UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One):
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the quarterly period ended March 31, 1997
__ Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
Commission File Number: 0-26102
AMERICAN RADIO SYSTEMS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 04-3196245
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
116 Huntington Avenue
Boston, Massachusetts 02116
(Address of principal executive offices)
Telephone Number (617)-375-7500
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days:
Yes X No __
Class of Common Stock Outstanding at April 30, 1997
Class A Common Stock 23,494,917 shares
Class B Common Stock 4,613,311 shares
Class C Common Stock 1,295,518 shares
Total 29,403,746 shares
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Unaudited Condensed Consolidated Financial Statements Page No.
Consolidated Balance Sheets
December 31, 1996 and March 31, 1997.................................... 1
Consolidated Statements of Operations
Three months ended March 31, 1996 and 1997.............................. 3
Consolidated Statements of Cash Flows
Three months ended March 31, 1996 and 1997.............................. 4
Notes to Consolidated Financial Statements.............................. 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..................................... 20
PART II. OTHER INFORMATION
Item 1. Legal Proceedings............................................. 24
Item 2. Changes in Securities......................................... 24
Item 6. Exhibits and Reports on Form 8-K.............................. 25
Signatures.............................................................. 28
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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AMERICAN RADIO SYSTEMS CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 31, 1996 March 31, 1997
----------------- --------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 10,447 $ 6,282
Accounts receivable, net 51,897 45,620
Employee and other related-party receivables 249 352
Prepaid expenses and other assets 3,354 4,956
Deferred income taxes 3,370 3,371
---------- ----------
Total current assets 69,317 60,581
---------- ----------
PROPERTY AND EQUIPMENT--Net 90,247 111,675
---------- ----------
OTHER ASSETS:
Station investment note receivable--related party
(less valuation allowance of $500 in 1996) 743
Station investment notes receivable 69,177 25,710
Intangible assets--net:
Goodwill 232,149 230,964
FCC licenses 233,558 541,433
Other intangible assets 27,553 39,434
Deposits and other long-term assets 26,064 9,588
Net assets held under exchange agreement 47,495
---------- ----------
Total other assets 636,739 847,129
---------- ----------
TOTAL $ 796,303 $1,019,385
========== ==========
</TABLE>
See notes to unaudited condensed consolidated financial statements.
1
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<TABLE>
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AMERICAN RADIO SYSTEMS CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 31, 1996 March 31, 1997
----------------- --------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 561 $ 617
Accounts payable 7,085 6,161
Accrued compensation 3,027 2,571
Accrued expenses 16,355 12,940
Accrued interest 7,303 3,879
----------- -----------
Total current liabilities 34,331 26,168
----------- -----------
DEFERRED INCOME TAXES 33,205 29,523
----------- -----------
OTHER LONG-TERM LIABILITIES 2,149 4,278
----------- -----------
LONG-TERM DEBT 330,111 376,491
----------- -----------
MINORITY INTEREST IN SUBSIDIARY 344 505
----------- -----------
COMMITMENTS AND CONTINGENCIES
REDEEMABLE STOCK
Cumulative Exchangeable Preferred Stock; $0.01 par value; 10,000,000 shares
authorized; 2,037,917 shares issued and outstanding;
liquidation preference $203,792 203,792
----------- -----------
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 1
Class A Common Stock; $.01 par value; 100,000,000 shares authorized;
15,101,022 and 15,192,397 shares issued and outstanding,
respectively 151 152
Class B Common Stock; $.01 par value; 15,000,000 shares authorized;
4,658,096 and 4,604,862 shares issued and outstanding,
respectively 47 46
Class C Common Stock; $.01 par value; 6,000,000 shares authorized;
1,295,518 shares issued and outstanding 13 13
Additional paid-in capital 390,731 379,127
Unearned compensation (297) (273)
Retained earnings 5,955 0
----------- -----------
Total 396,601 379,066
Less:
Treasury stock, at cost, 18,449 shares
March 31, 1996 and December 31, 1996 (438) (438)
----------- -----------
Total stockholders' equity 396,163 378,628
----------- -----------
TOTAL $ 796,303 $ 1,019,385
=========== ===========
</TABLE>
See notes to unaudited condensed consolidated financial statements.
2
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AMERICAN RADIO SYSTEMS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended March 31,
----------------------------
1996 1997
-------- --------
NET REVENUES $ 23,648 $ 54,237
-------- --------
OPERATING EXPENSES:
Operating expenses excluding depreciation and
amortization, net local marketing agreement and
corporate general and administrative expenses 18,123 40,884
Net local marketing agreement expenses 450 1,932
Depreciation and amortization 2,200 7,424
Corporate general and administrative 1,082 1,777
-------- --------
Total expenses 21,855 52,017
-------- --------
OPERATING INCOME 1,793 2,220
-------- --------
OTHER INCOME (EXPENSE):
Interest expense (4,702) (7,504)
Interest income 2,118 656
Gains (losses) on sale of assets and other, net (36) 218
-------- --------
Total other income (expense) (2,620) (6,630)
-------- --------
LOSS FROM OPERATIONS BEFORE
EXTRAORDINARY LOSS AND INCOME TAXES (827) (4,410)
INCOME TAX BENEFIT 371 1,685
-------- --------
LOSS BEFORE EXTRAORDINARY LOSS (456) (2,725)
EXTRAORDINARY LOSS ON EXTINGUISHMENT
OF DEBT, NET OF INCOME TAX BENEFIT OF
$1,013 IN 1997 (1,639)
-------- --------
NET LOSS (456) (4,364)
REDEEMABLE PREFERRED STOCK DIVIDENDS (6,198)
-------- --------
NET LOSS APPLICABLE TO COMMON
STOCKHOLDERS $ (456) $(10,562)
======== ========
PRIMARY AND FULLY DILUTED PER COMMON SHARE
AMOUNTS:
Loss before extraordinary loss $ (.03) $ (.42)
Extraordinary loss (.08)
-------- --------
Net loss $ (.03) $ (.50)
======== ========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING 17,901 21,095
======== ========
See notes to unaudited condensed consolidated financial statements.
3
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AMERICAN RADIO SYSTEMS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended March 31,
------------------------------
1996 1997
----------- ----------
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CASH FLOWS FROM (USED FOR) OPERATING
ACTIVITIES: $ 7,585 $ (1,587)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for purchase of property, equipment and intangible
assets (3,295) (7,853)
Proceeds from radio station sales 20,403
Payments for radio station acquisitions (262,863)
Payments for tower related (4,702)
acquisitions
Issuance of station investment notes receivable (15,514) (624)
Repayment of station investment note 1,243
receivable
Deposits and other long-term assets (13,569) 16,417
--------- ---------
Cash used for investing activities (37,080) (233,277)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under Credit Agreements and other 276,500
Repayments under Credit Agreements (151,500) (230,000)
Repayments of other obligations (176) (274)
Net proceeds from equity offerings and options 115,076 160
Net proceeds from exchangeable preferred stock offering 192,350
Net proceeds from debt offering - net of discount 168,321
Additions to deferred financing costs (5,526)
Distributions to minority interest (105)
Dividends Paid (2,406)
--------- ---------
Cash provided by financing activities 131,721 230,699
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 102,226 (4,165)
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD 3,890 10,447
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 106,116 $ 6,282
========= =========
</TABLE>
See notes to unaudited condensed consolidated financial statements.
4
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AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation - The financial statements included herein have been
prepared by American Radio Systems Corporation (American or the Company),
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Although certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, the Company believes that the
disclosures are adequate to make the information presented not misleading
and reflect all adjustments (consisting only of normal recurring
adjustments) which are necessary for a fair presentation of results of
operations for such periods. Results of interim periods may not be
indicative of results for the full year. These financial statements should
be read in conjunction with the consolidated financial statements for the
year ended December 31, 1996 and the notes thereto included in the
Company's Annual Report on Form 10-K (Form 10-K).
Reclassifications - Certain reclassifications have been made to the 1996
financial statements to conform to the 1997 presentation.
2. Per Share Data - Earnings (loss) per common share is based on the number of
common shares outstanding during the period as adjusted for dilutive stock
options using the provisions of Accounting Principles Board Opinion No. 15
"Earnings Per Share" (APB 15). Fully diluted earnings (loss) per share
amounts are not reported separately as the effects are not dilutive.
In March 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share," (FAS 128)
which will be effective during the fourth quarter of 1997. Had FAS 128 been
effective for the quarters ended March 31, 1997 and 1996, reported loss per
share on a pro forma basis would have been consistent with the per share
amounts under APB 15.
3. Income Taxes - The Company provides for income taxes at the end of each
interim period based on the estimated effective tax rate for the full
fiscal year for each tax reporting corporate entity. Cumulative adjustments
to the tax benefit (provision) are recorded in the interim period in which
a change in the estimated annual effective rate is determined.
4. Property and Equipment and Intangible Assets - Property and equipment and
intangible assets included approximately $193,716,000 of assets related to
radio stations held for sale or under exchange agreements as of March 31,
1997. Net revenues of approximately $7,158,000 and operating expenses of
approximately $5,412,000 relating to these stations are included in the
accompanying condensed consolidated financial statements for the three
months ended March 31, 1997. Net revenues of approximately $2,997,000 and
operating expenses of approximately $2,279,000 relating to these stations
that were owned during 1996 are included in the accompanying condensed
consolidated financial statements for the three months ended March 31,
1996.
5
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AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
5. Offerings - 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, initially to repay amounts outstanding under the 1997 Credit
Agreements and thereafter to fund acquisitions. The Exchangeable Preferred
Stock possesses mandatory redemption features and is classified as such in
the Company's consolidated financial statements. Redemption terms and
conditions of the Exchangeable Preferred Stock are described in the Form
10-K.
Under these terms and conditions, the Company was required to file a
registration statement and offer to exchange the shares of the Exchangeable
Preferred Stock for New Exchangeable Preferred Stock within ninety days of
January 30, 1997. In April 1997, the Company filed a Registration Statement
on Form S-4, as amended, (No. 333- 26085) and such registration statement
was declared effective on May 13, 1997. The offer will expire in June 1997,
unless extended by the Company.
6. 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. Terms and conditions of the 1997 Credit Agreement
are described in the Form 10-K. 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 facility 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. (EZ) which
were assumed by the Company in connection with the EZ M erger discussed in
the Form 10-K and in Note 9.
Following the closing of the 1997 Credit Agreement and repayment of
amounts outstanding under the previous agreement, the Company recognized an
extraordinary loss of approximately $1,639,000, net of a tax benefit of
$1,013,000, representing the write-off of deferred financing fees
associated with the previous agreement.
7. Acquisitions and Dispositions - During the first three months of 1996 and
1997, the Company consummated the following station and tower related
transactions. See the Form 10-K for additional information on these
transactions.
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 a local marketing agreement (LMA)
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. The Company does not
expect the final appraisals will have a material affect on the financial
position, results of operations or liquidity of the Company.
6
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AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
7. Acquisitions and Dispositions - (Continued)
Austin: In March 1997, the Company acquired KAMX-FM, KKMJ-FM, and KJCE-AM,
for approximately $28.7 million.
Baltimore: In February 1997, the Company acquired WWMX-FM and WOCT-FM for
approximately $90.0 million.
Boston/Worcester: In January 1997, the Company acquired WAAF-FM and WWTM-AM
for approximately $24.8 million.
Cincinnati: In January 1997, the Company merged with an unaffiliated
corporation pursuant to which it became a party to an agreement to acquire
WGRR-FM, for approximately $30.5, including the issuance of shares to
consummate the merger. Pursuant to such merger, the Company issued 18,341
shares of Class A Common Stock valued at approximately $.5 million. As
described in the Form 10-K, the acquisition of WGRR-FM is expected to be
consummated in the second quarter of 1997.
Dayton: In February 1997, the Company acquired WXEG-FM for approximately
$3.6 million and acquired WLQT-FM and WBBT-FM for approximately $12.0
million.
Detroit, Philadelphia, Sacramento: In February 1997, the Company exchanged
WFLN-FM in Philadelphia for KSFM-FM and KMJI-AM serving Sacramento and sold
WQRS-FM in Detroit for approximately $20.0 million. (See Note 9).
Rochester: In February 1997, the Company acquired WVOR-FM, WPXY-FM, WHAM-AM
and WHTK-AM for approximately $31.5 million including working capital. (See
Note 9).
Sacramento: In March 1997, the Company acquired KXOA-FM, KQPT-AM (formerly
KXOA-AM) and KZZO -FM (formerly KQPT-FM) for approximately $50.0 million.
(See Note 8).
Sacramento and West Palm Beach: In March 1997, the Company consummated a
station asset swap agreement to exchange KSTE-AM in Sacramento and $33.0
million in cash for WEAT-FM, WEAT- AM and WOLL-FM serving West Palm Beach.
(See Note 8).
San Jose: In February 1997, the Company acquired KBAY-FM and KKSJ-AM
serving San Jose for approximately $31.0 million. (See Note 8).
Tower Subsidiary: In February 1996, American Tower Systems, Inc. (the Tower
Subsidiary or Tower) acquired Skyline Communications and Skyline Antenna
Management for approximately $3.3 million.
7
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AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
7. Acquisitions and Dispositions - (Continued)
The following unaudited pro forma summary presents the consolidated results
of operations as if the acquisitions had occurred as of January 1, 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, 1996 or of
results which may occur in the future.
In thousands, except per share data:
Three Months Ended Three Months Ended
March 31,1996 March 31, 1997
------------------ ------------------
Net $ 33,343 $ 54,645
revenues
Loss before extraordinary loss (5,404) (4,767)
Net loss (5,404) (6,406)
Net loss applicable to common
stockholders (5,404) (12,604)
Net loss per common share $ (.30) $ (.60)
8. Pending Transactions - The Company has numerous pending transactions which
were described in the Form 10-K. In addition, the Company, as successor to
EZ, assumed the rights and obligations under certain EZ pending
transactions upon consummation of the EZ Merger described in Note 9.
Subsequent to March 31, 1997, the Company assumed such rights and
obligations, has entered into additional transactions and revised the terms
of the following transactions:
Charlotte and Pittsburgh: In February 1997, in order to comply with the
Charlotte Consent Decree described in Note 9 and the FCC's multiple
ownership rules, EZ entered into an asset exchange agreement pursuant to
which it will exchange WRFX-FM, serving Charlotte, for WDSY-FM, serving
Pittsburgh, and $20.0 million. Consummation of the exchange, which is
expected in the second or third quarter of 1997, is subject to, among other
conditions, the expiration or earlier termination of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (HSR Act) waiting period,
approval by the Antitrust Division of the U.S, Department of Justice (the
Justice Department) pursuant to the Charlotte Consent Decree and the
consent of the Federal Communications Commission (FCC).
Portland, Sacramento and San Jose: In April 1997, American entered into an
asset exchange agreement pursuant to which it will acquire KINK-FM, serving
Portland, KBRG-FM, serving Fremont, California, $2.0 million in cash, and
150,000 shares of common stock of Latin Communications, Inc., in exchange
for KBAY-FM, serving San Jose, and KSSJ-FM, serving Sacramento. The
agreement also provides for the exchange of KINK-FM for KBAY-FM in the
event regulatory approval for the exchange of KBRG-FM and KSSJ-FM cannot be
obtained. Subject to certain conditions, including the receipt of FCC
approval and expiration or earlier termination of the HSR Act waiting
period, and, in the case of the exchange of KSSJ-FM for KBRG-FM, Justice
Department approval of the acquisition pursuant to a consent decree, the
transaction is expected to be consummated in the third quarter of 1997.
8
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AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
8. Pending Transactions - (Continued)
Riverside/San Bernardino: In April 1997, the Company entered into an
agreement to acquire KFRG- FM, serving the Riverside/San Bernardino market,
and KXFG-FM, serving Sun City, California, for approximately $60.0 million.
Subject to the receipt of FCC approval and expiration or earlier
termination of the HSR Act waiting period, the acquisition is expected to
be consummated in the first quarter of 1998.
Sacramento: In October 1996, the Company entered into an agreement to sell
KXOA-FM for approximately $27.5 million. After the expiration of the HSR
Act waiting period, the other party to the agreement began programming and
marketing KXOA-FM pursuant to an LMA in January 1997. As a condition to
consummation of the EZ merger, KXOA-FM was transferred to an independent
and insulated trustee (under a trust for the benefit of American) and will
be held by the trustee subject to sale pursuant to the foregoing agreement.
Subject to receipt of FCC approval, the sale from the trustee to the
ultimate purchaser is expected to be consummated in the second quarter of
1997.
Seattle: In December 1996, EZ entered into an agreement to sell the assets
of KMPS-AM for approximately $2.0 million. Subject to the approval of the
FCC, the transaction is expected to be consummated in the second quarter of
1997.
St. Louis: In December 1996, EZ entered into an agreement to sell the
assets of KTRS-AM (formerly KSD-AM) for approximately $10.0 million.
Subject to the approval of the FCC, the transaction is expected to be
consummated in the second quarter of 1997.
Temple: In May 1997, the Company entered into an agreement to acquire radio
station KKIK-FM, licensed to Temple, Texas for approximately $3.7 million.
Subject to the approval of the FCC, the transaction is expected to be
consummated in the fourth quarter of 1997.
West Palm Beach: The Company expects to enter into an agreement in May 1997
to sell WKGR- FM, WOLL-FM, WBZT-AM, and WEAT-AM for approximately $33.0
million. Subject to certain conditions, including the signing of a
definitive agreement, the receipt of FCC approval and the expiration or
earlier termination of the HSR Act waiting period, the Company expects to
consummate this transaction in the third quarter of 1997.
Tower Subsidiary: In May 1997, the Tower Subsidiary expects to enter into
an agreement to purchase an aggregate of 21 tower sites and a tower site
management business in Georgia, North Carolina and South Carolina for
approximately $5.3 million. The agreement will also provide for additional
payments by the Company if the seller is able to arrange the purchase or
management of tower sites presently owned by an unaffiliated public utility
in South Carolina, which payments could aggregate up to approximately $1.2
million. The transaction is expected to be consummated in the second
quarter of 1997.
In May 1997, the Tower Subsidiary entered into an agreement to acquire the
assets of two companies that are affiliated with one another and are
engaged in the business of acquiring and developing tower sites for
unaffiliated third parties in various locations in the United States for
approximately $12.5 million. The transaction is expected to be consummated
in the second quarter of 1997.
9
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AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
9. Subsequent Events - Subsequent to March 31, 1997, the Company consummated
the following transactions:
EZ Merger: On April 4, 1997, the Company consummated the merger of EZ into
the Company (the EZ Merger) pursuant to which, the Company acquired
eighteen FM and six AM stations in eight markets: Seattle, St. Louis,
Pittsburgh, Sacramento, Charlotte, Kansas City, New Orleans and
Philadelphia, assumed approximately $222.4 million of long-term debt, paid
approximately $108.9 million in cash and issued approximately 8,344,000
shares of Class A Common Stock to the EZ stockholders (excluding
approximately 362,000 shares of common stock reserved for options held by
former employees of EZ). The foregoing station information does not give
effect to the consummation of certain pending EZ transactions which are
described in Notes 8 and 9.
As part of the EZ Merger, the Company assumed EZ's obligations with respect
to $150.0 million principal amount of the EZ Senior Subordinated Notes (the
EZ Notes) and repaid all borrowings under the EZ credit facility with
borrowings from the 1997 Credit Agreement. As required by the closing of
the EZ Merger, the Company is required to offer to purchase the EZ Notes at
101% of their principal amount. Such offer commenced on April 19, 1997 and
expires May 19, 1997 and, to the extent accepted, the Company will borrow
funds necessary to purchase tendered EZ Notes under the 1997 Credit
Agreement. The Company will pay $1,056.31 per $1,000 aggregate principal
amount of EZ Notes tendered in accordance with the offer to purchase.
Charlotte: In May 1997, the Company, as successor to EZ, is expected to
consummate an asset exchange agreement pursuant to which the Company will
exchange WIOQ-FM and WUSL-FM in Philadelphia for WRFX-FM, WPEG-FM, WBAV-FM,
WBAV-AM and WFNZ-AM serving Charlotte, and also consummate an asset
purchase agreement to purchase WNKS-FM serving Charlotte for approximately
$10.0 million. In February 1997, EZ and the seller entered into a consent
decree with the Justice Department (the Charlotte Consent Decree). Pursuant
to the Charlotte Consent Decree, and to comply with the FCC's multiple
ownership rules, EZ agreed to dispose of WRFX-FM (which will upon
consummation of the exchange, be transferred to an independent and
insulated trustee). (See Note 8).
Cincinnati and Rochester: In April 1997, the Company exchanged WVOR-FM,
WHAM-AM and WHTK-AM serving Rochester, together with $16.0 million, for
WKRQ-FM serving Cincinnati. (See Note 7).
Fresno: In April 1997, the Company acquired KOQO-AM and KOQO-FM for
approximately $6.0 million.
Rochester: In April 1997, the Company acquired WZNE-FM (formerly WAQB-FM),
a newly licensed Class A FM station for approximately $3.5 million.
Sacramento: In April 1997, the Company sold KMJI-AM for approximately $1.5
million. (See Note 7).
Seattle: In April 1997, the Company (as successor to EZ) exchanged WEZB-FM,
WRNO-FM and WBYU-AM, serving New Orleans, for KBKS-FM (formerly KCIN-FM)
and KRPM-AM.
10
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AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
9. Subsequent Events - (Continued)
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.
10. Subsidiary Guarantees:
The Company's payment obligations under the 9% Senior Subordinated Notes
(Senior 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.
The Senior Subordinated Notes and the Subsidiary Guarantees are
subordinated to all Senior Debt (as defined) of the Company including
indebtedness under the Credit Agreements and the Senior Subsidiary
Guarantees. The indenture governing the Senior 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 Debt 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.
11
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
10. Subsidiary Guarantees - (continued):
<TABLE>
<CAPTION>
Condensed Consolidating Balance Sheet
March 31, 1997
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiaries Subsidiaries Eliminations Totals
------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 4,629 $ 1,653 $ 6,282
Accounts receivable, net 43,837 $ 1,503 280 45,620
Prepaid expenses and other current assets 5,297 4 7 5,308
Deferred income taxes 3,078 168 125 3,371
--------- ---------- ----------- ----------- -----------
Total current assets 56,841 1,675 2,065 60,581
PROPERTY AND EQUIPMENT, NET 86,086 4,741 20,848 111,675
OTHER ASSETS:
Investment in and advances to subsidiaries 579,046 $ (579,046) 0
Station investment notes receivable 25,461 249 25,710
Goodwill - net 203,352 20,327 7,285 230,964
FCC licenses - net 541,433 541,433
Other intangible assets - net 30,712 311 8,411 39,434
Deposits and other long-term assets 9,151 437 9,588
--------- ---------- ----------- ------------ -----------
Total other assets 847,722 562,071 16,382 (579,046) 847,129
--------- ---------- ----------- ------------ -----------
TOTAL ASSETS $ 990,649 $ 568,487 $ 39,295 $ (579,046) $ 1,019,385
========= ========== =========== ============ ===========
12
<PAGE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
10. Subsidiary Guarantees - (continued):
Condensed Consolidating Balance Sheet
March 31, 1997
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiaries Subsidiaries Eliminations Totals
------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 497 $ 120 $ 617
Accounts payable and accrued expenses 23,018 $ 711 1,822 25,551
--------- ---------- ----------- ------------ -----------
Total current liabilities 23,515 711 1,942 26,168
NON-CURRENT LIABILITIES:
Deferred income taxes 8,350 20,943 230 29,523
Other long-term liabilities 4,260 18 4,278
Long-term debt 372,104 4,387 376,491
--------- ---------- ----------- ------------ -----------
Total non-current liabilities 384,714 20,943 4,635 410,292
MINORITY INTEREST IN SUBSIDIARY 505 505
REDEEMABLE EXCHANGEABLE
PREFERRED STOCK 203,792 203,792
STOCKHOLDERS' EQUITY:
Preferred Stock 1 1
Common Stock 211 211
Additional paid-in capital 379,127 546,270 32,861 $ (579,131) 379,127
Unearned compensation (273) (273)
Retained earnings 0 563 (648) 85 0
Treasury stock (438) (438)
--------- ---------- ----------- ------------ -----------
Total stockholders' equity 378,628 546,833 32,213 (579,046) 378,628
--------- ---------- ----------- ------------ -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 990,649 $ 568,487 $ 39,295 $ (579,046) $ 1,019,385
========= ========== =========== ============ ===========
13
<PAGE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
10. Subsidiary Guarantees - (continued):
Condensed Consolidating Statement of Operations
For the Three Months Ended March 31, 1997
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiaries Subsidiaries Eliminations Totals
------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net broadcast revenues $ 51,171 $ 1,773 $ 52,944
Tower revenues 8 $ 1,366 (81) 1,293
License fees charged to Parent (5,154) 5,154 0
--------- ---------- ----------- ------------ -----------
Total net revenues 46,025 6,927 1,366 (81) 54,237
Operating expenses excluding
depreciation and amortization, net
local marketing agreement and
corporate general and administrative 38,694 1,453 818 (81) 40,884
expenses
Net local marketing agreement expense 2,599 (667) 1,932
Depreciation and amortization 3,425 3,495 504 7,424
Corporate general and administrative 1,777 1,777
--------- ---------- ----------- ------------ -----------
Operating income (loss) (470) 2,646 44 0 2,220
Other income (expense):
Interest expense (7,408) (96) (7,504)
Interest income 631 25 656
Gain (loss) on sale of assets and other,
net 298 (80) 218
Equity in (loss) of subsidiaries, net of
income taxes recorded at the
subsidiary level (103) 103 0
--------- ---------- ----------- ------------ -----------
Income (loss) before income taxes and
extraordinary item (7,052) 2,646 (107) 103 (4,410)
Benefit (provision) for income taxes 4,327 (2,691) 49 1,685
--------- ---------- ----------- ------------ -----------
Income (loss) before extraordinary loss (2,725) (45) (58) 103 (2,725)
Extraordinary loss on extinguishment of
debt - net of tax benefit (1,639) (1,639)
--------- ---------- ----------- ------------ -----------
Net income (loss) $ (4,364) $ (45) $ (58) $ 103 $ (4,364)
========= ========== =========== ============ ===========
14
<PAGE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
10. Subsidiary Guarantees - (continued):
Condensed Consolidating Statement of Cash Flows
For the Three Months Ended March 31, 1997
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiaries Subsidiaries Eliminations Totals
------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash flows from (used for) operating $ (1,912) $ 34 $ 291 $ (1,587)
--------- ---------- ----------- ------------ -----------
Investing Activities:
Payments for purchase of property and
equipment and intangible assets (5,395) (2,458) (7,853)
Proceeds from radio station sales 403 20,000 20,403
Payments for radio station acquisitions (262,863) (262,863)
Repayment for station investment notes
receivable 1,243 1,243
Issuance of station investment notes
receivable (375) (249) (624)
Deposits and other long-term assets 16,455 (48) 10 16,417
--------- ---------- ----------- ------------ -----------
Cash flows used by investing activities (250,532) 19,952 (2,697) (233,277)
--------- ---------- ----------- ------------ -----------
Financing Activities:
Borrowings under Credit Agreements and
other 276,500 276,500
Repayment of Credit Agreements (230,000) (230,000)
Repayment of other obligations (245) (29) (274)
Net proceeds from equity offerings and
options 160 160
Net proceeds from exchangeable preferred
stock 192,350 192,350
Additions to deferred financing costs (5,526) (5,526)
Distributions to minority interest (105) (105)
Dividends paid (2,406) (2,406)
Investment in and advances to subsidiaries 18,166 (19,986) 1,820 0
--------- ---------- ----------- ------------ -----------
Cash flows from financing activities 248,999 (19,986) 1,686 230,699
--------- ---------- ----------- ------------ -----------
Decrease in cash and cash equivalents (3,445) (720) (4,165)
Cash and cash equivalents at beginning
of period 8,074 2,373 10,447
--------- ---------- ----------- ------------ -----------
Cash and cash equivalents at end of period $ 4,629 $ 0 $ 1,653 $ 0 $ 6,282
========= ========== =========== ============ ===========
15
<PAGE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
10. Subsidiary Guarantees - (continued):
Condensed Consolidating Balance Sheet
December 31, 1996
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiaries Subsidiaries 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
--------- ---------- ----------- ------------ -----------
16
<PAGE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
10. Subsidiary Guarantees - (continued):
Condensed Consolidating Balance Sheet
December 31, 1996
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiaries Subsidiaries 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
========= ========== =========== ============ ===========
17
<PAGE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
10. Subsidiary Guarantees - (continued):
Condensed Consolidating Statement of Operations
For the Three Months Ended March 31, 1996
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiaries Subsidiaries Eliminations Totals
------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net broadcast revenues $ 23,374 $ 23,374
Tower revenues $ 274 274
License fees (500) $ 500 0
--------- ---------- ----------- ------------ -----------
Total net revenues 22,874 500 274 23,648
Operating expenses excluding depreciation and
amortization, net local marketing agreement
corporate general and administrative
expenses 17,870 253 18,123
Net local marketing agreement expenses 450 450
Depreciation and amortization 1,590 500 110 2,200
Corporate general and administrative 1,082 1,082
--------- ---------- ----------- ------------ -----------
Operating income 1,882 (89) 1,793
Other income (expense):
Interest income 2,118 2,118
Interest expense (4,700) (2) (4,702)
Gain (loss) on sale of assets and other (36) (36)
Equity in (loss) of subsidiaries, net of income
taxes recorded at the subsidiary level $ (50) $ 50 0
--------- ---------- ----------- ------------ -----------
Income (loss) before income taxes (786) (91) 50 (827)
Benefit for income taxes 330 41 371
--------- ---------- ----------- ------------ -----------
Net income $ (456) $ 0 $ (50) $ 50 $ (456)
========= ========== =========== ============ ===========
18
<PAGE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
10. Subsidiary Guarantees - (continued):
Condensed Consolidating Statement of Cash Flows
For the Three Months Ended March 31, 1996
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiaries Subsidiaries Eliminations Totals
------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities $ 6,798 $ 787 $ 7,585
--------- ---------- ----------- ------------ -----------
Investing Activities:
Payments for purchase of property, equipment
and intangible assets (2,585) (710) (3,295)
Payments for purchase of tower properties (2,200) (2,502) (4,702)
Issuance of station investment notes receivable (15,514) (15,514)
Deposits and other long-term assets (13,514) (55) (13,569)
--------- ---------- ----------- ------------ -----------
Cash flows used by investing activities (33,813) (3,267) (37,080)
--------- ---------- ----------- ------------ -----------
Financing Activities:
Repayment under Credit Agreements (151,500) (151,500)
Net proceeds from debt offering - net of
discount 168,321 168,321
Net proceeds from equity offerings and options 115,076 115,076
Repayment of other obligations (175) (1) (176)
Investment in and advances to subsidiaries 2,626 (2,626)
--------- ---------- ----------- ------------ -----------
Cash flows from financing activities 131,722 2,625 (2,626) 131,721
Increase in cash and cash equivalents 104,707 145 (2,626) 102,226
Cash and cash equivalents at beginning of
period 3,890 3,890
--------- ---------- ----------- ------------ -----------
Cash and cash equivalents at end of period $ 108,597 $ 0 $ 145 $ (2,626) $ 106,116
========= ========== =========== ============ ===========
</TABLE>
19
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Report contains "forward-looking statements" including statements
concerning projections, plans, 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 certain important
factors may have affected and could in the future affect the Company's actual
results and could cause the
Company's actual results for subsequent periods to differ materially from those
expressed in any forward-looking statement made by or on behalf of the Company.
These important factors include among others, the following: (i) any adverse
change in the laws, regulations and policies governing the operation and
ownership of radio stations, including, but not limited to, those established by
Congress, the Federal Communications Commission and the Antitrust Division of
the U.S. Justice Department; and (ii) the Company's financial leverage as a
result of borrowings under its credit facility, which bear interest at variable
rates, and the issuance of the Subordinated Notes could make it vulnerable to an
increase in interest rates or a downturn in the operating performance of its
radio stations or a downturn in economic conditions.
