Termination of Option Securities and Convertible
Securities. The Company will take all action necessary to terminate all
outstanding Option Securities and the conversion rights of all Convertible
Securities issued by the Company immediately prior to the Effective Time and to
provide timely notice to all holders of Option Securities and Convertible
Securities notifying them of such termination. Without the prior written consent
of American, except as set forth in Section 4.15(a) of the Company Disclosure
Schedule, (a) such termination will not cause an acceleration of the exercise,
conversion or vesting schedule of any Option Security or of any Convertible
Security, and (b) the Company will not otherwise accelerate, or cause an
acceleration of, the exercise, conversion or vesting schedule of any Option
Security or Convertible Security. Prior to the Closing, the Company shall issue
Certificates to all holders of properly exercised Option Securities and properly
converted Convertible Securities; such Certificates shall accurately represent
the number of Company Shares to which such holder is entitled by virtue of such
exercise or conversion and the Company shall amend Section 4.15(a) of the
Company Disclosure Schedule accordingly.
SECTION 6.7 Conduct of Business by the Company Pending the Closing.
Except 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, the Company shall:
(a) comply with the provisions of Section 4.18;
(b) use all reasonable business efforts to preserve intact its business
organizations and goodwill, keep available the services of its present general
managers, on-air personalities and other key employees, and preserve the
goodwill and business relationships with customers and others having business
relationships with it and not engage in any action, directly or indirectly, with
the intent to Adversely Affect the Merger;
(c) maintain levels of advertising, marketing and promotion efforts and
expenditures at levels no less than those currently budgeted in the 1997
business plan;
(d) operate the Stations in conformity with the FCC Licenses on a basis
consistent with past practice and any special temporary authority or program
test authority issued thereunder, the FCA and
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the rules and regulations of any other Authority with jurisdiction over the
Stations, and take all actions necessary to maintain the FCC Licenses;
(e) refrain from changing the frequency or format of any Station or
making any material changes in any Station's studio or other structures, except
to the extent required by the FCA or the rules and regulation of the FCC;
(f) not make any material changes in the broadcast hours or in the
percentage or types of programming broadcast by any Station, or make any other
material changes in any Station's programming policies, except such changes as
in the good faith judgment of the Company are required by the public interest;
(g) notify American promptly if any Station's normal broadcast
transmissions are interrupted or impaired for (i) thirty (30) minutes or more
daily for a period of five (5) consecutive days or during any seven (7) days
within any period of thirty (30) consecutive days (except for normal
maintenance) or (ii) a period of six (6) continuous hours or more;
(h) not waive any material right relating to any Station;
(i) not (i) amend or propose to amend its Organic Documents, (ii)
split, combine or reclassify (whether by stock dividend or otherwise) its
outstanding capital stock, or (iii) declare, set aside or pay any dividend or
distribution payable in cash, stock, property or otherwise;
(j) 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 the Company would cause
American, the Company 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, or (iv) enter into any contract, agreement,
commitment or arrangement with respect to any of the foregoing; and
(k) 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.
ARTICLE 7
CLOSING CONDITIONS
SECTION 7.1 Conditions to Obligations of Each Party to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions, any or all of which may be waived, in whole or in part, to the
extent permitted by Applicable Law:
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(a) The American Shares constituting a part of the Exchange
Merger Consideration shall have been approved for trading on the Nasdaq
National Market, subject to official notice of issuance;
(b) As of the Closing Date, no Legal Action shall be pending
before or threatened in writing by any Authority or other Person
seeking to restrain, prohibit or make illegal the consummation of the
Merger, it being understood and agreed that one or more written
requests by any Authority for information or additional information
with respect to the Merger, which information could be used in
connection with such Legal Action, may not be deemed to be a threat of
Legal Action;
(c) Other than the filing of merger documents in accordance
with the DGCL and the CGCL, 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 the Company with any Authority,
prior to the consummation of the Merger and the 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
American, assuming consummation of the Merger, have a Material Adverse
Effect on American and its Subsidiaries taken as a whole. 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 without
any Materially Adverse Effect upon American and its Subsidiaries taken
as a whole or the Stations; and
(d) The Shareholder Distribution shall have been consummated
in accordance with Section 2.1 hereof.
SECTION 7.2 Conditions to Obligations of American. The obligation of
American to effect the Merger shall be subject to the satisfaction at or prior
to the Effective Time 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 Company shall have delivered or cause to be delivered
to American all of the Collateral Documents required to be delivered by
the Company to American at or prior to the Closing pursuant to the
terms of this Agreement; such Collateral 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 without limitation lien searches and
records of corporate proceedings, which they may reasonably request in
connection therewith, such documents where appropriate to be certified
by proper corporate officers;
(b) The Company 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 Gibson, Dunn & Crutcher LLP, counsel and Haley,
Bader & Potts, FCC counsel for the Company, with respect to the matters
set forth in Sections 4.1(a), (b) and (c) (other than as to Private
Authorizations and as to the Company's Contractual Obligations, limited
to such counsel's knowledge), 4.7(a) (limited to its knowledge and to
Legal Actions), 4.14 and 4.15 (limited to such counsel's knowledge as
to liens, outstanding options and
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ownership) and with respect to FCC related matters of a nature and
scope customary in comparable transactions (including without
limitation with respect to the grant of all necessary FCC Consents and
their being Final Orders, that all FCC Licenses are valid, binding and
in good standing and in full force and effect, the absence of Legal
Actions which could Materially Adversely Affect the FCC Licenses and
the FCC Consents, and the filing of all Material reports and the
payment of all fees) and with respect to such other matters arising
after the date of this Agreement incident to the Merger, as American or
its counsel or 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 the Company contained in this Agreement or otherwise made in writing
by it or on its behalf pursuant hereto or otherwise made in connection
with the Transactions shall be true and correct in all respects
Material to the Company 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 the Company or American and except for those additional
disclosures which have been accepted by American pursuant to the
provisions of Section 6.4); each and all of the agreements and
conditions to be performed or satisfied by the Company hereunder at or
prior to the Closing Date shall have been duly performed or satisfied
in all material respects; and the Company 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 (i) from, at American's
election, its or the Company's independent public accountants (with the
understanding that (A) any additional costs associated with the
preparation of such financial statements in accordance with GAAP and
Regulation S-X under the Securities Act shall be borne in all cases by
American and (B) if American's independent accountants are used, all
costs and expenses incurred by such accountants shall be the
responsibility of American) an unqualified report (as the scope of the
audit, access to the books and records and the cooperation of
management) with respect to the financial statements of the Company for
the year ended December 31, 1996, which financial statements shall have
been prepared in conformity with GAAP and Regulation S-X under the
Securities Act; and, in the case of the Company's independent public
accountants, its agreement to provide, from time to time, its consent
to the inclusion of such report in filings of American or its
affiliates under all applicable federal and state securities laws, or
(ii) from the Company such documentation as shall enable American's
independent accountants to advise American in writing that they could
issue such an unqualified report;
(e) All actions taken by the Company Stockholders to approve
and adopt this Agreement, the Merger and the Transactions shall comply
in all respects with and shall be legal, valid, binding, enforceable
and effective under the Law of the State of California, the Company's
Organic Documents and all Material Agreements to which it or any of its
Subsidiaries is a party or by which it or any of them or any of its or
any of their property or assets is bound;
(f) All consents and approvals of all Persons (other than
Authorities) having jurisdiction over the Company or the Stations or
having a relationship with the Company or the Stations and whose
consents and approvals are required in order to vest in American all of
the Company's
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right, title and interest in its assets, including without limitation
the Stations, (including without limitation all Private Authorizations
and Material Agreements and all modifications or terminations of
Material Agreements, to the extent, in each case, set forth in Schedule
7.2(f) of the Company 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 the Stations, other than such consents and
approvals, the absence of which, individually or in the aggregate,
would not Materially Adversely Affect the Stations;
(g) Each trustee under each Plan of the Company shall have
submitted his or her unqualified written resignation, dated as of the
Closing Date, as a trustee for each such Plan;
(h) American shall have received a favorable opinion, dated
the Closing Date, of Sullivan & Worcester LLP, its special tax counsel,
to the effect that this Agreement constitutes a plan of reorganization
in accordance with the provisions of Section 368(a)(1)(A) of the Code
and as to the consequences thereof to American and its stockholders and
the Company. In order to enable such firm to render such opinion, each
of the Company Stockholders by approving this Agreement, agrees to
execute and deliver to American and such counsel agreements, in form,
scope and substance, reasonably satisfactory to American and such
counsel, with respect to his intentions as to disposition, to assure
the continuity of ownership requirements of Section 368(a)(1)(A) of the
Code and the related regulations promulgated thereunder;
(i) As of the Closing Date, the condition, financial or other,
or results of operations of the Company shall not have been materially
and adversely affected, other than by reason of changes or developments
in the economy or the radio broadcast industry generally, whether or
not in the ordinary course of business, it being understood that the
failure to obtain all of the permits, licenses and other governmental
and private authorizations with respect to the Proposed Tower Site
shall not be deemed to materially and adversely affect the condition,
financial or other, or results of operation of the Stations;
(j) The Company shall have caused Levitt Property Managers,
Inc. to execute and deliver a leasehold option agreement substantially
in the form of Exhibit B attached hereto and made a part hereof (the
"Leasehold Option Agreement");
(k) The Company Stockholders shall have executed and delivered
(i) in the event the California Commissioner Fairness Ruling is issued
a letter agreeing to abide by the provisions of Rule 144 (as made
applicable by Rule 145) under the Securities Act with respect to
dispositions of the American Shares, and (ii) in the event the
California Commissioner Fairness Ruling is not issued an investment
letter in the form of Exhibit C attached hereto and made a part hereof
(the "Investment Letter");
(l) The Company Stockholders shall have executed and delivered
a noncompetition agreement substantially in the form of Exhibit D
attached hereto and made a part hereof (the "Noncompetition
Agreement"); and
(m) No Legal Action has been instituted or threatened (other
than a Proposed Tower Site Challenge) by any Authority or by any other
Person which could materially and adversely affect the Stations (it
being understood and agreed that one or more written requests by any
Authority for information or additional information with respect to the
Merger, which information could
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be used in connection with such action or proceedings, shall not be
deemed to be a threat of Legal Action).
SECTION 7.3 Conditions to Obligations of the Company. The obligation of
the Company to effect the Merger shall be subject to the satisfaction at or
prior to the Effective Time 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) American shall have delivered or cause to be delivered to
the Company all of the Collateral Documents required to be delivered by
American to the Company at or prior to the Closing pursuant to the
terms of this Agreement; such Collateral Documents shall be reasonably
satisfactory in form, scope and substance to the Company and its
counsel, and the Company 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 the Company with favorable
opinions, dated the Closing Date of Sullivan & Worcester LLP, counsel
for American, with respect to the matters set forth in Sections 5.1(a),
(b) and (c) (other than as to Private Authorizations and as to
American's Contractual Obligations, limited to such counsel's
knowledge), 5.5(a) (limited to its knowledge and to Legal Actions) and
5.6 and of Down, Lohnes & Albertson, FCC counsel for American, with
respect to FCC related matters of a nature and scope customary in
comparable transactions (including without limitation with respect to
the grant of all necessary FCC Consents and their being Final Orders,
that all FCC Licenses are valid, binding and in good standing and in
full force and effect, the absence of Legal Actions which could
Materially Adversely Affect the FCC Licenses and the FCC Consents, and
the filing of all Material reports and the payment of all fees) and
with respect to such other matters arising after the date of this
Agreement incident to the Merger, as the Company 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 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 the
Company and except for those additional disclosures which have been
accepted by the Company pursuant to the provisions of Section 6.4);
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 the Company 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 the Company or its counsel shall have
reasonably requested;
(d) As of the Closing Date, the condition, financial or other,
or results of operation of American shall not have been materially and
adversely affected, other than by reasons of changes or developments in
the economy or the radio broadcast industry generally, whether or not
in the ordinary course of business; and
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(e) American shall have executed and delivered a registration
rights agreement substantially in the form of Exhibit E attached hereto
and made a part hereof (the "Registration Rights Agreement").
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time:
(a) by mutual consent of the Company and American;
(b) by either American or the Company if any Legal Action
has been instituted or threatened by any Authority or
by any other Person seeking to enjoin or otherwise
prohibit the consummation of the Merger (it being
understood and agreed that one or more written
requests by any Authority for information or
additional information with respect to the Merger and
other Transactions, which could be used in connection
with any Legal Action, shall not be deemed a threat
of Legal Action); or
(c) by the Company in the event the Company 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
either (i) the Merger and the Transactions have not
been consummated prior to the Termination Date; or
(ii) 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, and such breach or untruth is not capable of
being cured by the Termination Date; or (iii) the
condition, financial or other, or results of
operation of American have been materially and
aversely affected, other than by reasons of changes
or developments in the economy or the radio broadcast
industry generally, whether or not in the ordinary
course of business; or
(d) by American
(i) in the event 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 either (A) the Merger
and the Transactions have not been
consummated prior to the Termination Date or
(B) the Company 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, and
such breach or untruth is not capable of
being cured by the Termination Date; or
(ii) if (A) the Board of Directors of the Company
shall (I) withdraw, modify or change its
recommendation so that it is not in favor of
this Agreement, the Merger or the
Transactions, or shall have resolved to do
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any of the foregoing, or (II) have
recommended or resolved to recommend to the
Company Stockholders any Other Transaction,
or (B) the Company shall have entered into
or agreed to enter into any Other
Transaction; or
(iii) if any Legal Action (other than a Proposed
Tower Site Challenge) has been instituted of
threatened by any Authority or any other
Person which could materially and adversely
affect the Stations (it being understood and
agreed that one or more written requests by
any Authority for information or additional
information with respect to the Merger and
other Transactions, which could be used in
connection with any Legal Action, shall not
be deemed a threat of Legal Action); or
(iv) if the condition, financial or other, or
results of operation of the Stations have
been materially and adversely affected,
other than by reason of changes or
developments in the economy or the radio
broadcast industry generally, whether or not
in the ordinary course of business, it being
understood that the failure to obtain all of
the permits, licenses and other governmental
and private authorizations with respect to
the Proposed Tower Site shall not be deemed
to materially and adversely affect the
condition, financial or other, or results of
operation of the Stations; or
(v) if all consents and approvals of (A) all
Authorities (including Final Orders of the
FCC) having jurisdiction over the Company or
the Stations, and (B) other Persons having a
relationship with the Company or the
Stations and whose consents and approvals
are required in order to vest in American
all of the Company's right, title and
interest in its assets, including without
limitation the Stations, other than such
consents and approvals the absence of which
would not materially and adversely affect
the Stations, have not been obtained; or
(vi) if it shall not have received from, at
American's election, its or the Company's
independent public accountants (with the
understanding that if American's independent
accountants are use, all costs and expenses
incurred by such accountants shall be the
responsibility of American) an unqualified
report (as the scope of the audit, access to
the books and records and the cooperation of
management) with respect to the financial
statements of the Company for the year ended
December 31, 1996, and, in the case of the
Company's independent public accountants,
its agreement to provide, from time to time,
its consent to the inclusion of such report
in filings of American or its affiliates
under all applicable federal and state
securities laws.
The term "Termination Date" shall mean April 1, 1998 or such other date
as the parties may, from time to time, mutually agree.
The right of either party to terminate this Agreement pursuant to this
Section 8.1 shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of either party,
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any Person controlling any such party or any of their respective Representatives
whether prior to or after the execution of this Agreement.
SECTION 8.2 Effect of Termination.
(a) Except as provided in Sections 6.1 (with respect to
confidentiality) and 6.3, this Section and Section 10.3, in the event of the
termination of this Agreement pursuant to Section 8.1, this Agreement shall
forthwith become void, there shall be no liability on the part of either party,
or any of their respective 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; provided, however, that anything in this Agreement
to the contrary notwithstanding, in no event shall the liability of either
party, in the absence of fraud, for any breach of any covenant or agreement
exceed $1,500,000 or for any breach of warranty or misrepresentation exceed the
lesser of (i) $250,000 or (ii) the other party's reasonable out-of-pocket fees
and expenses.
(b) In the event this Agreement is terminated, the Company shall be
entitled to liquidated damages (which, in the absence of fraud on the part of
American, shall, in the event specific performance has not been granted to the
Company (it being understood that the Company shall have no obligation to seek
specific performance), be the sole recourse and remedy of the Company and its
stockholders for the failure of the Merger to be consummated) of $1,500,000
payable to the Company in the event:
(i) the Company is not in material breach of any agreement or
warranty made by it in, and has not made any material misrepresentation
in, this Agreement; and
(ii) (A) the Company has terminated this Agreement pursuant to
Section 8.1(c)(ii), or (B) the Company has terminated this Agreement
pursuant to the Section 8.1(c)(i) or American has terminated this
Agreement pursuant to Section 8.1(d)(i)(A) or (C) either party has
terminated this Agreement pursuant to Section 8.1(b), other than, in
any such case, by reason of the failure of Final Orders of the FCC to
be issued because of any action or inaction of the Company, whether or
not related to the Merger;
provided, however, that, notwithstanding the foregoing, no such
liquidated damages shall be payable to the Company in the event:
(x) American shall have terminated this Agreement pursuant to
Section 8.1(d)(i)(B), Section 8.1(d)(ii), Section 8.1(d)(iii), Section
8.1(d)(iv) or Section 8.1(d)(v) (other than because American has been
unable to obtain (A) the clearances required under the HSR Act or the
Department of Justice or the Federal Trade Commission has opposed the
Merger pursuant to the HSR Act or other applicable federal antitrust
laws, or (B) Final Orders of the FCC because of any action or inaction
of American, whether or not related to the Merger);
(y) the Company shall have terminated this Agreement pursuant
to the provisions of Section 8.1(c)(iii); or
(z) the Company shall have terminated this Agreement pursuant
to the provisions of Section 8.1(c)(i) or American shall have
terminated this Agreement pursuant to the provisions of Section
8.1(d)(i)(A) or either party shall have terminated this Agreement
pursuant to the provisions of Section 8.1(b), by reason, in any such
case, of the failure of Final Orders of the
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FCC to be issued because of any action or inaction of the Company,
whether or not related to the Merger.
American and the Company agree in advance that actual damages would be difficult
to ascertain and that such amount is a fair and equitable amount to reimburse
the Company for damages sustained due to American's failure to consummate the
Transactions for the above-stated reasons.
(c) In the event this Agreement is terminated, then, except as
otherwise provided in Section 8.2(b), the entire Escrow Deposit (together with
interest or other earnings thereon) shall be paid to American and, if such
termination is pursuant to the provisions of Section 8.1(d), American shall have
the right to seek specific performance pursuant to the provisions of Section
10.3 and, except as provided in Section 8.2(a), no other rights or remedies.
ARTICLE 9
INDEMNIFICATION
SECTION 9.1 Survival. The representations and warranties of the Company
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 two (2) years after the Closing Date, regardless of any
investigation or statement as to the results thereof made by or on behalf of any
party hereto, except that, representations and warranties referred to in
Sections 4.11 and 4.22 shall extend until the expiration of any applicable
statute of limitations (the "Escrow Indemnity Period"). No claim for
indemnification may be asserted after the expiration of the Escrow Indemnity
Period. Notwithstanding anything herein to the contrary, any representation or
warranty which is the subject of a Claim which is asserted in writing prior to
the expiration of the Escrow Indemnity Period shall survive with respect to such
Claim or any dispute with respect thereto until the final resolution thereof.
The representations and warranties of American 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 two (2)
years after the Closing Date, regardless of any investigation or statement as to
the results thereof made by or on behalf of any party hereto. No claim for
indemnification may be asserted after the expiration of such period.
Notwithstanding anything herein to the contrary, any representation or warranty
which is the subject of a Claim which is asserted in writing prior to the
expiration of such period shall survive with respect to such Claim or any
dispute with respect thereto until the final resolution thereof.
SECTION 9.2 Indemnification. (a) Subject to the provisions of Section
9.3, the Company Stockholders agree that on and after the Closing they shall
indemnify American and hold American harmless 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 American by reason of, or
arising out of:
(i) any breach of representation or warranty made by the
Company pursuant to this Agreement or any Collateral
Document or any failure by the Company to
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perform or fulfill any of its covenants or agreements
set forth in this Agreement or any Collateral
Document; or
(ii) any Legal Action or other Claim by any third party
relating to the Company or the ownership or
operations of any of the Stations to the extent such
Legal Action or other Claim has also resulted in a
breach of representation or warranty by the Company
pursuant to this Agreement or any Collateral
Document.
(b) American agrees that on and after the Closing it shall indemnify
and hold harmless James Levitt and John Levitt and hold them harmless 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 provisions of this section, suffered, directly or indirectly, by
either of them by reason of, or arising out of:
(i) any breach of representation or warranty made by
American pursuant to this Agreement or any Collateral
Document or any failure by American to perform or
fulfill any of its covenants or agreements set forth
in this Agreement or any Collateral Document; or
(ii) the guarantees, dated October 31, 1996, made by
Messrs. Levitt and Levitt for the benefit of Joseph
and Yvonne Fields with respect to the Proposed Tower
Site.
SECTION 9.3 Limitation of Liability; Disposition of Escrow Indemnity
Funds.
(a) Notwithstanding the provisions of Section 9.2, after the Closing,
American shall be entitled to recover its Loss and Expense in respect of any
Claim only to the extent that the aggregate Loss and Expense for all Claims
exceeds, in the aggregate, $25,000.
(b) At the Effective Time, one or more certificates representing
American Shares with an aggregate Current Market Price of $500,000 shall be
withheld pro rata from the Company Stockholders from the Common Stock
Consideration hereunder and shall be deposited (the "Escrow Indemnity Funds")
with an escrow agent, reasonably satisfactory to the Company Stockholders and
American, together with duly executed stock powers from the Company
Stockholders, all pursuant to an escrow agreement satisfactory in form and
substance to American and the Company Stockholders. Anything in this Agreement,
including without limitation the provisions of Sections 9.2 or 9.3(a), to the
contrary notwithstanding, the exclusive recourse of American with respect to
Claims brought after the Effective Time arising out of the transactions
contemplated by this Agreement shall be the Escrow Indemnity Funds (including
interest or other earnings thereon). The Escrow Indemnity Funds may also be
applied by American to reimburse American (the "Accounts Receivable
Reimbursement") for an amount equal to the excess, if any, of 98.5% of the
aggregate face value of the Company's accounts receivable as of the Effective
Date over the aggregate amount collected by American with respect to such
accounts receivable within one hundred eighty (180) days after Closing. American
shall use the same procedures as it uses to collect is own accounts receivable
to collect accounts receivable of the Company; provided, however, that in no
event shall American be obligated to use any extraordinary efforts to collect
any of the accounts receivable of the Company or to refer any of such accounts
receivable to a collection agency or to any attorney for collection. In the
event that American shall apply any portion of the Escrow Indemnity Funds to any
Accounts Receivable Reimbursement and American shall thereafter collect any
amounts with
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respect to the Company accounts receivable for which reimbursement was
previously made, American shall add to the Escrow Indemnity Funds a cash amount
equal to the amount so collected.
(c) In the event there shall be no Claims pursuant to the provisions of
this Agreement with respect to the Escrow Indemnity Funds, if any, existing at
the expiration of the Escrow Indemnity Period, the Escrow Indemnity Funds then
remaining (together with any then existing interest or earnings) shall be
distributed to the Persons entitled thereto. In the event one or more such
Claims with respect to the Escrow Indemnity Funds, if any, shall exist upon the
expiration of the Escrow Indemnity Period, American Shares with a Fair Market
Value measured as of the date of such expiration equal to the sum of (i) the
aggregate amount of such Claims and (ii) the amount reasonably estimated by
American to cover the fees, expense and other costs (including reasonable
counsel fees and expenses) which will be required to resolve such Claims shall
be retained as part of the Escrow Indemnity Funds and the balance thereof, if
any, shall be distributed to the Persons entitled thereto. Upon the resolution
of all such Claims and the payment of all such fees, expenses and costs out of
the Escrow Indemnity Funds, the balance of the American Shares, if any, shall be
distributed to the Persons entitled thereto.
SECTION 9.4 Notice of Claims. If American believes that it has suffered
or incurred any Loss and Expense, it shall notify the Company Stockholders
promptly in writing, and in any event within the applicable time period
specified in Section 9.2, 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 American intends to claim
any liability or expense as Loss and Expense under this Article, American shall
promptly notify the indemnifying party of such Legal Action, but the failure to
so notify the indemnifying party shall not relieve it of its obligations under
this Article, except to the extent such failure to notify prejudices its ability
to defend against such Claim.
SECTION 9.5 Defense of Third Party Claims. The Company Stockholders
shall have the right to conduct and control, through counsel of their own
choosing, reasonably acceptable to American, any third party Legal Action or
other Claim, but American may, at its election, participate in the defense
thereof at its sole cost and expense; provided, however, that if the Company
Stockholders shall fail to defend any such Legal Action or other Claim, then
American may defend, through counsel of its own choosing, such Legal Action or
other Claim, and (so long as it gives the Company Stockholders at least fifteen
(15) days' notice of the terms of the proposed settlement thereof and permits
the Company Stockholders to then undertake the defense thereof) settle such
Legal Action or other Claim, and to recover out of the Escrow Indemnity Funds
the amount of such settlement or of any judgment and the costs and expenses of
such defense. The Company Stockholders shall not compromise or settle any such
Legal Action or other Claim without the prior written consent of American. All
costs and expenses defending any such third party Legal Action or other Claim,
including the amount of any settlement or of any judgment, shall be paid out of
the Escrow Indemnity Funds.
SECTION 9.6 Exclusive Remedy. The indemnification provided in this
Article shall be the sole and exclusive post-Closing remedy available to
American against the Company Stockholders for any Claim under this Agreement
absent a showing of fraud on the part of the Company or any of the Company
Stockholders.
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ARTICLE 10
GENERAL PROVISIONS
SECTION 10.1 Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that, after approval
of this Agreement and the Merger by the Company Stockholders, no amendment,
which under Applicable Law may not be made without the approval of the Company
Stockholders, may be made without such approval. This Agreement may not be
amended except by an instrument in writing signed by the parties hereto.
SECTION 10.2 Waiver. At any time prior to the Effective Time, except to
the extent not permitted by Applicable Law, American or the Company may (a)
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, (b) waive any
inaccuracies in the representations and warranties of the other contained herein
or in any document delivered pursuant hereto, and (c) 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.
SECTION 10.3 Fees, Expenses and Other Payments. All costs and expenses,
incurred in connection with 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 Governmental Authority in
connection with this Agreement, the Merger and the Transactions, shall be borne
equally by American and the Company. Filing fees required in connection with the
Hart-Scott-Rodino filings shall initially be paid by American and the Company
shall reimburse American for one half of the cost of such fees at or prior to
the Effective Time. Except as otherwise set forth in Section 4.21 and Section
5.7, all other costs and expenses incurred in connection with this Agreement,
the Merger and the 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.
SECTION 10.4 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, 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 the Company:
190 Park Center Plaza
San Jose, California 95113
Attention: James Levitt, Chief Executive Officer
Telecopier No.:
with a copy to:
Gibson, Dunn & Crutcher LLP
525 University Avenue, Suite 220
Palo Alto, California 94301
Attention: Buzz Gitelson, Esq.
Telecopier No.: (415) 463-7333
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.
SECTION 10.5 Specific Performance; Other Rights and Remedies. Each
party recognizes and agrees that in the event the Company should refuse to
perform any of its obligations under this Agreement or any Collateral Document,
American's remedy at law would be inadequate and agrees that for breach of such
provisions, American shall, in addition to such other remedies as may be
available to it at law or in equity or as provided in Article 9, 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 any 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, including without limitation the
recovery of damages.
SECTION 10.6 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
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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 Transactions are fulfilled and
consummated to the maximum extent possible.
SECTION 10.7 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.
SECTION 10.8 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.
SECTION 10.9 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 that the provisions of the DGCL
and the CGCL apply to the Merger. Anything in this Agreement to the contrary
notwithstanding, including without limitation the provisions of Article 9, 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.
SECTION 10.10 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.
SECTION 10.11 Entire Agreement. This Agreement (together with the
Company Disclosure Schedule 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 November 26, 1996, between the
parties.
SECTION 10.12 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 American by
operation of law, including by way of merger, consolidation or sale of all or
substantially all of its assets and except that American shall have the right to
assign this Agreement (without relieving it of any of its obligations hereunder)
as security to its senior lending banks and other financial institutions.
SECTION 10.13 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 (other than the provisions of Article 9 which are intended to
be binding upon the Company Stockholders), is intended to or shall
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confer upon any Person any right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement.
SECTION 10.14 Mutual Drafting. This Agreement is the result of the
joint efforts of American and the Company, 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.
SECTION 10.15 Arbitration. If there is any dispute between the parties
to this Agreement which remains unresolved for 30 days or more, either party
may, upon written notice to the other, submit such dispute to binding
arbitration in San Francisco, California in accordance with the choice of law
provisions of Section 10.9 of this Agreement and the commercial rules of the
American Arbitration Association (the "AAA") before a panel of three (3)
arbitrators knowledgeable in the radio broadcast industry, one arbitrator chosen
by American, one by the Company, and the third as mutually agreed upon by the
two arbitrators so appointed or, in the absence of such agreement, by the
President of the San Francisco Chapter of the AAA, and the decision of such
panel shall, in the absence of manifest error or error of law, be conclusively
binding on the parties.
SECTION 10.16 CALIFORNIA SECURITIES LAW MATTERS. THE SALE OF THE
SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH
THE CALIFORNIA COMMISSIONER AND THE ISSUANCE OF THE SECURITIES OR THE PAYMENT OR
RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO THE QUALIFICATION IS
UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE QUALIFICATION BY
SECTION 25100,25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF
ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON THE QUALIFICATION
BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
IN WITNESS WHEREOF, American and the Company 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: Steven B. Dodge
Title: President and Chief Executive Officer
ALTA BROADCASTING COMPANY, INC.
By:______________________________________
Name: James Levitt
Title: Chief Executive Officer
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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 the Company 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 this
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.
AAA shall have the meaning given to it in Section 10.15.
Accounts Receivable shall mean (a) any and all rights to the payment of
money or other forms of consideration of any kind (excluding any so-called trade
or barter accounts) at any time now or hereafter owing or to be owing to the
Company 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
to the Company from any other Person, all guarantees, security and Liens for the
payment of any thereof, and all of the Company's rights to goods, now owned or
hereafter acquired by the Company, 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 of which American or the Company, as the case may be, becomes aware after
the date hereof which is reasonably likely, in the reasonable business judgment
of American or the Company, as the case may be, 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, operation,
management or properties of the Company and its Subsidiaries taken as a whole or
American and its Subsidiaries taken as a whole, as the case may be, or (c)
impair the Company'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 the Company, as the case may be,
under this Agreement. Notwithstanding the foregoing, neither an Event affecting
the radio broadcasting industry generally nor a decline in the financial
condition or results of operations of the Company and its Subsidiaries taken as
a whole or American and its Subsidiaries taken as a whole, as the case may be,
shall 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
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
<PAGE>
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, all
schedules, including the Company 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 Disclosure Schedule shall mean the American Disclosure
Schedule dated as of the date of this Agreement delivered by American to the
Company.
American Financial Statements shall have the meaning given to it in
Section 5.2(a).
American SEC Documents shall have the meaning given to it in Section
5.2(b).
American Shares shall have the meaning given to it in the First
Recital.
American Class A Stock shall have the meaning given to it in the First
Recital.
American's Knowledge (including the term "to the knowledge 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
Merger, 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.
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 maintained by the Company with respect to employees or
directors of the Company or the beneficiaries of any such Persons.
Broadcast Cash Flow shall mean, with respect to the Company, 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 the Company and its Subsidiaries taken as a whole.
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California Commissioner shall mean the Commissioner of Corporations of
the State of California.
California Commissioner Fairness Ruling shall have the meaning given to
it in Section 6.2(a).
California Proceedings shall mean the proceedings before the California
Commissioner to determine the fairness of the Merger and to obtain a permit as
contemplated by Section 6.2(a) of this Agreement.
Cash Consideration shall have the meaning given to it in Section
3.1(b).
Certificate shall have the meaning given to it in Section 3.1(b).
CGCL shall have the meaning given to it in the First Recital.
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 1.2.
Closing Date shall mean the date on which the transactions contemplated
by this Agreement are consummated and the Merger becomes effective.
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, as amended, and the
rules and regulations promulgated from time to time thereunder.
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 Investment Letter (if applicable), the Registration Rights
Agreement, the Noncompetition Agreement, the Leasehold Option Agreement and the
escrow agreement referred to in Section 9.3(b).
Common Stock shall have the meaning given to it in the First Recital.
Common Stock Consideration shall have the meaning given to it in
Section 3.1(b).
Company shall have the meaning given to it in the Preamble.
Company Assignees shall have the meaning given to it in Section 2.1(a).
Company Common Stock shall have the meaning given to it in Section
3.1(b).
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Company Disclosure Schedule shall mean the Company Disclosure Schedule
dated as of the date of this Agreement delivered by the Company to American
within seven (7) days after the date of this Agreement..
Company Financial Statements shall have the meaning given to it in
Section 4.2.
the Company's knowledge (including the term "to the knowledge of the
Company") means the knowledge of any Company director or executive officer, and
that such director or executive officer, after reasonable inquiry of appropriate
Company executives and reasonable review of appropriate Company 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.
Company Personal Property shall have the meaning given to it in Section
4.5(a).
Company Real Property shall have the meaning given to it in Section
4.5(a).
Company Shares shall have the meaning given to it in Section 3.1(b).
Company Stockholders shall have the meaning given to it in the First
Recital.
Contract, Contractual Obligation shall mean any term, condition,
provision, representation, warranty, agreement, covenant, undertaking,
commitment, indemnity or other obligation set forth in the Organic Documents of
the obligee or which is outstanding or existing under any Instrument (including
without limitation any Instrument relating to or evidencing any Indebtedness) to
which the obligee is a party or by which it or any of its business is subject or
property or assets is bound.
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.
Credit Agreement shall mean the Credit Agreement dated as of December
19, 1995, as from time to time in effect, of American and the Agent, Co-Agents
and Lenders named therein, or any successor agreement thereto.
Current Market Price shall have the meaning given to it in Section
3.1(b).
DGCL shall have the meaning given to it in the First Recital.
Distribution shall mean, with respect to any Person, (a) the
declaration or payment of any dividend (except dividends payable in common stock
of such Person) on or in respect of any shares of any class of capital stock of
such Person or any shares of capital stock of any Subsidiary owned by a
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Person other than the Company or a Subsidiary, (b) the purchase, redemption or
other retirement of any shares of any class of capital stock of such Person or
any shares of capital stock of any Subsidiary of such Person owned by a Person
other than such Person or a Subsidiary of such Person, and (c) any other
distribution on or in respect of any shares of any class of capital stock of
such Person or any shares of capital stock of any Subsidiary of such Person
owned by a Person other than such Person or a Subsidiary of such Person.
Effective Time shall have the meaning given to it in Section 1.3.
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), 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.
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 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 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.
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<PAGE>
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 the Company under Sections 414(b), (c), (m) or (o) of the Code or
Section 4001(b)(1) of ERISA.
Escrow Agents shall have the meaning given to it in the Fourth Recital.
Escrow Agreement shall have the meaning given to it in the Fourth
Recital.
Escrow Deposit shall have the meaning given to it in the Fourth
Recital.
Escrow Indemnity Funds shall have the meaning given to it in Section
9.3(b).
Escrow Indemnity Period shall have the meaning given to it in Section
9.1.
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 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.
Exchange Merger Consideration shall have the meaning given to it in
Section 3.1.
Fair Market Value shall have the meaning given to it in Section 3.1(b).
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 control of the Company or the FCC Licenses relating to the
Stations to American.
FCC Licenses shall mean all of Governmental Authorizations issued by
the FCC to the Company or its Subsidiaries in connection with the conduct of the
business or operating of the Stations.
Final Determination (a) shall mean with respect to federal Taxes, a
"determination" as defined in Section 1313(a) of the Code or execution of an IRS
Form 870AD and, with respect to Taxes other than federal Taxes, any final
determination of liability in respect of a Tax which, under Applicable Law, is
not subject to further appeal, review or modification through proceedings or
otherwise, including without
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limitation the expiration of a statute of limitations or a period for the filing
of claims for refunds, amended returns or appeals from adverse determinations;
and (b) shall include the payment of Tax by or whichever is responsible for
payment of such Tax under Applicable Law, with respect to any item disallowed or
adjusted by a Taxing Authority, provided that the other party is notified of
such payment and the party that is responsible for such Tax under this Agreement
determines that no action should be taken to recoup such payment from such
Taxing Authority.
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.
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 the business or the operations 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.
Guaranteed shall mean any agreement, undertaking or arrangement by
which the Company guarantees, endorses or otherwise becomes or is liable,
directly or indirectly, contingently or otherwise, upon any Indebtedness of any
other Person including without limitation the payment of amounts drawn down by
beneficiaries of letters of credit (other than by endorsements of negotiable
instruments for deposit or collection in the ordinary course of business). The
amount of the obligor's obligation under any Guaranty shall be deemed to be the
outstanding amount (or maximum permitted amount, if larger) of the Indebtedness
directly or indirectly guaranteed thereby (subject to any limitation set forth
therein).
Hart-Scott-Rodino Act shall mean the Hart-Scott-Rodino Improvement Act
of 1976, as from time to time in effect, or any successor law, and any reference
to any statutory provision shall be deemed to be a reference to any successor
statutory provision.
Hazardous Materials shall mean and include any substance (in whatever
state of matter): (a) that is defined as a "hazardous waste", "hazardous
material" or "hazardous substance", under any Environment Law; (c) is
radioactive and is regulated under any Environmental Law; (d) that contains or
consists of gasoline, diesel fuel or other petroleum hydrocarbons in any
unconfined manner; or (e) that contains or consists of PCBs, asbestos, 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 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
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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.
Instrument shall mean, with respect to any Person, any agreement, bond,
certificate, commitment, contract, debenture, indenture, lease, letter of
credit, memorandum, mortgage, note, notice, permit, plan, purchase or sales
order, document or other writing (whether by formal agreement, letter or
otherwise), or any oral arrangement, understanding or commitment, under which
any debt, liability or other obligation is evidenced, assumed or undertaken, or
any Lien (or right or interest therein) is granted, perfected or exists.
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.
Investment Letter shall have the meaning given to it in Section 7.2(k).
Klue Note shall mean the promissory note dated June 19, 1996, made by
the Company to the order of Ralin Broadcasting Corporation, in the original
principal amount of $187,500.00.
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.
Lease shall mean any lease of property, whether real, personal or
mixed, and all amendments thereto.
Leasehold Option Agreement shall have the meaning given to it in
Section 7.2(k).
Legal Action shall mean, with respect to any Person, any 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
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<PAGE>
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.
Long-term Indebtedness shall mean Indebtedness of the Company or its
Subsidiaries the maturity date of which is scheduled to become due and payable
after the first anniversary of the Effective Time.
Loss and Expense shall have the meaning given to it in Section 9.2(a).
LPM shall have the meaning given to it in Section 6.2(e).
Margin Rules shall mean Regulations G, T, U or X of the Board of
Governors of the Federal Reserve System, 12 C.F.R., parts 207, 220, 221 and 224,
as now in effect.
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, dealer, license, distributorship, sales
representative or similar written agreement, or (e) accounted for more than
three percent (3%) of revenues in any of the last three fiscal years or is
likely to account for more than three percent (3%) of revenues during the
current fiscal year.
Merger shall have the meaning given to it in the First Recital.
Merger Consideration shall have the meaning given to it in Section
3.1(b).
Multiemployer Plan shall mean a Plan which is a "multiemployer plan"
within the meaning of Section 4001(a)3 of ERISA.
Net Working Capital shall mean, with respect to the Company, the amount
by which the current assets of the Company exceed (or are less than) the current
liabilities of the Company (exclusive of current portions of principal on the
Park Center Note, the Klue Note and any other Long-term Indebtedness and any
assets or liabilities relating to any trade or barter agreements), as determined
in accordance with GAAP, consistently applied with the Company Financial
Statements; provided, however, that for the purpose of determining Net Working
Capital, accounts receivable shall be valued at 98.5% of their face amount.
Noncompetition Agreement shall have the meaning given to it in Section
7.2(m).
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 Convertible Securities, whether or
not the right to subscribe for, purchase or otherwise acquire is immediately
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<PAGE>
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).
Other Transaction shall have the meaning given to it in Section 6.5(b).
parties shall have the meaning given to it in the Preamble.
Park Center Note shall mean the promissory note, dated February 12,
1996, made by the Company to the order of Comerica Bank-California, in the
original principal amount of $1,600,000.
PBGC shall mean the Pension Benefit Guaranty Corporation and any Entity
succeeding to any or all of its functions under ERISA.
Person shall mean any natural individual or any Entity.
Plan shall mean, with respect to the Company and at a particular time,
any employee benefit plan which is covered by ERISA and in respect of which the
Company 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.
Prepayment Penalty shall mean the amount paid or payable from and after
the date hereof by the Company or American, as the Surviving Corporation, as a
prepayment premium or penalty with respect to all Long-Term Indebtedness of the
Company, including the current portion thereof, and the costs associated with
the breaking of any fixed rate financing arrangements then in place, assuming
that all such Indebtedness were to be prepaid on the Closing Date.
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 Tower Site shall mean the site in Metcalf Park, California, at
which it is proposed to construct a communications tower, as more particularly
described in the Leasehold Option Agreement.
Proposed Tower Site Challenge shall mean any challenge by the County of
Santa Clara, the City of San Jose or any other Authority or Person to the
ownership, development or use of the Proposed Tower Site by the Company,
American or any of their Subsidiaries or Affiliates.
Registration Rights Agreement shall have the meaning given to it in
Section 7.3(e).
Representatives shall have the meaning given to it in Section 6.1(a).
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SEC shall mean the United States Securities and Exchange Commission, or
any successor Authority.
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.
Shareholder Distribution shall have the meaning given to it in Section
2.1(a).
Stations shall mean, collectively, radio stations KEZR-FM, San Jose,
California and KLUE-FM, Soledad, California.
Stockholder Agreement shall have the meaning given it in Section
7.2(m).
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 1.1
Tax (and "Taxable", which shall mean subject to Tax), shall mean, with
respect to the Company, (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 the Company or
any of its Subsidiaries, 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 the Company or any of its Subsidiaries with any
other Person for the payment of any amounts of the type described in (a) and (c)
any liability of the Company 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.
Tax Claim shall mean any Claim which relates to Taxes, including
without limitation the representations and warranties set forth in Section 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 8.1.
Transactions shall have the meaning given to it in the Second Recital.
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ASSIGNMENT OF OPTION TO PURCHASE
RADIO STATION WNVE(FM) AND CONSENT
This Assignment and Assumption of Option to Purchase Radio Station
WNVE(FM) and Consent (the "Assignment") is made as of December 23, 1996, by and
among American Radio Systems Corporation (successor by merger to American Radio
Systems, Inc., a Massachusetts corporation) ("Assignor"), Citicasters Co., an
Ohio corporation ("Assignee"), and The Great Lakes Wireless Talking Machine
Limited Liability Company, a New York limited liability company ("GLW") under
the following circumstances:
A. Assignor and GLW entered into an Option Agreement dated September
28, 1995, a copy of which is attached hereto as Exhibit A (the "Option
Agreement"), pursuant to which GLW granted to Assignor an option to purchase the
licenses and broadcasting equipment of WNVE(FM), South Bristol, New York (the
"Station") and the right to utilize the service mark "The Nerve" within the
Rochester, New York radio market.
B. Assignee is a party to an Asset Exchange Agreement (the "Exchange
Agreement"), dated December 23, 1996, with Assignor and American Radio Systems
License Corp. ("American License" and together with Assignor, the "American
Parties"), pursuant to which the American Parties have agreed to exchange
certain assets with Assignee.
C. In connection with the transactions contemplated by the Exchange
Agreement, Assignor wishes to assign all of its right, title and interest in the
Option Agreement and Assignee wishes to assume and agrees to perform all of
Assignor's obligations under the Option Agreement.
D. GLW is willing to consent to the assignment.
E. American, GLW and The Lincoln Group, L.P. are parties to a consent
decree (the "Consent Decree") as reflected in a Final Judgment that is expected
to be entered in January 1997, in United States of America and State of New York
vs. American Radio Systems Corporation, The Lincoln Group, L.P. and Great Lake
Wireless Talking Machine LLC, which Final Judgment has been filed in the United
States District Court for the District of Columbia. A copy of the Consent Decree
is attached as Exhibit B.
ACCORDINGLY, in consideration of the foregoing premises and agreements
contained herein, the parties hereto agree as follows:
Section 1. Condition to Effectiveness of Assignment. This Assignment
shall not become effective until approved by the United States pursuant to
Article VI of the Consent Decree. The date of such approval is referred to
herein as the "Effective Date".
Section 2. Assignment. Assignor assigns and transfers as of the
Effective Date to the Assignee all of the Assignor's right, title and interest
in the Option Agreement.
<PAGE>
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Section 3. Representations and Warranties of Assignor. Assignor hereby
warrants and represents to Assignee as follows:
3.1 The execution, delivery, and performance by Assignor of
this Assignment have been duly authorized by all necessary corporate action and
will not contravene any law or any governmental rule or order binding on
Assignor. Assignor has duly executed and delivered this Assignment and it is the
valid and binding obligation of Assignor enforceable according to its terms.
3.2 Assignor has given no "Election Notice" (as defined in the
Option Agreement) to GLW, and agrees that it will not give such an Election
Notice for so long as this Assignment is in effect.
Section 4. Representations and Warranties of Assignee. Assignee hereby
warrants and represents to Assignor that the execution, delivery and performance
by Assignee of this Assignment have been duly authorized by all necessary
corporate action and will not contravene any law or any governmental rule or
order binding on Assignee. Assignee has duly executed and delivered this
Assignment and it is the valid and binding obligation of Assignee enforceable
according to its terms.
Section 5. Consent of GLW. GLW by executing this Assignment hereby
agrees as follows:
5.1 GLW consents to the assignment to Assignee of Assignor's
rights and obligations under the Option Agreement as of the Effective Date.
5.2 GLW represents and warrants to Assignee that (i) Assignor
is not in default under the terms and conditions of the Option Agreement; (ii)
no event has occurred which now or will hereafter give GLW the right to
terminate the Option Agreement; and (iii) GLW has received no Election Notice
from Assignor.
5.3 GLW hereby waives any default under the Option Agreement
which may be created by this Assignment.
Section 6. Joint Sales Agreement. The parties agree that simultaneously
with the commencement of any Time Brokerage Agreement that may be entered into
by and between GLW and Assignee with respect to the Station, any Joint Sales
Agreement between Assignor and GLW that may then be in effect with respect to
the Station shall terminate.
Section 7. Termination. In the event the United States does not approve
this Assignment, then this Assignment shall terminate and be of no force or
effect; the parties agree to take such reasonable actions as may be necessary to
obtain such approval.
Section 8. Binding Effect. This Assignment shall be binding upon and
inure to the benefit of the respective legal representatives, successors and
assigns of the parties hereto.
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Section 9. Governing Law. All acts and transactions hereunder and the
rights and obligations of the parties hereto shall be governed, construed and
interpreted in accordance with the domestic laws of the State of New York.
Section 10. Execution and Counterparts. This Assignment may be executed
in several counterparts, each of which shall be an original and all of which
shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto through their respective duly
authorized representatives have executed this Assignment as of the day first
above written.
AMERICAN RADIO SYSTEMS CITICASTERS CO.
CORPORATION
By: /s/ Jerimiah L. Kiersting
By: /s/ Steven B. Dodge Name: Jerimiah L. Kiersting
Name: Steven B. Dodge Title: Senior Vice President
Title: Chief Executive Officer
THE GREAT LAKES WIRELESS
TALKING MACHINE LIMITED
LIABILITY COMPANY
By: /s/ Steven L. Chartrand
Name: Steven L. Chartrand
Title: Managing Member
OPTION AGREEMENT
OPTION AGREEMENT (this "Agreement"), dated as of September 20, 1996, by
and between Jupiter Radio Partners, a Florida partnership ("Seller"), and
American Radio Systems Corporation, a Delaware corporation ("Buyer").
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1. ASSET PURCHASE OPTION
Section 1.1 Option. Seller hereby grants to Buyer an exclusive and
irrevocable option (the "Option") to purchase for the Purchase Price (as defined
in Section 1.03 below) all of the tangible and intangible assets (the "Assets")
owned by Seller or used by Seller in connection with the business of Station
WTPX(FM), Jupiter, Florida (the "Station"), except for (i) Seller's cash or cash
equivalents on hand or on deposit and (ii) Seller's accounts receivable.
Notwithstanding anything to the contrary contained herein, no rights in the
Assets shall transfer until (a) the Station has begun to operate pursuant to
Program Test Authority under the rules of the Federal Communications Commission
("FCC"), (b) Buyer and Seller shall have entered into a definitive Asset
Purchase Agreement for the purchase of the Assets for the Purchase Price (the
"Purchase Agreement") and (c) the FCC has approved the assignment to Buyer of
Seller's construction permit and/or licenses relating to the Station.
Section 1.2 Option Period. The Option shall remain effective from the
date Buyer has received notification from Seller that the Station is operating
pursuant to Program Test Authority through and including the 90th day after such
date (the "Option Period").
Section 1.3 Option Exercise Notice. Buyer may notify Seller pursuant to
Section 7.02 hereof of its exercise of the Option (the "Notice") at any time
during the Option Period. Within 10 business days of Seller's deemed receipt of
the Notice pursuant to Section 7.02 hereof, Buyer and Seller shall execute the
Purchase Agreement. The Purchase Agreement shall provide that (i) Seller shall
sell, transfer, assign and deliver to Buyer the Assets free and clear of any
claims, liabilities, mortgages, liens, pledges, conditions, charges or
encumbrances of any nature whatsoever, except as to any obligation or liability
of Seller that Buyer agrees to assume pursuant to the Purchase Agreement, (ii)
the purchase price for the Assets (the "Purchase Price") shall be payable at the
closing of the transactions contemplated by the Purchase Agreement and shall be
as specified on Schedule 1.03 hereto, (iii) shall include the terms set forth on
Schedule 1.03 hereto and (iv) shall contain such other representations,
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warranties and covenants and such other terms and conditions as
are customary in similar transactions.
Section 1.4 Escrow Account; Distribution of Escrow Fund. Concurrently
with the execution of this Agreement, Buyer is placing in an escrow account the
sum of One Million Dollars ($1,000,000), pursuant to an Escrow Agreement of even
date herewith among the parties hereto and Blackburn & Company, as escrow agent
(the "Escrow Agreement"). The proceeds of the Escrow Account shall be
distributed as follows:
(a) subject to Section 1.04(b) hereof, if Buyer fails to give
the Notice within the Option Period, or, having given the Notice, fails
to enter into the Purchase Agreement within the time provided herein,
Seller shall be entitled to the Escrow Fund (as defined in the Escrow
Agreement) upon request therefor pursuant to Section 3 of the Escrow
Agreement; and
(b) if Buyer does not exercise the Option or, having given the
Notice, fails to enter into the Purchase Agreement within the time
provided herein, due to the failure of any or all of the conditions set
forth in Section 5.01 of this Agreement, Buyer shall be entitled to the
Escrow Fund upon request therefor pursuant to Section 3 of the Escrow
Agreement.
Buyer shall not object to a Demand (as defined in the Escrow Agreement) made by
Seller and Seller shall not object to a Demand made by Buyer if the Claimant (as
defined in the Escrow Agreement) is entitled to the Escrow Fund pursuant to this
Section 1.04.
Section 1.5 Conduct of Business. From the date hereof until the earlier
of the execution of the Purchase Agreement or the expiration of the Option
Period, Seller shall conduct its business in the ordinary course and the
warranties, representations and covenants of Seller contained herein shall
continue to be applicable until such date.
Section 1.6 Breach. In the event Seller breaches any of its warranties,
representations or covenants hereunder in any material respect, Buyer shall be
entitled to obtain specific performance of the terms of this Agreement, in
addition to any other remedies which may be available, including money damages.
In the event of any action to enforce this Agreement, Seller hereby waives the
defense that there is an adequate remedy at law.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF SELLER
Section 2.1 Representations and Warranties of Seller.
Seller represents and warrants to Buyer that:
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(a) Seller is a partnership duly organized, validly existing
and in good standing under the laws of the State of Florida. Seller has
the partnership power and authority to conduct all of the activities
conducted by it and to own or lease all of the assets owned or leased
by it and is duly licensed or qualified to do business and is in good
standing as a foreign partnership in all jurisdictions in which the
nature of the activities conducted by it and/or the character of the
assets owned and leased by it makes such qualification or license
necessary. Seller does not own any shares of stock or any other
securities of any corporation nor has any interest in any firm,
partnership, association or other entity. A complete and correct copy
of the Certificate of Partnership and the Partnership Agreement of
Seller, each as amended to the date hereof, was heretofore delivered to
Buyer. Except as set forth on Schedule 2.01(a) hereto, Seller does not
have outstanding any options to purchase, or any rights or warrants to
subscribe for, or any securities or obligations convertible into, or
any contracts or commitments to issue or sell partnership interests or
any such warrants, convertible securities or obligations. The Assets
are owned by or licensed or otherwise issued to Seller, and Buyer will
acquire, pursuant to and subject to the provisions of the Purchase
Agreement, good and valid title to the Assets, free and clear of all
mortgages, pledges, liens, security interests, conditional sale
agreements, charges, encumbrances, claims and restrictions of every
kind and nature whatsoever.
(b) Seller has the partnership power, authority and legal
capacity to execute and deliver this Agreement, to consummate the
transactions contemplated hereby and to take all other actions required
to be taken by it pursuant to the provisions hereof. This Agreement is
a legal, valid and binding obligation of Seller, enforceable against it
in accordance with its terms.
(c) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby by Seller will
(with or without the giving of notice thereof, the lapse of time or
both): (i) conflict with any provision of Seller's Certificate of
Partnership or Partnership Agreement; (ii) 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; (iii)
conflict with, constitute grounds for termination of, result in a
breach of, constitute a default under, or accelerate or permit the
acceleration of any performance required by the terms of, any material
agreement, instrument, license or permit to which Seller is a party or
by which it may be bound; or (iv) create any claim, liability,
mortgage, lien, pledge, condition, charge or encumbrance of any nature
whatsoever upon the Assets.
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(d) Seller has filed or caused to be filed, within the times
and in the manner prescribed by law, all federal, state, local and
foreign tax returns and tax reports which are required to be filed by,
or with respect to Seller. Such returns and reports reflect accurately
all liability for taxes of any nature whatsoever of Seller for the
periods covered thereby. All taxes of any nature whatsoever, together
with any related penalties and interest (all of the foregoing being
referred to herein as "Taxes") that are shown on such Tax returns as
due and required to be paid on or before the date hereof have been
fully paid and all Taxes not yet due are adequately disclosed and fully
provided for in the books and records and the financial statements of
Seller. There are no claims or assessments pending against Seller for
any alleged deficiency in the payment of any Taxes, and there are no
agreements in effect with respect to Seller to extend the period of
limitations for the assessment, payment or collection of any Taxes.
(e) Seller has provided to Buyer complete and correct copies
of all leases, agreements, contracts and other commitments of Seller
whether written or oral. All such agreements are in full force and
effect and neither Seller nor, to Seller's "Knowledge" (as hereinafter
defined), any other signatory is in material breach thereof. No consent
of any signatory to any agreement other than Seller is required for the
consummation of the transactions contemplated by this Agreement. For
purposes of this Agreement, a party hereto will be deemed to have
"Knowledge" of a particular matter or fact if an individual serving,
directly or indirectly, as an officer, a director, a partner or in a
similar capacity of such party is actually aware or reasonably should
be aware of such fact or other matter, but does not imply that any
independent investigation was conducted by such individual or party.
(f) Seller has good title to all of the Assets free and clear
of all mortgages, pledges, liens, security interests, conditional sale
agreements, charges, encumbrances, claims and restrictions of every
kind and nature, except liens for Taxes not yet due and payable. Seller
has provided to Buyer an inventory of all physical assets of Seller.
Such physical assets are in good condition, reasonable wear and tear
due to proper use excepted.
(g) Except as specified on Schedule 2.01(g) hereto, there is
no action, suit, proceeding or investigation pending or threatened
against or affecting Seller or any of its Assets Seller is not in
default under or with respect to any judgment, order, writ, injunction
or decree of any court or any federal, state, municipal, or other
governmental authority, department, commission, board, agency or other
instrumentality. Seller is not involved in any labor
<PAGE>
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dispute or disturbance. Seller has complied in all material
respects with all laws, regulations and orders applicable to
it or its business.
(h) Neither this Agreement nor any statement, list or
certificate furnished to Seller pursuant hereto or in connection with
this Agreement or any of the transactions hereby contemplated contains
any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein and
therein, in light of the circumstances in which they are made, not
misleading.
(i) Seller has no knowledge of any facts which would, under
present law (including, but not limited to, the Communications Act of
1934, as amended, and the rules, regulations and policies of the FCC)
disqualify Seller as a licensee or permittee of the licenses, permits
and other authorizations issued by the FCC relating to the Station, or
as owner and/or operator of the Station or the Assets or constitute a
material violation of said rules, regulations and policies.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that:
(a) Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and is
qualified to do business in the State of Florida.
(b) The Board of Directors of Buyer has authorized the
execution and delivery of this Agreement and the transactions
contemplated hereby. Buyer has the corporate power, authority and legal
capacity to execute and deliver this Agreement, to consummate the
transactions hereby contemplated and to take all other actions required
to be taken by it pursuant to the provisions hereof. This Agreement is
a legal, valid, and binding obligation of Buyer, enforceable against it
in accordance with its terms.
(c) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby by Buyer will
(with or without the giving of notice thereof, the lapse of time or
both) constitute any violation or breach of the Articles of
Incorporation or by-laws of Buyer or any material provision of any
material contract or instrument to which Buyer is a party or by which
Buyer is bound, or any order, writ, injunction, decree, statute,
regulation.
(d) Buyer has no knowledge of any facts which would, under
present law (including, but not limited to, the
<PAGE>
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Communications Act of 1934, as amended, and the rules, regulations and
policies of the FCC) disqualify Buyer as an assignee of the licenses,
permits and other authorizations issued by the FCC relating to the
Station, or as owner and/or operator of the Station or the Assets or
constitute a material violation of said rules, regulations and
policies.
Other than as provided for in this Agreement, Buyer makes no warranties
or representations hereunder, express or implied.
ARTICLE 4. COVENANTS
Section 4.1 Negative Covenants of Seller. From the date hereof until
the earlier of the execution of the Purchase Agreement or the expiration of the
Option Period, Seller covenants and agrees that it will not, without Buyer's
prior written consent:
(a) directly or indirectly, through representatives or any
other person or otherwise, solicit or entertain offers from, negotiate
with, or in any manner encourage, discuss, consider or accept any
proposal from any other person or entity relating to the acquisition of
any of Seller's partnership interests or the acquisition of Seller or
the Assets, in whole or in part, whether through direct purchase,
merger, consolidation or other business combination;
(b) dispose of any of the Assets, except in the ordinary
course of business;
(c) admit any additional partners or issue any options,
warrants, rights or convertible securities or equity equivalents;
(d) pay any dividends, redeem any securities or otherwise
cause any of the Assets to be distributed to its partners;
(e) make loans to any partners;
(f) borrow any money under any existing credit agreement or
otherwise (other than from Buyer pursuant to the Construction Loan
Agreement referred to in Section 4.04 hereof), or suffer to exist any
lien on any Asset;
(g) amend or propose to amend its Partnership Agreement;
(h) increase compensation of any of Seller's employees which
Buyer would employ if Buyer were to acquire the Assets;
<PAGE>
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(i) cancel insurance policies covering the Assets or the
Station;
(j) except as specified in Section 4.04 hereof, enter into any
agreement except in the ordinary course of business and upon reasonable
terms; or
(k) do anything to jeopardize its status as a permittee of the
FCC, including, but not limited to, allowing the construction permit
(BPH-8909140E) (as modified from time to time) for the Station to
expire.
Section 4.2 Affirmative Covenants of Seller. From the date hereof until
the earlier of the execution of the Purchase Agreement and the expiration of the
Option Period, Seller covenants and agrees, unless Buyer agrees in writing to
the contrary:
(a) to maintain the Station's business in the ordinary course;
(b) to timely pay all of Seller's obligations and perform all
duties, whether contractual, by statute or regulation or otherwise;
(c) to maintain Seller's books and records in a prudent manner
at a standard appropriate to Seller's business and industry;
(d) subject to the resolution of Item 1 of the FCC matters
specified in Schedule 2.01(g), to construct promptly the Station in
accordance with the terms of its construction permit;
(e) to comply in all material respects with (i) the rules,
regulations and policies of the FCC including, but not limited to,
timely filing all reports, applications and fees with the FCC, and (ii)
all other laws, rules and regulations which Seller, the Station and the
Assets are subject;
(f) to use its best efforts to obtain FCC consent to the grant
of a Class C2 channel to Hobe Sound, Florida or to Jupiter, Florida
through a rulemaking petition or application proceeding, whichever
occurs first, which authorizes the Station's operation thereon (the
"Upgrade"); and
(g) to 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
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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. 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 or information or
any investigation.
Section 4.3 Covenant of Buyer. From the date hereof until the earlier
of the execution of the Purchase Agreement or the expiration of the Option
Period, Buyer covenants and agrees that it will not, without Seller's prior
written consent, take any action to impede the Upgrade.
Section 4.4 Joint Covenants. (a) Each of the parties hereto covenants
and agrees from the date hereof until the earlier of the execution of the
Purchase Agreement and the expiration of the Option Period to notify each other
of (i) any proceeding pending or threatened against the party sending the notice
which challenges or seeks to restrain or enjoin the consummation of any of the
transactions contemplated hereunder or under the Purchase Agreement, (ii) any
event which has had or is reasonably likely to have a material adverse effect on
the party sending the notice or its ability to consummate any of the
transactions contemplated hereunder or under the Purchase Agreement or (iii) any
material developments with respect to the Station or any material change in any
of the information contained in the notifying party's representations and
warranties set forth in this Agreement. No such notification shall relieve the
notifying party of its obligations hereunder.
(b) If the Option is exercised in accordance with Section 1.03 hereof,
Buyer and Seller hereby agree to negotiate in good faith the Purchase Agreement
and to enter into the same within 10 business days of Seller's deemed receipt of
the Notice In addition, Buyer and Seller shall, as soon as practicable after the
date hereof, proceed in good faith and as expeditiously as possible to enter
into a Time Brokerage Agreement, Construction Loan Agreement, Tower Lease
Agreement and Studio Lease Agreement, each consistent with the terms specified
in Schedule 4.04 hereto and each containing such representations, warranties and
covenants and such other terms and conditions, as are reasonable in these
circumstances.
(c) Each of the parties hereto covenants and agrees from the date
hereof until the earlier of the execution of the Purchase Agreement and the
expiration of the Option Period to (i) use their respective commercially
reasonable efforts to take all actions and to do all things necessary, proper or
advisable in order to consummate and make effective the transactions
contemplated by this Agreement; and (ii) not knowingly take any action or omit
to take any action which will result in the
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material violation by such party of any law applicable to this transaction or
cause a material breach by it or any of its respective representations and
warranties set forth in this Agreement.
ARTICLE 5. CONDITIONS TO THE EXERCISE OF THE OPTION
Section 5.1 Buyer's exercise of the Option is conditioned upon (unless
Buyer, in its sole discretion, waives such conditions) (a) Seller's prior
execution and delivery of the Tower Lease Agreement described on Schedule 4.04
hereto, (b) the Program Test Authority for the Station being granted on terms
which are not materially different from those set forth in the construction
permit for the Station as modified by Seller's application to relocate the
Station's transmitter to Hobe Sound, Florida, (c) the representations and
warranties of Seller set forth herein shall be true and correct in all material
respects and Seller shall have, 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 end of the Option Period and (d)
there shall not exist a condition at the Station which would permit Buyer to
terminate the Time Brokerage Agreement described on Schedule 4.04 hereto. If
Buyer does not exercise the Option due to the failure of either or both of such
conditions, Buyer shall be entitled to all proceeds of the Escrow Account.
ARTICLE 6. INDEMNIFICATION
Section 6.1 Indemnification. (a) Seller agrees to indemnify and hold
harmless Buyer from and against, and to reimburse Buyer with respect to, any and
all loss, damage, liability, cost and expense, including reasonable attorneys,
fees, incurred by Buyer by reason of or arising out of or in connection with (i)
a material breach by Seller of any representation or warranty contained in this
Agreement, (ii) the failure of Seller to perform any agreement required by this
Agreement to be performed by Seller, unless such performance was or is
prohibited by law or by court order or such failure to perform is permitted by
the terms of such agreement, (iii) any claims, actions, suits, proceedings or
investigations involving Seller arising out of any matter, or (iv) any Taxes of
Seller of any nature whatsoever (including, without limitation, all federal,
state, county, local, foreign and other income taxes, estimated taxes, excise
taxes, sales taxes, use taxes, transfer taxes, gross receipts taxes, franchise
taxes, employment and payroll related taxes, property taxes and import duties
assessable against or payable by Seller, whether or not measured in whole or in
part by net income), together with any related penalties and interest. Seller
also agrees to file or cause to be filed all reports, returns or other
information required to be supplied to a taxing authority (or the partners of
Seller) with respect to taxable periods of Seller ending on or before the date
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hereof. Seller also agrees to pay Buyer interest on any amount owed by Seller to
Buyer pursuant to this Section 6.01 from the date of the event giving rise to
Seller's indemnification obligation pursuant to this Section 6.01, at a rate per
annum equal to the so-called "prime rate" as announced from time to time by The
Bank of New York, but not higher than the maximum interest rate legally payable
under the laws of the State of Florida. Buyer agrees to give prompt notice to
Seller of the existence of any claim for indemnification, and Seller shall have
the right to participate in and, with the consent of Buyer, which consent shall
not be unreasonably withheld or delayed, to control the contest and defense of
any such claim at its own cost and expense, including the cost and expense of
attorneys' fees in connection with such contest and defense.
(b) Buyer agrees to indemnify and hold harmless Seller from and against
and to reimburse Seller with respect to, any and all loss, damage, liability,
cost and expense, including reasonable attorneys' fees, incurred by Seller by
reason of or in connection with (i) a material breach by Buyer of any
representation or warranty contained in this Agreement, (ii) the failure of
Buyer to perform any agreement required by this Agreement to be performed by
Buyer, unless such performance was or is prohibited by law or by court order, or
such failure to perform is permitted by the terms of such agreement, (iii) any
claims, actions, suits, proceedings or investigations involving Buyer arising
out of any matter, or (iv) any Taxes of Buyer of any nature whatsoever
(including, without limitation, all federal, state, county, local, foreign and
other income taxes, estimated taxes, excise taxes, sales taxes, use taxes,
transfer taxes, gross receipts taxes, franchise taxes, employment and payroll
related taxes, property taxes and import duties assessable against or payable by
Buyer, whether or not measured in whole or in part by net income), together with
any related penalties and interest. Buyer also agrees to pay to Seller interest
on any amount owed by Buyer to Seller pursuant to this Section 6.01 from the
date of the event giving rise to Buyer's indemnification obligation pursuant to
this Section 6.01, at a rate per annum equal to the so-called "prime rate" as
announced from time to time by The Bank of New York, but not higher than the
maximum interest legally payable under the laws of the State of Florida. Seller
agrees to give prompt notice to Buyer of the existence of any claim for
indemnification, and Buyer shall have the right to participate in and, with the
consent of Seller, which consent shall not be unreasonably withheld or delayed,
to control the contest and defense of any such claim at its own cost and
expense, including the cost and expense of attorneys' fees in connection with
such contest and defense.
ARTICLE 7. MISCELLANEOUS
Section 7.1 Survival. All statements, certifications,
indemnifications, representations and warranties made herein by
the parties to this Agreement, and their respective obligations
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to be performed pursuant to the terms hereof, shall survive for a period of 15
months from the end of the Option Period, notwithstanding any examination by or
on behalf of any party hereto, notwithstanding any notice of a breach or of a
failure to perform not waived in writing and notwithstanding the consummation of
the transactions hereby contemplated with knowledge of such breach or failure.
Section 7.2 Notices. All notices and other communications hereunder
shall be in writing, including by facsimile, and shall be deemed to have been
duly delivered and received (i) on the date of personal delivery; (ii) on the
fifth day after deposit in the U.S. mail if mailed by registered or certified
mail, postage prepaid and return receipt requested; (iii) on the day after
delivery to a nationally recognized overnight courier service if sent for next
morning delivery; or (iv) when dispatched by facsimile transmission (with the
facsimile transmission confirmation being deemed conclusive evidence of such
dispatch); if intended for Buyer, shall be addressed as follows:
American Radio Systems Corporation
116 Huntington Avenue
Boston, Massachusetts 02116
Attn: Michael B. Milsom, Esq.
Vice President & General Counsel
Facsimile: (617) 375-7575
with a copy to:
Howard J. Braun, Esq.
Rosenman & Colin LLP
1300 l9th Street, NW
Washington, DC 20036
Facsimile: (202) 429-0046
or at such other address of which Buyer shall have given notice to Seller in the
manner herein provided; if intended for Seller, shall be addressed as follows:
Jupiter Radio Partners
c/o Ms. Tricia Dahlin
Vice President/Controller
InterMart Broadcasting
4801 Deltona Drive
Punta Gorda, FL 33950
Facsimile: (941) 639-6742
with a copy to:
Howard A. Topel, Esq.
Mullin, Rhyne, Emmons & Topel, P.C.
1225 Connecticut Avenue, NW
Suite 300
Washington, DC 20036
Facsimile: (202) 872-0604
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or at such other address of which Seller shall have given notice to Buyer in the
manner herein provided.
Section 7.3 Merger; Waiver and Modification. All prior or
contemporaneous agreements, contracts, promises, representations and statements,
if any, between the parties hereto, or their representative, are merged into
this Agreement and this Agreement, together with the schedules and exhibits
hereto, constitute the entire agreement between them. No waiver or modification
of the terms hereof shall be valid unless in writing signed by the party to be
charged and only to the extent therein set forth.
Section 7.4 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, their respective heirs,
administrators, executors, successors and assigns. No party may assign its
rights and interest under this Agreement without the prior written consent of
the other party hereto; provided, however, that Buyer may assign its rights
under this Agreement to a third party provided further, however that Buyer
agrees to remain liable to Seller for the satisfactory performance of the
assignee's obligations (and the obligations of any future assignee) under this
Agreement and the Purchase Agreement.
Section 7.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute a single agreement.
Section 7.6 Captions. The captions appearing in this Agreement are
inserted only as a matter of convenience and for reference and in no way define,
limit or describe the scope and intent of this Agreement or any of the
provisions hereof.
Section 7.7 Choice of Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Florida
applicable to contracts made and to be performed wholly within said State
without giving effect to conflict of laws principles thereof.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement the day and year first above written.
AMERICAN RADIO SYSTEMS CORPORATION
By:________________________________
Name:
Title:
JUPITER RADIO PARTNERS
<PAGE>
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By:________________________________
Name:
Title: Partner
<PAGE>
Schedule 1.03
1. Purchase Price. Subject to adjustments to reflect proration of all
taxes and assessments, utility bills, and all other ongoing costs of operating
the Station, the Purchase Price shall be the C2 Purchase Price or the C3
Purchase Price (as such terms are defined below), determined as follows:
(a) If, as of the date (the "Closing Date") of the closing
(the "Closing") of the transactions contemplated under the Purchase
Agreement, the FCC shall have approved an application or other filing
granting, on the terms and conditions requested, the allocation of a
Class C2 channel to Hobe Sound or Jupiter, Florida for the operation of
the Station (the "Upgrade Event") and such approval is not subject to
administrative or judicial review (a "Final Consent"), the purchase
price shall be Eleven Million Dollars ($11,000,000.00) or the appraised
value of the Station operating pursuant to Program Test Authority or-a
License as a Class C2 facility (the "C2 Appraised Value"), whichever is
less (the "C2 Purchase Price"), payable at the Closing.
(b) If, as of the Closing Date, a Final Consent approving the
Upgrade Event has not been granted, Buyer shall pay at the Closing,
subject to delivery of the Escrow Fund, Seven Million Dollars
($7,000,000.00) or the appraised value of the Station operating
pursuant to Program Test Authority or a License as a Class C3 facility
(the "C3 Appraised Value"), whichever is less (the "C3 Purchase
Price"). Within five business days after a Final Consent approving the
Upgrade Event, Buyer shall make an additional payment to Seller (the
"Upgrade Payment") in the amount of the difference between the C2
Purchase Price and the C3 Purchase Price. If a Final Consent approving
the Upgrade Event is not granted, the Purchase Price shall be deemed to
be the C3 Purchase Price and Buyer shall have no obligation to pay any
additional amounts with respect thereto.
(c) The C2 Appraised Value and the C3 Appraised Value shall be
the fair market value of the Station (exclusive of debt or other
discounts) operating as a Class C2 facility or a Class C3 facility,
respectively, as determined by an appraiser selected by Seller, upon
the consent of the Buyer, which consent shall not be unreasonably
withheld or delayed. The appraisal to determine the value of the
Station as a Class C2 or Class C3 facility shall be performed prior to
the filing of the application to approve Seller's assignment of its FCC
permits or licenses to Buyer. If a Final Consent approving the Upgrade
Event shall not have been granted at the time of the filing of said
application, Seller shall cause the appraiser selected in accordance
with this
<PAGE>
-2-
paragraph (c) to establish both a C2 Appraised Value and a
C3 Appraised Value.
2. Closing. The closing under the Purchase Agreement shall occur on a
mutually acceptable date within 10 days after the FCC's consent to the
assignment of the Station's license from Seller to Buyer has become final, i.e.,
no longer subject to administrative or judicial appeal, reconsideration, review,
recall, or stay.
3. Expenses; Fees. Each party shall bear the cost of its own legal and
accounting fees in connection with the Purchase Agreement. FCC filing fees shall
be divided equally between the parties. Buyer shall be responsible for the
brokerage fee of Blackburn & Company, and shall hold Seller harmless from any
claims of brokerage fees from any other parties.
4. FCC Application. Seller shall have filed an application with the FCC
(or an amendment to any pending application, as may be required) to operate its
broadcasting facilities from the American Tower Systems tower at Hobe Sound,
Florida as a Class C3 FM Station, authorized to serve Jupiter, Florida.
<PAGE>
Schedule 2.01(a)
Seller's Partnership Agreement contains provisions relating to (i) the
relative interests of each Partner in the Partnership including, but not limited
to, dilution and augmentation of partnership interests, and (ii) a right of
first refusal among the partners to acquire partnership interests in the
Partnership.
<PAGE>
Schedule 2.01(g)
1. Seller has pending with the FCC an application for modification of the
Station's construction permit (FCC File No. BMPH-960111IN). An informal
objection to this application was filed on May 9, 1996, to which Seller
filed an opposition on June 10, 1996.
Following execution of the Agreement, Seller will amend its pending
application to specify the American Tower Systems tower at Hobe Sound,
Florida, which will remove the grounds for the informal objection to
the application.
2. Seller has pending with the FCC a Petition for Rulemaking, filed July
29, 1996, to delete Channel 288C3 from Jupiter, Florida, and to allot
Channel 288C2 to Hobe Sound, Florida.
<PAGE>
Schedule 4.04
Ancillary Agreements
1. Tower Lease Agreement. Seller shall enter into an agreement with
American Tower Systems, Inc. ("ATS") to lease space on ATS's Hobe Sound Tower
(and sufficient space in ATS's building at the tower site) for the installation,
operation and maintenance of Seller's antenna at a height of Eight Hundred (800)
feet above mean sea level for a Class C2 operation or at One Thousand (1,000)
feet above mean sea level for a Class C3 operation, a studio-transmitter-link
antenna, and related equipment at the rate of Eight Thousand Dollars ($8,000)
per month, with annual escalations of Five Percent (5%). The initial term of the
lease shall commence on the date the Station begins operation pursuant to
program test authority and shall be for a period of ten (10) years, renewable at
Seller's written request for successive additional ten (10) year terms.
2. Construction Loan Agreement. Seller and Buyer (or its designee)
shall enter into a construction loan agreement, pursuant to which Buyer (or its
designee) will provide debt financing to Seller for the amount of Seller's
Construction Costs. Subject to waiver by Buyer, Seller shall expend no less than
One Hundred Fifty Thousand Dollars ($150,000) to construct the Station. The
amount actually expended by Seller shall be known as "Seller's Construction
Costs." Buyer shall be responsible for reasonable costs in excess of the
Seller's Construction Costs required to construct the Station.
3. Studio Lease Agreements. Seller and Buyer (or its designee) shall
enter into a lease agreement, pursuant to which Buyer (or its designee) shall
lease to Seller studio and office space (not to exceed 500 square feet) in West
Palm Beach, Florida at a monthly rental at the same rate currently paid by Buyer
in the West Palm Beach market but not to exceed Twelve Dollars ($12.00) per
square foot per year. Buyer will provide Seller with space for a main studio
within the Station's 3.16 mV/m predicted contour.
LOAN AGREEMENT
AMONG
AMERICAN TOWER SYSTEMS, INC. (THE "BORROWER");
THE FINANCIAL INSTITUTIONS WHOSE NAMES APPEAR AS BANKS ON
THE SIGNATURE PAGES HEREOF (COLLECTIVELY, THE "BANKS");
AND
TORONTO DOMINION (TEXAS), INC.,
AS ADMINISTRATIVE AGENT
FOR THE BANKS (THE "ADMINISTRATIVE AGENT")
Dated as of November 22, 1996
Powell, Goldstein, Frazer & Murphy
Atlanta, Georgia
<PAGE>
LOAN AGREEMENT
AMONG
AMERICAN TOWER SYSTEMS, INC. (THE "BORROWER");
THE FINANCIAL INSTITUTIONS WHOSE NAMES APPEAR AS BANKS ON
THE SIGNATURE PAGES HEREOF (COLLECTIVELY, THE "BANKS");
AND
TORONTO DOMINION (TEXAS), INC.,
AS ADMINISTRATIVE AGENT
FOR THE BANKS (THE "ADMINISTRATIVE AGENT")
INDEX
Page
ARTICLE 1 Definitions............................................... 1
ARTICLE 2 Loans..................................................... 20
Section 2.1 The Loans............................... 20
Section 2.2 Manner of Borrowing and Disbursement.... 20
Section 2.3 Interest................................ 24
Section 2.4 Commitment Fees......................... 25
Section 2.5 Mandatory Commitment Reductions......... 26
Section 2.6 Voluntary Commitment Reductions......... 28
Section 2.7 Prepayments and Repayments.............. 29
Section 2.8 Notes; Loan Accounts.................... 30
Section 2.9 Manner of Payment....................... 30
Section 2.10 Reimbursement........................... 31
Section 2.11 Pro Rata Treatment...................... 32
Section 2.12 Capital Adequacy........................ 32
Section 2.13 Bank Tax Forms.......................... 33
ARTICLE 3 Conditions Precedent...................................... 34
Section 3.1 Conditions Precedent to Initial Advance. 34
Section 3.2 Conditions Precedent to Each Advance.... 35
ARTICLE 4 Representations and Warranties............................ 36
Section 4.1 Representations and Warranties.......... 36
Section 4.2 Survival of Representations and
Warranties, etc......................... 44
ARTICLE 5 General Covenants......................................... 44
Section 5.1 Preservation of Existence and Similar
Matters................................. 44
Section 5.2 Business; Compliance with Applicable
Law..................................... 45
<PAGE>
Page
Section 5.3 Maintenance of Properties............... 45
Section 5.4 Accounting Methods and Financial
Records................................. 45
Section 5.5 Insurance............................... 45
Section 5.6 Payment of Taxes and Claims............. 46
Section 5.7 Compliance with ERISA................... 46
Section 5.8 Visits and Inspections.................. 48
Section 5.9 Payment of Indebtedness; Loans.......... 49
Section 5.10 Use of Proceeds......................... 49
Section 5.11 Real Estate............................. 49
Section 5.12 Indemnity............................... 50
Section 5.13 Interest Rate Hedging................... 51
Section 5.14 Covenants Regarding Formation of
Restricted Subsidiaries and
Acquisitions; Partnership, Subsidiaries. 51
Section 5.15 Payment of Wages........................ 52
Section 5.16 Further Assurances...................... 52
ARTICLE 6 Information Covenants..................................... 53
Section 6.1 Quarterly Financial Statements and
Information............................. 53
Section 6.2 Annual Financial Statements and
Information............................. 53
Section 6.3 Performance Certificates................ 54
Section 6.4 Copies of Other Reports................. 54
Section 6.5 Notice of Litigation and Other Matters.. 55
ARTICLE 7 Negative Covenants........................................ 56
Section 7.1 Indebtedness of the Borrower and its
Subsidiaries............................ 57
Section 7.2 Limitation on Liens..................... 57
Section 7.3 Amendment and Waiver.................... 57
Section 7.4 Liquidation, Merger or Disposition of
Assets.................................. 58
Section 7.5 Limitation on Guaranties................ 58
Section 7.6 Investments and Acquisitions............ 59
Section 7.7 Restricted Payments..................... 60
Section 7.8 Leverage Ratio.......................... 60
Section 7.9 Interest Coverage Ratio................. 61
Section 7.10 Annualized Operating Cash Flow to Pro
Forma Debt Service...................... 61
Section 7.11 Limitation on Capital Expenditures...... 61
Section 7.12 Affiliate Transactions.................. 62
Section 7.13 Real Estate............................. 62
Section 7.14 ERISA Liabilities....................... 62
-ii-
<PAGE>
Page
ARTICLE 8 Default................................................... 63
Section 8.1 Events of Default....................... 63
Section 8.2 Remedies................................ 66
Section 8.3 Payments Subsequent to Declaration of
Event of Default........................ 68
ARTICLE 9 The Administrative Agent.................................. 69
Section 9.1 Appointment and Authorization........... 69
Section 9.2 Interest Holders........................ 69
Section 9.3 Consultation with Counsel............... 69
Section 9.4 Documents............................... 69
Section 9.5 Administrative Agent and Affiliates..... 70
Section 9.6 Responsibility of the Administrative
Agent................................... 70
Section 9.7 Action by the Administrative Agent...... 70
Section 9.8 Notice of Default or Event of Default... 71
Section 9.9 Responsibility Disclaimed............... 72
Section 9.10 Indemnification......................... 72
Section 9.11 Credit Decision......................... 73
Section 9.12 Successor Administrative Agent.......... 73
Section 9.13 Delegation of Duties.................... 74
ARTICLE 10 Change in Circumstances Affecting LIBOR
Advances......................................... 74
Section 10.1 LIBOR Basis Determination Inadequate or
Unfair.................................. 74
Section 10.2 Illegality.............................. 74
Section 10.3 Increased Costs......................... 75
Section 10.4 Effect On Other Advances................ 76
ARTICLE 11 Miscellaneous.................................... 77
Section 11.1 Notices................................. 77
Section 11.2 Expenses................................ 78
Section 11.3 Waivers................................. 79
Section 11.4 Set-Off................................. 79
Section 11.5 Assignment.............................. 80
Section 11.6 Accounting Principles................... 82
Section 11.7 Counterparts............................ 83
Section 11.8 Governing Law........................... 83
Section 11.9 Severability............................ 84
Section 11.10 Interest................................ 84
Section 11.11 Table of Contents and Headings.......... 84
Section 11.12 Amendment and Waiver.................... 84
Section 11.13 Entire Agreement........................ 85
-iii-
<PAGE>
Page
Section 11.14 Other Relationships..................... 85
Section 11.15 Directly or Indirectly.................. 85
Section 11.16 Reliance on and Survival of Various
Provisions.............................. 86
Section 11.17 Senior Debt............................. 86
Section 11.18 Obligations Several..................... 86
Section 11.19 Confidentiality......................... 86
Section 11.20 Termination of Agreement................ 87
ARTICLE 12 Waiver of Jury Trial............................. 87
Section 12.1 Waiver of Jury Trial.................... 87
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<PAGE>
EXHIBITS
Exhibit A - Form of Borrower's Pledge Agreement
Exhibit B - Form of Borrower's Security Agreement
Exhibit C - Form of Certificate of Financial Condition
Exhibit D - Form of Promissory Note
Exhibit E - Form of Parent Pledge Agreement
Exhibit F - Form of Request for Advance
Exhibit G - Form of Subsidiary Guaranty
Exhibit H - Form of Subsidiary Pledge Agreement
Exhibit I - Form of Subsidiary Security Agreement
Exhibit J - Form of Use of Proceeds Letter
Exhibit K - Form of Borrower's Loan Certificate
Exhibit L - Form of Subsidiary Loan Certificate
Exhibit M - Form of Performance Certificate
Exhibit N - Form of Assignment and Assumption Agreement
SCHEDULES
Schedule 1 Licenses
Schedule 2 Description of Philadelphia Disposition
Schedule 3 List of Unrestricted Subsidiaries on the
Agreement Date
Schedule 4.1(a) Exceptions to Representations and Warranties
Schedule 4.1(c) Subsidiaries
Schedule 4.1(i) Litigation
Schedule 4.1(s) Affiliate Transactions
Schedule 4.1(v) Indebtedness
-v-
<PAGE>
LOAN AGREEMENT
AMONG
AMERICAN TOWER SYSTEMS, INC. (THE "BORROWER");
THE FINANCIAL INSTITUTIONS WHOSE NAMES APPEAR AS BANKS ON
THE SIGNATURE PAGES HEREOF (COLLECTIVELY, THE "BANKS");
AND
TORONTO DOMINION (TEXAS), INC.,
AS ADMINISTRATIVE AGENT
FOR THE BANKS (THE "ADMINISTRATIVE AGENT")
W I T N E S S E T H:
WHEREAS, Borrower has requested that the Banks make available to
Borrower a revolving credit facility permitting advances of up to Ninety Million
Dollars ($90,000,000) at any one time outstanding; and
WHEREAS, the Banks are willing to extend such financing to Borrower
subject to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the receipt, adequacy and sufficiency of
which are acknowledged by the parties hereto, it is hereby agreed as follows:
ARTICLE 1
Definitions
For the purposes of this Agreement:
"Acquisition" shall mean (whether by purchase, lease, exchange,
issuance of stock or other equity or debt securities, merger, reorganization or
any other method) (i) any acquisition by the Borrower or any Restricted
Subsidiary of any other Person, which Person shall then become consolidated with
the Borrower or any such Restricted Subsidiary in accordance with GAAP; (ii) any
acquisition by the Borrower or any Restricted Subsidiary of all or any
substantial part of the assets of any other Person; or (iii) any acquisition by
Borrower or any Restricted Subsidiary of any communications tower facilities,
communications tower management businesses or related contracts, other than any
such Acquisition which shall be made by, or of, any Person which shall have been
designated and approved as an Unrestricted Subsidiary.
"Acquisition Operating Cash Flow" shall mean in the case of an
Acquisition permitted hereunder, Operating Cash Flow of the Borrower and its
Restricted Subsidiaries for the period during which such Acquisition occurs,
adjusted (A) to give effect to such Acquisition, as if such Acquisition had
occurred on the
<PAGE>
first day of such period, by excluding the Operating Cash Flow of such
Acquisition during such period prior to the date of such Acquisition and adding
to the Operating Cash Flow of the Borrower, if positive, or subtracting from
such Operating Cash Flow, if negative, the product of (i) the actual Operating
Cash Flow of such Acquisition for that portion of such period from the date of
such Acquisition to the last day of such period, multiplied by (ii) a fraction
the numerator of which is the number of calendar days in such period and the
denominator of which is the number of days in such period from and including the
date of such Acquisition through the last day of such period.
"Administrative Agent" shall mean Toronto Dominion (Texas), Inc., in
its capacity as Administrative Agent for the Banks or any successor
Administrative Agent appointed pursuant to Section 9.12 hereof.
"Administrative Agent's Office" shall mean the office of the
Administrative Agent located at 909 Fannin Street, Suite 1700, Houston Texas
77010, or such other office as may be designated pursuant to the provisions of
Section 11.1 hereof.
"Advance" shall mean amounts advanced by the Banks to the Borrower
pursuant to Article 2 hereof on the occasion of any borrowing and having the
same Interest Rate Basis and Interest Period; and "Advances" shall mean more
than one Advance.
"Affiliate" shall mean, with respect to a Person, any other Person
directly or indirectly controlling, controlled by, or under common control with,
such first Person. For purposes of this definition, "control" when used with
respect to any Person includes, without limitation, the direct or indirect
beneficial ownership of more than ten percent (10%) of the voting securities or
voting equity of such Person or the power to direct or cause the direction of
the management and policies of such Person whether by contract or otherwise. For
purposes of this Agreement, American Radio Systems and its Affiliates shall be
deemed to be Affiliates of the Borrower.
"Agreement" shall mean this Loan Agreement, as amended, supplemented,
restated or otherwise modified from time to time.
"Agreement Date" shall mean November 22, 1996.
"American Radio Systems" shall mean American Radio Systems
Corporation, a Delaware corporation.
"Annualized Operating Cash Flow" (a) for any calculation date up to and
including December 31, 1997, the product of (i) Operating Cash Flow for the
calendar month-end being tested or the most recently completed calendar month
immediately preceding
-2-
<PAGE>
the calculation date, as the case may be, times (ii) twelve (12); and (b) for
any calculation date after December 31, 1997, the product of (i) Operating Cash
Flow for the fiscal quarter-end being tested or the most recently completed
fiscal quarter immediately preceding the calculation date, as the case may be,
times (ii) four (4).
"Applicable Law" shall mean, in respect of any Person, all provisions
of constitutions, statutes, rules, regulations and orders of governmental bodies
or regulatory agencies applicable to such Person, including, without limiting
the foregoing, the Licenses, the Communications Act, zoning ordinances and all
Environmental Laws, and all orders, decisions, judgments and decrees of all
courts and arbitrators in proceedings or actions to which the Person in question
is a party or by which it is bound.
"Applicable Margin" shall mean the interest rate margin applicable to
Base Rate Advances and LIBOR Advances, as the case may be, in each case
determined in accordance with Section 2.3(f) hereof.
"Applicable Margin Ratio" shall mean, as of any date, the ratio of (a)
the Total Debt of the Borrower and its Restricted Subsidiaries on a consolidated
basis on such date to (b) the product of (i) Operating Cash Flow of the Borrower
and its Restricted Subsidiaries, for the most recently completed fiscal quarter
times (ii) four (4).
"Authorized Signatory" shall mean such senior personnel of a Person as
may be duly authorized and designated in writing by such Person to execute
documents, agreements and instruments on behalf of such Person.
"Available Commitment" shall mean (a) prior to receipt by the Borrower
after the Agreement Date of not less than $3,000,000.00 of contributed equity,
and after giving effect to reductions in the Commitment under Section 2.5 and
Section 2.6 hereof and repayments of the Loans under Section 2.7 hereof,
$70,000,000, and (b) thereafter, after giving effect to reductions in the
Commitment under Section 2.5 and Section 2.6 hereof and repayments of the Loans
under Section 2.7 hereof, the lesser of (i) the Commitment and (ii) the maximum
amount of the Loans that could be outstanding hereunder on such date without
resulting in a breach of Section 7.8 or Section 7.10 hereof.
"Banks" shall mean the Persons whose names appear as "Banks" on the
signature pages hereof and any other Person which becomes a "Bank" hereunder
after the Agreement Date; and "Bank" shall mean any one of the foregoing Banks.
-3-
<PAGE>
"Base Rate" shall mean, at any time, a fluctuating interest rate per
annum equal to the higher of (a) the rate of interest quoted from time to time
by the Administrative Agent as its "prime rate" or "base rate" or (b) the
Federal Funds Rate plus one-half of one percent (1/2%). The Base Rate is not
necessarily the lowest rate of interest charged by the Administrative Agent in
connection with extensions of credit.
"Base Rate Advance" shall mean an Advance which the Borrower requests
to be made as a Base Rate Advance or is reborrowed as a Base Rate Advance, in
accordance with the provisions of Section 2.2 hereof, and which shall be in a
principal amount of at least $1,000,000, and in an integral multiple of
$500,000.
"Base Rate Basis" shall mean a simple interest rate equal to the sum of
(i) the Base Rate and (ii) the Applicable Margin applicable to Base Rate
Advances. The Base Rate Basis shall be adjusted automatically as of the opening
of business on the effective date of each change in the Base Rate to account for
such change, and shall also be adjusted to reflect changes of the Applicable
Margin applicable to Base Rate Advances.
"Borrower" shall mean American Tower Systems, Inc., a
Delaware corporation.
"Borrower's Pledge Agreement" shall mean that certain Borrower's Pledge
Agreement dated as of even date herewith between the Borrower and the
Administrative Agent, substantially in the form of Exhibit A attached hereto,
pursuant to which the Borrower has pledged to the Administrative Agent for the
ratable benefit of the Banks all of the Borrower's stock ownership and/or any
partnership interests in each of its Subsidiaries.
"Borrower's Security Agreement" shall mean that certain Security
Agreement dated as of even date herewith, made by the Borrower in favor of the
Administrative Agent for the ratable benefit of the Banks, substantially in the
form of Exhibit B attached hereto.
"Business Day" shall mean a day on which banks and foreign exchange
markets are open for the transaction of business required for this Agreement in
Houston, Texas, New York, New York and London, England, as relevant to the
determination to be made or the action to be taken.
"Capital Expenditures" shall mean, for any period, expenditures
(including the aggregate amount of Capitalized Lease Obligations required to be
paid during such period) incurred by any Person to acquire or construct fixed
assets, plant and equipment (including renewals, improvements and replacements,
but excluding repairs and maintenance) during such period, which
-4-
<PAGE>
would be required to be capitalized on the balance sheet of such Person in
accordance with GAAP.
"Capital Stock" shall mean, as applied to any Person, any capital stock
of such Person, regardless of class or designation, and all warrants, options,
purchase rights, conversion or exchange rights, voting rights, calls or claims
of any character with respect thereto.
"Capitalized Lease Obligation" shall mean that portion of any
obligation of a Person as lessee under a lease which at the time would be
required to be capitalized on the balance sheet of such lessee in accordance
with GAAP.
"Certificate of Financial Condition" shall mean a certificate,
substantially in the form of Exhibit C attached hereto, signed by the chief
financial officer of the Borrower, together with any schedules, exhibits or
annexes appended thereto.
"Change of Control" shall mean, as applied to the Borrower, any change
in the ownership of, or lien upon, the stock of the Borrower that results in (a)
less than fifty-one percent (51%) of all voting rights with respect to the
Capital Stock of the Borrower (including, without limitation, warrants, options,
conversion rights, voting rights and calls or claims of any character with
respect thereto, to the extent exercisable prior to repayment in full of the
Obligations) being owned, directly or indirectly, by the Parent, the senior
management of American Radio Systems, the Parent and/or the Borrower or
Affiliates of American Radio Systems, the Parent or the Borrower or (b) American
Radio Systems having no direct or indirect ownership interest in the Capital
Stock of the Borrower.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall mean any property of any kind constituting
collateral for the Obligations under any of the Security Documents.
"Commitment" shall mean the several obligations of the Banks to fund
their respective portion of the Loans to the Borrower in accordance with their
respective Commitment Ratios in the aggregate sum of up to $90,000,000, pursuant
to the terms hereof, as such obligations may be reduced from time to time
pursuant to the terms hereof.
"Commitment Ratios" shall mean the percentages in which the
Banks are severally bound to fund their respective portion of
-5-
<PAGE>
Advances to the Borrower under the Commitment, which are set forth below
(together with dollar amounts) as of the Agreement Date:
Bank Approximate Dollar
Percentage Commitment
---------- ----------
Toronto Dominion (Texas), Inc. 22.22222222% $20,000,000.00
Banque Paribas 16.66666667% $15,000,000.00
Bank of Montreal 13.33333333% $12,000,000.00
Credit Suisse 13.33333333% $12,000,000.00
Union Bank of California, N.A. 13.33333333% $12,000,000.00
Signet Bank 10.55555556% $9,500,000.00
Fleet National Bank 10.55555556% $9,500,000.00
============ ==============
100.00% $90,000,000.00
"Communications Act" shall mean the Communications Act of 1934, and any
similar or successor federal statute, and the rules and regulations of the FCC
thereunder, all as the same may be in effect from time to time.
"Default" shall mean any Event of Default, and any of the events
specified in Section 8.1 hereof, regardless of whether there shall have occurred
any passage of time or giving of notice, or both, that would be necessary in
order to constitute such event an Event of Default.
"Default Rate" shall mean a simple per annum interest rate equal to the
sum of (a) the Base Rate, plus (b) the Applicable Margin for Base Rate Advances
plus (c) two percent (2%).
"Employee Pension Plan" shall mean any Plan which is maintained by the
Borrower, any of its Subsidiaries or any ERISA Affiliate.
"Environmental Laws" shall mean all applicable federal, state or local
laws, statutes, rules, regulations or ordinances, codes, common law, consent
agreements, orders, decrees, judgments or injunctions issued, promulgated,
approved or entered thereunder relating to public health, safety or the
pollution or protection of the environment, including, without limitation, those
relating to releases, discharges, emissions, spills, leaching, or disposals to
air, water, land or ground water, to the withdrawal or use of ground water, to
the use, handling or disposal of polychlorinated biphenyls, asbestos or urea
formaldehyde, to the treatment, storage, disposal or management of hazardous
substances (including, without limitation, petroleum, crude oil or any fraction
thereof, or other hydrocarbons), pollutants or contaminants, to exposure to
toxic,
-6-
<PAGE>
hazardous or other controlled, prohibited, or regulated substances, including,
without limitation, any such provisions under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. ss. 9601
et seq.), or the Resource Conservation and Recovery Act of 1976, as amended
(42 U.S.C. ss. 6901 et seq.).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as in effect from time to time.
"ERISA Affiliate" shall mean any Person, including a Subsidiary or an
Affiliate of the Borrower, that is a member of any group of organizations of
which the Borrower is a member and which is covered by a Plan.
"Eurodollar Reserve Percentage" shall mean the percentage which is in
effect from time to time under Regulation D of the Board of Governors of the
Federal Reserve System, as such regulation may be amended from time to time, as
the maximum reserve requirement applicable with respect to Eurocurrency
Liabilities (as that term is defined in Regulation D), whether or not any Bank
has any such Eurocurrency Liabilities subject to such reserve requirement at
that time.
"Event of Default" shall mean any of the events specified in Section
8.1 hereof, provided that any requirement for notice or lapse of time, or both,
has been satisfied.
"Excess Cash Flow" shall mean, as of the end of any fiscal year of the
Borrower based on the audited financial statements provided under Section 6.2
hereof for such fiscal year, the excess, if any, of (a) Operating Cash Flow for
such fiscal year, minus (b) the sum of the following: (i) payments made with
respect to Capital Expenditures incurred by the Borrower and its Restricted
Subsidiaries during such fiscal year; (ii) repayments of the Loans resulting
from reductions of the Commitment (which shall include any reductions set forth
in Section 2.5(a) hereof); (iii) cash taxes paid by the Borrower and its
Restricted Subsidiaries (including any paid to American Radio Systems pursuant
to the Tax Sharing Agreement) during such fiscal year; (iv) Interest Expense
during such fiscal year; and (v) principal payments made in respect of
Indebtedness for Money Borrowed (other than with respect to the Loans) paid by
the Borrower and its Restricted Subsidiaries during such fiscal year.
"FCC" shall mean the Federal Communications Commission, or any other
similar or successor agency of the federal government administering the
Communications Act.
"Federal Funds Rate" shall mean, as of any date, the
weighted average of the rates on overnight federal funds
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transactions with the members of the Federal Reserve System arranged by federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business Day, the
average of the quotations for such day on such transactions received by the
Administrative Agent from three (3) federal funds brokers of recognized standing
selected by the Administrative Agent.
"GAAP" shall mean, as in effect from time to time, generally accepted
accounting principles in the United States, consistently applied.
"Guaranty" or "Guaranteed," as applied to an obligation, shall mean and
include (a) a guaranty, direct or indirect, in any manner, of all or any part of
such obligation, and (b) any agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, any
reimbursement obligations as to amounts drawn down by beneficiaries of
outstanding letters of credit or capital call requirements.
"Indebtedness" shall mean, with respect to any Person, and without
duplication, (a) all items, except items of shareholders' and partners' equity
or capital stock or surplus or general contingency or deferred tax reserves,
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, including,
without limitation, with respect to any secured non-recourse obligations of such
Person, the higher of the book value or fair market value of the property or
asset securing such obligation (if less than the amount of such obligation), (b)
all direct or indirect obligations of any other Person secured by any Lien to
which any property or asset owned by such Person is subject, but only to the
extent of the higher of the fair market value or the book value of the property
or asset subject to such Lien (if less than the amount of such obligation), if
the obligation secured thereby shall not have been assumed, (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, (d) all reimbursement obligations with respect to
outstanding letters of credit, and (e) to the extent not otherwise included, all
obligations subject to Guaranties of such Person or its Subsidiaries, and (f)
all obligations of such Person under Interest Hedge Agreements.
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"Indebtedness for Money Borrowed" shall mean, with respect to any
Person, Indebtedness for 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, all
Indebtedness upon which interest charges are customarily paid (other than trade
payables arising in the ordinary course of business, but only if and so long as
such accounts are payable on customary trade terms), all Capitalized Lease
Obligations, all reimbursement obligations with respect to outstanding letters
of credit, all Indebtedness issued or assumed as full or partial payment for
property or services (other than trade payables arising in the ordinary course
of business, but only if and so long as such accounts are payable on customary
trade terms), whether or not any such notes, drafts, obligations or Indebtedness
represent Indebtedness for money borrowed, and, without duplication, Guaranties
of any of the foregoing. For purposes of this definition, interest which is
accrued but not paid on the scheduled due date for such interest shall be deemed
Indebtedness for Money Borrowed.
"Indemnitee" shall have the meaning ascribed thereto in
Section 5.12 hereof.
"Interest Coverage Ratio" shall mean, for any period, the ratio of (a)
Annualized Operating Cash Flow as of (i) the calendar quarter end being tested,
or (ii) the most recently completed calendar quarter, as the case may be, to (b)
Interest Expense for (i) the four (4) calendar quarter period then ended or (ii)
the most recently completed four (4) calendar quarter period, as the case may
be, in each case calculated in accordance with GAAP.
"Interest Expense" shall mean, for any period, all cash interest
expense (including imputed interest with respect to Capitalized Lease
Obligations) with respect to any Indebtedness for Money Borrowed of the Borrower
and its Restricted Subsidiaries on a consolidated basis during such period
pursuant to the terms of such Indebtedness for Money Borrowed, together with all
fees payable in respect thereof, all as calculated in accordance with GAAP.
"Interest Hedge Agreements" shall mean the obligations of any Person
pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such Person
calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without
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limitation, interest rate swaps, caps, floors, collars and
similar agreements.
"Interest Period" shall mean (a) in connection with any Base Rate
Advance, the period beginning on the date such Advance is made and ending on the
last day of the calendar quarter in which such Advance is made, provided,
however, that if a Base Rate Advance is made on the last day of any calendar
quarter, it shall have an Interest Period ending on, and its Payment Date shall
be, the last day of the following calendar quarter, and (b) in connection with
any LIBOR Advance, the term of such Advance selected by the Borrower or
otherwise determined in accordance with this Agreement. Notwithstanding the
foregoing, however, (i) any applicable Interest Period which would otherwise end
on a day which is not a Business Day shall be extended to the next succeeding
Business Day unless, with respect to LIBOR Advances only, such Business Day
falls in another calendar month, in which case such Interest Period shall end on
the next preceding Business Day, (ii) any applicable Interest Period, with
respect to LIBOR Advances only, which begins on a day for which there is no
numerically corresponding day in the calendar month during which such Interest
Period is to end shall (subject to clause (i) above) end on the last day of such
calendar month, and (iii) the Borrower shall not select an Interest Period which
extends beyond the Maturity Date or such earlier date as would interfere with
the Borrower's repayment obligations under Section 2.5, Section 2.6 or Section
2.7 hereof. Interest shall be due and payable with respect to any Advance as
provided in Section 2.3 hereof.
"Interest Rate Basis" shall mean the Base Rate Basis or the LIBOR
Basis, as appropriate.
"known to the Borrower" or "to the knowledge of the Borrower" shall
mean known by or reasonably should have been known by the executive officers of
the Borrower (which shall include, without limitation, the chief executive
officer, the chief operating officer, if any, the chief financial officer and
the general counsel, or any vice president of the Borrower).
"Leasing Operating Expenses" shall mean, for any period, operating
expenses for such period attributable to the leasing operations of the Borrower
and its Restricted Subsidiaries based upon the ratio of the number of sites
owned or leased by the Borrower and its Restricted Subsidiaries to the total
number of all sites owned, leased and managed by the Borrower and its Restricted
Subsidiaries.
"Leasing Overhead" shall mean, for any period, corporate overhead
(exclusive of amortization and depreciation) attributable to the leasing
operations of the Borrower and its Restricted Subsidiaries for such period based
upon the ratio of
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the number of sites owned or leased by the Borrower and its Restricted
Subsidiaries to the total of all sites owned, leased and managed by the Borrower
and its Restricted Subsidiaries.
"Leverage Ratio" shall mean, as of any date, the ratio of (a) the Total
Debt of the Borrower and its Restricted Subsidiaries on a consolidated basis on
such date, to (b) Annualized Operating Cash Flow of the Borrower and its
Restricted Subsidiaries on a consolidated basis for (x) all periods ending prior
to January 1, 1998, the calendar month end being tested or the most recently
completed calendar month, as the case may be and (y) all periods ending
thereafter, the calendar quarter end being tested or the most recently completed
calendar quarter, as the case may be.
"LIBOR" shall mean, for any Interest Period, the average of the
interest rates per annum at which deposits in United States Dollars for such
Interest Period are offered to the Administrative Agent in the Eurodollar market
at approximately 11:00 a.m. (London time) two (2) Business Days before the first
day of such Interest Period, in an amount approximately equal to the principal
amount of, and for a length of time approximately equal to the Interest Period
for, the LIBOR Advance sought by the Borrower.
"LIBOR Advance" shall mean an Advance which the Borrower requests to be
made as a LIBOR Advance or which is reborrowed as a LIBOR Advance, in accordance
with the provisions of Section 2.2 hereof, and which shall be in a principal
amount of at least $5,000,000 and in an integral multiple of $1,000,000.
"LIBOR Basis" shall mean a simple per annum interest rate (rounded
upward, if necessary, to the nearest one-hundredth (1/100th) of one percent)
equal to the sum of (a) the quotient of (i) the LIBOR divided by (ii) one minus
the Eurodollar Reserve Percentage, if any, stated as a decimal, plus (b) the
Applicable Margin. The LIBOR Basis shall apply to Interest Periods of one (1),
two (2), three (3), or six (6) months, and, once determined, shall remain
unchanged during the applicable Interest Period, except for changes to reflect
adjustments in the Eurodollar Reserve Percentage and the Applicable Margin as
adjusted pursuant to Section 2.3(f) hereof. The LIBOR Basis for any LIBOR
Advance shall be adjusted as of the effective date of any change in the
Eurodollar Reserve Percentage.
"Licenses" shall mean any telephone, microwave, radio transmissions,
personal communications or other license, authorization, certificate of
compliance, franchise, approval or permit, whether for the construction, the
ownership or the operation of any communications tower facilities, granted or
issued by the FCC and held by the Borrower or any of its
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Restricted Subsidiaries, all of which as of the Agreement Date are listed on
Schedule 1 attached hereto.
"Lien" shall mean, with respect to any property, any mortgage, lien,
pledge, negative pledge or other agreement not to pledge, assignment, charge,
security interest, title retention agreement, levy, execution, seizure,
attachment, garnishment or other encumbrance of any kind in respect of such
property, whether created by statute, contract, the common law or otherwise, and
whether or not choate, vested or perfected.
"Loan Documents" shall mean this Agreement, the Notes, the Borrower's
Pledge Agreement, the Borrower's Security Agreement, the Subsidiary Security
Agreement, the Subsidiary Guaranty, the Subsidiary Pledge Agreement, the Parent
Pledge Agreement, all fee letters, all Requests for Advance, all Interest Hedge
Agreements between the Borrower, on the one hand, and the Administrative Agent
and the Banks, or any of them, on the other hand, and all other documents and
agreements executed or delivered by the Borrower or its Restricted Subsidiaries
in connection with or contemplated by this Agreement.
"Loans" shall mean, collectively, the amounts advanced by the Banks to
the Borrower under the Commitment, not to exceed the Commitment, and evidenced
by the Notes.
"Majority Banks" shall mean (i) at any time that no Loans are
outstanding hereunder, Banks the total of whose Commitment Ratios equals or
exceeds sixty percent (60%) of the Commitment Ratios of all Banks entitled to
vote hereunder, or (ii) at any time that there are Loans outstanding hereunder,
Banks the total of whose Loans outstanding equals or exceeds sixty percent (60%)
of the total principal amount of the Loans then outstanding of all Banks
entitled to vote hereunder.
"Management Operating Expenses" shall mean, for any period, operating
expenses attributable to the management operations of the Borrower and its
Restricted Subsidiaries for such period based upon the ratio of the number of
sites managed by the Borrower and its Restricted Subsidiaries to the total
number of all sites owned, leased and managed by the Borrower and its Restricted
Subsidiaries.
"Management Overhead" shall mean, for any period, corporate overhead
(exclusive of amortization and depreciation) attributable to the management
operations of the Borrower and its Restricted Subsidiaries based upon the ratio
of the number of sites managed by the Borrower and its Restricted Subsidiaries
to the total number of all sites owned, leased and managed by the Borrower and
its Restricted Subsidiaries.
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"Materially Adverse Effect" shall mean (a) any material adverse effect
upon the business, assets, business prospects, liabilities, financial condition,
results of operations or properties of the Borrower and its Restricted
Subsidiaries on a consolidated basis, taken as a whole, or (b) a material
adverse effect upon the binding nature, validity, or enforceability of this
Agreement and the Notes, or upon the ability of the Borrower and its Restricted
Subsidiaries to perform the payment obligations or other material obligations
under this Agreement or any other Loan Document, or upon the value of the
Collateral or upon the rights, benefits or interests of the Banks in and to the
Loans or the rights of the Administrative Agent and the Banks in the Collateral;
in either case, whether resulting from any single act, omission, situation,
status, event or undertaking, or taken together with other such acts, omissions,
situations, statuses, events or undertakings.
"Maturity Date" shall mean December 31, 2004, or, as the case may be,
such earlier date as payment of the Obligations shall be due (whether by
acceleration, reduction of the Commitment to zero or otherwise).
"Multiemployer Plan" shall mean a multiemployer pension plan as defined
in Section 3(37) of ERISA to which the Borrower, any of its Subsidiaries or any
ERISA Affiliate is or has been required to contribute.
"Necessary Authorizations" shall mean all approvals and licenses from,
and all filings and registrations with, any governmental or other regulatory
authority, including, without limiting the foregoing, the Licenses and all
approvals, licenses, filings and registrations under the Communications Act,
necessary in order to enable the Borrower and its Restricted Subsidiaries to
own, construct, maintain, and operate communications tower facilities and to
invest in other Persons who own, construct, maintain, manage and operate
communications tower facilities.
"Net Income" shall mean, for the Borrower and its Restricted
Subsidiaries on a consolidated basis, for any period, net income determined in
accordance with GAAP.
"Net Proceeds" shall mean, with respect to any sale, lease, transfer or
other disposition of assets by the Borrower or any of its Restricted
Subsidiaries, the aggregate amount of cash received for such assets (including,
without limitation, any payments received for non-competition covenants,
consulting or management fees in connection with such sale, and any portion of
the amount received evidenced by a promissory note or other evidence of
Indebtedness issued by the purchaser), net of (i) amounts reserved, if any, for
taxes payable with respect to any such sale (after application (assuming
application first to
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such reserves) of any available losses, credits or other offsets), (ii)
reasonable and customary transaction costs properly attributable to such
transaction and payable by the Borrower or any of its Restricted Subsidiaries
(other than to an Affiliate) in connection with such sale, lease, transfer or
other disposition of assets, including, without limitation, commissions, and
(iii) until actually received by the Borrower or any of its Restricted
Subsidiaries, any portion of the amount received held in escrow or evidenced by
a promissory note or other evidence of Indebtedness issued by a purchaser or
non-compete, consulting or management agreement or covenant or otherwise for
which compensation is paid over time. Upon receipt by the Borrower or any of its
Restricted Subsidiaries of (A) amounts referred to in item (iii) of the
preceding sentence, or (B) if there shall occur any reduction in the tax
reserves referred to in item (i) of the preceding sentence resulting in a
payment to the Borrower, such amounts shall then be deemed to be "Net Proceeds."
"Notes" shall mean, collectively, those certain promissory notes in the
aggregate original principal amount of $90,000,000, and issued to each of the
Banks by the Borrower, each one substantially in the form of Exhibit D attached
hereto, any other promissory note issued by the Borrower to evidence the Loans
pursuant to this Agreement, and any extensions, renewals, or amendments to, or
replacements of, the foregoing.
"Obligations" shall mean all payment and performance obligations of
every kind, nature and description of the Borrower, its Restricted Subsidiaries,
and any other obligors to the Banks, or the Administrative Agent, or any of
them, under this Agreement and the other Loan Documents (including any interest,
fees and other charges on the Loans or otherwise under the Loan Documents that
would accrue but for the filing of a bankruptcy action with respect to the
Borrower, whether or not such claim is allowed in such bankruptcy action and
including Obligations to the Banks pursuant to Section 5.13 hereof) as they may
be amended from time to time, or as a result of making the Loans, whether such
obligations are direct or indirect, absolute or contingent, due or not due,
contractual or tortious, liquidated or unliquidated, arising by operation of law
or otherwise, now existing or hereafter arising.
"Operating Cash Flow" shall mean, (a) with respect to the Borrower and
its Restricted Subsidiaries on a consolidated basis as of the end of any period
from the Agreement Date through and including June 30, 1997, (i) the sum of (A)
operating revenues of the Borrower and its Restricted Subsidiaries plus (B)
Unrestricted Subsidiary Distributions during such period less (ii) the sum of
(A) operating expenses for such period plus (B) corporate overhead (exclusive of
amortization and depreciation)
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for such period; and (b) with respect to the Borrower and its Restricted
Subsidiaries on a consolidated basis as of the end of any period ending after
June 30, 1997, the sum of (i) (A) operating revenues from leasing operations for
such period minus (B) the sum of (1) Leasing Operating Expenses for such period,
and (2) Leasing Overhead for such period, plus (ii) the lesser of (A) (1)
operating revenues from management agreement operations, minus (2) the sum of
(x) Management Operating Expenses and (y) Management Overhead ("Management
Operations Cash Flow") for such period and (B) ten percent (10%) of the amount
calculated under clause (b)(i) above for such period plus (iii) to the extent
that the total amount of Management Operations Cash Flow for such period is
greater than the amount calculated pursuant to clause (b)(ii) above, fifty
percent (50%) of such excess amount plus (iv) Unrestricted Subsidiary
Distributions for such period. In the case of determining Operating Cash Flow
under Sections 2.3, 7.8, 7.9 and 7.10 hereof following an Acquisition permitted
hereunder, Operating Cash Flow of the Borrower and its Restricted Subsidiaries
shall include the Acquisition Operating Cash Flow. For purposes of calculating
Operating Cash Flow in connection with any Advance for an Acquisition, Operating
Cash Flow for the Borrower and its Restricted Subsidiaries as of the last day of
the immediately preceding calendar quarter and/or calendar month end, as the
case may be, shall include "operating cash flow" for the Acquisition for the
same period after giving effect to adjustments reasonably satisfactory to the
Administrative Agent.
"Parent" shall mean American Tower Systems Holding
Corporation, a Delaware corporation.
"Parent Pledge Agreement" shall mean that certain Parent Pledge
Agreement dated as of even date herewith, made by Parent in favor of the
Administrative Agent for the ratable benefit of the Banks, substantially in the
form of Exhibit E attached hereto.
"Payment Date" shall mean the last day of any Interest
Period.
"PBGC" shall mean the Pension Benefit Guaranty Corporation,
or any successor thereto.
"Permitted Liens" shall mean, as applied to any Person:
(a) any Lien in favor of the Administrative Agent
given to secure the Obligations;
(b) (i) Liens on real estate or other property for taxes,
assessments, governmental charges or levies not yet delinquent and (ii) Liens
for taxes, assessments, judgments, governmental charges or levies or claims the
non-payment of which
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is being diligently contested in good faith by appropriate proceedings and for
which adequate reserves have been set aside on such Person's books, but only so
long as no foreclosure, distraint, sale or similar proceedings have been
commenced with respect thereto;
(c) Liens of carriers, warehousemen, mechanics, vendors,
(solely to the extent arising by operation of law) laborers and materialmen
incurred in the ordinary course of business for sums not yet due or being
diligently contested in good faith, if reserves or appropriate provisions shall
have been made therefor;
(d) Liens incurred in the ordinary course of business in
connection with worker's compensation and unemployment insurance, social
security obligations, assessments or government charges which are not overdue
for more than sixty (60) days;
(e) restrictions on the transfer of the Licenses or
assets of the Borrower or its Restricted Subsidiaries imposed by
any of the Licenses as presently in effect or by the
Communications Act and any regulations thereunder;
(f) easements, rights-of-way, zoning restrictions, licenses,
reservations or restrictions on use and other similar encumbrances on the use of
real property which do not materially interfere with the ordinary conduct of the
business of such Person or the use of such property;
(g) liens arising by operation of law in favor of purchasers
in connection with any asset sale permitted hereunder; provided that such lien
only encumbers the property being sold.
(h) Liens reflected by Uniform Commercial Code financing
statements filed in respect of Capitalized Lease Obligations permitted pursuant
to Section 7.1 hereof and true leases of the Borrower or any of its
Subsidiaries;
(i) Liens to secure performance of statutory obligations,
surety or appeal bonds, performance bonds, bids, tenders or escrow deposits in
connection with permitted Acquisitions;
(j) judgment Liens which do not result in an Event of
Default under Section 8.1(h) hereof;
(k) Liens in connection with escrow deposits made in
connection with Acquisitions permitted hereunder; and
(l) additional Liens securing Indebtedness which does
not in the aggregate outstanding at any time exceed $500,000.
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"Person" shall mean an individual, corporation, limited liability
company, association, partnership, joint venture, trust or estate, an
unincorporated organization, a government or any agency or political subdivision
thereof, or any other entity.
"Philadelphia Disposition" shall mean the sale by the Borrower of
certain real property located in Philadelphia, Pennsylvania and more
particularly described on Schedule 2 attached hereto.
"Plan" shall mean an employee benefit plan within the meaning of
Section 3(3) of ERISA or any other employee benefit plan maintained for
employees of any Person or any affiliate of such Person.
"Pro Forma Debt Service" shall mean with respect to the Borrower and
its Restricted Subsidiaries, on a consolidated basis, with respect to the next
succeeding complete twelve (12) month period following the calculation date, and
after giving effect to any Interest Hedge Agreements and LIBOR Advances, the sum
of the amount of all (i) scheduled payments of principal on Indebtedness for
Money Borrowed (determined with respect to the Loans only, as the difference
between the outstanding principal amount of the Loans on the calculation date
and the amount the Commitment will be after the reductions thereof set forth in
Section 2.5 hereof for such four calendar quarter period have taken effect) for
such period, (ii) Interest Expense for such period, (iii) fees payable under
this Agreement for such period, and (iv) other payments payable by such Persons
during such period in respect of Indebtedness for Money Borrowed (other than
voluntary repayments under Section 2.7 hereof). For purposes of this definition,
where interest payments for the twelve (12) month period immediately succeeding
the calculation date are not fixed by way of Interest Hedge Agreements, LIBOR
Advances, or otherwise for the entire period, interest shall be calculated on
such Indebtedness for Money Borrowed for periods for which interest payments are
not so fixed at the lesser of (a) the LIBOR Basis (based on the then current
adjustment under Section 2.3(f) hereof) for a LIBOR Advance having an Interest
Period of six (6) months as determined on the date of calculation and (b) the
Base Rate Basis as in effect on the date of calculation; provided, however, that
if such LIBOR Basis cannot be determined in the reasonable opinion of the
Administrative Agent, such interest shall be calculated using the Base Rate
Basis as then in effect.
"Reportable Event" shall mean, with respect to any Employee Pension
Plan, an event described in Section 4043(b) of ERISA.
"Request for Advance" shall mean a certificate designated as a "Request
for Advance," signed by an Authorized Signatory of the Borrower requesting an
Advance hereunder, which shall be in
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substantially the form of Exhibit F attached hereto, and shall, among other
things, (i) specify the date of the Advance, which shall be a Business Day, the
amount of the Advance, the type of Advance (Eurodollar or Base Rate), and, with
respect to LIBOR Advances, the Interest Period selected by the Borrower, (ii)
state that there shall not exist, on the date of the requested Advance and after
giving effect thereto, a Default, as of the date of such Advance and after
giving effect thereto, and (iii) the Applicable Margin then in effect.
"Restricted Payment" shall mean any direct or indirect distribution,
dividend or other payment to any Person (other than to the Borrower or any
Restricted Subsidiary of the Borrower) on account of any general or limited
partnership interest in, or shares of Capital Stock or other securities of, the
Borrower or any of its Restricted Subsidiaries (other than dividends payable
solely in stock of such Person and stock splits), including, without limitation,
any direct or indirect distribution, dividend or other payment to any Person
(other than to the Borrower or any Restricted Subsidiary of the Borrower) on
account of any warrants or other rights or options to acquire shares of Capital
Stock of the Borrower or any of its Restricted Subsidiaries.
"Restricted Subsidiary" shall mean any Subsidiary of the Borrower other
than an Unrestricted Subsidiary.
"Security Documents" shall mean the Borrower's Pledge Agreement, the
Subsidiary Guaranty, the Subsidiary Pledge Agreement, the Borrower's Security
Agreement, the Subsidiary Security Agreement, the Parent Pledge Agreement, any
other agreement or instrument providing collateral for the Obligations whether
now or hereafter in existence, and any filings, instruments, agreements, and
documents related thereto or to this Agreement, and providing the Administrative
Agent, for the benefit of the Banks, with Collateral for the Obligations.
"Security Interest" shall mean all Liens in favor of the Administrative
Agent, for the benefit of the Banks, created hereunder or under any of the
Security Documents to secure the Obligations.
"Subsidiary" shall mean, as applied to any Person, (a) any corporation
of which more than fifty percent (50%) of the outstanding stock (other than
directors' qualifying shares) having ordinary voting power to elect a majority
of its board of directors, regardless of the existence at the time of a right of
the holders of any class or classes of securities of such corporation to
exercise such voting power by reason of the happening of any contingency, or any
partnership of which more than fifty percent (50%) of the outstanding
partnership interests, is at the time owned directly or indirectly by such
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Person, or by one or more Subsidiaries of such Person, or by such Person and one
or more Subsidiaries of such Person, or (b) any other entity which is directly
or indirectly controlled or capable of being controlled by such Person, or by
one or more Subsidiaries of such Person, or by such Person and one or more
Subsidiaries of such Person.
"Subsidiary Guaranty" shall mean that certain Subsidiary Guaranty dated
as of even date herewith, in favor of the Administrative Agent and the Banks,
given by each Restricted Subsidiary of the Borrower, substantially in the form
of Exhibit G hereof, and shall include any similar agreements executed pursuant
to Section 5.14 hereof.
"Subsidiary Pledge Agreement" shall mean that certain Subsidiary Pledge
Agreement dated as of even date herewith made by each Restricted Subsidiary of
the Borrower having one or more of its own Subsidiaries, on the one hand, in
favor of the Administrative Agent, on the other hand, substantially in the form
of Exhibit H hereof, and shall include any similar agreements executed pursuant
to Section 5.14 hereof.
"Subsidiary Security Agreement" shall mean that certain Subsidiary
Security Agreement dated as of even date herewith between each of the Borrower's
Restricted Subsidiaries, on the one hand, and the Administrative Agent, (on
behalf of itself and the Banks), on the other hand, substantially in the form of
Exhibit I hereof, and shall include any similar agreements executed pursuant to
Section 5.14 hereof.
"Tax Sharing Agreement" shall mean that certain Tax Sharing Agreement,
dated as of October 15, 1996, among Borrower, American Radio Systems and certain
other Subsidiaries of American Radio Systems.
"Total Debt" shall mean, for the Borrower and its Restricted
Subsidiaries on a consolidated basis as of any date, the sum (without
duplication) of (i) the outstanding principal amount of the Loans, (ii) the
aggregate amount of Capitalized Lease Obligations and Indebtedness for Money
Borrowed, and (iii) the aggregate amount of all Guarantees.
"Unrestricted Subsidiary" shall mean any Subsidiary of the Borrower or
any joint venture (which may represent a minority interest) between the Borrower
and/or any Subsidiary of the Borrower and any other Person, in each case, which
the Borrower has heretofore designated or hereafter designates as an
Unrestricted Subsidiary by written notice to the Administrative Agent and the
Banks prior to the formation or acquisition of such Subsidiary or joint venture.
Notwithstanding the foregoing, no Restricted Subsidiary may be re-designated as
an Unrestricted
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Subsidiary without the prior consent of the Majority Banks. The Unrestricted
Subsidiaries as of the Agreement Date are as set forth on Schedule 3 attached
hereto.
"Unrestricted Subsidiary Distributions" shall mean, (a) for any period
ending prior to June 30, 1997, the amount of any distributions received during
such period by the Borrower and its Restricted Subsidiaries from any
Unrestricted Subsidiaries (other than in connection with the repayment of
intercompany Indebtedness) and (b) for all periods after June 30, 1997, the
lesser of (i) the amount of cash distributions received during such period by
the Borrower and its Restricted Subsidiaries from any Unrestricted Subsidiary
(other than in connection with the repayment of intercompany Indebtedness) and
(ii) fifteen percent (15%) of the sum of clauses (b)(i), (b)(ii) and (b)(iii) of
the definition of "Operating Cash Flow" set forth herein.
"Use of Proceeds Letter" shall mean that certain Use of Proceeds
Letter, substantially in the form of Exhibit J attached hereto, to be delivered
to the Administrative Agent and the Banks on the date of any Advance hereunder.
Each definition of an agreement in this Article 1 shall include such
agreement as modified, amended or supplemented from time to time in accordance
herewith.
ARTICLE 2
Loans
Section 2.1 The Loans. The Banks agree, severally, in accordance with
their respective Commitment Ratios and not jointly, upon the terms and subject
to the conditions of this Agreement and provided there exists no Default or
Event of Default hereunder, to lend to the Borrower, prior to the Maturity Date,
an amount not at any one time outstanding to exceed, in the aggregate, the
Available Commitment. Subject to the terms and conditions hereof and provided
there exists no Default or Event of Default hereunder, Advances under the
Commitment may be repaid and reborrowed from time to time on a revolving basis.
Section 2.2 Manner of Borrowing and Disbursement.
(a) Choice of Interest Rate, Etc. Any Advance under the
Commitment shall, at the option of the Borrower, be made as a Base Rate Advance
or a LIBOR Advance; provided, however, that at such time as there shall have
occurred and be continuing a Default hereunder, the Borrower shall not have the
right to receive a LIBOR Advance. Any notice given to the Administrative Agent
in connection with a requested Advance hereunder shall be
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given to the Administrative Agent prior to 11:00 a.m. (New York time) in order
for such Business Day to count toward the minimum number of Business Days
required.
(b) Base Rate Advances.
(i) Advances. The Borrower shall give the
Administrative Agent in the case of Base Rate Advances at least one (1)
Business Day's irrevocable prior telephonic notice followed immediately
by a Request for Advance; provided, however, that the Borrower's
failure to confirm any telephonic notice with a Request for Advance
shall not invalidate any notice so given if acted upon by the
Administrative Agent. Upon receipt of such notice from the Borrower,
the Administrative Agent shall promptly notify each Bank by telephone
or telecopy of the contents thereof.
(ii) Repayments and Reborrowings. The Borrower may repay
or prepay a Base Rate Advance without regard to its Payment Date and
(A) upon at least one (1) Business Day's irrevocable prior telephonic
notice followed by written notice, reborrow all or a portion of the
principal amount thereof as a Base Rate Advance, (B) upon at least
three (3) Business Days' irrevocable prior telephonic notice followed
by written notice, reborrow all or a portion of the principal thereof
as one or more LIBOR Advances, or (C) not reborrow all or any portion
of such Base Rate Advance. On the date indicated by the Borrower, such
Base Rate Advance shall be so repaid and, as applicable, reborrowed.
The failure to give timely notice hereunder with respect to the Payment
Date of any Base Rate Advance shall be considered a request for a Base
Rate Advance.
(c) LIBOR Advances.
(i) Advances. Upon request, the Administrative Agent,
whose determination in absence of manifest error shall be conclusive,
shall determine the available LIBOR Bases and shall notify the Borrower
of such LIBOR Bases. The Borrower shall give the Administrative Agent
in the case of LIBOR Advances at least three (3) Business Days'
irrevocable prior telephonic notice followed immediately by a Request
for Advance; provided, however, that the Borrower's failure to confirm
any telephonic notice with a Request for Advance shall not invalidate
any notice so given if acted upon by the Administrative Agent. Upon
receipt of such notice from the Borrower, the Administrative Agent
shall promptly notify each Bank by telephone or telecopy of the
contents thereof.