Three months ended March 31, 1997 and 1996
As of March 31, 1997, the Company owned and/or operated forty-seven FM and
twenty-four AM stations. See the Form 10-K and the unaudited condensed
consolidated financial statements for a description of the 1997 and 1996 station
and tower acquisitions. As of March 31, 1996, the Company owned and/or operated
sixteen FM and nine AM stations. These transactions have significantly affected
operations for the three months ended March 31, 1997 as compared to the three
months ended March 31, 1996.
Net revenues were $54.2 million for the three months ended March 31, 1997
compared to $23.6 million for the same three months in 1996, an increase of
$30.6 million or 129.7%. This increase was attributable to revenue growth in
some of the Company's existing markets and, to a more substantial extent, the
impact of acquisitions that occurred in the latter half of 1996 and first
quarter of 1997.
Station operating expenses excluding net local marketing agreement expenses,
depreciation and amortization and corporate general and administrative expenses
were $40.9 million for the three months ended March 31, 1997 compared to $18.1
million for the same period in 1996, an increase of $22.8 million or 126.0%.
This increase was due to the impact of increased costs associated with the
Company's revenue growth.
Net local marketing agreement expenses were $1.9 million for the three months
ended March 31, 1997 compared to $0.5 million for the same three months in 1996,
an increase of $1.4 million. Local marketing agreement expenses for the three
months ended March 31, 1997 are presented net of approximately $0.7 million of
revenues earned under such agreements.
Depreciation and amortization was $7.4 million and $2.2 million for the three
months ended March 31, 1997 and March 31, 1996, respectively, an increase of
$5.2 million. This increase was primarily attributable to the impact of
increased expenses associated with the increase in depreciable and amortizable
assets resulting from the 1996 and 1997 station acquisitions and, to a lesser
extent, the impact of increased values being ascribed to FCC licenses in the
purchase price allocation of 1997 station acquisitions.
Corporate general and administrative expenses increased to $1.8 million for the
three months ended March 31, 1997 from $1.1 million for the three months ended
March 31, 1996, an increase of $0.7 million or 63.6%. This increase was
primarily attributable to the higher personnel costs associated with supporting
the Company's greater number of stations.
20
<PAGE>
Results of Operations - (continued):
Interest expense was $7.5 million for the three months ended March 31, 1997
compared to $4.7 million for the 1996 period, an increase of $2.8 million or
59.6%. The increase is related to higher borrowing levels under the Company's
credit agreements in 1997 as compared to 1996 which resulted from the 1996 and
1997 acquisitions.
Interest income was $0.7 million for the three months ended March 31, 1997
compared to $2.1 million for the three months ended March 31, 1996, a decrease
of $1.4 million. The decrease is attributable to higher investable cash balances
and interest income earned on certain station investment notes in 1996 as
compared to 1997, a portion of which notes were used to fund station
acquisitions.
The gain (loss) on the sales of assets and other in 1997 and 1996 was not
material.
The income tax benefit from operations for the three months ended March 31, 1997
was $1.7 million as
compared to a benefit of $0.4 million for three months ended March 31, 1996. The
effective tax rate for the three months ended March 31, 1997 was approximately
38.2% compared to 44.9% in 1996. The higher effective rate in 1996 is due to the
effect of permanent differences, principally amortization of non-deductible
goodwill on certain stock acquisitions.
The extraordinary loss for the three months ended March 31, 1997 was $1.6
million, net of a $1.0 million tax benefit. The extraordinary loss was a result
of certain deferred financing costs being written off in January 1997 pursuant
to the extinguishment of debt under the Company's previous credit agreement.
Preferred stock dividends for the three months ended March 31, 1997 were $6.2
million. $2.4 million of the dividends are attributable to the Convertible
Preferred Stock issued in late June 1996 and $3.8 million of dividends are
attributable to the Cumulative Exchangeable Preferred Stock issued in late
January 1997.
Net loss applicable to common stockholders was $10.6 million for the three
months ended March 31, 1997 compared to $0.5 million for the three months ended
March 31, 1996, an increase of $10.1 million as a result of the factors
discussed above.
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 three months ended March 31, 1997 cash flows used from
operating activities was $1.6 million, as compared to cash from operating
activity of $7.6 million for the three months ended March 31, 1996. The change
is primarily attributable to working capital investments related to station
acquisition and growth.
Cash flows used for investing activities were $233.3 million for the three
months ended March 31, 1997 as compared to $37.1 million for the three months
ended March 31, 1996. The increase is attributable to the increased acquisition
activity in 1997 as compared to 1996.
Cash provided by financing activities was $230.7 million for the three months
ended March 31, 1997 as compared to $131.7 million for the three months ended
March 31, 1996. The increase in 1997 is due to the exchangeable preferred stock
offering described below and the impact of borrowings under the Company's credit
agreement.
21
<PAGE>
Liquidity and Capital Resources - (continued):
Offering: 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, or, at the Company's election, on or prior to January 15,
2002, with the issuance of additional shares. The Exchangeable Preferred Stock
possesses mandatory redemption features and has been classified accordingly in
the financial statements. See the Form 10-K for a description of the
Exchangeable Preferred Stock.
Credit Agreements: As of March 31, 1997, the Company had approximately $377.1
million of total long-term debt (including the current portion thereof)
outstanding. This included approximately $200.5 million of borrowings
outstanding under the Company's and the Tower Subsidiary's credit agreements and
the $175.0 million outstanding under the Senior Subordinated Notes. 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 which were assumed by
the Company in connection with the EZ Merger. The terms of the 1997 Credit
Agreement are described in the Form 10-K.
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. As of March 31, approximately $2.5 million of
borrowings were outstanding under the Tower Credit Agreement. The terms of the
Tower Credit Agreement are described in the Form 10-K.
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
assumed EZ's obligations with respect to $150.0 million principal amount of the
EZ Notes and repaid all borrowings under the EZ credit facility with borrowings
from the 1997 Credit Agreement. As required by the closing of the EZ Merger, the
Company is required to offer to purchase the EZ Notes at 101% of their principal
amount. Such offer commenced on April 19, 1997 and expires May 19, 1997 and, to
the extent accepted, the Company will borrow funds necessary to purchase
tendered EZ Notes under the 1997 Credit Agreement. The Company will pay
$1,056.31 per $1,000 aggregate principal amount of EZ Notes tendered in
accordance with the offer to purchase.
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 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.
22
<PAGE>
Liquidity and Capital Resources - (continued):
The Company believes that its cash flows from operations will be sufficient to
meet its 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 Form 10-K and the Notes to the Condensed Consolidated
Financial Statements). The consummation of each of these agreements is subject
to, among other things, FCC approval and in some cases expiration or earlier
termination of the HSR 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.
The Company incurred approximately $7.9 million in capital expenditures in the
three months ended March 31, 1997, principally related to tower construction and
office consolidations. 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 material 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
the Company will adopt in the fourth quarter of 1997. FAS 128 will require the
Company to restate all previously reported earnings per share information to
conform with the new pronouncement's requirements.
23
<PAGE>
PART II. OTHER INFORMATION
Item 1. - Legal Proceedings
In the normal course of business, the Company is subject to certain suits and
other matters. Management believes that the eventual resolution of any pending
matters, either individually or in the aggregate, will not have a material
effect on financial position, liquidity or results of operations.
Item 2. - Changes in Securities
Unregistered Issuances of Securities
On January 30, 1997, the Company sold 2,000,000 shares of its 11 3/8% Cumulative
Exchangeable Preferred Stock, $100 liquidation preference, to certain
institutional purchasers pursuant to the exemption from registration provided by
section 4 (2) of the Securities Act of 1933, as amended (the Securities Act).
The net proceeds to the Company from such sale were approximately $192.4
million.
On January 21, 1997, the Company issued 18,341 shares of Class A Common Stock
shares to the principal stockholders of Tsunami Communications of Cincinnati,
Inc. (Tsunami) as consideration, in part for the merger of Tsunami with and into
the Company. The Company issued such shares pursuant to the exemption from
registration provided by Section 4 (2) of the Securities Act.
24
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Listed below are the exhibits which are filed as part of this Form 10-Q
(according to the number assigned to them in Item 601 of Regulation S-K). Each
exhibit marked by a (*) is incorporated by reference to American's Report on
Form 10-K for the year ended December 31, 1996. Each exhibit marked by a (**)
has been previously filed as an exhibit as part of American's Registration
Statement on Form S-4 (File No. 333-26085), as amended, filed on April 29, 1997.
Exhibit numbers in parenthesis refer to the exhibit number in the applicable
filing.
<TABLE>
<CAPTION>
Exhibit No. Description of Document
<S> <C> <C>
3.1 The Certificate of Designation of Preferences and
Rights of the Series B Cumulative Exchangeable
Preferred Stock, as filed with the Secretary of State
of the State of Delaware on January 29, 1997.............. Incorporated by reference herein
from the Company's Form 8-K
dated February 10, 1997 (99.10)
3.2 The Certificate of Designation of Preferences and
Rights of the Cumulative Exchangeable Preferred
Stock, as filed with the Secretary of State
of the State of Delaware on January 29, 1997.............. Incorporated by reference herein
from the Company's Form 8-K
dated February 10, 1997 (99.9)
4 Indenture, dated as of January 30, 1997, by and
between the Company and Fleet National Bank
relating to the Company's 11 3/8% Subordinated
Exchange Debentures due 2009.............................. Incorporated by reference herein
from the Company's Form 8-K
dated February 10, 1997
10.1 Asset Exchange Agreement, dated March 31, 1996 by
and between Professional Broadcasting, Incorporated,
EZ New Orleans, Inc. and Heritage, Media Inc.............. Incorporated by reference herein
from the EZ Communications, Inc.
Quarterly Report on Form 10-Q
(File No. 0-16265) dated May 15,
1996
10.2 Time Brokerage Agreement, dated March 18, 1996
between EZ New Orleans, Inc. and Heritage Media,
Inc....................................................... Incorporated by reference herein
from the EZ Communications, Inc.
Quarterly Report on Form 10-Q
(File No. 0-16265) dated May 15,
1996
10.3 Time Brokerage Agreement, dated March 18, 1996
between Heritage Media, Inc and Professional
Broadcasting, Incorporated................................ Incorporated by reference herein
from the EZ Communications, Inc.
Quarterly Report on Form 10-Q
(File No. 0-16265) dated May 15,
1996
10.4 Asset Purchase Agreement, dated December 12, 1996
by and between Professional Broadcasting,
Incorporated, EZ Seattle, Inc. and Inspiration Media,
Inc....................................................... Incorporated by reference herein
from the EZ Communications, Inc.
Annual Report on Form 10-K (File
No. 0-16265) dated March 31,
1997
25
<PAGE>
<CAPTION>
Exhibit No. Description of Document
<S> <C> <C>
10.5 Asset Purchase Agreement, dated November 18, 1996
by and among Charter Communications Radio of St.
Louis, L.L.C., Professional Broadcasting,
Incorporated and EZ St. Louis, Inc. ...................... Incorporated by reference herein
from the EZ Communications, Inc.
Annual Report on Form 10-K (File
No. 0-16265) dated March 31,
1997
10.6 Asset Exchange Agreement, dated December 5, 1996
by and among EZ Communications, Inc., Professioanl
Broadcasting, Incorporated, EZ Philadelphia, Inc.,
Evergreen Media Corporation of the East, Evergreen
Media Corporation of Carolinaland, WBAV/WBAV-
FM/WPEG License Corp. and WRFX License Corp............... Incorporated by reference herein
from the EZ Communications, Inc.
Annual Report on Form 10-K (File
No. 0-16265) dated March 31,
1997
10.7 Agreement and Plan of Merger, dated January 2,
1997 between the Company and Tsunami
Communications of Cincinnati, Inc......................... *(10.102)
10.8 Agreement to Amend, dated January 2, 1997 by and
among the Company, Tsunami Communications of
Cincinnati, Inc., WGRR Limited Partnership and The
Dalton Group, Inc......................................... *(10.103)
10.9 Asset Purchase Agreement, dated January 22, 1997
by and among the Company, WGRR Limited
Partnership and The Dalton Group, Inc.................. *(10.104)
10.10 Asset Purchase Agreement, dated February 3, 1997
between the Company and Amaturo Group of Texas,
Ltd....................................................... *(10.105)
10.11 Time Brokerage Agreement, dated February 14, 1997
between the Company and Citicasters Co.................... *(10.106)
10.12 Agreement of Sale, dated February 14, 1997 by and
among the Company, American Radio Systems
License Corp. and Kimtron, Inc......................... *(10.107)
10.13 Time Brokerage Agreement, dated February 28, 1997
between the Company and Citicasters Co.................... *(10.108)
10.14 Agreement and Plan of Merger, dated March 3, 1997
between the Company and Alta Broadcasting
Company, Inc.............................................. *(10.109)
10.15 Credit Agreement, 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
Company's Form 8-K dated
February 10, 1997
26
<PAGE>
<CAPTION>
Exhibit No. Description of Document
<S> <C> <C>
10.16 Asset Purchase Agreement, dated February 5, 1997
between the Company and Meridian Sales and
Services Company.......................................... *(10.114)
10.17 Asset Exchange Agreement, dated February 25, 1997
by and between EZ Communications, Inc.,
Professional Broadcasting, Incorporated, EZ
Philadelphia, Inc., SFX Broadcasting, Inc. and SFX
Holdings, Inc............................................. Filed herewith as Exhibit 10.17
10.18 Asset Purchase Agreement, dated May 7, 1997 by
and between the Company, American Radio Systems
License Corp., KKSJ, Inc. and KKSJ License, Inc........... Filed herewith as Exhibit 10.18
10.19 Trust Agreement, dated April 4, 1997 by and
among the Company, American Radio Systems
License Corp. and Richard Oppenheimer as trustee.......... Filed herewith as Exhibit 10.19
10.20 Asset Exchange Agreement, dated April 17, 1997 by
and among the Company, American Radio Systems
License Corp., Latin Communications Group, Inc.,
EXCL Communications, Inc., Radio Exito, Inc. and
Portland Radio, Inc....................................... Filed herewith as Exhibit 10.20
10.21 Asset Purchase Agreement, dated March 31, 1997
between the Company and Amaturo Group of
California, Ltd........................................... Filed herewith as Exhibit 10.21
10.22 Asset Purchase Agreement, dated May 6, 1997
between the Company and Stellar Communications,
Inc....................................................... Filed herewith as Exhibit 10.22
11 Statement Re Computation of Per Share Earnings............ Filed herewith as Exhibit 11
12 Statement Re Computation of Ratio of Earnings to
Combined Fixed Charges and Preferred Stock Dividends...... Filed herewith as Exhibit 12
27 Financial Data Schedule................................... Filed herewith as Exhibit 27
99.1 Form of Notice of Guaranteed Delivery for 11 3/8
Cumulative Exchangeable Preferred Stock, Series B........ **(99.1)
99.2 Form of Letter of Transmittal for 11 3/8 Cumulative
Exchangeable Preferred Stock, Series B.................... **(99.2)
99.3 Form of Exchange Agent Agreement between
American and Harris Trust and Savings Bank, dated
as of April __, 1997...................................... **(99.3)
</TABLE>
(b) Reports on Form 8-K
1. Form 8-K/A (Items 5 and 7) on March 25, 1997.
2. Form 8-K (Items 5 and 7) on March 18, 1997.
3. Form 8-K (Items 2, 5 and 7) on February 18, 1997.
4. Form 8-K (Items 5 and 7) on February 10, 1997.
5. Form 8-K (Items 5 and 7) on January 22, 1997.
6. Form 8-K (Items 5 and 7) on January 3, 1997.
27
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMERICAN RADIO SYSTEMS CORPORATION
Date: May 14, 1997 BY: /s/ Joseph L. Winn
Joseph L. Winn
Treasurer & Chief Financial Officer
(Duly Authorized Officer)
Date: May 14, 1997 BY: /s/ Justin D. Benincasa
Justin D. Benincasa
Vice President & Corporate Controller
(Duly Authorized Officer)
28
EXHIBIT 10.17
ASSET EXCHANGE AGREEMENT
By and Between
EZ COMMUNICATIONS, INC.
PROFESSIONAL BROADCASTING, INCORPORATED
EZ PHILADELPHIA, INC.
SFX BROADCASTING, INC.
and
SFX HOLDINGS, INC.
Dated as of
February 25, 1997
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
ARTICLE 1 DEFINED TERMS...................................................................................2
ARTICLE 2 EXCHANGE OF LICENSES AND STATIONS...............................................................2
2.1 Agreement to Exchange Licenses and Stations; Exchange Schedule; Appraisals;
Tax Reporting.................................................................................2
2.2 Assumption of Liabilities and Obligations. .....................................................4
2.3 Closing.........................................................................................8
2.4 Escrow Arrangements.............................................................................8
2.5 Accounts Receivable.............................................................................8
2.6 Like-Kind Exchange..............................................................................9
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE SFX PARTIES...............................................9
3.1 Organization and Business; Power and Authority; Effect of Transaction..........................10
3.2 Financial and Other Information................................................................10
3.3 Changes in Condition...........................................................................11
3.4 Materiality....................................................................................11
3.5 Title to Properties; Leases....................................................................11
3.6 Compliance with Private Authorizations.........................................................12
3.7 Compliance with Governmental Authorizations and Applicable Law.................................12
3.8 Intangible Assets..............................................................................14
3.9 Related Transactions...........................................................................14
3.10 Insurance......................................................................................15
3.11 Tax Matters....................................................................................15
3.12 Employee Retirement Income Security Act of 1974................................................15
3.13 Inapplicability of Specified Statutes..........................................................17
3.14 Employment Arrangements........................................................................17
3.15 Material Agreements............................................................................17
3.16 Ordinary Course of Business....................................................................18
3.17 Broker or Finder...............................................................................19
3.18 Solvency.......................................................................................19
3.19 Environmental Matters..........................................................................19
3.20 Trade or Barter................................................................................20
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE EZ PARTIES...............................................20
4.1 Organization and Business; Power and Authority; Effect of Transaction..........................20
4.2 Financial and Other Information................................................................21
4.3 Changes in Condition...........................................................................21
4.4 Materiality....................................................................................22
4.5 Title to Properties; Leases....................................................................22
4.6 Compliance with Private Authorizations.........................................................23
4.7 Compliance with Governmental Authorizations and Applicable Law.................................23
4.8 Intangible Assets..............................................................................25
<PAGE>
4.9 Related Transactions...........................................................................25
4.10 Insurance......................................................................................25
4.11 Tax Matters....................................................................................26
4.12 Employee Retirement Income Security Act of 1974................................................26
4.13 Inapplicability of Specified Statutes..........................................................27
4.14 Employment Arrangements........................................................................28
4.15 Material Agreements............................................................................28
4.16 Ordinary Course of Business....................................................................29
4.17 Broker or Finder...............................................................................30
4.18 Solvency.......................................................................................30
4.19 Environmental Matters..........................................................................30
4.20 Trade or Barter................................................................................30
ARTICLE 5 COVENANTS......................................................................................31
5.1 Access to Information; Confidentiality.........................................................31
5.2 Agreement to Cooperate.........................................................................32
5.3 Public Announcements...........................................................................34
5.4 Notification of Certain Matters................................................................34
5.5 No Solicitation................................................................................35
5.6 Conduct of Business by SFX Pending the Closing.................................................35
5.7 Conduct of Business by EZ Pending the Closing..................................................37
5.8 FCC Application; Divesture Commitment..........................................................39
5.9 Delivery of Disclosure Schedules...............................................................40
ARTICLE 6 CLOSING CONDITIONS.............................................................................40
6.1 Conditions to Obligations of Each Party to Effect the Exchange.................................40
6.2 Conditions to Obligations of the EZ Parties....................................................41
6.3 Conditions to Obligations of the SFX Parties...................................................42
ARTICLE 7 TERMINATION, AMENDMENT AND WAIVER..............................................................44
7.1 Termination....................................................................................44
7.2 Effect of Termination..........................................................................45
ARTICLE 8 INDEMNIFICATION................................................................................46
8.1 Survival.......................................................................................46
8.2 Indemnification................................................................................46
8.3 Limitation of Liability........................................................................46
8.4 Notice of Claims...............................................................................47
8.5 Defense of Third Party Claims..................................................................47
8.6 Exclusive Remedy...............................................................................47
8.7 Rights Under Other Agreements..................................................................47
ARTICLE 9 GENERAL PROVISIONS.............................................................................48
9.1 Amendment......................................................................................48
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9.2 Waiver.........................................................................................48
9.3 Fees, Expenses and Other Payments..............................................................48
9.4 Notices........................................................................................49
9.5 Specific Performance; Other Rights and Remedies................................................50
9.6 Severability...................................................................................50
9.7 Counterparts...................................................................................51
9.8 Section Headings...............................................................................51
9.9 Governing Law..................................................................................51
9.10 Further Acts...................................................................................51
9.11 Entire Agreement...............................................................................51
9.12 Assignment.....................................................................................51
9.13 Parties in Interest............................................................................52
9.14 Mutual Drafting................................................................................52
9.15 EZ Agent for Other EZ Parties..................................................................52
9.16 SFX Agent for Other SFX Parties................................................................52
<CAPTION>
APPENDIX A: Definitions
EXHIBITS:
<S> <C>
EXHIBIT A-1: Form of Future EZ Station TBA (Section 5.2(d))
EXHIBIT A-2: Form of Future SFX Station TBA (Section 5.2(d))
</TABLE>
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<PAGE>
ASSET EXCHANGE AGREEMENT
This Asset Exchange Agreement (this "Agreement") is dated as of
February 25, 1997, by and among EZ Communications, Inc., a Virginia corporation
("EZ"), Professional Broadcasting, Incorporated, a Virginia corporation ("PBI"),
EZ Philadelphia, Inc., a Virginia corporation ("EZP" and, together with EZ and
PBI, sometimes referred to individually as an "EZ Party" and collectively as the
"EZ Parties") and SFX Broadcasting, Inc., a Delaware corporation ("SFX"), and
SFX Holdings, Inc., a Delaware corporation ("SFX Holdings" and, together with
SFX, sometimes referred to individually as an "SFX Party" and collectively as
the "SFX Parties", each as the context requires).
WHEREAS, SFX is party to an asset purchase agreement (the "Secret-SFX
Agreement") with Secret Communications Limited Partnership ("Secret"), which is
in turn party to an asset exchange agreement (the "Entercom Agreement" and,
together with the Secret-SFX Agreement, the "SFX Acquisition Agreements") with
Nationwide Communications, Inc. and Entertainment Communications, Inc.
("Entercom"), upon the consummation of which agreements SFX Holdings will be the
owner, operator and licensee of radio station WDSY (FM), Pittsburgh,
Pennsylvania (the "Future SFX Station") pursuant to a license issued by the FCC
(the "Future SFX License");
WHEREAS, the EZ Parties are party to an asset exchange agreement (the
"Evergreen-EZ Agreement") with certain affiliates of Evergreen Media Corporation
(the "Evergreen Entities" or "Evergreen"), upon the consummation of which an EZ
Party will be the owner, operator and licensee of radio station WRFX (FM),
Kannapolis, North Carolina (the "Future EZ Station") pursuant to licenses issued
by the FCC (the "Future EZ License");
WHEREAS, the EZ Parties and the SFX Parties desire to exchange the
Future EZ Assets for the Future SFX Assets and certain cash consideration, on
the terms and conditions hereinafter set forth;
WHEREAS, the parties hereto intend the Exchanges to qualify as
Like-Kind Exchanges; and
WHEREAS, EZ is party to an agreement and plan of merger (the "EZ Merger
Agreement"), dated as of August 5, 1996, as amended and restated as of September
27, 1996, with American Radio Systems Corporation, a Delaware corporation
("American"), pursuant to which EZ will be merged into American or a
wholly-owned subsidiary of American (the "American-EZ Merger"), and American
desires to consent to the Exchanges and the other transactions contemplated by
this Agreement;
NOW, THEREFORE, in consideration of the above premises and the
covenants and agreements contained herein, the EZ Parties and the SFX Parties
intending to be legally bound, do hereby covenant and agree as follows:
<PAGE>
ARTICLE 1
DEFINED TERMS
As used herein, unless the context otherwise requires, the terms
defined in Appendix A shall have the respective meanings set forth therein.
Terms defined in the singular shall have a comparable meaning when used in the
plural, and vice versa, and the reference to any gender shall be deemed to
include all genders. Unless otherwise defined or the context otherwise clearly
requires, terms for which meanings are provided in this Agreement shall have
such meanings when used in either Disclosure Schedule and each Collateral
Document executed or required to be executed pursuant hereto or thereto or
otherwise delivered, from time to time, pursuant hereto or thereto. The term
"either party" shall, unless the context otherwise requires, refer to SFX and
EZ, and shall include any Subsidiary of either thereof which is a party to this
Agreement.
ARTICLE 2
EXCHANGE OF LICENSES AND STATIONS
2.1 Agreement to Exchange Licenses and Stations; Exchange Schedule;
Appraisals; Tax Reporting.
(a) Subject to the terms and conditions set forth in this Agreement,
the SFX Parties and the EZ Parties hereby agree to exchange, transfer and
deliver at the Closing, the Future SFX Assets and the Future EZ Assets not
previously transferred by the parties pursuant to the applicable TBA, free and
clear of any Liens of any nature whatsoever except Permitted Liens, on the
following terms and conditions:
(i) the Future SFX Assets other than the Future SFX License,
together with a portion of the Cash Consideration, will be exchanged by
SFX Holdings with PBI for the Future EZ Assets other than the Future EZ
License (the "Asset Exchanges"); and
(ii) the Future SFX License, together with a portion of the
Cash Consideration, will be exchanged by SFX Holdings with EZP for the
Future EZ License (the "License Exchanges" and, collectively with the
Asset Exchanges, the "Exchanges").
(b) On or prior to the consummation of the Exchanges, each party shall
prepare a draft schedule that sets forth the "exchange groups" and "residual
group" (each within the meaning of Treas. Reg. Section 1.1031(j)-1) together
with each asset included in the Future EZ Assets and the Future SFX Assets that
belongs to the relevant exchange group or residual group, and send the schedule
to the other for approval, which approval shall not be unreasonably conditioned,
withheld or delayed. If the draft schedules do not contain any differences, they
shall form the basis for the final schedule (the "Section 1031 Schedule"). If
the draft schedules contain any differences, the
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parties shall negotiate in good faith to reconcile the draft and produce a
uniform schedule which shall constitute the Section 1031 Schedule.
(c) In the event EZ and SFX Parent are unable to agree upon the Section
1031 Schedule prior to the Exchange (or within such period thereafter as they
shall, from time to time, agree), the EZ Parties and the SFX Parties agree that
the fair market value of each asset included in the Future EZ Assets and the
Future SFX 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 EZ and SFX Parent. The parties shall direct Bond &
Pecaro to deliver Appraisals within thirty (30) days from the appointment of
such firm and to set forth in the Appraisals the fair market value of each asset
included in the Future EZ Assets and the Future SFX Assets. Within thirty (30)
days of the receipt of the Appraisals, each party shall prepare a draft Section
1031 Schedule and send the schedule to the other for approval, which approval
shall not be unreasonably conditioned, withheld or delayed. If the draft
schedules do not contain any differences, they shall form the basis for the
Section 1031 Schedule. If the draft schedules contain any differences, the
parties shall negotiate in good faith to reconcile the draft and produce a
uniform schedule which shall constitute the Section 1031 Schedule.
(d) Each of EZ and SFX shall cause to be prepared in a timely fashion a
draft of IRS Forms 8824 for itself on the basis of the Appraisals and the
Section 1031 Schedule. Each of EZ and SFX shall deliver drafts of their
respective IRS Forms 8824 to the other for approval, which approval shall not be
unreasonably conditioned, withheld or delayed.
(e) Each of EZ and SFX shall cause to be prepared in a timely fashion a
draft of IRS Form 8594 for itself in a manner consistent with the Section 1031
Schedule and IRS Forms 8824 prepared in accordance with paragraph (c) above,
reflecting (i) the allocation of consideration exchanged by it among the assets
acquired based on the respective fair market values of the relevant assets as
set forth in the Appraisals and in accordance with section 1060 of the Code and
(ii) such other information as required by Section 1060 of the Code and IRS Form
8594. Each of EZ and SFX shall deliver drafts of their respective IRS Forms 8594
to the other for approval, which approval shall not be unreasonably conditioned,
withheld or delayed.
(f) Each of EZ and SFX shall report the transactions contemplated
hereby as a Like- Kind Exchange under Section 1031 of the Code, consistent with
the Appraisals, the Section 1031 Schedule, and IRS Forms 8594 and 8824 prepared
in accordance with paragraphs (c) and (d) above, 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, the Appraisals, the Section 1301
Schedule or such IRS Form 8584 or 8824. Each of EZ and SFX shall promptly give
the other notice of any disallowance of or challenge to such reporting by any
Taxing Authority.
(g) Each of EZ and SFX shall cooperate with the other, including
without limitation in preparing the Section 1031 Schedule, the IRS Forms 8594
and 8824 and executing all necessary agreements and documents, to the extent
necessary for each of EZ and SFX to treat the exchange
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of the Future EZ Assets for the Future SFX Assets as a Like-Kind Exchange
pursuant to Section 1031 of the Code.
(h) 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.
(i) For purposes of this Agreement, the terms "Future SFX Assets" and
"Future EZ Assets" shall mean all of the Assets associated with the respective
Stations, other than the Excluded Assets, and, in the case of the Future SFX
Assets, shall include cash in the amount of Twenty Million Dollars ($20,000,000)
(the "Cash Consideration"). For purposes of this Agreement, the term "Excluded
Assets" shall mean the following Assets
(i) all cash and cash equivalents, except as otherwise set
forth above in the case of the Future SFX Assets;
(ii) all Accounts Receivable of the EZ Parties, the SFX
Parties or any direct or indirect Subsidiary of the EZ Parties and the
SFX Parties relating to the Future EZ Station and the Future SFX
Station, respectively;
(iii) the corporate names of each EZ Party and each SFX Party;
(iv) all books and records which any person is required by
Applicable Law to retain, subject to the right of the other party to
have access and to copy for a period of three (3) years from the
Closing Date;
(v) any pension, profit-sharing or employee benefit plans,
including any assets in any related trusts;
(vi) all insurance policies relating to the Future EZ Assets
and the Future SFX Assets, respectively, (other than insurance proceeds
that are specifically assigned in connection with the assignment of the
Future EZ Assets and the Future SFX Assets, respectively);
(vii) software programs and other assets at the principal
executive offices of any EZ Party or SFX Party used to provide certain
financial and accounting services for the Future EZ Station and the
Future SFX Station, respectively; and
(viii) 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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2.2 Assumption of Liabilities and Obligations.
(a) As of the Closing Date, (i) PBI shall assume and agree to pay,
discharge and perform all of the obligations and liabilities of the SFX Parties
with respect to the ownership and operation of the Future SFX Station and the
Future SFX Assets (except that all obligations and liabilities with respect to
Future SFX License shall be paid, discharged and performed by EZP), and (ii) SFX
Holdings shall assume and agree to pay, discharge and perform all of the
obligations and liabilities of each EZ Party with respect to the ownership and
operation of the Future EZ Station and the Future EZ Assets (including all
obligations and liabilities with respect to Future EZ License), including, in
both cases, without limitation the FCC Licenses and the Contracts, except to the
extent that, in either case, any such obligation or liability relates to or
arises out of the Nonassumed Obligations of any SFX Party or of any EZ Party,
all of which Nonassumed Obligations of such SFX Party and of such EZ Party shall
be and remain the sole and exclusive obligations and liabilities of such SFX
Party and of such EZ Party, respectively.