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(ii) Repayments and Reborrowings. At least three (3)
Business Days prior to the Payment Date for each LIBOR Advance, the
Borrower shall give the Administrative Agent telephonic notice followed
by written notice specifying whether all or a portion of such LIBOR
Advance (A) is to be repaid and then reborrowed in whole or in part as
one or more LIBOR Advances, (B) is to be repaid and then reborrowed in
whole or in part as a Base Rate Advance, or (C) is to be repaid and not
reborrowed. The failure to give such notice shall preclude the Borrower
from reborrowing such Advance as a LIBOR Advance on its Payment Date
and shall be considered a request for a Base Rate Advance. Upon such
Payment Date such LIBOR Advance will, subject to the provisions hereof,
be so repaid and, as applicable, reborrowed.
(d) Notification of Banks. Upon receipt of a Request for
Advance, or a notice from the Borrower with respect to any outstanding Advance
prior to the Payment Date for such Advance, the Administrative Agent shall
promptly but no later than the close of business on the day of such notice
notify each Bank by telephone or telecopy of the contents thereof and the amount
of such Bank's portion of the Advance. Each Bank shall, not later than 12:00
noon (New York time) on the date of borrowing specified in such notice, make
available to the Administrative Agent at the Administrative Agent's Office, or
at such account as the Administrative Agent shall designate, the amount of its
portion of any Advance which represents an additional borrowing hereunder in
immediately available funds.
(e) Disbursement.
(i) Prior to 2:00 p.m. (New York time) on the date of
an Advance hereunder, the Administrative Agent shall, subject to the
satisfaction of the conditions set forth in Article 3 hereof, disburse
the amounts made available to the Administrative Agent by the Banks in
like funds by (A) transferring the amounts so made available by wire
transfer pursuant to the Borrower's instructions, or (B) in the absence
of such instructions, crediting the amounts so made available to the
account of the Borrower maintained with the Administrative Agent.
(ii) Unless the Administrative Agent shall have received
notice from a Bank prior to 12:00 noon (New York time) on the date of
any Advance that such Bank will not make available to the
Administrative Agent such Bank's ratable portion of such Advance, the
Administrative Agent may assume that such Bank has made or will make
such portion available to the Administrative Agent on the date of such
Advance and the Administrative Agent may in its sole discretion and in
reliance upon such assumption, make
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available to the Borrower on such date a corresponding amount. If and
to the extent the Bank does not make such ratable portion available to
the Administrative Agent, such Bank agrees to repay to the
Administrative Agent on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to the
Administrative Agent, at the Federal Funds Rate.
(iii) If such Bank shall repay to the Administrative
Agent such corresponding amount, such amount so repaid shall constitute
such Bank's portion of the applicable Advance for purposes of this
Agreement. If such Bank does not repay such corresponding amount
immediately upon the Administrative Agent's demand therefor, the
Administrative Agent shall notify the Borrower and the Borrower shall
immediately pay such corresponding amount to the Administrative Agent,
with interest at the Federal Funds Rate. The failure of any Bank to
fund its portion of any Advance shall not relieve any other Bank of its
obligation, if any, hereunder to fund its respective portion of the
Advance on the date of such borrowing, but no Bank shall be responsible
for any such failure of any other Bank.
(iv) In the event that, at any time when the Borrower is
not in Default and has otherwise satisfied each of the conditions in
Section 3.2 hereof, a Bank for any reason fails or refuses to fund its
portion of an Advance and such failure shall continue for a period in
excess of thirty (30) days, then, until such time as such Bank has
funded its portion of such Advance (which late funding shall not
absolve such Bank from any liability it may have to the Borrower), or
all other Banks have received payment in full from the Borrower
(whether by repayment or prepayment) or otherwise of the principal and
interest due in respect of such Advance, such non-funding Bank shall
not have the right (A) to vote regarding any issue on which voting is
required or advisable under this Agreement or any other Loan Document,
and such Bank's portion of the Loans shall not be counted as
outstanding for purposes of determining "Majority Banks" hereunder, and
(B) to receive payments of principal, interest or fees from the
Borrower, the Administrative Agent or the other Banks in respect of its
portion of the Loans.
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Section 2.3 Interest.
(a) On Base Rate Advances. Interest on each Base Rate Advance
shall be computed on the basis of a year of 365/366 days for the actual number
of days elapsed and shall be payable at the Base Rate Basis for such Advance, in
arrears on the applicable Payment Date. Interest on Base Rate Advances then
outstanding
shall also be due and payable on the Maturity Date.
(b) On LIBOR Advances. Interest on each LIBOR Advance shall be
computed on the basis of a 360-day year for the actual number of days elapsed
and shall be payable at the LIBOR Basis for such Advance, in arrears on the
applicable Payment Date, and, in addition, if the Interest Period for a LIBOR
Advance exceeds three (3) months, interest on such LIBOR Advance shall also be
due and payable in arrears on every three-month anniversary of the beginning of
such Interest Period. Interest on LIBOR Advances then outstanding shall also be
due and payable on the Maturity Date.
(c) Interest if no Notice of Selection of Interest Rate Basis.
If the Borrower fails to give the Administrative Agent timely notice of its
selection of a LIBOR Basis, or if for any reason a determination of a LIBOR
Basis for any Advance is not timely concluded, the Base Rate Basis shall apply
to such Advance.
(d) Interest Upon Default. Immediately upon the occurrence of
an Event of Default hereunder, the outstanding principal balance of the Loans
shall bear interest at the Default Rate. Such interest shall be payable on
demand by the Majority Banks and shall accrue until the earlier of (i) waiver or
cure of the applicable Event of Default, (ii) agreement by the Majority Banks
(or, if applicable to the underlying Event of Default, the Banks) to rescind the
charging of interest at the Default Rate, or (iii) payment in full of the
Obligations.
(e) LIBOR Contracts. At no time may the number of
outstanding LIBOR Advances exceed six (6).
(f) Applicable Margin. With respect to any Advance,
the Applicable Margin shall be as set forth in a certificate of
the chief financial officer of the Borrower delivered to the
Administrative Agent based upon the Applicable Margin Ratio for
the most recent fiscal quarter end for which financial statements
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are furnished by the Borrower to the Administrative Agent and each Bank for the
fiscal quarter most recently ended as follows:
Applicable Margin Ratio Base Rate Advance LIBOR Advance
Applicable Margin Applicable Margin
A. Greater than or equal 1.250% 2.500%
to 5.50:1
B. Greater than or equal 1.125% 2.375%
to 5.00:1, but less
than 5.50:1
C. Greater than or equal 0.875% 2.125%
to 4.50:1, but less
than 5.00:1
D. Greater than or equal 0.625% 1.875%
to 4.00:1, but less
than 4.50:1
E. Less than 4.00:1 0.250% 1.500%
Changes to the Applicable Margin shall be effective (i) with respect to an
increase in the Applicable Margin, as of the second (2nd) Business Day after the
day on which the financial statements are required to be delivered to the
Administrative Agent and the Banks pursuant to Section 6.1 or Section 6.2
hereof, as the case may be; provided, however, if such financial statements are
not delivered to the Administrative Agent and the Banks on or before the date
specified in such Section, such increase shall be effective as of the date
specified in such Section for delivery of the financial statements, and (ii)
with respect to a decrease in the Applicable Margin, as of the later of (A) the
second (2nd) Business Day after the day on which such financial statements are
required to be delivered pursuant to Section 6.1 or Section 6.2 hereof, as the
case may be, and (B) the date on which such financial statements are actually
delivered to the Administrative Agent and the Banks.
Upon the occurrence and during the continuance of an Event of Default,
the Applicable Margins shall not be subject to downward adjustment and shall
automatically revert to the Applicable Margins set forth in part A of the above
table until such time as such Event of Default is cured or waived.
Section 2.4 Commitment Fees.
(a) Commencing on the Agreement Date, and continuing until the date of
the first Advance hereunder, the Borrower agrees to pay to the Administrative
Agent for the account of each of the Banks, in accordance with its respective
Commitment Ratio, a
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commitment fee on the amount of the Commitment for each day from the Agreement
Date until the date of the first Advance hereunder of a rate of one-quarter of
one percent (0.250%) per annum, which fee shall be computed on the basis of a
year of 365/366 days for the actual number of days elapsed, shall be payable on
the date of the first Advance hereunder, and shall be fully earned when due and
non-refundable when paid.
(b) Commencing on the date of the first Advance hereunder and of all
times thereafter, the Borrower agrees to pay to the Administrative Agent for the
account of each of the Banks in accordance with its respective Commitment Ratio,
a commitment fee on the aggregate unborrowed balance of the Commitment for each
day from the date of the first Advance hereunder until the Maturity Date, at a
rate of (i) one-half of one percent (0.500%) per annum when the Applicable
Margin Ratio is greater than or equal to 4.00:1; and (ii) three-eighths of one
percent (0.375%) per annum when the Applicable Margin Ratio is less than 4.00:1.
Such commitment fee shall be computed on the basis of a year of 365/366 days for
the actual number of days elapsed, shall be payable quarterly in arrears on the
last Business Day of each calendar quarter, and shall be fully earned when due,
and shall be non-refundable when paid. A final payment of any commitment fee
then payable shall also be due and payable on the Maturity Date.
Section 2.5 Mandatory Commitment Reductions.
(a) Scheduled Reductions. Commencing on September 30, 1999 and
at the end of each calendar quarter thereafter, the Commitment as of September
29, 1999 shall be automatically and permanently reduced as set forth below
(which reductions are in addition to those set forth in Sections 2.5(b), 2.5(c),
2.5(d) and 2.6 hereof):
Quarterly Percentage
of Reduction of
Dates of Commitment Reduction Commitment as
of September 29, 1999
September 30, 1999 and December 31, 1999 3.750%
March 31, 2000, June 30, 2000, 3.125%
September 30, 2000 and December 31, 2000
March 31, 2001, June 30, 2001, 4.375%
September 30, 2001 and December 31, 2001
March 31, 2002, June 30, 2002, 5.625%
September 30, 2002 and December 31, 2002
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March 31, 2003, June 30, 2003, 5.625%
September 30, 2003 and December 31, 2003
March 31, 2004, June 30, 2004 4.375%
September 30, 2004 and Maturity Date
The Borrower shall make a repayment of the Loans outstanding, together with
accrued interest thereon, on or before the effective date of each reduction in
the Commitment under this Section 2.5(a), such that the aggregate principal
amount of the Loans outstanding at no time exceeds the Commitment as so reduced.
Any remaining unpaid principal and interest under the Commitment shall be due
and payable in full on the Maturity Date, and the Commitment shall thereupon
terminate.
(b) Reduction From Excess Cash Flow. On April 15, 2000, and on
each April 15 thereafter during the term of this Agreement, the Commitment shall
be permanently reduced by an amount equal to fifty percent (50%) of Excess Cash
Flow for the fiscal year immediately preceding the calculation date. Reductions
to the Commitment under this Section shall be applied to the reductions set
forth in Section 2.5(a) hereof in inverse order of the reductions set forth
therein.
(c) Reduction From Permitted Asset Sales. On the Business Day
following the date of receipt by the Borrower or any of its Restricted
Subsidiaries of the Net Proceeds of any asset sale permitted pursuant to Section
7.4 hereof (other than with respect to the Philadelphia Disposition), the
Commitment shall be automatically and permanently reduced by an amount equal to
such Net Proceeds; provided, however, that the Commitment shall not be required
to be reduced by such Net Proceeds until the amount of such unapplied Net
Proceeds exceeds $250,000 in the aggregate; provided, further, however, that the
Borrower may notify the Administrative Agent in writing that it intends to use
any or all of such Net Proceeds to acquire fixed or capital assets permitted by
Section 7.6 hereof within six (6) months of the date of receipt of such Net
Proceeds, in which case, the reduction in the Commitment up to the amount of the
Net Proceeds intended to be used which is otherwise required by this Section
2.5(c) need not be made, but if all or part of such Net Proceeds are not used or
irrevocably committed to be used within such 6-month period, the Commitment
shall be permanently reduced by an amount equal to such Net Proceeds on the
earlier of (i) the first day following the end of such 6-month period and (ii)
the date on which the
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Borrower has reasonably determined that such Net Proceeds shall not be so used.
Reductions to the Commitment under this Section shall be applied to the
reductions set forth in Section 2.5(a) hereof in inverse order of the reductions
set forth therein.
(d) Reduction From Sale of Capital Stock and Debt Instruments.
On the Business Day following the date of receipt by the Borrower of the net
proceeds of any sale its Capital Stock or debt instruments or other securities
(other than an amount not to exceed $2,000,000 in the aggregate from the sale of
securities in connection with any employee stock option plan of the Borrower),
the Commitment shall automatically and permanently be reduced by an amount equal
(i) 100% of such net proceeds to the extent the Leverage Ratio is greater than
or equal to 4.0:1; or (ii) 50% of such net proceeds to the extent the Leverage
Ratio is less than 4.0:1; provided, however, the provisions of this Section
2.5(d) shall not apply to equity contributions by the Parent or American Radio
Systems. Reductions to the Commitment under this Section shall be applied to the
reductions set forth in Section 2.5(a) hereof in inverse order of the reductions
set forth therein.
Section 2.6 Voluntary Commitment Reductions. The Borrower shall have
the right, at any time and from time to time after the Agreement Date and prior
to the Maturity Date, upon at least three (3) Business Days' prior written
notice to the Administrative Agent, without premium or penalty, to cancel or
reduce permanently all or a portion of the Commitment, on a pro rata basis among
the Banks, provided, however, that any such -------- ------- partial reduction
shall be made in an amount not less than $5,000,000 and in integral multiples of
not less than $1,000,000. As of the date of cancellation or reduction set forth
in such notice, the Commitment shall be permanently reduced to the amount stated
in the Borrower's notice for all purposes herein, and the Borrower shall pay to
the Administrative Agent for the Banks the amount necessary to reduce the
principal amount of the Loans then outstanding under the Commitment to not more
than the amount of the Commitment as so reduced, together with accrued interest
on the amount so prepaid and commitment fees accrued through the date of the
reduction with respect to the amount reduced. Reductions in the Commitment
pursuant to this Section shall be applied pro rata to the then remaining
reductions set forth in Section 2.5(a).
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Section 2.7 Prepayments and Repayments.
(a) Prepayment. The principal amount of any Base Rate Advance
may be prepaid in full or ratably in part at any time, without penalty and
without regard to the Payment Date for such Advance. LIBOR Advances may be
prepaid prior to the applicable Payment Date, upon three (3) Business Days'
prior written notice to the Administrative Agent, provided that the Borrower
shall reimburse the Banks and the Administrative Agent, on demand by the
applicable Bank or the Administrative Agent, for any loss or reasonable
out-of-pocket expense incurred by any Bank or the Administrative Agent in
connection with such prepayment, as set forth in Section 2.10 hereof. Any
prepayment hereunder shall be in amounts of not less than $500,000 and in
integral multiples of $100,000.
(b) Repayments.
(i) Loans in Excess of Commitment. If, at any time, the
amount of the Loans then outstanding shall exceed the Available
Commitment, the Borrower shall, on such date and subject to Sections
2.10 and 2.11 hereof, make a repayment of the principal amount of the
Loans in an amount equal to such excess, together with any accrued
interest and fees with respect thereto.
(ii) From Excess Cash Flow. On April 15, 2000, and on
each April 15 thereafter during the term of this Agreement, the
Borrower shall make a repayment of the Loans then outstanding in an
amount equal to fifty percent (50%) of the Excess Cash Flow for the
fiscal year immediately preceding the calculation date.
(iii) From Permitted Asset Sales. On the Business Day
following the date of receipt by the Borrower or any of its Restricted
Subsidiaries of the Net Proceeds of any asset sale permitted pursuant
to Section 7.4 hereof (other than with respect to the Philadelphia
Disposition), and to the extent that the Borrower is required to reduce
the Commitment pursuant to Section 2.5(c) hereof, the Borrower shall
make a repayment of the Loans by an amount equal to the amount of such
reduction.
(iv) From Capital Stock and Debt Instruments. On the
Business Day following the receipt by the Borrower of the Net Proceeds
of any sale of its Capital Stock or debt instruments or other
securities, and to the extent that the Borrower is required to reduce
the Commitment pursuant to Section 2.5(d) hereof, the Borrower shall
make a repayment
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of the Loans by an amount equal to the amount of such
reduction.
(v) Maturity Date. In addition to the foregoing, a
final payment of all Obligations then outstanding shall be due and
payable on the Maturity Date.
Section 2.8 Notes; Loan Accounts.
(a) The Loans shall be repayable in accordance with the terms
and provisions set forth herein and shall be evidenced by the Notes. One Note
shall be payable to the order of each Bank, in accordance with such Bank's
respective Commitment Ratio. The Notes shall be issued by the Borrower to the
Banks and shall be duly executed and delivered by one or more Authorized
Signatories.
(b) Each Bank may open and maintain on its books in the name
of the Borrower a loan account with respect to its portion of the Loans and
interest thereon. Each Bank which opens such a loan account shall debit such
loan account for the principal amount of its portion of each Advance made by it
and accrued interest thereon, and shall credit such loan account for each
payment on account of principal of or interest on its Loans. The records of a
Bank with respect to the loan account maintained by it shall be prima facie
evidence of its portion of the Loans and accrued interest thereon absent
manifest error, but the failure of any Bank to make any such notations or any
error or mistake in such notations shall not affect the Borrower's repayment
obligations with respect to such Loans.
Section 2.9 Manner of Payment.
(a) Each payment (including any prepayment) by the Borrower on
account of the principal of or interest on the Loans, commitment fees and any
other amount owed to the Banks or the Administrative Agent or any of them under
this Agreement or the Notes shall be made not later than 1:00 p.m. (New York
time) on the date specified for payment under this Agreement to the
Administrative Agent at the Administrative Agent's Office, for the account of
the Banks or the Administrative Agent, as the case may be, in lawful money of
the United States of America in immediately available funds. Any payment
received by the Administrative Agent after 1:00 p.m. (New York time) shall be
deemed received on the next Business Day. Receipt by the Administrative Agent of
any payment intended for any Bank or Banks hereunder prior to 1:00 p.m. (New
York time) on any Business Day shall be deemed to constitute receipt by such
Bank or Banks on such Business Day. In the case of a payment for the account of
a Bank, the Administrative Agent will promptly, but no later than the close of
business on the date such payment is
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deemed received, thereafter distribute the amount so received in like funds to
such Bank. If the Administrative Agent shall not have received any payment from
the Borrower as and when due, the Administrative Agent will promptly notify the
Banks accordingly. In the event that the Administrative Agent shall fail to make
distribution to any Bank as required under this Section 2.9, the Administrative
Agent agrees to pay such Bank interest from the date such payment was due until
paid at the Federal Funds Rate.
(b) The Borrower agrees to pay principal, interest, fees and
all other amounts due hereunder or under the Notes without set-off or
counterclaim or any deduction whatsoever.
(c) Prior to the declaration of an Event of Default under
Section 8.2 hereof, if some but less than all amounts due from the Borrower are
received by the Administrative Agent with respect to the Obligations, the
Administrative Agent shall distribute such amounts in the following order of
priority, all on a pro rata basis to the Banks: (i) to the payment on a pro rata
basis of any fees or expenses then due and payable to the Administrative Agent
or the Banks, or any of them; (ii) to the payment of interest then due and
payable on the Loans; (iii) to the payment of all other amounts not otherwise
referred to in this Section 2.9(c) then due and payable to the Administrative
Agent or the Banks, or any of them, hereunder or under the Notes or any other
Loan Document; and (iv) to the payment of principal then due and payable on the
Loans.
(d) Subject to any contrary provisions in the definition of
Interest Period, if any payment under this Agreement or any of the other Loan
Documents is specified to be made on a day which is not a Business Day, it shall
be made on the next Business Day, and such extension of time shall in such case
be included in computing interest and fees, if any, in connection with such
payment.
Section 2.10 Reimbursement.
(a) Whenever any Bank shall sustain or incur any losses or
reasonable out-of-pocket expenses in connection with (i) failure by the Borrower
to borrow any LIBOR Advance after having given notice of its intention to borrow
in accordance with Section 2.2 hereof (whether by reason of the Borrower's
election not to proceed or the non-fulfillment of any of the conditions set
forth in Article 3), or (ii) prepayment (or failure to prepay after giving
notice thereof) of any LIBOR Advance in whole or in part for any reason, the
Borrower agrees to pay to such Bank, upon such Bank's demand, an amount
sufficient to compensate such Bank for all such losses and out-of-pocket
expenses. Such Bank's good faith determination of the amount of such losses or
out-of-pocket expenses, as set forth in writing and accompanied
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by calculations in reasonable detail demonstrating the basis for its demand,
shall be presumptively correct absent manifest error.
(b) Losses subject to reimbursement hereunder shall include,
without limiting the generality of the foregoing, lost margins, expenses
incurred by any Bank or any participant of such Bank permitted hereunder in
connection with the re-employment of funds prepaid, paid, repaid, not borrowed,
or not paid, as the case may be, and will be payable whether the Maturity Date
is changed by virtue of an amendment hereto (unless such amendment expressly
waives such payment) or as a result of acceleration of the Obligations.
Section 2.11 Pro Rata Treatment.
(a) Advances. Each Advance from the Banks hereunder, shall be
made pro rata on the basis of the respective Commitment Ratios of the Banks.
(b) Payments. Each payment and prepayment of principal of the
Loans, and, except as provided in Section 2.2(e) and Article 10 hereof, each
payment of interest on the Loans, shall be made to the Banks pro rata on the
basis of their respective unpaid principal amounts outstanding under the Notes
immediately prior to such payment or prepayment. If any Bank shall obtain any
payment (whether involuntary, through the exercise of any right of set-off, or
otherwise) on account of the Loans in excess of its ratable share of the Loans
under its Commitment Ratio, such Bank shall forthwith purchase from the other
Banks such participations in the portion of the Loans made by them as shall be
necessary to cause such purchasing Bank to share the excess payment ratably with
each of them; provided, however, that if all or any portion of such excess
payment is thereafter recovered from such purchasing Bank, such purchase from
each Bank shall be rescinded and such Bank shall repay to the purchasing Bank
the purchase price to the extent of such recovery. The Borrower agrees that any
Bank so purchasing a participation from another Bank pursuant to this Section
2.11(b) may, to the fullest extent permitted by law, exercise all its rights of
payment (including the right of set-off) with respect to such participation as
fully as if such Bank were the direct creditor of the Borrower in the amount of
such participation.
Section 2.12 Capital Adequacy. If after the date hereof, the adoption
of any Applicable Law regarding the capital adequacy of banks or bank holding
companies, or any change in Applicable Law (whether adopted before or after the
Agreement Date) or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by such Bank with any
directive regarding capital adequacy
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(whether or not having the force of law) of any such governmental authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on any Bank's capital as a consequence of its obligations
hereunder with respect to the Loans and the Commitment to a level below that
which it could have achieved but for such adoption, change or compliance (taking
into consideration such Bank's policies with respect to capital adequacy
immediately before such adoption, change or compliance and assuming that such
Bank's capital was fully utilized prior to such adoption, change or compliance)
by an amount reasonably deemed by such Bank to be material, then, upon demand by
such Bank, the Borrower shall promptly pay to such Bank such additional amounts
as shall be sufficient to compensate such Bank for such reduced return, together
with interest on such amount from the fourth (4th) Business Day after the date
of demand or the Maturity Date, as applicable, until payment in full thereof at
the Default Rate. A certificate of such Bank setting forth the amount to be paid
to such Bank by the Borrower as a result of any event referred to in this
paragraph and supporting calculations in reasonable detail shall be
presumptively correct absent manifest error.
Section 2.13 Bank Tax Forms. On or prior to the Agreement Date and on
or prior to the first Business Day of each calendar year thereafter, each Bank
which is organized in a jurisdiction other than the United States shall provide
each of the Administrative Agent and the Borrower with a properly executed
originals of Forms 4224 or 1001 (or any successor form) prescribed by the
Internal Revenue Service or other documents satisfactory to the Borrower and the
Administrative Agent, and properly executed Internal Revenue Service Forms W-8
or W-9, as the case may be, certifying (i) as to such Bank's status for purposes
of determining exemption from United States withholding taxes with respect to
all payments to be made to such Bank hereunder and under the Notes or (ii) that
all payments to be made to such Bank hereunder and under the Notes are subject
to such taxes at a rate reduced to zero by an applicable tax treaty. Each such
Bank agrees to provide the Administrative Agent and the Borrower with new forms
prescribed by the Internal Revenue Service upon the expiration or obsolescence
of any previously delivered form, or after the occurrence of any event requiring
a change in the most recent forms delivered by it to the Administrative Agent
and the Borrower.
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ARTICLE 3
Conditions Precedent
Section 3.1 Conditions Precedent to Initial Advance. The obligation of
the Banks to undertake the Commitment and to make the initial Advance hereunder
are subject to the prior or contemporaneous fulfillment of each of the following
conditions:
(a) The Administrative Agent and the Banks shall have
received each of the following:
(i) this Agreement duly executed;
(ii) the loan certificate of the Borrower dated as of
the Agreement Date, in substantially the form attached hereto as
Exhibit K, including a certificate of incumbency with respect to each
Authorized Signatory of such Person, together with the following items:
(A) a true, complete and correct copy of the Certificate of
Incorporation and By-laws of the Borrower as in effect on the Agreement
Date, (B) certificates of good standing for the Borrower issued by the
Secretary of State or similar state official for the state of
incorporation of the Borrower and for each state in which the Borrower
is required to qualify to do business, (C) a true, complete and correct
copy of the corporate resolutions of the Borrower authorizing the
Borrower to execute, deliver and perform this Agreement and the other
Loan Documents, and (D) a true, complete and correct copy of any
shareholders' agreements or voting trust agreements in effect with
respect to the stock of the Borrower;
(iii) duly executed Notes;
(iv) duly executed Security Documents;
(v) copies of insurance binders or certificates
covering the assets of the Borrower and its Restricted Subsidiaries,
and otherwise meeting the requirements of Section 5.5 hereof, together
with copies of the underlying insurance policies;
(vi) legal opinion of Sullivan & Worcester LLP counsel
to the Borrower; addressed to each Bank and the Administrative Agent
and dated as of the Agreement Date;
(vii) duly executed Certificate of Financial Condition
for the Borrower and its Restricted Subsidiaries on a consolidated and
consolidating basis, given by the chief financial officer of the
Borrower;
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(viii) copies of the most recent quarterly financial
statements of the Borrower and its Restricted Subsidiaries provided to
each Bank and each Administrative Agent, certified by the chief
financial officer of the Borrower;
(ix) all such other documents as the Administrative
Agent may reasonably request, certified by an appropriate governmental
official or an Authorized Signatory if so requested.
(b) The Administrative Agent and the Banks shall have received
evidence satisfactory to them that all Necessary Authorizations, including all
necessary consents to the closing of this Agreement, have been obtained or made,
are in full force and effect and are not subject to any pending or, to the
knowledge of the Borrower, threatened reversal or cancellation, and the
Administrative Agent and the Banks shall have received a certificate of an
Authorized Signatory so stating.
(c) The Borrower shall certify to the Administrative Agent and
the Banks that each of the representations and warranties in Article 4 hereof
are true and correct in all material respects as of the Agreement Date and that
no Default or Event of Default then exists or is continuing.
(d) The Administrative Agent shall have received evidence
reasonably satisfactory to it that the Parent or American Radio Systems has
contributed not less than $25,000,000 of equity into the Borrower comprised of
not less than $15,000,000 in cash (or acquisitions of property from non-
Affiliates made with Capital Stock of American Radio Systems) and the balance in
tangible assets (valued at American Radio Systems's cost for such assets).
(e) The Borrower shall have paid to the Administrative Agent
for the account of each Bank the facility fees set forth in those letter
agreements dated the Agreement Date in favor of each Bank.
(f) The Administrative Agent shall have received evidence
reasonably satisfactory to it that no real property owned by the Borrower is
located in a Federal or state designated flood zone or, to the extent that any
such real property is located in a Federal or state designated flood zone,
evidence satisfactory to it that such real property is sufficiently insured
against flood related losses.
Section 3.2 Conditions Precedent to Each Advance. The obligation of the
Banks to make each Advance on or after the Agreement Date is subject to the
fulfillment of each of the
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following conditions immediately prior to or contemporaneously
with such Advance:
(a) All of the representations and warranties of the Borrower
under this Agreement and the other Loan Documents (including, without
limitation, all representations and warranties with respect to the Borrower's
Restricted Subsidiaries), which, pursuant to Section 4.2 hereof, are made at and
as of the time of such Advance, shall be true and correct at such time in all
material respects, both before and after giving effect to the application of the
proceeds of such Advance, and after giving effect to any updates to information
provided to the Banks in accordance with the terms of such representations and
warranties, and no Default hereunder shall then exist or be caused thereby;
(b) With respect to Advances which, if funded, would increase
the aggregate principal amount of Loans outstanding hereunder, the
Administrative Agent shall have received a duly executed Request for Advance;
(c) The Administrative Agent and the Banks shall have received
all such other certificates, reports, statements, opinions of counsel (if such
Advance is in connection with an Acquisition) or other documents as the
Administrative Agent or any Bank may reasonably request;
(d) With respect to any Advance relating to any Acquisition or
the formation of any Subsidiary which is permitted hereunder, the Administrative
Agent and the Banks shall have received such documents and instruments relating
to such Acquisition or formation of a new Restricted Subsidiary as are described
in Section 5.14 hereof or otherwise required herein.
ARTICLE 4
Representations and Warranties
Section 4.1 Representations and Warranties. The Borrower hereby agrees,
represents and warrants, upon the Agreement Date, in favor of the Administrative
Agent and each Bank that:
(a) Organization; Ownership; Power; Qualification. The
Borrower is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. The Borrower has the corporate power
and authority to own its properties and to carry on its business as now being
and as proposed hereafter to be conducted. Except as set forth on Schedule
4.1(a) attached hereto, each Restricted Subsidiary of
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the Borrower is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation and has the corporate
power and authority to own its properties and to carry on its business as now
being and as proposed hereafter to be conducted. The Borrower and each of its
Restricted Subsidiaries are duly qualified, in good standing and authorized to
do business in each jurisdiction in which the character of their respective
properties or the nature of their respective businesses requires such
qualification or authorization, except where failure to be so qualified, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
(b) Authorization; Enforceability. The Borrower has the
corporate power and has taken all necessary corporate action to authorize it to
borrow hereunder, to execute, deliver and perform this Agreement and each of the
other Loan Documents to which it is a party in accordance with their respective
terms, and to consummate the transactions contemplated hereby and thereby. This
Agreement has been duly executed and delivered by the Borrower and is, and each
of the other Loan Documents to which the Borrower is party is, a legal, valid
and binding obligation of the Borrower enforceable against the Borrower in
accordance with its terms, subject, as to enforcement of remedies, to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity.
(c) Subsidiaries: Authorization; Enforceability. The
Borrower's Restricted Subsidiaries and the Borrower's direct and indirect
ownership thereof as of the Agreement Date are as set forth on Schedule 4.1(c)
attached hereto, and to the extent such Restricted Subsidiaries are
corporations, the Borrower has the unrestricted right to vote the issued and
outstanding shares of the Restricted Subsidiaries shown thereon and such shares
of such Restricted Subsidiaries have been duly authorized and issued and are
fully paid and nonassessable. Each Restricted Subsidiary of the Borrower has the
corporate power and has taken all necessary corporate action to authorize it to
execute, deliver and perform each of the Loan Documents to which it is a party
in accordance with their respective terms and to consummate the transactions
contemplated by this Agreement and by such Loan Documents. Each of the Loan
Documents to which any Restricted Subsidiary of the Borrower is party is a
legal, valid and binding obligation of such Restricted Subsidiary enforceable
against such Restricted Subsidiary in accordance with its terms, subject, as
enforcement of remedies, to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to general
principles of equity. The Borrower's
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ownership interest in each of its Restricted Subsidiaries represents a direct or
indirect controlling interest of such Restricted Subsidiary for purposes of
directing or causing the direction of the management and policies of each
Restricted Subsidiary.
(d) Compliance with Other Loan Documents and Contemplated
Transactions. The execution, delivery and performance, in accordance with their
respective terms, by the Borrower of this Agreement and the Notes, and by the
Borrower and its Restricted Subsidiaries of each of the other Loan Documents to
which they are respectively party, and the consummation of the transactions
contemplated hereby and thereby, do not and will not (i) require any consent or
approval, governmental or otherwise, not already obtained, (ii) violate any
Applicable Law respecting the Borrower or any Restricted Subsidiary of the
Borrower, (iii) conflict with, result in a breach of, or constitute a default
under the certificate or articles of incorporation or by-laws or partnership
agreements, as the case may be, as amended, of the Borrower or of any Restricted
Subsidiary of the Borrower, or under any material indenture, agreement, or other
instrument, including without limitation the Licenses, to which the Borrower or
any of its Restricted Subsidiaries is a party or by which any of them or their
respective properties may be bound, or (iv) result in or require the creation or
imposition of any Lien upon or with respect to any property now owned or
hereafter acquired by the Borrower or any of its Restricted Subsidiaries, except
for Permitted Liens.
(e) Business. The Borrower, together with its Subsidiaries, is
engaged in the business of owning, constructing, managing, operating, and
investing in communications tower facilities.
(f) Licenses, etc. The Licenses have been duly issued and are
in full force and effect. The Borrower and its Restricted Subsidiaries are in
compliance in all material respects with all of the provisions thereof. The
Borrower and its Restricted Subsidiaries have secured all Necessary
Authorizations and all such Necessary Authorizations are in full force and
effect. Neither any License nor any Necessary Authorization is the subject of
any pending or, to the best of the Borrower's knowledge, threatened revocation.
(g) Compliance with Law. The Borrower and its Restricted
Subsidiaries are in compliance with all Applicable Law, except where the failure
to be in compliance would not individually or in the aggregate have a Material
Adverse Effect.
(h) Title to Assets. As of the Agreement Date, the Borrower
and its Restricted Subsidiaries have good, legal and
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marketable title to, or a valid leasehold interest in, all of its assets. None
of the properties or assets of the Borrower or any of its Restricted
Subsidiaries is subject to any Liens, except for Permitted Liens. Except for
financing statements evidencing Permitted Liens, no financing statement under
the Uniform Commercial Code as in effect in any jurisdiction and no other filing
which names the Borrower or any of its Restricted Subsidiaries as debtor or
which covers or purports to cover any of the assets of the Borrower or any of
its Restricted Subsidiaries is currently effective and on file in any state or
other jurisdiction, and neither the Borrower nor any of its Restricted
Subsidiaries has signed any such financing statement or filing or any security
agreement authorizing any secured party thereunder to file any such financing
statement or filing.
(i) Litigation. As of the date hereof, there is no action,
suit, proceeding or investigation pending against, or, to the knowledge of the
Borrower, threatened against or in any other manner relating adversely to, the
Borrower or any of its Restricted Subsidiaries or any of their respective
properties, including without limitation the Licenses, in any court or before
any arbitrator of any kind or before or by any governmental body (including
without limitation the FCC) except as set forth on Schedule 4.1(i) attached
hereto (as such schedule may be updated from time to time). No such action,
suit, proceeding or investigation (i) calls into question the validity of this
Agreement or any other Loan Document, or (ii) individually or collectively
involves the possibility of any judgment or liability not fully covered by
insurance which, if determined adversely to the Borrower or any of its
Restricted Subsidiaries, would have a Materially Adverse Effect.
(j) Taxes. All federal, state and other tax returns of the
Borrower and each of its Restricted Subsidiaries required by law to be filed
have been duly filed and all federal, state and other taxes, including, without
limitation, withholding taxes, assessments and other governmental charges or
levies required to be paid by the Borrower or any of its Restricted Subsidiaries
or imposed upon the Borrower or any of its Restricted Subsidiaries or any of
their respective properties, income, profits or assets, which are due and
payable, have been paid, except any such taxes (i) (x) the payment of which the
Borrower or any of its Restricted Subsidiaries is diligently contesting in good
faith by appropriate proceedings, (y) for which adequate reserves have been
provided on the books of the Borrower or the Restricted Subsidiary of the
Borrower involved, and (z) as to which no Lien other than a Permitted Lien has
attached and no foreclosure, distraint, sale or similar proceedings have been
commenced, or (ii) which may result from audits not yet conducted. The charges,
accruals and reserves on the books of the Borrower and each of its Restricted
Subsidiaries
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in respect of taxes are, in the judgment of the Borrower,
adequate.
(k) Financial Statements. The Borrower has furnished or caused
to be furnished to the Administrative Agent and the Banks as of the Agreement
Date, the audited financial statements for American Radio Systems and its
Subsidiaries on a consolidated basis for the fiscal year ended December 31,
1995, and unaudited financial statements for the Borrower and its Restricted
Subsidiaries for the fiscal quarter ended June 30, 1996, all of which have been
prepared in accordance with GAAP and present fairly in all material respects the
financial position of the Borrower and its Restricted Subsidiaries on a
consolidated basis, on and as at such dates and the results of operations for
the periods then ended (subject, in the case of unaudited financial statements,
to normal year-end and audit adjustments). Neither the Borrower nor any of its
Restricted Subsidiaries has any material liabilities, contingent or otherwise,
other than as disclosed in the financial statements referred to in the preceding
sentence or as set forth or referred to in this Agreement.
(l) No Material Adverse Change. There has occurred no event
since June 30, 1996 which has or which could reasonably be expected to have a
Materially Adverse Effect.
(m) ERISA. The Borrower and each Subsidiary of the Borrower
and each of their respective Plans are in compliance with ERISA and the Code and
neither the Borrower nor any of its ERISA Affiliates, including its
Subsidiaries, has incurred any accumulated funding deficiency with respect to
any such Plan within the meaning of ERISA or the Code. The Borrower, each of its
Subsidiaries, and each other ERISA Affiliate have complied in all material
respects with all requirements of COBRA. Neither the Borrower nor any of its
Subsidiaries has made any promises of retirement or other benefits to employees,
except as set forth in the Plans, in written agreements with such employees, or
in the Borrower's employee handbook and memoranda to employees. Neither the
Borrower nor any of its ERISA Affiliates, including its Subsidiaries, has
incurred any material liability to PBGC in connection with any such Plan. The
assets of each such Plan which is subject to Title IV of ERISA are sufficient to
provide the benefits under such Plan, the payment of which PBGC would guarantee
if such Plan were terminated, and such assets are also sufficient to provide all
other "benefit liabilities" (within the meaning of Section 4041 of ERISA) due
under the Plan upon termination. No Reportable Event has occurred and is
continuing with respect to any such Plan. No such Plan or trust created
thereunder, or party in interest (as defined in Section 3(14) of ERISA), or any
fiduciary (as defined in Section 3(21) of ERISA), has engaged in a "prohibited
transaction" (as such term is
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defined in Section 406 of ERISA or Section 4975 of the Code) which would subject
such Plan or any other Plan of the Borrower or any of its Subsidiaries, any
trust created thereunder, or any such party in interest or fiduciary, or any
party dealing with any such Plan or any such trust, to the tax or penalty on
"prohibited transactions" imposed by Section 502 of ERISA or Section 4975 of the
Code. Neither the Borrower nor any of its ERISA Affiliates, including its
Subsidiaries, is or has been obligated to make any payment to a Multiemployer
Plan.
(n) Compliance with Regulations G, T, U and X. Neither the
Borrower nor any of the Borrower's Restricted Subsidiaries is engaged
principally or as one of its important activities in the business of extending
credit for the purpose of purchasing or carrying, and neither the Borrower nor
any of the Borrower's Restricted Subsidiaries owns or presently intends to
acquire, any "margin security" or "margin stock" as defined in Regulations G, T,
U, and X (12 C.F.R. Parts 207, 220, 221 and 224) of the Board of Governors of
the Federal Reserve System (herein called "margin stock"). None of the proceeds
of the Loans will be used, directly or indirectly, for the purpose of purchasing
or carrying any margin stock or for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry margin stock or
for any other purpose which might constitute this transaction a "purpose credit"
within the meaning of said Regulations G, T, U, and X. The Borrower has not
taken, caused or authorized to be taken, and will not take any action which
might cause this Agreement or the Notes to violate Regulation G, T, U, or X or
any other regulation of the Board of Governors of the Federal Reserve System or
to violate the Securities Exchange Act of 1934, in each case as now in effect or
as the same may hereafter be in effect. If so requested by the Administrative
Agent, the Borrower will furnish the Administrative Agent with (i) a statement
or statements in conformity with the requirements of Federal Reserve Forms G-3
and/or U-1 referred to in Regulations G and U of said Board of Governors and
(ii) other documents evidencing its compliance with the margin regulations,
reasonably requested by the Administrative Agent. Neither the making of the
Loans nor the use of proceeds thereof will violate, or be inconsistent with, the
provisions of Regulation G, T, U, or X of said Board of Governors.
(o) Investment Company Act. Neither the Borrower nor any of
its Restricted Subsidiaries is required to register under the provisions of the
Investment Company Act of 1940, as amended, and neither the entering into or
performance by the Borrower and its Restricted Subsidiaries of this Agreement
and the Loan Documents nor the issuance of the Notes violates any provision of
such Act or requires any consent, approval or authorization of, or registration
with, the Securities and Exchange Commission or
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any other governmental or public body or authority pursuant to
any provisions of such Act.
(p) Governmental Regulation. Neither the Borrower nor any of
its Restricted Subsidiaries is required to obtain any consent, approval,
authorization, permit or license which has not already been obtained from, or
effect any filing or registration which has not already been effected with, any
federal, state or local regulatory authority in connection with the execution
and delivery of this Agreement or any other Loan Document. Neither the Borrower
nor any of its Restricted Subsidiaries is required to obtain any consent,
approval, authorization, permit or license which has not already been obtained
from, or effect any filing or registration which has not already been effected
with, any federal, state or local regulatory authority in connection with the
performance, in accordance with their respective terms, of this Agreement or any
other Loan Document, other than filing of appropriate UCC financing statements
and mortgages.
(q) Absence of Default, Etc. The Borrower and its Restricted
Subsidiaries are in compliance in all respects with all of the provisions of
their respective partnership agreements, Certificates or Articles of
Incorporation and By-Laws, as the case may be, and no event has occurred or
failed to occur (including, without limitation, any matter which could create a
Default hereunder by cross-default) which has not been remedied or waived, the
occurrence or non-occurrence of which constitutes, (i) a Default or (ii) a
material default by the Borrower or any of its Restricted Subsidiaries under any
indenture, agreement or other instrument relating to Indebtedness of the
Borrower or any of its Restricted Subsidiaries in the amount of $1,000,000 or
more in the aggregate, any material License, or any judgment, decree or order to
which the Borrower or any of its Restricted Subsidiaries is a party or by which
the Borrower or any of its Restricted Subsidiaries or any of their respective
properties may be bound or affected.
(r) Accuracy and Completeness of Information. All information,
reports, prospectuses and other papers and data relating to the Borrower or any
of its Restricted Subsidiaries and furnished by or on behalf of the Borrower or
any of its Restricted Subsidiaries to the Administrative Agent or the Banks,
taken as a whole, were, at the time furnished, true, complete and correct in all
material respects to the extent necessary to give the Administrative Agent and
the Banks true and accurate knowledge of the subject matter, and all
projections, consisting of a consolidated projected cash flow statement, an
income statement, and a balance sheet for Borrower and its Restricted
Subsidiaries (the "Projections") (i) disclose all assumptions made with respect
to costs, general economic conditions, and financial and market conditions
formulating the Projections; (ii)
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are based on reasonable estimates and assumptions; and (iii) reflect, as of the
date prepared, and continue to reflect, as of the date hereof, the reasonable
estimate of Borrower of the results of operations and other information
projected therein for the periods covered thereby.
(s) Agreements with Affiliates. Except for agreements or
arrangements with Affiliates wherein the Borrower or one or more of its
Restricted Subsidiaries provides services to such Affiliates for fair
consideration or which are set forth on Schedule 4.1(s) attached hereto, neither
the Borrower nor any of its Restricted Subsidiaries has (i) any written
agreements or binding arrangements of any kind with any Affiliate or (ii) any
management or consulting agreements of any kind with any Affiliate, other than
those between the Borrower and its Restricted Subsidiaries.
(t) Payment of Wages. The Borrower and each of its Restricted
Subsidiaries are in compliance with the Fair Labor Standards Act, as amended, in
all material respects, and to the knowledge of the Borrower and each of its
Subsidiaries, such Persons have paid all minimum and overtime wages required by
law to be paid to their respective employees.
(u) Priority. The Security Interest is a valid and, upon
filing of appropriate UCC financing statements and/or mortgages, will be a
perfected first priority security interest in the Collateral in favor of the
Administrative Agent, for the benefit of itself and the Banks, securing, in
accordance with the terms of the Security Documents, the Obligations, and the
Collateral is subject to no Liens other than Permitted Liens. The Liens created
by the Security Documents are enforceable as security for the Obligations in
accordance with their terms with respect to the Collateral subject, as to
enforcement of remedies, to the following qualifications: (i) an order of
specific performance and an injunction are discretionary remedies and, in
particular, may not be available where damages are considered an adequate remedy
at law, and (ii) enforcement may be limited by bankruptcy, insolvency,
liquidation, reorganization, reconstruction and other similar laws affecting
enforcement of creditors' rights generally (insofar as any such law relates to
the bankruptcy, insolvency or similar event of the Borrower or any of its
Subsidiaries, as the case may be).
(v) Indebtedness. Except as shown on the financial statements
of Borrower for the fiscal quarter ended June 30, 1996, or as described on
Schedule 4.1(v) attached hereto neither the Borrower nor any of its Restricted
Subsidiaries has outstanding, as of the Agreement Date, and after giving effect
to the initial Advances hereunder on the Agreement Date, any Indebtedness for
Money Borrowed.
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(w) Solvency. As of the Agreement Date and after giving effect
to the transactions contemplated by the Loan Documents (i) the property of the
Borrower, at a fair valuation, will exceed its debt; (ii) the capital of the
Borrower will not be unreasonably small to conduct its business; (iii) the
Borrower will not have incurred debts, or have intended to incur debts, beyond
its ability to pay such debts as they mature; and (iv) the present fair salable
value of the assets of the Borrower will be greater than the amount that will be
required to pay its probable liabilities (including debts) as they become
absolute and matured. For purposes of this Section, "debt" means any liability
on a claim, and "claim" means (i) the right to payment, whether or not such
right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, undisputed, legal, equitable, secured or unsecured, or (ii)
the right to an equitable remedy for breach of performance if such breach gives
rise to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured, unmatured, undisputed, secured
or unsecured.
Section 4.2 Survival of Representations and Warranties, etc. All
representations and warranties made under this Agreement and any other Loan
Document shall be deemed to be made, and shall be true and correct in all
material respects, at and as of the Agreement Date and on the date of each
Advance except to the extent relating specifically to the Agreement Date. All
representations and warranties made under this Agreement and the other Loan
Documents shall survive, and not be waived by, the execution hereof by the Banks
and the Administrative Agent, any investigation or inquiry by any Bank or the
Administrative Agent, or the making of any Advance under this Agreement.
ARTICLE 5
General Covenants
So long as any of the Obligations is outstanding and unpaid or the
Banks have an obligation to fund Advances hereunder (whether or not the
conditions to borrowing have been or can be fulfilled), and unless the Majority
Banks, or such greater number of Banks as may be expressly provided herein,
shall otherwise consent in writing:
Section 5.1 Preservation of Existence and Similar Matters. Except as
permitted under Section 7.4 hereof, the Borrower will, and will cause each of
its Restricted Subsidiaries to:
(i) preserve and maintain its existence, and its material
rights, franchises, licenses and privileges in the
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state of its incorporation, including, without limiting the
foregoing, the Licenses and all other Necessary
Authorizations; and
(ii) qualify and remain qualified and authorized to do
business in each jurisdiction in which the character of its properties
or the nature of its business requires such qualification or
authorization, except for such failure to so qualify and be so
authorized as could not reasonably be expected to have a Material
Adverse Effect.
Section 5.2 Business; Compliance with Applicable Law. The Borrower
will, and will cause each of its Restricted Subsidiaries to, (a) engage in the
business of owning, constructing, managing, operating and investing in
communications tower facilities and related businesses and no unrelated
activities, and (b) comply in all material respects with the requirements of all
Applicable Law.
Section 5.3 Maintenance of Properties. The Borrower will, and will
cause each of its Restricted Subsidiaries to, maintain or cause to be maintained
in the ordinary course of business in good repair, working order and condition
(reasonable wear and tear excepted) all properties used in their respective
businesses (whether owned or held under lease), other than obsolete equipment or
unused assets and from time to time make or cause to be made all needed and
appropriate repairs, renewals, replacements, additions, betterments and
improvements thereto.
Section 5.4 Accounting Methods and Financial Records. The Borrower
will, and will cause each of its Restricted Subsidiaries on a consolidated and
consolidating basis to, maintain a system of accounting established and
administered in accordance with GAAP, keep adequate records and books of account
in which complete entries will be made in accordance with GAAP and reflecting
all transactions required to be reflected by GAAP and keep accurate and complete
records of their respective properties and assets. The Borrower and its
Restricted Subsidiaries will maintain a fiscal year ending on December 31.
Section 5.5 Insurance. The Borrower will, and will cause each of its
Restricted Subsidiaries to:
(a) Maintain insurance including, but not limited to, business
interruption coverage and public liability coverage insurance from responsible
companies in such amounts and against such risks to the Borrower and each of its
Restricted Subsidiaries as is prudent for similarly situated companies engaged
in the communications tower industry.
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(b) Keep their respective assets insured by insurers on terms
and in a manner reasonably acceptable to the Administrative Agent against loss
or damage by fire, theft, burglary, loss in transit, explosions and hazards
insured against by extended coverage, in amounts which are prudent for the
communications tower management and operation industry and reasonably
satisfactory to the Administrative Agent, all premiums thereon to be paid by the
Borrower and its Restricted Subsidiaries.
(c) Require that each insurance policy provide for at least
thirty (30) days' prior written notice to the Administrative Agent of any
termination of or proposed cancellation or nonrenewal of such policy, and name
the Administrative Agent as additional named lender loss payee and, as
appropriate, additional insured, to the extent of the Obligations.
Section 5.6 Payment of Taxes and Claims. The Borrower will, and will
cause each of its Restricted Subsidiaries to, pay and discharge all taxes,
including, without limitation, withholding taxes, assessments and governmental
charges or levies required to be paid by them or imposed upon them or their
income or profits or upon any properties belonging to them, prior to the date on
which penalties attach thereto, and all lawful claims for labor, materials and
supplies which, if unpaid, might become a Lien or charge upon any of their
properties; except that no such tax, assessment, charge, levy or claim need be
paid which is being diligently contested in good faith by appropriate
proceedings and for which adequate reserves shall have been set aside on the
appropriate books, but only so long as such tax, assessment, charge, levy or
claim does not become a Lien or charge other than a Permitted Lien and no
foreclosure, distraint, sale or similar proceedings shall have been commenced.
The Borrower will, and will cause each of its Restricted Subsidiaries to, timely
file all information returns required by federal, state or local tax
authorities.
Section 5.7 Compliance with ERISA.
(a) The Borrower shall, and shall cause its Subsidiaries to,
make all contributions to any Employee Pension Plan when such contributions are
due and not incur any "accumulated funding deficiency" within the meaning of
Section 412(a) of the Code, whether or not waived, and will otherwise comply
with the requirements of the Code and ERISA with respect to the operation of all
Plans, except to the extent that the failure to so comply could not have a
Materially Adverse Effect.
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(b) The Borrower shall, and shall cause its Subsidiaries to,
comply in all respects with the requirements of COBRA with respect to any Plans
subject to the requirements thereof, except to the extent that the failure to so
comply could not have a Materially Adverse Effect.
(c) The Borrower shall furnish to Administrative Agent (i)
within 30 days after any officer of the Borrower obtains knowledge that a
"prohibited transaction" (within the meaning of Section 406 of ERISA or Section
4975 of the Code) has occurred with respect to any Plan of the Borrower or its
ERISA Affiliates, including its Subsidiaries, that any Reportable Event has
occurred with respect to any Employee Pension Plan or that PBGC has instituted
or will institute proceedings under Title IV of ERISA to terminate any Employee
Pension Plan or to appoint a trustee to administer any Employee Pension Plan, a
statement setting forth the details as to such prohibited transaction,
Reportable Event or termination or appointment proceedings and the action which
it (or any other Employee Pension Plan sponsor if other than the Borrower)
proposes to take with respect thereto, together with a copy of the notice of
such Reportable Event given to PBGC if a copy of such notice is available to the
Borrower, any of its Subsidiaries or any of its ERISA Affiliates, (ii) promptly
after receipt thereof, a copy of any notice the Borrower, any of its
Subsidiaries or any of its ERISA Affiliates or the sponsor of any Plan receives
from PBGC, or the Internal Revenue Service or the Department of Labor which sets
forth or proposes any action or determination with respect to such Plan, (iii)
promptly after the filing thereof, any annual report required to be filed
pursuant to ERISA in connection with each Plan maintained by the Borrower or any
of its ERISA Affiliates, including the Subsidiaries, and (iv) promptly upon the
Administrative Agent's request therefor, such additional information concerning
any such Plan as may be reasonably requested by the Administrative Agent.
(d) The Borrower will promptly notify the Administrative Agent
of any excise taxes which have been assessed or which the Borrower, any of its
Subsidiaries or any of its ERISA Affiliates has reason to believe may be
assessed against the Borrower, any of its Subsidiaries or any of its ERISA
Affiliates by the Internal Revenue Service or the Department of Labor with
respect to any Plan of the Borrower or its ERISA Affiliates, including its
Subsidiaries.
(e) Within the time required for notice to the PBGC under
Section 302(f)(4)(A) of ERISA, the Borrower will notify the Administrative Agent
of any lien arising under Section 302(f) of ERISA in favor of any Plan of the
Borrower or its ERISA Affiliates, including its Subsidiaries.
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(f) The Borrower will not, and will not permit any of its
Subsidiaries or any of its ERISA Affiliates to take any of the following actions
or permit any of the following events to occur if such action or event together
with all other such actions or events would subject the Borrower, any of its
Subsidiaries, or any of its ERISA Affiliates to any tax, penalty, or other
liabilities which could have a Materially Adverse Effect:
(i) engage in any transaction in connection with which
the Borrower, any of its Subsidiaries or any ERISA Affiliate could be
subject to either a civil penalty assessed pursuant to Section 502(i)
of ERISA or a tax imposed by Section 4975 of the Code;
(ii) terminate any Employee Pension Plan in a manner, or
take any other action, which could result in any liability of the
Borrower, any of its Subsidiaries or any ERISA Affiliate to the PBGC;
(iii) fail to make full payment when due of all amounts
which, under the provisions of any Plan, the Borrower, any of its
Subsidiaries or any ERISA Affiliate is required to pay as contributions
thereto, or permit to exist any accumulated funding deficiency within
the meaning of Section 412(a) of the Code, whether or not waived, with
respect to any Employee Pension Plan; or
(iv) permit the present value of all benefit liabilities
under all Employee Pension Plans which are subject to Title IV of ERISA
to exceed the present value of the assets of such Plans allocable to
such benefit liabilities (within the meaning of Section 4041 of ERISA),
except as may be permitted under actuarial funding standards adopted in
accordance with Section 412 of the Code.
Section 5.8 Visits and Inspections. The Borrower will, and will cause
each of its Restricted Subsidiaries to, permit representatives of the
Administrative Agent and any of the Banks, upon reasonable notice, to (i) visit
and inspect the properties of the Borrower or any of its Restricted Subsidiaries
during business hours, (ii) inspect and make extracts from and copies of their
respective books and records, and (iii) discuss with their respective principal
officers their respective businesses, assets, liabilities, financial positions,
results of operations and business prospects. The Borrower and each of its
Restricted Subsidiaries will also permit representatives of the Administrative
Agent and any of the Banks to discuss with their respective accountants the
Borrower's and the Borrower's Restricted Subsidiaries' businesses, assets,
liabilities,
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financial positions, results of operations and business
prospects.
Section 5.9 Payment of Indebtedness; Loans. Subject to any provisions
herein or in any other Loan Document, the Borrower will, and will cause each of
its Restricted Subsidiaries to, pay any and all of their respective Indebtedness
when and as it becomes due, other than amounts diligently disputed in good faith
and for which adequate reserves have been set aside in accordance with GAAP.
Section 5.10 Use of Proceeds. The Borrower will use the aggregate
proceeds of all Advances under the Loans directly or indirectly:
(a) to fund Acquisitions permitted by Section 7.6 hereof;
(b) to fund Capital Expenditures to the extent permitted under
Section 7.11 hereof; and
(c) for working capital needs and other corporate purposes of
the Borrower and its Restricted Subsidiaries (including, without limitation, the
fees and expenses incurred in connection with the execution and delivery of this
Agreement) which do not otherwise conflict with this Section 5.10.
No proceeds of Advances hereunder shall be used for the purchase or carrying or
the extension of credit for the purpose of purchasing or carrying, any margin
stock within the meaning of Regulations G, T, U, and X of the Board of Governors
of the Federal Reserve System.
Section 5.11 Real Estate. The Borrower shall, and shall cause its
Restricted Subsidiaries to, on the Agreement Date, and, thereafter, within
thirty (30) days of the acquisition of any real estate permitted under Section
7.13 hereof, grant a mortgage to the Administrative Agent securing the
Obligations (or such amount thereof as is equal to the fair market value of such
real estate if the Majority Banks so permit), in form and substance reasonably
satisfactory to the Administrative Agent, covering any parcel of real estate as
may be owned by the Borrower or any of its Restricted Subsidiaries; provided,
that (a) this Section 5.11 shall not apply to the Philadelphia Disposition and
(b) any real estate so acquired that is incidental to such Acquisition or is
otherwise incidental to or not useful in the business of Borrower or such
Restricted Subsidiary, Borrower may notify the Administrative Agent in writing
that it or such Restricted Subsidiary intends to, subject to Section 2.5(c)
hereof, sell such real estate within eight (8) months of the date of the
acquisition thereof, in which case, the mortgage required to be
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granted pursuant to this Section 5.11 need not be granted, but if such real
estate is not sold in such eight (8) month period, Borrower or such Restricted
Subsidiary shall, on the first Business Day following the end of such eight (8)
month period, grant a mortgage with respect to such real estate to the
Administrative Agent as required and in accordance with this Section 5.11. The
Borrower shall, and shall cause its Restricted Subsidiaries to, deliver to the
Administrative Agent all documentation, including opinions of counsel and
policies of title insurance, which in the reasonable opinion of the
Administrative Agent are appropriate with each such grant, including any phase I
environmental audit requested by the Majority Banks.
Section 5.12 Indemnity. The Borrower agrees to indemnify and hold
harmless each Bank, the Administrative Agent, and each of their respective
affiliates, employees, representatives, shareholders, officers and directors
(any of the foregoing shall be an "Indemnitee") from and against any and all
claims, liabilities, losses, damages, actions, reasonable attorneys' fees and
expenses (as such fees and expenses are incurred) and demands by any party,
including the costs of investigating and defending such claims, whether or not
the Borrower, any Restricted Subsidiary or the Person seeking indemnification is
the prevailing party (a) resulting from any breach or alleged breach by the
Borrower or any Restricted Subsidiary of the Borrower of any representation or
warranty made hereunder; or (b) otherwise arising out of (i) the Commitment or
otherwise under this Agreement, any Loan Document or any transaction
contemplated hereby or thereby, including, without limitation, the use of the
proceeds of Loans hereunder in any fashion by the Borrower or the performance of
their respective obligations under the Loan Documents by the Borrower or any of
its Restricted Subsidiaries, (ii) allegations of any participation by the Banks,
the Administrative Agent, or any of them, in the affairs of the Borrower or any
of its Subsidiaries, or allegations that any of them has any joint liability
with the Borrower or any of its Restricted Subsidiaries for any reason, (iii)
any claims against the Banks, the Administrative Agent, or any of them, by any
shareholder or other investor in or lender to the Borrower or any Restricted
Subsidiary, by any brokers or finders or investment advisers or investment
bankers retained by the Borrower or by any other third party, arising out of the
Commitment or otherwise under this Agreement; or (c) in connection with taxes
(not including federal or state income or franchise taxes or other taxes based
solely upon the revenues or income of such Persons), fees, and other charges
payable in connection with the Loans, or the execution, delivery, and
enforcement of this Agreement, the Security Documents, the other Loan Documents,
and any amendments thereto or waivers of any of the provisions thereof; unless
the Person seeking indemnification hereunder is determined in such
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case to have acted with gross negligence or willful misconduct, in any case, by
a final, non-appealable judicial order. The obligations of the Borrower under
this Section 5.12 are in addition to, and shall not otherwise limit, any
liabilities which the Borrower might otherwise have in connection with any
warranties or similar obligations of the Borrower in any other Loan Document.
Section 5.13 Interest Rate Hedging. Within sixty (60) days of the
Agreement Date and forty-five (45) days after each Advance, the Borrower shall
enter into (and shall at all times thereafter maintain for a period of not less
than two (2) years) one or more Interest Hedge Agreements with respect to the
Borrower's interest obligations on not less than fifty percent (50%) of the
principal amount of the Loans outstanding from time to time. Such Interest Hedge
Agreements shall provide interest rate protection in conformity with
International Swap Dealers Association standards and for an average period of at
least two (2) years from the date of such Interest Hedge Agreements or, if
earlier, until the Maturity Date on terms reasonably acceptable to the
Administrative Agent, such terms to include consideration of the
creditworthiness of the other party to the proposed Interest Hedge Agreement.
All Obligations of the Borrower to either Administrative Agent or any of the
Banks pursuant to any Interest Hedge Agreement and all Liens granted to secure
such Obligations shall rank pari passu with all other Obligations and Liens
securing such other Obligations; and any Interest Hedge Agreement between the
Borrower and any other Person shall be unsecured.
Section 5.14 Covenants Regarding Formation of Restricted Subsidiaries
and Acquisitions; Partnership, Subsidiaries. At the time of (i) any Acquisition
permitted hereunder, (ii) the purchase by the Borrower or any of its Restricted
Subsidiaries of any interests in any Restricted or Unrestricted Subsidiary of
the Borrower, or (iii) the formation of any new Restricted or Unrestricted
Subsidiary of the Borrower or any of its Restricted Subsidiaries which is
permitted under this Agreement, the Borrower will, and will cause its Restricted
Subsidiaries, as appropriate, to (a) provide to the Administrative Agent an
executed Subsidiary Security Agreement for any new Restricted Subsidiary, in
substantially the form of Exhibit I attached hereto, together with appropriate
UCC-1 financing statements, as well as an executed Subsidiary Guaranty for such
new Restricted Subsidiary, in substantially the form of Exhibit G attached
hereto, which shall constitute both Security Documents and Loan Documents for
purposes of this Agreement, as well as a loan certificate for such new
Restricted Subsidiary, substantially in the form of Exhibit L attached hereto,
together with appropriate attachments; (b) pledge to the Administrative Agent
all of the stock or partnership interests (or other instruments or
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securities evidencing ownership) of such Subsidiary or Person which is acquired
or formed, beneficially owned by the Borrower or any of the Borrower's
Restricted Subsidiaries, as the case may be, as additional Collateral for the
Obligations to be held by the Administrative Agent in accordance with the terms
of the Borrower's Pledge Agreement, or a new Subsidiary Pledge Agreement in
substantially the form of Exhibit H attached hereto, and execute and deliver to
the Administrative Agent all such documentation for such pledge as, in the
reasonable opinion of the Administrative Agent, is appropriate; and (c) with
respect to any Acquisition or Restricted Subsidiary, provide revised financial
projections for the remainder of the fiscal year and for each subsequent year
until the Maturity Date which reflect such Acquisition or formation, certified
by the Chief Financial Officer of the Borrower, together with a statement by
such Person that no Default exists or would be caused by such Acquisition or
formation, and all other documentation, including one or more opinions of
counsel, reasonably satisfactory to the Administrative Agent which in their
reasonable opinion is appropriate with respect to such Acquisition or the
formation of such Subsidiary. Notwithstanding the foregoing, the Borrower shall
not be required to pledge any of the stock or other ownership interests for any
Unrestricted Subsidiary which (x) was not formed or created in anticipation of
the Borrower's direct or indirect investment therein and (y) at the time such
stock or ownership interest was acquired by the Borrower or its Restricted
Subsidiaries is subject to a restriction on any such Lien (whether such
restriction is in such Person's formation documents or otherwise), but shall be
required to grant the Administrative Agent (for the benefit of the Banks) a Lien
upon any right to receive distributions from such Unrestricted Subsidiary. Any
document, agreement or instrument (other than the Projections) executed or
issued pursuant to this Section 5.14 shall be a "Loan Document" for purposes of
this Agreement.