(b) The term "Nonassumed Obligations" shall mean all of the obligations
and liabilities of SFX or of EZ, or any of their Subsidiaries, as the case may
be, arising out of or relating to:
(i) the ownership and operation of the Future SFX Station and
the Future EZ Station, as the case may be, and the related Assets, on
or prior to the Closing Date, except to the extent otherwise provided
in the Future SFX Station TBA and the Future EZ Station TBA,
respectively;
(ii) those required to be disclosed in either Disclosure
Schedule which are not so disclosed or which, if disclosed, Section
2.2(b)(ii) of the appropriate Disclosure Schedule indicates that such
obligation or liability will not be assumed;
(iii) any breach of any warranty or any misrepresentation by
any party under this Agreement or any Collateral Document;
(iv) any party's breach or violation of, or failure to
perform, any of its obligations, covenants, agreements or undertakings
set forth in this Agreement or any Collateral Document, including
without limitation Article 5 of this Agreement;
(v) any obligation or liability relating to any Excluded
Asset;
(vi) any obligation or liability with respect to Indebtedness
for Money Borrowed;
(vii) any taxes, fees, expenses or other amounts required to
be paid by any party pursuant to the provisions of this Agreement or
any Collateral Document; and
(viii) any Contract with any Affiliate of any party (other
than those Contracts set forth in Section 2.2(b)(viii) of the
appropriate Disclosure Schedule).
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(c) Notwithstanding anything contained in this Agreement to the
contrary and except as otherwise provided in the Future SFX Station TBA or the
Future EZ Station 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 Future EZ Station and the Future SFX
Station (the conduct of such business to be in the ordinary course consistent
with past practice) shall be prorated between the EZ Parties and SFX Parties in
accordance with GAAP applied consistently with past practice 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 relating to any subsequent period. For these purposes, Pro
Ratable Taxes attributable to a period that begins before and ends after the
Cut-off Date shall be treated on a "closing of the books" basis as two partial
periods, one ending at the close of the day immediately preceding the Cut-off
Date and the other beginning on the Cut-off Date, except that Pro Ratable Taxes
(such as property Taxes) imposed on a periodic basis shall be allocated on a
daily basis. The parties shall use their best efforts prior to the Closing Date
to agree upon the prorations, including without limitation any with respect to
the Trade Agreements pursuant to the provisions of Section 2.2(g). If the
parties do agree upon the prorations prior to the Closing Date, payment of the
proration amounts shall be due on the later of (i) the fifteenth day after the
parties so agree or (ii) the Closing Date.
(d) If the parties shall not have agreed to the prorations prior to the
Closing Date, SFX shall deliver to EZ, not later than sixty (60) days after the
Closing Date, a schedule of its proposed prorations, including without
limitation any with respect to the EZ Trade Agreements pursuant to the
provisions of Section 2.2(g), which shall set forth in reasonable detail the
basis for those determinations (the "Pittsburgh Proration Schedule"). The
Pittsburgh Proration Schedule shall be conclusive and binding upon the EZ
Parties unless EZ provides SFX with written notice of objection (the "Notice of
Disagreement") within thirty (30) days after EZ's receipt of the Pittsburgh
Proration Schedule, which notice shall state the prorations proposed by EZ (the
"EZ Proration Schedule"). SFX shall have fifteen (15) days from receipt of a
Notice of Disagreement to accept or reject the EZ Proration Schedule. If SFX
rejects the EZ 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
the SFX Parties and the EZ Parties. EZ and SFX 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 EZ and
SFX. Payment by EZ or SFX, as the case may be, of the proration amounts
determined pursuant to this Section 2.2(d) shall be due fifteen (15) days after
the last to occur of (i) EZ's acceptance of the Pittsburgh Proration Schedule or
failure to give SFX a timely Notice of Disagreement; (ii) SFX's acceptance of
the EZ Proration Schedule or failure to reject within fifteen (15) days of
receipt of a timely Notice of Disagreement; (iii) SFX's rejection of the EZ
Proration Schedule in the event the amount in dispute equals or is less than
Five Thousand Dollars ($5,000); and (iv) notice to SFX and EZ 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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(e) If the parties shall not have agreed to the prorations prior to the
Closing Date, EZ shall deliver to SFX, not later than sixty (60) days after the
Closing Date, a schedule of its proposed prorations, including without
limitation any with respect to the SFX Trade Agreements pursuant to the
provisions of Section 2.2(g), which shall set forth in reasonable detail the
basis for those determinations (the "Charlotte Proration Schedule"). The
Charlotte Proration Schedule shall be conclusive and binding upon the SFX
Parties unless SFX provides EZ with a Notice of Disagreement within thirty (30)
days after SFX's receipt of the Charlotte Proration Schedule, which notice shall
state the prorations proposed by SFX (the "SFX Proration Schedule"). EZ shall
have fifteen (15) days from receipt of a Notice of Disagreement to accept or
reject the SFX Proration Schedule. If EZ rejects the SFX 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 the EZ Parties and the
SFX Parties. SFX and EZ 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 SFX and EZ. Payment by SFX or EZ,
as the case may be, of the proration amounts determined pursuant to this Section
2.2(e) shall be due fifteen (15) days after the last to occur of (i) SFX's
acceptance of the Charlotte Proration Schedule or failure to give EZ a timely
Notice of Disagreement; (ii) EZ's acceptance of the SFX Proration Schedule or
failure to reject within fifteen (15) days of receipt of a timely Notice of
Disagreement; (iii) EZ's rejection of the SFX Proration Schedule in the event
the amount in dispute equals or is less than Five Thousand Dollars ($5,000); and
(iv) notice to EZ and SFX of the resolution of the disputed amount by the
Referee in the event that the amount in dispute exceeds Five Thousand Dollars
($5,000).
(f) Any payment required by SFX to EZ or by EZ to SFX, as the case may
be, under Section 2.2(d), 2.2(e), 2.2(g) or 2.4 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 Charlotte
Proration Schedule or the Pittsburgh 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 SFX or EZ fails to pay when due any amount
under Section 2.2(d), 2.2(e), 2.2(g) or 2.4, 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) Obligations and liabilities under Trade Agreements shall be
prorated in favor of the party assuming the same only to the extent that the
aggregate obligations and liabilities (determined in accordance with GAAP) for
unperformed air time under all such agreements as of 12:01 a.m. on the
applicable Cut-off Date exceed by Twenty Thousand Dollars ($20,000) in the case
of the Future EZ Station or the Future SFX Station, the fair market value of the
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. Additionally, the aggregate obligations
and liabilities for unperformed air time under all SFX Trade Agreements and
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under all EZ Trade Agreements on the applicable Cut-off Date which are required
to be prorated (any excess being part of the applicable Nonassumed Liabilities)
shall not exceed One Hundred Thousand Dollars ($100,000). There shall be no
proration in favor of the assigning party with respect to the Trade Agreements,
notwithstanding the fact that the excess, if any, of the obligations and
liabilities under the Trade Agreements over the fair market value of the
property to be received under such Trade Agreements after 12:01 a.m. on the
applicable Cut-off Date is less than the amounts specified in the first sentence
of this paragraph.
(h) Nothing contained in this Section 2.2 is intended or shall be
deemed to amend or modify the indemnification provisions of Article 8 nor to
reallocate responsibility for the matters set forth herein.
2.3 Closing. The closing of the Exchanges (the "Closing") shall take
place at Hunton & Williams, 1751 Pinnacle Drive, Suite 1700, McLean, Virginia,
22102, at 10:00 a.m., local time, on the latest to occur of (a) the date on
which the transactions contemplated by the Evergreen-EZ Agreement are
consummated, (b) the date on which the transactions contemplated by the Secret-
SFX Agreement are consummated or (c) the tenth (10th) business day after the FCC
Consents shall have been issued and become Final Orders, or on such other date,
prior to the Termination Date, or at such other place, 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, opinions and other
instruments and documents as are described in this Agreement or as may be
otherwise reasonably requested by the parties and their respective counsel.
2.4 Escrow Arrangements. Concurrently with the execution hereof, SFX
shall pay to the Escrow Agent the sum of Five Million Dollars ($5,000,000) (the
"Escrow Deposit") to be held by the Escrow Agent pursuant to the terms of the
Escrow Agreement. On the Closing Date, the SFX Parties shall (i) pay to the EZ
Parties (or, in the event a Like-Kind Exchange is to be effected pursuant to
Section 2.6, to the "qualified intermediary" described in Section 2.6) the sum
of Fifteen Million Dollars ($15,000,000) and (ii) instruct the Escrow Agent to
disburse to the EZ Parties (or, in the event a Like-Kind Exchange is to be
effected pursuant to Section 2.6, to the "qualified intermediary" described in
Section 2.6) the Escrow Deposit and any interest or other earnings thereon, in
each case by wire transfer of immediately available funds to such account as is
designated by EZ in written instructions to SFX delivered not later than two (2)
business days prior to the Closing.
2.5 Accounts Receivable. Upon the earlier to occur of Closing or the
commencement of the applicable TBA, the SFX Parties shall appoint PBI their
agent and the EZ Parties shall appoint SFX their agent for the purpose of
collecting all Accounts Receivable relating to the Future SFX Station and the
Future EZ Station, respectively. Each party shall deliver to the other 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 of its Stations.
Subject to and limited by the following, revenues relating to the Accounts
Receivable relating to the Future SFX Station and the Future EZ Station,
respectively, will be for the account of the SFX Parties and the EZ Parties,
respectively. Each agent shall use its best efforts to collect the Accounts
Receivable with respect to which it is
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acting as agent for a period of ninety (90) days after the earlier to occur of
the Closing Date or the date of commencement of the applicable TBA (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
the Accounts Receivable, unless the customer contests in writing the validity of
such application or otherwise directs the application of such payment 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 on a monthly
basis. 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 Account Receivable, the parties shall negotiate a
good faith 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 a good faith 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 agent 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 agent. Neither agent shall incur any liability to any
other party for any uncollected account 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.
2.6 Like-Kind Exchange. The EZ Parties may elect to effect the transfer
and conveyance of that portion of the Future EZ Assets in respect of which the
Cash Consideration is to be paid hereunder as part of an exchange under Section
1031 of the Code, in lieu of selling such assets hereunder. If the EZ Parties so
elect, they shall provide notice to SFX of their election, and thereafter (a)
may at any time at or prior to Closing assign their rights (but such assignment
shall not relieve them of their 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 the SFX Parties and (b) shall
promptly provide written notice of such assignment to SFX. The SFX Parties shall
cooperate with all reasonable requests of the EZ Parties and the "qualified
intermediary" in arranging and effecting the exchange as one which qualifies
under Section 1031 of the Code. Without limiting the generality of the
foregoing, if the EZ Parties have given notice of their intention to effect the
disposition of that portion of the Future EZ Assets in respect of which the Cash
Consideration is to be paid hereunder as part of a tax-deferred exchange, the
SFX Parties shall (i) promptly provide the EZ Parties with written
acknowledgment of such notice and (ii) at Closing,
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pay the Cash Consideration for such portion of the Future EZ Assets to the
"qualified intermediary" rather than to the EZ Parties (which payment shall
discharge, to the extent of such payment, the obligation of the SFX Parties to
make payment for the Future EZ Assets hereunder).
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SFX PARTIES
Each SFX Party hereby, jointly and severally, represents, warrants and
covenants to, and agrees with, the EZ Parties as follows:
3.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) Each SFX Party 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 SFX Party 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 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 each
SFX Party. This Agreement has been duly executed and delivered by each SFX Party
and constitutes, and each Collateral Document to which any SFX Party becomes a
party will, when executed and delivered by such SFX Party, constitute, the
legally valid and binding obligation of such SFX Party, enforceable against such
SFX Party 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 SFX Disclosure
Schedule, neither the execution and delivery by each SFX Party of this Agreement
or any Collateral Document executed or required to be executed by it pursuant
hereto or thereto, nor the consummation by each SFX Party of the Transactions,
nor compliance with the terms, conditions and provisions hereof or thereof by
each SFX Party:
(i) will conflict with, or result in a breach or violation of,
or constitute a default under, any Organic Document of any SFX Party or
any Applicable Law on the part of any SFX Party, 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 SFX Material
Agreement; or
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(ii) will require any SFX Party to make or obtain any
Governmental Authorization, Governmental Filing or Private
Authorization, except for the FCC Consents, filings 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 a Material Adverse Effect on SFX.
(d) SFX does not have any direct or indirect Subsidiaries or other
Affiliates which own or have any interest in the Future SFX Station or any of
the Future SFX Assets other than the other SFX Parties.
3.2 Financial and Other Information. SFX has heretofore furnished to EZ
copies of the unaudited financial data of the Future SFX Station listed in
Section 3.2 of the SFX Disclosure Schedule (the "SFX Financial Data"). Except as
set forth in Section 3.2 of the SFX Disclosure Schedule (which schedule reflects
the inclusion of "barter" transactions and the effects thereof), and except for
normal year-end audit adjustments and accruals, if any, the SFX Financial Data
have been prepared in accordance with GAAP applied on a basis consistent with
past practices and are a true, accurate and fair presentation of the operating
revenues and operating expenses of the Future SFX Station for the periods
indicated.
3.3 Changes in Condition. Since June 30, 1996, except to the extent
specifically described in Section 3.3 of the SFX Disclosure Schedule, there has
been no Material Adverse Change in SFX. There is no Event known to SFX which
Materially Adversely Affects, or (so far as SFX can now reasonably foresee) is
likely to Materially Adversely Affect, SFX, except to the extent specifically
described in Section 3.3 of the SFX Disclosure Schedule.
3.4 Materiality. The representations and warranties set forth in this
Article would in the aggregate be true and correct even without the materiality
exceptions or qualifications contained therein or set forth in the SFX
Disclosure Schedule, except for such exceptions and qualifications including
without limitation those set forth in the SFX 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 SFX.
3.5 Title to Properties; Leases.
(a) There is no real property that is or will be owned by an SFX Party
that will be part of the Future SFX Assets. Section 3.5(a) of the SFX Disclosure
Schedule describes all Leases of Real Property (the "SFX Leases") used or held
for use in the operation of the Future SFX Station (the "SFX Real Property").
One of the SFX Parties will, assuming consummation of the transactions
contemplated by the Secret-SFX Agreement, have valid and subsisting leasehold
interests (as shown on Section 3.5(a) of the SFX Disclosure Schedule) in all SFX
Real Property, in each case free and clear of all Liens, except (i) Permitted
Liens and (ii) Liens set forth on Section 3.5(a) of the SFX Disclosure Schedule
(which Liens shall be released prior to Closing). Except as otherwise set forth
in Schedule 3.5(a) of the SFX Disclosure Schedule, each SFX Lease included
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in the SFX Real Property has, to SFX's knowledge, information and belief, been
duly authorized, executed and delivered by each of the parties thereto, and
will, assuming consummation of the transactions contemplated by the Secret-SFX
Agreement be a legally valid and binding obligation of the appropriate SFX
Party, and, to SFX's knowledge, information and belief, each of the other
parties thereto, enforceable in accordance with its terms. The appropriate SFX
Party will, assuming consummation of the transactions contemplated by the
Secret-SFX Agreement, have a valid leasehold interest in and enjoy peaceful and
undisturbed possession under all SFX Leases pursuant to which it will hold any
SFX Real Property. Assuming consummation of the transactions contemplated by the
Secret-SFX Agreement, (x) all SFX Leases will be valid and subsisting and in
full force and effect; and (y) neither any SFX Party nor, to SFX's knowledge,
information and belief, any other party thereto, will be in default in the
performance, observance or fulfillment of any obligation, covenant or condition
contained in any SFX Lease. Except as disclosed in Section 3.5(a) of the SFX
Disclosure Schedule, to the knowledge, information and belief of SFX, Secret or
Entercom, all improvements on the SFX Real Property are in compliance with
applicable zoning and land use laws, ordinances and regulations in all respects
necessary to conduct the operation of the Future SFX Station operating thereon
as presently conducted, except for any instances of non-compliance which do not
and will not individually or in the aggregate have a Material Adverse Effect on
the lessee of such SFX Real Property. Except as disclosed in Section 3.5(a) of
the SFX Disclosure Schedule, to the knowledge, information and belief of SFX,
Secret or Entercom, all such improvements are in good working condition and
repair (ordinary wear and tear excepted), are insurable at standard rates, and
comply in all Material respects with FCC rules and regulations. Except as
disclosed in Section 3.5(a) of the SFX Disclosure Schedule, all of the
transmitting towers, ground radials, guy anchors, transmitting buildings and
related improvements located on the SFX Real Property are located entirely on
the SFX Real Property. SFX has no knowledge of any pending, threatened or
contemplated action to take by eminent domain or otherwise to condemn any part
of the SFX Real Property.
(b) To SFX's knowledge, information and belief, Section 3.5(b) of the
SFX Disclosure Schedule contains a true, accurate and complete description of
all Material items of SFX Personal Property. None of the SFX Personal Property
is subject to any Lien, except (i) Permitted Liens and (ii) Liens set forth in
Section 3.5(b) of the SFX Disclosure Schedule (which Liens shall be released
prior to Closing). Except as set forth in Section 3.5(b) of the SFX Disclosure
Schedule, all Material items of SFX Personal Property are in a state of good
repair and maintenance and are in good operating condition, normal wear and tear
excepted, have been maintained in a manner consistent with generally accepted
standards of good engineering practice and will, assuming consummation of the
transactions contemplated by the Secret-SFX Agreement, permit the Future SFX
Station to be operated in accordance with the terms and conditions of the Future
SFX License and all Applicable Laws.
3.6 Compliance with Private Authorizations. To SFX's knowledge,
information and belief, Section 3.6 of the SFX 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 SFX
Private Authorizations is Material to the Future SFX Assets or the Future SFX
Station, all of which are in full force and effect. To SFX's knowledge,
information and belief,
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the SFX Private Authorizations are all Private Authorizations that are necessary
for the ownership and operation by SFX of the Future SFX Assets and the Future
SFX Station and the conduct of business thereof as now conducted or as presently
proposed to be conducted or which, if not obtained and maintained, could,
individually or in the aggregate, Materially Adversely Affect SFX. No SFX Party
will, assuming consummation of the transactions contemplated by the Secret-SFX
Agreement, be in breach or violation of, or in default in the performance,
observance or fulfillment of, any SFX 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 SFX Private Authorization, except for such defaults, breaches
or violations as do not and will not have in the aggregate any Material Adverse
Effect on SFX. No SFX Private Authorization is the subject of any pending or, to
SFX's knowledge, information or belief, threatened attack, revocation or
termination.
3.7 Compliance with Governmental Authorizations and Applicable Law.
(a) Section 3.7(a) of the SFX Disclosure Schedule contains a
description of:
(i) all Legal Actions pending or, to SFX's knowledge,
information and belief threatened against any SFX Party with respect to
the operation or ownership of any of the Future SFX Assets or the
conduct of the business of the Future SFX Station;
(ii) all Claims and Legal Actions pending or, to SFX's
knowledge, information and belief, threatened against any SFX Party
with respect to the operation or ownership of any of the Future SFX
Assets or the conduct of the business of the Future SFX Station which,
individually or in the aggregate, are reasonably likely to result in
the revocation or termination of the Future SFX License or the
imposition of any restriction of such a nature as would Adversely
affect the ownership or operations of the Future SFX Station; in
particular, but without limiting the generality of the foregoing, there
are no applications, complaints or Legal Actions pending or, to SFX's
knowledge, information and belief, threatened (x) before the FCC
relating to the ownership or operations of any of the Future SFX Assets
or the conduct of the business of the Future SFX Station other than
applications, complaints or Legal Actions which affect the radio
broadcasting industry generally, or (y) before any Authority involving
charges of illegal discrimination by the Future SFX Station under any
federal or state employment Laws; and
(iii) each Governmental Authorization (including without
limitation all FCC Licenses) required under Applicable Laws (x) to own
and operate the Future SFX 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 or (y) that are necessary to permit each SFX
Party to execute and deliver this Agreement and to perform its
obligations hereunder (the "SFX Governmental Authorizations").
The SFX Parties have delivered to the EZ Parties true and complete copies of the
SFX Governmental Authorizations (including any and all amendments and other
modifications thereto).
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(b) The appropriate SFX Party will, assuming consummation of the
transactions contemplated by the Secret-SFX Agreement, be the authorized legal
holder of the Future SFX License listed in Section 3.7(a) of the SFX Disclosure
Schedule, which will not, assuming such consummation, be subject to any
restriction or condition which would limit in any respect the operations of the
Future SFX Station as currently conducted or proposed to be conducted on or
prior to the Closing Date. The Future SFX License is valid and in good standing,
is in full force and effect and is not impaired in any Material respect by any
act or omission of any SFX Party or its officers, directors, employees or
agents, and the operation of the Future SFX Station is in accordance in all
Material respects with the Future SFX License. The Future SFX Station is
operating in accordance with the Future SFX License, all underlying construction
permits and the FCA. Except as disclosed in Section 3.7 of the SFX Disclosure
Schedule, no application, action or proceeding is pending for the renewal or
modification of the Future SFX License and, to SFX's knowledge, information and
belief, there is not as of the date of this Agreement issued or outstanding any
investigation or material complaint against any SFX Party at the FCC relating to
the Future SFX Station. Except as disclosed in Section 3.7 of the SFX 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 Future SFX Station.
All fees payable to Authorities pursuant to the Future SFX License, 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 a
Material Adverse Effect on SFX. All Material reports, forms and statements
required to be filed by each SFX Party with the FCC with respect to the Future
SFX Station have been filed and are true, complete and accurate in all Material
respects. To the knowledge, information and belief of SFX, under the FCA, there
are no facts that would disqualify it as the assignee of the Future EZ Station.
No renewal of the Future SFX License would constitute a major environmental
action (as defined in the FCC rules and regulations).
The Governmental Authorizations comprise all Governmental
Authorizations which are necessary for the lawful ownership or operation of the
Future SFX Assets or the lawful conduct of the business of the Future SFX
Station 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 SFX.
No SFX Governmental Authorization is the subject of any pending or, to SFX's
knowledge, information and belief, threatened challenge or proceeding to revoke
or terminate any SFX Governmental Authorization. SFX has no reason to believe
that any SFX Governmental Authorization would not be renewed in the name of SFX
by the granting Authority in the ordinary course.
(c) With respect to matters, if any, of a nature referred to in Section
3.7(a) or 3.7(b) of the SFX Disclosure Schedule, except as otherwise
specifically described in Section 3.7(c) of the SFX Disclosure Schedule, all
such information and matters set forth in the SFX Disclosure Schedule, if
adversely determined against SFX, will not, in the aggregate, Materially
Adversely Affect SFX.
3.8 Intangible Assets. To SFX's knowledge, information and belief,
Section 3.8 of the SFX Disclosure Schedule sets forth a true, accurate and
complete description of all Intangible Assets
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held or used by SFX (other than the SFX Governmental Authorizations and the SFX
Private Authorizations) relating to the ownership and operation of the Future
SFX Assets or the conduct of the business of the Future SFX Station (the "SFX
Intangible Assets"), including without limitation the nature of SFX's interest
in each and the extent to which the same have been duly registered in the
offices as indicated therein, assuming consummation of the transactions
contemplated by the Secret-SFX Agreement. One of the SFX Parties will, assuming
such consummation, own or possess or otherwise have the right to use all SFX
Intangible Assets necessary in order to operate the Future SFX Assets in the
manner currently being operated by Entercom or Secret, as the case may be.
Except as set forth in Section 3.8 of the SFX Disclosure Schedule, no Intangible
Assets (except for the SFX Governmental Authorizations and the SFX Private
Authorizations and the SFX Intangible Assets so set forth) are required for the
ownership or operation of the Future SFX Assets or the conduct of the business
of the Future SFX Station as currently owned, operated and conducted or proposed
to be owned, operated and conducted on or prior to the Closing Date.
3.9 Related Transactions. No SFX Party will, assuming consummation of
the transactions contemplated by the Secret-SFX Agreement, be a party or subject
to any Contract relating to the ownership and operation of the Future SFX Assets
or the conduct of the business of the Future SFX Station between any SFX Party
and any of its officers, directors, stockholders, employees or, to the
knowledge, information and belief of SFX, any Affiliate of any thereof (other
than another SFX Party), including without limitation any Contract 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) SFX Employment Arrangements listed or described in Section 3.12
of the SFX Disclosure Schedule and (ii) Contracts between SFX and officers which
constitute SFX Excluded Assets and obligations of SFX not being assumed by EZ.
3.10 Insurance. To the knowledge, information and belief of SFX,
Entercom or Secret maintains, with respect to the Future SFX Assets and the
Future SFX Station, policies of fire and extended coverage and casualty,
liability and other forms of insurance in such amounts and against such risks
and losses as are, in the reasonable business judgment of Entercom or Secret, as
the case may be, prudent (a true, complete and accurate description of which is
set forth in Section 3.10 of the SFX Disclosure Schedule) and the SFX Parties
shall use their reasonable business efforts to cause Entercom or Secret to keep
such insurance or comparable insurance in full force and effect through the
Closing Date, except to the extent otherwise provided in the Future SFX Station
TBA.
3.11 Tax Matters. Each SFX Party has, and to the knowledge, information
and belief of SFX, Secret or Entercom, either Secret or Entercom has, in respect
of the Future SFX Assets and the Future SFX Station filed all Material Tax
Returns which are required to be filed by it, and has paid, or made adequate
provision for the payment of, all Taxes which have or may become due and payable
by it pursuant to said Tax Returns and all other governmental charges and
assessments received by it to date other than those Taxes being contested by it
in good faith. There are no unpaid Taxes which are due and payable by SFX, or
alleged by any Taxing Authority to be due and payable, the non-payment of which
is or could become a Lien on any of the Future SFX Assets or the Future SFX
Station. To the knowledge, information and belief of SFX, Secret or Entercom,
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there are no unpaid Taxes which are due and payable by Secret or Entercom, or
alleged by any Taxing Authority to be due and payable by Secret or Entercom, the
non-payment of which is or could become a Lien on any of the Future SFX Assets
or the Future SFX Station. All Taxes in respect of the Future SFX Assets and the
Future SFX Station which SFX 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. To the knowledge,
information and belief of SFX, Secret or Entercom, all Taxes in respect of the
Future SFX Assets and the Future SFX Station which Secret or Entercom is
required by law to withhold and collect have been duly withheld and collected,
and have been paid over, in a timely manner, to the proper Authorities to the
extent due and payable. Except as set forth in Section 3.11 of the SFX
Disclosure Schedule, no SFX Party has executed any waiver to extend, or
otherwise taken or failed to take any action that would have the effect of
extending, the applicable statute of limitations in respect of any Tax
associated with the Future SFX Assets or the Future SFX Station for the fiscal
years prior to and including the most recent fiscal year.
3.12 Employee Retirement Income Security Act of 1974. To SFX's
knowledge, information and belief:
(a) Section 3.12(a) of the SFX Disclosure Schedule contains a
true, accurate and complete list of all employees employed in the
ownership or operation of any of the Future SFX Assets or the conduct
of the business of the Future SFX Station (the "Future SFX Station
Employees"), together with each such employee's title or the capacity
in which he or she is employed and all Employment Arrangements with
respect to such employee (each, an "SFX Employment Arrangement"). All
of the SFX Employee Plans and all other SFX Employment Arrangements are
listed in Section 3.12(a) of the SFX Disclosure Schedule and true,
complete and accurate copies of all such written SFX Employee Plans and
SFX Employment Arrangements (or related insurance policies) have been
furnished to EZ, along with copies of any employee handbooks or similar
documents describing such SFX Employee Plans or any other SFX
Employment Arrangements. Section 3.12(a) of the SFX Disclosure Schedule
also contains a true, complete and accurate description of any
unwritten SFX Employee Plan or other unwritten SFX Employment
Arrangement.
(b) Each SFX Employment Arrangement has been administered in
compliance with its own terms and in Material compliance with the
provisions of ERISA, the Code, the Age Discrimination in Employment Act
and any other applicable federal or state Laws. SFX is not aware of any
pending audit or examination of any SFX Employee Plan or any other SFX
Employment Arrangement by any Authority or of any facts which would
lead it to believe that any such audit or examination is threatened.
There exists no Claim or Legal Action (other than routine claims for
benefits) with respect to any SFX Employee Plan or any other SFX
Employment Arrangement pending or, to SFX's knowledge, information and
belief, threatened against any SFX Employee Plan or any other SFX
Employment Arrangement, and no SFX Party possesses any knowledge of any
facts which could give rise to any such Legal Action or Claim.
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(c) No SFX Party contributes to or is required to contribute
to any Multiemployer Plan with respect to the Future SFX Station
Employees and neither any SFX Party nor any other trade or business
under common control with any SFX Party (within the meaning of Section
414(b), (c), (m) or (o) of the Code) has incurred or reasonably expects
to incur any "withdrawal liability," as defined under Section 4201 et
seq. of ERISA.
(d) Except as described in Section 3.12(d) of the SFX
Disclosure Schedule, neither any SFX Party nor any other trade or
business under common control with any SFX Party (within the meaning of
Sections 414(b), (c), (m) or (o) of the Code) sponsors, maintains or
contributes to any SFX Employment Arrangement that provides retiree
medical or retiree life insurance coverage to the Future SFX Station
Employee upon his/her retirement.
(e) Except as described in Section 3.12(e) of the SFX
Disclosure Schedule with respect to each SFX Employee Plan and, to the
extent applicable, any other compensation arrangement comprising an SFX
Employment Arrangement: (i) each such SFX Employee Plan that is
intended to be tax-qualified, and each amendment thereto, is the
subject of a favorable determination letter, and no plan amendment
thereto that is not the subject of a favorable determination letter
would affect the validity of an SFX Employee Plan's letter; (ii) no
prohibited transaction, within the definition of Section 4975 of the
Code or Title 1, Part 4 of ERISA, has occurred which would subject any
SFX Party to any liability that could become a liability of EZ; and
(iii) all contributions premiums or payments accrued, in whole or in
part, under each such SFX Employee Plan or other SFX Employment
Arrangement or with respect thereto as of the Closing will be paid by
the appropriate SFX Party prior to the Closing.
(f) For purposes of this Section, the term "SFX Employee Plan"
shall mean any pension, profit-sharing, deferred compensation,
vacation, bonus, incentive, medical, vision, dental, disability, life
insurance or any other employee benefit plan as defined in Section 3(3)
of ERISA to which any SFX Party (under the terms of Section 414(b),
(c), (m) or (o) of the Code) sponsors, maintains or otherwise is bound
which provides benefits to any person employed or previously employed
at the Future SFX Station.
3.13 Inapplicability of Specified Statutes. SFX 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.
3.14 Employment Arrangements. Except as described in Section 3.14 of
the SFX Disclosure Schedule, with respect to the Future SFX Station (i) none of
the Future SFX Station Employees is now, or, to SFX's knowledge, information and
belief, since the date on which Entercom acquired the Future SFX Station, has
been, represented by any labor union or other
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employee collective bargaining organization, and no SFX Party is, or has ever
been, a party to any labor or other collective bargaining agreement with respect
to the Future SFX Station Employees, (ii) to the knowledge, information and
belief of SFX, Secret or Entercom, 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 any SFX Party nor any of such employees is
now, or, to SFX's knowledge, information and belief, since the date on which
Entercom acquired the Future SFX Station, has been, subject to or involved in
or, to SFX's knowledge, information and belief, threatened with, any union
elections, petitions therefore or other organizational or recruiting activities,
in each case with respect to the Future SFX Station Employees. Each SFX Party
has performed in all Material respects all obligations required to be performed
under each SFX Employee Plan and each other SFX 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.
3.15 Material Agreements. Listed on Section 3.15 of the SFX Disclosure
Schedule are all Material Agreements relating to the ownership or operation of
the Future SFX Assets or the conduct of the business of the Future SFX Station
or to which any of the Future SFX Assets will be subject (the "SFX Material
Agreements"). True, accurate and complete copies of each SFX Material Agreement
have been made available by SFX to EZ and SFX has provided EZ with photocopies
of all SFX Material Agreements requested by EZ (or true, accurate and complete
descriptions thereof have been set forth in Section 3.15 of the SFX Disclosure
Schedule, if any such Material Agreements are oral). All of the SFX Material
Agreements will, assuming consummation of the transactions contemplated by the
Secret-SFX Agreement, be valid, binding and legally enforceable obligations of
an SFX Party and, to SFX's knowledge, information and belief, all other parties
thereto (except to the extent that the invalidity or non-binding nature of any
SFX Material Agreements, individually or in the aggregate, would not have a
Material Adverse Effect on SFX). Each SFX Party will, assuming consummation of
the transactions contemplated by the Secret-SFX Agreement, have duly complied
with all of the Material terms and conditions of each SFX Material Agreement to
which it will, assuming such consummation, be a party and has not done or
performed, or failed to do or perform (and there is no pending or, to the
knowledge, information and belief of SFX, threatened Claim that any SFX Party
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 SFX Material
Agreement or impair the rights or benefits, or increase the costs, of any SFX
Party under any SFX Material Agreement. No SFX Party has granted any Material
waivers or forbearance under any SFX Material Agreement and, to SFX's knowledge,
information and belief, no third party is in material default in the performance
of any of its obligations under any SFX Material Agreement. Except for those
consents or approvals listed in Section 3.15 of the SFX Disclosure Schedule, no
consents or approvals of any third party are necessary to permit the assignment
by the SFX Parties of the SFX Material Agreements to the EZ Parties and such
assignment will not affect the validity or enforceability of any SFX Material
Agreement or cause any Material change in the substantive terms of any of them.
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3.16 Ordinary Course of Business. To the knowledge, information and
belief of SFX, Entercom, from the end of its most recent fiscal quarter to the
date of the consummation of the transactions contemplated by the Entercom
Agreement, and Secret, from the date of the consummation of the transactions
contemplated by the Entercom Agreement to the date hereof, except (i) as may be
described on Section 3.16 of the SFX Disclosure Schedule, or (ii) as may be
required or expressly contemplated by the terms of this Agreement or the SFX
Acquisition Agreements, with respect to the Future SFX Assets and the Future SFX
Station:
(a) has operated its business in the normal, usual and
customary manner in the ordinary and regular course of business,
consistent with prior practice;
(b) has not sold or otherwise disposed of or contracted to
sell or otherwise dispose of any Future SFX Asset having a value in
excess of $50,000, other than in the ordinary course of business;
(c) except in each case in the ordinary course of business,
consistent with prior practice:
(i) has not incurred any obligations or liabilities
(fixed, contingent or other) having a value in excess of
$50,000;
(ii) has not entered into any commitments having a
value in excess of $50,000; and
(iii) has not canceled any debts or claims;
(d) has not made or committed to make any additions to its
property or any purchases of equipment, except for normal maintenance
and replacements;
(e) except as described in Section 3.16(e) of the SFX
Disclosure Schedule, has not increased the compensation payable or to
become payable to the Future SFX Station Employees other than in the
ordinary course of business or otherwise altered, modified or changed
the terms of their employment;
(f) has not suffered any Material damage, destruction or loss
(whether or not covered by insurance) or any acquisition or taking of
property by any Authority;
(g) has not waived any rights of Material value without fair
and adequate consideration;
(h) has not experienced any work stoppage; and
(i) except in the ordinary course of business, has not entered
into, amended or terminated any Lease, Governmental Authorization,
Private Authorization, Material
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Agreement, Employment Arrangement or Contract, or any transaction,
agreement or arrangement with any Affiliate of Entercom, Secret or SFX.
3.17 Broker or Finder. No Person assisted in or brought about the
negotiation of this Agreement, the Exchange or the subject matter of any other
Transactions in the capacity of broker, agent or finder or in any similar
capacity on behalf of any SFX Party other than Ed Dugan & Associates whose fee
will be borne equally by EZ and SFX.
3.18 Solvency. As of the execution and delivery of this Agreement, each
SFX Party is, and immediately prior to giving effect to the consummation of the
Transactions will be, Solvent.
3.19 Environmental Matters. Except as set forth in Section 3.19 of the
SFX Disclosure Schedule, with respect to the Future SFX Assets.
(a) to the knowledge, information and belief of SFX, neither
Entercom nor Secret has been notified that it is potentially liable
under, has received any request for information or other correspondence
concerning its potential liability with respect to any site or facility
under, or is 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) to the knowledge, information and belief of SFX, neither
Entercom nor Secret has entered into or received any consent decree,
compliance order or administrative order issued pursuant to any
Environmental Law;
(c) to the knowledge, information and belief of SFX, neither
Entercom nor Secret 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) to the knowledge, information and belief of SFX, each of
Entercom and Secret is in substantial compliance in all Material
respects with all Environmental Laws, has, to SFX's knowledge,
information and belief, obtained all Environmental Permits required
under Environmental Laws, and is not the subject of or, to SFX's
knowledge, information and belief, threatened with any Legal Action
involving a demand for damages or other potential liability including
any Lien with respect to Material violations or Material breaches of
any Environmental Law; and
(e) to the knowledge, information and belief of SFX, neither
Entercom nor Secret has any knowledge of any past or present Event
related to the Future SFX Station or any of the Future SFX 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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3.20 Trade or Barter. To SFX's knowledge, information and belief,
Section 3.20 of the SFX Disclosure Schedule sets forth a true, complete and
accurate description (including obligations and liabilities remaining
thereunder) of all SFX 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 EZ PARTIES
Each EZ Party hereby, jointly and severally, represents, warrants and
covenants to, and agrees with, the SFX Parties as follows:
4.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) Each EZ Party 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 EZ Party 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 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 each
EZ Party. This Agreement has been duly executed and delivered by each EZ Party
and constitutes, and each Collateral Document to which any EZ Party becomes a
party will, when executed and delivered by such EZ Party, constitute, the
legally valid and binding obligation of such EZ Party, enforceable against such
EZ Party 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 EZ Disclosure
Schedule, neither the execution and delivery by each EZ Party of this Agreement
or any Collateral Document executed or required to be executed by it pursuant
hereto or thereto, nor the consummation by each EZ Party of the Transactions,
nor compliance with the terms, conditions and provisions hereof or thereof by
each EZ Party:
(i) will conflict with, or result in a breach or violation of,
or constitute a default under, any Organic Document of any EZ Party or
any Applicable Law on the part of any EZ Party, 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
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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 EZ Material Agreement; or
(ii) will require any EZ Party to make or obtain any
Governmental Authorization, Governmental Filing or Private
Authorization, except for the FCC Consents, filings 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 a Material Adverse Effect on EZ.
(d) EZ does not have any direct or indirect Subsidiaries or other
Affiliates which own or have any interest in the Future EZ Station or any of the
Future EZ Assets other than the other EZ Parties.
4.2 Financial and Other Information. EZ has heretofore furnished to SFX
copies of the unaudited financial data of the Future EZ Station listed in
Section 4.2 of the EZ Disclosure Schedule (the "EZ Financial Data"). Except as
set forth in Section 4.2 of the EZ Disclosure Schedule (which schedule reflects
the inclusion of "barter" transactions and the effects thereof), and except for
normal year-end audit adjustments and accruals, if any, the EZ Financial Data
have been prepared in accordance with GAAP applied on a basis consistent with
past practices and are a true, accurate and fair presentation of the operating
revenues and operating expenses of the Future EZ Station for the periods
indicated.
4.3 Changes in Condition. Since June 30, 1996, except to the extent
specifically described in Section 4.3 of the EZ Disclosure Schedule, there has
been no Material Adverse Change in EZ. There is no Event known to EZ which
Materially Adversely Affects, or (so far as EZ can now reasonably foresee) is
likely to Materially Adversely Affect, EZ, except to the extent specifically
described in Section 4.3 of the EZ Disclosure Schedule.
4.4 Materiality. The representations and warranties set forth in this
Article would in the aggregate be true and correct even without the materiality
exceptions or qualifications contained therein or set forth in the EZ Disclosure
Schedule, except for such exceptions and qualifications including without
limitation those set forth in the EZ Disclosure Schedule which, in the aggregate
for all such representations and warranties, are not and could not reasonably be
expected to be Materially Adverse to EZ.
4.5 Title to Properties; Leases.
(a) There is no real property that is or will be owned by an EZ Party
that will be part of the Future EZ Assets. Section 4.5(a) of the EZ Disclosure
Schedule lists all Real Property and describes all Leases of Real Property (the
"EZ Leases") used or held for use in the operation of the Future EZ Station (the
"EZ Real Property"). One of the EZ Parties will, assuming consummation of the
transactions contemplated by the Evergreen-EZ Agreement, have valid and
subsisting leasehold interests (as shown on Section 4.5(a) of the EZ Disclosure
Schedule) in all EZ Real
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Property, 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 EZ Disclosure Schedule (which
Liens shall be released prior to Closing). Except as otherwise set forth in
Schedule 4.5(a) of the EZ Disclosure Schedule, each EZ Lease included in the EZ
Real Property has to EZ's knowledge, information and belief, been duly
authorized, executed and delivered by each of the parties thereto, and will,
assuming consummation of the transactions contemplated by the Evergreen-EZ
Agreement, be a legally valid and binding obligation of the appropriate EZ
Party, and, to EZ's knowledge, information and belief, each of the other parties
thereto, enforceable in accordance with its terms. The appropriate EZ Party
will, assuming consummation of the transactions contemplated by the Evergreen-EZ
Agreement, have a valid leasehold interest in and enjoy peaceful and undisturbed
possession under all EZ Leases pursuant to which it will hold any EZ Real
Property. Assuming consummation of the transactions contemplated by the
Evergreen-EZ Agreement, (x) all EZ Leases will be valid and subsisting and in
full force and effect and (y) neither any EZ Party nor, to EZ's knowledge,
information and belief, any other party thereto, will be in default in the
performance, observance or fulfillment of any obligation, covenant or condition
contained in any EZ Lease. Except as disclosed in Section 4.5(a) of the EZ
Disclosure Schedule, to the knowledge, information and belief of EZ or
Evergreen, all improvements on the EZ Real Property are in compliance with
applicable zoning and land use laws, ordinances and regulations in all respects
necessary to conduct the operation of the Future EZ Station operating thereon as
presently conducted, except for any instances of non-compliance which do not and
will not individually or in the aggregate have a Material Adverse Effect on the
lessee of such EZ Real Property. Except as disclosed in Section 4.5(a) of the EZ
Disclosure Schedule, to the knowledge, information and belief of EZ or
Evergreen, all such improvements are in good working condition and repair
(ordinary wear and tear excepted), are insurable at standard rates, and comply
in all Material respects with FCC rules and regulations. Except as disclosed in
Section 4.5(a) of the EZ Disclosure Schedule, all of the transmitting towers,
ground radials, guy anchors, transmitting buildings and related improvements
located on the EZ Real Property are located entirely on the EZ Real Property. EZ
has no knowledge of any pending, threatened or contemplated action to take by
eminent domain or otherwise to condemn any part of the EZ Real Property.
(b) To EZ's knowledge, information and belief, Section 4.5(b) of the EZ
Disclosure Schedule contains a true, accurate and complete description of all
Material items of EZ Personal Property. None of the EZ Personal Property is
subject to any Lien, except (i) Permitted Liens and (ii) Liens set forth in
Section 4.5(b) of the EZ Disclosure Schedule (which Liens shall be released
prior to Closing). Except as set forth in Section 4.5(b) of the EZ Disclosure
Schedule), all Material items of EZ Personal Property are in a state of good
repair and maintenance and are in good operating condition, normal wear and tear
excepted, have been maintained in a manner consistent with generally accepted
standards of good engineering practice and will, assuming consummation of the
transactions contemplated by the Evergreen-EZ Agreement, permit the Future EZ
Station to be operated in accordance with the terms and conditions of its FCC
License and all Applicable Laws.
4.6 Compliance with Private Authorizations. To EZ's knowledge,
information and belief, Section 4.6 of the EZ Disclosure Schedule sets forth a
true, accurate and complete list and description of each Private Authorization
which individually or when taken together with other
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substantially similar EZ Private Authorizations is Material to the Future EZ
Assets or the Future EZ Station, all of which are in full force and effect. To
EZ's knowledge, information and belief, the EZ Private Authorizations are all
Private Authorizations that are necessary for the ownership and operation by EZ
of the Future EZ Assets and the Future EZ Station and the conduct of business
thereof as now conducted or as presently proposed to be conducted or which, if
not obtained and maintained, could, individually or in the aggregate, Materially
Adversely Affect EZ. No EZ Party will, assuming consummation of the transactions
contemplated by the Evergreen-EZ Agreement, be in breach or violation of, or in
default in the performance, observance or fulfillment of, any EZ 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 EZ Private
Authorization, except for such defaults, breaches or violations as do not and
will not have in the aggregate any Material Adverse Effect on EZ. No EZ Private
Authorization is the subject of any pending or, to EZ's knowledge, information
or belief, threatened attack, revocation or termination.
4.7 Compliance with Governmental Authorizations and Applicable Law.
(a) Section 4.7(a) of the EZ Disclosure Schedule contains a description
of:
(i) all Legal Actions pending or, to EZ's knowledge,
information and belief threatened against any EZ Party with respect to
the operation or ownership of any of the Future EZ Assets or the
conduct of the business of the Future EZ Station;
(ii) all Claims and Legal Actions pending or, to EZ's
knowledge, information and belief, threatened against any EZ Party with
respect to the operation or ownership of any of the Future EZ Assets or
the conduct of the business of the Future EZ Station which,
individually or in the aggregate, are reasonably likely to result in
the revocation or termination of the Future EZ License or the
imposition of any restriction of such a nature as would Adversely
affect the ownership or operations of the Future EZ Station; in
particular, but without limiting the generality of the foregoing, there
are no applications, complaints or Legal Actions pending or, to EZ's
knowledge, information and belief, threatened (x) before the FCC
relating to the ownership or operations of any of the Future EZ Assets
or the conduct of the business of the Future EZ Station other than
applications, complaints or Legal Actions which affect the radio
broadcasting industry generally, or (y) before any Authority involving
charges of illegal discrimination by the Future EZ Station under any
federal or state employment Laws; and
(iii) each Governmental Authorization (including without
limitation all FCC Licenses) required under Applicable Laws (x) to own
and operate the Future EZ 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 or (y) that are necessary to permit each EZ Party
to execute and deliver this Agreement and to perform its obligations
hereunder (the "EZ Governmental Authorizations").
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The EZ Parties have delivered to the SFX Parties true and complete copies of the
EZ Governmental Authorizations (including any and all amendments and other
modifications thereto).
(b) The appropriate EZ Party will, assuming consummation of the
transactions contemplated by the Evergreen-EZ Agreement, be the authorized legal
holder of the Future EZ License listed in Section 4.7(a) of the EZ Disclosure
Schedule, which will not, assuming such consummation, be subject to any
restriction or condition which would limit in any respect the operations of the
Future EZ Station as currently conducted or proposed to be conducted on or prior
to the Closing Date. The Future EZ License is valid and in good standing, is in
full force and effect and is not impaired in any Material respect by any act or
omission of any EZ Party or its officers, directors, employees or agents, and
the operation of the Future EZ Station is in accordance in all Material respects
with the Future EZ License. The Future EZ Station is operating in accordance
with the Future EZ License, all underlying construction permits and the FCA.
Except as disclosed in Section 4.7 of the EZ Disclosure Schedule, no
application, action or proceeding is pending for the renewal or modification of
the Future EZ License and, to EZ's knowledge, information and belief, there is
not as of the date of this Agreement issued or outstanding any investigation or
material complaint against any EZ Party at the FCC relating to the Future EZ
Station. Except as disclosed in Section 4.7 of the EZ 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 Future EZ Station. All fees
payable to Authorities pursuant to the Future EZ License, 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 a Material Adverse
Effect on EZ. All Material reports, forms and statements required to be filed by
each EZ Party with the FCC with respect to the Future EZ Station have been filed
and are true, complete and accurate in all Material respects. To the knowledge,
information and belief of EZ, under the FCA, there are no facts that would
disqualify it as the assignee of the Future SFX Station. No renewal of the
Future EZ License would constitute a major environmental action (as defined in
the FCC rules and regulations).
The Governmental Authorizations comprise all Governmental
Authorizations which are necessary for the lawful ownership or operation of the
Future EZ Assets or the lawful conduct of the business of the Future EZ Station
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 EZ. No
EZ Governmental Authorization is the subject of any pending or, to EZ's
knowledge, information and belief, threatened challenge or proceeding to revoke
or terminate any EZ Governmental Authorization. EZ has no reason to believe that
any EZ Governmental Authorization would not be renewed in the name of EZ 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 EZ Disclosure Schedule, except as otherwise specifically
described in Section 4.7(c) of the EZ Disclosure Schedule, all such information
and matters set forth in the EZ Disclosure Schedule, if adversely determined
against EZ, will not, in the aggregate, Materially Adversely Affect EZ.
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4.8 Intangible Assets. To EZ's knowledge, information and belief,
Section 4.8 of the EZ Disclosure Schedule sets forth a true, accurate and
complete description of all Intangible Assets held or used by EZ (other than the
EZ Governmental Authorizations and the EZ Private Authorizations) relating to
the ownership and operation of the Future EZ Assets or the conduct of the
business of the Future EZ Station (the "EZ Intangible Assets"), including
without limitation the nature of EZ's interest in each and the extent to which
the same have been duly registered in the offices as indicated therein, assuming
consummation of the transactions contemplated by the Evergreen-EZ Agreement. One
of the EZ Parties will, assuming such consummation, own or possess or otherwise
have the right to use all EZ Intangible Assets necessary in order to operate the
Future EZ Assets in the manner currently being operated by the Evergreen
Entities. Except as set forth in Section 4.8 of the EZ Disclosure Schedule, no
Intangible Assets (except for the EZ Governmental Authorizations and the EZ
Private Authorizations and the EZ Intangible Assets so set forth) are required
for the ownership or operation of the Future EZ Assets or the conduct of the
business of the Future EZ Station as currently owned, operated and conducted or
proposed to be owned, operated and conducted on or prior to the Closing Date.
4.9 Related Transactions. No EZ Party will, assuming consummation of
the transactions contemplated by the Evergreen-EZ Agreement, be a party or
subject to any Contract relating to the ownership and operation of the Future EZ
Assets or the conduct of the business of the Future EZ Station between any EZ
Party and any of its officers, directors, stockholders, employees or, to the
knowledge, information and belief of EZ, any Affiliate of any thereof (other
than another EZ Party), including without limitation any Contract 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) EZ Employment Arrangements listed or described in Section 4.12 of
the EZ Disclosure Schedule and (ii) Contracts between EZ and officers which
constitute EZ Excluded Assets and obligations of EZ not being assumed by SFX.
4.10 Insurance. To the knowledge, information and belief of EZ, one of
the Evergreen Entities maintains, with respect to the Future EZ Assets and the
Future EZ Station, policies of fire and extended coverage and casualty,
liability and other forms of insurance in such amounts and against such risks
and losses as are in such Evergreen Entity's reasonable business judgment
prudent (a true, complete and accurate description of which is set forth in
Section 4.10 of the EZ Disclosure Schedule) and the EZ Parties shall use their
reasonable business efforts to cause the Evergreen Entities to keep such
insurance or comparable insurance in full force and effect through the Closing
Date, except to the extent otherwise provided in the Future EZ Station TBA.
4.11 Tax Matters. Each EZ Party has, and to the knowledge, information
and belief of EZ or Evergreen, Evergreen has, in respect of the Future EZ Assets
and the Future EZ Station filed all Material Tax Returns which are required to
be filed by it, and has paid, or made adequate provision for the payment of, all
Taxes which have or may become due and payable by it pursuant to said Tax
Returns and all other governmental charges and assessments received by it to
date other than those Taxes being contested by it in good faith. There are no
unpaid Taxes which are due and payable by EZ, or alleged by any Taxing Authority
to be due and payable by EZ, the non-payment
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of which is or could become a Lien on any of the Future EZ Assets or the Future
EZ Station. To the knowledge, information and belief of EZ or Evergreen, there
are no unpaid Taxes which are due and payable by Evergreen, or alleged by any
Taxing Authority to be due and payable by Evergreen, the non-payment of which is
or could become a Lien on any of the Future EZ Assets or the Future EZ Station.
All Taxes in respect of the Future EZ Assets and the Future EZ Station which EZ
is required by law to withhold and collect have been duly withheld and
collected, and have been paid over, in a timely manner, to the proper
Authorities to the extent due and payable. To the knowledge, information and
belief of EZ or Evergreen, all Taxes in respect of the Future EZ Assets and the
Future EZ Station which Evergreen is required by law to withhold and collect
have been duly withheld and collected, and have been paid over, in a timely
manner, to the proper Authorities to the extent due and payable. Except as set
forth in Section 4.11 of the EZ Disclosure Schedule, no EZ Party has executed
any waiver to extend, or otherwise taken or failed to take any action that would
have the effect of extending, the applicable statute of limitations in respect
of any Tax associated with the Future EZ Assets or the Future EZ Station for the
fiscal years prior to and including the most recent fiscal year.
4.12 Employee Retirement Income Security Act of 1974. To EZ's
knowledge, information and belief:
(a) Section 4.12(a) of the EZ Disclosure Schedule contains a
true, accurate and complete list of all employees employed in the
ownership or operation of any of the Future EZ Assets or the conduct of
the business of the Future EZ Station (the "Future EZ Station
Employees"), together with each such employee's title or the capacity
in which he or she is employed and all Employment Arrangements with
respect to such employee (each, an "EZ Employment Arrangement"). All of
the EZ Employee Plans and all other EZ Employment Arrangements are
listed in Section 4.12(a) of the EZ Disclosure Schedule and true,
complete and accurate copies of all such written EZ Employee Plans and
EZ Employment Arrangements (or related insurance policies) have been
furnished to SFX, along with copies of any employee handbooks or
similar documents describing such EZ Employee Plans or any other EZ
Employment Arrangements. Section 4.12(a) of the EZ Disclosure Schedule
also contains a true, complete and accurate description of any
unwritten EZ Employee Plan or other unwritten EZ Employment
Arrangement.
(b) Each EZ Employment Arrangement has been administered in
compliance with its own terms and in Material compliance with the
provisions of ERISA, the Code, the Age Discrimination in Employment Act
and any other applicable federal or state Laws. EZ is not aware of any
pending audit or examination of any EZ Employee Plan or any other EZ
Employment Arrangement by any Authority or of any facts which would
lead it to believe that any such audit or examination is threatened.
There exists no Claim or Legal Action (other than routine claims for
benefits) with respect to any EZ Employee Plan or any other EZ
Employment Arrangement pending or, to EZ's knowledge, information and
belief, threatened against any EZ Employee Plan or any other EZ
Employment Arrangement, and no EZ Party possesses any knowledge of any
facts which could give rise to any such Legal Action or Claim.
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(c) No EZ Party contributes to or is required to contribute to
any Multiemployer Plan with respect to the Future EZ Station Employees
and neither any EZ Party nor any other trade or business under common
control with any EZ Party (within the meaning of Section 414(b), (c),
(m) or (o) of the Code) has incurred or reasonably expects to incur any
"withdrawal liability," as defined under Section 4201 et seq. of ERISA.
(d) Except as described in Section 4.12(d) of the EZ
Disclosure Schedule, neither any EZ Party nor any other trade or
business under common control with any EZ Party (within the meaning of
Sections 414(b), (c), (m) or (o) of the Code) sponsors, maintains or
contributes to any EZ Employment Arrangement that provides retiree
medical or retiree life insurance coverage to the Future EZ Station
Employee upon his/her retirement.
(e) Except as described in Section 4.12(e) of the EZ
Disclosure Schedule with respect to each EZ Employee Plan and, to the
extent applicable, any other compensation arrangement comprising an EZ
Employment Arrangement: (i) each such EZ Employee Plan that is intended
to be tax-qualified, and each amendment thereto, is the subject of a
favorable determination letter, and no plan amendment thereto that is
not the subject of a favorable determination letter would affect the
validity of an EZ Employee Plan's letter; (ii) no prohibited
transaction, within the definition of Section 4975 of the Code or Title
1, Part 4 of ERISA, has occurred which would subject any EZ Party to
any liability that could become a liability of SFX; and (iii) all
contributions premiums or payments accrued, in whole or in part, under
each such EZ Employee Plan or other EZ Employment Arrangement or with
respect thereto as of the Closing will be paid by the appropriate EZ
Party prior to the Closing.
(f) For purposes of this Section, the term "EZ Employee Plan"
shall mean any pension, profit-sharing, deferred compensation,
vacation, bonus, incentive, medical, vision, dental, disability, life
insurance or any other employee benefit plan as defined in Section 3(3)
of ERISA to which any EZ Party (under the terms of Section 414(b), (c),
(m) or (o) of the Code) sponsors, maintains or otherwise is bound which
provides benefits to any person employed or previously employed at the
Future EZ Station.
4.13 Inapplicability of Specified Statutes. EZ is not a "holding
company", or a "subsidiary company" or an "affiliate" of a "holding company", as
such terms are defined in the Public Utility Holding Company Act of 1935, as
amended, or an "investment company" or a company "controlled" by or acting on
behalf of an "investment company", as defined in the Investment Company Act of
1940, as amended, or a "carrier" or a person which is in control of a "carrier",
as defined in section 11301 of Title 49, U.S.C.
4.14 Employment Arrangements. Except as described in Section 4.14 of
the EZ Disclosure Schedule, with respect to the Future EZ Station (i) none of
the Future EZ Station Employees is now, or, to EZ's knowledge, information and
belief, since the date on which the appropriate Evergreen Entity acquired the
Future EZ Station, has been, represented by any labor
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union or other employee collective bargaining organization, and no EZ Party is,
or has ever been, a party to any labor or other collective bargaining agreement
with respect to the Future EZ Station Employees, (ii) to the knowledge,
information and belief of EZ or Evergreen, 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 any EZ Party nor any of such employees
is now, or, to EZ's knowledge, information and belief, since the date on which
the appropriate Evergreen Entity acquired the Future EZ Station, has been,
subject to or involved in or, to EZ's knowledge, information and belief,
threatened with, any union elections, petitions therefore or other
organizational or recruiting activities, in each case with respect to the Future
EZ Station Employees. Each EZ Party has performed in all Material respects all
obligations required to be performed under each EZ Employee Plan and each other
EZ 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.
4.15 Material Agreements. Listed on Section 4.15 of the EZ Disclosure
Schedule are all Material Agreements relating to the ownership or operation of
the Future EZ Assets or the conduct of the business of the Future EZ Station or
to which any of the Future EZ Assets will be subject (the "EZ Material
Agreements"). True, accurate and complete copies of each EZ Material Agreement
have been made available by EZ to SFX and EZ has provided SFX with photocopies
of all EZ Material Agreements requested by SFX (or true, accurate and complete
descriptions thereof have been set forth in Section 4.15 of the EZ Disclosure
Schedule, if any such Material Agreements are oral). All of the EZ Material
Agreements will, assuming consummation of the transactions contemplated by the
Evergreen-EZ Agreement, be valid, binding and legally enforceable obligations of
an EZ Party and, to EZ's knowledge, information and belief, all other parties
thereto (except to the extent that the invalidity or non-binding nature of any
EZ Material Agreements, individually or in the aggregate, would not have a
Material Adverse Effect on EZ). Each EZ Party will, assuming consummation of the
transactions contemplated by the Evergreen-EZ Agreement, have duly complied with
all of the Material terms and conditions of each EZ Material Agreement to which
it will, assuming such consummation, be a party and has not done or performed,
or failed to do or perform (and there is no pending or, to the knowledge,
information and belief of EZ, threatened Claim that any EZ Party 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 EZ Material Agreement or impair the
rights or benefits, or increase the costs, of any EZ Party under any EZ Material
Agreement. No EZ Party has granted any Material waivers or forbearance under any
EZ Material Agreement and, to EZ's knowledge, information and belief, no third
party is in material default in the performance of any of its obligations under
any EZ Material Agreement. Except for those consents or approvals listed in
Section 4.15 of the EZ Disclosure Schedule, no consents or approvals of any
third party are necessary to permit the assignment by the EZ Parties of the EZ
Material Agreements to the SFX Parties and such assignment will not affect the
validity or enforceability of any EZ Material Agreement or cause any Material
change in the substantive terms of any of them.
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4.16 Ordinary Course of Business. To the knowledge, information and
belief of EZ, Evergreen, from the end of its most recent fiscal quarter to the
date hereof, except (i) as may be described on Section 4.16 of the EZ Disclosure
Schedule, or (ii) as may be required or expressly contemplated by the terms of
this Agreement or the Evergreen-EZ Agreement, with respect to the Future EZ
Assets and the Future EZ Station:
(a) has operated its business in the normal, usual and
customary manner in the ordinary and regular course of business,
consistent with prior practice;
(b) has not sold or otherwise disposed of or contracted to
sell or otherwise dispose of any Future EZ Asset having a value in
excess of $50,000, other than in the ordinary course of business;
(c) except in each case in the ordinary course of business,
consistent with prior practice:
(i) has not incurred any obligations or liabilities
(fixed, contingent or other) having a value in excess of
$50,000;
(ii) has not entered into any commitments having a
value in excess of $50,000; and
(iii) has not canceled any debts or claims;
(d) has not made or committed to make any additions to its
property or any purchases of equipment, except for normal maintenance
and replacements;
(e) has not increased the compensation payable or to become
payable to the Future EZ Station Employees other than in the ordinary
course of business or otherwise altered, modified or changed the terms
of their employment;
(f) has not suffered any Material damage, destruction or loss
(whether or not covered by insurance) or any acquisition or taking of
property by any Authority;
(g) has not waived any rights of Material value without fair
and adequate consideration;
(h) has not experienced any work stoppage; and
(i) except in the ordinary course of business, has not entered
into, amended or terminated any Lease, Governmental Authorization,
Private Authorization, Material Agreement, Employment Arrangement or
Contract, or any transaction, agreement or arrangement with any
Affiliate of Evergreen or EZ.
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4.17 Broker or Finder. No Person assisted in or brought about the
negotiation of this Agreement, the Exchange or the subject matter of any other
Transactions in the capacity of broker, agent or finder or in any similar
capacity on behalf of any EZ Party other than Ed Dugan & Associates whose fee
will be borne equally by SFX and EZ.
4.18 Solvency. As of the execution and delivery of this Agreement, each
EZ Party is, and immediately prior to giving effect to the consummation of the
Transactions will be, Solvent.
4.19 Environmental Matters. Except as set forth in Section 4.19 of the
EZ Disclosure Schedule, with respect to the Future EZ Assets:
(a) to the knowledge, information and belief of EZ, Evergreen
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;
(b) to the knowledge, information and belief of EZ, Evergreen
has not entered into or received any consent decree, compliance order
or administrative order issued pursuant to any Environmental Law;
(c) to the knowledge, information and belief of EZ, Evergreen
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) to the knowledge, information and belief of EZ, Evergreen
is in substantial compliance in all Material respects with all
Environmental Laws, has, to EZ's knowledge, information and belief,
obtained all Environmental Permits required under Environmental Laws,
and is not the subject of or, to EZ's knowledge, information and
belief, threatened with any Legal Action involving a demand for damages
or other potential liability including any Lien with respect to
Material violations or Material breaches of any Environmental Law; and
(e) to the knowledge, information and belief of EZ, Evergreen
has no knowledge of any past or present Event related to the Future EZ
Station or any of the Future EZ 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.