Section 5.15 Payment of Wages. The Borrower shall and shall cause each
of its Restricted Subsidiaries to at all times comply, in all material respects,
with the material requirements of the Fair Labor Standards Act, as amended,
including, without limitation, the provisions of such Act relating to the
payment of minimum and overtime wages as the same may become due from time to
time.
Section 5.16 Further Assurances. The Borrower will promptly cure, or
cause to be cured, defects in the creation and issuance of any of the Notes and
the execution and delivery of the Loan Documents (including this Agreement),
resulting from any acts or failure to act by the Borrower or any of the
Borrower's Restricted Subsidiaries or any employee or officer thereof. The
Borrower at its expense will promptly execute and deliver to the Administrative
Agent and the Banks, or cause to be executed and
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delivered to the Administrative Agent and the Banks, all such other and further
documents, agreements, and instruments in compliance with or accomplishment of
the covenants and agreements of the Borrower in the Loan Documents, including
this Agreement, or to correct any omissions in the Loan Documents, or more fully
to state the obligations set out herein or in any of the Loan Documents, or to
obtain any consents, all as may be necessary or appropriate in connection
therewith and as may be reasonably requested.
ARTICLE 6
Information Covenants
So long as any of the Obligations is outstanding and unpaid or the
Banks have an obligation to fund Advances hereunder (whether or not the
conditions to borrowing have been or can be fulfilled) and unless the Majority
Banks shall otherwise consent in writing, the Borrower will furnish or cause to
be furnished to each Bank and the Administrative Agent, at their respective
offices:
Section 6.1 Quarterly Financial Statements and Information. Within
forty-five (45) days after the last day of each of the first three (3) quarters
of each fiscal year of the Borrower, the balance sheets of the Borrower on a
consolidated basis with its Restricted Subsidiaries and a consolidating basis
with its Unrestricted Subsidiaries as at the end of such quarter and as of the
end of the preceding fiscal year, and the related statements of operations and
the related statements of cash flows of the Borrower on a consolidated basis
with its Restricted Subsidiaries and a consolidating basis with its Unrestricted
Subsidiaries for such quarter and for the elapsed portion of the year ended with
the last day of such quarter, which shall set forth in comparative form such
figures as at the end of and for such quarter and appropriate prior period and
shall be certified by the chief financial officer of the Borrower to have been
prepared in accordance with GAAP and to present fairly in all material respects
the financial position of the Borrower on a consolidated basis with its
Restricted Subsidiaries and a consolidating basis with its Unrestricted
Subsidiaries as at the end of such period and the results of operations for such
period, and for the elapsed portion of the year ended with the last day of such
period, subject only to normal year-end and audit adjustments.
Section 6.2 Annual Financial Statements and Information.
Within ninety (90) days after the end of each fiscal year of the
Borrower, the audited consolidated balance sheet of the Borrower
and its Restricted Subsidiaries (and unaudited consolidating
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balance sheet of the Borrower and its Unrestricted Subsidiaries) as of the end
of such fiscal year and the related audited consolidated and unaudited
consolidating statements of operations for such fiscal year and for the previous
fiscal year, the related audited consolidated statements of cash flow and
stockholders' equity for such fiscal year and for the previous fiscal year,
which shall be accompanied by an opinion which shall be in scope and substance
reasonably satisfactory to the Administrative Agent of Deloitte & Touche, LLP or
other independent certified public accountants of recognized national standing
reasonably acceptable to the Administrative Agent, together with a statement of
such accountants that in connection with their audit, nothing came to their
attention that caused them to believe that the Borrower was not in compliance
with the terms, covenants, provisions or conditions of Sections 7.8, 7.9, 7.10
and 7.11 hereof insofar as they relate to accounting matters.
Section 6.3 Performance Certificates. At the time the financial
statements are furnished pursuant to Sections 6.1 and 6.2, a certificate of the
president or chief financial officer of the Borrower as to its financial
performance, in substantially the form attached hereto as Exhibit M:
(a) setting forth as and at the end of such quarterly period
or fiscal year, as the case may be, the arithmetical calculations required to
establish (i) any adjustment to the Applicable Margins, as provided for in
Section 2.3(f), and (ii) whether or not the Borrower was in compliance with the
requirements of Sections 7.7, 7.8, 7.9, 7.10 and 7.11;
(b) stating that, to the best of his or her knowledge, no
Default has occurred as at the end of such quarterly period or year, as the case
may be, or, if a Default has occurred, disclosing each such Default and its
nature, when it occurred, whether it is continuing and the steps being taken by
the Borrower with respect to such Default; and
(c) containing a list of all Acquisitions, Investments,
Restricted Payments and dispositions of assets from the Agreement Date through
the date of such certificate, together with the total amount for each of the
foregoing categories.
Section 6.4 Copies of Other Reports.
(a) Promptly upon receipt thereof, copies of all reports, if
any, submitted to the Borrower by the Borrower's independent public accountants
regarding the Borrower, including, without limitation, any management report
prepared in connection with the annual audit referred to in Section 6.2.
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(b) Promptly upon receipt thereof, copies of any material
adverse notice or report regarding any License from the FCC.
(c) From time to time and promptly upon each request, such
data, certificates, reports, statements, documents or further information
regarding the business, assets, liabilities, financial position, projections,
results of operations or business prospects of the Borrower or any of its
Restricted Subsidiaries, as Administrative Agent or any Bank may reasonably
request.
(d) Annually, certificates of insurance indicating that the
requirements of Section 5.5 hereof remain satisfied for such fiscal year,
together with copies of any new or replacement insurance policies obtained
during such year.
(e) Prior to January 31 of each year, the annual budget for
the Borrower and the Borrower's Restricted Subsidiaries, including forecasts of
the income statement, the balance sheet and a cash flow statement for such year,
on a quarter by quarter basis.
(f) Promptly after the sending thereof, copies of all
statements, reports and other information which the Borrower or any of its
Restricted Subsidiaries sends to public security holders of the Borrower
generally or files with the Securities and Exchange Commission or any national
securities exchange.
Section 6.5 Notice of Litigation and Other Matters. Notice specifying
the nature and status of any of the following events, promptly, but in any event
not later than fifteen (15) days after the occurrence of any of the following
events becomes known to the Borrower:
(i) the commencement of all proceedings and
investigations by or before any governmental body and all actions and
proceedings in any court or before any arbitrator against the Borrower
or any Restricted Subsidiary, or, to the extent known to the Borrower,
which could have a Material Adverse Effect;
(ii) any material adverse change with respect to the
business, assets, liabilities, financial position, results of
operations or business prospects of the Borrower and its Restricted
Subsidiaries, taken as a whole, other than changes in the ordinary
course of business which have not had and would not reasonably be
expected to have a Materially Adverse Effect and other than changes in
the industry in which Borrower or any of its Restricted
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Subsidiaries operate which would not reasonably be expected
to have a Material Adverse Effect;
(iii) any material adverse amendment or change to the
projections or annual budget provided to the Banks by the Borrower;
(iv) any Default or the occurrence or non-occurrence of
any event (A) which constitutes, or which with the passage of time or
giving of notice or both would constitute a default by the Borrower or
any Restricted Subsidiary of the Borrower under any material agreement
other than this Agreement and the other Loan Documents to which the
Borrower or any Restricted Subsidiary of the Borrower is party or by
which any of their respective properties may be bound, or (B) which
could have a Materially Adverse Effect, giving in each case a
description thereof and specifying the action proposed to be taken with
respect thereto;
(v) the occurrence of any Reportable Event or a
"prohibited transaction" (as such term is defined in Section 406 of
ERISA or Section 4975 of the Code) with respect to any Plan of the
Borrower or any of its Subsidiaries or the institution or threatened
institution by PBGC of proceedings under ERISA to terminate or to
partially terminate any such Plan or the commencement or threatened
commencement of any litigation regarding any such Plan or naming it or
the trustee of any such Plan with respect to such Plan or any action
taken by the Borrower, any Subsidiary of the Borrower or any ERISA
Affiliate of the Borrower to withdraw or partially withdraw from any
Plan or to terminate any Plan; and
(vi) the occurrence of any event subsequent to the
Agreement Date which, if such event had occurred prior to the Agreement
Date, would have constituted an exception to the representation and
warranty in Section 4.1(m) of this Agreement.
ARTICLE 7
Negative Covenants
So long as any of the Obligations is outstanding and unpaid or the
Banks have an obligation to fund Advances hereunder (whether or not the
conditions to borrowing have been or can be fulfilled) and unless the Majority
Banks, or such greater number
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of Banks as may be expressly provided herein, shall otherwise give their prior
consent in writing:
Section 7.1 Indebtedness of the Borrower and its Subsidiaries. The
Borrower shall not, and shall not permit any of its Subsidiaries to, create,
assume, incur or otherwise become or remain obligated in respect of, or permit
to be outstanding, any Indebtedness except:
(a) the Obligations;
(b) accounts payable, accrued expenses (including taxes)
and customer advance payments incurred in the ordinary course of business;
(c) Indebtedness secured by Permitted Liens;
(d) obligations under Interest Hedge Agreements with
respect to the Loans;
(e) Indebtedness of the Borrower or any of its Restricted
Subsidiaries to the Borrower or any other Restricted Subsidiary so long as the
corresponding debt instruments are pledged to the Administrative Agent as
security for the Obligations and such Indebtedness is expressly permitted
pursuant to Section 7.5 hereof;
(f) Indebtedness incurred by any Unrestricted Subsidiary;
provided that such Indebtedness is non-recourse to the Borrower or any of its
Restricted Subsidiaries and no Lien is placed on the Borrower's or any of its
Restricted Subsidiaries' equity interests in such Unrestricted Subsidiary; and
(g) Capitalized Lease Obligations not to exceed in the
aggregate at any one time outstanding $1,000,000.
Section 7.2 Limitation on Liens. The Borrower shall not, and shall not
permit any of its Restricted Subsidiaries to, create, assume, incur or permit to
exist or to be created, assumed, incurred or permitted to exist, directly or
indirectly, any Lien on any of its properties or assets, whether now owned or
hereafter acquired, except for Permitted Liens.
Section 7.3 Amendment and Waiver. The Borrower shall not, and shall not
permit any of its Restricted Subsidiaries to, enter into any amendment of, or
agree to or accept or consent to any waiver of any of the material provisions of
its articles or certificate of incorporation or partnership agreement, as
appropriate, if the effect thereof would be to adversely affect the rights of
the Banks hereunder or under any Loan Document.
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Section 7.4 Liquidation, Merger or Disposition of Assets.
(a) Disposition of Assets. The Borrower shall not, and shall
not permit any of its Restricted Subsidiaries to, at any time sell, lease,
abandon, or otherwise dispose of any assets (other than assets disposed of in
the ordinary course of business and other than the Philadelphia Disposition)
without the prior written consent of the Banks; provided, however, that the
prior written consent of the Banks shall not be required for (i) the transfer of
assets (including cash or cash equivalents) among the Borrower and its
Restricted Subsidiaries (excluding Subsidiaries described in clause (b) of the
definition of "Subsidiary") or for the transfer of assets (including cash or
cash equivalents) between or among Restricted Subsidiaries (excluding
Subsidiaries described in clause (b) of the definition of "Subsidiary") of the
Borrower, (ii) the disposition of communications tower facilities that
contribute in the aggregate, less than (A) five percent (5%) of the Operating
Cash Flow of Borrower for the twelve calendar month period immediately preceding
such disposition, and (B) fifteen percent (15%) of the Operating Cash Flow of
the Borrower for the period from the Agreement Date through the date of such
disposition or (iii) subject to Section 2.5(c) hereof, any other property (real
or personal) not used or useful in Borrower's or such Restricted Subsidiary's
business. Upon any sale or disposition of a Restricted Subsidiary permitted
hereunder, the Administrative Agent and the Banks shall, at Borrower's expense,
take such actions as the Borrower reasonably requests to cause such Restricted
Subsidiary to be released from its obligations under the Subsidiary Guaranty.
(b) Liquidation or Merger. The Borrower shall not, and shall
not permit any of its Restricted Subsidiaries to, at any time liquidate or
dissolve itself (or suffer any liquidation or dissolution) or otherwise wind up,
or enter into any merger, other than (i) a merger or consolidation among the
Borrower and one or more Restricted Subsidiaries, provided the Borrower is the
surviving corporation, or (ii) a merger between or among two or more Restricted
Subsidiaries, or (iii) in connection with an Acquisition permitted hereunder
effected by a merger in which the Borrower or, in a merger in which the Borrower
is not a party, a Restricted Subsidiary is the surviving corporation or the
surviving corporation becomes a Restricted Subsidiary.
Section 7.5 Limitation on Guaranties. The Borrower shall not, and shall
not permit any of its Restricted Subsidiaries to, at any time Guaranty, assume,
be obligated with respect to, or permit to be outstanding any Guaranty of, any
obligation of any other Person other than (a) a guaranty by endorsement of
negotiable instruments for collection in the ordinary course of business, or (b)
obligations under agreements of the Borrower or any of its Restricted
Subsidiaries entered into in connection
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with Acquisitions permitted under this Agreement leases of real property or the
acquisition of services, supplies and equipment in the ordinary course of
business of the Borrower or any of its Restricted Subsidiaries, or (c)
Guaranties of Indebtedness incurred as permitted pursuant to Section 7.1 hereof,
or (d) as may be contained in any Loan Document including, without limitation,
any Subsidiary Guaranty.
Section 7.6 Investments and Acquisitions. The Borrower shall not, and
shall not permit any of its Restricted Subsidiaries to, directly or indirectly
make any loan or advance, or otherwise acquire for consideration evidences of
Indebtedness, capital stock or other securities of any Person or other assets or
property (other than assets or property in the ordinary course of business), or
make any Acquisition, except that so long as no Default then exists or would be
caused thereby:
(a) The Borrower and its Restricted Subsidiaries may, directly
or through a brokerage account (i) purchase marketable, direct obligations of
the United States of America, its agencies and instrumentalities maturing within
three hundred sixty-five (365) days of the date of purchase, (ii) purchase
commercial paper, money-market funds and business savings accounts issued by
corporations, each of which shall have a combined net worth of at least $100
million and each of which conducts a substantial part of its business in the
United States of America, maturing within two hundred seventy (270) days from
the date of the original issue thereof, and rated "P-2" or better by Moody's
Investors Service, Inc. or "A-2" or better by Standard and Poor's Ratings Group,
a division of McGraw-Hill, (iii) purchase repurchase agreements, bankers'
acceptances, and domestic and Eurodollar certificates of deposit maturing within
three hundred sixty-five (365) days of the date of purchase which are issued by,
or time deposits maintained with, a United States national or state bank the
deposits of which are insured by the Federal Deposit Insurance Corporation or
the Federal Savings and Loan Insurance Corporation and having capital, surplus
and undivided profits totaling more than $100 million and rated "A" or better by
Moody's Investors Service, Inc. or Standard and Poor's Ratings Group, a division
of McGraw-Hill, Inc.; and
(b) Subject to compliance with Section 5.14 hereof, the
Borrower or any of its Restricted Subsidiaries may (i) make Acquisitions; (ii)
initiate construction of new communications tower facilities; and (iii) make
investments in Unrestricted Subsidiaries so long as the maximum amount of the
proceeds of the Loans invested or used to acquire interests in any such
Unrestricted Subsidiary does not exceed the sum of (A) $13,500,000 in the
aggregate during the term hereof and (B) to the extent not used for Restricted
Payments, funds permitted to be used for Restricted Payments pursuant to
Sections 7.7(a) and
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(b) hereof, provided that proceeds from the disposition of any such investment
permitted by this clause (b)(iii), shall be available to be used for Restricted
Payments or to make additional investments permitted hereunder; provided that
Borrower may, subject to Section 2.5(d) hereof, use the Net Proceeds of any
issuance of equity interests to invest in any such Unrestricted Subsidiary over
and above the limitations set forth in this clause (b).
Section 7.7 Restricted Payments The Borrower shall not, and shall not
permit any of its Restricted Subsidiaries to, directly or indirectly declare or
make any Restricted Payment; provided, however, that so long as no Default
hereunder then exists or would be caused thereby, the Borrower may make (a)
subject to Section 2.5(b) hereof, cash distributions in an amount not to exceed
(i) fifty percent (50%) of Excess Cash Flow for the immediately preceding
calendar year, on or after April 15 of each calendar year commencing on April
15, 2000 less (ii) any portion thereof used for purposes of investing in
Unrestricted Subsidiaries; (b) cash distributions from (i) fifty percent (50%)
of the net proceeds of any equity offering less (ii) any portion thereof used
for purposes of investing in Unrestricted Subsidiaries, subject to Section
2.5(d) hereof and so long as the Leverage Ratio on such date is less than 4.0 to
1 after giving effect to any payment pursuant to Section 2.7(b)(iv) hereof and
(c) a $500,000 cash distribution to Parent or American Radio Systems out of the
Net Proceeds of the Philadelphia Disposition.
Section 7.8 Leverage Ratio. (a) As of the end of any calendar quarter,
and (b) at the time of any Advance hereunder (after giving effect to such
Advance), the Borrower shall not permit its Leverage Ratio to exceed the ratios
set forth below during the periods indicated:
Period Ratio
Agreement Date through 6.00:1
September 29, 1998
September 30, 1998 through 5.50:1
March 30, 1999
March 31, 1999 through 5.00:1
September 29, 1999
September 30, 1999 through 4.50:1
March 30, 2000
March 31, 2000 through 4.00:1
December 30, 2000
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December 31, 2000 through 3.50:1
December 30, 2001
December 31, 2001 and 3.00:1
thereafter
Section 7.9 Interest Coverage Ratio. The Borrower and its consolidated
Restricted Subsidiaries shall maintain, on a consolidated basis, at all times
during the applicable periods set forth below, an Interest Coverage Ratio for
such fiscal quarter of not less than the ratio set forth below opposite each
such period:
Period Ratio
Agreement Date through 2.00:1
September 29, 1999
September 30, 1999 and thereafter 2.50:1
Section 7.10 Annualized Operating Cash Flow to Pro Forma Debt Service.
(a) As of the end of any calendar quarter, and (b) at the time of any Advance
hereunder (after giving effect to such Advance), the Borrower shall not permit
the ratio of (i) its Annualized Operating Cash Flow (for the calendar
quarter/month end being tested in the case of Section 7.10(a) hereof, or for the
most recently completed calendar quarter/month end, in the case of Section
7.10(b) hereof) to (ii) its Pro Forma Debt Service to be less than the ratio set
forth below opposite each such period:
Period Ratio
Agreement Date through 1.10:1
September 29, 1999
September 30, 1999 and 1.15:1
thereafter
Section 7.11 Limitation on Capital Expenditures. The Borrower, on a
consolidated basis with its Restricted
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Subsidiaries, shall not permit its Capital Expenditures to exceed the amounts
set forth below for the periods indicated:
Period Dollar Amount
Agreement Date through $10,000,000
December 31, 1996
From January 1, 1997 $15,000,000
through December 31, 1997
From January 1, 1998 $8,000,000
through December 31, 1998
From January 1, 1999 $4,000,000
through December 31, 1999
and each calendar year
period thereafter
To the extent not used in any calendar year, an amount equal to the lesser of
(a) the unused amounts permitted for Capital Expenditures for such calendar year
and (b) 15% of the maximum Capital Expenditure availability for such calendar
year may (exclusive of any carryforwards from prior periods) be carried forward
to the next calendar year, and may be spent in addition to the otherwise
applicable limitations for such year.
Section 7.12 Affiliate Transactions. Except as specifically provided
herein (including, without limitation, Sections 7.4 and 7.7 hereof) and as may
be described on Schedule 4.1(s) attached hereto, the Borrower shall not, and
shall not permit any of its Restricted Subsidiaries to, at any time engage in
any transaction with an Affiliate, or make an assignment or other transfer of
any of its properties or assets to any Affiliate, on terms less advantageous to
the Borrower or such Restricted Subsidiary than would be the case if such
transaction had been effected with a non-Affiliate.
Section 7.13 Real Estate. Subject to Section 5.11 hereof, the Borrower
and its Restricted Subsidiaries may purchase real estate solely for use in the
business of the Borrower and its Restricted Subsidiaries unless incidental to an
Acquisition permitted hereunder.
Section 7.14 ERISA Liabilities. The Borrower shall not, and shall cause
each of its ERISA Affiliates not to, (i) permit the assets of any of their
respective Plans to be less than the amount necessary to provide all accrued
benefits under such Plans, or (ii) enter into any Multiemployer Plan.
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ARTICLE 8
Default
Section 8.1 Events of Default. Each of the following shall constitute
an Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
governmental or non-governmental body:
(a) Any representation or warranty made under this Agreement
shall prove incorrect or misleading in any material respect when made or deemed
to be made pursuant to Section 4.2 hereof;
(b) The Borrower shall default in the payment of: (i) any
interest under any of the Notes or fees or other amounts payable to the Banks
and the Administrative Agent under any of the Loan Documents, or any of them,
when due, and such Default shall not be cured by payment in full within three
(3) Business Days from the due date; or (ii) any principal under any of the
Notes when due;
(c) The Borrower shall default (i) in the performance or
observance of any agreement or covenant contained in Sections 5.2(a) or 5.10
hereof, or Sections 7.1, 7.2, 7.4, 7.5, 7.7, 7.8, 7.9, 7.10 and 7.11 hereof;
(d) The Borrower shall default in the performance or
observance of any other agreement or covenant contained in this Agreement not
specifically referred to elsewhere in this Section 8.1, and such default shall
not be cured within a period of thirty (30) days (or with respect to Sections
5.3, 5.4, 5.5, 5.6, 5.7, 5.8, 5.9, 5.14, 5.15, 5.16, 6.4, 6.5, 7.3, 7.12, 7.13
and 7.14, such longer period not to exceed sixty (60) days if such default is
curable within such period and the Borrower is proceeding in good faith with all
diligent efforts to cure such default) from the later of (i) occurrence of such
Default and (ii) the date on which such Default became known to the Borrower;
(e) There shall occur any default in the performance or
observance of any agreement or covenant or breach of any representation or
warranty contained in any of the Loan Documents (other than this Agreement or as
otherwise provided in Section 8.1 of this Agreement) by the Borrower, any of its
Restricted Subsidiaries, or any other obligor thereunder, which shall not be
cured within a period of thirty (30) days (or such longer period not to exceed
sixty (60) days if such default is cured within such period and the Borrower is
proceeding in good faith with all diligent efforts to cure such default) from
the
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later of (i) occurrence of such Default and (ii) date on which
such default became known to the Borrower;
(f) There shall be entered and remain unstayed a decree or
order for relief in respect of the Borrower or any of the Borrower's Restricted
Subsidiaries under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other applicable Federal or state bankruptcy law or
other similar law, or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or similar official of the Borrower or any of the
Borrower's Restricted Subsidiaries, or of any substantial part of their
respective properties, or ordering the winding-up or liquidation of the affairs
of the Borrower, or any of the Borrower's Restricted Subsidiaries; or an
involuntary petition shall be filed against the Borrower or any of the
Borrower's Restricted Subsidiaries and a temporary stay entered, and (i) such
petition and stay shall not be diligently contested, or (ii) any such petition
and stay shall continue undismissed for a period of ninety (90) consecutive
days;
(g) The Borrower or any of the Borrower's Restricted
Subsidiaries shall file a petition, answer or consent seeking relief under Title
11 of the United States Code, as now constituted or hereafter amended, or any
other applicable Federal or state bankruptcy law or other similar law, or the
Borrower or any of the Borrower's Restricted Subsidiaries shall consent to the
institution of proceedings thereunder or to the filing of any such petition or
to the appointment or taking of possession of a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Borrower or
any of the Borrower's Restricted Subsidiaries or of any substantial part of
their respective properties, or the Borrower or any of the Borrower's Restricted
Subsidiaries shall fail generally to pay their respective debts as they become
due or shall be adjudicated insolvent; the Borrower shall suspend or discontinue
its business; the Borrower or any of the Borrower's Restricted Subsidiaries
shall have concealed, removed any of its property with the intent to hinder or
defraud its creditors or shall have made a fraudulent or preferential transfer
under any applicable fraudulent conveyance or bankruptcy law, or the Borrower or
any of the Borrower's Restricted Subsidiaries shall take any action in
furtherance of any such action;
(h) A judgment not covered by insurance or indemnification,
where the indemnifying party has agreed to indemnify and is financially able to
do so, shall be entered by any court against the Borrower or any of the
Borrower's Restricted Subsidiaries for the payment of money which exceeds singly
or in the aggregate with other such judgments, $1,000,000, or a warrant of
attachment or execution or similar process shall be issued or levied against
property of the Borrower or any of
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the Borrower's Restricted Subsidiaries which, together with all other such
property of the Borrower or any of the Borrower's Restricted Subsidiaries
subject to other such process, exceeds in value $1,000,000 in the aggregate, and
if, within thirty (30) days after the entry, issue or levy thereof, such
judgment, warrant or process shall not have been paid or discharged or stayed
pending appeal or removed to bond, or if, after the expiration of any such stay,
such judgment, warrant or process shall not have been paid or discharged or
removed to bond;
(i) There shall be at any time any "accumulated funding
deficiency," as defined in ERISA or in Section 412 of the Code, with respect to
any Plan maintained by the Borrower or any of its Subsidiaries or any ERISA
Affiliate, or to which the Borrower or any of its Subsidiaries or any ERISA
Affiliate has any liabilities, or any trust created thereunder; or a trustee
shall be appointed by a United States District Court to administer any such
Plan; or PBGC shall institute proceedings to terminate any such Plan; or the
Borrower or any of its Subsidiaries or any ERISA Affiliate shall incur any
liability to PBGC in connection with the termination of any such Plan; or any
Plan or trust created under any Plan of the Borrower or any of its Subsidiaries
or any ERISA Affiliate shall engage in a "prohibited transaction" (as such term
is defined in Section 406 of ERISA or Section 4975 of the Code) which would
subject any such Plan, any trust created thereunder, any trustee or
administrator thereof, or any party dealing with any such Plan or trust to the
tax or penalty on "prohibited transactions" imposed by Section 502 of ERISA or
Section 4975 of the Code;
(j) There shall occur (i) any acceleration of the maturity of
any Indebtedness of the Borrower or any of the Borrower's Restricted
Subsidiaries in an aggregate principal amount exceeding $1,000,000, or, as a
result of a failure to comply with the terms thereof, such Indebtedness shall
otherwise have become due and payable; (ii) any event or condition the
occurrence of which would permit such acceleration of such Indebtedness, or
which, as a result of a failure to comply with the terms thereof, would make
such Indebtedness otherwise due and payable, and which event or condition has
not been cured within any applicable cure period or waived in writing prior to
any declaration of an Event of Default or acceleration of the Loans hereunder;
or (iii) any material default under any Interest Hedge Agreement which would
permit the obligation of the Borrower to make payments to the counterparty
thereunder to be then due and payable;
(k) The Borrower and its Restricted Subsidiaries are for any
reason no longer able to operate or manage the related communications tower
facilities or portions thereof and retain the revenue received therefrom, and
the overall effect of such
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loss, destruction, termination, revocation or failure to renew would be to
reduce Operating Cash Flow (determined as at the last day of the most recently
ended fiscal year of the Borrower) by ten percent (10%) or more;
(l) Any material Loan Document or any material provision
thereof, shall at any time and for any reason be declared by a court of
competent jurisdiction to be null and void, or a proceeding shall be commenced
by the Borrower or any of the Borrower's Restricted Subsidiaries or by any
governmental authority having jurisdiction over the Borrower or any of the
Borrower's Restricted Subsidiaries seeking to establish the invalidity or
unenforceability thereof (exclusive of questions of interpretation of any
provision thereof), or the Borrower or any of the Borrower's Subsidiaries shall
deny that it has any liability or obligation for the payment of principal or
interest purported to be created under any Loan Document;
(m) Any material Security Document shall for any reason, fail
or cease (except by reason of lapse of time) to create a valid and perfected and
first-priority Lien on or Security Interest in any material portion of the
Collateral purported to be covered thereby;
(n) There shall occur any Change of Control; or
(o) Borrower or any of its Restricted Subsidiaries
shall be indicted under the Racketeer Influenced and Corrupt
Organizations Act of 1970 (18 U.S.C. ss. 1961 et seq.).
Section 8.2 Remedies.
(a) If an Event of Default specified in Section 8.1 (other
than an Event of Default under Section 8.1(f) or Section 8.1(g)) shall have
occurred and shall be continuing, the Administrative Agent, at the request of
the Majority Banks subject to Section 9.8(a) hereof, shall (i) terminate the
Commitment, and/or (ii) declare the principal of and interest on the Loans and
the Notes and all other amounts owed to the Banks and the Administrative Agent
under this Agreement, the Notes and any other Loan Documents to be forthwith due
and payable without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived, anything in this Agreement, the Notes
or any other Loan Document to the contrary notwithstanding, and the Commitment
shall thereupon forthwith terminate.
(b) Upon the occurrence and continuance of an Event of Default
specified in Section 8.1(f) or Section 8.1(g), all principal, interest and other
amounts due hereunder and under the Notes, and all other Obligations, shall
thereupon and
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concurrently therewith become due and payable and the Commitment shall forthwith
terminate and the principal amount of the Loans outstanding hereunder shall bear
interest at the Default Rate, all without any action by the Administrative Agent
or the Banks or the Majority Banks or any of them and without presentment,
demand, protest or other notice of any kind, all of which are expressly waived,
anything in this Agreement or in the other Loan Documents to the contrary
notwithstanding.
(c) Upon acceleration of the Notes, as provided in subsection
(a) or (b) of this Section 8.2, above, the Administrative Agent and the Banks
shall have all of the post-default rights granted to them, or any of them, as
applicable under the Loan Documents and under Applicable Law.
(d) Upon acceleration of the Notes, as provided in subsection
(a) or (b) of this Section 8.2, the Administrative Agent shall have the right
(but not the obligation) upon the request of the Banks to operate the
communications tower facilities of the Borrower and its Restricted Subsidiaries
in accordance with the terms of the Licenses and pursuant to the terms and
subject to any limitations contained in the Security Documents and, within
guidelines established by the Majority Banks, to make any and all payments and
expenditures necessary or desirable in connection therewith, including, without
limitation, payment of wages as required under the Fair Labor Standards Act, as
amended, and of any necessary withholding taxes to state or federal authorities.
In the event the Majority Banks fail to agree upon the guidelines referred to in
the preceding sentence within six (6) Business Days' after the Administrative
Agent has begun to operate the communications tower facilities, the
Administrative Agent may, after giving three (3) days' prior written notice to
the Banks of its intention to do so, make such payments and expenditures as it
deems reasonable and advisable in its sole discretion to maintain the normal
day-to-day operation of such communications tower facilities. Such payments and
expenditures in excess of receipts shall constitute Advances under the
Commitment, not in excess of the amount of the Commitment. Advances made
pursuant to this Section 8.2(d) shall bear interest as provided in Section
2.3(d) and shall be payable on demand. The making of one or more Advances under
this Section 8.2(d) shall not create any obligation on the part of the Banks to
make any additional Advances hereunder. No exercise by the Administrative Agent
of the rights granted to it under this Section 8.2(d) shall constitute a waiver
of any other rights and remedies granted to the Administrative Agent and the
Banks, or any of them, under this Agreement or at law. The Borrower hereby
irrevocably appoints the Administrative Agent as agent for the Banks, the true
and lawful attorney of the Borrower, in its name and stead and on its behalf, to
execute, receipt for or otherwise act in connection with any and all contracts,
instruments or
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other documents in connection with the completion and operation of the
communications tower facilities in the exercise of the Administrative Agent's
and the Banks' rights under this Section 8.2(d). Such power of attorney is
coupled with an interest and is irrevocable. The rights of the Administrative
Agent under this Section 8.2(d) shall be subject to its prior compliance with
the Communications Act and the FCC rules and policies promulgated thereunder to
the extent applicable to the exercise of such rights.
(e) Upon acceleration of the Notes, as provided in subsection
(a) or (b) of this Section 8.2, the Administrative Agent, upon request of the
Majority Banks, shall have the right to the appointment of a receiver for the
properties and assets of the Borrower and its Restricted Subsidiaries, and the
Borrower, for itself and on behalf of its Restricted Subsidiaries, hereby
consents to such rights and such appointment and hereby waives any objection the
Borrower or any Restricted Subsidiary may have thereto or the right to have a
bond or other security posted by the Administrative Agent on behalf of the
Banks, in connection therewith. The rights of the Administrative Agent under
this Section 8.2(e) shall be subject to its prior compliance with the
Communications Act and the FCC rules and policies promulgated thereunder to the
extent applicable to the exercise of such rights.
(f) The rights and remedies of the Administrative
Agent and the Banks hereunder shall be cumulative, and not
exclusive.
Section 8.3 Payments Subsequent to Declaration of Event of Default.
Subsequent to the acceleration of the Loans under Section 8.2 hereof, payments
and prepayments under this Agreement made to the Administrative Agent and the
Banks or otherwise received by any of such Persons (from realization on
Collateral for the Obligations or otherwise) shall be paid over to the
Administrative Agent (if necessary) and distributed by the Administrative Agent
as follows: first, to the Administrative Agent's reasonable costs and expenses,
if any, incurred in connection with the collection of such payment or
prepayment, including, without limitation, any reasonable costs incurred by it
in connection with the sale or disposition of any Collateral for the Obligations
and all amounts under Section 11.2(b) and (c); second, to the Banks or the
Administrative Agent for any fees hereunder or under any of the other Loan
Documents then due and payable; third, to the Banks pro rata on the basis of
their respective unpaid principal amounts (except as provided in Section
2.2(e)), to the payment of any unpaid interest which may have accrued on the
Obligations; fourth, to the Banks pro rata until all Loans have been paid in
full (and, for purposes of this clause, obligations under Interest Hedge
Agreements with the
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Banks or any of them shall be paid on a pro rata basis with the Loans); fifth,
to the Banks pro rata on the basis of their respective unpaid amounts, to the
payment of any other unpaid Obligations; and sixth, to the Borrower or as
otherwise required by law.
ARTICLE 9
The Administrative Agent
Section 9.1 Appointment and Authorization. Each Bank hereby irrevocably
appoints and authorizes, and hereby agrees that it will require any transferee
of any of its interest in its portion of the Loans and in its Note irrevocably
to appoint and authorize, the Administrative Agent to take such actions as its
agent on its behalf and to exercise such powers hereunder and under the other
Loan Documents as are delegated by the terms hereof and thereof, together with
such powers as are reasonably incidental thereto. Neither the Administrative
Agent, nor any of its respective directors, officers, employees or agents, shall
be liable for any action taken or omitted to be taken by it or them hereunder or
in connection herewith, except for its or their own gross negligence or willful
misconduct as determined by a final, non-appealable judicial order of a court of
competent jurisdiction.
Section 9.2 Interest Holders. The Administrative Agent may treat each
Bank, or the Person designated in the last notice filed with the Administrative
Agent, as the holder of all of the interests of such Bank in its portion of the
Loans and in its Note until written notice of transfer, signed by such Bank (or
the Person designated in the last notice filed with the Administrative Agent)
and by the Person designated in such written notice of transfer, in form and
substance satisfactory to the Administrative Agent, shall have been filed with
the Administrative Agent.
Section 9.3 Consultation with Counsel. The Administrative Agent may
consult with Powell, Goldstein, Frazer & Murphy, Atlanta, Georgia, special
counsel to the Administrative Agent, or with other legal counsel selected by it
and shall not be liable for any action taken or suffered by it in good faith in
consultation with the Majority Banks and in reasonable reliance on such
consultations.
Section 9.4 Documents. The Administrative Agent shall be under no duty
to examine, inquire into, or pass upon the validity, effectiveness or
genuineness of this Agreement, any Note, any other Loan Document, or any
instrument, document or communication furnished pursuant hereto or in connection
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herewith, and the Administrative Agent shall be entitled to assume that they are
valid, effective and genuine, have been signed or sent by the proper parties and
are what they purport to be.
Section 9.5 Administrative Agent and Affiliates. With respect to the
Commitment and the Loans, the Administrative Agent shall have the same rights
and powers hereunder as any other Bank and the Administrative Agent and
Affiliates of the Administrative Agent may accept deposits from, lend money to
and generally engage in any kind of business with the Borrower, any of its
Subsidiaries or any Affiliates of, or Persons doing business with, the Borrower,
as if they were not affiliated with the Administrative Agent and without any
obligation to account therefor.
Section 9.6 Responsibility of the Administrative Agent. The duties and
obligations of the Administrative Agent under this Agreement are only those
expressly set forth in this Agreement. The Administrative Agent shall be
entitled to assume that no Default or Event of Default has occurred and is
continuing unless it has actual knowledge, or has been notified in writing by
the Borrower, of such fact, or has been notified by a Bank in writing that such
Bank considers that a Default or an Event of Default has occurred and is
continuing, and such Bank shall specify in detail the nature thereof in writing.
The Administrative Agent shall not be liable hereunder for any action taken or
omitted to be taken except for its own gross negligence or willful misconduct as
determined by a final, non-appealable judicial order of a court of competent
jurisdiction. The Administrative Agent shall provide each Bank with copies of
such documents received from the Borrower as such Bank may reasonably request.
Section 9.7 Action by the Administrative Agent.
(a) The Administrative Agent shall be entitled to use its
discretion with respect to exercising or refraining from exercising any rights
which may be vested in it by, and with respect to taking or refraining from
taking any action or actions which it may be able to take under or in respect
of, this Agreement, unless the Administrative Agent shall have been instructed
by the Majority Banks to exercise or refrain from exercising such rights or to
take or refrain from taking such action; provided that the Administrative Agent
shall not exercise any rights under Section 8.2(a) of this Agreement without the
request of the Majority Banks (or, where expressly required, all the Banks)
unless time is of the essence, in which case, such action can be taken at the
request of the Administrative Agent. The Administrative Agent shall incur no
liability under or in respect of this Agreement with respect to anything which
it may do or refrain from doing in the reasonable exercise of its
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judgment or which may seem to it to be necessary or desirable in the
circumstances, except for its gross negligence or willful misconduct as
determined by a final, non-appealable judicial order of a court having
jurisdiction over the subject matter.
(b) The Administrative Agent shall not be liable to the Banks
or to any Bank or the Borrower or any of the Borrower's Subsidiaries in acting
or refraining from acting under this Agreement or any other Loan Document in
accordance with the instructions of the Majority Banks (or, where expressly
required, all the Banks), and any action taken or failure to act pursuant to
such instructions shall be binding on all Banks, except for its gross negligence
or willful misconduct as determined by a final, non-appealable judicial order of
a court having jurisdiction over the subject matter. The Administrative Agent
shall not be obligated to take any action which is contrary to law or which
would in its reasonable opinion subject it to liability.
Section 9.8 Notice of Default or Event of Default. In the event that
the Administrative Agent or any Bank shall acquire actual knowledge, or shall
have been notified, of any Default or Event of Default, the Administrative Agent
or such Bank shall promptly notify the Banks (provided failure to give such
notice shall not result in any liability on the part of such Bank or
Administrative Agent), and the Administrative Agent shall take such action and
assert such rights under this Agreement and the other Loan Documents as the
Majority Banks shall request in writing, and the Administrative Agent shall not
be subject to any liability by reason of its acting pursuant to any such
request. If the Majority Banks shall fail to request the Administrative Agent to
take action or to assert rights under this Agreement or any other Loan Documents
in respect of any Default or Event of Default within ten (10) days after their
receipt of the notice of any Default or Event of Default from the Administrative
Agent or any Bank, or shall request inconsistent action with respect to such
Default or Event of Default, the Administrative Agent may, but shall not be
required to, take such action and assert such rights (other than rights under
Article 8 hereof) as it deems in its discretion to be advisable for the
protection of the Banks, except that, if the Majority Banks have instructed the
Administrative Agent not to take such action or assert such right, in no event
shall the Administrative Agent act contrary to such instructions unless time is
of the essence, in which case, the Administrative Agent may act in accordance
with its reasonable discretion.
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Section 9.9 Responsibility Disclaimed. The Administrative Agent shall
not be under any liability or responsibility whatsoever as Administrative Agent:
(a) To the Borrower or any other Person as a
consequence of any failure or delay in performance by or any
breach by, any Bank or Banks of any of its or their obligations
under this Agreement;
(b) To any Bank or Banks, as a consequence of any failure or
delay in performance by, or any breach by, (i) the Borrower of any of its
obligations under this Agreement or the Notes or any other Loan Document, or
(ii) any Restricted Subsidiary of the Borrower or any other obligor under any
other Loan Document;
(c) To any Bank or Banks, for any statements, representations
or warranties in this Agreement, or any other document contemplated by this
Agreement or any information provided pursuant to this Agreement, any other Loan
Document, or any other document contemplated by this Agreement, or for the
validity, effectiveness, enforceability or sufficiency of this Agreement, the
Notes, any other Loan Document, or any other document contemplated by this
Agreement; or
(d) To any Person for any act or omission other than that
arising from gross negligence or willful misconduct of the Administrative Agent
as determined by a final, non-appealable judicial order of a court of competent
jurisdiction.
Section 9.10 Indemnification. The Banks agree to indemnify the
Administrative Agent (to the extent not reimbursed by the Borrower) pro rata
according to their respective Commitment Ratios, from and against any and all
liabilities, obligations, losses (other than the loss of principal and interest
hereunder in the event of a bankruptcy or out-of-court `work-out' of the Loans),
damages, penalties, actions, judgments, suits, costs, expenses (including fees
and expenses of experts, agents, consultants and counsel), or disbursements of
any kind or nature whatsoever which may be imposed on, incurred by or asserted
against the Administrative Agent in any way relating to or arising out of this
Agreement, any other Loan Document, or any other document contemplated by this
Agreement or any other Loan Document or any action taken or omitted by the
Administrative Agent under this Agreement, any other Loan Document, or any other
document contemplated by this Agreement, except that no Bank shall be liable to
the Administrative Agent for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses, or
disbursements resulting from the gross negligence or willful misconduct of the
Administrative Agent as determined by a final, non-appealable
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judicial order of a court having jurisdiction over the subject
matter.
Section 9.11 Credit Decision. Each Bank represents and warrants to each
other and to the Administrative Agent that:
(a) In making its decision to enter into this Agreement and to
make its portion of the Loans it has independently taken whatever steps it
considers necessary to evaluate the financial condition and affairs of the
Borrower and that it has made an independent credit judgment, and that it has
not relied upon the Administrative Agent or information provided by the
Administrative Agent (other than information provided to the Administrative
Agent by the Borrower and forwarded by the Administrative Agent to the Banks);
and
(b) So long as any portion of the Loans remains outstanding or
such Bank has an obligation to make its portion of Advances hereunder, it will
continue to make its own independent evaluation of the financial condition and
affairs of the Borrower.
Section 9.12 Successor Administrative Agent. Subject to the appointment
and acceptance of a successor Administrative Agent as provided below, the
Administrative Agent may resign at any time by giving written notice thereof to
the Banks and the Borrower and may be removed at any time for cause by the
Majority Banks. Upon any such resignation or removal, the Majority Banks shall
have the right to appoint a successor Administrative Agent which appointment
shall, prior to a Default, be subject to the consent of the Borrower, acting
reasonably. If (a) no successor Administrative Agent shall have been so
appointed by the Majority Banks or (b) if appointed, no successor Administrative
Agent shall have accepted such appointment within thirty (30) days after the
retiring Administrative Agent gave notice of resignation or the Majority Banks
removed the retiring Administrative Agent, then the retiring Administrative
Agent may, on behalf of the Banks, appoint a successor Administrative Agent
which shall be any Bank or a commercial bank organized under the laws of the
United States of America or any political subdivision thereof which has combined
capital and reserves in excess of $250,000,000 and which shall be reasonably
acceptable to the Borrower. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent such
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges, duties and obligations of the retiring
Administrative Agent and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder and under the other Loan Documents.
After any retiring Administrative Agent's resignation or removal hereunder as
Administrative Agent the provisions of
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this Article shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as the Administrative
Agent. In the event that the Administrative Agent or any of its respective
affiliates ceases to be a Bank hereunder, such Person shall resign its agency
hereunder.
Section 9.13 Delegation of Duties. The Administrative Agent may execute
any of its duties under the Loan Documents by or through agents or attorneys
selected by it using reasonable care, and shall be entitled to advice of counsel
concerning all matters pertaining to such duties.
ARTICLE 10
Change in Circumstances
Affecting LIBOR Advances
Section 10.1 LIBOR Basis Determination Inadequate or Unfair. If with
respect to any proposed LIBOR Advance for any Interest Period, the
Administrative Agent determines after consultation with the Banks that deposits
in dollars (in the applicable amount) are not being offered to each of the Banks
in the relevant market for such Interest Period, the Administrative Agent shall
forthwith give notice thereof to the Borrower and the Banks, whereupon until the
Administrative Agent notifies the Borrower that the circumstances giving rise to
such situation no longer exist, the obligations of any affected Bank to make its
portion of such LIBOR Advances shall be suspended.
Section 10.2 Illegality. If after the date hereof, the adoption of any
Applicable Law, or any change in any Applicable Law (whether adopted before or
after the Agreement Date), or any change in interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Bank
with any directive (whether or not having the force of law) of any such
authority, central bank or comparable agency, shall make it unlawful or
impossible for any Bank to make, maintain or fund its portion of LIBOR Advances,
such Bank shall so notify the Administrative Agent, and the Administrative Agent
shall forthwith give notice thereof to the other Banks and the Borrower. Before
giving any notice to the Administrative Agent pursuant to this Section 10.2,
such Bank shall designate a different lending office if such designation will
avoid the need for giving such notice and will not, in the sole reasonable
judgment of such Bank, be otherwise materially disadvantageous to such Bank.
Upon receipt of such notice, notwithstanding anything contained in Article 2
hereof, the Borrower shall repay in full the then outstanding principal amount
of such Bank's portion of
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each affected LIBOR Advance, together with accrued interest thereon, on either
(a) the last day of the then current Interest Period applicable to such affected
LIBOR Advances if such Bank may lawfully continue to maintain and fund its
portion of such LIBOR Advance to such day or (b) immediately if such Bank may
not lawfully continue to fund and maintain its portion of such affected LIBOR
Advances to such day. Concurrently with repaying such portion of each affected
LIBOR Advance, the Borrower may borrow a Base Rate Advance from such Bank,
whether or not it would have been entitled to effect such borrowing and such
Bank shall make such Advance, if so requested, in an amount such that the
outstanding principal amount of the affected Note held by such Bank shall equal
the outstanding principal amount of such Note or Notes immediately prior to such
repayment.
Section 10.3 Increased Costs.
(a) If after the date hereof, the adoption of any Applicable
Law, or any change in any Applicable Law (whether adopted before or after the
Agreement Date), or any interpretation or change in interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof or compliance
by any Bank with any directive (whether or not having the force of law) of any
such authority, central bank or comparable agency:
(1) shall subject any Bank to any tax, duty or other
charge with respect to its obligation to make its portion of LIBOR
Advances, or its portion of existing Advances, or shall change the
basis of taxation of payments to any Bank of the principal of or
interest on its portion of LIBOR Advances or in respect of any other
amounts due under this Agreement, in respect of its portion of LIBOR
Advances or its obligation to make its portion of LIBOR Advances
(except for changes in the rate or method of calculation of tax on the
revenues or net income of such Bank); or
(2) shall impose, modify or deem applicable any
reserve (including, without limitation, any imposed by the Board of
Governors of the Federal Reserve System, but excluding any included in
an applicable Eurodollar Reserve Percentage), special deposit, capital
adequacy, assessment or other requirement or condition against assets
of, deposits with or for the account of, or commitments or credit
extended by, any Bank or shall impose on any Bank or the London
interbank borrowing market any other condition affecting its obligation
to make its portion of such LIBOR Advances or its portion of existing
Advances;
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and the result of any of the foregoing is to increase the cost to such Bank of
making or maintaining any of its portion of LIBOR Advances, or to reduce the
amount of any sum received or receivable by such Bank under this Agreement or
under its Note with respect thereto, then, within ten (10) days after demand by
such Bank, the Borrower agrees to pay to such Bank such additional amount or
amounts as will compensate such Bank for such increased costs. Each Bank will
promptly notify the Borrower and the Administrative Agent of any event of which
it has knowledge, occurring after the date hereof, which will entitle such Bank
to compensation pursuant to this Section 10.3 and will designate a different
lending office if such designation will avoid the need for, or reduce the amount
of, such compensation and will not, in the sole reasonable judgment of such Bank
made in good faith, be otherwise disadvantageous to such Bank.
(b) Any Bank claiming compensation under this Section 10.3
shall provide the Borrower with a written certificate setting forth the
additional amount or amounts to be paid to it hereunder and calculations
therefor in reasonable detail. Such certificate shall be presumptively correct
absent manifest error. In determining such amount, such Bank may use any
reasonable averaging and attribution methods. If any Bank demands compensation
under this Section 10.3, the Borrower may at any time, upon at least five (5)
Business Days' prior notice to such Bank, prepay in full such Bank's portion of
the then outstanding LIBOR Advances, together with accrued interest thereon to
the date of prepayment, along with any reimbursement required under Section 2.10
hereof. Concurrently with prepaying such portion of LIBOR Advances the Borrower
may, whether or not then entitled to make such borrowing, borrow a Base Rate
Advance, or a LIBOR Advance not so affected, from such Bank, and such Bank
shall, if so requested, make such Advance in an amount such that the outstanding
principal amount of the affected Note or Notes held by such Bank shall equal the
outstanding principal amount of such Note or Notes immediately prior to such
prepayment.
Section 10.4 Effect On Other Advances. If notice has been given
pursuant to Section 10.1, 10.2 or 10.3 suspending the obligation of any Bank to
make its portion of any type of LIBOR Advance, or requiring such Bank's portion
of LIBOR Advances to be repaid or prepaid, then, unless and until such Bank
notifies the Borrower that the circumstances giving rise to such repayment no
longer apply, all amounts which would otherwise be made by such Bank as its
portion of LIBOR Advances shall, unless otherwise notified by the Borrower, be
made instead as Base Rate Advances.
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ARTICLE 11
Miscellaneous
Section 11.1 Notices.
(a) Except as otherwise expressly provided herein, all notices
and other communications under this Agreement and the other Loan Documents
(unless otherwise specifically stated therein) shall be in writing and shall be
deemed to have been given three (3) Business Days after deposit in the mail,
designated as certified mail, return receipt requested, postage-prepaid, or one
(1) Business Day after being entrusted to a reputable commercial overnight
delivery service for next day delivery, or when sent on a Business Day prior to
5:00 p.m. (New York time) by telecopy addressed to the party to which such
notice is directed at its address determined as provided in this Section 11.1.
All notices and other communications under this Agreement shall be given to the
parties hereto at the following addresses:
(i) If to the Borrower, to it at:
American Tower Systems, Inc.
6400 North Congress Avenue, Suite 1750
Boca Raton, Florida 33487
Attn: James S. Eisenstein,
Chief Executive Officer
and David U. Lee, Chief Financial Officer
with a copies to:
American Radio Systems Corporation
116 Huntington Avenue
Boston, Massachusetts 02111
Attn: Joseph B. Winn, Chief Financial Officer
and
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02110
Attn: Norman A. Bikales, Esq.
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(ii) If to the Administrative Agent, to
it at:
Toronto Dominion (Texas), Inc.
909 Fannin Street, Suite 1700
Houston, Texas 77010
Attention: Agency Department
with a copy to:
The Toronto-Dominion Bank
USA Division
31 West 52nd Street
New York, NY 10019-6101
Attn: Director, Communications Finance
and
with a copy to:
Powell, Goldstein, Frazer & Murphy
Sixteenth Floor
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attn: Douglas S. Gosden, Esq.
(iii) If to the Banks, to them at the addresses set
forth beside their names on the signature pages
hereof.
The failure to provide copies shall not affect the validity of the notice given
to the primary recipient.
(b) Any party hereto may change the address to which notices
shall be directed under this Section 11.1 by giving ten (10) days' written
notice of such change to the other parties.
Section 11.2 Expenses. The Borrower will promptly pay, or reimburse:
(a) all reasonable out-of-pocket expenses of the
Administrative Agent in connection with the preparation, negotiation, execution
and delivery of this Agreement and the other Loan Documents, and the
transactions contemplated hereunder and thereunder and the making of the initial
Advance hereunder (whether or not such Advance is made), including, but not
limited to, the reasonable fees and disbursements of Powell, Goldstein, Frazer &
Murphy, special counsel for the Administrative Agent; and
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(b) all reasonable out-of-pocket costs and expenses of the
Administrative Agent and the Banks of enforcement under this Agreement or the
other Loan Documents and all reasonable out-of-pocket costs and expenses of
collection if an Event of Default occurs in the payment of the Notes, which in
each case shall include reasonable fees and out-of-pocket expenses of counsel
for the Administrative Agent and the Banks.
Section 11.3 Waivers. The rights and remedies of the Administrative
Agent and the Banks under this Agreement and the other Loan Documents shall be
cumulative and not exclusive of any rights or remedies which they would
otherwise have. No failure or delay by the Administrative Agent, the Majority
Banks, or the Banks, or any of them, in exercising any right, shall operate as a
waiver of such right. The Administrative Agent and the Banks expressly reserve
the right to require strict compliance with the terms of this Agreement in
connection with any future funding of a Request for Advance. In the event the
Banks decide to fund a Request for Advance at a time when the Borrower is not in
strict compliance with the terms of this Agreement, such decision by the Banks
shall not be deemed to constitute an undertaking by the Banks to fund any
further Request for Advance or preclude the Banks or the Administrative Agent
from exercising any rights available under the Loan Documents or at law or
equity. Any waiver or indulgence granted by the Administrative Agent, the Banks,
or the Majority Banks, shall not constitute a modification of this Agreement or
any other Loan Document, except to the extent expressly provided in such waiver
or indulgence, or constitute a course of dealing at variance with the terms of
this Agreement or any other Loan Document such as to require further notice of
their intent to require strict adherence to the terms of this Agreement or any
other Loan Document in the future.
Section 11.4 Set-Off. In addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
upon the occurrence of an Event of Default and during the continuation thereof,
the Administrative Agent and each of the Banks are hereby authorized by the
Borrower at any time or from time to time, without notice to the Borrower or to
any other Person, any such notice being hereby expressly waived, to set off and
to appropriate and to apply any and all deposits (general or special, time or
demand, including, but not limited to, Indebtedness evidenced by certificates of
deposit, in each case whether matured or unmatured) and any other Indebtedness
at any time held or owing by any Bank or Administrative Agent, to or for the
credit or the account of the Borrower or any of its Restricted Subsidiaries,
against and on account of the obligations and liabilities of the Borrower to the
Banks and the Administrative Agent, including, but not limited to, all
Obligations and any other claims of any nature or description arising out of or
connected with this Agreement, the
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Notes or any other Loan Document, irrespective of whether (a) any Bank or
Administrative Agent shall have made any demand hereunder or (b) any Bank or
Administrative Agent shall have declared the principal of and interest on the
Loans and other amounts due hereunder to be due and payable as permitted by
Section 8.2 and although such obligations and liabilities or any of them shall
be contingent or unmatured. Upon direction by the Administrative Agent with the
consent of all of the Banks each Bank holding deposits of the Borrower or any of
its Restricted Subsidiaries shall exercise its set-off rights as so directed;
and, within one (1) Business Day following any such setoff, the Administrative
Agent shall give notice thereof to the Borrower. Notwithstanding anything to the
contrary contained in this Section 11.4, no Bank shall exercise any right of
offset without the prior consent of the Majority Banks so long as the
Obligations shall be secured by any real property or real property interest
including leaseholds located in the State of California, it being understood and
agreed that the provisions of this sentence are for the exclusive benefit of the
Banks, may be amended, modified or waived by the Majority Banks without notice
to or consent of the Borrower or any Subsidiary of the Borrower and shall not
constitute a waiver of any rights against the Borrower or any Subsidiary or
against any Collateral.
Section 11.5 Assignment.
(a) The Borrower may not assign or transfer any of its rights
or obligations hereunder, under the Notes or under any other Loan Document
without the prior written consent of each Bank.
(b) Each Bank may sell (i) assignments of any amount of its
interest hereunder to any Bank, or (ii) assignments or participations of one
hundred percent (100%) (or, with the consent of the Borrower, a smaller
percentage) of its interest hereunder to (A) one or more wholly-owned Affiliates
of such Bank (provided that, if such Affiliate is not a financial institution,
such Bank shall be obligated to repurchase such assignment if such Affiliate is
unable to honor its obligations hereunder), or (B) any Federal Reserve Bank as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal Reserve
Bank (no assignment shall relieve such Bank from its obligations hereunder).
(c) Each of the Banks may at any time enter into assignment
agreements or participations with one or more other banks or other Persons
pursuant to which each Bank may assign or participate its interest under this
Agreement and the other Loan Documents, including, its interest in any
particular Advance or portion thereof, provided, that (1) all assignments (other
than
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assignments described in clause (b) hereof) shall be in minimum principal
amounts of the lesser of (X) $5,000,000, and (Y) the amount of such Bank's
Commitment (in a single assignment only), and (2) all assignments (other than
assignments described in clause (b) hereof) and participations hereunder shall
be subject to the following additional terms and conditions:
(i) No assignment (except assignments permitted in
Section 11.5(b) hereof) shall be sold without the prior consent of the
Administrative Agent and prior to the occurrence and continuation of an
Event of Default, the consent of the Borrower, which consents shall not
be unreasonably withheld;
(ii) Any Person purchasing a participation or an
assignment of any portion of the Loans from any Bank shall be required
to represent and warrant that its purchase shall not constitute a
"prohibited transaction" (as defined in Section 4.1(m) hereof);
(iii) The Borrower, the Banks, and the Administrative
Agent agree that assignments permitted hereunder (including the
assignment of any Advance or portion thereof) may be made with all
voting rights, and shall be made pursuant to an Assignment and
Assumption Agreement substantially in the form of Exhibit N attached
hereto. An administrative fee of $3,500 shall be payable to the
Administrative Agent by the assigning Bank at the time of any
assignment under this Section 11.5(b);
(iv) No participation agreement shall confer any rights
under this Agreement or any other Loan Document to any purchaser
thereof, or relieve any issuing Bank from any of its obligations under
this Agreement, and all actions hereunder shall be conducted as if no
such participation had been granted; provided, however, that any
participation agreement may confer on the participant the right to
approve or disapprove decreases in the interest rate, increases in the
principal amount of the Loans participated in by such participant,
decreases in fees, extensions of the Maturity Date or other principal
payment date for the Loans or of the scheduled reduction of the
Commitment and releases of Collateral;
(v) Each Bank agrees to provide the
Administrative Agent and the Borrower with prompt written
notice of any issuance of participations in or assignments
of its interests hereunder;
(vi) No assignment, participation or other
transfer of any rights hereunder or under the Notes shall be
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effected that would result in any interest requiring registration under
the Securities Act of 1933, as amended, or qualification under any
state securities law;
(vii) No such assignment may be made to any bank or other
financial institution (x) with respect to which a receiver or
conservator (including, without limitation, the Federal Deposit
Insurance Corporation, the Resolution Trust Company or the Office of
Thrift Supervision) has been appointed or (y) that is not "adequately
capitalized" (as such term is defined in Section 131(b)(1)(B) of the
Federal Deposit Insurance Corporation Improvement Act as in effect on
the Agreement Date); and
(viii) If applicable, each Bank shall, and shall cause
each of its assignees to, provide to the Administrative Agent on or
prior to the effective date of any assignment an appropriate Internal
Revenue Service form as required by Applicable Law supporting such
Bank's or assignee's position that no withholding by the Borrower or
the Administrative Agent for U.S. income tax payable by such Bank or
assignee in respect of amounts received by it hereunder is required.
For purposes of this Agreement, an appropriate Internal Revenue Service
form shall mean Form 1001 (Ownership Exemption or Reduced Rate
Certificate of the U.S. Department of Treasury), or Form 4224
(Exemption from Withholding of Tax on Income Effectively Connected with
the Conduct of a Trade or Business in the United States), or any
successor or related forms adopted by the relevant U.S.
taxing authorities.
(d) Except as specifically set forth in Section 11.5(b) or (c)
hereof, nothing in this Agreement or the Notes, expressed or implied, is
intended to or shall confer on any Person other than the respective parties
hereto and thereto and their successors and assignees permitted hereunder and
thereunder any benefit or any legal or equitable right, remedy or other claim
under this Agreement or the Notes.
(e) In the case of any participation, all amounts payable by
the Borrower under the Loan Documents shall be calculated and made in the manner
and to the parties hereto as if no such participation had been sold.
(f) The provisions of this Section 11.5 shall not
apply to any purchase of participations among the Banks pursuant
to Section 2.11 hereof.
Section 11.6 Accounting Principles. All references in this Agreement to
GAAP shall be to such principles as in effect from time to time. All accounting
terms used herein without
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definition shall be used as defined under GAAP. All references to the financial
statements of the Borrower and to its Operating Cash Flow, Total Debt, Fixed
Charges, Pro Forma Debt Service, and other such terms shall be deemed to refer
to such items of the Borrower and its Restricted Subsidiaries, on a fully
consolidated basis. The Borrower shall deliver to the Banks at the same time as
the delivery of any quarterly or annual financial statements required pursuant
to Section 6.1 or 6.2 hereof, as applicable, (a) a description in reasonable
detail of any material variation between the application of GAAP employed in the
preparation of such statements and the application of GAAP employed in the
preparation of the next preceding quarterly or annual financial statements, as
applicable, and (b) reasonable estimates of the differences between such
statements arising as a consequence thereof. If, within thirty (30) days after
the delivery of the quarterly or annual financial statements referred to in the
immediately preceding sentence, the Majority Banks shall object in writing to
the Borrower's determining compliance hereunder on such basis, (1) calculations
for the purposes of determining compliance hereunder shall be made on a basis
consistent with those used in the preparation of the latest financial statements
as to which such objection shall not have been made, or (2) if requested by the
Borrower, the Majority Banks will negotiate in good faith to amend the covenants
herein to give effect to the changes in GAAP in a manner consistent with this
Agreement (and so long as the Borrower complies in good faith with the
provisions of this Section 11.6, no Default or Event of Default shall occur
hereunder solely as a result of such changes in GAAP).
Section 11.7 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
Section 11.8 Governing Law. This Agreement and the Notes shall be
construed in accordance with and governed by the internal laws of the State of
New York applicable to agreements made and to be performed in New York. If any
action or proceeding shall be brought by the Administrative Agent or any Bank
hereunder or under any other Loan Document in order to enforce any right or
remedy under this Agreement or under any Note or any other Loan Document, the
Borrower hereby consents and will, and the Borrower will cause each Restricted
Subsidiary to, submit to the jurisdiction of any state or federal court of
competent jurisdiction sitting within the area comprising the Southern District
of New York on the date of this Agreement. The Borrower, for itself and on
behalf of its Restricted Subsidiaries, hereby agrees that, to the extent
permitted by Applicable Law, service of the summons and complaint and all other
process which may be served in any such suit, action or
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proceeding may be effected by mailing by registered mail a copy of such process
to the offices of the Borrower at the address given in Section 11.1 hereof and
that personal service of process shall not be required. Nothing herein shall be
construed to prohibit service of process by any other method permitted by law,
or the bringing of any suit, action or proceeding in any other jurisdiction. The
Borrower agrees that final judgment in such suit, action or proceeding shall be
conclusive and may be enforced in any other jurisdiction by suit on the judgment
or in any other manner provided by Applicable Law.
Section 11.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof in that jurisdiction or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 11.10 Interest.
(a) In no event shall the amount of interest due or payable
hereunder or under the Notes exceed the maximum rate of interest allowed by
Applicable Law, and in the event any such payment is inadvertently made by the
Borrower or inadvertently received by the Administrative Agent or any Bank, then
such excess sum shall be credited as a payment of principal, unless the Borrower
shall notify the Administrative Agent or such Bank, in writing, that it elects
to have such excess sum returned forthwith. It is the express intent hereof that
the Borrower not pay and the Administrative Agent and the Banks not receive,
directly or indirectly in any manner whatsoever, interest in excess of that
which may legally be paid by the Borrower under Applicable Law.
(b) Notwithstanding the use by the Banks of the Base Rate and
the LIBOR as reference rates for the determination of interest on the Loans, the
Banks shall be under no obligation to obtain funds from any particular source in
order to charge interest to the Borrower at interest rates related to such
reference rates.
Section 11.11 Table of Contents and Headings. The Table of Contents and
the headings of the various subdivisions used in this Agreement are for
convenience only and shall not in any way modify or amend any of the terms or
provisions hereof, nor be used in connection with the interpretation of any
provision hereof.