4.20 Trade or Barter. To EZ's knowledge, information and belief,
Section 4.20 of the EZ Disclosure Schedule sets forth a true, complete and
accurate description (including obligations and liabilities remaining
thereunder) of all EZ Trade Agreements that individually involve or may involve,
valued in accordance with GAAP, more than $500 in obligations remaining
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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 Evergreen-EZ Agreement EZ will use its
reasonable business efforts to cause Evergreen to afford, and prior to the
consummation of the transactions contemplated by the Secret- SFX Agreement SFX
will use its reasonable business efforts to cause Entercom or Secret, as the
case may be, to afford, to the other party (including, in the case of EZ, to
American) 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
Exchanges and other Transactions or which may have a Material effect on their
respective Assets or Stations or their businesses, operations, properties,
prospects, personnel, condition, (financial or other), or results of operations
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 or controlled by (x) SFX or its accountants deemed by EZ
or its Representatives necessary or useful for the purpose of performing an
audit of the business of the Future SFX Station and certifying financial
statements and financial information, and (y) EZ or its accountants deemed by
SFX or its Representatives necessary or useful for the purpose of performing an
audit of the business of the Future EZ Station and certifying financial
statements and financial information, and (iii) such other information
concerning any of the foregoing as EZ or SFX 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, 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, whether prior to or from and after the
Closing, without the prior written consent of the party disclosing such
information (and, in the case of EZ, American), be disclosed by the other party
in any manner whatsoever, in whole or in part, and shall not be used prior to
the Closing for any purposes, other than in connection with the Exchanges and
the other Transactions. In no event shall either party (or, in the case of EZ,
American) or any of its Representatives use such information to the detriment of
the other party whether prior to or from and after the Closing. Prior to the
Closing, each party (and, in the case of EZ, American) 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 Exchanges and the
other Transactions, who are
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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 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 Exchanges and no such information shall be used for any purposes, other than
in connection with the Exchanges 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 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 (and, in the case of EZ, American) 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
Exchanges 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
Exchanges 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
Exchanges 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 Exchanges and the other Transactions by all
such applicable Authorities, (ii) to obtain all necessary or appropriate
waivers, consents and approvals, (iii) to effect all necessary registrations,
filings and submissions (including without limitation filings within ten (10)
business days of the date of this Agreement under the Hart-Scott-Rodino Act and
all filings, including without limitation the filing of all appropriate
applications for FCC Consents, necessary for EZ and SFX to own and operate the
Future SFX Station and the Future EZ Station, respectively), (iv) to lift any
injunction or other legal bar to the Exchanges or any of the other Transactions
(and, in such case, to proceed with the Exchanges and the other 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
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conditions to be performed or satisfied by such party. The parties shall
prosecute said filings and applications with all reasonable diligence and
otherwise use reasonable business efforts to obtain the termination of the
Hart-Scott-Rodino Act waiting period and the grant of FCC Consents to such
applications as expeditiously as practicable. If the FCC Consents, or any of
them, imposes any condition on either party hereto (or, in the case of EZ,
American or any of its Subsidiaries), 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, SFX and EZ 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
Exchanges are expressly conditioned upon the grant of the Final Order as to the
FCC Consents for the transfer of the FCC Licenses for the Stations without any
condition Materially Adverse to the party acquiring such Stations, it being
understood that the imposition of any condition requiring (a) any SFX Party (or
any Affiliate thereof) to divest its interest in any radio station in the
Charlotte, North Carolina market or to otherwise take any action to comply with
Section 73.3555(a) of the FCC rules shall not be deemed to have a Materially
Adverse Effect upon the SFX Parties, or (b) any EZ Party (including American and
its Subsidiaries) to divest their interest in any radio station in the
Pittsburgh, Pennsylvania market or to otherwise take any action to comply with
Section 73.3555(a) of the FCC rules shall not be deemed to have a Materially
Adverse Effect upon the EZ Parties. Notwithstanding the foregoing, nothing in
this Agreement shall be construed to require any EZ Party or any SFX Party to
divest any asset to obtain termination of the Hart-Scott-Rodino Act waiting
period or to avoid or settle litigation initiated by any antitrust enforcement
Authority seeking to block the transactions contemplated by this Agreement
(unless such divesture is necessary to comply with the multiple ownership rules
or policies of the FCC).
(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 Exchanges and the other Transactions that are required or
permitted to be filed on or before the Closing Date.
(c) SFX shall cooperate and use its reasonable business efforts to
cause its independent accountants to reasonably cooperate with EZ, and at EZ's
expense, in order to enable EZ to have SFX and EZ's or SFX's independent
accountants prepare audited financial statements for the Future SFX Station
described in Section 6.2(f). SFX represents and warrants that such financial
statements will have been prepared in accordance with GAAP applied on a basis
consistent with past practices, will be true, correct and complete, and will
present fairly the financial condition and results of operation of the Future
SFX Station. Without limiting the generality of the foregoing, SFX agrees that
it will (i) consent to the use of such audited financial statements in any
registration statement or other document filed by EZ (or American or any of
either of their Subsidiaries) under the Securities Act or the Exchange Act and
(ii) 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 EZ's independent accountants may reasonably
request under the circumstances. EZ
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shall cooperate and use its reasonable business efforts to cause its independent
accountants to reasonably cooperate with SFX, and at SFX's expense, in order to
enable SFX to have EZ and SFX's or EZ's independent accountants prepare audited
financial statements for the Future EZ Station described in Section 6.3(f). EZ
represents and warrants that such financial statements will have been prepared
in accordance with GAAP applied on a basis consistent with past practices, will
be true, correct and complete, and will present fairly the financial condition
and results of operation of the Future EZ Station. Without limiting the
generality of the foregoing, EZ agrees that it will (i) consent to the use of
such audited financial statements in any registration statement or other
document filed by SFX (or any of its Subsidiaries) under the Securities Act or
the Exchange Act and (ii) 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 SFX's independent
accountants may reasonably request under the circumstances.
(d) The parties acknowledge and agree that they intend, if appropriate
at the time the Hart-Scott-Rodino Act waiting period has expired or been
terminated, and subject, in the case of the Future EZ Station, to the provisions
of the Evergreen-EZ Agreement and, in the case of the Future SFX Station, to the
provisions of the Secret-SFX Agreement, to execute and deliver a time brokerage
agreement with respect to each of (i) the Future EZ Station substantially in the
form of Exhibit A-1 attached hereto and made a part hereof (the "Future EZ
Station TBA") and (ii) the Future SFX Station substantially in the form of
Exhibit A-2 attached hereto and made a part hereof (the "Future SFX Station
TBA"). Anything in this Agreement to the contrary notwithstanding, including
without limitation any provision of Articles 3, 4 and 8 and Sections 6.2 and
6.3, (A) none of the SFX Parties shall be liable in any respect to the extent
any of the representations and warranties contained in Article 3, and none of
the EZ Parties shall be liable in any respect to the extent any of the
representations and warranties contained in Article 4, are not true and correct
in any Material respect on and as of the Closing Date due solely to the
existence and operation of the Future SFX Station TBA and the Future EZ Station
TBA, respectively, (B) the conditions set forth in Sections 6.2(c), 6.2(e),
6.3(c) and 6.3(e) shall not be deemed to be not satisfied as a result of any
action or failure to act of EZ pursuant to the provisions of the Future SFX
Station TBA and of SFX pursuant to the provisions of the Future EZ Station TBA,
respectively, and (C) the certificates to be delivered to EZ and SFX pursuant to
the provisions of Section 6.2(c) and 6.3(c), respectively, shall not be required
to address any of such representations and warranties that are not true and
correct in any material respect on and as of the Closing Date due to the
existence and operation of such agreements.
5.3 Public Announcements. Until the Closing, or in the event of
termination of this Agreement, each of SFX and EZ shall consult with the other
before issuing any press release or otherwise making any public statements with
respect to this Agreement, the Exchanges or any other Transaction and shall not
issue any such press release or make any such public statement without the prior
consent of the other. Notwithstanding the foregoing, each party acknowledges and
agrees that SFX and EZ 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.
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5.4 Notification of Certain Matters. SFX and EZ 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 or any of its Subsidiaries 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 SFX Disclosure Schedule
or the EZ Disclosure Schedule, as the case may be, in any respect such that one
or more of the conditions of Closing might not be satisfied, and any failure
made by it to comply with or satisfy, or be able to comply with or satisfy, any
covenant, condition or agreement to be complied with or satisfied by it
hereunder 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 SFX nor EZ shall, nor shall it permit any
Subsidiary, or any of its Representatives (including, without limitation, any
investment banker, broker, finder, attorney or accountant retained by it or, in
the case of EZ, American) 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 Exchanges and the other Transactions) resulting in
(i) any merger or consolidation of either, regardless of whether it is the
surviving Entity unless the surviving Entity remains obligated under this
Agreement to the same extent as it was, or (ii) any sale or other disposition of
all or any substantial part of the Assets owned by it or any of the Stations
owned by it. The provisions of this Section shall apply to each of SFX's and
EZ's Subsidiaries.
5.6 Conduct of Business by SFX Pending the Closing. Except as otherwise
contemplated by this Agreement, and subject to EZ's time brokering of the Future
SFX Station pursuant to the provisions of the Future SFX Station TBA after the
date hereof and prior to the Closing Date or earlier termination of this
Agreement, unless EZ shall otherwise agree in writing, (i) after the date hereof
and prior to the consummation of the transactions contemplated by the Entercom
Agreement or the earlier termination of this Agreement, SFX shall, to the extent
permitted by the SFX Acquisition Agreements, cause Entercom, (ii) after the
consummation of the transactions contemplated by the Entercom Agreement and
prior to the consummation of the transactions contemplated by the Secret-SFX
Agreement or the earlier termination of this Agreement, SFX shall, to the extent
permitted by the Secret-SFX Agreement, cause Secret, and (iii) from and after
the date SFX acquires the Future SFX Station and prior to the Closing Date or
earlier termination of this Agreement, SFX shall, and shall cause its
Subsidiaries, to the extent relating to the Future SFX Station or the Future SFX
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 (subject to the provisions of
Sections 5.6(n) and (o)), 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) confer on a regular and frequent basis with one or more
representatives of EZ to report Material operational matters and the
general status of ongoing operations;
(d) 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;
(e) maintain levels of advertising, marketing and promotion
efforts and expenditures at levels no less than those currently
budgeted in the current business plan, a true, correct and complete in
all material respects description of which is set forth in Section
5.6(e) of the SFX Disclosure Schedule;
(f) (i) to operate the Future SFX Station in conformity with
its 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 Future SFX Station, and (ii) take
all actions necessary to maintain the FCC Licenses for the Future SFX
Station;
(g) prior to the effectiveness of the Future EZ Station TBA,
refrain from changing the frequency or format of the Future SFX Station
or making any material changes in the Future SFX Station's studio or
other structures, except to the extent required by the FCA or the rules
and regulation of the FCC;
(h) prior to the effectiveness of the Future EZ Station TBA,
not make any material changes in the broadcast hours or in the
percentage or types of programming broadcast by the Future SFX Station,
or make any other Material changes in such Station's programming
policies, except such changes as in the good faith judgment of SFX are
required by the public interest;
(i) not (i) dispose of any of the Future SFX Assets owned by
SFX or used in the operation of the Future SFX Station (other than for
the disposition in the ordinary course of business of immaterial assets
that are of no further use to such Station) or (ii) modify,
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change in any Material respect or enter into any Material Agreement
relating to the business of the Future SFX Station;
(j) notify EZ promptly if the Future SFX Station's normal
broadcast transmissions are interrupted or impaired for (i) thirty (30)
minutes or more for a period of five (5) consecutive days or for seven
(7) days within any thirty (30) day period (except for normal
maintenance) or (ii) a period of six (6) continuous hours or more;
(k) not create, assume or permit to exist any Lien upon any of
the Future SFX Assets or the Future SFX Station, except for (i)
Permitted Liens and (ii) other Liens, if any, set forth on Section
3.5(a) or 3.5(b) of the SFX Disclosure Schedule (which Liens shall be
released prior to Closing);
(l) not waive any Material right relating to the Future SFX
Station;
(m) (i) refrain from entering into additional trade or barter
agreements obligating the Future SFX Station, (ii) use reasonable
business efforts to fulfill its obligations under all trade and barter
agreements currently in effect, and (iii) take such other steps as are
necessary to assure that trade and barter assets exceed trade and
barter obligations for the Future SFX Station as of the Closing Date;
(n) not renew or enter into new employment agreements without
the consent of EZ;
(o) not institute any general increase in the compensation of
the employees of the Future SFX Station except as and to the extent set
forth in the current business plan or as required under any existing
employment agreement; and
(p) not enter into any agreements providing for annual
payments by the Future SFX Station in excess of $25,000 per agreement
or $100,000 in the aggregate for all such agreements.
5.7 Conduct of Business by EZ Pending the Closing. Except as otherwise
contemplated by this Agreement, and subject to SFX's time brokering of the
Future EZ Station pursuant to the provisions of the Future EZ Station TBA, after
the date hereof and prior to the Closing Date or earlier termination of this
Agreement, unless SFX shall otherwise agree in writing, (i) after the date
hereof and prior to the consummation of the transactions contemplated by the
Evergreen-EZ Agreement or the earlier termination of this Agreement, EZ shall,
to the extent permitted by the Evergreen-EZ Agreement, cause Evergreen, and (ii)
from and after the date EZ acquires the Future EZ Station and prior to the
Closing Date or earlier termination of this Agreement, EZ shall, and shall cause
its Subsidiaries, to the extent relating to the Future EZ Station or the Future
SFX 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 (subject to the provisions of
Sections 5.7(n) and (o)), 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) confer on a regular and frequent basis with one or more
representatives of SFX to report Material operational matters and the
general status of ongoing operations;
(d) 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;
(e) maintain levels of advertising, marketing and promotion
efforts and expenditures at levels no less than those currently
budgeted in the current business plan, a true, correct and complete in
all material respects description of which is set forth in Section
5.7(e) of the EZ Disclosure Schedule;
(f) (i) to operate the Future EZ Station in conformity with
its 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 Future EZ Station and (ii) take
all actions necessary to maintain the FCC Licenses for the Future EZ
Station;
(g) prior to the effectiveness of the Future SFX Station TBA,
refrain from changing the frequency or format of the Future EZ Station
or making any material changes in the Future EZ Station's studio or
other structures, except to the extent required by the FCA or the rules
and regulation of the FCC;
(h) prior to the effectiveness of the Future SFX Station TBA,
not make any material changes in the broadcast hours or in the
percentage or types of programming broadcast by the Future EZ Station,
or make any other Material changes in such Station's programming
policies, except such changes as in the good faith judgment of EZ are
required by the public interest;
(i) not (i) dispose of any of the Future EZ Assets owned by EZ
or used in the operation of the Future EZ Station (other than for the
disposition in the ordinary course of business of immaterial assets
that are of no further use to such Station) or (ii) modify,
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change in any Material respect or enter into any Material Agreement
relating to the business of the Future EZ Station;
(j) notify SFX promptly if the Future EZ Station's normal
broadcast transmissions are interrupted or impaired for (i) thirty (30)
minutes or more for a period of five (5) consecutive days or for seven
(7) days within any thirty (30) day period (except for normal
maintenance) or (ii) a period of six (6) continuous hours or more;
(k) not create, assume or permit to exist any Lien upon any of
the Future EZ Assets or the Future EZ Station, except for (i) Permitted
Liens and (ii) other Liens, if any, set forth on Section 4.5(a) or
4.5(b) of the EZ Disclosure Schedule (which Liens shall be released
prior to Closing);
(l) not waive any Material right relating to the Future EZ
Station;
(m) (i) refrain from entering into additional trade or barter
agreements obligating the Future EZ Station, (ii) use reasonable
business efforts to fulfill its obligations under all trade and barter
agreements currently in effect, and (iii) take such other steps as are
necessary to assure that trade and barter assets exceed trade and
barter obligations for the Future SFX Station as of the Closing Date;
(n) not renew or enter into new employment agreements without
the consent of SFX;
(o) not institute any general increase in the compensation of
the employees of the Future EZ Station except as and to the extent set
forth in the current business plan or as required under any existing
employment agreement; and
(p) not enter into any agreements providing for annual
payments by the Future EZ Station in excess of $25,000 per agreement or
$100,000 in the aggregate for all such agreements.
5.8 FCC Application; Divesture Commitment.
(a) The parties acknowledge that Affiliates of the EZ Parties have
entered into agreements (including the Evergreen-EZ Agreement) to acquire a
number of radio stations serving the Charlotte, North Carolina area that, when
combined with the radio stations now licensed to Affiliates of the EZ Parties
and the Future EZ Station, would cause the EZ Parties or their Affiliates to be
in violation of Section 73.3555 of the FCC's rules (absent a waiver of those
rules). The parties further acknowledge that the FCC's granting its consents
with respect to the transfer of the Future EZ Station from the applicable
Evergreen Entities to the EZ Parties (the "Evergreen FCC Consents") may contain
a condition requiring the EZ Parties to divest their interest in one or more FM
radio stations in the Charlotte market prior to the closing under the
Evergreen-EZ Agreement. In order to ensure that the EZ Parties can meet such a
condition if the Closing under this Agreement
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does not occur simultaneously with the closing under the Evergreen-EZ Agreement,
prior to the filing of the applications for the Evergreen FCC Consents, the EZ
Parties agreed to assign the Future EZ Station to a trustee (the "Charlotte
Trustee") pursuant to a trust agreement that satisfies the FCC's multiple
ownership rules and policies, including the cross-interest policy, then in
effect. In the event that the acquisition by the EZ Parties of the Future EZ
Station pursuant to the Evergreen- EZ Agreement would not comply with the FCC's
multiple ownership rules and policies, including the cross-interest policy, on
or prior to the date of the closing under the Evergreen-EZ Agreement, unless the
Evergreen FCC Consents permit retention of the Future EZ Station, the EZ Parties
shall assign, subject to receipt of the FCC's grant of the Charlotte Trustee
Application, the Future EZ Station to the Charlotte Trustee on the date of the
closing under the Evergreen-EZ Agreement in order to effectuate the closing
under the Evergreen-EZ Agreement.
(b) Pursuant to the Evergreen-EZ Agreement, the EZ Parties have filed
an application with the FCC requesting the consent to the assignment of the FCC
authorizations for the Future EZ Station to the Charlotte Trustee (the
"Charlotte Trustee Application"), and the EZ Parties and the Evergreen Entities
have agreed to prosecute the Charlotte Trustee Application in good faith and
with due diligence.
(c) Anything in this Section to the contrary notwithstanding, the
Evergreen-EZ Agreement permits the EZ Parties, upon the execution and delivery
of this Agreement, to file an application with the FCC as contemplated by
Section 5.2(a) hereof requesting the consent to the assignments of the FCC
authorizations for the Future EZ Station to the SFX Parties, either directly to
the SFX Parties or indirectly to the SFX Parties through the Charlotte Trustee,
and, accordingly, the EZ Parties need not transfer the Future EZ Station to the
Charlotte Trustee pursuant to the provisions of the Evergreen-EZ Agreement so
long as the application with respect to this Agreement is pending or has been
granted, except in the event such application relates solely to an indirect
transfer through the Charlotte Trustee. Notwithstanding the foregoing, the
parties agree that the trust and the Charlotte Trustee Application shall be left
in effect until such time as the Transactions have been consummated.
5.9 Delivery of Disclosure Schedules. As soon as practicable after the
date hereof and in any event not later than fifteen (15) business days after the
date hereof, the EZ Parties shall deliver to the SFX Parties the EZ Disclosure
Schedule and the SFX Parties shall deliver to the EZ Parties the SFX Disclosure
Schedule.
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 Exchanges 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:
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(a) 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 Exchanges and
the other Transactions, or which might, in the reasonable business
judgment of EZ or SFX, based upon the advice of counsel, have a
Material Adverse Effect on the Assets and Stations to be acquired by
it, it being understood and agreed that a written request by any
Authority for information with respect to the Exchanges or any other
Transaction, which information could be used in connection with such
Legal Action, shall not be deemed to be a threat of any such Legal
Action; and
(b) All authorizations, consents, waivers, orders or approvals
required to be obtained from all Authorities, and all Governmental
Filings required to be made by any EZ Party or any SFX Party with any
Authority, prior to the consummation of the Exchange, shall have been
obtained from, and made with, the FCC and all other required
Authorities, except for such authorizations, consents, waivers, orders,
approvals, filings, registrations, notices or declarations the failure
to obtain or make would not, in the reasonable business judgment of
each of the parties, have a Material Adverse Effect on the Assets and
Stations being acquired by such party. Without limiting the generality
of the foregoing, the FCC shall have issued the FCC Consents, 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; provided, however, that any condition requiring
any party hereto (or, in the case of EZ, American or any of its
Subsidiaries) to divest its interest in any radio station in the
Charlotte, North Carolina market (in the case of SFX) or in the
Pittsburgh, Pennsylvania market (in the case of EZ) or to otherwise
take any action to comply with Section 73.3555 of the FCC's rules in
such markets shall not be a condition of such party's obligation to
effect the Exchange.
6.2 Conditions to Obligations of the EZ Parties. The obligation of the
EZ Parties to effect the Exchanges 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) SFX shall have delivered or caused to be delivered to EZ
all of the Collateral Documents required to be delivered to the EZ
Parties by the SFX 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 EZ and its counsel and
American and its counsel; and EZ and its counsel and American and its
counsel shall have received all information and copies of all
documents, including records of corporate proceedings, which they may
reasonably request in connection therewith, such documents where
appropriate to be certified by proper corporate officers;
(b) SFX shall have furnished EZ and, at EZ's request, any bank
or other financial institution providing credit to EZ or American or
any Subsidiary of EZ or American, with a favorable opinion, dated the
Closing Date, of Richard A. Liese, Esq., counsel for SFX,
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with respect to the matters set forth in Sections 3.1(a), (b) and (c)
(other than as to Private Authorizations), 3.7(a) (limited to his
knowledge and to Legal Actions), and 3.14 and of Fisher Wayland Cooper
Leader & Zaragoza, L.L.P., FCC counsel for SFX, 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 License and the FCC Consents, and the filing of all
Material reports and the payment of all fees) and, in each case, with
respect to such other matters arising after the date of this Agreement
incident to the Exchanges and the other Transactions, as EZ 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 each SFX Party 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
each SFX Party hereunder at or prior to the Closing Date shall have
been duly performed or satisfied in all material respects; and SFX
shall have furnished EZ with such certificates and other documents
evidencing the truth of such representations, warranties, covenants and
agreements and the performance of such agreements or conditions as EZ
or its counsel shall have reasonably requested;
(d) All authorizations, consents, waivers, orders or approvals
required to be obtained from all Persons (other than Authorities) prior
to the consummation of the Exchanges and the other Transactions,
including without limitation those required in order to vest fully in
EZ all right, title and interest in and to all of the Future SFX Assets
and the Future SFX Station (including without limitation all Private
Authorizations and Material Agreements of SFX and all modifications of
Contractual Obligations heretofore requested by EZ and set forth in
Section 6.2(d) of the EZ 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 SFX;
(e) Between the date of this Agreement and the Closing Date,
there shall not have occurred and be continuing any Material Adverse
Change in SFX; as of the Closing Date, the Future SFX License shall not
have been Materially and Adversely Affected by any act, or failure to
act, of SFX;
(f) To the extent required of EZ by Rule 3-05 of Regulation
S-X under the Securities Act, EZ shall have received (i) from its or
American's or SFX'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
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and statements of operations and cash flow for each of the three years
in the period ended December 31, 1996) of the Future SFX Station, which
financial statements shall have been prepared in conformity with GAAP
and Regulation S-X under the Securities Act, or (ii) from the SFX
Parties such documentation as shall enable EZ's independent accountants
to advise EZ in writing that they could issue such an unqualified
report; and
(g) The closing under the Evergreen-EZ Agreement shall have
occurred.
6.3 Conditions to Obligations of the SFX Parties. The obligation of the
SFX Parties to effect the Exchanges 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) EZ shall have delivered or caused to be delivered to SFX
all of the Collateral Documents required to be delivered to the SFX
Parties by the EZ 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 SFX and its counsel; and
SFX 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) EZ shall have furnished SFX and, at SFX's request, any
bank of other financial institution providing credit to SFX or any
Subsidiary, with favorable opinions, dated the Closing Date of Hunton &
Williams, special counsel for EZ, with respect to the matters set forth
in Sections 4.1(a), (b) and (c) (other than as to Private
Authorizations), 4.7(a) (limited to its knowledge and to Legal
Actions), and 4.14, and of Koteen & Naftalin, LLP, FCC counsel for EZ,
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 License and the FCC Consents, and
the filing of all Material reports and the payment of all fees), and,
in each case, with respect to such other matters arising after the date
of this Agreement incident to the Exchanges and the other Transactions,
as SFX 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 each EZ Party 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
each EZ Party hereunder at or prior to the Closing Date shall have been
duly performed or satisfied in all material respects; and EZ shall have
furnished SFX with such certificates and other documents evidencing the
truth of such representations,
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warranties, covenants and agreements and the performance of such
agreements or conditions as SFX or its counsel shall have reasonably
requested;
(d) All authorizations, consents, waivers, orders or approvals
required to be obtained from all Persons (other than Authorities) prior
to the consummation of the Exchanges and the other Transactions,
including without limitation those required in order to vest fully in
SFX all right, title and interest in and to all of the Future EZ Assets
and the Future EZ Station (including without limitation all Private
Authorizations and Material Agreements of EZ and its Subsidiaries and
all modifications of Contractual Obligations heretofore requested by
SFX and set forth in Schedule 6.3(d) of the SFX 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 EZ;
(e) Between the date of this Agreement and the Closing Date,
there shall not have occurred and be continuing any Material Adverse
Change in EZ; as of the Closing Date, the Future EZ License shall not
have been Materially and Adversely Affected by any act, or failure to
act, of EZ;
(f) To the extent required of SFX by Rule 3-05 of Regulation
S-X under the Securities Act, SFX shall have received (i) from its or
American's or EZ'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 Future EZ Station, which financial statements shall have been
prepared in conformity with GAAP and Regulation S-X under the
Securities Act, or (ii) from the EZ Parties such documentation as shall
enable SFX's independent accountants to advise SFX in writing that they
could issue such an unqualified report; and
(g) The closing under the Secret-SFX Agreement shall have
occurred.
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 SFX and EZ;
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(b) by either EZ or SFX if any permanent injunction, decree or
judgment by any Authority preventing the consummation of the Exchanges
shall have become final and nonappealable; or
(c) by SFX in the event no SFX Party is 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 Exchanges and the other Transactions have not been consummated
prior to the Termination Date, (ii) one or more of the EZ Parties 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 a breach or untruth exists and is not cured within
the cure period specified in this Section, (iii) the EZ Disclosure
Schedule delivered to the SFX Parties by the EZ Parties pursuant to
Section 5.9 discloses matters that could in the reasonable judgment of
SFX be expected to have a Material Adverse Effect on the Future EZ
Assets, or (iv) the Secret-SFX Agreement shall have been terminated
(other than because of a breach or default thereunder of any SFX Party
party thereto); or
(d) by EZ in the event no EZ Party is 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 Exchanges and the other Transactions have not been consummated
prior to the Termination Date, (ii) one or more of the SFX Parties 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 a breach or untruth exists and is not cured within
the cure period specified in this Section, (iii) the SFX Disclosure
Schedule delivered to the EZ Parties by the SFX Parties pursuant to
Section 5.9 discloses matters that could in the reasonable judgment of
EZ be expected to have a Material Adverse Effect on the Future SFX
Assets, or (iv) the Evergreen-EZ Agreement shall have been terminated
(other than because of a breach or default thereunder of any EZ Party
party thereto).
Neither party shall have the right to terminate this Agreement (i) 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 or (ii) pursuant to the
provisions of Section 7.1(c)(iii) or 7.1(d)(iii) unless the terminating party
shall have given notice thereof (specifying in reasonable detail the basis
therefor) within ten (10) business days of the receipt of the EZ Disclosure
Schedule or the SFX Disclosure Schedule, as the case may be.
The term "Termination Date" shall mean December 31, 1997 or such other
date as the parties may, from time to time, mutually agree.
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The right of EZ or SFX 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 (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, or in the event
the Exchanges shall not have 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 Affiliates (including stockholders, officers or
directors), to the other and all rights and obligations of either party
shall cease; provided, however, that such termination shall not relieve
either party from liability for any misrepresentation or breach of any
of its warranties, covenants or agreements set forth in this Agreement.
(b) In the event this Agreement is terminated by (i) SFX
pursuant to the provisions of Section 7.1(c)(ii) or (ii) EZ pursuant to
the provisions of Section 7.1(d)(ii), then the terminating party shall
be entitled to liquidated damages in the amount of $5,000,000, it being
agreed that such amount shall constitute full payment for any and all
damages suffered by the terminating party by reason of other party's
failure to consummate the Exchange. EZ and SFX agree in advance that
actual damages would be difficult to ascertain and that $5,000,000 is a
fair and equitable amount to reimburse SFX or EZ, as the case may be,
for damages sustained due to EZ's or SFX's failure to consummate the
Exchanges for the above-stated reasons. Notwithstanding the foregoing,
each party shall have the right to seek specific performance pursuant
to the provisions of Section 9.5.
(c) In the event this Agreement is terminated (i) by the
parties pursuant to the provisions of Section 7.1(a), (ii) by SFX or EZ
pursuant to the provision of Section 7.1 (b), (iii) by SFX pursuant to
the provisions of Section 7.1(c)(i), Section 7.1(c)(iii) or Section
7.1(c)(iv), or (iv) by EZ pursuant to the provisions of Section
7.1(d)(i), Section 7.1(d)(iii) or Section 7.1(d)(iv), the EZ Parties
shall instruct the Escrow Agent to distribute to the SFX Parties the
Escrow Deposit and any interest or other earnings thereon and except as
provided in Section 7.2(a), none of the parties shall have any further
rights or remedies.
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ARTICLE 8
INDEMNIFICATION
8.1 Survival. The representations, warranties, covenants and agreements
of the parties contained in or made pursuant to this Agreement or any Collateral
Document shall survive the Closing and shall remain operative and in full force
and effect for a period of (a) one (1) year after the Closing Date or (b) the
applicable statute of limitations in the case of matters of a nature referred to
in Sections 3.1, 3.7(b), 3.11, 3.12, 4.1, 4.7(b), 4.11 and 4.12 (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 of SFX and EZ (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:
(a) any breach of representation or warranty made by the
indemnifying party pursuant to this Agreement or any Collateral
Document or any failure by the indemnifying party to perform or fulfill
any of its respective covenants or agreements set forth in this
Agreement or any Collateral Document; or
(b) any Legal Action or other Claim by any third party
relating to the indemnifying party or the ownership or operations of
any of its Assets or the conduct of the business of its Stations to the
extent such Legal Action or other Claim has also resulted in a breach
of representation or warranty by the indemnifying party pursuant to
this Agreement or any Collateral Document; or
(c) the Nonassumed Obligations of the respective indemnifying
parties and the failure of the respective indemnifying parties to
comply with the Bulk Sales laws of the Commonwealth of Pennsylvania and
the State of North Carolina.
8.3 Limitation of Liability. Notwithstanding the provisions of Section
8.2, after the Closing, each indemnifying party's rights to indemnification
shall be subject to the following limitations: (i) the indemnified party shall
be entitled to recover its Loss and Expense in respect of any Claim only in the
event that the aggregate Loss and Expense for all Claims exceeds, in the
aggregate, $50,000, in which event the indemnified party shall be entitled to
recover all such Loss
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and Expense (including such $50,000), and (ii) in no event shall the aggregate
amount required to be paid by each indemnifying party pursuant to the provisions
of this Section exceed $3,000,000, except for any Loss or Expense arising out of
matters of a nature referred to in Sections 3.1 and 4.1 and the first paragraph
of Section 3.7(b) and 4.7(b) as to which the limitations set forth in this
clause (ii) shall not apply. The provisions of the immediately preceding
sentence of this Section with respect to the limitation on each indemnifying
party's obligation to indemnify the indemnified party in respect of Loss and
Expense shall not be applicable to any claims which are based on fraud or
willful or intentional breach of representation or warranty.
8.4 Notice of Claims. If an indemnified party believes that it has
suffered or incurred any Loss and Expense, it shall notify the indemnifying
party promptly in writing, and in any event within the applicable time period
specified in Section 8.4, describing such Loss and Expense, all with reasonable
particularity and containing a reference to the provisions of this Agreement in
respect of which such Loss and Expense shall have occurred. If any Legal Action
is instituted by a third party with respect to which an indemnified party
intends to claim any liability or expense as Loss and Expense under this
Article, such indemnified party shall promptly notify the indemnifying party of
such Legal Action, but the failure to so notify the indemnifying party shall not
relieve such indemnifying party of its obligations under this Article, except to
the extent such failure to notify prejudices such indemnifying party's ability
to defend against such Claim.
8.5 Defense of Third Party Claims. The indemnifying party shall have
the right to conduct and control, through counsel of their own choosing,
reasonably acceptable to the indemnified party, any third party Legal Action or
other Claim, but the indemnified party may, at its election, participate in the
defense thereof at its sole cost and expense; provided, however, that if the
indemnifying party shall fail to defend any such Legal Action or other Claim,
then the indemnified party may defend, through counsel of its own choosing, such
Legal Action or other Claim, and (so long as it gives the indemnifying party at
least fifteen (15) days' notice of the terms of the proposed settlement thereof
and permits the indemnifying party to then undertake the defense thereof) settle
such Legal Action or other Claim and to recover the amount of such settlement or
of any judgment and the reasonable costs and expenses of such defense. The
indemnifying party shall not compromise or settle any such Legal Action or other
Claim without the prior written consent of the indemnified party.
8.6 Exclusive Remedy. Except for fraud or as otherwise provided in
Section 9.5, 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.
8.7 Rights Under Other Agreements.
(a) SFX shall use its reasonable best efforts to obtain the written
consent of each of Entercom and Secret to the assignment to EZ, on or
immediately after the Closing Date, of SFX's rights under the SFX Acquisition
Agreements with respect to the Future SFX Station and, after such assignment has
been consummated, shall take all actions reasonably requested by EZ to enforce
any of such rights with respect to the Future SFX Station for the benefit of EZ
(it being the intent of the
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parties that pursuant to this provision SFX shall transfer to EZ to the maximum
extent possible the benefits of all representations and warranties and covenants
of each of Entercom and Secret contained in the SFX Acquisition Agreements). If
SFX is unable to obtain the consent of Entercom or Secret to the assignment of
SFX's rights under the SFX Acquisition Agreements with respect to the Future SFX
Station, SFX shall, upon the request of EZ, proceed diligently to exercise SFX's
right to indemnification under the SFX Acquisition Agreements with respect to
the Future SFX Station and EZ shall be entitled to receive from SFX any amount
actually received by SFX with respect to such rights, less reasonable out of
pocket fees and expenses incurred by SFX in exercising such rights.
Notwithstanding the foregoing, SFX shall retain such rights against each of
Entercom and Secret under the SFX Acquisition Agreements (to the extent such
rights exist under the SFX Acquisition Agreements) as shall be necessary to
recover from each of Entercom and Secret with respect to any liability for which
SFX makes payment to EZ pursuant to SFX's indemnification obligation under this
Agreement.
(b) EZ shall use its reasonable best efforts to obtain the written
consent of Evergreen to the assignment to SFX, on or immediately after the
Closing Date, of EZ's rights under the Evergreen-EZ Agreement with respect to
the Future EZ Station and, after such assignment has been consummated, shall
take all actions reasonably requested by SFX to enforce any of such rights with
respect to the Future EZ Station for the benefit of SFX (it being the intent of
the parties that pursuant to this provision EZ shall transfer to SFX to the
maximum extent possible the benefits of all representations and warranties and
covenants of Evergreen contained in the Evergreen-EZ Agreement). If EZ is unable
to obtain the consent of Evergreen to the assignment of rights under the
Evergreen-EZ Agreement, EZ shall, upon the request of SFX, proceed diligently to
exercise EZ's right to indemnification under the Evergreen-EZ Agreement with
respect to the Future EZ Station and SFX shall be entitled to receive from EZ
any amount actually received by EZ with respect to such rights, less reasonable
out of pocket fees and expenses incurred by EZ in exercising such rights.
Notwithstanding the foregoing, EZ shall retain such rights against Evergreen
under the Evergreen-EZ Agreement (to the extent such rights exist under the
Evergreen-EZ Agreement) as shall be necessary to recover from Evergreen with
respect to any liability for which EZ makes payment to SFX pursuant to EZ's
indemnification obligation 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, EZ or SFX 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
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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 Exchanges
and the other Transactions, shall be borne by EZ insofar as they related to the
Future EZ Station and the Future EZ Assets and by SFX insofar as they relate to
the Future SFX Station and the Future SFX Assets. All filing and similar fees
(including without limitation Hart-Scott-Rodino filings and FCC filing
fees),shall be borne equally by EZ and SFX. All other costs and expenses
incurred in connection with this Agreement, the Exchanges and the other
Transactions, and in compliance with Applicable Law and Contractual Obligations
as a consequence hereof and thereof, including without limitation fees and
disbursements of counsel, financial advisors and accountants incurred by the
parties hereto shall, subject to the provisions of Sections 3.17 and 4.17
hereof, 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 any EZ Party:
EZ Communications, Inc.
10800 Main Street
Fairfax, Virginia 22030
Attention: Alan Box, Chief Executive Officer
Telecopier No.: (703) 934-1200
with copies to:
Hunton & Williams
1751 Pinnacle Drive
Suite 1700
McLean, Virginia 22102
Attention: Joseph W. Conroy, Esq.
Telecopier No.: (703) 714-7410
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American Radio Systems Corporation
116 Huntington Avenue
Boston, Massachusetts 02116
Attention: Steven B. Dodge, President and
Chief Executive 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
(b) If to any SFX Party:
SFX Broadcasting, Inc.
150 East 58th Street
New York, New York 10155
Attention: Michael G. Ferrel, President and
Chief Executive Officer
Telecopier No.: (212) 486-4979
with a copy to:
SFX Broadcasting, Inc.
150 East 58th Street
New York, New York 10155
Attention: Richard A. Liese, Esq.
Telecopier No.: (212) 486-4830
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 Exchanges and the other 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.
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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 without limitation that certain
letter of intent, dated August 28, 1996, between the parties.
9.12 Assignment. Subject to the provisions of Section 2.6, 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 (including without limitation, in the case of EZ,
American) 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.
9.13 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party and, so long as the EZ Merger
Agreement has not been terminated and, in any event, after the consummation of
the merger of EZ and American contemplated thereby, American, 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 EZ and SFX, 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 EZ Agent for Other EZ Parties. Anything in this Agreement to the
contrary notwithstanding, each of the EZ Parties (other than EZ) hereby grants
EZ an irrevocable power of attorney and hereby irrevocably appoints EZ 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 EZ, waivers, terminations or amendments, and
any action taken by EZ pursuant to such power of attorney and agency, and any
such extension, waiver, termination or amendment executed and delivered by EZ,
shall be binding upon each other EZ Party whether or not it has specifically
approved such action or executed such extension, waiver, termination or
amendment.
9.16 SFX Agent for Other SFX Parties. Anything in this Agreement to the
contrary notwithstanding, each of the SFX Parties (other than SFX) hereby grants
SFX an irrevocable power of attorney and hereby irrevocably appoints SFX 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 SFX, waivers, terminations or
amendments, and any action taken by SFX pursuant to such power of attorney and
agency, and any such extension, waiver, termination or amendment executed and
delivered by SFX, shall be binding upon each other SFX Party whether or not it
has specifically approved such action or executed such extension, waiver,
termination or amendment.
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IN WITNESS WHEREOF, the EZ Parties and the SFX Parties have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
EZ COMMUNICATIONS, INC.
By:_____________________________________
Name:
Title:
PROFESSIONAL BROADCASTING, INCORPORATED
By:_____________________________________
Name:
Title:
EZ PHILADELPHIA, INC.
By:_____________________________________
Name:
Title:
SFX BROADCASTING, INC.
By:______________________________________
Name:
Title:
SFX HOLDINGS, INC.
By:_______________________________________
Name:
Title:
American represents and warrants that it has heretofore entered into
the EZ Merger Agreement with EZ and hereby acknowledges and agrees (a) to be
bound by the provisions of Sections 5.1, (b) that the terms and conditions of
the above Agreement are satisfactory to it, and (c) that it consents to such
terms and conditions.
AMERICAN RADIO SYSTEMS CORPORATION
By:_____________________________________
Name:
Title:
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APPENDIX A
DEFINITIONS
As used in this Agreement, unless the context otherwise requires, the
following terms (or any variant in the form thereof) have the following
respective meanings. Terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa, and the reference to any gender
shall be deemed to include all genders. Unless otherwise defined or the context
otherwise clearly requires, terms for which meanings are provided herein shall
have such meanings when used in either Disclosure Schedule, and each Collateral
Document executed or required to be executed pursuant hereto or thereto or
otherwise delivered, from time to time, pursuant hereto or thereto. References
to "hereof", "herein" or similar terms are intended to refer to the Agreement as
a whole and not a particular section, and references to "this Section" are
intended to refer to the entire section and not a particular subsection thereof.
Accounts Receivable shall mean 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 any EZ Party or any SFX Party, as the case may be,
attributable to the sale of time or talent on the Future EZ Station or the
Future SFX Station, as the case may be.
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 EZ or
SFX, as the case may be, to be expected to (a) adversely affect the validity or
enforceability of this Agreement or the likelihood of consummation of the
Exchange, or (b) adversely affect the business, operations, management,
properties or prospects, or the condition, financial or other, or results of
operation of the Future SFX Station or the Future EZ Station, as the case may
be, or (c) impair SFX's or EZ'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 EZ or SFX, as the case may be, under this
Agreement. Notwithstanding the foregoing, and anything in this Agreement to the
contrary notwithstanding, any Event affecting the radio broadcasting industry
generally shall not be deemed to constitute an Adverse Change, have an Adverse
Effect or to Adversely Affect or Effect.
Affiliate, Affiliated shall mean, with respect to any Person, 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,
unless the context otherwise specifically requires, this Appendix A, the EZ
Disclosure Schedule, the SFX 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 fifth Whereas
paragraph.
<PAGE>
American-EZ Merger shall have the meaning given to it in the fifth
Whereas paragraph.
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.
Appraisals shall have the meaning given to it in Section 2.1(c).
Asset Exchanges shall have the meaning given to it in Section
2.1(a)(i).
Assets shall mean the business and the tangible and intangible assets
used in connection with the conduct of the business or operations of one or more
of the Stations, which business and assets are being exchanged, transferred or
otherwise conveyed hereunder, including without including without limitation the
following:
(a) the Personal Property;
(b) the Real Property;
(c) the Governmental Authorizations;
(d) the Contracts (other than the Nonassumed Obligations);
(e) all Intellectual Property and other proprietary
information, which relate to the Station, including without limitation,
technical information and data, machinery and equipment warranties,
maps, computer discs and tapes, plans, diagrams, blueprints and
schematics, including filings with the FCC which relate to the
Stations;
(f) all claims, chooses in action and rights under warranties
relating to any Station or any of the Assets;
(g) all books and records relating to the business or
operations of each Station, including executed copies of the written
Contracts, and all records required by the FCC to be kept, subject to
the right of the conveying party to have such books and records made
available to it for a reasonable period, not to exceed three (3) years;
and
(h) any and all products, profits and proceeds of, and
including without limitation any Claims with respect to, any of the
foregoing;
provided, however, that notwithstanding the foregoing, the term Assets shall not
include any of the Excluded Assets.
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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.
Cash Consideration shall have the meaning given to it in Section
2.1(i).
Charlotte Proration Schedule shall have the meaning given to it in
Section 2.2(e).
Charlotte Trustee shall have the meaning given to it in Section 5.8(a).
Charlotte Trustee Application shall have the meaning given to it in
Section 5.8(b).
Claims shall mean any and all debts, liabilities, obligations, losses,
damages, deficiencies, assessments and penalties, together with all Legal
Actions, pending or threatened, claims and judgments of whatever kind and nature
relating thereto, and all fees, costs, expenses and disbursements (including
without limitation reasonable attorneys' and other legal fees, costs and
expenses) relating to any of the foregoing.
Closing shall have the meaning given to it in Section 2.3.
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 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 Future EZ Station TBA and the Future SFX Station TBA.
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 Assets or the
conduct of the business of any of the Stations.
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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 any 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.
Disclosure Schedule shall mean the EZ Disclosure Schedule or the SFX
Disclosure Schedule, as the case may be.
Employment Arrangement shall mean, with respect to EZ or SFX, any
employment, consulting, retainer, severance or similar contract, agreement,
plan, arrangement or policy (exclusive of any which is terminable within thirty
(30) days without liability, penalty or payment of any kind by such Person or
any Affiliate), or providing for severance, termination payments, insurance
coverage (including any self-insured arrangements), workers compensation,
disability benefits, life, health, medical, dental or hospitalization benefits,
supplemental unemployment benefits, vacation or sick leave benefits, pension or
retirement benefits or for deferred compensation, profit-sharing, bonuses, stock
options, stock purchase or appreciation rights or other forms of incentive
compensation or post-retirement insurance, compensation or post-retirement
insurance, compensation or benefits, or any collective bargaining or other labor
agreement, whether or not any of the foregoing is subject to the provisions of
ERISA, but only to the extent that it covers or relates to any officer, employee
or other Person involved in the ownership and operation of any of the Assets or
the conduct of the business of any of the Stations.
Encumber shall mean to suffer, accept, agree to or permit the
imposition of a Lien.
Entercom shall have the meaning given to it in the first Whereas
paragraph.
Entercom Agreement shall have the meaning give to it in the first
Whereas paragraph.
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
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<PAGE>
environment (including, without limitation, ambient air, surface water, ground
water, mining or reclamation or mined land, land surface or subsurface strata)
or otherwise relating to the manufacture, processing, generation, distribution,
use, treatment, storage, disposal, cleanup, transport or handling of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances, materials
or wastes. Environmental Laws shall include without limitation the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. Section 6901
et seq.), the Hazardous Material Transportation Act (49 U.S.C. Section 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et
seq.), the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.),
the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances Control
Act (15 U.S.C. Section 2601 et seq.), the Occupational Safety and Health Act (29
U.S.C. Section 651 et seq.), the Federal Insecticide Fungicide and Rodenticide
Act (7 U.S.C. Section 136 et seq.), and the Surface Mining Control and
Reclamation Act of 1977 (30 U.S.C. Section 1201 et seq.), and any analogous
federal, state, local or foreign, Laws, and the rules and regulations
promulgated thereunder all as from time to time in effect, and any reference to
any statutory or regulatory provision shall be deemed to be a reference to any
successor statutory or regulatory provision.
Environmental Permit shall mean any Governmental Authorization required
by or pursuant to any Environmental Law.
ERISA shall mean the Employee Retirement Income Security Act of 1974,
and the rules and regulations thereunder, all as from time to time in effect, or
any successor law, rules or regulations, and any reference to any statutory or
regulatory provision shall be deemed to be a reference to any successor
statutory or regulatory provision.
ERISA Affiliate shall mean any Person that is treated as a single
employer with SFX or EZ, as the case may be, under Sections 414(b), (c), (m) or
(o) of the Code or Section 4001(b)(1) of ERISA.
Escrow Agent shall mean the escrow agent named in the Escrow Agreement.
Escrow Agreement shall mean the Escrow Agreement of even date herewith
among SFX, EZ and the Escrow Agent.
Escrow Deposit shall have the meaning given to it in Section 2.4.
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.
Evergreen and Evergreen Entities shall have the meaning given to them
in second Whereas paragraph.
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Evergreen-EZ Agreement shall have the meaning given to it in the second
Whereas paragraph.
Evergreen FCC Consents shall have the meaning given to it in Section
5.8(a).
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.
Exchanges shall have the meaning given to it in Section 2.1(a)(ii).
Excluded Assets shall have the meaning given to it in Section 2.1(i).
EZ shall have the meaning given to it in the Preamble.
EZ Disclosure Schedule shall mean the EZ Disclosure Schedule dated as
of the date of this Agreement delivered by EZ to SFX.
EZ Financial Data shall have the meaning given to it in Section 4.2(a).
EZ Governmental Authorizations shall have the meaning given to it in
Section 4.7(a).
EZ Merger Agreement shall have the meaning given to it in the fifth
Whereas paragraph.
EZP shall have the meaning given to it in the Preamble.
EZ Parties shall have the meaning given to it in the Preamble.
EZ Proration Schedule shall have the meaning given to it in Section
2.2(d).
EZ's knowledge (including the term "to the knowledge, information and
belief of EZ") means the knowledge of any EZ executive officer or any General
Manager of the Future EZ Station.
EZ Trade Agreement shall mean any Contract relating to the Future EZ
Station pursuant to which any EZ Party is required to provide air time in
exchange for property or services other than cash.
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.
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<PAGE>
FCC shall mean the Federal Communications Commission and shall include
any successor Authority.
FCC Consents shall mean the actions of the FCC granting its consents to
the transfer of the FCC Licenses relating to the Future SFX Station to EZ and
the Future EZ Station to SFX.
FCC Licenses shall mean all Governmental Authorizations issued by the
FCC to SFX or EZ or their respective Subsidiaries in connection with the
ownership, operation and conduct of the business of the Future SFX Station and
the Future EZ Station, as the case may be.
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.
Future EZ Assets shall have the meaning given to it in Section 2.1(i).
Future EZ License shall have the meaning given to it in Section 2.1.
Future EZ Station shall have the meaning given to it in the third
Whereas paragraph.
Future EZ Station Employees shall have the meaning given to it in
Section 4.12(a).
Future EZ Station TBA shall have the meaning given to it in Section
5.2(d).
Future SFX Assets shall have the meaning given to it in Section 2.1(i).
Future SFX License shall have the meaning given to it in the first
Whereas paragraph.
Future SFX Station shall have the meaning given to it in the first
Whereas paragraph.
Future SFX Station Employees shall have the meaning given it in the
Section 3.12(a).
Future SFX Station TBA shall have the meaning given it in the Section
5.2(d).
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
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<PAGE>
Licenses, issued by the FCC, the Federal Aviation Administration and any other
Authority in connection with the conduct of business or operations of any of the
Stations.
Governmental Filings shall mean all filings, including franchise and
similar Tax filings, and the payment of all fees, assessments, interest and
penalties associated with such filings, with all Authorities.
Hart-Scott-Rodino Act shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, and the rules and regulations thereunder, all as from
time to time in effect, or any successor law, rules or regulations, and any
reference to any such statutory or regulatory provision shall be deemed to be a
reference to any successor statutory or regulatory provision.
Hazardous Materials shall mean and include any substance, material,
waste, constituent, compound, chemical, natural or man-made element or force (in
whatever state of matter): (a) the presence of which requires investigation or
remediation under any Environmental Law, or (b) that is defined as a "hazardous
waste" or "hazardous substance" under any Environmental Law; or (c) that is
toxic, explosive, corrosive, etiologic, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous and is regulated by any
applicable Authority or subject to any Environmental Law; or (d) the presence of
which on the real property owned or leased by 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 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 EZ and SFX,
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
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<PAGE>
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, 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, trade SFXs,
drawing, plans, systems, methods, specifications, computer software programs,
tapes, discs and related data processing software (including without limitation
object and source codes) owned by such Person or in which it has an ownership
interest and all other manufacturing, engineering, technical, research and
development data and know-how made, conceived, developed and/or acquired by such
Person, which relate to the manufacture, production or processing of any
products developed or sold by such Person or which are within the scope of or
usable in connection with such Person's business as it may, from time to time,
hereafter be conducted or proposed to be conducted.
Law shall mean any (a) administrative, judicial, legislative or other
action, code, consent decree, constitution, decree, directive, enactment,
finding, guideline, law, injunction, interpretation, judgment, order, ordinance,
policy statement, proclamation, promulgation, regulation, requirement, rule,
rule of law, rule of public policy, settlement agreement, statute, or writ or
any Authority, domestic or foreign; (b) the common law, or other legal or
quasi-legal precedent; or (c) arbitrator's, mediator's or referee's award,
decision, finding or recommendation; including, in each such case or instance,
any interpretation, directive, guideline or request, whether or not having the
force of law including, in all cases, without limitation any particular section,
part or provision thereof.
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, in equity or in arbitration.
License Exchanges shall have the meaning given to it in Section
2.1(a)(ii).
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,
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<PAGE>
exception, reservation or limitation, right of way, and the like); conditional
sale, title retention or other similar agreement, arrangement, device or
restriction; preemptive or similar right; any financing lease involving
substantially the same economic effect as any of the foregoing; the filing of
any financing statement under the Uniform Commercial Code or comparable law of
any jurisdiction; restriction on sale, transfer, assignment, disposition or
other alienation; or any option, equity, claim or right of or obligation to, any
other Person, of whatever kind and character.
Like-Kind Exchange shall mean an exchange of assets of the nature
contemplated by the provisions of Section 1031 of the Code.
Loss and Expense shall have the meaning given to it in Section 8.2.
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 Fifty Thousand Dollars ($50,000) during any of
the last three fiscal years, (ii) extends for more than three (3) months, or
(iii) is not terminable on thirty (30) days or less notice without penalty or
other payment, (c) involves Indebtedness for Money Borrowed, (d) is or otherwise
constitutes a written agency, broker, dealer, license, distributorship, sales
representative or similar written agreement, or (e) accounted for more than
three percent (3%) of the revenues of the Future EZ Station or the Future SFX
Station in any of the last three fiscal years or is likely to account for more
than three percent (3%) of revenues of the Future EZ Station or the Future SFX
Station during the current fiscal year.
Multiemployer Plan shall mean a Plan which is a "multiemployer plan"
within the meaning of Section 4001(a)3 of ERISA.
Nonassumed Obligations shall have the meaning given to it in Section
2.2(b).
Notice of Disagreement shall have the meaning given to it in Section
2.2(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.
PBGC shall mean the Pension Benefit Guaranty Corporation and any Entity
succeeding to any or all of its functions under ERISA.
PBI shall have the meaning given to it in the Preamble
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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 Future EZ Station or the Future SFX Station, as the case may be.
Person shall mean any natural individual or any Entity.
Personal Property shall mean all of the machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, inventory,
spare parts and other tangible personal property which are owned or leased by
SFX or EZ, as the case may be, and used or useful as of the date hereof in the
conduct of the business or operations of the Future SFX Station or the Future EZ
Station, as the case may be, plus such additions thereto and deletions therefrom
arising in the ordinary course of business between the date hereof and the
Closing Date.
Pittsburgh Proration Schedule shall have the meaning given to it in
Section 2.2(d).
Plan shall mean, with respect to any Person and at a particular time,
any employee benefit plan which is covered by ERISA and in respect of which such
Person or an ERISA Affiliate is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA, but only to the extent that it covers or relates to any
officer, employee or other Person involved in the ownership and operation of the
Assets or the conduct of the business of any of the Stations.
Private Authorizations shall mean all approvals, concessions, consents,
franchises, licenses, permits, and other authorizations of all Persons (other
than Authorities) including without limitation those with respect to copyrights,
computer software programs, patents, service marks, trademarks, trade names,
technology and know-how.
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 which are owned or used by SFX or
EZ, as the case may be, as of the date hereof, in the operations of any Future
SFX Station or Future EZ Station, as the case may be.
Referee shall have the meaning given to it in Section 2.2(d).
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Regulations shall mean the federal income tax regulations promulgated
under the Code, as such Regulations may be amended from time to time. All
references herein to specific sections of the Regulations shall be deemed also
to refer to any corresponding provisions of succeeding Regulations, and all
references to temporary Regulations shall be deemed also to refer to any
corresponding provisions of final Regulations.
Representatives shall have the meaning given to it in Section 5.1(a).
SEC shall mean the United States Securities and Exchange Commission, or
any successor Authority.
Secret shall have the meaning given to it in the first Whereas
paragraph.
Secret-SFX Agreement shall have the meaning given to it in the first
Whereas paragraph.
Section 1031 Schedule shall have the meaning given to it in Section
2.1(b).
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.
SFX shall have the meaning given to it in the Preamble.
SFX Acquisition Agreements shall have the meaning given to it in the
first Whereas paragraph.
SFX Disclosure Schedule shall mean the SFX Disclosure Schedule dated as
of the date of this Agreement delivered by SFX to EZ.
SFX Financial Data shall have the meaning given to it in Section
3.2(a).
SFX Governmental Authorizations shall have the meaning given it in
Section 3.7(a).
SFX Holdings shall have the meaning given to it in the Preamble.
SFX Parties shall have the meaning given to it in the Preamble.
SFX Proration Schedule shall have the meaning given to it in Section
2.2(e).
SFX's knowledge (including the term "to the knowledge, information and
belief of SFX") means the knowledge of any SFX director or executive officer,
and that such Person, after reasonable inquiry of appropriate SFX officers and
reasonable review of appropriate SFX records,
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<PAGE>
to the extent customary in transactions such as the Exchange, shall have reason
to believe and shall believe that the subject representation or warranty is true
and accurate as stated.
SFX Trade Agreement shall mean any Contract relating to the Future SFX
Station pursuant to which any SFX Party is required to provide air time in
exchange for property or services other than cash.
Solvent shall mean, with respect to any Person on a particular date,
that on such date (i) the fair value of the assets of such Person (both at fair
valuation and at present fair saleable value) is, on the date of determination,
greater than the total amount of liabilities, including, without limitation,
contingent and unliquidated liabilities, of such Person, (ii) such Person is
able to pay all liabilities of such Person as they mature, and (iii) such Person
does not have unreasonably small capital with which to carry on its business. In
computing the amount of contingent or unliquidated liabilities at any time, such
liabilities will be computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.
Stations shall mean, collectively, the Future SFX Station and the
Future EZ Station.
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 Claim shall mean any Claim which relates to Taxes, including
without limitation the representations and warranties set forth in Section 3.11
or 4.11.
Tax Return or Returns shall mean all returns, consolidated or otherwise
(including without limitation information returns), required to be filed with
any Authority with respect to Taxes.
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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.
Trade Agreements shall mean, collectively, the SFX Trade Agreements and
the EZ Trade Agreements.
Transactions shall mean the Exchanges and all of the other transactions
hereunder or under the Collateral Documents.
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EXHIBIT 10.18
ASSET PURCHASE AGREEMENT
Dated as of May 7, 1997
Between
KKSJ, INC.
KKSJ LICENSE, INC.
and
AMERICAN RADIO SYSTEMS CORP.
AMERICAN RADIO SYSTEMS LICENSE CORP.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I................................................................... 2
DEFINED TERMS............................................................ 2
1.1 Defined Terms..................................................... 2
ARTICLE II.................................................................. 6
SALE AND PURCHASE OF ASSETS.............................................. 6
2.1 Agreement to Sell and Buy............................................ 6
2.2 Excluded Assets...................................................... 7
2.3 Purchase Price....................................................... 8
2.4 Adjustments and Prorations........................................... 8
2.5 Assumption of Liabilities and Obligations............................ 10
2.6 Allocation........................................................... 12
ARTICLE III................................................................. 12
REPRESENTATIONS AND WARRANTIES OF SELLER................................. 12
3.1 Organization, Standing and Authority............................... 12
3.2 Authorization and Binding Obligation............................... 13
3.3 Absence of Conflicting Agreements.................................. 13
3.4 Licenses........................................................... 14
3.5 Real Property...................................................... 14
3.6 Title to and Condition of Personal Property........................ 15
3.7 Contracts.......................................................... 16
3.8 Consents........................................................... 17
3.9 Trademarks, Trade Names and Copyrights............................. 17
3.10 Financial Statements.............................................. 18
3.11 Insurance......................................................... 18
3.12 Reports........................................................... 19
3.13 Employee Benefit Plans............................................ 19
3.14 Labor Relations................................................... 20
3.15 Taxes............................................................. 21
3.16 Claims; Legal Actions............................................. 22
3.17 Laws.............................................................. 22
3.18 Undisclosed Liabilities........................................... 22
3.19 Books and Records................................................. 23
3.20 Assets............................................................ 23
3.21 No Adverse Developments........................................... 23
3.22 Environment, Health and Safety.................................... 23
3.23 Full Disclosure................................................... 24
<PAGE>
ARTICLE IV.................................................................. 24
REPRESENTATIONS AND WARRANTIES OF BUYER.................................. 24
4.1 Organization, Standing and Authority............................... 24
4.2 Authorization and Binding Obligation............................... 24
4.3 Absence of Conflicting Agreements or Consents...................... 25
4.4 Qualification...................................................... 26
4.5 Full Disclosure.................................................... 26
ARTICLE V................................................................... 26
COVENANTS OF SELLER...................................................... 26
5.1 Pre-Closing Covenants.............................................. 26
5.2 Post-Closing Covenants............................................. 30
ARTICLE VI.................................................................. 31
COVENANTS OF BUYER....................................................... 31
6.1 Inconsistent Action................................................ 31
ARTICLE VII................................................................. 31
SPECIAL COVENANTS AND AGREEMENTS......................................... 31
7.1 FCC Consent....................................................... 31
7.2 Control of the Station............................................ 32
7.3 Accounts Receivable............................................... 32
7.4 Taxes, Fees and Expenses.......................................... 33
7.5 Brokers........................................................... 34
7.6 Bulk Sales Law.................................................... 34
7.7 Confidentiality................................................... 34
7.8 Cooperation....................................................... 35
7.9 Risk of Loss...................................................... 36
ARTICLE VIII................................................................ 37
CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER............................ 37
8.1 Conditions to Obligations of Buyer................................. 37
8.2 Conditions to Obligations of Seller................................ 40
ARTICLE IX.................................................................. 41
CLOSING AND CLOSING DELIVERIES........................................... 41
9.1 Closing............................................................ 41
9.2 Deliveries by Seller............................................... 41
9.3 Deliveries by Buyer................................................ 42
<PAGE>
ARTICLE X................................................................... 43
RIGHTS OF BUYER AND SELLER............................................... 43
10.1 Termination....................................................... 43
10.2 Specific Performance.............................................. 44
ARTICLE XI.................................................................. 45
SURVIVAL OF REPRESENTATIONS AND.......................................... 45
11.1 Representations and Warranties.................................... 45
11.2 Indemnification by Seller......................................... 45
11.3 Indemnification by Buyer.......................................... 46
11.4 Procedure for Indemnification..................................... 47
ARTICLE XII................................................................. 49
MISCELLANEOUS............................................................ 49
12.1 Notices........................................................... 49
12.2 Benefit and Binding Effect........................................ 50
12.3 Headings.......................................................... 51
12.4 Gender and Number................................................. 51
12.5 Counterparts...................................................... 51
12.6 Attorneys' Fees................................................... 51
12.7 Entire Agreement.................................................. 51
12.8 Choice of Law..................................................... 52
<PAGE>
EXHIBITS
Exhibit A - Escrow Deposit Agreement
Exhibit B - Non-Competition Agreement
Exhibit C - Seller's Certificate
Exhibit D - Opinion of Seller's Counsel
Exhibit E - Opinion of Seller's FCC Counsel
Exhibit F - Buyer's Certificate
Exhibit G - Opinion of Buyer's Counsel
<PAGE>
SCHEDULES
2.5(b) Air Time Due Client
3.4 Licenses
3.5 Leased Property
3.6 Title to Condition of Personal Property
3.7 Contracts
3.8 Consents
3.9 Trademarks, Trade Names and Copyrights
3.10 Financial Statements
3.11 Insurance
3.13(a) List of Employees
3.13(b) Employee Benefit Plans
3.14 Labor Relations
3.16 Claims and Legal Action
3.18 Liabilities
3.22 Environmental, Health & Safety
<PAGE>
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT, dated as of May 7, 1997, is by and
between AMERICAN RADIO SYSTEMS CORP., a Delaware corporation, and AMERICAN RADIO
SYSTEMS LICENSE CORP., a Delaware corporation (collectively, "Seller"), and
KKSJ, INC., a Delaware corporation, and KKSJ LICENSE, INC., a Delaware
corporation (collectively, "Buyer").
P R E M I S E S:
A. Seller owns and operates radio station KKSJ-AM in San Jose,
California ("Station") pursuant to licenses issued by the Federal Communications
Commission (the "FCC").
B. Seller desires to sell and Buyer desires to buy certain of the assets
used or useful in the operation of the Station and by so doing to acquire the
radio broadcast business presently conducted by the Station, upon the terms and
conditions hereinafter 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:
<PAGE>
ARTICLE I
DEFINED TERMS
1.1 Defined Terms. The following terms shall have the
following meanings in this Agreement:
"Accounts Receivable" means the rights of Seller to payment for
advertising broadcast by Station prior to the Clos ing Date.
"Assets" means all the tangible and intangible assets owned,
leased or licensed by Seller directly and solely for Station, and used by or
useful for the Station, but specifically excluding those assets specified in
Section 2.2 hereof.