Section 11.12 Amendment and Waiver. Neither this Agreement nor any Loan
Document nor any term hereof or thereof may be
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<PAGE>
amended orally, nor may any provision hereof or thereof be waived orally but
only by an instrument in writing signed by or at the direction of the Majority
Banks and, in the case of an amendment, by the Borrower, except that in the
event of (a) any increase in the amount of any Bank's portion of the Commitment,
(b) any delay or extension in the terms of repayment of the Loans provided in
Section 2.5 or 2.7 hereof, (c) any reduction in principal, interest or fees due
hereunder or postponement of the payment thereof without a corresponding payment
of such principal, interest or fee amount by the Borrower, (d) any release of
any portion of the Collateral for the Loans, except under Section 7.4 hereof,
(e) any waiver of any Default due to the failure by the Borrower to pay any sum
due to any of the Banks hereunder, (f) any release of any Guaranty of all or any
portion of the Obligations, except in connection with a merger, sale or other
disposition otherwise permitted hereunder (in which case, such release shall
require no further approval by the Banks), (g) any amendment to the pro rata
treatment of the Banks set forth in Section 2.11 hereof, or (h) any amendment of
this Section 11.12, of the definition of Majority Banks, or of any Section
herein to the extent that such Section requires action by all Banks, any
amendment or waiver or consent may be made only by an instrument in writing
signed by each of the Banks and, in the case of an amendment, by the Borrower.
Any amendment to any provision hereunder governing the rights, obligations, or
liabilities of the Administrative Agent in its capacity as such, may be made
only by an instrument in writing signed by such affected Person and by each of
the Banks.
Section 11.13 Entire Agreement. Except as otherwise expressly provided
herein, this Agreement and the other documents described or contemplated herein
will embody the entire agreement and understanding among the parties hereto and
thereto and supersede all prior agreements and understandings relating to the
subject matter hereof and thereof.
Section 11.14 Other Relationships. No relationship created hereunder or
under any other Loan Document shall in any way affect the ability of the
Administrative Agent and each Bank to enter into or maintain business
relationships with the Borrower or any of its Affiliates beyond the
relationships specifically contemplated by this Agreement and the other Loan
Documents.
Section 11.15 Directly or Indirectly. If any provision in this
Agreement refers to any action taken or to be taken by any Person, or which such
Person is prohibited from taking, such provision shall be applicable whether
such action is taken directly or indirectly by such Person, whether or not
expressly specified in such provision.
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<PAGE>
Section 11.16 Reliance on and Survival of Various Provisions. All
covenants, agreements, statements, representations and warranties made herein or
in any certificate delivered pursuant hereto (i) shall be deemed to have been
relied upon by the Administrative Agent and each of the Banks notwithstanding
any investigation heretofore or hereafter made by them, and (ii) shall survive
the execution and delivery of the Notes and shall continue in full force and
effect so long as any Note is outstanding and unpaid. Any right to
indemnification hereunder, including, without limitation, rights pursuant to
Sections 2.10, 2.12, 5.12, 10.3 and 11.2 hereof, shall survive the termination
of this Agreement and the payment and performance of all Obligations.
Section 11.17 Senior Debt. The Obligations are secured by the Security
Documents and are intended by the parties hereto to be in parity with the
Interest Hedge Agreements and senior in right of payment to all other
Indebtedness of the Borrower.
Section 11.18 Obligations Several. The obligations of the
Administrative Agent and each of the Banks hereunder are several, not joint.
Section 11.19 Confidentiality. The Banks shall hold all non-public,
proprietary or confidential information (which has been identified as such by
the Borrower) obtained pursuant to the requirements of this Agreement in
accordance with their customary procedures for handling confidential information
of this nature and in accordance with safe and sound banking practices;
provided, however, the Banks may make disclosure of any such information to
their examiners, Affiliates, outside auditors, counsel, consultants, appraisers
and other professional advisors in connection with this Agreement or as
reasonably required by any proposed syndicate member or any proposed transferee
or participant in connection with the contemplated transfer of any Note or
participation therein or as required or requested by any governmental authority
or representative thereof or in connection with the enforcement hereof or of any
Loan Document or related document or pursuant to legal process or with respect
to any litigation between or among the Borrower and any of the Banks, so long as
the person (other than any examiners) receiving such information is advised of
the provisions of this Section 11.19 and agrees to be bound thereby. In no event
shall any Bank be obligated or required to return any materials furnished to it
by the Borrower. The foregoing provisions shall not apply to a Bank with respect
to information that (i) is or becomes generally available to the public (other
than through such Bank), (ii) is already in the possession of such Bank on a
nonconfidential basis, or (iii) comes into the possession of such Bank in a
manner not known to such Bank to involve a breach of a duty of confidentiality
owing to the Borrower.
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<PAGE>
Section 11.20 Termination of Agreement. Notwithstanding anything
contained in this Agreement or any Loan Document to the contrary, in the event
that the Borrower has failed to satisfy all of the conditions set forth in
Section 3.1 hereof on or prior to December 20, 1996, then at 5:00 p.m. (New York
time) all obligations of the Banks hereunder, pursuant to the Commitment or
otherwise, shall immediately (and without notice of any kind) terminate and be
of no force and effect; provided, however, that notwithstanding any such
termination and irrespective of any such termination, the Borrower hereby agrees
to pay to the Administrative Agent, on or prior to December 20, 1996, the fees
required to be paid pursuant to Section 2.4(a) hereof and hereby acknowledges
that such Section 2.4(a) shall survive any such termination of this Agreement.
Promptly following the termination of the Banks' obligations pursuant to the
preceding sentence, the Banks shall return the Notes to the Borrower and take
reasonable steps (at the expense of the Borrower) as may be requested by the
Borrower to cause any Liens granted under the Loan Documents to be released.
ARTICLE 12
Waiver of Jury Trial
Section 12.1 Waiver of Jury Trial. THE BORROWER, FOR ITSELF AND ON
BEHALF OF ITS RESTRICTED SUBSIDIARIES, AND THE ADMINISTRATIVE AGENT AND THE
BANKS, HEREBY AGREE, TO THE EXTENT PERMITTED BY LAW, TO WAIVE AND HEREBY WAIVE
THE RIGHT TO A TRIAL BY JURY IN ANY COURT AND IN ANY ACTION OR PROCEEDING OF ANY
TYPE IN WHICH THE BORROWER, ANY OF THE BORROWER'S RESTRICTED SUBSIDIARIES, ANY
OF THE BANKS, THE ADMINISTRATIVE AGENT OR ANY OF THEIR RESPECTIVE SUCCESSORS OR
ASSIGNS IS A PARTY, AS TO ALL MATTERS AND THINGS ARISING DIRECTLY OR INDIRECTLY
OUT OF THIS AGREEMENT, ANY OF THE NOTES OR THE OTHER LOAN DOCUMENTS AND THE
RELATIONS AMONG THE PARTIES LISTED IN THIS SECTION 12.1. EXCEPT AS PROHIBITED BY
LAW, EACH PARTY TO THIS AGREEMENT WAIVES ANY RIGHTS IT MAY HAVE TO CLAIM OR
RECOVER IN ANY LITIGATION REFERRED TO IN THIS SECTION, ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES. EACH PARTY TO THIS AGREEMENT (i) CERTIFIES THAT NEITHER ANY
REPRESENTATIVE, AGENT OR ATTORNEY OF THE ADMINISTRATIVE AGENT OR ANY BANK HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE ADMINISTRATIVE AGENT OR ANY BANK
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND
(ii) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND EACH
OTHER LOAN DOCUMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION. THE PROVISIONS OF THIS SECTION HAVE BEEN FULLY
DISCLOSED BY AND TO THE PARTIES AND THE PROVISIONS SHALL BE SUBJECT TO NO
EXCEPTIONS. NO PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER
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<PAGE>
PARTY THAT THE PROVISIONS OF THIS SECTION WILL NOT BE FULLY ENFORCED IN ALL
INSTANCES.
[Remainder of Page Intentionally Left Blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused it to be executed by their duly authorized officers, all as of the day
and year first above written.
BORROWER: AMERICAN TOWER SYSTEMS, INC., a
Delaware corporation
By:
Its:
[CORPORATE SEAL] Attest:
Its:
ADMINISTRATIVE AGENT: TORONTO DOMINION (TEXAS), INC.
By:
Its:
BANKS:
ADDRESS: TORONTO DOMINION (TEXAS), INC.
909 Fannin Street
Suite 1700 By:
Houston, Texas 77010
Its:
ADDRESS: BANK OF MONTREAL
430 Park Avenue
New York, New York 10022 By:
Its:
AMERICAN TOWER SYSTEMS, INC.
LOAN AGREEMENT
SIGNATURE PAGE 1
<PAGE>
ADDRESS: BANQUE PARIBAS
787 Seventh Avenue
32nd Floor By:
New York, New York 10019
Its:
By:
Its:
ADDRESS: CREDIT SUISSE
12 East 49th Street
44th Floor By:
New York, New York 10017
Its:
By:
Its:
ADDRESS: FLEET NATIONAL BANK
3rd Floor
Mail Code: MAOF D03D By:
One Federal Street
Boston, Massachusetts 02110 Its:
ADDRESS: SIGNET BANK
7799 Leesburg Pike
Suite #500 By:
Falls Church, Virginia 22043
Its:
ADDRESS: UNION BANK OF CALIFORNIA, N.A.
15th Floor
445 South Figueroa Street By:
Los Angeles, California 90071
Its:
AMERICAN TOWER SYSTEMS, INC.
LOAN AGREEMENT
SIGNATURE PAGE 2
<PAGE>
EXHIBIT A
FORM OF
BORROWER'S PLEDGE AGREEMENT
THIS BORROWER'S PLEDGE AGREEMENT (this "Agreement"), entered into as of
this 22nd day of November 1996, by and between American Tower Systems, Inc., a
Delaware corporation (the "Borrower"), and Toronto Dominion (Texas), Inc. (the
"Administrative Agent") as administrative agent for itself and on behalf of the
Banks.
W I T N E S S E T H:
WHEREAS, the Borrower, the Banks and the Administrative Agent are all
parties to that certain Loan Agreement dated as of even date herewith (the "Loan
Agreement"); and
WHEREAS, as a condition precedent to the effectiveness of the Loan
Agreement, the Borrower is required to execute and deliver this Agreement; and
WHEREAS, to secure the payment and performance of, among other things,
all obligations of the Borrower under the Loan Agreement and the promissory
notes issued by the Borrower to the Banks thereunder (the "Notes"), the Borrower
and the Administrative Agent (on behalf of itself and the Banks), have agreed
that the shares of capital stock (the "Stock") owned by the Borrower in each of
the Subsidiaries of the Borrower listed on Schedule 1 attached hereto, which are
the only directly owned corporate Subsidiaries of the Borrower, shall be pledged
by the Borrower to the Administrative Agent (on behalf of itself and the Banks)
to secure the Obligations;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree that capitalized terms used herein shall
have the meanings ascribed to them in the Loan Agreement to the extent not
otherwise defined or limited herein, and further agree as follows:
1. Warranty. The Borrower hereby represents and warrants to the
Administrative Agent and the Banks that, except for the security interest
created hereby, the Borrower owns the Stock, which constitutes the percentage of
the issued and outstanding stock of the Subsidiaries as set forth on Schedule 1
attached hereto, free and clear of all Liens, that the Stock is duly issued,
fully paid and non-assessable, and that the Borrower has the unencumbered right
to pledge the Stock. In addition, the Borrower represents and covenants as
follows: (1) the Stock represents all
<PAGE>
of Borrower's shares of capital stock in any Subsidiary of the Borrower; (2)
upon possession and retention of the Stock by the Administrative Agent, the
Administrative Agent shall have a valid and perfected first priority security
interest in the Stock, securing the payment of the Obligations; and (3) except
as noted on Schedule 2 attached hereto, the Stock represents all of the
outstanding shares of stock issued by any direct Subsidiary of the Borrower.
2. Security Interest. Subject to the provisions of Section 13 hereof,
the Borrower hereby unconditionally grants and assigns to the Administrative
Agent, for itself and on behalf of the Banks, and their respective successors
and assigns, a continuing security interest in and security title to the Stock
and any other shares of capital stock of any Subsidiary of the Borrower obtained
in the future, and in each case, all certificates representing such shares, all
rights, options, warrant, stock or other securities or other property which may
hereafter be received, receivable or distributed in respect of the Stock,
together with all proceeds of the foregoing, including, without limitation, all
dividends, cash, notes, securities or other property from time to time acquired,
receivable or otherwise distributed in respect of, or in exchange for, the
foregoing, all of which shall constitute "Stock" hereunder. The Borrower has
delivered to and deposited with the Administrative Agent all of its right, title
and interest in and to the Stock, together with certificates representing the
Stock, and undated stock powers endorsed in blank, as security for the
Obligations; it being the intention of the parties hereto that beneficial
ownership of the Stock, including, without limitation, all voting, consensual
and dividend rights, shall remain in the Borrower until the occurrence and
during continuance of an Event of Default under the terms of the Loan Agreement
and until the Administrative Agent shall notify the Borrower of the
Administrative Agent's exercise of voting and dividend rights to the Stock
pursuant to Section 9 of this Agreement.
3. Additional Shares. In the event that, during the term of
this Agreement:
(a) any stock dividend, stock split, reclassification,
readjustment, or other change is declared or made in the capital
structure of any directly owned Subsidiary, or any new stock is issued
by such Subsidiary, or any new directly owned Subsidiary is formed or
acquired, all new, substituted, and additional shares shall be issued
to the Borrower and shall be promptly delivered to the Administrative
Agent, together with undated stock powers endorsed in blank by the
Borrower, and shall thereupon constitute Stock to be held by the
Administrative Agent under the terms of this Agreement; and
(b) any subscriptions, warrants or any other rights or options
shall be issued in connection with the Stock, all new stock or other
securities acquired through such subscriptions,
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<PAGE>
warrants, rights or options by the Borrower shall be promptly delivered
to the Administrative Agent, together with undated stock powers
endorsed in blank, and shall thereupon constitute Stock to be held by
the Administrative Agent under the terms of this Agreement.
4. Default. In the event of the occurrence of an Event of Default and
so long as any such Event of Default is continuing, subject, however, to Section
13 hereof, the Administrative Agent may sell or otherwise dispose of the Stock
at a public or private sale or make other commercially reasonable disposition of
the Stock or any portion thereof after fifteen (15) days' notice to the
Borrower, and the Administrative Agent and the Banks or any of them, may
purchase the Stock or any portion thereof at any public sale. The proceeds of
the public or private sale or other disposition shall be applied first to the
costs of the Administrative Agent incurred in connection with the sale,
expressly including, without limitation, any costs under Section 7 hereof, and
then to the Obligations as provided in the Loan Agreement. In the event the
proceeds of the sale or other disposition of the Stock are insufficient to
satisfy the Obligations, the Borrower shall remain liable for any such
deficiency. The Borrower waives, to the extent permitted by Applicable Law, the
rights of equity of redemption, appraisal, notice of acceptance, presentment,
demand and marshalling, to the extent applicable.
5. Additional Rights of Secured Party. In addition to its rights and
privileges under this Agreement, the Administrative Agent, on behalf of itself
and the Banks, shall have all the rights, powers and privileges of a secured
party under the Uniform Commercial Code as in effect in any applicable
jurisdiction and other Applicable Law.
6. Return of Stock to the Borrower. Upon payment in full of all
principal and interest on the Notes, full performance by the Borrower of all
covenants, undertakings and obligations under the Loan Agreement, the Notes, and
the other Loan Documents, and satisfaction in full of any other Obligations,
other than the Obligations which survive the termination of the Loan Agreement
as provided in Section 11.16 of the Loan Agreement, and after such time as the
Banks shall have no obligation to make any further Advances to the Borrower,
this Agreement shall terminate and the Administrative Agent shall return the
remaining Stock and all rights received by the Administrative Agent as a result
of its possessory interest in the Stock to the Borrower.
7. Disposition of Stock by Administrative Agent. The Stock is not
registered or qualified under the various Federal or state securities laws of
the United States and disposition thereof after default may be restricted to one
or more private (instead of public) sales. The Borrower understands that upon
such disposition, the Administrative Agent may approach only a
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<PAGE>
restricted number of potential purchasers and further understands that a sale
under such circumstances may yield a lower price for the Stock than if the Stock
were registered and qualified pursuant to Federal and state securities laws and
sold on the open market.
The Borrower, therefore, agrees that:
(a) if the Administrative Agent shall, pursuant to the terms
of this Agreement, sell or cause the Stock or any portion thereof to be
sold at a private sale, the Administrative Agent shall have the right
to rely upon the advice and opinion of any national brokerage or
investment firm having recognized expertise and experience in
connection with shares of communications tower companies (but shall not
be obligated to seek such advice and the failure to do so shall not be
considered in determining the commercial reasonableness of such action)
as to the best manner in which to expose the Stock for sale and as to
the best price reasonably obtainable at the private sale thereof; and
(b) that such reliance shall be conclusive evidence that the
Administrative Agent has handled such disposition in a commercially
reasonable manner absent manifest error.
8. Borrower's Obligations Absolute. The obligations of the Borrower
under this Agreement shall be direct and immediate and not conditional or
contingent upon the pursuit of any remedies against the Borrower or any other
Person, nor against other security or liens available to the Administrative
Agent or any Bank. The Borrower hereby waives any right to require that an
action be brought against any other Person or to require that resort be had to
any other security or to any balance of any deposit account or credit on the
books of the Administrative Agent or any of the Banks in favor of any other
Person prior to the exercise of remedies hereunder, or to require action
hereunder prior to resort by the Administrative Agent to any other security or
collateral for the Notes and the other Obligations. No amendment, modification,
waiver, transfer or renewal, extension, assignment or termination of this
Agreement or of the Loan Agreement or of any other Loan Document, or of any
instrument or document executed and delivered by the Borrower or any other
obligor with respect to the Obligations to the Banks and the Administrative
Agent, or any of them, nor additional advances made by the Banks and the
Administrative Agent, or any of them, to the Borrower, nor the taking of further
security, nor the retaking or re-delivery or release of the Collateral or any
other collateral or guaranty to the Borrower by the Banks and the Administrative
Agent, or any of them, nor any lack of validity or enforceability of any Loan
Document or any term thereof, nor any other act of the Banks and the
Administrative Agent, or any of them, shall release the Borrower from any
Obligation, except a release or discharge executed in writing by the
Administrative Agent in accordance with the Loan Agreement with respect to such
Obligation or upon full payment and satisfaction of all Obligations. Neither the
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<PAGE>
Administrative Agent nor any Bank shall, by any act, delay, omission or
otherwise, be deemed to have waived any of its or their rights or remedies
hereunder, unless such waiver is in writing and signed by the Administrative
Agent in accordance with the Loan Agreement and then only to the extent therein
set forth. A waiver by the Banks and the Administrative Agent, or any of them,
of any right or remedy on any occasion shall not be construed as a bar to the
exercise of any such right or remedy which any such Person would otherwise have
had on any other occasion.
9. Voting Rights.
(a) For so long as the Notes or any other Obligations remain
unpaid, after and during the continuation of an Event of Default, but
subject to the provisions of Section 13 hereof, (i) the Administrative
Agent may, upon fifteen (15) days' prior written notice to the Borrower
of its intention to do so, exercise all voting rights, and all other
ownership or consensual rights of the Stock, but under no circumstances
is the Administrative Agent obligated by the terms of this Agreement to
exercise such rights, and (ii) the Borrower hereby appoints the
Administrative Agent, which appointment shall be effective on the
fifteenth (15th) day following the giving of notice by the
Administrative Agent as provided in the foregoing Section 9(a)(i), the
Borrower's true and lawful attorney-in-fact and IRREVOCABLE PROXY to
vote the Stock in any manner the Administrative Agent deems advisable
for or against all matters submitted or which may be submitted to a
vote of shareholders. The power-of-attorney granted hereby is coupled
with an interest and shall be irrevocable.
(b) For so long as the Borrower shall have the right to vote
the Stock, the Borrower covenants and agrees that it will not, without
the prior written consent of the Administrative Agent, vote or take any
consensual action with respect to the Stock which would constitute an
Event of Default.
10. Notices. All notices and other communications required
or permitted hereunder shall be in writing, and shall be given in
the manner and at the addresses set forth in Section 11.1 of the
Loan Agreement.
11. Binding Agreement. The provisions of this Agreement shall be
construed and interpreted, and all rights and obligations of the parties hereto
determined, in accordance with the internal laws of the State of New York
applicable to contracts made and to be performed in the State of New York. This
Agreement, together with all documents referred to herein, constitutes the
entire agreement between the parties with respect to the matters addressed
herein and may not be modified except by a writing executed by the
Administrative Agent and the Borrower and delivered by the Administrative Agent
to the Borrower.
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<PAGE>
12. Severability. If any paragraph or part thereof shall for any reason
be held or adjudged to be invalid, illegal or unenforceable by any court of
competent jurisdiction, such paragraph or part thereof so adjudicated invalid,
illegal or unenforceable shall be deemed separate, distinct and independent, and
the remainder of this Agreement shall remain in full force and effect and shall
not be affected by such holding or adjudication.
13. FCC Compliance. Notwithstanding anything herein which may be
construed to the contrary, no action shall be taken by the Administrative Agent
which may require the consent or approval of the FCC, and the proxy granted in
Section 9(a) shall not become effective, unless and until all requirements of
the Communications Act requiring the consent to or approval of such action by
the FCC have been satisfied. The Borrower covenants that, following and during
the continuation of an Event of Default, upon request of the Administrative
Agent, it will cause to be filed such applications and take such other action as
may be reasonably requested by the Administrative Agent to obtain consent or
approval of the FCC to any action contemplated by this Agreement and to give
effect to the security interest of the Administrative Agent, including, without
limitation, the execution of an application for consent by the FCC to an
assignment or transfer involving a change in ownership or control pursuant to
the provisions of the Communications Act.
14. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, but
all such separate counterparts shall together constitute but one
and the same instrument.
15. Administrative Agent. Each reference herein to any right granted
to, benefit conferred upon or power exercisable by the "Administrative Agent"
shall be a reference to the Administrative Agent for the benefit of all the
Banks, and each action taken or right exercised hereunder shall be deemed to
have been so taken or exercised by the Administrative Agent for the benefit of
and on behalf of all the Banks.
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<PAGE>
IN WITNESS WHEREOF, the undersigned parties hereto have executed this
Agreement by and through their duly authorized officers, as of the day and year
first above written.
BORROWER: AMERICAN TOWER SYSTEMS, INC.,
a Delaware corporation
By:
[CORPORATE SEAL] Title:
Attest:
Title:
Address:
American Tower Systems, Inc.
6400 North Congress Avenue
Suite 1750
Boca Raton, Florida 33482
Attention: David U. Lee
Telecopy: 610/341-1835
ADMINISTRATIVE AGENT: TORONTO DOMINION (TEXAS), INC.,
as Administrative Agent
By:
Title:
SCHEDULES
Schedule 1 - Shares Pledged Pursuant to Pledge Agreement
Schedule 2 - Outstanding Shares of Stock
BORROWER'S PLEDGE AGREEMENT
SIGNATURE PAGE 1
<PAGE>
EXHIBIT B
FORM OF
BORROWER SECURITY AGREEMENT
THIS BORROWER SECURITY AGREEMENT (this "Agreement") dated as of the
22nd day of November 1996, by and between American Tower Systems, Inc., a
Delaware corporation (the "Borrower"), and Toronto Dominion (Texas), Inc., as
administrative agent (the "Administrative Agent") for itself and the Banks.
W I T N E S S E T H:
WHEREAS, the Borrower, the Banks and the Administrative Agent are all
parties to that certain Loan Agreement dated as of even date herewith (the "Loan
Agreement"); and
WHEREAS, as a condition precedent to the effectiveness of the Loan
Agreement, the Borrower is required to execute and deliver this Agreement;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree that capitalized terms used herein shall
have the meanings ascribed to them in the Loan Agreement to the extent not
otherwise defined or limited herein, and further agree as follows:
1. Grant of Security Interest. Subject to the provisions of
Sections 23 and 25 hereof, and to the extent permitted by Applicable Law in the
case of the Licenses, the Borrower hereby unconditionally grants and assigns to
the Administrative Agent (for itself and the Banks) a continuing security
interest in and security title to (hereinafter referred to as the "Security
Interest") all of its property and assets and all additions thereto and
replacements thereof, and all other property whether now owned or hereafter
created, acquired or reacquired by the Borrower, including:
Inventory
All of the Borrower's inventory and supplies of whatsoever nature and
kind and wheresoever situated, including, without limitation, raw materials,
components, work in process, finished goods, goods in transit and packing and
shipping materials, accretions and accessions thereto, trust receipts and
similar documents covering the same products (the "Inventory");
<PAGE>
Accounts
All right to payment for goods sold or leased or for services rendered,
expressly including, without limitation, in connection with owning, leasing,
managing and operating communications tower facilities, whether or not earned by
performance, including, without limitation, all agreements with and sums due
from customers and other Persons, and all books and records recording,
evidencing or relating to such rights or any part thereof (the "Accounts");
Equipment
All machinery, equipment and supplies (installed and uninstalled) not
included in Inventory above, including motor vehicles and accretions and
accessions thereto; and expressly including, without limitation, towers,
antennas and equipment located at communications tower facilities; any
distribution systems and all components thereof, including, without limitation,
hardware, cables, fiber optic cables, switches, CODECs, computer equipment,
amplifiers, and associated devices; and any other equipment used in connection
with the Borrower's business (the "Equipment");
Contracts and Leases
All assignable (a) construction contracts, subscriber contracts,
customer service agreements, management agreements, rights of way, easements,
pole attachment agreements, transmission capacity agreements, public utility
contracts and other agreements to which the Borrower is a party, whether now
existing or hereafter arising, including, without limitation, those listed on
Exhibit A hereto (the "Contracts"); (b) lease agreements for personal property
to which the Borrower is a party, whether now existing or hereafter arising
including without limitation those listed on Exhibit B hereto (the "Leases");
and (c) other contracts and contractual rights, remedies or provisions now
existing or hereafter arising in favor of the Borrower (the "Other Contracts");
General Intangibles
All general intangibles including personal property not included above,
such as, without limitation, all goodwill, trademarks, trademark applications,
trade names, trade secrets, industrial designs, other industrial or intellectual
property or rights therein, whether under license or otherwise, claims for tax
refunds, and tax refund amounts (the "Intangibles");
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<PAGE>
Licenses
To the extent permitted by Applicable Law and subject to Sections 23
and 25 hereof, all franchises, permits and operating rights authorizing or
relating to the Borrower's rights to operate and maintain communications tower
facilities or similar business including, without limitation, the Licenses, all
as more particularly described on Exhibit C attached hereto;
Furniture and Fixtures
All furniture and fixtures in which the Borrower has an
interest (the "Furniture and Fixtures");
Miscellaneous Items
All goods, chattel paper, documents, instruments, supplies, choses in
action, claims, money, deposits, certificates of deposit, stock or share
certificates, and licenses and other rights in intellectual property not
included above (the "Miscellaneous Items"); and
Proceeds
All proceeds of any of the above, and all proceeds of any loss of,
damage to or destruction of the above, whether insured or not insured, and all
other proceeds of any sale, lease or other disposition of any property (or
interest therein) referred to above (including, without limitation, the proceeds
from the sale of any License), together with all proceeds of any policies of
insurance covering any or all of the above, the proceeds of any award in
condemnation with respect to any of the property of the Borrower, any rebates or
refunds, whether for taxes or otherwise, together with all proceeds of any such
proceeds (the "Proceeds").
The Inventory, Accounts, Equipment, Contracts, Other
Contracts, Leases, Intangibles, Licenses, Furniture and Fixtures,
Miscellaneous Items, and Proceeds, as described above, are
hereinafter collectively referred to as the "Collateral."
This Agreement and the Security Interest secure the payment and
performance of the Obligations (as defined in the Loan Agreement).
2. Further Assurances. The Borrower hereby authorizes the
Administrative Agent to file such financing statements and such other documents
as the Administrative Agent may reasonably require to protect or perfect the
interest of the Banks and the Administrative Agent in the Collateral, and the
Borrower further irrevocably appoints the Administrative Agent as the Borrower's
attorney-in-fact, with a power of attorney to execute on behalf of the Borrower
such Uniform Commercial Code
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<PAGE>
(the "UCC") financing statement forms as the Administrative Agent may from time
to time deem necessary or desirable to protect or perfect such interest in the
Collateral. Such power of attorney is coupled with an interest and shall be
irrevocable. In addition, the Borrower agrees to do, execute and deliver or
cause to be done, executed and delivered all such further acts, documents and
things as the Administrative Agent may reasonably require for the purpose of
perfecting or protecting the rights of the Banks and the Administrative Agent
hereunder or otherwise giving effect to this Agreement, all promptly upon
request therefor.
3. Representations and Warranties. The Borrower
represents and warrants to the Banks and the Administrative Agent
that:
(a) Exhibit A attached hereto and incorporated herein by this
reference sets forth a complete and accurate list of the Contracts in
effect on the date hereof which provide for aggregate payments to the
Borrower over the life of any single Contract in excess of $250,000 or
which are otherwise material to the Borrower, and the Borrower will
furnish copies thereof to the Banks and the Administrative Agent upon
the request of the Administrative Agent;
(b) Exhibit B attached hereto and incorporated herein by this
reference sets forth a complete and accurate list of all Leases
providing for aggregate payments to the Borrower over the life of any
single Lease in excess of $100,000, to which the Borrower is party in
effect on the date hereof, and the Borrower will furnish copies thereof
to the Banks and the Administrative Agent upon the request of the
Administrative Agent; and
(c) Exhibit C attached hereto and incorporated herein by this
reference sets forth a complete and accurate list of the Licenses in
effect on the date hereof.
4. Representations and Warranties Concerning Collateral. The
Borrower further represents and warrants that (a) the Security Interest in the
Collateral granted hereunder shall constitute at all times a valid first
priority security interest (subject only to Permitted Liens), vested in the
Administrative Agent, in and upon the Collateral, free of any Liens except for
Permitted Liens, (b) the location of the Inventory and Equipment is as set forth
in Schedule 1 hereto, and (c) none of the Accounts are represented by promissory
notes or other instruments. The Borrower shall take or cause to be taken such
acts and actions as shall be necessary or appropriate to assure that the
Security Interest in the Collateral shall not become subordinate or junior to
the security interests, liens or claims of any other Person, and that the
Collateral shall not otherwise be or become subject to any Lien, except for
Permitted Liens.
-4-
<PAGE>
5. Location of Books and Records. The Borrower further
represents and warrants that it now keeps all of its records concerning its
Accounts, Contracts, Leases, Other Contracts, and Intangibles at its chief
executive office, which is the address set forth with respect to the Borrower in
Section 11.1 of the Loan Agreement. The Borrower covenants and agrees that it
shall not keep any of such records at any other address, unless written notice
thereof is given to the Administrative Agent at least thirty (30) days prior to
the creation of any new address for the keeping of such records. The Borrower
further agrees that it shall promptly advise the Administrative Agent, in
writing making reference to this Section 4 of this Agreement, of the opening of
any material new place of business, the closing of any existing material place
of business, or any change in the location of the place where it keeps the
Collateral or of its chief executive officer.
6. Collateral Not Fixtures. The parties intend that,
to the extent permitted by Applicable Law, the Collateral shall
remain personal property irrespective of the manner of its
attachment or affixation to realty.
7. Covenants Regarding Collateral. Any and all injury to, or
loss or destruction of, the Collateral shall be at the Borrower's risk, and
shall not release the Borrower from its obligations hereunder. The Borrower
agrees not to sell, transfer, assign, dispose of, mortgage, grant a security
interest in, or encumber any of the Collateral except as permitted under the
Loan Agreement. The Borrower agrees to maintain in force such insurance with
respect to the Collateral as is required under the Loan Agreement. The Borrower
agrees to pay all required taxes, liens, and assessments upon the Collateral,
its use or operation, as required under the Loan Agreement. The Borrower further
agrees that the Administrative Agent may, but shall in no event be obligated to,
upon prior written notice to the Borrower, insure any of the Collateral in such
form and amount as the Administrative Agent may deem necessary or desirable if
the Borrower fails to obtain insurance as required by the Loan Agreement, and
that the Administrative Agent may pay or discharge any taxes if the Borrower
fails to pay such taxes as required by the Loan Agreement or Liens (which are
not Permitted Liens) on any of the Collateral, and the Borrower agrees to pay
any such sum so expended by the Administrative Agent, with interest at the
Default Rate, and such amounts shall be deemed to be a part of the Obligations
secured by the Collateral under the terms of this Agreement.
8. Covenants Regarding Contracts, Other Contracts and Leases.
The Borrower shall (i) fulfill, perform and observe each and every material
condition and covenant contained in any of the Contracts, the Other Contracts or
the Leases other than those being contested in good faith or unless the other
party thereto is in default, (ii) give prompt notice to the Administrative
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<PAGE>
Agent of any claim of material default under any Contract, Other Contract or
Lease given to the Borrower or by the Borrower, (iii) at the sole cost and
expense of the Borrower, enforce the performance and observance of each and
every material covenant and condition of the Contracts, the Other Contracts and
the Leases, and (iv) appear in and defend any action growing out of or in any
manner connected with any Contract, Other Contract or Lease other than those
which in the Borrower's reasonable business judgment are no longer in the best
interest of the Borrower to enforce and which have been approved by the
Administrative Agent. The rights and interests granted to the Administrative
Agent hereunder include all of the Borrower's rights and title (i) to modify the
Contracts, the Other Contracts and the Leases, (ii) to terminate the Contracts,
the Other Contracts and the Leases, and (iii) to waive or release the
performance or observance of any obligation or condition of the Contracts, the
Other Contracts and the Leases; provided, however, that the Borrower shall have
the right to exercise these rights in a fashion consistent with this Agreement
prior to any Event of Default and that these rights shall not be exercised by
the Administrative Agent prior to the occurrence and during the continuance of
an Event of Default.
9. Remedies. Upon the occurrence and during the continuation
of an Event of Default the Banks and the Administrative Agent shall have such
rights and remedies as are set forth in the Loan Agreement and herein, all the
rights, powers and privileges of a secured party under the UCC of the State of
New York and any other applicable jurisdiction, and all other rights and
remedies available to the Banks and the Administrative Agent, or any of them, at
law or in equity. The Borrower covenants and agrees that any notification of
intended disposition of any Collateral, if such notice is required by law, shall
be deemed reasonably and properly given if given in the manner provided for in
Section 20 hereof at least ten (10) days prior to such disposition. Under such
circumstances, the Administrative Agent shall have the right to the appointment
of a receiver for the properties and assets of the Borrower, and the Borrower
hereby consents to such right and to such appointment and hereby waives any
objection the Borrower may have thereto and hereby waives the right to have a
bond or other security posted by the Administrative Agent or any other Person in
connection therewith. The Borrower agrees, after the occurrence and during the
continuation of an Event of Default, to take any actions that the Administrative
Agent may reasonably request in order to enable the Administrative Agent to
obtain and enjoy the full rights and benefits granted to the Administrative
Agent under this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, the Borrower shall, at the Borrower's cost and
expense, use its reasonable best efforts to assist in obtaining all approvals of
the FCC which are then required by law for or in connection with any action or
transaction contemplated by this Agreement or Article 9 of the
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<PAGE>
UCC as in effect in any applicable jurisdiction, and, at the Administrative
Agent's request, prepare, sign and file with the FCC the assignor's or
transferor's portion of any application or applications for consent to the
assignment of the Licenses or transfer of control thereof necessary or
appropriate under the FCC's rules for approval of any sale or transfer of the
Licenses in connection with the Administrative Agent's exercise of remedies
under this Agreement. The Administrative Agent shall have the right, in
connection with the issuance of any order for relief in a bankruptcy proceeding,
to petition the bankruptcy court for the transfer of control or assignment of
the Licenses to a receiver, trustee, transferee, or similar official or to any
purchaser of the Collateral pursuant to any public or private sale, foreclosure
or other exercise of remedies available to the Administrative Agent, all as
permitted by Applicable Law. All amounts realized or collected through the
exercise of remedies hereunder shall be applied to the Obligations as provided
in the Loan Agreement.
10. Notification of Account Debtors. Upon the occurrence and
during the continuation of an Event of Default, the Administrative Agent may
notify the account debtors that all payments with respect to Accounts are to be
paid directly to the Administrative Agent and any amount thereafter paid to the
Borrower shall be received in trust by the Borrower for the benefit of the
Administrative Agent and segregated from other funds of the Borrower and paid
over to the Administrative Agent in the form received (together with any
necessary endorsements).
11. Remedies of Administrative Agent. Upon the occurrence and
during the continuation of an Event of Default, and after written notice to the
Borrower, the Administrative Agent or its designee may proceed to perform any
and all of the obligations of the Borrower contained in any of the Contracts,
Other Contracts or Leases and exercise any and all rights of the Borrower
therein contained as fully as the Borrower itself could. The Borrower hereby
appoints the Administrative Agent its attorney-in-fact, with power of
substitution, to take such action, execute such documents, and perform such work
as the Administrative Agent may deem appropriate in exercise of the rights and
remedies granted the Banks and the Administrative Agent, or any of them, herein
or in any other Loan Document. The power of attorney granted herein is coupled
with an interest and shall be irrevocable.
12. Additional Remedies. Upon the occurrence and during the
continuation of an Event of Default, should the Borrower fail to perform or
observe any covenant or comply with any condition contained in any of the
Contracts, the Other Contracts or the Leases, then the Administrative Agent may,
but without obligation to do so and without releasing the Borrower from its
obligation to do so, and after written notice to the Borrower, perform such
covenant or condition and, to the extent
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<PAGE>
that the Administrative Agent shall incur any reasonable costs or pay any
expenses in connection therewith, including any reasonable costs or expenses of
litigation associated therewith, such costs, expenses or payments shall be
included in the Obligations secured hereby and shall bear interest from the
payment of such costs or expenses by the Administrative Agent at the Default
Rate. Neither the Administrative Agent nor any Bank shall be obliged to perform
or discharge any obligation of the Borrower under any of the Contracts, the
Other Contracts or the Leases.
13. Administrative Agent May Collect Accounts. The Borrower hereby
further appoints the Administrative Agent, effective upon the occurrence and
during continuation of an Event of Default as its attorney-in-fact, with power
of substitution, with authority to collect all Accounts, to endorse the name of
the Borrower on any note, acceptance, check, draft, money order or other
evidence of debt or of payment which constitutes a portion of the Collateral and
which may come into the possession of the Banks and the Administrative Agent, or
any of them, and generally to do such other things and acts in the name of the
Borrower with respect to the Collateral as are necessary or appropriate to
protect or enforce the rights hereunder of the Banks and the Administrative
Agent. The Borrower further authorizes the Administrative Agent, effective upon
the occurrence and during the continuation of an Event of Default, to compromise
and settle or to sell, assign or transfer or to ask, collect, receive or issue
any and all claims possessed by the Borrower which constitute a portion of the
Collateral, all in the name of the Borrower. After deducting all reasonable
expenses and charges (including the Administrative Agent's attorneys' fees) of
retaking, keeping, storing and selling the Collateral, the Administrative Agent
may apply the proceeds in payment of any of the Obligations in the order of
application set forth in the Loan Agreement. The power of attorney granted
herein is coupled with an interest and shall be irrevocable. The Borrower agrees
that if steps are taken by the Administrative Agent to enforce its rights
hereunder, or to realize upon any of the Collateral, the Borrower shall pay to
the Administrative Agent the amount of the Administrative Agent's reasonable
costs, including attorneys' fees, and the Borrower's obligation to pay such
amounts shall be deemed to be a part of the Obligations secured hereunder. Upon
the occurrence and during the continuation of an Event of Default, the Borrower
shall segregate all proceeds of any Collateral from other assets of the
Borrower.
14. Indemnification. The Borrower shall indemnify and hold harmless the
Administrative Agent and each Bank, and any other Person acting hereunder for
all losses, costs, damages, fees and expenses whatsoever associated with the
exercise of the powers of attorney granted herein and shall release the
Administrative Agent and each Bank, and any other Person acting hereunder from
all liability whatsoever for the exercise of the foregoing powers
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<PAGE>
of attorney and all actions taken pursuant thereto, except, in either event, in
the case of bad faith, gross negligence or willful misconduct by the Person
seeking indemnification.
15. Remedies Cumulative. The Borrower agrees that the rights of the
Banks and the Administrative Agent, or any of them, under this Agreement, the
Loan Agreement, any other Loan Document or any other contract or agreement now
or hereafter in existence among the Banks and the Administrative Agent and the
Borrower or any Subsidiary of the Borrower and the other obligors thereunder, or
any of them, shall be cumulative, and that the Administrative Agent and each
Bank may from time to time exercise such rights and such remedies as such Person
or Persons may have thereunder and under the laws of the United States or any
state, as applicable, in the manner and at the time that such Person or Persons
in its or their sole discretion desire, subject to the terms of such agreements.
The Borrower further expressly agrees that the Banks and the Administrative
Agent shall in no event be under any obligation to resort to any Collateral
secured hereby prior to exercising any other rights that the Banks and the
Administrative Agent, or any of them, may have against the Borrower or any
Subsidiary of the Borrower or any of their respective properties, nor shall the
Banks and the Administrative Agent, or any of them, be obliged to resort to any
other collateral or security for the Obligations, other than the Collateral,
prior to any exercise of the Administrative Agent's rights against the Borrower
and its property hereunder.
16. Obligations Commercial in Nature. The Borrower hereby acknowledges
that the Obligations arose out of a commercial transaction, and agrees that if
an Event of Default shall occur and be continuing, the Administrative Agent
shall, to the extent permitted by Applicable Law, have the right to immediate
possession without notice or a hearing, and hereby knowingly and intelligently
waives, to the extent permitted by Applicable Law, any and all rights it may
have to any notice and posting of a bond by the Banks and the Administrative
Agent, or any of them, prior to seizure by the Administrative Agent or any of
its transferees, assigns or successors in interest, of the Collateral or any
portion thereof.
17. Amendments and Waivers. No amendment, modification, waiver,
transfer or renewal, extension, assignment or termination of this Agreement or
of the Loan Agreement or of any other Loan Document, or of any instrument or
document executed and delivered by the Borrower or any other obligor to the
Banks and the Administrative Agent, or any of them, nor additional advances made
by the Banks and the Administrative Agent, or any of them, to the Borrower, nor
the taking of further security, nor the retaking or re-delivery or release of
the Collateral to the Borrower or any other collateral or guaranty by the Banks
and the Administrative Agent, or any of them, nor any lack of validity or
enforceability of any Loan Document or any term thereof nor any
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<PAGE>
other act of the Banks and the Administrative Agent, or any of them, shall
release the Borrower from any Obligation, except a release or discharge executed
in writing by the Administrative Agent in accordance with the Loan Agreement
with respect to such Obligation or upon full payment and satisfaction of all
Obligations and termination of the Commitment. Neither the Administrative Agent
nor any Bank shall by any act, delay, omission or otherwise, be deemed to have
waived any of its or their rights or remedies hereunder, unless such waiver is
in writing and signed by the Administrative Agent or one or more of the Banks in
accordance with the Loan Agreement and then only to the extent therein set
forth. A waiver by the Banks and the Administrative Agent, or any of them, of
any right or remedy on any occasion shall not be construed as a bar to the
exercise of any such right or remedy which any such Person would otherwise have
had on any other occasion.
18. Assignment. The Borrower hereby agrees that this Agreement or the
rights hereunder may, in the discretion of the Banks and the Administrative
Agent or any of them, as applicable, be assigned in whole or in part in
connection with any assignment of the Loan Agreement or the Obligations arising
thereunder, as permitted thereunder. In the event this Agreement or the rights
hereunder are so assigned by any of the Banks and the Administrative Agent, the
terms "Banks", or "Administrative Agent" wherever used herein shall be deemed,
as applicable, to refer to and include any such assignee.
19. Successors and Assigns. This Agreement shall apply to and bind the
respective successors and permitted assigns of the Borrower and inure to the
benefit of the successors and permitted assigns of the Borrower, the Banks and
the Administrative Agent.
20. Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be given in the manner prescribed in
Section 11.1 of the Loan Agreement.
21. Governing Law. The provisions of this Agreement shall be construed
and interpreted, and all rights and obligations of the parties hereto
determined, in accordance with the internal laws of the State of New York
applicable to contracts made and to be performed in the State of New York. This
Agreement, together with all documents referred to herein, constitutes the
entire agreement among the Borrower and the Banks and the Administrative Agent
with respect to the matters addressed herein and may not be modified except by a
writing executed by the Administrative Agent and delivered to the Borrower.
22. Severability. If any paragraph or part thereof of this Agreement
shall for any reason be held or adjudged to be invalid, illegal or unenforceable
by any court of competent jurisdiction, such paragraph or part thereof so
adjudicated invalid, illegal or unenforceable shall be deemed separate, distinct
and independent,
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<PAGE>
and the remainder of this Agreement shall remain in full force and effect and
shall not be affected by such holding or adjudication.
23. FCC Consent. Notwithstanding anything herein which may be construed
to the contrary, no action shall be taken by the Administrative Agent with
respect to the Licenses issued by the FCC unless and until all requirements of
Applicable Law, including, without limitation, any required approval under the
Communications Act, including without limitation the provision for ten (10) days
notice to the FCC required by 47 C.F.R. ss. 22.917(e), requiring the consent to
or approval of such action by the FCC or any governmental or other authority,
have been satisfied. The Borrower covenants that upon request of the
Administrative Agent it will cause to be filed such applications and take such
other action as may be reasonably requested by the Administrative Agent to
obtain the consent or approval of the FCC or any governmental or other authority
which has granted any License to the Borrower to any action contemplated by this
Agreement and to give effect to the Security Interest of the Administrative
Agent, including, without limitation, the execution of an application for
consent by the FCC to an assignment or transfer involving a change in ownership
or control pursuant to the provisions of the Communications Act.
24. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
25. Changes in Applicable Law. The parties acknowledge their intent
that, upon the occurrence and during the continuation of an Event of Default,
the Administrative Agent shall receive, to the fullest extent permitted by
Applicable Law and governmental policy (including, without limitation, the
rules, regulations and policies of the FCC), all rights necessary or desirable
to obtain, use or sell the Collateral and to exercise all remedies available to
it under this Agreement, the UCC as in effect in any applicable jurisdiction, or
other Applicable Law. The parties further acknowledge and agree that, in the
event of changes in law or governmental policy occurring subsequent to the date
hereof that affect in any manner the Administrative Agent's rights of access to,
or use or sale of, the Collateral, or the procedures necessary to enable the
Administrative Agent to obtain such rights of access, use or sale, the
Administrative Agent and the Borrower shall amend this Agreement in such manner
as the Administrative Agent shall reasonably request in order to provide the
Administrative Agent such rights to the greatest extent possible consistent with
Applicable Law and governmental policy.
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<PAGE>
26. Administrative Agent. Each reference herein to any right granted
to, benefit conferred upon or power exercisable by the "Administrative Agent"
shall be a reference to the Administrative Agent for the benefit of all the
Banks, and each action taken or right exercised hereunder shall be deemed to
have been so taken or exercised by the Administrative Agent for the benefit of
and on behalf of all the Banks.
[Remainder of Page Intentionally Left Blank]
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<PAGE>
IN WITNESS WHEREOF, the undersigned have hereunto set their hands by
and through their duly authorized representatives, as of the day and year first
written above.
BORROWER: AMERICAN TOWER SYSTEMS, INC., a
Delaware corporation
By:
Its:
[CORPORATE SEAL] Attest:
Its:
ADMINISTRATIVE AGENT: TORONTO DOMINION (TEXAS), INC., as
Administrative Agent
By:
Its:
EXHIBITS
Exhibit A - Contracts
Exhibit B - Leases
Exhibit C - Licenses
SCHEDULES
Schedule 1 - List and Location of Inventory
and Equipment
BORROWER'S SECURITY AGREEMENT
SIGNATURE PAGE 1
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF FINANCIAL CONDITION
American Tower Systems, Inc., a Delaware corporation (the "Borrower"),
in connection with that certain Loan Agreement (the "Loan Agreement") of even
date herewith among the Borrower, the Banks (as defined in the Loan Agreement)
and Toronto Dominion (Texas), Inc., as administrative agent for the Banks (in
such capacity, the "Administrative Agent"), pursuant to which the Banks have
agreed to make loans to the Borrower (the "Loans") as evidenced by those certain
promissory notes of even date herewith by the Borrower to the order of the
Banks, hereby certifies to each of the foregoing Persons other than the Borrower
that:
1. The financial statements and all other documents relating to the
Borrower's present or projected future financial condition (together with
similar information relating to the Restricted Subsidiaries of the Borrower)
provided to the Administrative Agent and the Banks in connection with the Loan
Agreement, have been prepared by the undersigned or under the supervision of the
undersigned, with due diligence and in full awareness of the reliance of the
Banks on the information contained therein in reaching their decision to make
the Loans. Such financial statements (other than those relating to projected
financial condition) have been prepared in accordance with GAAP.
2. The Borrower, as a result of the Loans and any obligations incurred
in connection therewith and the other transactions contemplated by the Loan
Agreement, believes that the Borrower has not incurred and will not incur debts
beyond its ability to satisfy them as they mature, and will have a positive
operating cash flow after paying all of its anticipated indebtedness when due,
including the obligations due to the Banks under the Loan Agreement.
3. After giving effect to the Loans and the obligations incurred in
connection therewith and the other transactions contemplated by the Loan
Agreement and the Loan Documents, the Borrower (on a consolidated basis with its
Restricted Subsidiaries) anticipates that it will have sufficient proceeds from
its cash flow, the sale of assets in the ordinary course of business, the
proceeds of contemplated sales of assets not necessary for the Borrower's
business (and the business of its Restricted Subsidiaries), and future debt or
equity financings sufficient to pay cash interest expense and long-term
Indebtedness when due, whether at maturity or otherwise.
<PAGE>
4. Immediately after giving effect to the transactions contemplated by
the Loan Agreement and the other Loan Documents, the fair saleable value of the
assets of the Borrower and its Restricted Subsidiaries (on a consolidated basis)
will exceed the aggregate amount of all Indebtedness then outstanding of the
Borrower and its Restricted Subsidiaries (on a consolidated basis).
5. Based on the present and anticipated needs for capital of the
businesses conducted, or anticipated to be conducted in the future by the
Borrower and its Restricted Subsidiaries, and after giving effect to the Loans,
the Borrower (on a consolidated basis with its Restricted Subsidiaries) will not
be left with unreasonably small capital to finance the needs and anticipated
needs of such businesses.
Capitalized terms used herein and not otherwise defined are used as
defined in the Loan Agreement.
IN WITNESS WHEREOF, the Borrower has caused the execution of this
Certificate and the affixation hereto of the seal of the Borrower this ____ day
of November 1996.
AMERICAN TOWER SYSTEMS, INC., a
Delaware corporation
By:
Its:
[CORPORATE SEAL]
Attest:
Its:
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<PAGE>
EXHIBIT D
FORM OF PROMISSORY NOTE
$____________________ As of __________ ____, ____
FOR VALUE RECEIVED, the undersigned, AMERICAN TOWER SYSTEMS, INC., a
Delaware corporation (the "Borrower"), promises to pay to the order of
____________________ (hereinafter, together with its successors and assigns,
called the "Bank"), in immediately available funds, at such place as is
designated in or pursuant to the Loan Agreement (as hereinafter defined), the
principal sum of ______________________ AND __/100s DOLLARS ($_________________)
of United States funds, or, if less, so much thereof as may from time to time be
advanced by the Bank to the Borrower and is outstanding hereunder, plus interest
as hereinafter provided. Such advances and repayments thereof may be endorsed
from time to time on the grid attached hereto, but the failure to make such
notations (or any error in such notation) shall not affect the obligation of the
Borrower to repay unpaid principal and interest hereunder.
Except as otherwise defined or limited herein, capitalized terms used
herein shall have the meanings ascribed to them in that certain Loan Agreement
dated as of ____________ ____, 1996 (as amended from time to time, the "Loan
Agreement") among the Borrower, the Bank, the other financial institutions party
thereto (together with the Bank, the "Banks") and Toronto Dominion (Texas),
Inc., as administrative agent for the Banks (in such capacity, the
"Administrative Agent").
The principal amount of this Note shall be paid in such amounts and at
such times as are set forth in Sections 2.5 and 2.7 of the Loan Agreement. A
final payment of all principal amounts and other Obligations then outstanding
hereunder shall be due and payable in full on the Maturity Date.
The Borrower shall be entitled to borrow, repay and reborrow hereunder
pursuant to the terms and conditions of the Loan Agreement. Prepayment of the
principal amount hereof may be made only as provided in the Loan Agreement. The
principal amount of each Advance shall be repaid on its Payment Date.
The Borrower hereby promises to pay interest on the unpaid principal
amount of the Loans outstanding hereunder as provided in the Loan Agreement.
Interest under this Note shall also be due and payable when this Note shall
become due (whether at maturity, by reason of acceleration or otherwise).
Overdue
<PAGE>
principal and, to the extent permitted by Applicable Law, overdue interest,
shall bear interest at the Default Rate as provided in the Loan Agreement.
No provision of the Loan Agreement or this Note shall require the
payment or permit the collection of interest in excess of that permitted by
Applicable Law. If any excess amount of interest in such respect is provided
for, or shall be adjudicated to be so provided for, in connection with the Loans
outstanding hereunder, the provisions of this paragraph shall govern and
prevail, and neither the Borrower nor any sureties, guarantors, successors or
assigns of the Borrower shall be obligated to pay the excess amount of such
interest or any other excess sum paid for the use, forbearance, or detention of
sums loaned pursuant hereto. In the event the Borrower ever pays, or the Bank
ever receives, collects or applies as interest any such sum, such amount which
would be in excess of the maximum amount permitted by Applicable Law shall be
applied as a payment in the reduction of the principal, unless the Borrower
shall notify the Bank in writing that it elects to have such excess returned
forthwith; and, if the principal has been paid in full, any remaining excess
shall forthwith be returned to the Borrower. Because of the variable nature of
the rates of interest applicable to the Loans evidenced by this Note, the total
interest that will accrue hereon cannot be determined in advance. Neither the
Borrower nor the Bank intends for the Bank to contract for, charge or receive
usurious interest and, to prevent such an occurrence, any agreements which may
now or hereafter be in effect between the Borrower and the Bank regarding the
payment of fees to the Bank are hereby limited by the provisions of this
paragraph. To the extent not prohibited by Applicable Law, determination of the
legal maximum amount of interest shall at all times be made by amortizing,
prorating or allocating all interest at any time contracted for, charged or
received from the Borrower in connection with the portion of the Loans
outstanding hereunder until the Maturity Date, so that the actual rate of
interest on account of the Loans outstanding hereunder does not exceed the
maximum amount permitted under Applicable Law.
All parties now or hereafter liable with respect to this Note, whether
the Borrower, any guarantor, endorser or any other Person, hereby waive to the
extent permitted by Applicable Law presentment for payment, demand, notice of
nonpayment or dishonor, protest and notice of protest.
No delay or omission on the part of the Bank or any holder hereof in
exercising its rights under this Note, or delay or omission on the part of the
Bank, the Administrative Agent or the Banks collectively, in exercising its or
their rights under the Loan Agreement or any other Loan Documents, or course of
conduct relating thereto, shall operate as a waiver of such right or any
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<PAGE>
other right of the Bank or any holder hereof, nor shall any waiver by the Bank,
the Administrative Agent or the Banks collectively, or any holder hereof, of any
such right or rights on any one occasion be deemed a bar to, or waiver of, the
same right or rights on any future occasion.
The Borrower promises to pay all reasonable costs of collection,
including attorneys' fees, should this Note be collected by or through an
attorney-at-law or under advice therefrom.
Time is of the essence of this Note.
This Note evidences the Bank's portion of the Loans under, and is
entitled to the benefits and subject to the terms of, the Loan Agreement which
contains provisions with respect of the acceleration of the maturity of this
Note upon the happening of certain stated events and provisions for prepayment.
This Note is secured by and is also entitled to the benefits of the Security
Documents.
This Note shall be construed in accordance with and governed by the
internal laws of the State of New York applicable to contracts made and to be
performed in the State of New York.
[Remainder of Page Intentionally Left Blank]
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<PAGE>
IN WITNESS WHEREOF, the Borrower has executed this Note as of the day
and year first above written.
AMERICAN TOWER SYSTEMS, INC., a Delaware
corporation
By:
Its:
[CORPORATE SEAL]
Attest:
Its:
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<PAGE>
ADVANCES
Amount of Amount of Principal Notation
Date Advance Paid or Prepaid Made By
<PAGE>
EXHIBIT E
FORM OF PARENT PLEDGE AGREEMENT
THIS PARENT PLEDGE AGREEMENT (this "Agreement"), entered into as of
this 22th day of November 1996, by and between American Tower Systems Holding
Corporation, a Delaware corporation (the "Pledgor"), and Toronto Dominion
(Texas), Inc., as administrative agent (the "Administrative Agent") for itself
and on behalf of the Banks.
W I T N E S S E T H:
WHEREAS, American Tower Systems, Inc., a Delaware corporation (the
"Borrower"), the Banks and the Administrative Agent are all parties to that
certain Loan Agreement dated as of even date herewith (the "Loan Agreement");
and
WHEREAS, the Pledgor is the sole stockholder of the Borrower and, as
such, will derive substantial direct and indirect economic benefit from the
making of the Loans; and
WHEREAS, as a condition precedent to the effectiveness of the Loan
Agreement, the Pledgor is required to execute and deliver this Agreement; and
WHEREAS, to secure the payment and performance of Borrower arising
under the Loan Agreement, the Pledgor and the Administrative Agent (on behalf of
itself and the Banks) have agreed that the shares of capital stock (the "Stock")
owned by the Pledgor in each of the Subsidiaries of the Pledgor listed on
Schedule 1 attached hereto (the "Subsidiaries") shall be pledged by the Pledgor
to the Administrative Agent (on behalf of itself and the Banks) to secure the
Obligations (as defined below);
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree that capitalized terms used herein shall
have the meanings ascribed to them in the Loan Agreement to the extent not
otherwise defined or limited herein, and further agree as follows:
1. Warranty. The Pledgor hereby represents and warrants to the
Administrative Agent and the Banks that, except for the security interest
created hereby, the Pledgor owns the Stock, which constitutes the percentage of
the issued and outstanding stock of the Subsidiaries as set forth on Schedule 1
attached hereto, free and clear of all Liens, that the Stock is duly
<PAGE>
issued, fully paid and non-assessable, and that the Pledgor has the unencumbered
right to pledge the Stock. In addition, Pledgor represents and covenants as
follows: (1) the Stock represents all of Pledgor's shares of capital stock in
any Subsidiary; (2) upon possession and retention of the Stock by the
Administrative Agent, the Administrative Agent shall have a valid and perfected
first priority security interest in the Stock, securing the payment of the
Obligations; and (3) except as noted on Schedule 2 attached hereto, the Stock
represents all the outstanding shares of stock issued by any Subsidiary of the
Pledgor.
2. Security Interest. Subject to the provisions of Section 13 hereof,
the Pledgor hereby unconditionally grants and assigns to the Administrative
Agent, for itself and on behalf of the Banks, and their respective successors
and assigns, a continuing security interest in and security title to the Stock
and any other shares of capital stock of any Subsidiary of the Pledgor obtained
in the future, and in each case, all certificates representing such shares, all
rights, options, warrants, stock or other securities or other property which may
hereafter be received, receivable or distributed in respect of the Stock,
together with all proceeds of the foregoing, including, without limitation, all
dividends, cash, notes, securities or other property from time to time acquired,
receivable or otherwise distributed in respect of, or in exchange for, the
foregoing, all of which shall constitute "Stock" hereunder. The Pledgor has
delivered to and deposited with the Administrative Agent herewith all of its
right, title and interest in and to the Stock, together with certificates
representing the Stock, and undated stock powers endorsed in blank, as security
for the payment and performance of all of the obligations of the Pledgor and any
other obligor to the Administrative Agent, the Banks, or any of them, under this
Agreement and any extensions, renewals or amendments of any of the foregoing,
however created, acquired, arising or evidenced, whether direct or indirect,
absolute or contingent, now or hereafter existing, or due or to become due (the
"Obligations"); it being the intention of the parties hereto that beneficial
ownership of the Stock, including, without limitation, all voting, consensual
and dividend rights, shall remain in the Pledgor until the occurrence and during
continuance of an Event of Default and until the Administrative Agent shall
notify the Pledgor of the Administrative Agent's exercise of voting and dividend
rights to the Stock pursuant to Section 9 of this Agreement.
3. Additional Shares. In the event that, during the term
of this Agreement:
(a) any stock dividend, stock split, reclassification,
readjustment, or other change is declared or made in the
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<PAGE>
capital structure of any Subsidiary, or any new stock is issued by such
Subsidiary, all new, substituted, and additional shares shall be issued
to the Pledgor and shall be promptly delivered to the Administrative
Agent, together with undated stock powers endorsed in blank by the
Pledgor, and shall thereupon constitute Stock to be held by the
Administrative Agent under the terms of this Agreement; and
(b) any subscriptions, warrants or any other rights or options
shall be issued in connection with the Stock, all new stock or other
securities acquired through such subscriptions, warrants, rights or
options by the Pledgor shall be promptly delivered to the
Administrative Agent, together with undated Stock powers endorsed in
blank, and shall thereupon constitute Stock to be held by the
Administrative Agent under the terms of this Agreement.
4. Default. In the event of the occurrence of an Event of Default and
so long as any such Event of Default is continuing, subject, however, to Section
13 hereof, the Administrative Agent may sell or otherwise dispose of the Stock
at a public or private sale or make other commercially reasonable disposition of
the Stock or any portion thereof after fifteen (15) days' notice to the Pledgor
and the Administrative Agent and the Banks, or any of them, may purchase the
Stock or any portion thereof at any public sale. The proceeds of the public or
private sale or other disposition shall be applied first to the costs of the
Administrative Agent incurred in connection with the sale, expressly including,
without limitation, any costs under Section 7 hereof, and then as provided in
the Loan Agreement. In the event the proceeds of the sale or other disposition
of the Stock are insufficient to satisfy the Obligations, the Pledgor shall
remain liable for any such deficiency. Pledgor waives, to the extent permitted
by Applicable Law, the rights of equity of redemption, appraisal, notice of
acceptance, presentment, demand and marshalling, to the extent applicable.
5. Additional Rights of Secured Party. In addition to its rights and
privileges under this Agreement, the Administrative Agent, on behalf of itself
and the Banks, shall have all the rights, powers and privileges of a secured
party under the Uniform Commercial Code as in effect in any applicable
jurisdiction and other Applicable Law.
6. Return of Stock to the Pledgor. Upon payment in full of all
principal and interest on the Notes, full performance by the Borrower of all
covenants, undertakings and obligations under the Loan Agreement and the other
Loan Documents, and satisfaction in full of any other Obligations, other than
the Obligations which survive the termination of the Loan Agreement as provided
in Section 11.16 of the Loan Agreement, and after such time as the Banks shall
have no obligation to make any further Advances
- 3 -
<PAGE>
to the Borrower, this Agreement shall terminate and the Administrative Agent
shall return the remaining Stock and all rights received by the Administrative
Agent as a result of its possessory interest in the Stock to the Pledgor.
7. Disposition of Stock by Administrative Agent. The Stock is not
registered or qualified under the various Federal or state securities laws of
the United States and disposition thereof after an Event of Default may be
restricted to one or more private (instead of public) sales in view of the lack
of such registration. The Pledgor understands that upon such disposition, the
Administrative Agent may approach only a restricted number of potential
purchasers and further understands that a sale under such circumstances may
yield a lower price for the Stock than if the Stock were registered and
qualified pursuant to Federal and state securities laws and sold on the open
market. The Pledgor, therefore, agrees that:
(a) if the Administrative Agent shall, pursuant to the terms
of this Agreement, sell or cause the Stock or any portion thereof to be
sold at a private sale, the Administrative Agent shall have the right
to rely upon the advice and opinion of any national brokerage or
investment firm having recognized expertise and experience in
connection with shares of communications tower companies (but shall not
be obligated to seek such advice and the failure to do so shall not be
considered in determining the commercial reasonableness of such action)
as to the best manner in which to expose the Stock for sale and as to
the best price reasonably obtainable at the private sale thereof; and
(b) that such reliance shall be conclusive evidence that the
Administrative Agent has handled such disposition in a commercially
reasonable manner absent manifest error.