"Assumed Contracts" means (i) all Contracts described and set
forth on Schedule 3.7 which are expressly designated by an asterisk as being
assumed by Buyer, (ii) all other non-trade advertising Contracts for cash
entered into by Seller for Station which are terminable on not more than 30 days
notice, (iii) all contracts entered into by Seller prior to the date of this
Agreement that require payment or benefits by Seller of less than $1,000 for
each such Contract and $3,500 in the aggregate for all such Contracts, (iv) all
Contracts related directly and solely to the Station, entered into by Seller on
or after the date of this Agreement and before the Closing in
<PAGE>
accordance with the applicable provisions of Section 5.1(a), and (v) Trade Deals
described in Section 2.5(b).
"Chose in Action" means a right to receive or recover property,
debt or damages on a cause of action, whether pending or not and whether arising
in contract, tort or otherwise. The term shall include, but not be limited to,
rights to judgments, settlements and proceeds from judgments or settlements.
"Closing" means the consummation of the transactions
contemplated by this Agreement in accordance with the provisions of Article IX
hereof.
"Closing Date" means the date of the Closing specified
in Article IX hereof.
"Code" means the Internal Revenue Code of 1986, as
amended to the date hereof.
"Consents" means the FCC Consent, the consents of third parties
necessary to transfer the Assets of Seller to Buyer or otherwise to consummate
the transactions contemplated hereby.
"Contracts" means all agreements, written or oral (including any
amendments and other modifications thereto), to which Seller is a party and
which relate directly and solely to the Assets or the business or operations of
the Station.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
<PAGE>
"Escrow Agent" means Media Venture Partners, Ltd.
"Escrow Deposit" means the sum of One Hundred Thousand Dollars
($100,000) which will be deposited by Buyer with the Escrow Agent in accordance
with the provisions of the Escrow Deposit Agreement.
"Escrow Deposit Agreement" means the Escrow Deposit Agreement
among Seller, Buyer and the Escrow Agent substantially in the form of Exhibit A
attached hereto.
"FCC" means the Federal Communications Commission.
"FCC Consent" means actions by the FCC granting its
consent to the assignment of the FCC Licenses of the Station to
Buyer as contemplated by this Agreement.
"FCC Licenses" means all of the licenses, permits and other
authorizations issued by the FCC to Seller and applications to the FCC directly
and solely relating to or used in the business or operations of the Station,
including those listed on Schedule 3.4 hereto with any additions thereto between
the date hereof and the Closing Date.
"Final Order" means written action or order issued by the FCC
setting forth an 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
<PAGE>
stay, and the time for filing any such requests and for the FCC to set aside the
action on its own motion has expired or (ii) in the event of review,
reconsideration or appeal, such review, re consideration or appeal has been
denied and the time for further review, reconsideration or appeal has expired.
"Financial Statements" means the financial statements of the
Station as described in Section 3.10 hereof.
"Intellectual Property" has the meaning assigned to
such term in Section 2.1.
"Licenses" means the FCC Licenses and all of the licenses,
permits and other authorizations issued by any other federal, state or local
governmental authorities to Seller used in the business and operations of the
Station, including those listed on Schedule 3.4 hereto with any additions
thereto between the date hereof and the Closing Date.
"LMA" means the Local Marketing Agreement dated as of
the date hereof by and between KKSJ License, Inc. and American
Radio Systems License, Inc.
"Non-Competition Agreement" means the agreement among Buyer,
Seller and Mr. Steve Dodge substantially in the form attached hereto as Exhibit
B.
"Personal Property" means all of the machinery, equip
ment, computer programs, computer software, tools, motor
<PAGE>
vehicles, furniture, leasehold improvements, office equipment, supplies, plant,
spare parts and other tangible or intangible personal property which are owned
or leased by Seller directly and solely in the business and operation of the
Station all of which is listed on Schedule 3.6 hereto together with any
additions or deletions thereto permitted by Buyer or this Agreement between the
date hereof and the Closing Date.
"Purchase Price" means the consideration payable to Seller for
the Assets as provided in Section 2.3 hereof.
"Real Property" means all of Seller's leasehold inter ests,
easements, licenses, rights to access, and rights-of-way which are used in the
business and operations of the Station, which are identified in Schedule 3.5
hereto.
"Trade Deals" means the exchanges by the Station of its
advertising time for goods or services, other than solely in connection with the
licensing of programs and programming material.
<PAGE>
ARTICLE II
SALE AND PURCHASE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and conditions set
forth in this Agreement, Seller hereby agrees to transfer and deliver to Buyer
on the Closing Date, and Buyer agrees to purchase on the Closing Date all of the
Station's Assets, free and clear of any liabilities, mortgages, liens, pledges,
conditions or encumbrances of any nature whatsoever (except for those permitted
in accordance with Section 3.6 hereof), including but not limited to:
(1) Personal Property;
(2) Real Property;
(3) FCC Licenses and the other Licenses;
(4) Assumed Contracts;
(5) All trademarks, trade names, service marks, copy rights
owned by Seller or in which Seller has an interest (for which a consent
is not required or can otherwise be obtained), patents and applications
therefor and all other similar intangible assets, in each case relating
to the Station, including, but not limited to the call letters KKSJ-AM
and KKSJ and the goodwill related to the foregoing (the "Intellectual
Property");
(6) All of Station's technical information and data, machinery
and equipment warranties, if any, (to the extent such warranties are
assignable), maps, plans, diagrams, blueprints, and schematics relating
to the Station, if any, including filings with the FCC which relate to
the Station, and goodwill relating to the foregoing;
(7) All books and records relating to the business and
operations of the Station, including, without limitation, (a)
<PAGE>
executed copies of the Assumed Contracts or, if no executed agreement
exists, summaries of the Assumed Contracts transferred pursuant to
Section 2.1(4) hereof and (b) all records required by the FCC to be kept
by Station; all subject to the right of Seller to have the books and
records made reasonably available to Seller for tax and corporate
purposes for a period of three (3) years after the Closing;
(8) To the extent assignable, all computer programs and software
(other than software for accounting purposes), and all rights and
interests in and to computer programs and software (other than software
for accounting purposes) used in connection with the business and
operations of the Station; and
(9) All intangible assets of Seller relating to the Station not
specifically described above, including, without limitation, goodwill.
2.2 Excluded Assets. The Assets shall exclude the following
assets:
(1) Seller's cash on hand as of the Closing Date and all other
cash in any of Seller's bank or savings accounts; notes receivable,
letters of credit or other similar items; and any stocks, bonds,
certificates of deposit and similar investments;
(2) Accounts Receivable;
(3) The studio building of the Seller at 399 North
Third Street in Campbell, California;
(4) Seller's corporate minute books and other books and records
relating to internal corporate matters and any other books and records
not related to the Station or its business or operations;
(5) 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 which relate solely to the period prior to the Closing
Date;
(6) All insurance contracts (except as otherwise
provided in Section 7.9);
<PAGE>
(7) All contracts listed on Schedule 3.13 and all assets or
funds held in trust, or otherwise, associated with or used in connection
with Seller's employee benefit plans, programs or arrangements;
(8) All computer software used for accounting purposes
relating to the Station; and
(9) All Choses in Action of Seller which existed on or prior to
the Closing Date and which relate entirely to the period before the
Closing Date.
2.3 Purchase Price. The Purchase Price for the Assets is
Three Million One Hundred Ninety Thousand Dollars ($3,190,000),
which amount shall be payable as follows:
(i) the Escrow Deposit, which shall be deposited
by Buyer with the Escrow Agent on the execution of this Agreement and shall be
transferred to Seller by wire transfer at the Closing and credited to the
Purchase Price; and
(ii) Three Million Ninety Thousand Dollars
($3,090,000) of the Purchase Price shall be paid to the Seller or its designee
at Closing by wire transfer to an account designated by Seller of which Buyer is
notified in writing at least two (2) business days prior to the Closing Date.
2.4 Adjustments and Prorations.
(a) All revenues arising from the operation of the Sta tion
earned or accrued up until midnight on the day prior to the Closing Date, and
all expenses, costs and liabilities, arising
<PAGE>
therefrom incurred, accrued or payable up until such time in cluding, without
limitation, business, license, utility charges, real and personal property taxes
and assessments levied against the Assets, property and equipment rentals,
applicable copyright or other fees, sales and service charges, taxes, wages,
salaries, vacation and sick pay shall be prorated between Buyer and Seller in
accordance with the principle that (i) Seller shall receive all revenues,
refunds and deposits of Seller held by third parties, and shall be responsible
for all expenses, costs and liabilities incurred, payable or allocable to the
conduct of the business and operations of the Station for the period prior to
the Closing Date and (ii) Buyer shall receive all revenues earned or accrued,
and shall be responsible for all expenses, costs and liabilities incurred,
payable or allocable to the conduct of the business and operations of the
Station for the period commencing on and continuing after the Closing Date.
Seller will be liable for all of the costs of employee compensation, including,
but not limited to (i) all taxes and related contributions, vacations and sick
pay properly attributable to or accruable on account of ser vice with Seller
through midnight on the date prior to the Closing Date and (ii) all group
medical, dental or death benefits for expenses incurred, related to or arising
from, events occurring on or prior to midnight on the date prior to the
<PAGE>
Closing Date, or death or disability occurring on or prior to midnight on the
date prior to the Closing Date, whether reported by the Closing Date or
thereafter; Buyer will be liable for all of the costs of employee compensation,
if any, properly attributable or accruable thereafter on account of service with
Buyer. Except as provided in Section 2.5(b), Trade Deals shall not be adjusted
or pro rated.
(b) Adjustments or prorations pursuant to this Section 2.4 will,
insofar as feasible, be determined and paid on the Closing Date based upon
Seller's calculation delivered to Buyer ten (10) days prior to the Closing Date
and approved by Buyer, with final settlement and payment by the appropriate
party oc curring no later than sixty (60) days after the Closing Date. The
determination of the amount of adjustment under Section 2.4 shall be made by
Buyer in accordance with generally accepted accounting principles, consistently
applied. Upon such deter mination, within sixty (60) days after the Closing
Date, Buyer shall submit such determination to Seller for approval. If Seller
disagrees with the determination made by Buyer of the adjustment, Seller shall
give prompt written notice thereof, but in no event later than twenty (20) days
after receipt of such determination, specifying in reasonable detail the nature
and extent of such disagreement, and Buyer and Seller shall have a
<PAGE>
period of thirty (30) days in which to resolve such disagreement. If the parties
are unable to resolve such disagreement within such 30-day period, the matter
shall be submitted to Price Waterhouse, an independent certified public
accounting firm, which accounting firm shall be directed to submit a final
resolu tion within thirty (30) days. Such accounting firm's determina tion shall
be binding on Buyer and Seller. Each party shall bear the fees and expenses of
its own representatives, including its independent accountants, if any, and
shall share equally the fees and expenses of any firm selected to resolve any
disagreement between the parties. Within ten (10) business days following a
final determination hereunder, the party obligated to make payment will make the
payments determined to be due and owing in accordance with this Section 2.4.
2.5 Assumption of Liabilities and Obligations. (a) As of the Closing
Date, Buyer shall assume and undertake to pay, dis charge and perform all the
obligations and liabilities of Seller relating to the Station under the Licenses
and the Assumed Con tracts assigned to Buyer relating to the time period
beginning on or arising out of events occurring on or after the Closing Date,
except to the extent expressly provided for otherwise in the LMA. All other
obligations and liabilities of Seller, including, without limitation, (i)
obligations or liabilities under any
<PAGE>
contract not included in the Assumed Contracts, (ii) obligations or liabilities
under any Assumed Contract for which a Consent, if required, has not been
obtained as of the Closing, (iii) any obligations or liabilities arising under
the Assumed Contracts or otherwise relating to the time period prior to the
Closing Date or arising out of events occurring prior to the Closing Date
(including liabilities for breach by Seller prior to Closing) and (iv) any
forfeiture, claim or pending litigation or proceeding relating to the business
or operations of the Station, prior to the Closing Date, shall remain and be the
obligation and liability solely of Seller, except to the extent expressly
provided for otherwise in the LMA. Other than as specified herein, Buyer shall
assume no liabilities or obligations of Seller.
(b) Schedule 2.5(b), captioned "Air Time Due Client", contains a
description of all of the Trade Deals on the date hereof and correctly sets
forth Seller's current obligations un der the caption "Air Time Due Client"
under each such Trade Deal. On the Closing Date, Buyer shall assume the Trade
Deals listed on Schedule 2.5(b) and all other Trade Deals entered into by Seller
between the date hereof and the Closing Date; provided, however, if the Seller's
aggregate obligations for "Air Time Due Client" as of the Closing Date exceeds
$5,000 then all amounts in excess
<PAGE>
of $5,000 shall be considered an operating expense of Seller to be pro-rated in
accordance with Section 2.4. The Trade Deals assumed by Buyer pursuant to the
terms of this Section 2.5(b) shall be considered Assumed Contracts.
2.6 Allocation. The Purchase Price shall be allocated to the Assets in a
manner which complies with Section 1060 of the Code with respect to the
allocation of the Purchase Price among the Assets. The allocation shall be
consistently reported by Buyer and Seller on Form 8594 in compliance with
Section 1060 based upon an asset valuation supplied by Broadcast Investment
Analysts (BIA). The cost of the appraisal shall be shared equally by Buyer and
Seller. The appraisal shall be provided to Seller no later than January 31,
1998, but no earlier than ninety (90) days after the Closing. For purposes of
allocation, the Non-Competition Agreement shall be allocated a value of $10,000.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
The Seller represents and warrants to Buyer as follows:
3.1 Organization, Standing and Authority. Each Seller is now and on the
Closing Date shall be a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and has all necessary power
and
<PAGE>
authority to own, lease and operate the Assets and to carry on the business of
the Station as now being conducted and as proposed to be conducted by Seller
between the date hereof and the Closing Date.
3.2 Authorization and Binding Obligation. Each Seller has the requisite
power and corporate authority to execute, deliver, and perform this Agreement
and all other agreements to be executed and delivered by it hereunder or in
connection herewith, and all necessary corporate actions on the part of Seller
have been duly and validly taken to authorize the execution, delivery and
performance of this Agreement and such other agreements and instruments to be
executed and delivered by Seller. This Agreement has been duly executed and
delivered by Seller and constitutes the legal, valid and binding obligation of
Seller enforceable against it in accordance with its terms.
3.3 Absence of Conflicting Agreements. Neither the execution, delivery
and performance of this Agreement and such other agreements and instruments
(with or without the giving of notice, the lapse of time, or both) nor the
consummation of the transactions contemplated hereby, (i) conflicts with any pro
vision of the Certificate of Incorporation or Bylaws of Seller; (ii)conflicts
with, results in a breach of, or constitutes a default under any applicable law,
judgment, order, ordinance,
<PAGE>
decree, rule, regulation or ruling of any court or governmental instrumentality;
(iii) results in a breach of, conflicts with, constitutes a default under or
permits any party to terminate, modify, accelerate the performance of or cancel
the terms of, any agreement, lease, license, indenture, instrument of
indebtedness or other obligations to which Seller is a party or by which Seller
may be bound; or (iv) creates any liability, mortgage, lien, pledge, condition
or encumbrance of any nature whatsoever upon any of the Assets.
3.4 Licenses. Schedule 3.4 hereto is a true and complete list of the
Licenses. The Licenses comprise all of the licenses, permits and other
authorizations necessary under the law to conduct the business and operations of
the Station in the manner and to the full extent it is now being conducted, and
none of the Licenses is subject to any restriction or condition which would
limit the full operation of the Station as presently operated. The Licenses are
in full force and effect, and the conduct of the business and operations of the
Station is in accordance therewith. The Station is operating in accordance with
the Licenses and in compliance with the Communications Act of 1934, as amended
and the rules, regulations and policies of the FCC and all other applicable
laws. The Station is currently being operated at 5,000 watts day and night.
<PAGE>
3.5 Real Property. Schedule 3.5 hereto contains a list of the leasehold
interests (including all improvements thereon) which comprise all leasehold
interests used in connection with or necessary to conduct the business and
operations of the Station as now conducted. Except as set forth on Schedule 3.5,
there are no parties in possession of all or any portion of the Real Property
other than Seller, whether as lessees, tenants at will, trespassers or
otherwise. To the best knowledge of Seller, no zoning, building or other
federal, state or municipal law, ordinance, regulation or restriction is
violated by the continued maintenance, operation or use of the Real Property or
any tract or portion thereof or interest therein in its present manner. The
current use of the Real Property and all parts thereof as aforesaid does not
violate any restrictive covenants of record affecting the real property. All
necessary licenses, permits and authorizations required by any governmental
authority with respect to the Real Property have been obtained, have been
validly issued and are in full force and effect. Except as otherwise disclosed
on Schedule 3.5, Seller is not, and to Seller's knowledge, no other party is in
material default under any lease or other instrument of conveyance. Subject to
obtaining applicable Consents, Seller has the full legal power and authority to
assign its rights under the leases listed in
<PAGE>
Schedule 3.5 hereto to Buyer. All leasehold interests (including the
improvements thereon) are available for immediate use in the conduct of the
business and operations of the Station.
3.6 Title to and Condition of Personal Property. Schedule 3.6 hereto
contains a description of the items of Personal Property which comprise all
Personal Property directly used in connection with the business and operations
of the Station (having a replacement value of not less than $100 for each item).
Except as set forth on Schedule 3.6 hereto, Seller has good title to all
Personal Property and none of the Personal Property is subject to any security
interest, mortgage, pledge, conditional sales agreement or other lien or
encumbrance, except for (i) liens for current taxes and other governmental
charges not yet due and payable, (ii) encumbrances which in the aggregate do not
affect the use or value of the Personal Property and (iii) other liens which
shall be discharged or removed by Seller prior to or at Closing. Seller is not,
and to Seller's knowledge no other party is, in material default under any of
the leases, licenses and other agreements relating to the Personal Property.
Except as otherwise disclosed in Schedule 3.6 hereto, the Personal Property is
in good operating condition and repair (ordinary wear and tear excepted),
permits the operation of the Station as currently conducted without any
immediate need for replacement
<PAGE>
and is available for immediate use in the business and operation of the Station.
3.7 Contracts. Schedule 3.7 and Schedule 3.13 hereto con tain
descriptions of all the Contracts in effect on the date hereof relating directly
and solely to the Station other than Contracts for (i) the sale of advertising
time on the Station which can be canceled on not more than thirty (30) days
notice (not including Trade Deals) and (ii) all other non-advertising Contracts
where the obligations of Seller are less than $1,000 for each such contract and
with aggregate obligations for all such contracts relating to the Station of
less than $3,500. All of the Assumed Contracts are in full force and effect, and
are valid, binding and enforceable in accordance with their terms. Except as
otherwise disclosed on Schedule 3.7, there is not under any Assumed Contract any
default or breach by Seller, or to Seller's knowledge, any other party. Schedule
3.7 separately identifies each program license, agreement, and advertising
agreement required to be set forth thereon, and correctly sets forth the balance
of Seller's rights and obligations under each agreement listed thereon as of the
date hereof.
3.8 Consents. Schedule 3.8 sets forth those Assumed Contracts which
require consent for assignment to Buyer and all other consents required to
consummate the transactions
<PAGE>
contemplated hereby. Except for the Consents described in Schedule 3.8 hereto,
no consent, authorization, approval, order, license, certificate or permit of or
from, or declaration or filing with, any federal, state, local or other
governmental authority or any court or other tribunal, and no consent or waiver
of any party to any contract to which Seller is a party is required or
declaration to or filing with any governmental or regulatory authority, or any
other third party is required (i) execute this Agreement, (ii) to consummate
this Agreement and the transactions contemplated hereby, (iii) to permit Seller
to assign or transfer the Assets to Buyer or (iv) to enable Buyer to conduct the
business or operations of the Station in the same manner as such business and
operations are presently conducted.
3.9 Trademarks, Trade Names and Copyrights. Schedule 3.9 hereto is a
true and complete list of all copyrights, trademarks, trade names, patents and
applications, if any, used directly and solely in connection with the business
and operations of the Station. The Intellectual Property includes all
copyrights, trademarks, tradenames, patents and applications; if any, and all
licenses (other than program licenses), patents, permits, jingles, privileges,
logos, computer software, data and documentation, confidential business
information and other similar intangible property rights and interests issued to
or
<PAGE>
owned by Seller, or under which Seller is licensed or franchised relating
directly and solely to the conduct of the business and operations of the
Station. Schedule 3.9 describes all Intel lectual Property, if any, which are
licensed to third parties. Neither Seller nor any of its affiliates or their
respective officers, directors or employees has received any notices of
infringement, misappropriation, or conflict from any third party with respect to
the Intellectual Property; and to Seller's knowl edge, Seller has not infringed,
misappropriated or otherwise con flicted with any proprietary rights of any
third parties.
3.10 Financial Statements. Schedule 3.10 hereto contains copies of the
financial statement of operating income pertaining to the Station, as at and for
Station's fiscal year ended December 31, 1996 (the "1996 Financials") and as at
and for the quarter ended March 31, 1997 (the "Financial") (the 1996 Financials
and the Stub Financials are collectively referred to herein as the "Financial
Statements"). The Financial Statements are true and correct and present fairly
the operating income and financial condition of the Station as at their date.
3.11 Insurance. Schedule 3.11 hereto comprises a true and complete list
of all insurance policies of Seller covering any of the Assets, employees or
business and operations of the Station except for employee benefit plans. All
policies of insurance
<PAGE>
listed in Schedule 3.11 hereto are in full force and effect. All premiums have
been paid in full and Seller is not in default with respect to its obligations
thereunder.
3.12 Reports. During Seller's period of ownership of the Station, all
material returns, reports and statements which the Station is 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. The FCC public inspection file for
the Station is current and complete in all material respects.
3.13 Employee Benefit Plans. (a) Schedule 3.13(a) contains a complete
list of all employees of the Station, date of hire, job description and payroll
information, as at December 31, 1996. Since December 31, 1996, there has been no
increase in compensation or bonuses payable to employees except as otherwise
disclosed to Buyer in writing. Seller agrees to terminate all employees listed
on Schedule 3.13(a) on the day prior to the Closing Date, except for those
employees, if any, that Buyer notifies Seller in writing at least ten (10) days
prior to the Closing Date that it wishes to retain.
(b) Schedule 3.13(b) contains a true and complete list as of the
date of this Agreement of all employment agreements,
<PAGE>
employee benefit plans or arrangements currently applicable to the employees of
Seller employed at the Station and of all fixed or contingent liabilities or
obligations of Seller with respect to any person now employed at the Station,
including pension or thrift plans, individual or supplemental pension or accrued
compensation arrangements, contributions to hospitalization or other health or
life insurance programs, incentive plans, bonus arrangements and vacation, sick
leave, disability and termination arrangements or policies. Seller has furnished
Buyer with a summary of all employment practices, a summary of all currently
applicable plan documents, trust documents, insurance contracts, contracts with
employees and plan description of the written plans and arrangements listed in
Schedule 3.13(b) hereto relating to the Station, and with descriptions, in
writing, of the unwritten plans and arrangements listed in Schedule 3.13(b)
hereto relating to the Station. All employee benefits and wel fare plans or
arrangements listed in Schedule 3.13(b) hereto were established and have been
executed, managed and administered without material exception in accordance with
all applicable requirements of the Code and ERISA, as amended, and of other
applicable laws. There exists no action, suit or claim (other than routine
claims for benefits) with respect to any of such plans or arrangements pending
or threatened against any of such
<PAGE>
plans or arrangements, nor any facts which could give rise to any such action,
suit or claim.
3.14 Labor Relations. As of the date hereof, Seller is not a party to
nor subject to any collective bargaining agreements with respect to the Station
and Seller does not have any written or oral contracts of employment with any
employee of the Station, other than those listed in Schedule 3.13 hereto. As of
the date hereof, to the best of Seller's knowledge, Seller, in the opera tion 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; sex, age,
national origin, race and religious discrimination; and the payment of social
security and other payroll related taxes, and as of the date hereof Seller has
not received any notice alleging that it has failed to comply with any such
laws, rules or regulations in the operation of the Station. No controversies,
disputes or proceedings are pending or, to the best knowledge of Seller
threatened, between Seller and its employees (singly or collectively) of the
Station except as disclosed in Schedule 3.14 hereto. No labor union or other
collective bargaining unit represents or claims to represent any of the
employees of the Station as of the date hereof.
<PAGE>
3.15 Taxes. Except to the extent set forth in Schedule 3.15, Seller has filed or
caused to be filed all federal, state, county, local or city tax returns
affecting the Station or the Assets which are required to be filed by Seller,
and all taxes assessments and other governmental charges which are due and
payable have been timely paid. There are no tax liens upon the Station or the
Assets. All tax reports filed by Seller fairly reflect the taxes of Seller for
the periods covered thereby and the Seller has received no notice of any tax
deficiency or delinquency. All monies required to be withheld by Seller from
employees or collected from customers for income taxes, social security and
unemployment insurance taxes and sales, excise and use taxes, and the portion of
any such taxes to be paid by Seller to governmental agencies or set aside in
accounts for such purposes have been so paid or set aside, or such monies have
been approved, reserved against and entered upon the books and Financial
Statements.
3.16 Claims; Legal Actions. As of the date hereof, except as set forth
in Schedule 3.16 hereto, there is no 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
Seller's knowledge, threatened against or relating to the Station, the
<PAGE>
Assets, or the business and operations of the Station. All claims listed on
Schedule 3.16 will be satisfied on or prior to the Closing Date.
3.17 Laws. Seller has complied in all respects with (i) the Licenses and
(ii) all material applicable federal, state and local laws, rules, regulations,
ordinances, judgments, orders and decrees. Neither the ownership or use of the
properties of Sel ler relating to the Station nor the conduct of the business
and operations of the Station conflict with the rights of any other person, firm
or corporation.
3.18 Undisclosed Liabilities. With respect to the Station or the Assets,
except as set forth in Schedule 3.18 hereto or otherwise disclosed in this
Agreement, Seller has no liability, secured or unsecured (whether absolute,
accrued, contingent or otherwise and whether due or to become due) whether
within or outside the ordinary course of business consistent with past
practices, none of which individually or in the aggregate are materially adverse
to the Assets or operations of the Station.
3.19 Books and Records. The books of account of the Station and other
records of the Seller relating to the Station are complete and correct in all
material respects. At the Closing, all such books and records shall be located
at the business of fice of the Station, except for the excluded books and
records.
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3.20 Assets. The Assets include all assets used in connec tion with the business
of the Station as currently conducted and all assets which permit the operation
of the Station as currently conducted (having a value in excess of $100).
3.21 No Adverse Developments. Since December 31, 1996 there has not
occurred:
(a) any sale, lease, transfer, assignment, abandonment
or other disposition of any of the Assets of the Station
other than obsolete Assets; or
(b) except as otherwise expressly disclosed on any of the
Schedules hereto or otherwise expressly disclosed to Buyer in writing,
any action or failure to act, which if it occurs after the date of this
Agreement but prior to Closing, would constitute a breach of any
covenant or representation set forth in this Agreement. 3.22
Environment, Health and Safety.
(a) Except as expressly set forth on Schedule 3.22, Seller has
obtained all permits and licenses required under ap plicable law, and has
complied in all material respects with and is in compliance with all such
permits and licenses and laws and orders relating to, public health and safety,
worker health and safety and pollution or protection of the environment (col
lectively, "Health, Safety and Environmental Requirements").
<PAGE>
(b) Except as expressly set forth on Schedule 3.22, no facts, events or
conditions relating to the present facilities or operations of the Station or,
to Seller's knowledge, their pre decessors interfere with such operations or
prevent continued compliance with, or give rise to any common law or statutory
liability or remediation under, any Health, Safety and Environ mental
Requirement.
3.23 Full Disclosure. No representation or warranty made by Seller
herein nor any certificate, document or other written instrument furnished or to
be furnished pursuant hereto contains or will contain any untrue statement of a
material fact nor shall any such certificate, document or written instrument
omit any material fact necessary in order to make any statement herein or
therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization, Standing and Authority. Each Buyer is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Delaware, and is duly qualified to conduct business and is in good
standing in the State of California.
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4.2 Authorization and Binding Obligation. Each Buyer has the requisite power and
authority to execute, deliver, and perform this Agreement and all other
agreements to be executed and delivered by it hereunder or in connection
herewith and all necessary action on the part of Buyer has been duly and validly
taken to authorize the execution, delivery and performance of this Agreement and
such other agreements and instruments to be executed and delivered by Buyer.
This Agreement has been duly executed by Buyer and constitutes the legal, valid,
and binding obligation of Buyer, enforceable against Buyer in accordance with
its terms.
4.3 Absence of Conflicting Agreements or Consents. Subject to obtaining
the Consents and any consent required by Buyer's lenders, no consent,
authorization, approval, order, license, certificate or permit of or from, or
declaration or filing with any federal, state, local or other governmental
authority or any court or other tribunal, and no consent or waiver of any party
to any material contract to which Buyer is a party is required for the
execution, delivery and performance of this Agreement or any of the agreements
or instruments contemplated hereby. Neither the execution, delivery and
performance of this Agreement and such other agreements and instruments (with or
without the giving of notice, the lapse of time, or both) nor the consummation
of
<PAGE>
the transactions contemplated hereby (i) conflicts with the Certificate of
Incorporation of Buyer; (ii) except for the necessity of obtaining applicable
Consents and any consent required by Buyer's lenders, conflicts with, results in
a breach of, or constitutes a default under any applicable law, judgment, order,
injunction, decree, rule, regulation or ruling of any court or governmental
instrumentality or (iii) except for the necessity of obtaining applicable
Consents and any consent required by Buyer's lenders, conflicts with, results in
a breach of, constitutes a default under, permits any party to terminate,
modify, accelerate the performance of or cancel the terms of, any agreement,
lease, instrument of indebtedness, license or other obligations to which Buyer
is a party, or by which Buyer may be bound, such that Buyer could not acquire or
operate the Assets.
4.4 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 (including financial qualification), permits and
authorizations listed on Schedule 3.4 hereto, or as an owner and/or operator of
the Stations' Assets.
4.5 Full Disclosure. No representation and warranty made by Buyer herein
nor any certificate, document or other written in
<PAGE>
strument furnished or to be furnished pursuant hereto contains or will contain
any untrue statement of a material fact nor shall such representations and
warranties omit any statement necessary in order to make any material statement
contained herein or therein not misleading.
ARTICLE V
COVENANTS OF SELLER
5.1 Pre-Closing Covenants. Except as contemplated or required by this
Agreement or the LMA, commencing on the date hereof until the Closing Date,
Seller shall cause the Station to be operated in the ordinary course of business
in accordance with past practices, provided, however:
(a) Negative Covenants. Seller shall not do any of the following
without the prior written consent of the Buyer:
(1) Compensation. Except in accordance with normal past
practices or reasonable bonuses relating to the Closing hereunder, (a) Increase
the compensation of any person employed in connection with the conduct of the
business or operations of the Station, (b) pay or grant 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, or (c) enter into any
employment, severance or similar
<PAGE>
agreement with any employee of the Station which does not by its terms
terminate, or cannot be terminated or satisfied by Seller without premium or
penalty, prior to or at the Closing;
(2) Contracts. (a) Modify, amend or terminate any of the
Assumed Contracts or (b) enter into other non-advertising Contracts obligating
Seller to provide payments or benefits other than advertising time in excess of
$1,000 each over the life of the Contract or $3,500 in the aggregate. Schedule
3.7 will be amended and supplemented to include any Contracts permitted to be
entered into, amended or approved pursuant to this paragraph 5.1(a)(2);
(3) Disposition of Assets. Sell, assign, lease, or
otherwise transfer or dispose of, or agree to sell, assign, lease or otherwise
transfer or dispose of, any of the Assets, other than obsolete Assets or in
connection with the acquisition of replacement property of equivalent kind and
value;
(4) Encumbrances. Create or assume any mortgage, lien,
pledge, condition, charge or encumbrance of any nature whatsoever, or permit to
exist any liability, mortgage, lien, pledge, condition, charge or encumbrance of
any nature whatso ever, upon the Assets, except for those in existence on the
date of this Agreement and disclosed on Schedules 3.5 and 3.6 hereto;
<PAGE>
(5) FCC Licenses. Do any act or fail to do any act which
would result in the expiration, revocation, suspension or modification of any of
the FCC Licenses;
(6) Labor Relations. Except as required by law, enter
into any collective bargaining agreement or, through nego tiations or otherwise,
make any commitment or incur any liability to any labor organization with
respect to the employees of the Station; or
(7) No Inconsistent Action. Take any action which is
inconsistent with its obligations hereunder or which could hinder or delay the
consummation of the transaction con templated by this Agreement.