8. Pledgor's Obligations Absolute. The obligations of the Pledgor under
this Agreement shall be direct and immediate and not conditional or contingent
upon the pursuit of any remedies against the Borrower or any other Person, nor
against other security or liens available to the Administrative Agent or any
Bank. The Pledgor hereby waives any right to require that an action be brought
against any other Person or to require that resort be had to any security or to
any balance of any deposit account or credit on the books of the Administrative
Agent or any of the Banks in favor of any other Person prior to the exercise of
remedies hereunder, or to require action hereunder prior to resort by the
Administrative Agent to any other security or collateral for the Obligations. No
amendment, modification, waiver, transfer or renewal, extension, assignment or
termination of this Agreement or of the Loan Agreement or of any other Loan
Document, or of any instrument or document executed and delivered
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<PAGE>
by the Pledgor or any other obligor with respect to the Obligations to the Banks
and the Administrative Agent, or any of them, nor additional advances made by
the Banks and the Administrative Agent, or any of them, to the Borrower, nor the
taking of further security, nor the retaking or re-delivery or release of the
Collateral to the Borrower or any other Person or any other collateral or
guaranty to the Borrower or any other Person by the Banks and the Administrative
Agent, or any of them, nor any lack of validity or enforceability of any Loan
Document or any term thereof, nor any other act of the Banks and the
Administrative Agent, or any of them, shall release the Pledgor from any
Obligation, except a release or discharge executed in writing by the
Administrative Agent in accordance with the Loan Agreement with respect to such
Obligation or upon full payment and satisfaction of all Obligations. Neither the
Administrative Agent nor any Bank shall, by any act, delay, omission or
otherwise, be deemed to have waived any of its or their rights or remedies
hereunder, unless such waiver is in writing and signed by the Administrative
Agent in accordance with the Loan Agreement and then only to the extent therein
set forth. A waiver by the Banks and the Administrative Agent, or any of them,
of any right or remedy on any occasion shall not be construed as a bar to the
exercise of any such right or remedy which any such Person would otherwise have
had on any other occasion.
9. Voting Rights.
(a) For so long as any Obligations remain unpaid, after and
during the continuation of an Event of Default, but subject to the
provisions of Section 13 hereof, (i) the Administrative Agent may, upon
fifteen (15) days' prior written notice to the Pledgor of its intention
to do so, exercise all voting rights, and all other ownership or
consensual rights of the Stock, but under no circumstances is the
Administrative Agent obligated by the terms of this Agreement to
exercise such rights, and (ii) the Pledgor hereby appoints the
Administrative Agent, which appointment shall be effective on the
fifteenth (15th) day following the giving of notice by the
Administrative Agent as provided in the foregoing Section 9(a)(i), the
Pledgor's true and lawful attorney-in-fact and IRREVOCABLE PROXY to
vote the Stock in any manner the Administrative Agent deems advisable
for or against all matters submitted or which may be submitted to a
vote of shareholders. The power-of-attorney granted hereby is coupled
with an interest and shall be irrevocable.
(b) For so long as the Pledgor shall have the right to vote
the Stock, the Pledgor covenants and agrees that it will not, without
the prior written consent of the Administrative Agent, vote or take any
consensual action with respect to the Stock which would constitute an
Event of Default.
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<PAGE>
10. Notices. All notices and other communications required or permitted
hereunder shall be in writing, and shall be given in the fashion set forth in
Section 11.1 of the Loan Agreement, and with respect to the Pledgor, at the
address for the Borrower set forth in or otherwise provided pursuant to Section
11.1 of the Loan Agreement.
11. Binding Agreement. The provisions of this Agreement shall be
construed and interpreted, and all rights and obligations of the parties hereto
determined, in accordance with the internal laws of the State of New York
applicable to contracts made and to be performed in the State of New York. This
Agreement, together with all documents referred to herein, constitutes the
entire agreement between the parties with respect to the matters addressed
herein and may not be modified except by a writing executed by the
Administrative Agent and the Pledgor and delivered by the Administrative Agent
to the Pledgor.
12. Severability. If any paragraph or part thereof shall for any reason
be held or adjudged to be invalid, illegal or unenforceable by any court of
competent jurisdiction, such paragraph or part thereof so adjudicated invalid,
illegal or unenforceable shall be deemed separate, distinct and independent, and
the remainder of this Agreement shall remain in full force and effect and shall
not be affected by such holding or adjudication.
13. FCC Compliance. Notwithstanding anything herein which may be
construed to the contrary, no action shall be taken by the Administrative Agent
which may require the consent or approval of the FCC, and the proxy granted in
Section 9(a) hereof shall not become effective, unless and until all
requirements of the Communications Act, requiring the consent to or approval of
such action by the FCC have been satisfied. The Pledgor covenants that,
following and during the continuance of an Event of Default, upon request of the
Administrative Agent, it will cause to be filed such applications and take such
other action as may be reasonably requested by the Administrative Agent to
obtain consent or approval of the FCC to any action contemplated by this
Agreement and to give effect to the security interest of the Administrative
Agent, including, without limitation, the execution of an application for
consent by the FCC to an assignment or transfer involving a change in ownership
or control pursuant to the provisions of the Communications Act.
14. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
15. Administrative Agent. Each reference herein to any right granted
to, benefit conferred upon or power exercisable by
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<PAGE>
the "Administrative Agent" shall be a reference to the Administrative Agent for
the benefit of all the Banks, and each action taken or right exercised hereunder
shall be deemed to have been so taken or exercised by the Administrative Agent
for the benefit of and on behalf of all the Banks.
[Remainder of Page Intentionally Left Blank]
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<PAGE>
IN WITNESS WHEREOF, the undersigned parties hereto have executed this
Agreement by and through their duly authorized officers, as of the day and year
first above written.
PLEDGOR: AMERICAN TOWER SYSTEMS HOLDING
CORPORATION, a Delaware corporation
By:
[CORPORATE SEAL] Title:
Attest:
Title:
ADMINISTRATIVE AGENT: TORONTO DOMINION (TEXAS), INC., as
Administrative Agent
By:
Title:
Schedule 1 - Shares Pledged Pursuant to Pledge Agreement
Schedule 2 - Outstanding Shares of Stock
PARENT PLEDGE AGREEMENT
SIGNATURE PAGE 1
<PAGE>
EXHIBIT F
FORM OF REQUEST FOR ADVANCE
______________________________, the duly elected and qualified
____________________________ of American Tower Systems, Inc., a Delaware
corporation (the "Borrower"), in connection with that certain Loan Agreement (as
in effect on the date hereof, the "Loan Agreement"), dated as of November 22,
1996, among the Borrower, the Banks (as defined in the Loan Agreement) and
Toronto-Dominion (Texas), Inc., as administrative agent for the Banks (in such
capacity, the "Administrative Agent"), hereby certifies to each of the foregoing
Persons other than the Borrower that:
1. The Borrower hereby requests an Advance in the amount of $__________
to be made on ____________ __, _____, under the Commitment. Such Advance shall
be a [Base Rate/LIBOR] Advance. [The Interest Period for the LIBOR Advance shall
be _____________ month(s).] The proceeds of the Advance should be wired as set
forth on Schedule 1 attached hereto. The foregoing instructions shall be
irrevocable.
2. All of the representations and warranties of the Borrower made under
the Loan Agreement (including, without limitation, all representations and
warranties with respect to the Borrower's Subsidiaries) and the other Loan
Documents are as of the date hereof, and will be as of the date of such Advance,
true and correct in all material aspects both before and after giving effect to
the application of the proceeds of the Advance of the Loans in connection with
which this Request for Advance is given, and after giving effect to any updates
to information provided to the Banks in accordance with the terms of the Loan
Agreement.
3. There does not exist, as of this date, and there will not exist
after giving effect to the Advance requested in this Request for Advance, any
Default under the Loan Agreement.
4. All Necessary Authorizations have been obtained or
made, are in full force and effect and are not subject to any
pending or threatened reversal or cancellation.
5. There has occurred no event having a Materially Adverse
Effect since ____________ ___, _____.
<PAGE>
6. On the date of such Advance, after giving effect to the Advance
requested hereby, the Borrower shall be in compliance on a pro forma basis with
the covenants set forth in Sections 7.8, 7.9 and 7.10 of the Loan Agreement, and
Schedule 2 attached hereto sets forth calculations demonstrating such
compliance.
7. All other conditions precedent to the Advance requested hereby set
forth in Section 3.2 of the Loan Agreement have been satisfied.
Capitalized terms used in this Request for Advance and not otherwise
defined are used as defined in the Loan Agreement.
IN WITNESS WHEREOF, the Borrower, acting through an Authorized
Signatory, has signed this Request for Advance, as of the ______ day of
____________, 19__.
AMERICAN TOWER SYSTEMS, INC., a Delaware
corporation
By:
Its:
Schedule 1 - Wiring Instructions
Schedule 2 - Compliance Calculations
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<PAGE>
EXHIBIT G
FORM OF SUBSIDIARY GUARANTY
THIS SUBSIDIARY GUARANTY (the "Guaranty"), made as of the ___ day of
__________, 19__, by ____________, a ___________ (the "Guarantor"), in favor of
Toronto Dominion (Texas), Inc., as administrative agent (the "Administrative
Agent") for the Banks (as defined in the Loan Agreement described below).
W I T N E S S E T H:
WHEREAS, American Tower Systems Inc., a Delaware corporation (the
"Borrower"), the Banks, and the Administrative Agent are all parties to that
certain Loan Agreement dated as of November 22, 1996 (as in effect on the date
hereof, the "Loan Agreement"); and
WHEREAS, pursuant to the terms of the Loan Agreement, the
Guarantor is required to execute and deliver this Guaranty; and
WHEREAS, the Guarantor is a Restricted Subsidiary of the
Borrower; and
WHEREAS, the Borrower and the Guarantor are mutually dependent on each
other in the conduct of their respective businesses as an integrated operation,
and the Borrower has as one of its corporate purposes the obtaining of financing
needed from time to time by the Guarantor, with the Borrower's ability to obtain
such financing being dependent, in part, on the successful operations of and the
properties owned by the Guarantor; and
WHEREAS, the Guarantor has determined that its execution, delivery and
performance of this Guaranty directly benefit, and are within the corporate
purposes and in the best interests of, the Guarantor; and
WHEREAS, as a condition to the extension of the Loans by the Banks, the
Guarantor has agreed to execute this Guaranty guaranteeing the payment and
performance by the Borrower of its obligations and covenants under the Notes,
the Loan Agreement and the other Loan Documents (the Loan Agreement, the Notes
and the other Loan Documents, as executed on the date hereof and as they may be
amended, modified or extended from time to time being hereinafter referred to as
the "Guaranteed Agreements"); and
<PAGE>
WHEREAS, capitalized terms used herein and not otherwise defined shall
be used as defined in the Loan Agreement;
NOW, THEREFORE, in consideration of the above premises, Ten Dollars
($10.00) in hand paid and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, subject to the provisions of
Section 7 hereof, the Guarantor hereby unconditionally guarantees to the Banks
and the Administrative Agent full and prompt payment and performance when due
whether at maturity, by acceleration or otherwise of all Obligations. Each
Obligation shall rank pari passu with each other Obligation.
The Guarantor hereby further agrees, for the benefit of the Banks and
the Administrative Agent, that:
1. Obligations Several. Regardless of whether any proposed guarantor or
any other Person or Persons is, are or shall become in any other way responsible
to the Banks and the Administrative Agent, or any of them, for or in respect of
the Obligations or any part thereof, and regardless of whether or not any Person
or Persons now or hereafter responsible to the Banks and the Administrative
Agent, or any of them, for the Obligations or any part thereof, whether under
this Guaranty or otherwise, shall cease to be so liable, the Guarantor hereby
declares and agrees that this Guaranty is and shall continue to be a several
obligation, shall be a continuing guaranty and shall be operative and binding,
and that the Guarantor shall have no right of subrogation with respect to this
Guaranty.
2. Guaranty Final. Upon the execution and delivery of this Guaranty to
the Administrative Agent, this Guaranty shall be deemed to be finally executed
and delivered by the Guarantor and shall not be subject to or affected by any
promise or condition affecting or limiting the Guarantor's liability (other than
as expressly set forth in Section 7 hereof), and no statement, representation,
agreement or promise on the part of the Banks, the Administrative Agent, the
Borrower, or any of them, or any officer, employee or agent thereof, unless
contained herein forms any part of this Guaranty or has induced the making
hereof or shall be deemed in any way to affect the Guarantor's liability
hereunder.
3. Amendment and Waiver. No alteration or waiver of this Guaranty or of
any of its terms, provisions or conditions shall be binding upon the Persons
against whom enforcement is sought unless made in writing and signed by an
authorized officer of such Person.
4. Dealings with Borrower. The Banks and the Administrative Agent, or
any of them, may, from time to time, without exonerating or releasing the
Guarantor in any way under this Guaranty, (i) take such further or other
security or securities for the Obligations or any part thereof as the Banks
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<PAGE>
and the Administrative Agent, or any of them, may deem proper, consistent with
the Loan Agreement, or (ii) release, discharge, abandon or otherwise deal with
or fail to deal with any guarantor of the Obligations or any security or
securities therefor or any part thereof now or hereafter held by the Banks and
the Administrative Agent, or any of them, or (iii) consistent with the Loan
Agreement, amend, modify, extend, accelerate or waive in any manner any of the
provisions, terms, or conditions of the Guaranteed Agreements, all as the Banks
and the Administrative Agent, or any of them, may consider expedient or
appropriate in their sole discretion. Without limiting the generality of the
foregoing, or of Paragraph 5 hereof, it is understood that the Banks and the
Administrative Agent, or any of them, may, without exonerating or releasing the
Guarantor, give up, or modify or abstain from perfecting or taking advantage of
any security for the Obligations and accept or make any compositions or
arrangements, and realize upon any security for the Obligations when, and in
such manner, as the Banks and the Administrative Agent, or any of them, may deem
expedient, consistent with the Loan Agreement, all without notice to the
Guarantor, except as required by Applicable Law.
5. Guaranty Unconditional. The Guarantor acknowledges and agrees that
no change in the nature or terms of the Obligations or any of the Guaranteed
Agreements, or other agreements, instruments or contracts evidencing, related to
or attendant with the Obligations (including any novation), nor any
determination of lack of enforceability thereof, shall discharge all or any part
of the liabilities and obligations of the Guarantor pursuant to this Guaranty;
it being the purpose and intent of the Guarantor, the Banks and the
Administrative Agent that the covenants, agreements and all liabilities and
obligations of the Guarantor hereunder are absolute, unconditional and
irrevocable under any and all circumstances. Without limiting the generality of
the foregoing, the Guarantor agrees that until each and every one of the
covenants and agreements of this Guaranty is fully performed, the Guarantor's
undertakings hereunder shall not be released, in whole or in part, by any action
or thing which might, but for this paragraph of this Guaranty, be deemed a legal
or equitable discharge of a surety or guarantor, or by reason of any waiver,
omission of the Banks and the Administrative Agent, or any of them, or their
failure to proceed promptly or otherwise, or by reason of any action taken or
omitted by the Banks and the Administrative Agent, or any of them, whether or
not such action or failure to act varies or increases the risk of, or affects
the rights or remedies of, the Guarantor or by reason of any further dealings
between the Borrower, the Banks and the Administrative Agent, or any of them, or
any other guarantor or surety, and the Guarantor, to the extent permitted by
Applicable Law, hereby expressly waives and surrenders any defense to its
liability hereunder, or any right of counterclaim or offset of any nature or
description which it may have or which may exist based upon, and shall be deemed
to have consented to,
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<PAGE>
any of the foregoing acts, omissions, things, agreements or waivers.
6. Set-off. The Banks and the Administrative Agent, or any of them,
may, without demand or notice of any kind upon or to the Guarantor, at any time
or from time to time when any amount shall be due and payable hereunder by the
Guarantor, if the Borrower shall not have timely paid its Obligations, set off
and appropriate any property, balances, credit accounts or moneys of the
Guarantor (other than those held in a trust) in the possession of the Banks and
the Administrative Agent, or any of them, or under the control of any of them
for any purpose, which property, balances, credit accounts or moneys shall
thereupon be turned over and remitted to the Administrative Agent, to be held
and applied to the Obligations by the Administrative Agent in accordance with
the Loan Agreement, and the Guarantor hereby grants to the Banks and the
Administrative Agent, a security interest in all such property. The
Administrative Agent shall give written notice to the Borrower of the exercise
of any of the foregoing rights within one (1) Business Day following the
exercise thereof.
7. Maximum Guaranteed Amount. The creation or existence from time to
time of Obligations in excess of the amount committed to or outstanding on the
date of this Guaranty is hereby authorized by the Guarantor, without notice to
the Guarantor, and shall in no way impair or affect this Guaranty or the rights
of the Banks and the Administrative Agent, or any of them, herein. Anything in
this Guaranty to be contrary notwithstanding, it is the intention of the
Guarantor, the Banks and the Administrative Agent, that the Guarantor's
obligations hereunder shall be, but not in excess of, the Maximum Guaranteed
Amount. The "Maximum Guaranteed Amount" shall mean the greater of (a) the amount
of economic benefit received (directly or indirectly) by the Guarantor pursuant
to the Loan Agreement and the other Loan Documents, and (b) the maximum amount
which could be paid out by the Guarantor without rendering this Guaranty void or
voidable under Applicable Law including, without limitation, (i) Title 11 of the
United States Code, as amended, and (ii) applicable state law regarding
fraudulent conveyances.
8. Bankruptcy. Upon the bankruptcy or winding up or other distribution
of assets of the Borrower or any Subsidiary of the Borrower (other than the
Guarantor) or of any surety or guarantor for the Obligations, the rights of the
Banks and the Administrative Agent, or any of them, against the Guarantor shall
not be affected or impaired by the omission of the Banks and the Administrative
Agent, or any of them, to prove its or their claim, as appropriate, or to prove
its or their full claim, as appropriate, and the Banks and the Administrative
Agent may prove such claims as they see fit and may refrain from proving any
claim and in their respective discretion they may value as they see fit or
refrain from valuing any security held by the Banks
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<PAGE>
and the Administrative Agent, or any of them, without in any way releasing,
reducing or otherwise affecting the liability to the Banks and the
Administrative Agent of the Guarantor.
9. Application of Payments. Any amount received by the Banks and the
Administrative Agent, or any of them, from whatsoever source and applied toward
the payment of the Obligations shall be applied in such order of application as
is set forth in the Loan Agreement.
10. Waivers by Guarantor. The Guarantor hereby expressly waives, to the
extent permitted by Applicable Law: (a) notice of acceptance of this Guaranty,
(b) notice of the existence or creation of all or any of the Obligations, (c)
presentment, demand, notice of dishonor, protest, and all other notices
whatsoever, (d) all diligence in collection or protection of or realization upon
the Obligations or any part thereof, any obligation hereunder, or any security
for any of the foregoing and (e) all rights of subrogation, indemnification,
contribution and reimbursement against the Borrower, all rights to enforce any
remedy the Banks and the Administrative Agent, or any of them, may have against
the Borrower and any benefit of, or right to participate in, any collateral or
security now or hereinafter held by the Banks and the Administrative Agent, or
any of them, in respect of the Obligations, even upon payment in full of the
Obligations. Any money received by the Guarantor in violation of this Section
shall be held in trust by the Guarantor for the benefit of the Banks and the
Administrative Agent. If a claim is ever made upon the Banks and the
Administrative Agent, or any of them, for the repayment or recovery of any
amount or amounts received by any of them in payment of any of the Obligations
and such Person repays all or part of such amount by reason of (a) any judgment,
decree, or order of any court or administrative body having jurisdiction over
such Person or any of its property, or (b) any good faith settlement or
compromise of any such claim effected by such Person with any such claimant,
including the Borrower, then in such event the Guarantor agrees that any such
judgment, decree, order, settlement, or compromise shall be binding upon the
Guarantor, notwithstanding any revocation hereof or the cancellation of any
promissory note or other instrument evidencing any of the Obligations, and the
Guarantor shall be and remain obligated to such Person hereunder for the amount
so repaid or recovered to the same extent as if such amount had never originally
been received by such Person.
11. Assignment by Banks or Administrative Agent. To the extent
permitted under the Loan Agreement, the Banks and the Administrative Agent may
each, and without notice of any kind, except as otherwise required by the Loan
Agreement, sell, assign or transfer all or any of the Obligations, and in such
event each and every immediate and successive assignee, transferee, or holder of
all or any of the Obligations, shall have the right to enforce this Guaranty, by
suit or otherwise, for the benefit of
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<PAGE>
such assignee, transferee or holder as fully as if such assignee, transferee or
holder were herein by name specifically given such rights, powers and benefits.
12. Remedies Cumulative. No delay by the Banks and the Administrative
Agent, or any of them, in the exercise of any right or remedy shall operate as a
waiver thereof, and no single or partial exercise by the Banks and the
Administrative Agent, or any of them, of any right or remedy shall preclude
other or further exercise thereof or the exercise of any other right or remedy.
No action by the Banks and the Administrative Agent, or any of them, permitted
hereunder shall in any way impair or affect this Guaranty. For the purpose of
this Guaranty, the Obligations shall include, without limitation, all
Obligations of the Borrower to the Banks and the Administrative Agent
notwithstanding any right or power of any third party, individually or in the
name of the Borrower or any other Person, to assert any claim or defense as to
the invalidity or unenforceability of any such Obligation, and no such claim or
defense shall impair or affect the obligations of the Guarantor hereunder.
13. Successors and Assigns. This Guaranty shall be binding upon the
Guarantor, its successors and assigns and inure to the benefit of the successors
and assigns of the Guarantor, the Banks and the Administrative Agent. The
Guarantor shall not assign its rights or obligations under this Guaranty without
the consent of the Administrative Agent and all the Banks, nor shall the
Guarantor amend this Guaranty, without the consent of the Administrative Agent
and the Majority Banks.
14. Miscellaneous. This is a Guaranty of payment and not of collection.
In the event of a demand upon the Guarantor under this Guaranty, the Guarantor
shall be held and bound to the Banks and the Administrative Agent directly as
debtor in respect of the payment of the amounts hereby guaranteed. All
reasonable costs and expenses, including attorneys' fees and expenses, incurred
by the Banks and the Administrative Agent, or any of them, in obtaining
performance of or collecting payments due under this Guaranty shall be deemed
part of the Obligations guaranteed hereby. Any notice or demand which the Banks
and the Administrative Agent, or any of them, may wish to give shall be served
upon the Guarantor in the fashion prescribed for notices in Section 11.1 of the
Loan Agreement in care of the Borrower at the address for the Borrower set forth
in or otherwise provided pursuant to Section 11.1 of the Loan Agreement, and the
notice so sent shall be deemed to be served as set forth in Section 11.1 of the
Loan Agreement.
15. Loans Benefit Guarantor. The Guarantor expressly represents and
acknowledges that any financial accommodations by the Banks and the
Administrative Agent, or any of them, to the Borrower, including, without
limitation the extension of the
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<PAGE>
Loans, are and will be of direct interest, benefit and advantage to the
Guarantor.
16. Solvency. The Guarantor expressly represents and warrants that as
of the date hereof and after giving effect to the transactions contemplated by
the Loan Documents (i) the property of the Guarantor, at a fair valuation, will
exceed its debt; (ii) the capital of the Guarantor will not be unreasonably
small to conduct its business; (iii) the Guarantor will not have incurred debts,
or have intended to incur debts, beyond its ability to pay such debts as they
mature; and (iv) the present fair salable value of the assets of the Guarantor
will be materially greater than the amount that will be required to pay its
probable liabilities (including debts) as they become absolute and matured. For
purposes of this Section 16, "debt" means any liability on a claim, and "claim"
means (a) the right to payment, whether or not such right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
undisputed, legal, equitable, secured or unsecured, or (b) the right to an
equitable remedy for breach of performance if such breach gives rise to a right
to payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, undisputed, secured or
unsecured.
17. Visits and Inspections. The Guarantor covenants and agrees that so
long as any amount is owing on account of Obligations or otherwise pursuant to
this Guaranty, the Guarantor shall permit representatives of the Banks and the
Administrative Agent, or any of them, to visit and inspect properties of the
Guarantor during normal business hours after reasonable notice, inspect the
Guarantor's books and records and discuss with the principal officers of the
Guarantor its businesses, assets, liabilities, financial positions, results of
operations and business prospects.
18. Governing Law. This Guaranty shall be construed in accordance with
and governed by the internal laws of the State of New York applicable to
contracts made and to be performed in the State of New York.
19. Jurisdiction and Venue. If any action or proceeding shall be
brought by the Administrative Agent in order to enforce any right or remedy
under this Guaranty, the Guarantor hereby consents to the jurisdiction of any
state or federal court of competent jurisdiction sitting within the area
comprising the Southern District of New York on the date of this Guaranty. The
Guarantor hereby agrees, to the extent permitted by Applicable Law that service
of the summons and complaint and all other process which may be served in any
such suit, action or proceeding may be effected by mailing by registered mail a
copy of such process to the offices of the Borrower, as set forth in or
otherwise provided pursuant to Section 11.1 of the Loan Agreement, and that
personal service of process shall not be
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<PAGE>
required. Nothing herein shall be construed to prohibit service of process by
any other method permitted by law, or the bringing of any suit, action or
proceeding in any other jurisdiction. The Guarantor agrees that final judgment
in such suit, action or proceeding shall be conclusive and may be enforced in
any other jurisdiction by suit on the judgment or in any other manner provided
by Applicable Law.
20. Waiver of Jury Trial. The Guarantor waives any right to a trial by
jury in any proceeding arising out of this Guaranty.
21. Time of the Essence. Time is of the essence with regard to the
Guarantor's performance of its obligations hereunder.
22. Administrative Agent. Each reference herein to any right granted
to, benefit conferred upon or power exercisable by the "Administrative Agent"
shall be a reference to the Administrative Agent for the benefit of itself and
all the Banks, and each action taken or right exercised hereunder shall be
deemed to have been so taken or exercised by the Administrative Agent for the
benefit of and on behalf of itself and all the Banks.
23. Ratifications. The Guarantor hereby ratifies and affirms each
representation, warranty, covenant and other agreement made on its behalf by the
Borrower in the Loan Agreement.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
executed and sealed as of the date first above written.
ADMINISTRATIVE AGENT: TORONTO DOMINION (TEXAS), INC., as
Administrative Agent
By:
Its:
GUARANTOR: _______________, a _______________
By:
Its:
[CORPORATE SEAL]
Attest:
Its:
SUBSIDIARY GUARANTY
Signature Page 1
<PAGE>
EXHIBIT H
FORM OF SUBSIDIARY PLEDGE AGREEMENT
THIS SUBSIDIARY PLEDGE AGREEMENT (the "Agreement"), entered into as of
this ___ day of October, 1996, by and between ___________________, a __________
(the "Pledgor") and Toronto Dominion (Texas), Inc., as administrative agent (the
"Administrative Agent") for itself and on behalf of the Banks.
W I T N E S S E T H:
WHEREAS, American Tower Systems, Inc., a Delaware corporation (the
"Borrower"), the Banks and the Administrative Agent are all parties to that
certain Loan Agreement dated as of November 22, 1996 (as in effect on the date
hereof, the "Loan Agreement"); and
WHEREAS, pursuant to the terms of the Loan Agreement, the Pledgor is
required to execute and deliver this Agreement; and
WHEREAS, the Pledgor is a Restricted Subsidiary of the Borrower and is
engaged in the business of owning and operating communications tower facilities
as an integrated operation with the Borrower and its other Subsidiaries; and
WHEREAS, the Pledgor has determined that its execution, delivery and
performance of this Agreement directly benefit, and are within the corporate
purposes and in the best interests of, the Pledgor; and
WHEREAS, to secure the payment and performance of, among other things,
the obligations of the Pledgor arising from that certain Subsidiary Guaranty of
even date herewith (the "Subsidiary Guaranty"), the Pledgor and the
Administrative Agent (on behalf of itself and the Banks) have agreed that the
shares of capital stock (the "Stock") owned by the Pledgor in each of the
Subsidiaries of the Pledgor listed on Schedule 1 attached hereto (the
"Subsidiaries") shall be pledged by the Pledgor to the Administrative Agent (on
behalf of itself and the Banks) to secure the Obligations (as defined below);
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree that capitalized terms used herein shall
have the meanings ascribed to them in the Loan Agreement to the extent not
otherwise defined or limited herein, and further agree as follows:
<PAGE>
1. Warranty. The Pledgor hereby represents and warrants to the
Administrative Agent and the Banks that, except for the security interest
created hereby, the Pledgor owns the Stock, which constitutes the percentage of
the issued and outstanding stock of the Subsidiaries as set forth on Schedule 1
attached hereto, free and clear of all Liens, that the Stock is duly issued,
fully paid and non-assessable, and that the Pledgor has the unencumbered right
to pledge the Stock. In addition, Pledgor represents and covenants as follows:
(1) the Stock represents all of Pledgor's shares of capital stock in any
Subsidiary; (2) upon possession and retention of the Stock by the Administrative
Agent, the Administrative Agent shall have a valid and perfected first priority
security interest in the Stock, securing the payment of the Obligations; and (3)
except as noted on Schedule 2 attached hereto, the Stock represents all the
outstanding shares of stock issued by any Subsidiary of the Pledgor.
2. Security Interest. Subject to the provisions of Section 13 hereof,
the Pledgor hereby unconditionally grants and assigns to the Administrative
Agent, for itself and on behalf of the Banks, and their respective successors
and assigns, a continuing security interest in and security title to the Stock
and any other shares of capital stock of any Subsidiary of the Pledgor obtained
in the future, and in each case, all certificates representing such shares, all
rights, options, warrants, stock or other securities or other property which may
hereafter be received, receivable or distributed in respect of the Stock,
together with all proceeds of the foregoing, including, without limitation, all
dividends, cash, notes, securities or other property from time to time acquired,
receivable or otherwise distributed in respect of, or in exchange for, the
foregoing, all of which shall constitute "Stock" hereunder. The Pledgor has
delivered to and deposited with the Administrative Agent herewith all of its
right, title and interest in and to the Stock, together with certificates
representing the Stock, and undated stock powers endorsed in blank, as security
for the payment and performance of all of the obligations of the Pledgor and any
other obligor to the Administrative Agent, the Banks, or any of them, under this
Agreement and the Subsidiary Guaranty and any extensions, renewals or amendments
of any of the foregoing, however created, acquired, arising or evidenced,
whether direct or indirect, absolute or contingent, now or hereafter existing,
or due or to become due (the "Obligations"); it being the intention of the
parties hereto that beneficial ownership of the Stock, including, without
limitation, all voting, consensual and dividend rights, shall remain in the
Pledgor until the occurrence and during continuance of an Event of Default and
until the Administrative Agent shall notify the Pledgor of the Administrative
Agent's exercise of voting and dividend rights to the Stock pursuant to Section
9 of this Agreement.
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<PAGE>
3. Additional Shares. In the event that, during the term
of this Agreement:
(a) any stock dividend, stock split, reclassification,
readjustment, or other change is declared or made in the capital
structure of any Subsidiary, or any new stock is issued by such
Subsidiary, all new, substituted, and additional shares shall be issued
to the Pledgor and shall be promptly delivered to the Administrative
Agent, together with undated stock powers endorsed in blank by the
Pledgor, and shall thereupon constitute Stock to be held by the
Administrative Agent under the terms of this Agreement; and
(b) any subscriptions, warrants or any other rights or options
shall be issued in connection with the Stock, all new stock or other
securities acquired through such subscriptions, warrants, rights or
options by the Pledgor shall be promptly delivered to the
Administrative Agent, together with undated Stock powers endorsed in
blank, and shall thereupon constitute Stock to be held by the
Administrative Agent under the terms of this Agreement.
4. Default. In the event of the occurrence of an Event of Default and
so long as any such Event of Default is continuing, subject, however, to Section
13 hereof, the Administrative Agent may sell or otherwise dispose of the Stock
at a public or private sale or make other commercially reasonable disposition of
the Stock or any portion thereof after fifteen (15) days' notice to the Pledgor
and the Administrative Agent and the Banks, or any of them, may purchase the
Stock or any portion thereof at any public sale. The proceeds of the public or
private sale or other disposition shall be applied first to the costs of the
Administrative Agent incurred in connection with the sale, expressly including,
without limitation, any costs under Section 7 hereof, and then as provided in
the Loan Agreement. In the event the proceeds of the sale or other disposition
of the Stock are insufficient to satisfy the Obligations, the Pledgor shall
remain liable for any such deficiency. Pledgor waives, to the extent permitted
by Applicable Law, the rights of equity of redemption, appraisal, notice of
acceptance, presentment, demand and marshalling, to the extent applicable.
5. Additional Rights of Secured Party. In addition to its rights and
privileges under this Agreement, the Administrative Agent, on behalf of itself
and the Banks, shall have all the rights, powers and privileges of a secured
party under the Uniform Commercial Code as in effect in any applicable
jurisdiction and other Applicable Law.
6. Return of Stock to the Pledgor. Upon payment in full of all
principal and interest on the Notes, full performance by the Borrower of all
covenants, undertakings and obligations under
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<PAGE>
the Loan Agreement and the other Loan Documents, and satisfaction in full of any
other Obligations, other than the Obligations which survive the termination of
the Loan Agreement as provided in Section 11.16 of the Loan Agreement, and after
such time as the Banks shall have no obligation to make any further Advances to
the Borrower, this Agreement shall terminate and the Administrative Agent shall
return the remaining Stock and all rights received by the Administrative Agent
as a result of its possessory interest in the Stock to the Pledgor.
7. Disposition of Stock by Administrative Agent. The Stock is not
registered or qualified under the various Federal or state securities laws of
the United States and disposition thereof after an Event of Default may be
restricted to one or more private (instead of public) sales in view of the lack
of such registration. The Pledgor understands that upon such disposition, the
Administrative Agent may approach only a restricted number of potential
purchasers and further understands that a sale under such circumstances may
yield a lower price for the Stock than if the Stock were registered and
qualified pursuant to Federal and state securities laws and sold on the open
market. The Pledgor, therefore, agrees that:
(a) if the Administrative Agent shall, pursuant to the terms
of this Agreement, sell or cause the Stock or any portion thereof to be
sold at a private sale, the Administrative Agent shall have the right
to rely upon the advice and opinion of any national brokerage or
investment firm having recognized expertise and experience in
connection with shares of communications tower companies (but shall not
be obligated to seek such advice and the failure to do so shall not be
considered in determining the commercial reasonableness of such action)
as to the best manner in which to expose the Stock for sale and as to
the best price reasonably obtainable at the private sale thereof; and
(b) that such reliance shall be conclusive evidence that the
Administrative Agent has handled such disposition in a commercially
reasonable manner absent manifest error.
8. Pledgor's Obligations Absolute. The obligations of the Pledgor under
this Agreement shall be direct and immediate and not conditional or contingent
upon the pursuit of any remedies against the Borrower or any other Person, nor
against other security or liens available to the Administrative Agent or any
Bank. The Pledgor hereby waives any right to require that an action be brought
against any other Person or to require that resort be had to any security or to
any balance of any deposit account or credit on the books of the Administrative
Agent or any of the Banks in favor of any other Person prior to the exercise of
remedies hereunder, or to require action hereunder prior to
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<PAGE>
resort by the Administrative Agent to any other security or collateral for the
Obligations. No amendment, modification, waiver, transfer or renewal, extension,
assignment or termination of this Agreement or of the Loan Agreement or of any
other Loan Document, or of any instrument or document executed and delivered by
the Pledgor or any other obligor with respect to the Obligations to the Banks
and the Administrative Agent, or any of them, nor additional advances made by
the Banks and the Administrative Agent, or any of them, to the Borrower, nor the
taking of further security, nor the retaking or re-delivery or release of the
Collateral to the Borrower or any other person or any other collateral or
guaranty by the Banks and the Administrative Agent, or any of them, nor any lack
of validity or enforceability of any Loan Document or any term thereof, nor any
other act of the Banks and the Administrative Agent, or any of them, shall
release the Pledgor from any Obligation, except a release or discharge executed
in writing by the Administrative Agent in accordance with the Loan Agreement
with respect to such Obligation or upon full payment and satisfaction of all
Obligations. Neither the Administrative Agent nor any Bank shall, by any act,
delay, omission or otherwise, be deemed to have waived any of its or their
rights or remedies hereunder, unless such waiver is in writing and signed by the
Administrative Agent in accordance with the Loan Agreement and then only to the
extent therein set forth. A waiver by the Banks and the Administrative Agent, or
any of them, of any right or remedy on any occasion shall not be construed as a
bar to the exercise of any such right or remedy which any such Person would
otherwise have had on any other occasion.
9. Voting Rights.
(a) For so long as any Obligations remain unpaid, after and
during the continuation of an Event of Default, but subject to the
provisions of Section 13 hereof, (i) the Administrative Agent may, upon
fifteen (15) days' prior written notice to the Pledgor of its intention
to do so, exercise all voting rights, and all other ownership or
consensual rights of the Stock, but under no circumstances is the
Administrative Agent obligated by the terms of this Agreement to
exercise such rights, and (ii) the Pledgor hereby appoints the
Administrative Agent, which appointment shall be effective on the
fifteenth (15th) day following the giving of notice by the
Administrative Agent as provided in the foregoing Section 9(a)(i), the
Pledgor's true and lawful attorney-in-fact and IRREVOCABLE PROXY to
vote the Stock in any manner the Administrative Agent deems advisable
for or against all matters submitted or which may be submitted to a
vote of shareholders. The power-of-attorney granted hereby is coupled
with an interest and shall be irrevocable.
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<PAGE>
(b) For so long as the Pledgor shall have the right to vote
the Stock, the Pledgor covenants and agrees that it will not, without
the prior written consent of the Administrative Agent, vote or take any
consensual action with respect to the Stock which would constitute an
Event of Default.
10. Notices. All notices and other communications required or permitted
hereunder shall be in writing, and shall be given in the fashion set forth in
Section 11.1 of the Loan Agreement, and with respect to the Pledgor, at the
address for the Borrower set forth in or otherwise provided pursuant to Section
11.1 of the Loan Agreement.
11. Binding Agreement. The provisions of this Agreement shall be
construed and interpreted, and all rights and obligations of the parties hereto
determined, in accordance with the internal laws of the State of New York
applicable to contracts made and to be performed in the State of New York. This
Agreement, together with all documents referred to herein, constitutes the
entire agreement between the parties with respect to the matters addressed
herein and may not be modified except by a writing executed by the
Administrative Agent and the Pledgor and delivered by the Administrative Agent
to the Pledgor.
12. Severability. If any paragraph or part thereof shall for any reason
be held or adjudged to be invalid, illegal or unenforceable by any court of
competent jurisdiction, such paragraph or part thereof so adjudicated invalid,
illegal or unenforceable shall be deemed separate, distinct and independent, and
the remainder of this Agreement shall remain in full force and effect and shall
not be affected by such holding or adjudication.
13. FCC Compliance. Notwithstanding anything herein which may be
construed to the contrary, no action shall be taken by the Administrative Agent
which may require the consent or approval of the FCC, and the proxy granted in
Section 9(a) hereof shall not become effective, unless and until all
requirements of the Communications Act, requiring the consent to or approval of
such action by the FCC have been satisfied. The Pledgor covenants that,
following and during the continuance of an Event of Default, upon request of the
Administrative Agent, it will cause to be filed such applications and take such
other action as may be reasonably requested by the Administrative Agent to
obtain consent or approval of the FCC to any action contemplated by this
Agreement and to give effect to the security interest of the Administrative
Agent, including, without limitation, the execution of an application for
consent by the FCC to an assignment or transfer involving a change in ownership
or control pursuant to the provisions of the Communications Act.
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<PAGE>
14. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
15. Administrative Agent. Each reference herein to any right granted
to, benefit conferred upon or power exercisable by the "Administrative Agent"
shall be a reference to the Administrative Agent for the benefit of all the
Banks, and each action taken or right exercised hereunder shall be deemed to
have been so taken or exercised by the Administrative Agent for the benefit of
and on behalf of all the Banks.
[Remainder of Page Intentionally Left Blank]
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<PAGE>
IN WITNESS WHEREOF, the undersigned parties hereto have executed this
Agreement by and through their duly authorized officers, as of the day and year
first above written.
PLEDGOR: ________________, a ____________
By:
[CORPORATE SEAL] Title:
Attest:
Title:
ADMINISTRATIVE AGENT: TORONTO DOMINION (TEXAS),
INC., as Administrative Agent
By:
Title:
Schedule 1 - Shares Pledged Pursuant to Pledge Agreement
Schedule 2 - Outstanding Shares of Stock
SUBSIDIARY PLEDGE AGREEMENT
SIGNATURE PAGE 1
<PAGE>
EXHIBIT I
FORM OF SUBSIDIARY SECURITY AGREEMENT
THIS SUBSIDIARY SECURITY AGREEMENT (this "Agreement") dated as of the
___ day of _________, 1996, by and between __________________, a
____________(the "Subsidiary"), and Toronto Dominion (Texas), Inc., as
administrative agent (the "Administrative Agent") for itself and on behalf of
the Banks (as
defined in the Loan Agreement defined below).
W I T N E S S E T H:
WHEREAS, American Tower Systems, Inc., a Delaware corporation (the
"Borrower"), the Banks and the Administrative Agent are all parties to that
certain Loan Agreement dated as of November 22, 1996 (as in effect on the date
hereof the "Loan Agreement"); and
WHEREAS, pursuant to the terms of the Loan Agreement, the Subsidiary is
required to execute and deliver this Agreement;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree that capitalized terms used herein shall
have the meanings ascribed to them in the Loan Agreement to the extent not
otherwise defined or limited herein, and further agree as follows:
1. Grant of Security Interest. Subject to the provisions of Sections 23
and 25 hereof, and to the extent permitted by Applicable Law in the case of the
Licenses, the Subsidiary, as a direct Subsidiary of the Borrower, hereby
unconditionally grants and assigns to the Administrative Agent (for itself and
on behalf of the Banks) a continuing security interest in and security title to
(hereinafter referred to as the "Security Interest") all of its property and
assets and all additions thereto and replacements thereof, and all other
property whether now owned or hereafter created, acquired or reacquired by the
Subsidiary, including:
Inventory
All of the Subsidiary's inventory and supplies of whatsoever nature and
kind and wheresoever situated, including, without limitation, raw materials,
components, work in process, finished goods, goods in transit and packing and
shipping materials,
<PAGE>
accretions and accessions thereto, trust receipts and similar documents covering
the same products (the "Inventory");
Accounts
All right to payment for goods sold or leased or for services rendered,
expressly including, without limitation, in connection with owning, leasing,
managing and operating communications tower facilities, whether or not earned by
performance, including, without limitation, all agreements with and sums due
from customers and other Persons, and all books and records recording,
evidencing or relating to such rights or any part thereof (the "Accounts");
Equipment
All machinery, equipment and supplies (installed and uninstalled) not
included in Inventory above, including motor vehicles and accretions and
accessions thereto; and expressly including, without limitation, towers,
antennas and equipment located at communications tower facilities; any
distribution systems and all components thereof, including, without limitation,
hardware, cables, fiber optic cables, switches, CODECs, computer equipment,
amplifiers, and associated devices; and any other equipment used in connection
with the Subsidiary's business (the "Equipment");
Contracts and Leases
All assignable (a) construction contracts, subscriber contracts,
customer service agreements, management agreements, rights of way, easements,
pole attachment agreements, transmission capacity agreements, public utility
contracts and other agreements to which the Subsidiary is a party, whether now
existing or hereafter arising, including without limitation those listed on
Exhibit A hereto (the "Contracts"); (b) lease agreements for personal property
to which the Subsidiary is a party, whether now existing or hereafter arising,
including, without limitation, those listed on Exhibit B hereto (the "Leases");
and (c) other contracts and contractual rights, remedies or provisions now
existing or hereafter arising in favor of the Subsidiary (the "Other
Contracts");
General Intangibles
All general intangibles including personal property not included above,
such as, without limitation, all goodwill, trademarks, trademark applications,
trade names, trade secrets, industrial designs, other industrial or intellectual
property or rights therein, whether under license or otherwise, claims for tax
refunds, and tax refund amounts (the "Intangibles");
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<PAGE>
Licenses
To the extent permitted by Applicable Law and subject to Sections 23
and 25 hereof, all franchises, Licenses, permits and operating rights
authorizing or relating to the Subsidiary's rights to operate and maintain
communications tower facilities or similar business including, without
limitation, the Licenses, all as more particularly described on Exhibit C
attached hereto;
Furniture and Fixtures
All furniture and fixtures in which the Subsidiary has an interest (the
"Furniture and Fixtures");
Miscellaneous Items
All goods, chattel paper, documents, instruments, supplies, choses in
action, claims, money, deposits, certificates of deposit, stock or share
certificates, and licenses and other rights in intellectual property not
included above (the "Miscellaneous Items"); and
Proceeds
All proceeds of any of the above, and all proceeds of any loss of,
damage to or destruction of the above, whether insured or not insured, and all
other proceeds of any sale, lease or other disposition of any property or
interest therein referred to above including, without limitation, the proceeds
of the sale of any License, together with all proceeds of any policies of
insurance covering any or all of the above, the proceeds of any award in
condemnation with respect to any of the property of the Subsidiary, any rebates
or refunds, whether for taxes or otherwise, together with all proceeds of any
such proceeds (the "Proceeds").
The Inventory, Accounts, Equipment, Contracts, Other Contracts, Leases,
Intangibles, Licenses, Furniture and Fixtures, Miscellaneous Items, and
Proceeds, as described above, are hereinafter collectively referred to as the
"Collateral."
This Agreement and the Security Interest secure payment and performance
of all obligations of the Subsidiary to the Banks and the Administrative Agent,
or any of them, under that certain Subsidiary Guaranty of even date given by the
Subsidiary for the benefit of the Banks and the Administrative Agent, and any
extensions, renewals or amendments thereto, however created, acquired, arising
or evidenced, whether direct or indirect, absolute or contingent, now or
hereafter existing, or due or to become due, (all of the foregoing obligations
being hereinafter collectively referred to as the "Obligations").
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<PAGE>
2. Further Assurances. The Subsidiary hereby authorizes the
Administrative Agent to file such financing statements and such other documents
as the Administrative Agent may reasonably require to protect or perfect the
interest of the Banks and the Administrative Agent in the Collateral, and the
Subsidiary further irrevocably appoints the Administrative Agent as its
attorney-in-fact, with a power of attorney to execute on behalf of the
Subsidiary such UCC financing statement forms as the Administrative Agent may
from time to time reasonably deem necessary or desirable to protect or perfect
such interest in the Collateral. Such power of attorney is coupled with an
interest and shall be irrevocable. In addition, the Subsidiary agrees to do,
execute and deliver or cause to be done, executed and delivered all such further
acts, documents and things as the Administrative Agent may reasonably require
for the purpose of perfecting or protecting the rights of the Banks and the
Administrative Agent hereunder or otherwise giving effect to this Agreement, all
promptly upon request therefor.
3. Representations and Warranties. The Subsidiary represents and
warrants to the Banks and the Administrative Agent that:
(a) the execution of this Agreement and the fulfillment of the
terms hereof will not result in a breach of any of the terms or
provisions of, or constitute a default under, the Subsidiary's Articles
of Incorporation or By-Laws as currently in effect, or any order, rule
or regulation applicable to the Subsidiary of any court or of any
Federal or state regulatory body or administrative agency or other
governmental body having jurisdiction over the Subsidiary, or result in
the termination or cancellation or breach of any indenture, mortgage,
deed of trust, deed to secure debt, lease or other agreement or
instrument to which the Subsidiary is a party or by which it is bound
or affected;
(b) the Subsidiary has taken all necessary corporate action to
authorize the execution and delivery of this Agreement, and this
Agreement, when executed and delivered, will be the valid and binding
obligation of the Subsidiary enforceable in accordance with its terms,
subject only to the following qualifications:
(i) certain equitable remedies are discretionary
and, in particular, may not be available where damages
are considered an adequate remedy at law,
(ii) enforcement may be limited by bankruptcy,
insolvency, liquidation, reorganization, reconstruction and
other similar laws affecting enforcement of creditors' rights
generally (insofar as any such law
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<PAGE>
relates to the bankruptcy, insolvency or similar event
of the Subsidiary), and
(iii) enforcement as to the Licenses is limited by
FCC rules and regulations restricting the transfer of
such Licenses.
(c) Exhibit A attached hereto and incorporated herein by this
reference sets forth a complete and accurate list of the Contracts in
effect on the date hereof which provide for aggregate payments over the
life of each such Contract in excess of $100,000 or which are otherwise
material to the Subsidiary, and the Subsidiary will furnish copies
thereof to the Banks and the Administrative Agent upon the request of
the Administrative Agent;
(d) Exhibit B attached hereto and incorporated herein by this
reference sets forth a complete and accurate list of all Leases
providing for aggregate payments over the life of any single Lease in
excess of $250,000, to which the Subsidiary is a party in effect on the
date hereof, and the Subsidiary will furnish copies thereof to the
Banks and the Administrative Agent upon the request of the
Administrative Agent; and
(e) Exhibit C attached hereto and incorporated herein by this
reference sets forth a complete and accurate list of the Licenses in
effect on the date hereof.
4. Representations and Warranties Concerning Collateral. The Subsidiary
further represents and warrants that (a) the Security Interest in the Collateral
granted hereunder shall constitute at all times a valid first priority security
interest (subject only to Permitted Liens), vested in the Administrative Agent,
in and upon the Collateral, free of any Liens except for Permitted Liens, (b)
the location of the Inventory and the Equipment is as set forth on Schedule 1
hereto, and (c) none of the Accounts are represented by promissory notes or
other instruments. The Subsidiary shall take or cause to be taken such acts and
actions as shall be necessary or appropriate to assure that the Security
Interest in the Collateral shall not become subordinate or junior to the
security interests, liens or claims of any other Person, and that the Collateral
shall not otherwise be or become subject to any Lien, except for Permitted
Liens.
5. Location of Books and Records. The Subsidiary further represents and
warrants that it now keeps all of its records concerning its Accounts,
Contracts, Leases, Other Contracts, and Intangibles at its chief executive
office, except as listed on Exhibit D hereto. The Subsidiary covenants and
agrees that it shall not keep any of such records at any other address, unless
written notice thereof is given to the Administrative Agent at least thirty (30)
days prior to the creation of any new address
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<PAGE>
for the keeping of such records. The Subsidiary further agrees that it shall
promptly advise the Administrative Agent, in writing making reference to this
Section 4 of this Agreement, of the opening of any material new place of
business, the closing of any existing material place of business, or any change
in the location of the place where it keeps the Collateral or of its chief
executive officer.
6. Collateral Not Fixtures. The parties intend that, to the extent
permitted by Applicable Law, the Collateral shall remain personal property
irrespective of the manner of its attachment or affixation to realty.
7. Covenants Regarding Collateral. Any and all injury to, or loss or
destruction of, the Collateral shall be at the Subsidiary's risk, and shall not
release the Subsidiary from its obligations hereunder. The Subsidiary agrees not
to sell, transfer, assign, dispose of, mortgage, grant a security interest in,
or encumber any of the Collateral except as permitted under the Loan Agreement.
The Subsidiary agrees to maintain in force such insurance with respect to the
Collateral as is required under the Loan Agreement. The Subsidiary agrees to pay
all required taxes, liens, and assessments upon the Collateral, its use or
operation, as required under the Loan Agreement. The Subsidiary further agrees
that the Administrative Agent may, but shall in no event be obligated to,
following written notice to the Subsidiary, insure any of the Collateral in such
form and amount as the Administrative Agent may deem necessary or desirable if
the Subsidiary fails to obtain insurance as required by the Loan Agreement, and
that the Administrative Agent may pay or discharge any taxes if the Subsidiary
fails to pay such taxes as required by the Loan Agreement or Liens (which are
not Permitted Liens) on any of the Collateral, and the Subsidiary agrees to pay
any such sum so expended by the Administrative Agent, with interest at the
Default Rate, and such amounts shall be deemed to be a part of the Obligations
secured by the Collateral under the terms of this Agreement.
8. Covenants Regarding Contracts, Other Contracts and Leases. The
Subsidiary shall (a) fulfill, perform and observe each and every material
condition and covenant contained in any of the Contracts, the Other Contracts or
the Leases, other than those being contested in good faith or unless the other
party thereto is in default, (b) give prompt notice to the Administrative Agent
of any claim of material default under any Contract, Other Contract or Lease
given to the Subsidiary or by the Subsidiary other than those which in the
Subsidiary's reasonable business judgment are no longer in the best interest of
the Subsidiary to enforce and which have been previously approved by the
Administrative Agent, (c) at the sole cost and expense of the Subsidiary,
enforce the performance and observance of each and every material covenant and
condition of the Contracts, the Other Contracts and the Leases to which it is a
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<PAGE>
party other than those which in the Subsidiary's reasonable business judgment
are no longer in the best interest of the Subsidiary to enforce and which have
been previously approved by the Administrative Agent, and (d) appear in and
defend any action growing out of or in any manner connected with any Contract,
Other Contract or Lease to which it is a party. The rights and interests granted
to the Administrative Agent hereunder include all of the Subsidiary's rights and
title (i) to modify the Contracts, the Other Contracts and the Leases, (ii) to
terminate the Contracts, the Other Contracts and the Leases, and (iii) to waive
or release the performance or observance of any obligation or condition of the
Contracts, the Other Contracts and the Leases; provided, however, that the
Subsidiary shall have the right to exercise these rights in a fashion consistent
with this Agreement prior to any Event of Default and that these rights shall
not be exercised by the Administrative Agent prior to the occurrence and during
the continuation of an Event of Default.
9. Remedies. Upon the occurrence and during the continuation of an
Event of Default, the Banks and the Administrative Agent shall have such rights
and remedies as are set forth in the Loan Agreement, the other Loan Documents
and herein, all the rights, powers and privileges of a secured party under the
Uniform Commercial Code of the State of New York and any other applicable
jurisdiction, and all other rights and remedies available to the Banks and the
Administrative Agent, or any of them, at law or in equity. The Subsidiary
covenants and agrees that any notification of intended disposition of any
Collateral, if such notice is required by law, shall be deemed reasonably and
properly given if given in the manner provided for in Section 20 hereof at least
ten (10) days prior to such disposition. Under such circumstances, the
Administrative Agent shall have the right to the appointment of a receiver for
the properties and assets of the Subsidiary, and the Subsidiary hereby consents
to such rights and to such appointment and hereby waives any objection it may
have thereto and hereby waives the right to have a bond or other security posted
by the Administrative Agent or any other Person in connection therewith. The
Subsidiary agrees, after the occurrence of an Event of Default, to take any
actions that the Administrative Agent may reasonably request in order to enable
the Administrative Agent to obtain and enjoy the full rights and benefits
granted to the Administrative Agent under this Agreement and the other Loan
Documents. Without limiting the generality of the foregoing, the Subsidiary
shall, at the Subsidiary's cost and expense, use its reasonable best efforts to
assist in obtaining all approvals of the FCC which are then required by law for
or in connection with any action or transaction contemplated by this Agreement
or Article 9 of the Uniform Commercial Code as in effect in any applicable
jurisdiction, and, at the Administrative Agent's request, prepare, sign and file
with the FCC the assignor's or transferor's portion of any application or
applications for consent to the assignment of the Licenses or transfer of
control
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<PAGE>
thereof necessary or appropriate under the FCC's rules for approval of any sale
or transfer of the Administrative Agent's remedies under this Agreement. The
Administrative Agent shall have the right, in connection with the issuance of
any order for relief in a bankruptcy proceeding, to petition the bankruptcy
court for the transfer of control or assignment of the Licenses to a receiver,
trustee, transferee, or similar official or to any purchaser of the Collateral
pursuant to any public or private sale, foreclosure or other exercise of
remedies available to the Administrative Agent, all as permitted by Applicable
Law. All amounts realized or collected through the exercise of remedies
hereunder shall be applied to the Obligations as provided in the Loan Agreement.
10. Notification of Account Debtors. Upon the occurrence and during the
continuation of an Event of Default, the Administrative Agent may notify the
account debtors that all payments with respect to Accounts are to be paid
directly to the Administrative Agent and any amount thereafter paid to the
Subsidiary shall be received in trust by the Subsidiary for the benefit of the
Administrative Agent and segregated from other funds of the Subsidiary and paid
over to the Administrative Agent in the form received (together with any
necessary endorsements).
11. Remedies of Administrative Agent. Upon the occurrence of an Event
of Default and during the continuation thereof, the Administrative Agent or its
designee may proceed to perform any and all of the obligations of the Subsidiary
contained in any of the Contracts, Other Contracts or Leases and exercise any
and all rights of the Subsidiary therein contained as fully as the Subsidiary
itself could. The Subsidiary hereby appoints the Administrative Agent its
attorney-in-fact, with power of substitution, to take such action, execute such
documents, and perform such work as the Administrative Agent may deem
appropriate in exercise of the rights and remedies granted the Banks and the
Administrative Agent, or any of them, herein or in any other Loan Document
following written notice to the Subsidiary. The powers herein granted shall
include, without limitation, powers to: (a) sue on the Contracts, the Other
Contracts or the Leases; (b) seek all governmental approvals (other than FCC
approvals) required for the operation of the business of the Subsidiary; (c)
modify or terminate the Contracts, the Other Contracts and the Leases; and (d)
waive or release the performance or observance of any obligation under any of
the Contracts, Other Contracts or Leases. The power of attorney granted herein
is coupled with an interest and shall be irrevocable.
12. Additional Remedies. Upon the occurrence of an Event of Default and
during the continuation thereof, should the Subsidiary fail to perform or
observe any covenant or comply with any condition contained in any of the
Contracts, the Other Contracts or the Leases, then following written notice to
the
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<PAGE>
Subsidiary, the Administrative Agent may, but without obligation to do so and
without releasing the Subsidiary from its obligation to do so, perform such
covenant or condition and, to the extent that the Administrative Agent shall
incur any reasonable costs or pay any expenses in connection therewith,
including any reasonable costs or expenses of litigation associated therewith,
such costs, expenses or payments shall be included in the Obligations secured
hereby and shall bear interest from the payment of such costs or expenses by the
Administrative Agent at the Default Rate. Neither the Administrative Agent nor
any Bank shall be obliged to perform or discharge any obligation of the
Subsidiary under any of the Contracts, the Other Contracts or the Leases, and,
except as may result from the bad faith, gross negligence or willful misconduct
of the Person seeking indemnification, the Subsidiary agrees to indemnify and
hold the Administrative Agent and each Bank harmless against any and all
liability, loss or damage which any such Person may incur under any of the
Contracts, the Other Contracts or the Leases or under or by reason of this
Agreement, and any and all claims and demands whatsoever which may be asserted
against the Subsidiary by reason of an act of the Administrative Agent or any
Bank under any of the terms of this Agreement or under the Contracts, the Other
Contracts or the Leases.
13. Administrative Agent May Collect Accounts. The Subsidiary hereby
further appoints the Administrative Agent as its attorney-in-fact, with power of
substitution, with authority to collect all Accounts, to endorse the name of the
Subsidiary on any note, acceptance, check, draft, money order or other evidence
of debt or of payment which constitutes a portion of the Collateral and which
may come into the possession of the Banks and the Administrative Agent, or any
of them, and generally to do such other things and acts in the name of the
Subsidiary with respect to the Collateral as are necessary or appropriate to
protect or enforce the rights hereunder of the Banks and the Administrative
Agent. The Subsidiary further authorizes the Administrative Agent, effective
upon the occurrence of an Event of Default and during the continuation thereof,
to compromise and settle or to sell, assign or transfer or to ask, collect,
receive or issue any and all claims possessed by the Subsidiary which constitute
a portion of the Collateral, all in the name of the Subsidiary. After deducting
all reasonable expenses and charges (including the Administrative Agent's
attorneys' fees) of retaking, keeping, storing and selling the Collateral, the
Administrative Agent may apply the proceeds in payment of any of the Obligations
in the order of application set forth in the Loan Agreement. The power of
attorney granted herein is coupled with an interest and shall be irrevocable.
The Subsidiary agrees that a failure to so notify the Administrative Agent shall
be a waiver and bar to any subsequent claim for any such property. The
Subsidiary agrees that if steps are taken by the Administrative Agent to enforce
its rights hereunder, or to realize upon any of the Collateral, the Subsidiary
shall pay to the Administrative
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<PAGE>
Agent the amount of the Administrative Agent's reasonable costs, including
attorneys' fees, and the Subsidiary's obligation to pay such amounts shall be
deemed to be a part of the Obligations secured hereunder. Upon the occurrence
and during the continuation of an Event of Default, the Subsidiary shall
segregate all proceeds of any Collateral from other assets of the Subsidiary.
14. Indemnification. The Subsidiary shall indemnify and hold harmless
the Administrative Agent, each Bank, and any other Person acting hereunder for
all losses, costs, damages, fees and expenses whatsoever associated with the
exercise of the powers of attorney granted herein and shall release the
Administrative Agent, each Bank, and any other Person acting hereunder from all
liability whatsoever for the exercise of the foregoing powers of attorney and
all actions taken pursuant thereto, except, in either event, in the case of bad
faith, gross negligence or willful misconduct by the Person seeking
indemnification.
15. Remedies Cumulative. The Subsidiary agrees that the rights of the
Banks and the Administrative Agent, or any of them, under this Agreement, the
Loan Agreement, any other Loan Document, or any other contract or agreement now
or hereafter in existence among the Banks and the Administrative Agent and the
Subsidiary and the other obligors thereunder, or any of them, shall be
cumulative, and that the Administrative Agent and each Bank may from time to
time exercise such rights and such remedies as such Person or Persons may have
thereunder and under the laws of the United States or any state, as applicable,
in the manner and at the time that such Person or Persons in its or their sole
discretion desire, subject to the terms of such agreements. The Subsidiary
further expressly agrees that the Banks and the Administrative Agent shall in no
event be under any obligation to resort to any Collateral secured hereby prior
to exercising any other rights that the Banks and the Administrative Agent, or
any of them, may have against the Subsidiary or its property, nor shall the
Banks and the Administrative Agent be obliged to resort to any other collateral
or security for the Obligations, other than the Collateral, prior to any
exercise of the Administrative Agent's rights against the Subsidiary and its
property hereunder.
16. Obligations Commercial in Nature. The Subsidiary hereby
acknowledges that the Obligations arose out of a commercial transaction, and
agrees that if an Event of Default shall occur and be continuing, the
Administrative Agent shall, to the extent permitted by Applicable Law, have the
right to immediate possession without notice or a hearing, and hereby knowingly
and intelligently waives, to the extent permitted by Applicable Law, any and all
rights it may have to any notice and posting of a bond by the Banks and the
Administrative Agent, or any of them, prior to seizure by the Administrative
Agent or any of its transferees, assigns or successors in interest of the
Collateral or any portion thereof.
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17. Amendments and Waivers. No amendment, modification, waiver,
transfer or renewal, extension, assignment or termination of this Agreement or
of the Loan Agreement or of any other Loan Document, or of any instrument or
document executed and delivered by the Subsidiary or any other obligor to the
Banks and the Administrative Agent, or any of them, nor additional advances made
by the Banks and the Administrative Agent, or any of them, to the Borrower, nor
the taking of further security, nor the retaking or re-delivery or release of
the Collateral to the Subsidiary by the Banks and the Administrative Agent, or
any of them, nor any lack of validity or enforceability of any Loan Document or
any term thereof, nor any other act of the Banks and the Administrative Agent,
or any of them, shall release the Subsidiary from any Obligation, except a
release or discharge executed in writing by the Administrative Agent in
accordance with the Loan Agreement with respect to such Obligation or upon full
payment and satisfaction of all Obligations and termination of the Commitment.
Neither the Administrative Agent nor any Bank shall by any act, delay, omission
or otherwise, be deemed to have waived any of its or their rights or remedies
hereunder, unless such waiver is in writing and signed by the Administrative
Agent in accordance with the Loan Agreement and then only to the extent therein
set forth. A waiver by the Banks and the Administrative Agent, or any of them,
of any right or remedy on any occasion shall not be construed as a bar to the
exercise of any such right or remedy which any such Person would otherwise have
had on any other occasion.
18. Assignment. The Subsidiary agrees that this Agreement or the rights
hereunder may in the discretion of the Banks and the Administrative Agent, or
any of them, as applicable, be assigned in whole or in part in connection with
any assignment of the Loan Agreement or the Obligations arising thereunder, as
permitted thereunder. In the event this Agreement or the rights hereunder are so
assigned by any of the Banks and the Administrative Agent, the terms "Banks" or
"Administrative Agent" wherever used herein shall be deemed, as applicable, to
refer to and include any such assignee.
19. Successors and Assigns. This Agreement shall apply to and bind the
respective successors and permitted assigns of the Subsidiary and inure to the
benefit of the successors and permitted assigns of the Subsidiary, the Banks and
the Administrative Agent.
20. Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be given in a fashion prescribed in
Section 11.1 of the Loan Agreement with respect to the Banks and the
Administrative Agent, and in the fashion prescribed in Section 11.1 of the Loan
Agreement with respect to the Subsidiary to the address of the Borrower set
forth in or otherwise provided pursuant to the Loan Agreement.
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<PAGE>
21. Governing Law. The provisions of this Agreement shall be construed
and interpreted, and all rights and obligations of the parties hereto
determined, in accordance with the internal laws of the State of New York
applicable to contracts made and to be performed in the State of New York. This
Agreement, together with all documents referred to herein, constitutes the
entire agreement among the Subsidiary and the Banks and the Administrative Agent
with respect to the matters addressed herein and may not be modified except by a
writing executed by the Administrative Agent and delivered to the Subsidiaries.
22. Severability. If any paragraph or part thereof of this Agreement
shall for any reason be held or adjudged to be invalid, illegal or unenforceable
by any court of competent jurisdiction, such paragraph or part thereof so
adjudicated invalid, illegal or unenforceable shall be deemed separate, distinct
and independent, and the remainder of this Agreement shall remain in full force
and effect and shall not be affected by such holding or adjudication.
23. FCC Consent. Notwithstanding anything herein which may be construed
to the contrary, no action shall be taken by the Administrative Agent with
respect to the Licenses issued by the FCC unless and until all requirements of
Applicable Law, including, without limitation, any required approval under the
Communications Act, including without limitation the provision for ten (10) days
notice to the FCC required by 47 C.F.R. ss. 22.917(e), requiring the consent to
or approval of such action by the FCC or any governmental or other authority,
have been satisfied. The Subsidiary covenants that upon request of the
Administrative Agent it will cause to be filed such applications and take such
other action as may be reasonably requested by the Administrative Agent to
obtain the consent or approval of the FCC or any governmental or other authority
which has granted any License to the Subsidiary to any action contemplated by
this Agreement and to give effect to the Security Interest of the Administrative
Agent, including, without limitation, the execution of an application for
consent by the FCC to an assignment or transfer involving a change in ownership
or control pursuant to the provisions of the Communications Act.
24. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
25. Changes in Applicable Law. The parties acknowledge their intent
that, upon the occurrence of an Event of Default and during the continuance
thereof, the Administrative Agent shall receive, to the fullest extent permitted
by Applicable Law and governmental policy (including, without limitation, the
rules, regulations and policies of the FCC), all rights necessary or desirable
to obtain, use or sell the Collateral and to exercise
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all remedies available to it under this Agreement, the Uniform Commercial Code
as in effect in any applicable jurisdiction, or other Applicable Law. The
parties further acknowledge and agree that, in the event of changes in law or
governmental policy occurring subsequent to the date hereof that affect in any
manner the Administrative Agent's rights of access to, or use or sale of, the
Collateral, or the procedures necessary to enable the Administrative Agent to
obtain such rights of access, use or sale, the Administrative Agent and the
Subsidiary shall amend this Agreement in such manner as the Administrative Agent
shall reasonably request in order to provide the Administrative Agent such
rights to the greatest extent possible consistent with Applicable Law and
governmental policy.
26. Administrative Agent. Each reference herein to any right granted
to, benefit conferred upon or power exercisable by the "Administrative Agent"
shall be a reference to the Administrative Agent for the benefit of all the
Banks, and each action taken or right exercised hereunder shall be deemed to
have been so taken or exercised by the Administrative Agent for the benefit of
and on behalf of all the Banks.
[Remainder of Page Intentionally Left Blank]
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<PAGE>
IN WITNESS WHEREOF, the undersigned have hereunto set their hands, by
and through their duly authorized representatives, as of the day and year first
written above.
SUBSIDIARY: __________________, INC., a ____________
By:
Its:
[CORPORATE SEAL]
Attest:
Its:
ADMINISTRATIVE AGENT: TORONTO DOMINION (TEXAS), INC., as
Administrative Agent
By:
Its:
SUBSIDIARY SECURITY AGREEMENT
Signature Page 1
<PAGE>
EXHIBIT J
FORM OF USE OF PROCEEDS LETTER
As of ________ __, ____
Toronto Dominion (Texas), Inc.,
as Administrative Agent
909 Fannin Street
Suite 1700
Houston, Texas 77010
Re: $90,000,000 Loans to American Tower Systems, Inc.
Ladies and Gentlemen:
We refer to the Loan Agreement dated as of November 22, 1996 (as in
effect on the date hereof, the "Loan Agreement"), among American Tower Systems,
Inc., a Delaware corporation (the "Borrower"), the Banks (as defined in the Loan
Agreement) and Toronto Dominion (Texas), Inc., as administrative agent for the
Banks (in such capacity, the "Administrative Agent"), pursuant to which and
subject to the terms and conditions whereof the Banks agreed to make loans to
the Borrower. Unless otherwise defined herein, terms defined in the Loan
Agreement are used herein as therein defined.
The Borrower hereby certifies to the Administrative Agent and the Banks
that the proceeds of the Advance made under the Commitment on ___________ ____,
____ shall be used as follows:
______________________________________________________
______________________________________________________
______________________________________________________
Attached hereto is a sources and uses statement describing the
transactions contemplated to occur on __________ __, ____.
AMERICAN TOWER SYSTEMS, INC., a Delaware
corporation
By:
Its:
<PAGE>
EXHIBIT K
FORM OF BORROWER'S LOAN CERTIFICATE
AMERICAN TOWER SYSTEMS, INC.
The undersigned, _________________, as the duly elected
___________________ of American Tower Systems, Inc., a Delaware corporation (the
"Corporation"), hereby certifies, that:
1. The following persons are, on and as of the date hereof, duly
elected officers of the Corporation holding the office(s) set opposite their
respective names, and the signatures set opposite their respective names are the
true signatures of said officers:
Name Office Signature
- ----------------- ------------------ --------------------------
- ----------------- ------------------ --------------------------
- ----------------- ------------------ --------------------------
2. Exhibit A attached hereto is a true and complete copy of the
resolutions duly adopted by the Board of Directors of the Corporation; and such
resolutions have not been amended, modified or rescinded and remain in full
force and effect as of the date hereof.
3. Exhibit B attached hereto is a true and complete copy of the
Certificate of Incorporation of the Corporation and all amendments thereto in
effect on the date hereof.
4. Exhibit C attached hereto is a true and complete copy of the By-Laws
of the Corporation together with all amendments thereto as of the date hereof.
5. Exhibit D attached hereto are true, complete and correct copies of
certificates of good standing for the Borrower from the Secretary of State for
the State of Delaware and for each other jurisdiction in which the Borrower is
required to qualify to do business in order to transact the business which it
transacts in such jurisdiction in accordance with Applicable Law, subject to the
provisions of the Loan Agreement. The Borrower has, from the dates of such
certificates, remained in good standing under the laws of such states.
<PAGE>
6. Exhibit E attached hereto is a true, complete and correct copy of
any shareholders' agreements or voting trust agreements in effect with respect
to the stock of the Borrower.
IN WITNESS WHEREOF, the undersigned _________________, as
___________________ of American Tower Systems, Inc., has executed this
Certificate as of the ____ day of November, 1996.
AMERICAN TOWER SYSTEMS, INC., a Delaware
corporation
By:
Name:
Title:
EXHIBITS
Exhibit A - Authorizing Resolutions
Exhibit B - Certificate of Incorporation
Exhibit C - By-laws
Exhibit D - Good-Standing Certificates
Exhibit E - Shareholders' or Voting Trust Agreements
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<PAGE>
EXHIBIT L
FORM OF SUBSIDIARY LOAN CERTIFICATE
[NAME OF SUBSIDIARY]
The undersigned, _________________________, as the duly elected
_____________________ of ________________, a ___________ corporation (the
"Corporation"), hereby certifies, that:
1. The following persons are, on and as of the date hereof, duly
elected officers of the Corporation holding the office(s) set opposite their
respective names, and the signatures set opposite their respective names are the
true signatures of said officers:
Name Office Signature
- ----------------- ------------------- ----------------------
- ----------------- ------------------- ----------------------
- ----------------- ------------------- ----------------------
2. Exhibit A attached hereto is a true and complete copy of the
resolutions duly adopted by the Board of Directors of the Corporation; and such
resolutions have not been amended, modified or rescinded and remain in full
force and effect as of the date hereof.
3. Exhibit B attached hereto is a true and complete copy of the
Certificate of Incorporation of the Corporation and all amendments thereto in
effect on the date hereof.
4. Exhibit C attached hereto is a true and complete copy of the By-Laws
of the Corporation together with all amendments thereto as of the date hereof.
IN WITNESS WHEREOF, the undersigned ______________________, as
______________________ of _____________________, has executed this Certificate
as of the _____ day of November, 1996.
[NAME OF SUBSIDIARY], a __________
corporation
By:
Name:
Title:
EXHIBITS
Exhibit A - Authorizing Resolutions
Exhibit B - Certificate of Incorporation
Exhibit C - By-laws
<PAGE>
EXHIBIT M
FORM OF PERFORMANCE CERTIFICATE
The undersigned hereby certifies that he or she is the Chief Financial
Officer of American Tower Systems, Inc., a Delaware corporation (the
"Borrower"). In connection with that certain Loan Agreement dated as of November
22, 1996 (as in effect on the date hereof, the "Loan Agreement") by and among
the Borrower, the Banks (as defined in the Loan Agreement) and Toronto Dominion
(Texas), Inc., as administrative agent for the Banks (in such capacity, the
"Administrative Agent"), the undersigned does hereby certify, as the Chief
Financial Officer of and on behalf of the Borrower, that:
1. Calculations demonstrating the interest rate adjustment, as
provided for in Section 2.3(f) of the Loan Agreement, for the
[quarter/year] ended ______________, 199_, are set forth on
Schedule 1 attached hereto;
2. Calculations demonstrating compliance with Sections 7.7, 7.8,
7.9, 7.10 and 7.11 of the Loan Agreement are set forth on
Schedule 2 attached hereto; and
4. To the knowledge of the undersigned after due inquiry of other
officers of the Borrower, no Default or Event of Default has
occurred during or as at the end of such [quarter/year].
Capitalized terms used herein and not otherwise defined are used as
defined in the Loan Agreement.
IN WITNESS WHEREOF, I have executed this Performance Certificate as of
__________________, ____.
AMERICAN TOWER SYSTEMS, INC., a
Delaware corporation
By:
Name:
Chief Financial Officer
<PAGE>
EXHIBIT N
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement is made and entered into as of
____________ ____, ____, by and between _______________________________________
(the "Assignor"), and ______________________________________________ (the
"Assignee").
Recitals
A. American Tower Systems, Inc., a Delaware corporation (the
"Borrower"), the Assignor and certain other financial institutions (together
with any other person which becomes a 'Bank' under the Loan Agreement, as such
term is hereinafter defined, the "Banks"), and Toronto Dominion (Texas), Inc.,
as administrative agent for the Banks (in such capacity, the "Administrative
Agent"), are parties to a certain Loan Agreement dated as of November 22, 1996
(as the same has been amended, modified or supplemented from time to time, the
"Loan Agreement"). Pursuant to the Loan Agreement, the Banks have agreed to
extend credit to the Borrower under the Commitment, of which the Assignor's
portion of the Commitment is the amount specified in Item 1 of Schedule 1 hereto
(the "Assignor's Commitment"). The principal amount of outstanding Loans made by
the Assignor to the Borrower pursuant to the Assignor's Commitment is specified
in Item 2 of Schedule 1 hereto (the "Assignor's Loans"). All capitalized terms
not otherwise defined herein are used herein as defined in the Loan Agreement.
B. The Assignor wishes to sell and assign to the Assignee, and the
Assignee wishes to purchase and assume from the Assignor, (i) the portion of the
Assignor's Commitment specified in Item 3 of Schedule 1 hereto which is
equivalent to the percentage of Assignor's Commitment specified in Item 4 of
Schedule 1 ("Assigned Commitment"), and (ii) the portion of the Assignor's Loans
under the Commitment specified in Item 5 of Schedule 1 hereto (the "Assigned
Loans").
The parties agree as follows:
1. Assignment. Subject to the terms and conditions set forth herein,
the Assignor hereby sells and assigns to the Assignee, and the Assignee
purchases and assumes from the Assignor, without recourse to the Assignor, on
the date set forth above (the "Assignment Date") (a) all right, title, and
interest of the Assignor to the Assigned Loans and (b) all obligations of the
Assignor under the Loan Agreement with respect to the Assigned Commitment. As
full consideration for the sale of the
<PAGE>
Assigned Loans and the Assigned Commitment, the Assignee shall pay to the
Assignor on the Assignment Date such amount as shall have been agreed to between
the Assignor and the Assignee (the "Purchase Price").
2. Consents and Undertaking. The Administrative Agent and the Borrower
hereby consent to the assignment made herein, and the Borrower undertakes within
five (5) Business Days from the Assignment Date to provide new Notes to the
Administrative Agent, for the benefit of the Assignee and the Assignor, as
appropriate to reflect the portion of the Commitment held by each of the
Assignee and the Assignor after giving effect to the assignment contemplated by
this Agreement. The Assignor agrees on the Business Day following receipt by the
Administrative Agent of the new Note, to return its superseded Note to the
Administrative Agent, which shall thereupon transmit the new Notes to the
Assignor and the Assignee and the superseded Note to the Borrower for
cancellation.
3. Representations and Warranties. Each of the Assignor and the
Assignee represents and warrants to the other, to the Administrative Agent and
to the Borrower (a) that (i) it has full power and legal right to execute and
deliver this Agreement and to perform the provisions of this Agreement; (ii) the
execution, delivery, and performance of this Agreement have been authorized by
all necessary action, corporate or otherwise, on its part and do not violate any
provisions of its charter or by-laws or any contractual obligations or
requirement of law binding on it; and (iii) this Agreement constitutes its
legal, valid and binding obligation, enforceable against it in accordance with
its terms subject, as to enforcement of remedies, to the following
qualifications: (A) an order of specific performance and an injunction are
discretionary remedies and, in particular, may not be available where damages
are considered an adequate remedy at law, and (B) enforcement may be limited by
bankruptcy, insolvency, liquidation, reorganization, reconstruction and other
similar laws affecting enforcement of creditors' rights generally (insofar as
any such law relates to the bankruptcy, insolvency or similar event of the
Assignee or the Assignor, as the case may be), and (b) that its purchase of the
Assigned Loans and the Assigned Commitment does not constitute a "prohibited
transaction" as defined in Section 4.1(m) of the Loan Agreement.
4. Condition Precedent. The obligations of the Assignor and the
Assignee hereunder shall be subject to the fulfillment of the condition that (i)
the Assignor shall have received payment in full of the Purchase Price and (ii)
the Assignor and the Assignee shall have complied with other applicable
provisions of Section 11.5(c) of the Loan Agreement.
5. Notice of Assignment. The Assignor hereby gives notice of the
assignment and assumption of the Assigned Loans and the Assigned Commitment to
the Administrative Agent and hereby
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<PAGE>
instructs the Borrower to make payments with respect to the Assigned Loans and
the Assigned Commitment directly to the Administrative Agent for the benefit of
the Assignee as provided in the Loan Agreement; provided, however, that the
Borrower and the Administrative Agent shall be entitled to continue to deal
solely and directly with the Assignor in connection with the interests so
assigned until (i) the Administrative Agent shall have received a copy of this
Assignment and Assumption Agreement duly executed by the Assignor, the Assignee,
and the Borrower, and shall have received the assignment fee described in
Section 11.5(c)(iii) of the Loan Agreement, and (ii) the Assignor shall have
delivered to the Administrative Agent its Note. From and after the date (the
"Effective Date") on which the Administrative Agent shall notify the Borrower,
the Assignee and the Assignor that (i) and (ii) have occurred and all consents
(if any) required have been given, the Assignee shall be deemed to be a party to
the Loan Agreement and, to the extent that rights and obligations thereunder
shall have been assigned to Assignee as provided herein, shall have the rights
and obligations of a Bank under the Loan Agreement. After the Effective Date,
and with respect to all such amounts accrued from the Assignment Date, (a) all
interest, principal, fees, and other amounts that would otherwise be payable to
the Assignor in respect of the Assigned Loans and the Assigned Commitment shall
be paid to the Assignee, (b) if the Assignor receives any payment on account of
the Assigned Loans or the Assigned Commitment that is payable to the Assignee,
the Assignor shall promptly deliver such payment to the Assignee, and (c) if the
Assignee receives any payment in respect of Obligations of the Borrower accrued
prior to the Effective Date, then the Assignee shall pay over the same to the
Assignor. The Assignee agrees to deliver to the Borrower and the Administrative
Agent on or before the Effective Date such Internal Revenue Service forms as may
be required to establish that the Assignee is entitled to receive payments under
the Loan Agreement without deduction or withholding of tax.
6. Independent Investigation. The Assignee acknowledges that it is
purchasing the Assigned Loans and the Assigned Commitment from the Assignor
without recourse and, except as provided in Section 3(a) hereof, without
representation or warranty. The Assignee further acknowledges that it has made
its own independent investigation and credit evaluation of the Borrower in
connection with its purchase of the Assigned Loans and the Assigned Commitment
and has received copies of all Loan Documents that it has requested. Except for
the representations or warranties set forth in Section 3(a), the Assignee
acknowledges that it is not relying on any representation or warranty of the
Assignor, expressed or implied, including without limitation, any representation
or warranty relating to the legality, validity, genuineness, enforceability,
collectibility, interest rate, repayment schedule, or accrual status of the
Assigned Loans or the Assigned Commitment, the legality, validity, genuineness,
or enforceability of the Loan Agreement,
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<PAGE>
the Notes, or any other Loan Document referred to in, or delivered pursuant to,
the Loan Agreement, or the financial condition or creditworthiness of the
Borrower. The Assignor has not acted and will not be acting as either the
representative, agent or trustee of the Assignee with respect to matters arising
out of or relating to the Loan Agreement or this Agreement. From and after the
Effective Date, the Assignor shall have no rights or obligations with respect to
the Assigned Loans or the Assigned Commitment.
7. Method of Payment. All payments to be made by the Assignor or the
Assignee party hereunder shall be in funds available at the place of payment on
the same day and shall be made by wire transfer to the account designated by the
party to receive payment.
8. Integration. This Agreement shall supersede any prior agreement or
understanding between the parties (other than the Loan Agreement or other Loan
Documents) as to the subject matter hereof.
9. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and shall be
binding upon the parties, their successors and assigns.
10. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the internal laws of the State of New York applicable to
contracts made and to be performed in New York.
IN WITNESS WHEREOF, the Assignor and Assignee have executed, sealed and
delivered this Agreement as of the date first above written.
[ASSIGNOR]
By:
Title:
[ASSIGNEE]
By:
Title:
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<PAGE>
Agreed and Accepted:
AMERICAN TOWER SYSTEMS, INC.,
a Delaware corporation
By: _____________________________
Title :__________________________
Acknowledged:
TORONTO DOMINION (TEXAS), INC.,
as Administrative Agent
By: _____________________________
Title :__________________________
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<PAGE>
SCHEDULE 1
TO
ASSIGNMENT AND ASSUMPTION AGREEMENT
Loan Agreement
for American Tower Systems, Inc.
dated as of November 22, 1996
Item 1. Assignor's Commitment: $__________
Item 2. Assignor's Loans Outstanding
(a) Base Rate Advances $__________
(b) LIBOR Advances $__________
Item 3. Amount of Assigned Commitment $__________
Item 4. Percentage of Commitment Assigned __________%
Item 5. Amount of Assigned Loans $__________
(a) Base Rate Advances $__________
(b) LIBOR Advances $__________
Item 6. Lending Office of Assignee _________________________
and Address for Notices _________________________
under Loan Agreement _________________________
_________________________
<PAGE>
Notes to Schedule 1
1. Insert the dollar amount of Assignor's portion of the Commitment
prior to assignment.
2. Insert the total amount of outstanding Loans of Assignor, showing a
breakdown by type. Description of the type of Loan should conform to the
description in the Loan Agreement.
3. Insert the dollar amount of the Assignor's Commitment, including
outstanding Loans, being assigned.
4. Assigned Commitment as of a percentage of total Commitment of all
Banks.
5. Insert the total amount of outstanding Loans of Assignor being
assigned to Assignee. Description of the type of Loans should be consistent with
Item 2.
6. Insert the name and address of the lending office of the Assignee.
ASSET PURCHASE AGREEMENT
By and Between
AMERICAN TOWER SYSTEMS, INC.
and
MERIDIAN SALES AND SERVICES COMPANY
Dated as of
February 5, 1997
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
ARTICLE 1 DEFINED TERMS...................................................................................1
ARTICLE 2 SALE AND PURCHASE OF ASSETS.....................................................................2
2.1 Agreement to Sell and Buy.......................................................................2
2.2 Assumption of Liabilities and Obligations. .....................................................3
2.3 Closing; Purchase Price.........................................................................5
2.4 Accounts Receivable.............................................................................6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF MERIDIAN......................................................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.................................11
3.8 Intangible Assets..............................................................................12
3.9 Related Transactions...........................................................................13
3.10 Insurance......................................................................................13
3.11 Tax Matters. .................................................................................13
3.12 Employee Retirement Income Security Act of 1974................................................14
3.13 Absence of Sensitive Payments..................................................................16
3.14 Inapplicability of Specified Statutes..........................................................16
3.15 Employment Arrangements........................................................................16
3.16 Material Agreements............................................................................17
3.17 Ordinary Course of Business....................................................................17
3.18 Material and Adverse Restrictions..............................................................19
3.19 Broker or Finder...............................................................................19
3.20 Solvency.......................................................................................19
3.21 Environmental Matters..........................................................................19
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF ATS..........................................................20
4.1 Organization and Business; Power and Authority; Effect of Transaction..........................20
4.2 Broker or Finder...............................................................................20
4.3 Solvency.......................................................................................21
4.4 No Legal Action................................................................................21
4.5 Physical Assets "AS IS"........................................................................21
ARTICLE 5 COVENANTS......................................................................................21
5.1 Access to Information; Confidentiality.........................................................21
5.2 Agreement to Cooperate.........................................................................23
5.3 Public Announcements...........................................................................24
5.4 Notification of Certain Matters................................................................24
5.5 No Solicitation................................................................................24
5.6 Conduct of Business by Meridian Pending the Closing............................................25
<PAGE>
5.7 Preliminary Title Reports......................................................................26
5.8 Environmental Site Assessments.................................................................26
ARTICLE 6 CLOSING CONDITIONS.............................................................................27
6.1 Conditions to Obligations of Each Party to Effect the Transactions.............................27
6.2 Conditions to Obligations of ATS...............................................................27
6.3 Conditions to Obligations of Meridian..........................................................30
ARTICLE 7 TERMINATION, AMENDMENT AND WAIVER..............................................................32
7.1 Termination....................................................................................32
7.2 Effect of Termination..........................................................................32
ARTICLE 8 INDEMNIFICATION................................................................................33
8.1 Survival.......................................................................................33
8.2 Indemnification................................................................................34
8.3 Limitation of Liability........................................................................36
8.4 Notice of Claims...............................................................................37
8.5 Defense of Third Party Claims..................................................................37
8.6 Exclusive Remedy...............................................................................38
ARTICLE 9 GENERAL PROVISIONS.............................................................................38
9.1 Amendment......................................................................................38
9.2 Waiver.........................................................................................38
9.3 Fees, Expenses and Other Payments..............................................................38
9.4 Notices........................................................................................39
9.5 Specific Performance; Other Rights and Remedies................................................40
9.6 Severability...................................................................................40
9.7 Counterparts...................................................................................41
9.8 Section Headings...............................................................................41
9.9 Governing Law..................................................................................41
9.10 Further Acts...................................................................................41
9.11 Entire Agreement; Separate Agreements..........................................................41
9.12 Assignment.....................................................................................42
9.13 Parties in Interest............................................................................42
9.14 Mutual Drafting................................................................................42
9.15 Venue..........................................................................................42
</TABLE>
APPENDIX A: Definitions
EXHIBITS:
EXHIBIT A Form of Noncompetition Agreement
EXHIBIT B Form of Indemnity Escrow Agreement
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<PAGE>
SCHEDULES:
Meridian Disclosure Schedule
Tax Allocation Schedule
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<PAGE>
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is dated as of
February 5, 1997 by and between American Tower Systems, Inc., a Delaware
corporation ("ATS"), and Meridian Sales and Services Company, a California
corporation ("Meridian").
WHEREAS, Meridian owns and leases and operates communication towers and
is engaged in the business of managing communication sites for third parties
(the "Meridian Business");
WHEREAS, ATS desires to purchase and Meridian desire to sell the
Meridian Assets and the Meridian Business on the terms and conditions
hereinafter set forth;
WHEREAS, simultaneously with the execution and delivery of this
Agreement, ATS and Meridian have entered into an escrow agreement (the "Escrow
Agreement") with Sullivan & Worcester LLP, counsel for ATS, and Levinson,
Miller, Jacobs & Phillips, counsel for Meridian (the "Escrow Agent"), pursuant
to which ATS has made a deposit of $167,500 (the "Escrow Deposit"); and
WHEREAS, ATS is or will become party to an asset purchase agreement
with each of Meridian Radio Sites ("MRS") and Meridian Communications North
("MCN") (individually, an "Other Agreement" and collectively, the "Other
Agreements" as further modified in the definition thereof), relating to the
purchase and sale of the communication towers and the business of managing
communication sites for third parties of each of MRS and MCN;
NOW, THEREFORE, in consideration of the above premises and the
covenants and agreements contained herein, the parties, intending to be legally
bound, do hereby 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 the Meridian 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. The term
"either party" shall, unless the context otherwise requires, refer to Meridian
and ATS.
<PAGE>
ARTICLE 2
SALE AND PURCHASE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and conditions set
forth in this Agreement, Meridian hereby agrees to sell, assign, transfer and
deliver to ATS at the Closing, and ATS agrees to purchase at the Closing, the
Meridian Assets and the Meridian Business, free and clear of any Liens of any
nature whatsoever except for Permitted Liens. For purposes of this Agreement,
the term "Meridian Assets" shall mean all of the Assets of Meridian, including
without limitation the right to use the name "Meridian" and all variations
thereof, 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;
(iii) all FCC Licenses and equipment and other assets relating
to the specialized mobile radio business of Meridian as more
specifically described in Section 2(iii) of the Meridian Disclosure
Schedule;
(iv) all FCC licenses and equipment and other assets relating
to the repeater radio service business of Meridian as more specifically
described in Section 2.1(iv) of the Meridian Disclosure Schedule;
(v) all books and records (including without limitation, if
retained by Meridian, any financial records necessary or desirable to
enable the condition specified in Section 6.2(g) to be satisfied) which
Meridian is required by Applicable Law to retain, subject to the right
of ATS to have access and to copy for a period of five (5) years from
the Closing Date; the records described herein shall further include
without limitation all corporate seals, certificates of incorporation,
minute books, stock books, Tax Returns or other records having to do
with the corporate organization of Meridian;
(vi) any pension, profit-sharing or employee benefit plans,
including any assets in any related trusts;
(vii) the personal assets of the officers, directors and
shareholders of Meridian as more specifically described in Section
2.1(vii) of the Meridian Disclosure Schedule;
(viii) any and all rights of Meridian and its shareholders for
federal, state and local tax refunds; and
(ix) any and all products, profits and proceeds of, and
including without limitation any Claims with respect to, any of the
foregoing.
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<PAGE>
2.2 Assumption of Liabilities and Obligations.
(a) At the Closing, ATS shall assume and agree to pay, discharge and
perform the following obligations and liabilities of Meridian (collectively, the
"Meridian Assumed Obligations"): (i) all of the obligations and liabilities of
Meridian under the ATS Assumable Agreements, (ii) all obligations and
liabilities of Meridian with respect to the ownership and operation of the
Meridian Assets and the conduct of the Meridian Business, on and after the
Closing Date, and (iii) all obligations and liabilities of Meridian arising from
or relating to the acquisition, ownership or operation of the New Sites, whether
arising prior to or after the Closing Date (the "New Site Assumed Obligations"),
except for such obligations and liabilities (A) that arise from grossly
negligent or willful misconduct of Meridian prior to the Closing Date or (B) the
existence of which is in contravention of (I) representations or warranties made
by Meridian pursuant to the provisions of Article 3, (II) covenants or
agreements made by Meridian pursuant to the provisions of Section 5.6, or (III)
provisions of this Agreement requiring the approval of ATS; provided, however,
that notwithstanding the foregoing, ATS shall not assume and agree to pay, and
shall not be obligated with respect to, the Meridian obligation and liabilities
referred to in Section 2.2(b) (the "Meridian Nonassumed Obligations"); provided
further, however, that, notwithstanding the preceding proviso or Section 2.2(b),
the term "Meridian Nonassumed Obligations" shall not include, and the term
"Meridian Assumed Obligations" shall include, any liability arising out of the
transfer or assignment to ATS of, or the use or enjoyment of the benefits by ATS
under, any Contract, Governmental Authorization or Private Authorization the
transfer or assignment of which (according to Section 2.2(a) of the Meridian
Disclosure Schedule) requires or may require the consent of any Authority or
other third party (collectively, the "Nonassignable Contracts"), if ATS has, on
or prior to the Closing Date, notified Meridian in writing (an "Acceptance
Notice") that ATS consents to the transfer or assignment of such Nonassignable
Contract despite the failure or inability of ATS and Meridian to obtain the
approval or consent of an Authority or a third party whose approval or consent
is required pursuant to the terms of such Nonassignable Contract, or elects to
receive the benefits of such Nonassumable Contract, in either of which events,
if the approval or consent of an Authority or a third party applicable to
transfer of such Nonassignable Contract is required to be obtained as a
condition to ATS's obligations at Closing pursuant to the provisions of Section
6.1(a), 6.2(d) or 6.2(m), ATS shall be deemed to have waived such condition with
respect to such Nonassignable Contract. With respect to any Nonassignable
Contract for which the applicable consent of the third party is not obtained
prior to the Termination Date and for which ATS does not timely deliver an
Acceptance Notice as described in the preceding sentence, the rights and
obligations of the parties shall be as follows unless otherwise agreed by
Meridian and ATS in writing: (1) if obtaining such approval or consent was a
condition to ATS's obligations at the Closing pursuant to the provisions of
Section 6.1(a), 6.2(d) or 6.2(m), this Agreement shall terminate in the manner
described in Section 7.2(a); and (2) if obtaining such approval or consent was
not such a condition to ATS's obligations, the purchase and sale contemplated
hereunder shall proceed in accordance with all the terms of this Agreement,
except that the Nonassignable Contract shall no longer constitute part of the
"Meridian Assets" and Meridian shall retain all benefits and liabilities
thereunder.
(b) Except for the Meridian Assumed Obligations or as expressly
provided in this Agreement, ATS shall not assume or become obligated to perform
any debt, liability or obligation
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<PAGE>
of Meridian or relating to the ownership or operation of any of the Meridian
Assets or the conduct of the Meridian Business whatsoever, including without
limitation the following:
(i) subject to the provisions of Article 8, the ownership and
operation of the Meridian Assets or the conduct of the Meridian
Business prior to the Closing Date, including without limitation Taxes,
unfunded pension costs, any Employment Arrangement of Meridian
(including without limitation any obligation to any Meridian Employee
for severance benefits, vacations time or sick leave), and any of the
following to the extent same arise from Events occurring prior to or
existing on the Closing Date: products liability, Legal Actions or
other Claims, and obligations and liabilities relating to Environmental
Law;
(ii) any obligations or liabilities under the ATS Assumable
Agreements relating to the period prior to the Closing;
(iii) any insurance policies of Meridian;
(iv) those required to be disclosed in the Meridian Disclosure
Schedule which are not so disclosed or which, if disclosed, Section
8.2(b)(ii) of the Meridian Disclosure Schedule indicates that such
obligation or liability will not be assumed;
(v) any liability or obligation from or relating to breach of
any warranty or any misrepresentation by Meridian under this Agreement
or any Collateral Document;
(vi) any liability or obligation from or relating to breach or
violation of, or failure to perform, any of Meridian's obligations,
covenants, agreements or undertakings set forth in this Agreement or
any Collateral Document, including without limitation Article 5 of this
Agreement;
(vii) any obligation or liability relating to any Excluded
Asset;
(viii) any obligation or liability with respect to capitalized
lease obligations or Indebtedness for Money Borrowed;
(ix) any taxes, fees, expenses or other amounts required to be
paid by Meridian pursuant to the provisions of this Agreement or any
Collateral Document; and
(x) any Contract with any Affiliate of Meridian, other than
those set forth in Section 2(b)(x) of the Meridian Disclosure Schedule.
The term "ATS Assumable Agreements" shall mean all obligations and liabilities
of Meridian under all Contractual Obligations, Governmental Authorizations and
Private Authorizations relating to the ownership or operation of any of the
Meridian Assets or the conduct of the Meridian Business, other than any Meridian
Nonassumed Obligation.
(c) Notwithstanding anything contained in this Agreement to the
contrary, except as set forth in Article 8 or Section 2.2(c) of the Meridian
Disclosure Schedule, all items of income and
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<PAGE>
expense (including without limitation with respect to rent, utility charges, Pro
Ratable Taxes and wages, salaries and accrued but unused vacation of Meridian
employees) arising from the ownership or operation of the Meridian Assets or the
conduct of the Meridian Business shall be prorated as of 12:01 a.m., Eastern
time, on the Closing Date, with Meridian entitled to and responsible for any
such items on or prior to the Closing Date and ATS entitled to and responsible
for any such items relating to any subsequent period. For these purposes, Pro
Ratable 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 Pro Ratable Taxes (such as property
Taxes) imposed on a periodic basis shall be allocated on a daily basis. If
either party shall have received any such revenues or paid any such expenses or
charges which, pursuant to the terms hereof, the other party is entitled to or
responsible for, it shall furnish the other party with a detailed statement of
any such items as soon as practicable after receipt or payment thereof. The
parties shall use their best efforts to agree upon such items and other
adjustments prior to the Closing Date and, in any event, except as set forth in
Section 2.2(c) of the Meridian Disclosure Schedule, with sixty (60) days
thereafter. If the parties are unable within such period to agree upon such
items and other adjustments, Meridian and ATS shall, within the following ten
(10) days, jointly designate a nationally known independent public accounting
firm to be retained to review such items and other adjustments. The fees and
other expenses of retaining such independent public accounting firm shall be
borne equally by Meridian and ATS. Such firm shall report its conclusions as to
such items and other adjustments pursuant to this Section and such report shall
be conclusive on all parties to this Agreement and not subject to dispute or
review. Upon such agreement or determination by such independent accounting
firm, Meridian or ATS, as the case may be, shall promptly reimburse the other
party for any income received or expenses paid by the other party and not
previously reimbursed or any other adjustment required by this Section.
Notwithstanding the foregoing or any other provision of this Agreement to the
contrary, ATS shall be solely responsible for the payment of, and shall defend,
indemnify and hold harmless Meridian, its officers, directors and shareholders
from, any and all supplemental or additional real property or personal property
taxes assessed on or in connection with the Meridian Assets or any part thereof,
which arise from the transactions contemplated by this Agreement, except as
otherwise provided in Section 9.3 with respect to California or other sales
and/or use taxes, and documentary or governmental transfer or stamp taxes
arising from the purchase and sale of the Meridian Assets and the Meridian
Business contemplated hereby.
Nothing contained in this Section 2.2(c) 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 therein.
2.3 Closing; Purchase Price. The closing of the Transactions (the
"Closing") shall take place at Levinson, Miller, Jacobs & Phillips, 1875 Century
Park East, Los Angeles, California 90067, at 10:00 a.m., local time, on the date
on or prior to June 30, 1997 which is five (5) business days after all of the
conditions specified in Article 6 (other than those which are to be satisfied at
the Closing) have been satisfied or waived in writing or such other date, prior
to the Termination Date, as the parties may agree (the "Closing Date"). At the
Closing, each of the parties shall deliver such bills of sale, assignments,
assumptions of liabilities 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. The purchase price for the Meridian Assets and the
Meridian Business (the
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"Purchase Price") shall be an amount equal to $21,559,456, plus an amount equal
to the Construction Adjustment. The term "Construction Adjustment" shall mean an
amount equal to the aggregate amount actually paid by Meridian after June 13,
1996 and prior to the Closing Date with respect to the costs and expenses
incurred in the acquisition and construction of those certain projects
(collectively, the "New Sites") (a) described in Section 2.3 of the Meridian
Disclosure Schedule or (b) acquired after the date of this Agreement with the
prior written consent of ATS, which consent shall not be unreasonably withheld,
other than, in all cases, those costs and expenses which are unreasonable or to
which ATS shall have objected in writing prior to their incurrence or commitment
by Meridian. The Purchase Price shall be payable by wire transfer of immediately
available funds (a) to the Indemnity Escrow Agent (or as it may designate)
pursuant to the provisions of the Indemnity Escrow Agreement in the amount of
$2,155,946 minus an amount equal to the amount, if any, expended by Meridian
subsequent to the date of this Agreement pursuant to a mutually agreed upon
designation of Meridian and ATS entitled an "Indemnity Escrow Fund Reducing
Expense" to remedy any misrepresentation, breach of warranty or other breach or
defect (the "Indemnity Escrow Fund") and (b) to Meridian for the balance of the
purchase price to such account as is designated by Meridian in written
instructions to ATS delivered not later than two (2) business days prior to the
Closing.
The parties hereto have heretofore agreed upon an allocation schedule
(the "Tax Allocation Schedule") pursuant to which the Purchase Price shall be
allocated among the Meridian Assets. Each of Meridian and ATS shall report the
purchase and sale of the Meridian Assets and the Meridian Business and the other
Transactions in accordance with the Tax Allocation Schedule (as adjusted for
Events between the date hereof and the Closing Date) for purposes of all
federal, state and local Tax Returns and shall not take, and shall cause their
respective Affiliates, representatives, successors and assigns not to take, any
position on any federal, state or local Tax Return or report, inconsistent with
such reporting position. Each of Meridian and ATS shall promptly give the other
notice of any disallowance of or challenge to such reporting by any Taxing
Authority. Notwithstanding the provisions of this Section, 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.
2.4 Accounts Receivable. At the closing, Meridian shall appoint ATS its
agent for the purpose of collecting all Accounts Receivable relating to the
Meridian Business. Meridian shall deliver to ATS on or as soon as practicable
after the Closing Date a complete and detailed statement showing the name,
amount and age of each Accounts Receivable of the Meridian Business. Subject to
and limited by the following, revenues relating to the Accounts Receivable
relating to the Meridian Business will be for the account of Meridian. ATS shall
use its reasonable business efforts to collect the Accounts Receivable with
respect to the Meridian Business for a period of ninety (90) days after the
Closing Date (the "Collection Period"). Any payment received by ATS during the
Collection Period from any customer with an account which is an Accounts
Receivable with respect to the Meridian Business shall first be applied in
reduction of the Accounts Receivable, unless the customer contests in writing
the validity of such application. During the Collection Period, ATS shall
furnish Meridian with a list of, and pay over to Meridian, the amounts collected
with respect to the Accounts Receivable with respect to the Meridian Business on
a bi-weekly basis and forward
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to Meridian, promptly upon receipt or delivery, as the case may be, copies of
all correspondence relating to Accounts Receivable. ATS shall provide Meridian
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, the parties shall meet to mutually and in good faith analyze any
uncollected Accounts Receivable to determine if the same, in their reasonable
business judgment, are deemed to be collectable and if ATS desires to retain
such Accounts Receivable. As to each such Accounts Receivable, the parties shall
negotiate a good faith value of such Accounts Receivable, which ATS shall pay to
Meridian if ATS, in its sole discretion, chooses to retain such Accounts
Receivable. Meridian shall retain the right to collect any of its Accounts
Receivable as to which the parties are unable to reach agreement as to a good
faith value, and ATS agrees to turn over to Meridian any payments received
against any such Accounts Receivable. ATS shall not be obligated to use any
extraordinary efforts 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 ATS shall not make any
such referral or compromise, nor settle or adjust the amount of any such
Accounts Receivable, except with the approval of Meridian. ATS shall not incur
any liability to Meridian for any uncollected account unless ATS shall have
engaged in willful misconduct or gross negligence in the performance of its
obligations set forth in this Section. During and after the Collection Period,
without specific agreement with ATS to the contrary, neither Meridian nor its
agents shall make any direct solicitation of the Accounts Receivable for
collection purposes, except for Accounts Receivable retained by Meridian after
the Collection Period. The provisions of this Section shall not apply to those
certain Accounts Receivable set forth in Section 2.4 of the Meridian Disclosure
Schedule or to any other Accounts Receivable which Meridian, in its sole
business judgment, determines will require extraordinary collection efforts or
referrals to a collection agency or attorney for collection (collectively, the
"Retained Accounts Receivable"), provided the Retained Accounts Receivable are
set forth in a written notice delivered to ATS by Meridian on or prior to the
Closing Date. As to all Retained Accounts Receivable, Meridian shall retain the
sole and exclusive right to collect same as Meridian in its sole discretion may
determine.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF MERIDIAN
Meridian hereby represents, warrants and covenants to, and agrees with,
ATS as follows:
3.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) Meridian is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization, 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) Meridian has all requisite corporate power and corporate authority
and has in full force and effect all Governmental Authorizations (which, for
purposes of this Section 3.1(b), relate only to the sale of the Meridian Assets
and Meridian Business generally and not to "site-specific" Governmental
Authorizations or those required by local Applicable Law) and Private
Authorizations, except for those set forth in Section 3.1(b) of the Meridian
Disclosure Schedule or
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those the failure of which to obtain do not and will not have, individually or
in the aggregate, any Material Adverse Effect on ATS, 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 by it pursuant
hereto or thereto or to consummate the Transactions; and the execution, delivery
and performance of this Agreement and each Collateral Document executed or
required to be executed by it pursuant hereto or thereto have been duly
authorized by all requisite corporate action on the part of Meridian. This
Agreement has been duly executed and delivered by Meridian and constitutes, and
each Collateral Document executed or required to be executed by it pursuant
hereto or thereto or to consummate the Transactions when executed and delivered
by Meridian will constitute, legal, valid and binding obligations of Meridian,
enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, moratorium, insolvency and similar
laws affecting the rights and remedies of creditors and obligations of debtors
generally and by general principles of equity.
(c) Except as set forth in Section 3.1(c) of the Meridian Disclosure
Schedule, and except for matters which would have no Material Adverse Effect on
ATS, neither the execution and delivery by Meridian of this Agreement or any
Collateral Document executed or required to be executed by it pursuant hereto or
thereto, nor the consummation by Meridian of the Transactions, nor compliance
with the terms, conditions and provisions hereof or thereof by Meridian:
(i) will conflict with, or result in a breach or violation of,
or constitute a default under, any Organic Document of Meridian or any
Applicable Law (which, for purposes of this Section 3.1(c)(i), relates
only to the sale of the Meridian Assets and the Meridian Business
generally and not to local Applicable Law) on the part of Meridian, 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 Meridian, other than
those constituting Meridian Nonassumed Obligations; or
(ii) will require Meridian to make or obtain any Governmental
Authorization or Filings (which, for purposes of this Section
3.1(c)(ii), relates only to the sale of the Meridian Assets and the
Meridian Business generally and not to "site-specific" authorizations
or those required by local Applicable Law) or Private Authorization
including without limitation under the FCA, except for filings under
the Hart-Scott-Rodino Act.
(d) Meridian does not have any Subsidiaries, except as set forth in
Section 3.1(d) of the Meridian Disclosure Schedule.
3.2 Financial and Other Information. Meridian has heretofore furnished
to ATS copies of the financial statements of the Meridian Business listed in
Section 3.2 of the Meridian Disclosure Schedule (the "Meridian Financial
Statements"). The Meridian Financial Statements, including in each case the
notes thereto, have been prepared in accordance with Applicable Principles
applied on a consistent basis throughout the periods covered thereby, except as
otherwise noted therein or as set forth in Section 3.2 of the Meridian
Disclosure Schedule, are true, accurate and complete in all Material respects,
do not contain any untrue statement of a material fact or omit to state a
material
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fact required by Applicable Principles to be stated therein or necessary in
order to make the statements contained therein not misleading, and fairly
present in all material respects the financial position and the results of
operations of the Meridian 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.
3.3 Changes in Condition. Since November 30, 1996, except to the extent
specifically described in Section 3.3 of the Meridian Disclosure Schedule and
except for the effect, if any, of the New Sites, there has been, to Meridian's
knowledge, no Material Adverse Change in Meridian. There is no Event (other than
Events which generally affect the economy or any identifiable segment thereof
including without limitation the industries in which Meridian does business and
in which it competes) known to Meridian which Materially Adversely Affects, or
(so far as Meridian can now reasonably foresee) is likely to Materially
Adversely Affect, Meridian, except to the extent specifically described in
Section 3.3 of the Meridian Disclosure Schedule and except for the effect, if
any, of the New Sites.
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 materiality qualifications contained therein or set forth in the
Meridian Disclosure Schedule, except for such exceptions and qualifications
(other than those set forth in the Meridian 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 Meridian.
3.5 Title to Properties; Leases.
(a) Section 3.5(a) of the Meridian Disclosure Schedule contains a true,
accurate and complete list of all real property owned or leased by Meridian that
is part of the Meridian Assets. Subject to any exceptions set forth with
reasonable specificity on Section 3.5(a) of the Meridian Disclosure Schedule,
Meridian has good and marketable title to all real property (other than
leasehold Real Property and Insured Real Property) and good and merchantable
title to all other assets (other than real property), tangible and intangible,
constituting a part of the Meridian Assets, in each case free and clear of all
Liens, except (i) Permitted Liens, (ii) Liens set forth on Section 3.5(a) of the
Meridian Disclosure Schedule and (iii) Approved Title Conditions. 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 Meridian Disclosure Schedule), no financing statements
under the Uniform Commercial Code and no other filing which names Meridian as
debtor or which covers or purports to cover any of the Meridian Assets is on
file in any state or other jurisdiction, and Meridian 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 Meridian Disclosure Schedule,
each Lease or other occupancy or other agreement under which Meridian holds real
or personal property constituting a part of the Meridian Assets has been duly
authorized, executed and delivered by Meridian and, to Meridian's knowledge,
each of the other parties thereto, and is a legal, valid and binding obligation
of Meridian, and, to Meridian's knowledge, each of the other parties thereto,
enforceable in accordance with its terms, except as such enforceability may be
limited by bankruptcy, moratorium, insolvency and similar laws affecting the
rights and remedies
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of creditors and obligations of debtors generally and by general principles of
equity. Except as otherwise set forth in Section 3.5(a) of the Meridian
Disclosure Schedule, Meridian has, to Meridian's knowledge, 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.
Except as otherwise set forth in Section 3.5(a) of the Meridian Disclosure
Schedule, all of such Leases are, to Meridian's knowledge, valid and subsisting
and in full force and effect; neither Meridian nor, to Meridian's knowledge, any
other party thereto, is in Material default in the performance, observance or
fulfillment of any obligation, covenant or condition contained in any such
Lease.
Except as disclosed in Section 3.5(a) of the Meridian Disclosure
Schedule, to Meridian's current actual knowledge, all improvements on the real
property owned or leased by Meridian are in compliance with applicable zoning
and land use laws, ordinances and regulations in all respects necessary to
conduct the operations as presently conducted, except for any instances of
non-compliance which do not and will not in the aggregate have a Material
Adverse Effect on the owner or lessee, as the case may be, of such real
property. Except as disclosed in Section 3.5(a) of the Meridian Disclosure
Statement, all such improvements, to Meridian's current actual knowledge, comply
in all Material aspects with all Applicable Laws, Governmental Authorizations
and Private Authorizations. Except as disclosed in Section 3.5(a) of the
Meridian Disclosure Statement, to Meridian's current actual knowledge, all of
the transmitting towers, ground radials, guy anchors, transmitting buildings and
related improvements located on the real property owned or leased by Meridian
are located entirely on such real property. Meridian has no knowledge of any
pending, threatened or contemplated action to take by eminent domain or
otherwise to condemn any part of any real property owned or leased by Meridian.
The representations and warranties set forth in this paragraph shall not apply
to the New Sites.
(b) Section 3.5(b) of the Meridian Disclosure Schedule contains a true,
accurate and complete description of all Leases under which any real property
used in the Meridian Business is leased. None of the fixed assets or equipment
comprising a part of the Meridian Assets is subject to contracts of sale, and
none is held by Meridian as lessee or as conditional 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 Meridian Disclosure
Schedule. Except for the New Sites, such real property (other than land),
fixtures, fixed assets and other material items of personal property, including
equipment, have, between November 30, 1996 and the date of this Agreement, been
maintained in all Material respects in a manner consistent with past practice.
(c) Except as set forth in Section 3.5(c) of the Meridian Disclosure
Schedule, since January 1, 1993, Meridian has not received any written notice
that any such real property owned or leased by Meridian and reflected in Section
3.5(b) of the Meridian 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 Meridian
Disclosure Schedule sets forth a true, accurate and complete list and
description of each Private Authorization (other than those with respect to the
New Sites) which individually is Material to the Meridian Assets or the Meridian
Business, all of which are, to Meridian's current actual knowledge, in full
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force and effect. To Meridian's knowledge, Meridian has obtained all Private
Authorizations (other than those with respect to the New Sites) with respect to
the ownership or operation of the Meridian Assets or the conduct of the Meridian
Business as currently conducted which, if not obtained and maintained, could,
individually or in the aggregate, Materially Adversely Affect Meridian. Meridian
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 Meridian. No such Private Authorization is the subject of any pending
or, to Meridian's knowledge, threatened attack, revocation or termination.
3.7 Compliance with Governmental Authorizations and Applicable Law.
(a) Section 3.7(a) of the Meridian Disclosure Schedule contains a
description of:
(i) all Legal Actions pending or, to Meridian's knowledge, at
any time since January 1, 1993 was pending or is currently threatened
against Meridian with respect to the operation or ownership of the
Meridian Assets or conduct of the Meridian Business;
(ii) all Legal Actions pending or, to Meridian's knowledge,
threatened with respect to the operation or ownership of the Meridian
Assets or the conduct of the Meridian Business which, individually or
in the aggregate, are reasonably likely to result in the revocation or
termination of any Governmental Authorization or the imposition of any
restriction of such a nature as would Adversely Affect the ownership or
operations of the Meridian Business; in particular, but without
limiting the generality of the foregoing, there are no applications,
complaints or Legal Actions pending or, to Meridian's knowledge,
threatened before or by any Authority (x) relating to the ownership or
operation of the Meridian Assets or the conduct of the Meridian
Business, (y) involving charges of illegal discrimination by Meridian
under any federal or state employment Laws, or (z) involving
Environmental Laws or zoning laws; and
(iii) to Meridian's current actual knowledge, each
Governmental Authorization required by a conditional use permit or
special use permit that is necessary to permit Meridian to execute and
deliver this Agreement and to perform its obligations hereunder.
(b) To Meridian's current actual knowledge, Meridian has obtained all
Governmental Authorizations which constitutes conditional use permits or special
use permits (other than those with respect to the New Sites) (a true, complete
and accurate, in all material respects, list of which is set forth in Section
3.7(b) of the Meridian Disclosure Schedule or referenced in the documents or
agreements so listed) which are necessary for the ownership or operation of the
Meridian Assets or the conduct of the Meridian Business as now conducted and
which, if not obtained and maintained, would, individually or in the aggregate,
have any Material Adverse Effect on Meridian. None of such Governmental
Authorizations is, to Meridian's current actual knowledge, subject to any
restriction or condition which would limit in any Material respect the ownership
or operations of the Meridian Assets or the conduct of the Meridian Business as
currently conducted, except for
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restrictions and conditions that are either (i) set forth in the documents
evidencing such Governmental Authorization or (ii) generally applicable to
Governmental Authorizations of such type. To Meridian's current actual
knowledge: (x) such Governmental Authorizations 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 Meridian or its officers, directors, employees or agents; and
(y) the ownership or operation of the Meridian Assets or the conduct of the
Meridian Business are in accordance in all Material respects with the
Governmental Authorizations. To Meridian's current actual knowledge, all
Material reports, forms and statements required to be filed by Meridian with all
Authorities with respect to the Meridian Business (other than with respect to
the New Sites) have been filed and are true, complete and accurate in all
Material respects. No such Governmental Authorization is the subject of any
pending or, to Meridian's knowledge, threatened challenge or proceeding to
revoke or terminate any such Governmental Authorization. To Meridian's current
actual knowledge, no such Governmental Authorization would not be renewed in the
name of Meridian by the granting Authority in the ordinary course, except as set
forth in Section 3.7(b) of the Meridian Disclosure Schedule or except with
respect to the New Sites.
(c) Neither Meridian nor any director or officer thereof (in connection
with ownership, operation or operation of the Meridian Assets or the conduct of
the Meridian Business) is in or is charged by any Authority with or, to
Meridian's knowledge, at any time since January 1, 1993 has been in or has been
charged by any Authority with, or, to Meridian's knowledge, 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 or any Applicable Law relating to the ownership and operation of
the Meridian Assets or the conduct of the Meridian Business, and, to Meridian's
current actual knowledge, 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
(x) any Governmental Authorization or any Applicable Law,
except for such breaches, violations or defaults as do not and will not
have, individually or in the aggregate, any Material Adverse Effect on
Meridian, or
(y) any Material requirement of any insurance carrier,
applicable to the ownership or operations of the Meridian Assets or the
conduct of the Meridian Business;
except as otherwise specifically described in Section 3.7(c) of the Meridian
Disclosure Schedule. or except with respect to the New Sites.
(d) With respect to matters, if any, of a nature referred to in Section
3.7(a), 3.7(b) or 3.7(c) of the Meridian Disclosure Schedule, except as
otherwise specifically described in Section 3.7(d) of the Meridian Disclosure
Schedule, all such information and matters set forth in the Meridian Disclosure
Schedule, if adversely determined against Meridian, will not, individually or in
the aggregate, in the reasonable business judgment of Meridian, Materially
Adversely Affect Meridian.
3.8 Intangible Assets. Section 3.8 of the Meridian Disclosure Schedule
sets forth a true, accurate and complete description of all Intangible Assets
(other than Governmental Authorizations)
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relating to the ownership and operation of the Meridian Assets or the conduct of
the Meridian Business held or used by Meridian, including without limitation the
nature of Meridian's interest in each and the extent to which the same have been
duly registered in the offices as indicated therein. Except as set forth in
Section 3.8 of the Meridian Disclosure Schedule, to Meridian's knowledge, no
Intangible Assets (except Governmental Authorizations and Private Authorizations
and the Intangible Assets so set forth) are required for the ownership or
operation of the Meridian Assets or the conduct of the Meridian Business
substantially as currently owned, operated and conducted or proposed to be
owned, operated and conducted on or prior to the Closing Date. To Meridian's
knowledge, Meridian does not wrongfully infringe upon or unlawfully use any
Intangible Assets owned or claimed by another, and Meridian has not received any
notice of any claim or infringement relating to any such Intangible Asset.
3.9 Related Transactions. Meridian is not a party or subject to any
Contractual Obligation relating to the ownership or operation of the Meridian
Assets or the conduct of the Meridian Business between Meridian and any of its
officers, directors, shareholders, employees or, to the knowledge of Meridian,
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 of the Meridian Disclosure Schedule, (ii) Contractual
Obligations between Meridian and any of its directors, shareholders, officers,
employees or Affiliates of Meridian or any of the foregoing, which constitute
Excluded Assets or Meridian Nonassumed Obligations, or (iii) as specifically set
forth in Section 3.9 of the Meridian Disclosure Schedule.
3.10 Insurance. Meridian maintains, with respect to the Meridian Assets
and the Meridian Business, 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 set forth in Section 3.10 of the Meridian Disclosure Schedule.
3.11 Tax Matters.
(a) Except as set forth in Section 3.11(a) of the Meridian Disclosure
Schedule, Meridian has in accordance with all Applicable Laws filed all Tax
Returns which are required to be filed, except with respect to failures to file
which in the aggregate would not have a Material Adverse Effect on Meridian and,
to Meridian's knowledge, 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 for which adequate
provision has been made on the most recent balance sheet forming part of
Meridian Financial Statements. The Tax Returns of Meridian have, to Meridian's
knowledge, been prepared in all Material respects in accordance with all
Applicable Laws and generally accepted principles applicable to taxation
consistently applied. All Taxes which Meridian is required by law to withhold
and collect have, to Meridian's knowledge, been duly withheld and collected, and
have been paid over, in a timely manner, to the proper Authorities to the extent
due and payable. Meridian 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
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of any Tax liabilities of Meridian for the fiscal years prior to and including
the most recent fiscal year. Except as set forth in Section 3.11(a) of the
Meridian Disclosure Schedule, adequate provision has, to Meridian's knowledge,
been made on the most recent balance sheet forming part of Meridian Financial
Statements for all Taxes accrued through the date of such balance sheet of any
kind, 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, to Meridian's knowledge, no past
transactions or matters which could result in additional Taxes of a Material
nature to Meridian for which an adequate reserve has not been provided on such
balance sheet. Meridian is not a "consenting corporation" within the meaning of
Section 341(f) of the Code. Meridian has since January 1, 1989 (i) at all times
been taxable as a Subchapter S corporation under the Code, and (ii) never been a
member of any consolidated group for Tax purposes, except as otherwise set forth
in Section 3.11(a) of the Meridian Disclosure Schedule.
(b) The information shown on the federal income Tax Returns of Meridian
for each of the most recent five tax years (true and complete copies of which
have been furnished by Meridian to ATS to the extent requested in writing by
ATS) is, to Meridian's knowledge, true, accurate and complete in all Material
respects and fairly and accurately reflects the information purported to be
shown. Federal and state income Tax Returns of Meridian have not been examined
by the IRS or applicable state Authority, and Meridian has not been notified of
any proposed examination, except as shown in Section 3.11(b) of the Meridian
Disclosure Schedule.
(c) Meridian is not a party to any tax sharing agreement or
arrangement.
3.12 Employee Retirement Income Security Act of 1974.
(a) Meridian (which for purposes of this Section shall include any
ERISA Affiliate) has not been and has not made at any time since its
organization any contribution to any Plans and has not sponsored any Plan or
Benefit Arrangement except as set forth in Section 3.12(a) of the Meridian
Disclosure Schedule. As to all Plans and Benefit Arrangements listed in Section
3.12(a) of the Meridian 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 Meridian has not received any notice from
any Authority questioning or challenging such compliance;
(ii) all such Plans maintained or previously maintained by
Meridian that are or were intended to comply with Sections 401 and 501
of the Code comply and complied 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;
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(iv) 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 and Meridian has not otherwise engaged in any
prohibited transaction;
(v) there have been no acts or omissions by Meridian 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 Meridian may be liable;
(vi) there are no Claims (other than routine claims for
benefits or actions seeking qualified domestic relations orders)
pending or threatened involving such Plans or the assets of such Plans,
and, to Meridian's knowledge, 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 4043 of ERISA), and no steps have been taken to terminate any
such Plan;
(viii) all group health Plans of Meridian 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 Meridian 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 Meridian nor any of its respective 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 Meridian 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 Meridian to be incurred by Meridian 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) Meridian is not and never has been a party to any
Multiemployer Plan or made contributions to any such Plan;
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(xiv) except as set forth in Section 3.12(a)(xiv) of the
Meridian Disclosure Schedule (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, Meridian 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 Meridian;
and
(xv) Meridian has made available to ATS a copy of the two most
recently filed Federal Form 5500 series and accountant's opinion, if
applicable, for each Plan (and the two most recent actuarial valuation
reports for each Plan, if any, that is subject to Title IV of ERISA),
and all information provided by Meridian to any actuary in connection
with the preparation of any such actuarial valuation report was true,
accurate and complete in all material respects.
(b) The execution, delivery and performance by Meridian of this
Agreement and the Collateral Documents executed or required to be executed
pursuant hereto and thereto will not involve any prohibited transaction within
the meaning of ERISA or Section 4975 of the Code.
3.13 Absence of Sensitive Payments. Neither Meridian nor, to Meridian's
knowledge, any of its officers, directors, employees, agents or other
representatives, has with respect to the Meridian Assets or the Meridian
Business (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. Meridian 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.
3.15 Employment Arrangements. Section 3.15 of the Meridian Disclosure
Schedule contains a true, accurate and complete list of all Meridian employees
involved in the ownership or operation of the Meridian Assets or the conduct of
the Meridian Business (the "Meridian Employees"), together with each such
employee's title or the capacity in which he or she is employed and the basis
for each such employee's compensation. Meridian has no obligation or liability,
contingent or other, under any Employment Arrangement with any Meridian
Employee, other than those listed or described in Section 3.15 of the Meridian
Disclosure Schedule. Except as described in Section 3.15 of the Meridian
Disclosure Schedule, (i) none of the Meridian Employees is now, or, to
Meridian's knowledge, since January 1, 1993, has been, represented by any labor
union or other employee collective bargaining organization, and Meridian is not,
and has never been, a party to any labor or other collective bargaining
agreement with respect to any of the Meridian 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
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stoppages or slowdowns or any pending demands for collective bargaining by any
such union or other organization, and (iii) neither Meridian nor any of such
employees is now, or, to Meridian's knowledge, has since January 1, 1993 been,
subject to or involved in or, to Meridian's knowledge, threatened with, any
union elections, petitions therefore or other organizational or recruiting
activities, in each case with respect to the Meridian Employees. Meridian 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 Meridian
Disclosure Schedule are all Material Agreements relating to the ownership or
operation of the Meridian Assets or the conduct of the business of the Meridian
Business or to which Meridian is a party or to which it is bound or which any of
the Meridian Assets is subject. True, accurate and complete copies of each of
such Material Agreements have been made available by Meridian to ATS and
Meridian has provided ATS with photocopies of all such Material Agreements
requested by ATS (or true, accurate and complete descriptions thereof have been
set forth in Section 3.16 of the Meridian Disclosure Schedule, with respect to
Material Agreements comprised of site leases and site licenses granted by
Meridian to third parties and with respect to Material Agreements that are
oral). All of such Material Agreements are valid, binding and legally
enforceable obligations of Meridian and, to Meridian's knowledge, all other
parties thereto, except as such enforceability may be limited by bankruptcy,
moratorium, insolvency and similar laws affecting the rights and remedies of
creditors and obligations of debtors generally and by general principles of
equity. Meridian has duly complied with all of the Material terms and conditions
of each such Material Agreement (including without limitation with respect to
site user agreements which are Material Agreements) and has not done or
performed, or failed to do or perform (and there is no pending or, to the
knowledge of Meridian, Claim threatened in writing that Meridian 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 Meridian under any of such
Material Agreements in any Material respect, except to the extent set forth in
Section 3.16 of the Meridian Disclosure Schedule or with respect to the New
Sites.
3.17 Ordinary Course of Business. Meridian, from November 30, 1996 to
the date hereof, except (i) as may be described on Section 3.17 of the Meridian
Disclosure Schedule, or (ii) as may be required or expressly contemplated by the
terms of this Agreement, with respect to the Meridian Assets and the Meridian
Business:
(a) has operated its business in all Material respects in the
normal, usual and customary manner in the ordinary and regular course
of business, consistent with prior practice, except with respect to the
New Sites;
(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 $20,000, other than in the ordinary course of
business;
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(c) except in each case in the ordinary course of business
(including without limitation with respect to site user agreements),
consistent with prior practice or with respect to the New Sites:
(i) has not incurred any obligation or liability
(fixed, contingent or other) individually having a value in
excess of $20,000;
(ii) has not entered into any individual commitment
having a value in excess of $20,000; and
(iii) has not canceled any Material debts or claims;
(d) has not discharged or satisfied any Lien, other than a
Permitted Lien, and has not paid 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 (including without limitation site user agreements)
and commitments under Leases existing on that date or incurred since
that date in the ordinary course of business or repaying or prepaying
Long-Term Indebtedness or the current portion thereof, except with
respect to the New Sites;
(e) has not created or permitted to be created any Lien on any
of its tangible property other than Permitted Liens;
(f) has not made or committed to make any Material additions
to its property or any purchases of equipment, except (i) in the
ordinary course of business consistent with past practice or for normal
maintenance and replacements or (ii) with respect to the New Sites;
(g) except as described in Section 3.17(h) of the Meridian
Disclosure Schedule, has not increased the compensation payable or to
become payable to any of the Meridian Employees other than in the
ordinary course of business or otherwise Materially altered, modified
or changed the terms of their employment;
(h) 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;
(i) has not waived any rights of Material value without fair
and adequate consideration;
(j) has not experienced any work stoppage;
(k) except in the ordinary course of business (including
without limitation site user agreements), or with respect to the New
Sites, has not entered into, amended or terminated any Lease,
Governmental Authorization, Private Authorization, Material Agreement
or Employment Arrangement, or any transaction, agreement or arrangement
with any Affiliate of Meridian, except for Meridian Nonassumed
Obligations; and
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(l) has not entered into any other transaction or series of
related transactions which individually or in the aggregate is Material
to the Meridian Assets or the Meridian Business except in the ordinary
course of business or with respect to the New Sites.
3.18 Material and Adverse Restrictions. To Meridian's current actual
knowledge, none of the telecommunication towers owned or operated by Meridian,
during the year ended December 31, 1996, incurred costs in connection with such
site in excess of revenues or other benefits attributable to such site, except
as specifically set forth in Section 3.18 of the Meridian Disclosure Schedule.
3.19 Broker or Finder. No Person assisted in or brought about the
negotiation of this Agreement or the Transactions in the capacity of broker,
agent or finder or in any similar capacity on behalf of Meridian.
3.20 Solvency. As of the execution and delivery of this Agreement,
Meridian is, and immediately prior to and after giving effect to the
consummation of the Transactions will be, solvent.
3.21 Environmental Matters. Except as set forth in Section 3.21 of the
Meridian Disclosure Schedule and except with respect to the New Sites, with
respect to the Meridian Assets, Meridian:
(a) to the knowledge of Meridian, 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, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended, the Resource Conservation 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;
(d) is, to the knowledge of Meridian, in substantial
compliance in all Material respects with all Environmental Laws, has,
to Meridian's knowledge, obtained all Environmental Permits required
under Environmental Laws, and is not the subject of or, to Meridian's
knowledge, 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
the Meridian Business or the Meridian 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.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF ATS
ATS represents, warrants and covenants to, and agrees with, Meridian as
follows:
4.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) ATS is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and 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) ATS has all requisite corporate power and corporate authority
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 by it pursuant hereto or thereto or to consummate the Transactions; and
the execution, delivery and performance of this Agreement and each Collateral
Document executed or required to be executed by it pursuant hereto or thereto
have been duly authorized by all requisite corporate or other action on the part
of ATS. This Agreement has been duly executed and delivered by ATS and
constitutes, and each Collateral Document executed or required to be executed by
it pursuant hereto or thereto or to consummate the Transactions when executed
and delivered by ATS will constitute, legal, valid and binding obligations of
ATS, enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, moratorium, insolvency and similar
laws affecting the rights and remedies of creditors and the obligations of
debtors generally and by general principles of equity.
(c) Except for matters which would have not Material Adverse Effect on
Meridian, neither the execution and delivery by ATS of this Agreement or any
Collateral Document executed or required to be executed by it pursuant hereto or
thereto, nor the consummation by ATS of the Transactions, nor compliance with
the terms, conditions and provisions hereof or thereof by ATS:
(i) will conflict with, or result in a breach or violation of,
or constitute a default under, any Organic Document of ATS or any
Applicable Law on the part of ATS, 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 ATS; or
(ii) will require ATS to make or obtain any Governmental
Authorization, Governmental Filing or Private Authorization including
without limitation under the FCA, except for filings under the
Hart-Scott-Rodino Act.
4.2 Broker or Finder. No Person assisted in or brought about the
negotiation of this Agreement or the Transactions in the capacity of broker,
agent or finder or in any similar capacity on behalf of ATS.
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4.3 Solvency. As of the execution and delivery of this Agreement, ATS
is, and immediately prior to and after giving effect to the consummation of the
Transactions will be, solvent.
4.4 No Legal Action. There are no Legal Actions pending or, to the
knowledge of ATS, threatened against ATS or any of its Affiliated Entities,
officers or directors, that question or may affect the validity of this
Agreement or the right of ATS to consummate the transactions contemplated
hereunder.
4.5 Physical Assets "AS IS". ATS acknowledges and agrees as follows:
ALL BUILDINGS, STRUCTURES, TRANSMITTING AND COMMUNICATION TOWERS,
EQUIPMENT, LEASEHOLD IMPROVEMENTS, PHYSICAL ASSETS AND OTHER PERSONAL
PROPERTY (AS DEFINED IN THIS AGREEMENT) PURCHASED BY ATS HEREUNDER IS
BEING PURCHASED "AS IS", "WHERE IS", AND "WITH ALL FAULTS". BY ITS
EXECUTION OF THIS AGREEMENT, ATS ACKNOWLEDGES AND AGREES THAT, MERIDIAN
MAKES NO WARRANTY WHATSOEVER, EXPRESS OR IMPLIED (INCLUDING WITHOUT
LIMITATION ANY WARRANTY AS TO MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE) AS TO THE WORKING ORDER OR PHYSICAL CONDITION OF
ANY SUCH PERSONAL PROPERTY, EXCEPT AS PROVIDED IN THE LAST SENTENCE OF
SECTION 3.5(b).
Nothing contained in this Section shall be construed as a limitation on
Meridian's obligations pursuant to Section 5.6(a).
ARTICLE 5
COVENANTS
5.1 Access to Information; Confidentiality.
(a) Meridian shall afford to ATS and its accountants, counsel, lenders,
financial advisors and other representatives (the "Representatives") full access
during normal business hours throughout the period prior to the Closing Date to
all of Meridian's properties, books, contracts, commitments and records
(including without limitation Tax Returns) relating to the Meridian Assets and
the Meridian Business 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 or filed by it
with any Authority in connection with the Transactions or which may have an
Adverse Effect on the Meridian Assets or the Meridian Business or the
businesses, operations, properties, prospects, personnel, condition, (financial
or other), or results of operations thereof, (ii) to the extent not provided for
pursuant to the preceding clause, all financial records, ledgers, work papers
and other sources of financial information possessed and
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controlled by Meridian or its accountants deemed by ATS or its Representatives
necessary or useful for the purpose of performing an audit of the business of
the Meridian Business and certifying financial statements and financial
information, and (iii) such other information in the possession and control of
Meridian or its accountants concerning any of the foregoing as ATS shall
reasonably request; provided, however, that Meridian shall not be required to
permit any such access to the extent same would unreasonably interfere with
Meridian's normal business operations. All non-public information relating to
the Meridian Assets or the Meridian Business furnished prior to the execution,
or pursuant to the provisions, of this Agreement, including without limitation
this Section, or, in the case of Meridian, with respect to the covenant
hereinafter set forth, whether or not so furnished, will be kept confidential
and shall not, (x) prior to the Closing, without the prior written consent of
Meridian, or (y) from and after the Closing, without the prior written consent
of ATS, be disclosed by ATS or Meridian, as the case may be, in any manner
whatsoever, in whole or in part, and shall not be used by ATS prior to the
Closing for any purposes, other than in connection with the Transactions. In no
event shall ATS or any of its Representatives use such information to the
detriment of Meridian or, from and after the Closing by Meridian or any of its
Representatives, to the detriment of ATS. Prior to the Closing, ATS 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
Transactions, who are informed of the confidential nature of such information
and who shall undertake to act in accordance with the terms and conditions of
this Agreement. From and after the Closing, Meridian shall not, without the
prior written consent of ATS, disclose any information remaining in its
possession with respect to the Meridian Assets or the Meridian Business or to
which it may have access in accordance with the provisions of the following
paragraph, and no such information shall be used for any purposes, other than in
connection with the Transactions or to the extent required by Applicable Law,
except as otherwise provided in the following paragraph.
All books and records to which Meridian is entitled to access pursuant
to the provisions of this Agreement shall be retained by ATS at is offices in
the Los Angeles area for a period of at least five (5) years from the Closing
Date. ATS shall permit Meridian to photocopy such books and records to the
extent reasonably required for the permissible purposes described in the
definition of Assets. In the event of any conflict between the provisions of
this paragraph and the provisions of any noncompetition or confidentiality
agreement executed by Meridian or any of its principals, the provisions of this
paragraph shall be controlling.
(b) Subject to the terms and conditions of Section 5.1(a), ATS may,
subject to prior consultation with Meridian, 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 for any reason, ATS 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 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 and may be used only in the event of any
Legal Action or other Claim arising in connection with the subject matter of
this Agreement or the termination of this Agreement.
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(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, except as set forth in
Section 8.3(e).
5.2 Agreement to Cooperate.
(a) Subject to the provisions of Section 9.16, each of the parties
hereto shall use reasonable business efforts promptly (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 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 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 Transactions by all such applicable Authorities, each of which
must be obtained or become final to the extent provided in Section 6.1(a), (ii)
to obtain all necessary or appropriate waivers, consents and approvals,
including without limitation those referred to in Section 6.2(d), without
payment of consideration to the other party, (iii) to effect all necessary
registrations, filings and submissions (including without limitation filings
under the Hart-Scott-Rodino Act and all filings necessary for ATS to own and
operate the Meridian Assets and conduct the Meridian Business), (iv) to lift any
injunction or other legal bar to the Transactions (and, in such case, to proceed
with the Transactions as expeditiously as possible), and (v) to obtain the
satisfaction of the conditions specified in Article 6, 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, without the payment of
any amounts, except to the extent otherwise required by the provisions of this
Agreement.
(b) 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 Transactions that are required or permitted to be filed on
or before the Closing Date.
(c) Meridian shall cooperate and use its reasonable business efforts to
(i) prepare balance sheets and statements of income (loss) and cash flow for
eleven month period ended November 30, 1996 and thereafter on a monthly basis
until the month preceding the Closing in accordance with GAAP subject only to
such exceptions for periods ending on or before December 31, 1996 as are set
forth in Section 3.2 of the Meridian Disclosure Schedule, and (ii) cause its
independent accountants to reasonably cooperate with ATS, and at ATS's expense,
in order to enable ATS to have its independent accountants prepare audited
financial statements for the Meridian Business described in Section 6.2(g).
Without limiting the generality of the foregoing, Meridian agrees that after the
Closing Date it will (x) consent to the use of such audited financial statements
in any registration statement or other document filed by ATS or any Affiliate of
ATS under the Securities Act or the Exchange Act to the extent required by
Applicable Law or any underwriter in an
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underwritten public offering, and (y) execute and deliver, and cause its
directors and officers to execute and deliver, such "representation" letters as
are customarily delivered in connection with audits and as ATS's independent
accountants may reasonably request under the circumstances; provided, however,
that as a condition precedent to the use of such audited financial statements by
any Affiliate of ATS, such Affiliate shall execute an indemnification agreement,
in form and content reasonably acceptable to Meridian's counsel, pursuant to
which such Affiliate agrees to indemnify Meridian and related parties from
liability arising from the use of such statements on the same terms and subject
to the same conditions as ATS so agrees in Section 8.2(e)(ii) of this Agreement.
5.3 Public Announcements. Until the Closing, or in the event of
termination of this Agreement, Meridian and ATS shall consult with the other
before issuing any press release or otherwise making any public statements with
respect to this Agreement or the Transactions and shall not issue any such press
release or make any such public statement without the prior consent of the
other. Notwithstanding the foregoing, each party acknowledges and agrees that
Meridian and ATS may, without its 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, the party proposing to make such press release or
public statement will consult with the other regarding the nature, extent and
form of such press release or public statement.
5.4 Notification of Certain Matters. Meridian and ATS 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 Meridian Disclosure Schedule 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 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. Meridian shall not, nor shall it knowingly permit
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 Transactions) resulting in (i) any merger or consolidation, regardless of
whether Meridian 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 Meridian Assets or the
Meridian Business. If Meridian or any of its Representatives receives any
inquiry with respect to an Alternative Transaction while this Agreement is in
effect,
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Meridian shall inform the inquiring party that it is not entitled to enter into
discussions or negotiations relating to an Alternative Transaction. ATS
acknowledges that prior to the date of this Agreement, Meridian engaged in
discussion with certain other parties relating to the possibility of acquiring
the Meridian Assets and the Meridian Business.
5.6 Conduct of Business by Meridian Pending the Closing. Except as
otherwise contemplated by this Agreement, after the date hereof and prior to the
Closing Date or earlier termination of this Agreement, unless ATS shall
otherwise agree in writing, Meridian shall, to the extent relating to the
Meridian Business or the Meridian Assets:
(a) conduct its business in the ordinary and usual course of
business and consistent with past practice, including without
limitation the performance of such maintenance, repairs or replacements
with respect to communication towers, fixtures and Personal Property
comprising the Meridian Assets as is consistent with past practice;
(b) use all reasonable business efforts to preserve intact its
business organizations and goodwill, keep available the services of its
present key employees, and preserve the goodwill and business
relationships with customers and others having business relationships
with it;
(c) confer, as and when reasonably requested, on a regular and
frequent basis with one or more representatives of ATS to report
Material operational matters and the general status of ongoing
operations;
(d) maintain with financially responsible insurance companies
insurance on its assets and its business in such amounts and against
such risks and losses as are consistent with past practice;
(e) use reasonable business efforts to (i) operate the
Meridian Business in conformity in all Material respects with all
Governmental and Private Authorizations, Leases and Material Agreements
on a basis consistent with past practice and Applicable Law and the
rules and regulations of any Authority with jurisdiction over the
Meridian Assets or the Meridian Business, and (ii) maintain in full
force and effect all such Governmental and Private Authorizations,
Leases and Material Agreements relating to the Meridian Business;
(f) not (i) dispose of any of the Meridian Assets owned by
Meridian or used in the operation of the Meridian Business (other than
for the disposition in the ordinary course of business of immaterial
assets that are of no further use to the Meridian Business) or (ii)
modify or change in any Material respect, or enter into, any Material
Agreement relating to the Meridian Business (other than site user
agreements); and
(g) not voluntarily take any action which if taken between the
end of its most recent fiscal quarter and prior to the date of this
Agreement would have been required to be noted as an exception on
Section 3.17 of the Meridian Disclosure Schedule.
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With respect to any transaction or act proposed to be entered into or performed
by Meridian which, pursuant to Sections 5.1(a) through (g), requires the prior
approval of ATS, ATS shall be deemed to have approved same unless written notice
of disapproval is received by Meridian within five (5) business days after
receipt by Meridian of a written request for approval made by Meridian.
5.7 Preliminary Title Reports. Prior to the execution of this
Agreement, Meridian has, at its sole cost and expense, delivered or caused to be
delivered to ATS a standard preliminary title report dated as of a recent date
issued by one or more title companies authorized to do business in the State of
California (the "Title Company") with respect to those Meridian Assets comprised
of the parcels of real property described in Section 5.7 of the Meridian
Disclosure Schedule (the "Insured Real Property"). Such reports, as same may be
amended or supplemented from time to time to reflect additional title matters,
are referred to herein as the "Title Reports". Section 5.7 of the Meridian
Disclosure Schedule sets forth a description of those matters, if any, shown in
the Title Reports as to which ATS has objected and which Meridian has agreed to
remedy prior to or, with the written approval of ATS, subsequent to the Closing
Date (the "Disapproved Title Matters", which term shall include any matters
added thereto pursuant to the provisions of the last sentence of this Section).
All matters disclosed by the Title Reports (as of the date hereof) which are not
reflected on Section 5.7 of the Meridian Disclosure Schedule have heretofore
been approved by ATS. If, at any time following the date hereof, Meridian or the
Title Company notifies ATS of any additional matter affecting title to the
Insured Real Property, the parties shall negotiate in good faith in an effort to
resolve such matters and, in the event that are not able to reach such agreement
within thirty (30) days of the date ATS has received written notification
thereof, either party may terminate this Agreement with the effect set forth in
Section 7.2.
5.8 Environmental Site Assessments. Prior to the execution of this
Agreement, ATS has, at its sole cost and expense, delivered or caused to be
delivered to Meridian a Phase I environmental assessment report dated as of a
recent date issued by Aquaterra Environmental Services Corp.(the "Environmental
Company") with respect to those Meridian Assets comprised of the parcels of real
property described in Section 5.8 of the Meridian Disclosure Schedule (the
"Environmental Real Property"). Such reports, as same may be amended or
supplemented from time to time to reflect additional environmental matters, are
referred to herein as the "Environmental Reports". Section 5.8 of the Meridian
Disclosure Schedule sets forth a description of those matters, if any, shown in
the Environmental Reports as to which ATS has objected and which Meridian has
agreed to remedy prior to or, with the written approval of ATS, subsequent to
the Closing Date (the "Disapproved Environmental Matters" which term shall
include any matters added thereto pursuant to the provisions of the last
sentence of this Section). All matters disclosed by the Environmental Reports
(as of the date hereof) which are not reflected on Section 5.8 of the Meridian
Disclosure Schedule have heretofore been approved by ATS. If, at any time
following the date hereof, Meridian or the Environmental Company notifies ATS of
any additional matter affecting the environmental status of the Environmental
Real Property, the parties shall negotiate in good faith in an effort to resolve
such matters and, in the event that are not able to reach such agreement within
thirty (30) days of the date ATS has received written notification thereof,
either party may terminate this Agreement with the effect set forth in Section
7.2.
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ARTICLE 6
CLOSING CONDITIONS
6.1 Conditions to Obligations of Each Party to Effect the Transactions.
The respective obligations of each party to effect the Transactions 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) 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 ATS and Meridian with any Authority, prior to the consummation of
the Transactions, shall have been obtained from, and made with, all
such Authorities, except for such authorizations, consents, waivers,
orders, approvals, filings, registrations, notices or declarations as
are set forth in Section 6.1(a) of the Meridian Disclosure Schedule or
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
Meridian Assets and the Meridian Business;
(b) The transactions contemplated by the Other Agreements
shall have been consummated prior to or simultaneously with the
consummation of the Transactions; and
(c) The parties shall have entered into an escrow agreement in
customary form, reasonably satisfactory to the parties with an escrow
agent reasonably acceptable to the parties, pursuant to which, among
other things, Meridian shall have delivered deeds in customary form
with respect to all of the real property to be conveyed to ATS as part
of the Meridian Assets, and ATS will have deposited the portion of the
purchase price attributable to such real property, the parties, to the
extent required by Section 9.3, shall have deposited an amount
sufficient to pay all recording fees and transfer taxes, and other fees
and expenses which must be paid as a condition of consummation of the
transactions contemplated by this Agreement.
6.2 Conditions to Obligations of ATS. The obligation of ATS to effect
the Transactions 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
required to be delivered pursuant to the provisions of this Agreement
shall be reasonably satisfactory in form, scope and substance to ATS
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) Meridian shall have furnished ATS and, at ATS's request,
any bank or other financial institution providing credit to ATS, with
an opinion, dated the Closing Date of Levinson, Miller, Jacobs &
Phillips, counsel for Meridian, reasonably acceptable to ATS,
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with respect to the matters set forth in Sections 3.1(a), (b) and (c),
3.7(a)(i) and (ii), and 3.14 and with respect to such other matters
arising after the date of this Agreement and incident to the
Transactions, as ATS or its counsel 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 Meridian contained in this Agreement or otherwise made in writing by
it or on its behalf pursuant hereto or otherwise made in connection
with the 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 in all
Material respects as of such date on the Closing Date (including
without limitation giving effect to any later obtained knowledge of
Meridian or ATS, except as otherwise specifically provided herein);
each and all of the agreements and conditions to be performed or
satisfied by Meridian hereunder at or prior to the Closing Date shall
have been duly performed or satisfied in all Material respects; and
Meridian shall have furnished ATS 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 ATS or its counsel shall have reasonably requested;
(d) Except to the extent, if any, specifically set forth in
Section 6.2(d) of the Meridian Disclosure Schedule, all authorizations,
consents, waivers, orders or approvals required by the provisions of
this Agreement to be obtained from all Persons (other than Authorities)
prior to the consummation of the Transactions, including without
limitation those required by the provisions of this Agreement in order
to vest fully in ATS all right, title and interest in and to all of the
Meridian Assets and the Meridian Business (including without limitation
all Private Authorizations, Leases and Material Agreements of Meridian
and, at the cost and expense of Meridian, all modifications of Leases
and other Contractual Obligations heretofore requested by ATS and set
forth in Section 6.2(d) of the Meridian 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 Adversely Affect ATS;
(e) Between the date of this Agreement and the Closing Date,
there shall not have occurred and be continuing any Material Adverse
Change in Meridian from that reflected in the most recent Meridian
Financial Statements; as of the Closing Date, the Governmental
Authorizations with respect to the ownership or operation of the
Meridian Assets or the conduct of the Meridian Business shall not have
been Materially and Adversely Affected by any act, or failure to act,
of Meridian;
(f) Meridian shall have delivered or cause to be delivered to
ATS all of the Collateral Documents and other agreements, documents and
instruments required to be delivered by Meridian to ATS at or prior to
the Closing pursuant to the terms of this Agreement;
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(g) ATS shall have received from Meridian such documentation
as shall reasonably enable ATS's independent accountants to advise ATS
in writing that they could issue an unqualified report (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
and statements of operations and cash flow required by Rule 3.05(b)(2)
of Regulation S-X) of the Meridian Assets and the Meridian Business,
and that such financial statements can be prepared in conformity with
GAAP and Regulation S-X under the Securities Act;
(h) As of the Closing Date, except as otherwise set forth in
Section 3.7(a) of the Meridian Disclosure Schedule, 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 Transactions, or which might, in the reasonable business judgment
of ATS, based upon the advice of counsel, have a Material Adverse
Effect on the Meridian Assets and the Meridian Business, it being
understood and agreed that a written request by any Authority for
information with respect to the Transactions, which information could
be used in connection with such Legal Action, shall not be deemed to be
a threat of any such Legal Action;
(i) All Disapproved Environmental Matters shall have been
cured or arrangement shall have been made to cure, in each case, in a
manner reasonably satisfactory to ATS;
(j) E. J. Reichler ("Reichler"), the chief executive officer
and trustee for the principal shareholder of Meridian, shall have
executed and delivered to ATS an agreement substantially in the form of
Exhibit A attached hereto and made a part hereof (the "Reichler
Noncompetition Agreement");
(k) Meridian and Reichler shall have executed and delivered to
ATS and the escrow agent named therein (the "Indemnity Escrow Agent")
an escrow agreement (the "Indemnity Escrow Agreement") substantially in
the form of Exhibit B attached hereto and made a part hereof;
(l) All Disapproved Title Matters shall have been cured or
arrangements shall have been made to cure, in each case, in a manner
reasonably satisfactory to ATS, and ATS shall have received standard
CLTA title insurance policies insuring ATS' fee interests in all
Insured Real Property, subject only to Approved Title Conditions;
(m) Meridian shall have delivered to ATS, or ATS shall have
otherwise received, all use permits, consents or other Governmental
Authorizations of and Leases from the United States Forest Service set
forth in Section 6.2(m) of the Meridian Disclosure Schedule;
(n) Meridian shall have an assignment, in form, scope and
substance reasonably satisfactory to ATS, from the holder or holders of
all interests in the sites identified in Section 6.2(n) of the Meridian
Disclosure Schedule of such holder's or holders' interests in all such
sites;
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(o) Meridian shall have executed and delivered to ATS an
agreement, in form, scope and substance reasonably satisfactory to ATS
(the "Nonassignable Contracts Agreement"), pursuant to which (i)
Meridian will hold (but with no obligation to perform services
thereunder), for the account of ATS, and remit promptly to ATS all
amounts received pursuant to the provisions of, all of the
Nonassignable Contracts as to which the required approval or consent to
the assignment or transfer of which was not obtained and as to which
ATS has delivered an Acceptance Notice, and (ii) ATS will agree to (A)
perform all services required to be performed under such Nonassignable
Contracts, (B) reimburse Meridian for all costs and expenses reasonably
incurred pursuant to the Nonassignable Contracts Agreement and (C)
indemnify and hold harmless Meridian with respect to all actions taken
by ATS pursuant thereto and all actions, if any, taken by Meridian
pursuant thereto other than those relating to the bad faith or willful
misconduct of Meridian or its officers, directors, stockholders or
employees; and
(p) To the extent that the representations and warranties of
Meridian specifically exclude a reference to the New Sites, ATS shall
have determined, in its reasonable business judgment, that
representations and warranties to the extent not so made would be true
and correct in all Material respects at and as of the Closing Date with
the same force and effect as though made with respect to the New Sites
as of the Closing Date.
6.3 Conditions to Obligations of Meridian. The obligation of Meridian
to effect the Transactions 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
required to be delivered pursuant to the provisions of this Agreement
shall be reasonably satisfactory in form, scope and substance to
Meridian and its counsel, and Meridian 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) ATS shall have furnished Meridian and, at ATS's request,
any bank of other financial institution providing credit to Meridian,
with an opinion, dated the Closing Date of Sullivan & Worcester LLP,
counsel for ATS, reasonably acceptable to Meridian, with respect to
matters set forth in Sections 4.1(a), (b) and (c) and with respect to
such other matters arising after the date of this Agreement and
incident to the Transactions, as Meridian 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 ATS contained in this Agreement or otherwise made in writing by it
or on its behalf pursuant hereto or otherwise made in connection with
the 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 in all Material
respects as of such date on the Closing Date (including without
limitation giving effect to any later obtained knowledge of Meridian or
ATS, except as
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otherwise specifically provided herein); each and all of the agreements
and conditions to be performed or satisfied by ATS hereunder at or
prior to the Closing Date shall have been duly performed or satisfied
in all Material respects; and ATS shall have furnished Meridian 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 Meridian or its counsel
shall have reasonably requested;
(d) ATS shall have delivered or cause to be delivered to
Meridian all of the Collateral Documents and other agreements,
documents and instruments required to be delivered by ATS to Meridian
at or prior to the Closing pursuant to the terms of this Agreement;
(e) 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 Transactions, it
being understood and agreed that a written request by any Authority for
information with respect to the Transactions, which information could
be used in connection with such Legal Action, shall not be deemed to be
a threat of any such Legal Action;
(f) ATS shall have executed and delivered to Meridian and E.J.
Reichler and the Indemnity Escrow Agent a counterpart of the Indemnity
Escrow Agreement substantially in the form of Exhibit C attached hereto
and made a part hereof;
(g) ATS shall have executed and delivered to Meridian an
agreement (the "Meridian License Agreement"), reasonably satisfactory
to Meridian, pursuant to which ATS will grant to Meridian (and its
successors and assigns) a non-exclusive three-year royalty-free license
to use, throughout Southern California, the name "Meridian
Communications" with respect to Meridian's radio repeater service
business; provided, however, that such agreement shall continue only so
long as Reichler, members of his family or trusts for the benefit of
same are actively involved in such business and own equity interests in
proportions not less than those they currently hold in Meridian;
(h) ATS shall have executed and delivered to Meridian site
user agreements for Meridian's radio repeater service business and
specialized mobile radio business, containing the terms and conditions
described in Section 6.3(h) of the Meridian Disclosure Schedules; and
(i) ATS shall have executed and delivered to Meridian the
Nonassumable Contracts Agreement, in form, scope and substance
reasonably satisfactory to Meridian.
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ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement shall terminate if the Closing does not
occur on or prior to the Termination Date and may be terminated at any time
prior to the Closing Date:
(a) by mutual consent of Meridian and ATS;
(b) by either ATS or Meridian if any permanent injunction, decree or
judgment by any Authority preventing the consummation of the Transactions shall
have become final and nonappealable; or
(c) by Meridian in the event (i) Meridian 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
Transactions have not been consummated prior to the Termination Date and ATS 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 Transactions by or beyond the Termination Date; or
(d) by ATS in the event (i) ATS 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
Transactions have not been consummated prior to the Termination Date and
Meridian 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 Transactions by or beyond
the Termination Date; or
(e) by ATS in the event of a failure of the condition set forth in
Section 6.2(i) or 6.2(l); or.
(f) by either party pursuant to the provisions of Section 9.16.
The term "Termination Date" shall mean June 30, 1997 or such other date
as the parties may, from time to time, mutually agree.
The right of ATS or Meridian 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, 5.3 and 9.3 and this Section,
in the event of the termination of this Agreement pursuant to Section 7.1, or in
the event the Transactions shall not have
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been consummated prior to the end of business on 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 shareholders, 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 Meridian pursuant to
the provisions of Section 7.1(c) or by ATS pursuant to the provisions of Section
7.1(d), the terminating party shall be entitled to damages as follows and in no
other circumstances other than fraud:
(i) in the event that any misrepresentation that was made was
not a willful misrepresentation at the time it was made, or any breach
of any warranty, covenant or agreement set forth in this Agreement was
not a willful breach, on the part of the non- terminating party, then
the terminating party shall be entitled to recover only its reasonable
out-of-pocket fees and expenses not to exceed in the aggregate
$167,500; and
(ii) in the event that any misrepresentations that was made
was a willful misrepresentation at the time it was made, or the breach
of any warranty, covenant or agreement was a willful breach, on the
part of the non-terminating party, then the terminating party shall be
entitled to recover the actual amount of its damages, including without
limitation consequential damages and reasonable out-of-pocket fees and
expenses, in an amount not to exceed the amount of the Indemnity Escrow
Fund.
Notwithstanding the foregoing, each party shall have the right to seek specific
performance pursuant to the provisions of Section 9.5.
(c) In the event this Agreement is terminated pursuant to the
provisions of Sections 5.7, 5.8, 7.1(a), 7.1(b), 7.1(e) or 7.1(f), except as
provided in Section 7.2(a), neither of the parties shall have any further rights
or remedies.
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 (including without limitation the indemnification obligations set forth
in this Article) shall, except as provided in Section 8.3(e), survive the
Closing and shall remain operative and in full force and effect, regardless of
any investigation or statement as to the results thereof made by or on behalf of
any party hereto, for a period of two (2) years after the Closing Date (the
"Indemnity Period"); provided, however, that notwithstanding the foregoing (a)
the representations and warranties referred to in (i) Section 3.21 shall survive
for a period of four (4) years after the Closing Date, and (ii) Sections 3.1 (to
the extent they relate to due organization, valid existence and good standing of
Meridian, corporate power and corporate authority of Meridian, the due
execution, delivery and performance by
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Meridian of this Agreement and each Collateral Document, and the legal, valid,
binding and enforceable nature of this Agreement and each Collateral Document on
Meridian), 3.12, and 4.1 (to the extent they related to due organization, valid
existence and good standing of ATS, corporate power and corporate authority of
ATS, the due execution, delivery and performance by ATS of this Agreement and
each Collateral Document, and the legal, valid, binding and enforceable nature
of this Agreement and each Collateral Document of ATS) shall survive for the
applicable statute of limitations, (b) those covenants and agreements set forth
in Sections 5.1, 5.2(b) and 5.2(c) and Article 9 shall survive for the statute
of limitations applicable to contracts, (c) the indemnification obligations of
ATS set forth in Section 8.2(c), to the extent same relate to New Site Assumed
Obligations or to obligations and liabilities under ATS Assumable Agreements
applicable to periods from and after the Closing Date, shall survive until all
liabilities and obligations which are the subject thereof have been paid or
discharged in full, and (d) the indemnification obligations of ATS referred to
in Section 8.2(e) shall survive until all liabilities and obligations which are
the subject thereof have been paid or discharged in full. No claim for
indemnification, other than with respect to fraud, may be asserted after the
expiration of the Indemnity Period, except as provided in this Section and
Section 8.3(d). Notwithstanding anything herein to the contrary, any
representation, warranty, covenant and agreement which arises and 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.
8.2 Indemnification.
(a) Each of Meridian and ATS (the "indemnifying party") agrees that on
and after the Closing it shall indemnify and hold harmless the other (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:
(i) 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 (including without limitation any
Legal Action or other Claim by any third party which Claim is based
upon a breach or alleged breach of representation or warranty by the
indemnifying party pursuant to this Agreement or any Collateral
Document); or
(ii) in the case of Meridian as the indemnifying party, the
failure of Meridian to comply with Bulk Sales law of the State of
California.
(b) Meridian agrees that from and after the Closing it shall indemnify
and hold harmless ATS and each of its officers, directors, stockholders, and any
of their respective heirs, executors, representatives, successors and assigns,
from and against any and all Loss and Expense suffered, directly or indirectly,
by any of them by reason of, or arising out of, including without limitation any
Legal Action or other Claim that relates to Meridian Nonassumed Obligations or
the ownership and
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operation of the Meridian Assets and the Meridian Business prior to the Closing
Date; provided, that the foregoing obligation shall not extend to any Claim,
Legal Action, Loss or Expense from or relating to (i) the condition of physical
assets which, pursuant to the provisions of Section 4.5, are being sold
hereunder on an "AS IS" basis, (ii) Events, Contracts, transactions, acts,
omissions, agreements, matters or things the existence or nonexistence of which
is disclosed with reasonable specificity in the Meridian Disclosure Schedule or
in the documents reference therein (to the extent copies thereof have been
furnished to ATS), except to the extent, if at all, Section 8.2(b) of the
Meridian Disclosure Schedule specifically indicates to the contrary, (iii)
Environmental Law or environmental matters, except to the extent Meridian is in
breach of the representations and warranties set forth in Section 3.21 with
respect thereto, or (iv) matters of a type described in Section 8.2(d).
(c) ATS agrees that from and after the Closing it shall indemnify and
hold harmless Meridian and each of its officers, directors, stockholders, and
any of their respective heirs, executors, trustees, beneficiaries,
representatives, successors and assigns (collectively, the "Meridian Indemnified
Parties"), from and against any and all Loss and Expense suffered, directly of
indirectly, by any of them by reason of, or arising out of, including without
limitation any Legal Action or other Claim that relates to, (i) Meridian Assumed
Obligations or (ii) the ownership and operation of the Meridian Assets and the
Meridian Business from and after the Closing Date, except for Events arising
prior to or existing on the Closing Date, unless they are part of the Meridian
Assumed Obligations or are within the provisions of Section 8.2(d).
(d) Notwithstanding any provision of this Agreement to the contrary,
ATS agrees that from and after the Closing it shall indemnify and hold harmless
Meridian and each of the other Meridian Indemnified Parties, from and against
any Legal Action or other Claim arising from damage or injury to person or
property (including wrongful death) based upon, involving or arising out of the
ownership or operation (whether prior to or after the Closing Date) of the
Meridian Assets and the Meridian Business; provided, however, that nothing
contained in this Section is intended to relieve Meridian of its obligations set
forth in Section 8.2(a).
(e) ATS agrees that from and after the Closing, it shall indemnify and
hold harmless Meridian and each of the other Meridian Indemnified Parties, from
and against the following:
(i) Such matters as are the subject of ATS's indemnification
obligations under the Nonassignable Contracts Agreement described in
Section 6.2(o); and
(ii) All Loss and Expense suffered, directly or indirectly, by
any of them by reason of, or arising out of, the use by ATS of audited
financial statements relating to the Meridian Business as described in
Section 5.2(c); provided, however, that notwithstanding the foregoing,
to the extent (A) such Loss and Expense is attributable to a breach of
warranty and a misrepresentation from those contained in Section 3.2 of
this Agreement and (B) at the time ATS is obligated to make
indemnification under this subparagraph (ii) or any ATS Affiliate is so
obligated pursuant to the provision of any agreement executed pursuant
to the provisions of Section 5.2(c) there are Escrow Indemnity Funds to
cover all or part of such obligation, then ATS may utilize such Escrow
Indemnity Funds to discharge that portion of
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its or such Affiliate's obligation as is commensurate with the amount
of Escrow Indemnity Funds so available.
8.3 Limitation of Liability.
(a) Notwithstanding the provisions of Section 8.2, after the Closing,
except as otherwise provided in Section 8.6, 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, $100,000, in which event the indemnified party
shall be entitled to recover all such Loss and Expense (including without
limitation such $100,000), and (ii) in no event shall the aggregate amount
required to be paid pursuant to the provisions of this Article exceed the Escrow
Indemnity Fund in the case of Meridian or $2,155,946 in the case of ATS'
obligations under Sections 8.2(a) and 8.2(c); provided, that ATS's obligation to
indemnify Meridian or other Persons from (x) New Site Assumed Obligations, (y)
liabilities or obligations arising after the Closing Date pursuant to ATS
Assumable Agreements, or (z) liabilities or obligations referred to in Section
8.2(e), shall be subject to no maximum dollar limitation.
(b) Anything in this Agreement, including without limitation the
provisions of Sections 8.2 or 8.3(a), to the contrary notwithstanding, except as
provided in Sections 8.3(d) and 8.6, (i) the exclusive recourse of ATS with
respect to the liability of Meridian pursuant to Section 8.2 or any other
provision of this Agreement or Applicable Law which requires Meridian to defend,
indemnify or hold harmless ATS from or against any Claim, Loss or Expense shall
be the Escrow Indemnity Fund; and (ii) ATS's remedies for any such liability of
Meridian, or for any Claim or Loss or Expense arising under this Agreement,
shall be limited to its right to recover from the Escrow Indemnity Funds in
accordance with the provisions of the Escrow Indemnity Agreement, and neither
ATS nor any of its officers, directors, shareholders, agents or Affiliated
Entities shall have any right of recovery against Meridian or any other Meridian
Indemnified Party or against the assets of any of them for any such liability.
(c) In the event there shall be no Claims pursuant to the provisions of
this Agreement with respect to the Escrow Indemnity Funds, if any, existing at
the expiration of the Indemnity Period, the Escrow Indemnity Funds then
remaining (together with any then existing interest or earnings) shall be
distributed to the Persons entitled thereto. In the event one or more such
Claims with respect to the Escrow Indemnity Funds, if any, shall exist upon the
expiration of the Indemnity Period, funds in an amount equal to the sum of (i)
the aggregate amount of such Claims and (ii) the amount reasonably necessary to
cover the fees, expense and other costs (including reasonable counsel fees and
expenses) which will be required to resolve such Claims shall be retained as
part of the Escrow Indemnity Funds and the balance thereof, if any, shall be
distributed to the Persons entitled thereto. Upon the resolution of all such
Claims and the payment of all such fees, expenses and costs out of the Escrow
Indemnity Funds, the remainder of the Escrow Indemnity Funds, if any, shall be
distributed to the Persons entitled thereto.
(d) If, following the expiration of the Indemnity Period and the
distribution to Meridian or any other Person claiming by, through or in the name
of Meridian of any remaining Escrow Indemnity Funds, ATS becomes entitled to
indemnification for Loss and Expense suffered by ATS
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arising from (i) any misrepresentation or breach of warranty with respect to the
matters referred to in clause (a) of the proviso or (ii) any breach of the
covenants and agreements referred to in clause (b) of the proviso, in each case
in the first sentence of Section 8.1, then, subject to the limitation periods
stated in such proviso, ATS may pursue its Claim for such indemnification
directly against Meridian, its successors and assigns and Reichler; provided,
however, that the maximum amount of liability in the aggregate of Meridian (and
such successors and assigns and Reichler) for any and all such Claims shall be
the amount of Escrow Indemnity Funds that were distributed to Meridian or any
other Person (other than a claimant whose Claim is alleged by ATS to be subject
to satisfaction from the Indemnity Escrow Fund) claiming by, through or in the
name of Meridian (including without limitation Reichler or Meridian's or his
successors, assigns, trustees, beneficiaries, representatives, heirs or
executors) upon the expiration of the Indemnity Period or thereafter.
(e) In the case any event shall occur which would otherwise entitle
either party to assert a claim for indemnification hereunder, no Loss and
Expense shall be deemed to have been sustained by such party to the extent of
any proceeds received by such party from any insurance policies with respect
thereto. No indemnifying party shall be liable under this Article for a loss
resulting from any event relating to a misrepresentation or breach of warranty
if the indemnifying party can establish that the indemnified party had actual
knowledge on or before the Closing Date of such event and did not, on or before
the Closing Date, reserve its rights with respect thereto.
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 8.1, 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 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; provided,
however, that if the indemnified party fails or refuses to consent in writing to
any compromise of settlement proposed by the indemnifying party and agreed to in
writing by the claimant in such Legal Action or other Claim (the "Settlement
Proposal") within ten
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(10) business days after receipt of written notice of all of the material terms
and conditions of the Settlement Proposal, and such terms and conditions (a)
include a full release of the indemnified party from the Legal Action or other
Claim which is the subject of the Settlement Proposal and (b) if the indemnified
party is ATS, do not include any term or condition which would restrict in any
material manner the continued ownership and operations of the Meridian Assets
and the conduct of the Meridian Business in substantially the manner theretofore
owned, operated and conducted by Meridian, then, unless the indemnifying party
forthwith withdraws the Settlement Proposal, the indemnified party (i) shall
have the right but not the obligation to undertake the conduct of the defense of
such Legal Action or other Claim, and (ii) whether or not it shall so undertake
the defense of such Legal Action or other Claim, shall bear, and shall indemnify
and hold the indemnifying party harmless from, all Loss and Expense arising from
such Legal Action or other Claim (to the extent not theretofore (x) accrued with
respect to the costs and expenses of the defense of such Legal Action or other
Claim or (y) paid with respect to such Legal Action or other Claim) in excess of
the amount contained in the Settlement Proposal, it being understood, in such
event, that the indemnifying party shall bear all Loss and Expense, including
subsequently incurred Loss and Expense (including without limitation those
attributable to legal fees and expenses) up to the amount contained in the
Settlement Proposal, even if the ultimate disposition of such Legal Action or
other Claim results in payments to the claimant of less than those contained in
the Settlement Proposal.
8.6 Exclusive Remedy. Except for fraud or willful or intentional breach
of representation or warranty or as otherwise provided in Section 9.5, 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 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.
9.2 Waiver. At any time prior to the Closing Date, except to the extent
not permitted by Applicable Law, ATS or Meridian may extend the time for the
performance of any of the obligations or other acts of the other, subject,
however, to the provisions with respect to the Termination Date, 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 California and other sales
and/or use Taxes, documentary or governmental transfer Taxes, recording fees, or
other comparable charges levied by any Authority in connection with the purchase
and sale of the Meridian Assets and the Meridian Business contemplated hereby,
and all Hart-Scott-Rodino filing fees, shall be borne equally by
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Meridian and ATS. All title insurance costs and expenses shall be borne by
Meridian and all Environmental Report costs and expenses shall be borne by ATS,
except that in the event this Agreement is terminated pursuant to the provisions
of Section 5.8, all such Environmental Report costs and expenses shall be borne
by Meridian. All other costs and expenses incurred in connection with this
Agreement and the consummation of the 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").
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, 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 ATS:
6400 North Congress Avenue, Suite 1750
Boca Raton, Florida 33487
Attention: Chief Executive Officer and
Chief Financial Officer
Telecopier No.: (407) 998-2278
with copies to:
American Radio Systems Corporation
116 Huntington Avenue
Boston, Massachusetts 02116
Attention: Joseph B. Winn, Chief Financial Officer
Telecopier No.: (617) 375-7575
and
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attention: Norman A. Bikales, Esq.
Telecopier No.: (617) 338-2880
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(b) If to Meridian:
23501 Park Sorrento, Suite 213A
Calabasas, California 91302
Attention: E. J. Reichler, Chief Executive Officer
Telecopier No.: (818) 222-2857
with a copy to:
Levinson, Miller, Jacobs & Phillips
1875 Century Park East, Suite 2000
Los Angeles, California 90067-2534
Attention: Stephen I. Halper, Esq.
Telecopier No.: (310) 282-0472
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, 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. Notwithstanding the foregoing or any provision of this
Agreement to the contrary, ATS shall not be entitled to specific performance or
any other remedy to the extent that the aggregate costs and expenses required to
be paid by Meridian arising from the enforcement or exercise of such remedy
(inclusive of reasonable attorneys fees) would exceed an amount equal to the
amount of the Escrow Indemnity Fund, and after the Closing Meridian shall not be
required to expend any of its funds (other than payments by the Indemnity Escrow
Agent out of the Escrow Indemnity Fund (as reduced in accordance with the
provisions of Section 2.3) or except as provided in Section 8.3(d)) for such
purpose.
9.6 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
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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 Transactions are fulfilled and
consummated to the maximum extent possible.
9.7 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.
9.8 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.
9.9 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.
9.10 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.
9.11 Entire Agreement; Separate Agreements. This Agreement (together
with the Meridian Disclosure Schedule 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 July 24, 1996, between
the parties. ATS acknowledges that (i) Meridian, MRS and MCN are separate
parties with differing ownership, (ii) this Agreement and the Other Agreements
are separate agreements, and (iii) Meridian shall have no obligation or
liability with respect to the Other Agreements or any claims made thereunder.
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9.12 Assignment. This Agreement shall not be assignable by any 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 any party by operation of
law, including by way of merger, consolidation or sale of all or substantially
all of its assets, and ATS may assign its rights and remedies hereunder to any
bank or other financial institution which has loaned funds or otherwise extended
credit to it.
9.13 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 9.12.
9.14 Mutual Drafting. This Agreement is the result of the joint efforts
of Meridian and ATS, 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.
9.15 Venue. In the event of any Legal Action between the parties
arising out of this Agreement, the parties agree to submit the matter to the
appropriate municipal, state or federal court sitting in Los Angeles County,
California, and the parties agree to submit to the jurisdiction of such courts.
9.16 Meridian Disclosure Schedule. Meridian will deliver to ATS, on or
before February 21, 1997, the Meridian Disclosure Schedule and all other
documents (including the interim financial statements constituting a part of the
Meridian Financial Statements) required to be delivered by Meridian pursuant to
Article 3 of this Agreement. Without limiting the generality of the foregoing,
the Meridian Disclosure Schedule shall set forth Meridian's proposal with
respect to which (a) authorizations, consents, waivers, orders or approvals are
proposed to be a condition of Closing pursuant to the provisions of Section
6.1(a), (ii) which Private Authorizations, Leases and Material Agreements and
which modifications, if any, of Leases and other Contractual Obligations are
proposed to be a condition to Closing pursuant to the provisions of Section
6.2(d), and (iii) which permits, consents or other Governmental Authorizations
of the United States Forest Service are proposed to be a condition to Closing
pursuant to the provisions of Section 6.2(m).
ATS shall have the right, for a period commencing upon its receipt of
the Meridian Disclosure Schedule and each other document (other than such
interim financial statements) together with a letter from Meridian indicating
that such delivery constitutes a "final and complete" delivery pursuant to this
Section and terminating at 11:59 p.m. on the fifteenth (15th) day following such
receipt, (a) to terminate this Agreement, if the Meridian Disclosure Schedule
reveals any Event of which it was unaware as of the date of this Agreement,
which unknown Events, individually or in the aggregate, would have a Material
Adverse Effect on Meridian, and (b) to propose to Meridian alternatives as to
which (i) authorizations, consents, waivers, orders or approvals are to be a
condition of Closing pursuant to the provisions of Section 6.1(a), (ii) which
Private Authorizations, Leases and Material Agreements and which modifications,
if any, of Leases and other Contractual Obligations are to be a condition to
Closing pursuant to the provisions of Section 6.2(d), and (iii) which permits,
consents or other Governmental Authorizations of the United States Forest
Service are to be a condition to Closing pursuant to the provisions of Section
6.2(m). ATS shall have a
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further right to terminate this Agreement for a period of five (5) business days
following receipt of such interim financial statements marked "final and
complete" if such interim financial statements indicate that a Material Adverse
Change in Meridian has occurred of which ATS was unaware of the date of this
Agreement.
Anything in this Section 9.16 or elsewhere in this Agreement to the
contrary notwithstanding, Meridian shall not be obligated to agree to any
proposal of ATS pursuant to clause (b) of the first sentence of the preceding
paragraph and neither Meridian nor ATS shall be obligated to negotiate in good
faith with respect to resolving such matters and each may make a determination
to terminate in its sole and absolute discretion. In the event ATS and Meridian
do not agree in writing on the resolution of matters raised by any proposal made
by ATS pursuant to such clause (b) on or prior to ten (10) business days of
receipt by Meridian of any such proposal of ATS (the "Interim Period") either
party may, on or prior to ten (10) business days (the "Termination Period"),
following the expiration of the Interim Period, terminate this Agreement. In the
event neither party shall have so terminated this Agreement on or prior to the
expiration of the Termination Period, or, in the event ATS makes no proposal
pursuant to clause (b) of the preceding paragraph, this Agreement shall continue
in full force and effect and the original proposal of Meridian (as set forth in
the Meridian Disclosure Schedule) shall control for purposes of determining the
conditions of Closing set forth in Section 6.1(a), 6.2(d) and 6.2(m).
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IN WITNESS WHEREOF, ATS and Meridian have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
American Tower Systems, Inc.
By:_____________________________________
Name:
Title:
Meridian Sales and Services Company
By:______________________________________
Name:
Title:
The undersigned, E.J. Reichler, the principal shareholder of Meridian,
hereby acknowledges and agrees to be bound by the provisions of Section 8.3(d).
----------------------------------
E. J. Reichler
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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 the Meridian 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. The term "either party" shall, unless the context otherwise
requires, refer to Meridian and ATS.
Acceptance Notice shall have the meaning given to it in Section 2.2(a).
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 Meridian attributable to the ownership or operation of
the Meridian Business (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 Meridian's 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 ATS, to
be expected to (a) adversely affect the validity or enforceability of this
Agreement or the likelihood of consummation of the Transactions, or (b)
adversely affect the business, operations, management, properties or prospects,
or the condition, financial or other, or results of operation of the Meridian
Business, or (c) impair Meridian's ability to fulfill its obligations under the
terms of this Agreement, or (d) adversely affect the aggregate rights and
remedies of ATS under this Agreement. Notwithstanding the foregoing, and
anything in this Agreement to the contrary notwithstanding, any Event generally
affecting the economy or any identifiable segment thereof, including without
limitation the industries in which Meridian does business and in which it
competes, shall not be deemed to constitute an Adverse Change, have an Adverse
Effect or to Adversely Affect or Effect.
Additional Title Matter shall have the meaning given to it in Section
5.7.
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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.
Agreement shall mean this Agreement as originally in effect, including,
unless the context otherwise specifically requires, this Appendix A, the
Meridian 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.
Applicable Law shall mean any Law of any Authority, whether domestic or
foreign, including without limitation the FCA and 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.
Applicable Principles shall mean (a) with respect to Meridian Financial
Statements for periods ending prior to November 30, 1996, tax accounting
principles and (b) with respect to Meridian Financial Statements for periods
ending on or after November 30, 1996, generally accepted accounting principles.
Approved Title Conditions shall mean any one or more of the following:
(a) Liens for real property taxes and assessments not then delinquent; (b) the
Lien of supplemental Taxes assessed pursuant to Chapter 3.5 commencing with
Section 75 of the California Revenue and Taxation Code, to the extent that such
supplemental Taxes are attributable to the transactions contemplated by this
Agreement; (c) matters set forth on the Title Reports other than Disapproved
Title Matters; and (d) matters of title created following the date of this
Agreement by or with the written consent of ATS.
Assets shall mean the business and the tangible and intangible assets
owned by Meridian and used in connection with the conduct of the business or
operations of the Meridian Business, which business and assets are being
exchanged, transferred or otherwise conveyed hereunder, including without
including without limitation the following:
(a) the Personal Property;
(b) the Real Property;
(c) the Governmental Authorizations, to the extent
transferable;
(d) the Private Authorizations;
(e) the Contracts (other than the Meridian Nonassumed
Obligations);
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(f) the corporate name of Meridian and all variations thereof;
(g) all Intellectual Property and other proprietary
information, which relate to the Meridian Business, including without
limitation, technical information and data, machinery and equipment
warranties, maps, computer discs and tapes, plans, diagrams, blueprints
and schematics, including filings with all Authorities which relate to
the Meridian Business;
(h) all claims, choses in action and rights under warranties
(to the extent transferable) relating to the Meridian Business or any
of the Meridian Assets;
(i) all books and records relating to the ownership or
operation of the Meridian Assets or the conduct of the Meridian
Business, including executed copies of Leases, Material Agreements and
other written Contracts, and all records required by Applicable Law to
be kept, subject to the right of the conveying party to have such books
and records made available to it for such time as may be reasonably
required in connection with audits, defense or prosecution of lawsuits,
or other legitimate business purposes. The records described herein
shall not include corporate seals, certificates of incorporation,
minute books, stock books, tax returns or other records having to do
with the corporate organization of Meridian; and
(j) 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.
ATS shall have the meaning given to it in the Preamble.
ATS Assumable Agreements shall have the meaning given to it in Section
2.2(b).
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., including without limitation the FCC.
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
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involved in the ownership and operation of the Assets or the conduct of the
business of the Meridian Business.
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 2.3.
Closing Date shall have the meaning given to it in Section 2.3.
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 the Escrow Agreement, the Indemnity
Escrow Agreement, the Meridian License Agreement, the Nonassumable Contracts
Agreement, the Reichler Noncompetition Agreement, deeds (warrantying against
Meridian's acts), bills of sale, assignments of intangibles, assumption
agreements with respect to the Meridian Assumed Obligations, other instruments
of conveyance and assignment sufficient to vest in ATS title to all of the other
Meridian Assets and the Meridian Business, and any other agreement, certificate,
contract, instrument, notice, opinion or other document delivered pursuant to
the provisions of this Agreement or any Collateral Document.
Collection Period shall have the meaning given to it in Section 2.4.
Construction Adjustment shall have the meaning given to it in Section
2.3.
Contract, Contractual Obligation shall mean any agreement (including
without limitation any Lease), arrangement, commitment, contract, covenant,
indemnity, undertaking or other obligation or liability which involves the
ownership or operation of the Meridian Assets or the conduct of the Meridian
Business, other than pursuant to a Governmental Authorization or Private
Authorization.
Control (including the terms "controlled," "controlled by" and "under
common control with") shall mean 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,
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by contract, arrangement or understanding, or as trustee or executor, by
contract or credit arrangement or otherwise.
Disapproved Environmental Matter shall have the meaning given to it in
Section 5.8.
Disapproved Title Matter shall have the meaning given to it in Section
5.7.
Escrow Agent shall have the meaning given to it in the fourth Whereas
paragraph.
Escrow Agreement shall have the meaning given to it in the fourth
Whereas paragraph.
Escrow Deposit shall have the meaning given to it in the fourth Whereas
paragraph.
Employment Arrangement shall mean, with respect to Meridian, 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 Meridian 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 or operation of the Meridian Assets or
the conduct of the Meridian Business.
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 Company shall have the meaning given to it in Section
5.8.
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
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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 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.
Environmental Real Property shall have the meaning given to it in
Section 5.8.
Environmental Reports shall have the meaning given to it in Section
5.8.
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 Meridian 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 statutory or
regulatory provision shall be deemed to be a reference to any successor
statutory or regulatory provision.
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.
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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.
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 without limitation the United
States Forest Service (other than Leases from the United States Forest Service)
and the Federal Aviation Administration, in connection with the ownership or
operation of the Meridian Assets or the conduct of the Meridian Business.
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 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 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 on
the consolidated balance sheet of such Person, which in accordance with GAAP
would be
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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 Meridian,
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, (c) customer advance payments and customer deposits received in the
ordinary course of business, or (d) conditional sales agreements not prohibited
by the terms of this Agreement.
Indemnity Escrow Agent shall have the meaning given to it in Section
6.2(k).
Indemnity Escrow Agreement shall have the meaning given to it in
Section 6.2(k).
Indemnity Escrow Fund shall have the meaning given to it in Section
2.3.
Insured Real Property shall have the meaning given to it in Section
5.7.
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.
Interim Period shall have then meaning given to it in Section 9.16.
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.
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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 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.
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.
Loss and Expense shall have the meaning given to it in Section 8.2.
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 Meridian, any
Contractual Obligation (other than Governmental Authorizations) 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 $20,000
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 a capitalized lease obligation or
Indebtedness for Money Borrowed, (d) is or otherwise constitutes a written
agency, broker, dealer, license, distributorship, sales representative or
similar written agreement, (e) accounted for more than three percent (3%) of the
revenues of the Meridian Business in any of the last three fiscal years or is
likely to account for more than three percent (3%) of revenues of the Meridian
Business during the current fiscal year, (d) is with the United States Forest
Service or any
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other Authority, or (e) involves the management by Meridian of any communication
tower of any other Person.
MCN shall have the meaning given to it in the fourth Whereas paragraph.
Meridian shall have the meaning given to it in the Preamble.
Meridian Assets shall have the meaning given to it in Section 2.1.
Meridian Assumed Obligations shall have the meaning given to it in
Section 2.2(a).
Meridian Business shall have the meaning given them in the first
Whereas paragraph.
Meridian Disclosure Schedule shall mean the Meridian Disclosure
Schedule dated as of the date of this Agreement delivered by Meridian to ATS.
Anything in this Agreement to the contrary notwithstanding, all matters set
forth under a specific Section number of the Meridian Disclosure Schedule (or in
any agreement, instrument or other document specifically referenced therein to
the extent a copy thereof has been delivered to ATS) shall be deemed to have
been fully disclosed and set forth under all other Sections of the Meridian
Disclosure Schedule.
Meridian Employees shall have the meaning given it in the Section
3.15(a).
Meridian Financial Statements shall have the meaning given to it in
Section 3.2(b).
Meridian Indemnified Parties shall have the meaning given to it in
Section 8.2(d).
Meridian License Agreement shall have the meaning given to it in
Section 6.3(g).
Meridian Nonassumed Obligations shall have the meaning given to it in
Section 2.2(b).
Meridian's current actual knowledge shall mean the actual knowledge of
any Meridian director or executive officer, as such knowledge exists on the date
of this Agreement and on no later date, without any duty of inquiry or
investigation on the part of such director or executive officer and without any
review of (i) Meridian's Contracts, Governmental Authorizations, Private
Authorizations, files, books or records or (ii) public records or the files or
records of any Authority.
Meridian's knowledge shall mean the actual knowledge of any Meridian
director or officer, as such knowledge exists on the date of this Agreement and
no later date, after reasonable review of appropriate Meridian records.
MRS shall have the meaning given to it in the fourth Whereas paragraph.
Multiemployer Plan shall mean a Plan which is a "multiemployer plan"
within the meaning of Section 4001(a)3 of ERISA.
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New Sites shall have the meaning to it in Section 2.3.
New Sites Assumed Obligations shall have the meaning given to it in
Section 2.2(a).
Nonassignable Contracts shall have the meaning to it in Section 2.2(a).
Nonassignable Contracts Agreement shall have the meaning to it in
Section 2.2(a).
Organic Document shall mean, with respect to a Person which is a
corporation, its charter, its by-laws and all shareholder 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).
Otay Mountain Litigation shall have the meaning given to it in Section
2.1.
Other Agreement(s) shall have the meaning given to it in the fourth
Whereas paragraph, it being understood by the parties, however, that the Other
Agreement which relates to MCN may be modified to reflect the acquisition by ATS
of the partnership interest of Reichler in MCN rather than the assets and
business of MCN and that all references in this Agreement to the Other
Agreements, insofar as they relate to MCN shall be deemed to include such
understanding.
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, (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 conduct of the
Meridian Business, and (c) such other Liens as are permitted by the provisions
of this Agreement to be in place on the Closing Date.
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
Meridian and used or useful as of the date hereof in the conduct of the business
or operations of the Meridian Business, plus such additions thereto and
deletions therefrom arising in the ordinary course of business between the date
hereof and the Closing Date. Personal Property includes without limitation the
communication towers, buildings and other fixtures and improvements located on
Real Property.
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,
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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 the Meridian Business.
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
Intellectual Property.
Pro Ratable Taxes shall mean real estate and other property Taxes, ad
valorem Taxes, gross receipts Taxes and similar Taxes, but shall not include
federal, state or local income Taxes, franchise Taxes or other Taxes measured by
or based upon income or gain on sale or other disposition of property or assets.
Purchase Price shall have the meaning given to it in Section 2.3.
Real Property shall mean all of the fee estates, leasehold interest,
easements, licenses, rights to access, right-of- way, and other real property
interest which are owned by Meridian as of the date hereof, in the operations of
the Meridian Business, 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.
Reichler shall have the meaning given to it in Section 6.2(j).
Reichler Noncompetition Agreement shall have the meaning given to it in
Section 6.2(j).
Representatives shall have the meaning given to it in Section 5.1(a).
Retained Accounts Receivable shall have the meaning given to it in
Section 2.4.
SEC shall mean the United States Securities and Exchange Commission, or
any successor Authority.
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.
Settlement Proposal shall have the meaning given to it in Section 8.5.
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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.
Tax Allocation Schedule shall have the meaning given to it in Section
2.3.
Tax Claim shall mean any Claim which relates to Taxes, including
without limitation the representations and warranties set forth in Section 3.11.
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.
Tax accounting principles shall have the meaning given to it in Section
3.2.
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.
Termination Period shall have the meaning given to it in Section 9.16.
Title Company shall have the meaning given to it in Section 5.7.
Title Reports shall have the meaning given to it in Section 5.7.
Transactions shall mean the transactions contemplated to be consummated
on or prior to the Closing Date, including without limitation the purchase and
sale of the Meridian Assets and the Meridian Business and the execution,
delivery and performance of the Collateral Documents.
A-13
<TABLE>
<CAPTION>
STATEMENT RE COMPUTATION OF EARNINGS PER SHARE
American Radio Systems Corporation
EXHIBIT 11
In thousands except per share data
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
PRIMARY:
Weighted average shares of common stock .............. 8,705 11,853 19,549
Add common stock equivalents in the form of stock
options and warrants (using treasury stock method) 633 793 961
-------- -------- --------
Weighted average common stock and common stock
equivalents ....................................... 9,338 12,646 20,510
======== ======== ========
Net income (loss):
Income (loss) before extraordinary loss after
dividends ..................................... $ (1,960) $ 8,290 $ 162
Extraordinary loss .............................. (1,160) (817)
-------- -------- --------
Net income (loss) applicable to common
stockholders .................................. $ (3,120) $ 7,473 $ 162
======== ======== ========
Primary per common share amounts:
Income (loss) before extraordinary loss ......... $ (.21) $ .65 $ .01
Extraordinary loss .............................. (.12) (.06)
Net income (loss) applicable to common
stockholders .................................. (.33) .59 .01
FULLY DILUTED (not presented due to anti-dilution):
Weighted average shares of common stock .............. 8,705 11,853 19,549
Add common stock equivalents in the form of stock
options and warrants (using treasury stock method) 633 793 961
-------- -------- --------
Assumed conversion of preferred stock -- -- 1,675
Weighted average common stock and common stock
equivalents ....................................... 9,338 12,646 22,185
======== ======== ========
Net income (loss):
Income (loss) before extraordinary loss after
dividends ..................................... $ (1,960) $ 8,290 $ 162
Add convertible preferred dividends -- -- 4,973
-------- -------- --------
Income (loss) after redeemable stock
dividends before extraordinary loss (1,960) 8,290 5,135
Extraordinary loss .............................. (1,160) (817)
-------- -------- --------
Net income (loss) applicable to common
stockholders .................................. $ (3,120) $ 7,473 $ 5,135
======== ======== ========
Fully diluted per common share amounts:
Income (loss) before extraordinary loss ......... $ (.21) $ .65 $ .23
Extraordinary loss .............................. (.12) (.06)
Net income (loss) applicable to common
stockholders .................................. (.33) .59 .23
</TABLE>
<TABLE>
<CAPTION>
STATEMENT RE COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
American Radio Systems Corporation
EXHIBIT 12
The following table reflects the computation of the ratio of earnings
to fixed charges and preferred stock dividends for the years indicated. (In
thousands, except ratio data)
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Computation of Earnings:
Income (loss) from continuing operations before
extraordinary loss and income taxes ........ $ 483 $15,934 $ 9,961
Add:
Interest expense (1) .......................... 7,276 12,497 22,287
Rent expense (2) .............................. 394 531 1,312
------- ------- -------
Earnings as adjusted .......................... 8,153 28,962 33,560
======= ======= =======
Computation of Fixed Charges:
Interest expense (1) .......................... 7,276 12,497 22,287
Rent expense (2) .............................. 394 531 1,312
Preferred dividends (3) ....................... 1,887 815 4,973
------- ------- -------
Fixed charges ................................. 9,557 13,843 28,572
======= ======= =======
Ratio of earnings to combined fixed charges and 2.09x 1.17x
Preferred Stock Dividends...................
Deficiency in earnings required to cover
combined fixed charges and Preferred Stock
Dividends................................... 1,404
- -----------------------------------
<FN>
(1) Interest expense includes amortization of deferred financing costs.
(2) The interest element of rent expense is assumed to be 30% of gross operating rent charges.
(3) Includes dividends on redeemable common and preferred stock.
</FN>
</TABLE>
Exhibit 21
The Company owns, either directly or through wholly owned subsidiaries,
100% of the capital stock of each of the following corporations:
ARS Acquisition II, Inc. (Delaware)
American Merger Corporation (Delaware)
American Radio Systems License Corp. (Delaware)
American Tower Systems Holding Corporation (Delaware)
American Tower Systems, Inc. (Delaware)
Radio Systems of Miami, Inc. (Delaware)
Radio Systems of Philadelphia, Inc. (Pennsylvania)
The Company owns, either directly or through wholly owned subsidiaries,
25% of the outstanding capital stock of Radio Data Group, Inc. (Virginia), a
50.1% interest in ATS Needham, LLC and a 32.5% interest in Briar Summit
Wireless, LLC.
American Radio Systems Corporation
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
333-08601 on Form S-8 and Form S-3 of our report dated February 25, 1997,
appearing in the Annual Report on Form 10-K of American Radio Systems
Corporation for the year ended December 31, 1996.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
March 26, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 10,447
<SECURITIES> 0
<RECEIVABLES> 56,457
<ALLOWANCES> 4,560
<INVENTORY> 0
<CURRENT-ASSETS> 69,317
<PP&E> 99,621
<DEPRECIATION> 9,374
<TOTAL-ASSETS> 796,303
<CURRENT-LIABILITIES> 34,331
<BONDS> 330,111
0
1
<COMMON> 211
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 796,303
<SALES> 0
<TOTAL-REVENUES> 178,019
<CGS> 0
<TOTAL-COSTS> 120,004
<OTHER-EXPENSES> 30,984
<LOSS-PROVISION> 2,568
<INTEREST-EXPENSE> 22,287
<INCOME-PRETAX> 9,961
<INCOME-TAX> 4,826
<INCOME-CONTINUING> 5,135
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 162
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