(b) Affirmative Covenants. Seller shall do the following:
(1) Access to Information. Upon prior notice to Seller
allow Buyer and its authorized representatives reasonable access at Buyer's
expense during normal business hours to the Assets, the personnel of the Station
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 representa tives all
information with respect to the affairs and business of the Station as Buyer may
reasonably request and make its indepen
<PAGE>
dent accountants and key employees reasonably available, it being understood
that the rights of Buyer hereunder shall not be exer cised in such a manner as
to interfere unreasonably with the operations or the business of the Station;
(2) Maintenance of Assets. Maintain all of the Assets or
replacements thereof and improvements thereon in good working order and repair,
with inventories of spare parts and expendable supplies being maintained at
levels consistent with past practices and at normal and adequate amounts needed
to operate the Station in the usual and customary manner;
(3) Insurance. Maintain all existing insurance policies,
or comparable coverage, for the Station and the Assets, as listed in Schedule
3.11 hereto;
(4) Consents. Use its best efforts to obtain the
Consents;
(5) Preservation of Business. Use its best ef forts to
maintain and preserve the business and operations of the Station and maintain
and preserve consistent with the ordinary course of business, the goodwill of
and present relationships with suppliers, advertisers, customers and others
having business relations with Station;
<PAGE>
(6) Books and Records. Maintain the books and records of
Seller relating to the Station in accordance with past practices;
(7) Notification. Promptly notify Buyer in writ ing of
any unusual or material developments or changes adversely relating to or
affecting the business and operations of the Station or the Assets; and by no
later than ten (10) days prior to the Closing Date, provide written disclosures
reflecting such additions or deletions to the information contained in the
attached Schedules as may be necessary to make such Schedules accurate and
complete as of the Closing Date; and
(8) Compliance with Laws. Use its best efforts to comply
in all respects with all rules and regulations of the FCC, and all other
material laws, rules and regulations to which the Station or the Assets are
subject.
5.2 Post-Closing Covenants. After the Closing, Seller shall take such
actions, and shall execute and deliver to Buyer such further deeds, bills of
sale or other transfer documents as, in the reasonable opinion of counsel for
Seller and Buyer, may be necessary to ensure, complete and evidence the full and
effective transfer of the Assets to Buyer pursuant to this Agreement.
<PAGE>
ARTICLE VI
COVENANTS OF BUYER
6.1 Inconsistent Action. Buyer will not take any action that is
inconsistent with its obligations under this Agreement.
6.2 Post-Closing Covenants. After the Closing, Buyer shall take such
actions, and shall execute and deliver to Seller such documents as, in the
reasonable opinion of counsel for Seller and Buyer, may be necessary to ensure,
complete and evidence the full and effective transfer of the Assets to Buyer
pursuant to this Agreement.
ARTICLE VII
SPECIAL COVENANTS AND AGREEMENTS
7.1 FCC Consent.
(a) Within five (5) business days after the execution of this
Agreement, Buyer and Seller will file with the FCC appro priate applications for
the FCC Consent. The parties shall prosecute the applications with all
reasonable diligence and otherwise use their best efforts to obtain the grant of
such applications as expeditiously as practicable. Each party will use its
reasonable efforts to obtain all government consents and authorizations and
promptly make filings with and give notices to
<PAGE>
government agencies reasonably required to effect the trans actions contemplated
hereby.
(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 attributable to Seller or arising out of Seller's operation
of the Station; (ii) compliance by the parties hereto with the conditions (if
any) imposed in the FCC Consents and (iii) the FCC Consent, through the passage
of time or otherwise, becoming a Final Order.
7.2 Control of the Station. Buyer shall not, directly or indirectly,
control, supervise, direct or attempt to control, supervise or direct, the
programming of the Station until the completion of the Closing hereunder. The
control and supervision of all of the Station's operations shall be the sole
responsibil ity of Seller until the Closing.
7.3 Accounts Receivable. All accounts receivable of Seller arising out
of the operations of the Station and outstanding on the Closing Date shall
remain as provided herein, the property of the Seller, provided Seller hereby
authorizes Buyer, for purposes of collection only to collect such receivables
for a period of 120 days after the Closing. Seller shall deliver to Buyer a
complete and detailed statement of each account and Buyer shall use its
reasonable efforts, consistent with its customary
<PAGE>
collection practices for its own accounts receivable, to collect each such
account receivable during said 120 days. Buyer shall provide to Seller a
detailed monthly aging of such Accounts Receivable showing amounts collected to
the date of such aging and amounts outstanding as of the date of such aging and
within twenty (20) days of the end of each month deliver to Seller the aging
report and a check for the amounts collected during such month. Buyer shall not
be required to refer any account to a collection agency or an attorney for
collection, nor shall it compromise, settle, or adjust any account without
receiving the approval of Seller. Seller shall take no action with respect to
the Accounts Receivable, such as litigation, until the expiration of said 120
day period. Following the expiration of said 120 day period, Seller shall be
free to take such action as Seller may in its sole discretion determine to
collect any Accounts Receivable then outstanding. All payments received by Buyer
from a customer who has an Account Receivable which is being collected by Buyer
for Seller and who also has other accounts with Buyer shall be applied by Buyer
by first paying the Accounts Receivable arising prior to the Closing Date and
then paying the Accounts Receivable arising on or after the Closing Date;
provided, however, that in the event any account debtor disputes in writing any
Account Receivable (or portion thereof) of Seller, Buyer may apply
<PAGE>
payments received from such account debtor to the undisputed portion of such
account debtor's Accounts Receivable if Buyer notifies Seller of such disputed
Account Receivable.
7.4 Taxes, Fees and Expenses. All sales, use, transfer, and purchase
taxes and fees, if any, arising out of the transfer of the Assets pursuant to
this Agreement shall be paid by Seller. All filing fees required by the FCC
shall be shared 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.
7.5 Brokers. Buyer and Seller each represent and warrant to the other
that neither it nor any of its affiliates, any person or entity acting on its
behalf or its affiliates has incurred any liability for any finder's, or
broker's, fees or commissions in connection with the transaction contemplated by
this Agreement except (i) those which have been disclosed in writing to the
other party and are the sole obligation of such party or its affiliates, and
(ii) the payment of a fee to Media Venture Partners, Ltd. which Seller will pay
at the Closing. Seller shall indemnify Buyer against any, and hold Buyer
harmless against and with respect to, and shall reimburse Buyer for, all
<PAGE>
claims for broker fees which are the obligation of Seller under this Section
7.5.
7.6 Bulk Sales Law. Buyer hereby waives compliance by Seller with the
provisions of the California Bulk Sales Law, if applicable, and Seller warrants
and agrees to pay and discharge when due all claims of creditors which could be
asserted against Buyer by reason of such noncompliance to the extent that such
liabilities arise before the Closing and are not specifically assumed by Buyer
under this Agreement, and agrees to protect, defend, same harmless and indemnify
Buyer from and against any and all such claims and demands pursuant to the
procedures set forth in Article XI hereof which shall apply thereto in all
respects.
7.7 Confidentiality. Except as necessary for the consum mation of the
transaction contemplated hereby, including Buyer obtaining financing related
thereto, each party hereto shall keep confidential any information which is
obtained from the other party in connection with the transactions contemplated
hereby; and except to the extent that such materials or information are or
become readily available to the industry, have been obtained from independent
sources, were known to Buyer on a non- confidential basis prior to disclosure to
Buyer from Seller or are required to be disclosed in public filings or by law.
In the
<PAGE>
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. Commencing on the date hereof, Seller, Buyer and their
respective affiliates shall not make any public announcement or press release
concerning the transactions contemplated hereby without the consent of both
parties hereto, which consent shall not be unreasonably withheld. Section 7.7
shall survive the termination or cancellation of this Agreement for a period of
one (1) year from the date of termination or cancellation.
7.8 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 a part of their respective obligations under this
Agreement including but not limited to the obtaining of Consents. After the
Closing, each of Seller and Buyer shall take such actions, and shall execute and
deliver to the other party such further documents as, in the reasonable opinion
of counsel for such other party, may be necessary to ensure, complete and
evidence the full and effective transfer of the Assets to Buyer or to otherwise
consummate the transactions pursuant to this Agreement.
7.9 Risk of Loss.
<PAGE>
(a) The risk of any loss, damage or impairment, con fiscation or
condemnation of any of the Assets from any cause whatsoever shall be borne by
Seller at all times prior to the Closing unless due to causes relating solely to
actions of Buyer in performance of the LMA. In the event of any such loss,
damage or impairment, confiscation or condemnation, whether or not covered by
insurance, Seller shall promptly notify Buyer of such loss, damage, impairment
or condemnation and advise Buyer of the estimated cost of repair and replacement
and advise Buyer whether Seller intends to repair, replace or restore such
Assets (the "Loss Notice").
(b) If Seller, at its expense, repairs, replaces or restores
such Assets to their prior condition at least five (5) days prior to the
Closing, Seller shall be entitled to all insurance proceeds and condemnation
awards, if any, by reason of such award or loss.
(c) If Seller does not or cannot restore or replace the damaged
Assets at least five (5) days prior to the Closing, or informs the Buyer in the
Loss Notice that it does not intend to restore or replace such Assets, Buyer may
at its option:
(i) terminate this Agreement by notice forthwith without
any further obligation hereunder; or
<PAGE>
(ii) proceed to the Closing of this Agreement without
Seller completing the restoration and replacement of such damaged Assets,
provided that Seller shall assign all rights under applicable insurance policies
and condemnation awards, if any, to Buyer.
(d) Buyer will notify Seller of a decision under the options
described in Section 7.9(c)(i) or (ii) above within ten (10) business days after
Buyer's receipt of the Loss Notice; provided, however, that if Seller states in
the Loss Notice that it intends to restore the damaged Assets and, based upon
such statement Buyer agrees to proceed to the Closing, then if Seller has not
restored such damaged Assets five (5) days prior to the Closing Date,
notwithstanding Buyer's prior delivery of a notice to proceed pursuant to this
Section 7.9(d), Buyer shall have the right, in its sole discretion, to either
postpone the Closing or terminate this Agreement.
(e) 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 transmissions by the
Station as it is currently operating for a period of two (2) or more consecutive
days or causes the Station to operate at less than ninety percent (90%)
<PAGE>
of its authorized operating power for a period of more than five
(5) days.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
8.1 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:
(a) Representations and Warranties. All representa tions and
warranties of Seller in this Agreement shall be true and complete in all
material respects at and as of the Closing Date 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 all covenants, agreements and conditions
required by this Agreement to be per formed or complied with by it prior to or
on the Closing Date.
(c) Consents. The FCC Consent, the Consents listed on Schedule
3.8 hereto, and any other Consents which are designated by Buyer as material to
the business and operations of the Station shall have been duly obtained and
delivered to Buyer
<PAGE>
except as hereinafter set forth. The FCC Consent shall have become a Final Order
unless waived by Buyer.
(d) Licenses; FCC Compliance. Seller shall be the holder of the
Licenses, and there shall not have been any modi fication of any of such
Licenses which has a material adverse effect on the Station or the conduct of
the business or opera tions of the Station arising out of Seller's operation of
the Station. No proceeding shall be pending or threatened, the effect of which
would be to revoke, cancel, fail to renew, sus pend or modify on a materially
adverse basis any of the Licenses. The Station shall be operating in material
compliance with all applicable FCC rules, regulations and policies.
(e) Deliveries. Seller shall have made or cause to be made or
stand willing and able to make or cause to be made all the deliveries to Buyer
set forth in Section 9.2 hereof.
(f) Adverse Change. Since December 31, 1996 there shall have
been no material adverse change in the Assets or operation of the Station or
Seller which alone or together with other adverse changes would delay or hinder
or will delay or hinder the consummation of the transactions contemplated
hereby.
(g) Good and Marketable Title to Assets. At Closing, the title
of Seller to the Assets will be in the form described in Sections 3.5 and 3.6,
free and clear of all liens, encum
<PAGE>
brances, charges, claims, agreements or other imperfections of title, except as
otherwise provided in Sections 3.5 and 3.6.
(h) No Adverse Proceedings. No action or proceeding shall have
been instituted by any governmental entity against, and no order, decree or
judgment of any court, agency, commission or governmental authority shall be
subsisting against, any party that would render it unlawful, as of Closing, to
effect the transactions contemplated by this Agreement in accordance with the
terms hereof or would materially adversely affect, as of Closing, the validity
of the FCC Licenses or would adversely affect the Assets or operations
(financial or otherwise) of the Station.
(i) Non-Competition Agreement. The Seller and Steve Dodge
shall have executed and delivered a non-competition agreement, substantially in
the form attached hereto as Exhibit B (the "Non-Competition Agreement"), for a
three (3) year period covering any foreign language format in the San Jose radio
market as defined by Arbitron.
8.2 Conditions to Obligations of Seller. All 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:
<PAGE>
(a) Representations and Warranties. All representa tions and warranties of Buyer
contained in this Agreement shall be true and complete in all material respects
at and as of the Closing Date as though 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 all covenants, agreements, and conditions
required by this Agreement to be per formed 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 9.3 hereof.
(d) FCC Consent. The FCC Consent shall have been granted without
the imposition on Seller of any conditions that require additional compliance by
Seller.
(e) No Adverse Proceeding. No action or proceeding shall have
been instituted by any governmental entity against, and no order, decree or
judgment of any court, agency, commission or governmental authority shall be
subsisting against, any party that would render it unlawful, as of Closing, to
effect the transactions contemplated by this Agreement in accordance with the
terms hereof or would adversely affect, as of Closing, the
<PAGE>
validity of the FCC Licenses or would adversely affect the Assets or operations
of the Station.
ARTICLE IX
CLOSING AND CLOSING DELIVERIES
9.1 Closing. Subject to subparagraph (b) below, the Closing shall take
place at 10:00 a.m. on a date selected by Buyer on five (5) days notice to
Seller which date shall be within fifteen (15) days after the FCC Consent has
become a Final Order. The Closing shall be held at the offices of Buyer's
attorney, Buyer's lender's counsel, or such other place as shall be mutually
agreed upon by Buyer and Seller, or by overnight or facsimile delivery of
closing documents.
9.2 Deliveries by Seller. Prior to or on the Closing Date, Seller shall
deliver or cause to be delivered to Buyer the fol lowing, in form and substance
reasonably satisfactory to Buyer and its counsel:
(a) Transfer Documents. Duly executed bills of sale, assignments
and other transfer documents;
(b) Consents; Acknowledgments. The original of each Consent;
<PAGE>
(c) Estoppel Certificates. Estoppel certificates from the
lessor(s) under the lease(s) covering the transmitter and studio;
(d) Secretary's Certificate. A certificate, dated as of the
Closing Date, executed by Seller's Secretary certifying that the resolutions, as
attached to such certificate, were duly adopted by Seller's Board of Directors
and shareholders, auth orizing and approving the execution of this Agreement and
the consummation of the transactions contemplated hereby and that such
resolutions remain in full force and effect;
(e) Licenses, Contracts, Business Records, Etc. To the extent
they are in possession of Seller, 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
the Station's business and operations, which copies shall be available at the
Closing or at the Station's principal business office;
(f) Seller's Certificate. A Certificate, dated as of the Closing
Date, executed by the President or a Vice-President of Seller on behalf of
Seller, in the form attached hereto as Exhibit C;
(g) Opinions of Counsel. Opinion of Seller's General Counsel and
FCC Counsel, dated as of the Closing Date, substan-
<PAGE>
tially in the forms attached hereto, respectively, as Exhibit D and Exhibit E;
and
(h) Non-Competition Agreement. Executed counterparts of the
Non-Competition Agreement.
9.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer shall
deliver to Seller the following, in form and sub stance reasonably satisfactory
to Seller and its counsel:
(a) Purchase Price. The Purchase Price for the Assets and 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 Assumed Contracts arising on or after the Closing Date;
(c) Buyer's Certificate. A Certificate, dated as of the Closing
Date, executed by the Chairman, President or a Vice President of Buyer, in the
form of Exhibit F;
(d) Buyer's Authorization. A certificate, dated as of the
Closing Date, executed by Buyer's Secretary or Assistant Secretary 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 transactions contemplated hereby and that
such resolutions remain in full force and effect; and
<PAGE>
(e) Opinion of Counsel. An opinion of Buyer's counsel dated as
of the Closing Date substantially in the form attached hereto as Exhibit G.
ARTICLE X
RIGHTS OF BUYER AND SELLER
UPON TERMINATION OR BREACH
10.1 Termination. This Agreement may be terminated by either Seller or
Buyer, if the terminating party is not then in breach of any material obligation
under this Agreement (provided that Sections 7.4 and 7.7 will continue in full
force and effect), on written notice to the other at any time prior to Closing
as follows:
(a) By Buyer, in accordance with the provisions of Section 7.9;
(b) By Buyer or Seller, as the case may be, if the other shall
commit a material breach of any of the provisions applicable to it hereunder;
(c) By mutual agreement of Buyer and Seller, at any time, set
forth in a writing executed by both parties; or
(d) By Buyer or Seller, if any of the conditions to their
respective performance obligations under Sections 8.1 and 8.2 is not satisfied
by the six (6) month anniversary of the date
<PAGE>
(the "Final Termination Date") the FCC accepts the application for the
assignment of the FCC Licenses to Buyer upon not less than thirty (30) days
notice given after such date.
Except as otherwise provided in this Section 10, if this Agreement is
terminated, each party will pay all of its costs and expenses and neither will
have any further liability or obliga tion of any nature to the other.
10.2 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, in
addition to any other remedies which may be available, including money damages,
to ob tain specific performance of the terms of this Agreement. In the event of
any action to enforce this Agreement specifically, Seller hereby waives the
defense that there is an adequate remedy at law.
<PAGE>
ARTICLE XI
SURVIVAL OF REPRESENTATIONS AND
WARRANTIES AND INDEMNIFICATION
11.1 Representations and Warranties. Notwithstanding any examination
made for or on behalf of any of the parties hereto, the knowledge of any
officer, director or employee or agent of any of the parties hereto or any of
their respective affiliates, or the acceptance of any certificate or opinion,
all represen tations, warranties and preclosing covenants contained in this
Agreement and the Closing Certificate shall be deemed continuing
representations, warranties and preclosing covenants, and shall survive the
Closing Date for a period of two (2) years, except for any breach of the
representations and warranties under Section 3.15 and Section 3.22 hereof which
shall survive until the expiration of the applicable statute of limitations.
11.2 Indemnification by Seller. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Buyer or any
information Buyer may have, Seller shall indemnify and hold Buyer harmless
against and with respect to, and shall reimburse Buyer for all claims, notice of
which have been received by Seller within a period of two (2) years from the
Closing Date (and with respect to claims under Section 3.15 and
<PAGE>
Section 3.22 hereof, until the applicable statute of limitations has expired),
relating to:
(a) Any and all losses, liabilities or damages result ing from
any untrue representation, breach of warranty or nonful fillment of any covenant
by Seller contained herein or in any certificate, document or instrument
delivered to Buyer hereunder provided, that with respect to the representation
contained in Section 3.15 above, Buyer shall not be required to prove Seller's
knowledge in order to receive indemnification for losses incurred with respect
to a breach of such representation;
(b) Any and all obligations or liabilities of Seller relating to
the Station not expressly assumed by Buyer pursuant to the terms hereof,
including without limitation, any such obli gation or liability imposed on Buyer
by process of law as a suc cessor to the business of Seller;
(c) Any and all losses, liabilities or damages result ing from
Seller's operation or control 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, costs and expenses, including
<PAGE>
reasonable legal fees and expenses, incident to any of the fore going or in
enforcing this indemnity.
11.3 Indemnification by Buyer. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Seller or
any information Seller may have, Buyer shall indemnify and hold Seller harmless
against and with respect to, and shall reimburse Seller for all claims, notice
of which have been received by Buyer within for a period of two (2) years from
the Closing Date relating to:
(a) Any and all losses, liabilities or damages result ing from
any untrue representation, breach of warranty or nonful fillment of any covenant
by Buyer contained herein or in any cer tificate, document or instrument
delivered to Seller hereunder;
(b) Any and all losses, liabilities or damages resulting from
Buyer's operation or control of the Station on and after the Closing Date,
including any and all liabilities arising under the Licenses or the Assumed
Contracts which relate to events occurring after the Closing Date; and
(c) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including reasonable legal fees and
expenses, incident to any of the foregoing or in enforcing this indemnity.
<PAGE>
11.4 Procedure for Indemnification. The procedure for indemnification
shall be as follows:
(a) The party claiming indemnification (the "Claimant", shall
give reasonably prompt 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
ten (10) days after written notice of such action, suit or proceeding is
received by Claimant.
(b) Following receipt of notice from the Claimant of a claim,
the Indemnifying Party shall have twenty (20) days (or such shorter period of
time as is required to respond to the subject litigation or proceeding) 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 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
20-day period (or any mutually agreed upon extension thereof) to the validity
<PAGE>
and amount of such claim, the Indemnifying Party shall immedi ately pay to the
Claimant the full amount of the claim. If the Claimant and the Indemnifying
Party do not agree within said period (or any mutually agreed upon extension
thereof), the Claimant may seek appropriate legal remedy.
(c) With respect to any claim by a third party as to which the
Claimant is entitled to indemnification hereunder, the Indemnifying Party shall
have the right at its own expense, to participate in or assume control of the
defense of such claim, and the Claimant shall cooperate fully with the
Indemnifying Party. 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 and retain separate co-counsel at its
own expense; provided if requested to participate at Indemnifying Party's
request or if the Claimant reasonably believes (based upon an opinion of
counsel) that a conflict of interest exists between Claimant and the
Indemnifying Party, then the Claimant will be reimbursed for reasonable expenses
of counsel. The Indemnifying Party will select counsel reasonably satisfactory
to the Claimant. The Indemnifying Party will not consent to an entry of judgment
or settlement without release of liability and, with respect to nonmonetary
terms, the Claimant's consent (not to be unreasonably withheld or delayed);
<PAGE>
provided that if Claimant does not consent to settlement of a claim solely with
respect to the monetary terms thereof, pursuant to which Claimant has been
released without liability, Seller's liability under this Section 11 shall be
limited to the amount of the settlement or entry of judgment, plus costs
(including attorney fees).
(d) If a claim, whether between the parties or by a third party,
requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible.
(e) 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 by the Claimant with respect to such claim.
ARTICLE XII
MISCELLANEOUS
12.1 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 sent by telecopy,
(iii) deemed to have been given on the date of personal delivery or the date
<PAGE>
set forth in the records of the delivery service or on the return receipt or, in
the case of a telecopy, upon receipt thereof and (iv) addressed as follows:
If to Seller:
American Radio Systems Corp.
116 Huntington Avenue, 11th Floor
Boston, MA 02116
Attention: Mr. Steve Dodge
Telecopy No.: (617) 375-7575
With a copy to:
Michael Milsom, Esq.
c/o American Radio Systems Corp.
116 Huntington Avenue, 11th Floor
Boston, MA 02116
Telecopy No.: (617) 375-7575
If to Buyer:
c/o Douglas Broadcasting, Inc.
499 Hamilton Avenue
Suite 140
Palo Alto, CA 94301
Attention: N. John Douglas
Telecopy No.: (415) 688-1166
With a copy to:
Ira J. Goldstein, Esq.
Pryor, Cashman, Sherman & Flynn
410 Park Avenue
New York, NY 10022
Telecopy No.: (212) 326-0806
or to any 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
12.1.
<PAGE>
12.2 Benefit and Binding Effect. Neither party hereto may assign this Agreement
without the prior written consent of the other party hereto; provided, however,
that Buyer may assign its rights, but not its obligations under this Agreement,
upon notice to Seller to an affiliated or commonly-owned entity in which the
owners of the stock of Buyer have an equity or operating interest, provided such
assignment does not violate the Communications Act of 1934, as amended or the
rules, regulations and policies of the FCC. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
12.3 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.
12.4 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 requires.
12.5 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.
<PAGE>
12.6 Attorneys' Fees. The prevailing party in any action brought under
this Agreement shall be entitled to its reasonable attorneys' fees and
disbursements in addition to its damages.
12.7 Entire Agreement. This Agreement, all schedules and exhibits hereto
and all documents, writings, instruments and certificates delivered or to be
delivered by the parties pursuant hereto collectively represent the sole and
entire understanding and agreement between Buyer and Seller with respect to the
subject matter hereof. All schedules, and exhibits attached to this Agreement
shall be deemed part of this Agreement and incorporated herein, as if fully set
forth herein.
This Agreement supersedes all prior negotiations and understandings between
Buyer and Seller whatsoever, and all letters of intent and other writings
relating to such negotiations and understandings. This Agreement 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.
12.8 Choice of Law. This Agreement will be governed by and construed in
accordance with the laws of the State of California. Each party hereto submits
itself to the jurisdiction of any court
<PAGE>
sitting in Santa Clara County for the purpose of adjudicating the rights of the
parties hereunder.
<PAGE>
This Agreement has been executed by Buyer and Seller as of the date first above
written.
AMERICAN RADIO SYSTEMS CORP.
By:
Steve Dodge
President
AMERICAN RADIO SYSTEMS LICENSE CORP.
By:
Steve Dodge
President
KKSJ, INC.
By:
Darryl B. Thompson
President
KKSJ LICENSE, INC.
By:
Darryl B. Thompson
President
EXHIBIT 10.19
TRUST AGREEMENT
THIS TRUST AGREEMENT (the "Trust Agreement") is entered into as of
March____, 1997, by and among American Radio Systems Corporation, a Delaware
corporation and American Radio Systems License Corp. (collectively, "American")
a Delaware corporation wholly owned by American Radio Systems Corporation, and
Richard E. Oppenheimer (the "Trustee").
RECITALS
A. American holds various licenses, permits and authorizations issued by the
Federal Communication Commission (the "FCC") with respect to three FM radio
broadcast stations and three AM broadcast stations in the Sacramento,
California, radio market.
B. American has entered into an Amended and Restated Agreement and Plan of
Merger with EZ Communications, Inc. ("EZ"), a subsidiary of which holds various
licenses, permits and authorizations issued by the FCC for two FM radio
broadcast stations and one AM radio broadcast station in the Sacramento,
California, radio market. An application to transfer control of EZ to American
is pending before the FCC.
C. American has entered into certain other agreements by which it will acquire,
subject to FCC consent, the licenses to three additional FM radio broadcast
stations and two additional AM radio broadcast stations, including KXOA-FM,
Sacramento, California.
D. American has further entered in certain agreements by which it will sell,
subject to FCC consent, the licenses to two AM radio broadcast stations and one
FM radio broadcast station, such FM radio broadcast station being KXOA-FM.
E. The rules and regulations of the FCC state that in a radio market with 45 or
more commercial radio broadcast stations (such as Sacramento, California), a
party may own up to eight commercial radio broadcast stations, not more than
five of which are in the same service (AM or FM). American desires to enter into
this Trust Agreement to facilitate consummation of the merger with EZ and the
consummation of its other transactions in the Sacramento, California, radio
market by assuring that such consummations will not, under Section 73.3555(a) of
the FCC's rules, result in the attribution to American, at any given time, of
more than eight radio broadcast stations in any contour-based radio market in or
around Sacramento, California.
F. American has entered into an agreement to sell KXOA-FM to ECI License
Company, L.P. ("ECI") and has filed an application with the FCC seeking consent
to such assignment in order to comply with the FCC's rules regarding the maximum
number of radio broadcast stations that may be owned by a particular entity in a
single contour-based radio market. Interim acquisition by the Trustee, for the
benefit of American, of the assets of KXOA-FM
<PAGE>
(the "Station") would provide an appropriate mechanism to facilitate
consummation of the merger with EZ and the consummation of American's other
transactions in or around Sacramento, California, while complying with the laws
and regulations relating to transactions of this type.
G. ECI and American have entered into a Time Brokerage Agreement ("TBA") dated
______, 1997, under Section 73.3555(a)(ii) of the Commission's, by which
American has agreed to permit ECI to program and sell advertising time on the
Station.
H. In the event that American requests that the Trustee sell the Stations
Assets, as hereinafter defined, pursuant to Section 3(f) of this Trust
Agreement, and the Trustee concurs with the decision, then the Trustee agrees to
use his best efforts to apply to the FCC for consent to the assignment of the
Station Assets within six (6) months of the date of this Trust Agreement.
Therefore, the parties agree as follows:
AGREEMENT
1. Creation and Purpose of The KXOA-FM Trust. Subject to the terms and
conditions hereof, a trust in respect of the Station Assets is hereby created
and established, to be known as the "The KXOA-FM Trust," and the Trustee hereby
accepts the trust created hereby and agrees to serve as trustee hereunder. The
trust created hereby shall be irrevocable until such time as American or its
affiliates no longer holds an ownership interest (through this Trust or
otherwise) in more than nine radio broadcast stations in two contour-based radio
markets in or around Sacramento, California.
2. Assets to be Conveyed; Assumption of Obligations.
(a) Upon execution of this Trust Agreement and pursuant to
consent by the FCC, American shall transfer and convey to Trustee, and Trustee
shall acquire from American, all of the assets, real, personal and mixed,
tangible and intangible (including the business of the Station as a going
concern), owned or held by American as of the date of the consummation of its
acquisition of the Station, and used, useful or necessary in the conduct of the
business and operation of the Station, including, but not limited to, the
following:
(i) all of American's right, title and interest
in and to the licenses, permits and other
authorizations issued by any governmental
authority and used, useful or necessary in
the conduct of the business and operation of
the Station, including the call letter
"KXOA-FM" and any applications for such
licenses, permits and authorizations;
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<PAGE>
(ii) all of American's right, title and interest
in and to all real property, including
leasehold interests and easements, used,
useful or necessary in the conduct of the
business and the operation of the Station;
(iii) all equipment, office furniture and
fixtures, office materials and supplies,
inventory, spare parts, motor vehicles and
other tangible personal property of every
kind and description, owned, leased or held
by American and used, useful or necessary in
the conduct of the business and operation of
the Station;
(iv) all cash in the Station's operating bank
account;
(v) all accounts receivable arising out of the
operation of the Station;
(vi) all of American's rights under and interest
in all contracts relating to the conduct of
the business of the Station (but excluding
any contract or agreement for the sale of
the Station's assets following termination
of the Trust created hereby);
(vii) all programs and programming materials of
whatever form or nature owned by American
and used or intended for use on or by the
Station;
(viii) all of American's right, title and interest
in and to the trademarks, trade names,
service marks, franchises, copyrights,
including registrations and applications for
registration of any of them, jingles, logos,
slogans, licenses, permits and privileges
owned or held by American and used, useful
or necessary in the conduct of the business
and operation of the Station;
(ix) all files, records, books of account,
computer programs and software and logs
relating to the operation of the Station,
including, without limitation, payable
records, receivable records, invoices,
statements, traffic material, programming
information and studies, technical
information and engineering data, news and
advertising studies and consultants'
reports, ratings reports, marketing and
demographic data, sales correspondence,
lists of advertisers, promotional materials,
credit and sales reports, budgets, financial
reports and projections, sales, operating
and business plans, filings with the
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<PAGE>
FCC and original executed copies of all
written contracts to be assigned hereunder;
and
(x) all of American's rights under
manufacturers' and vendors' warranties
relating to items included in the Station
Assets and all similar rights against third
parties relating to items included in the
Station Assets to the extent contractually
assignable.
(b) The assets to be transferred to Trustee hereunder are
hereinafter collectively referred to as the "Station Assets."
(c) The Trustee shall assume and undertake to pay, satisfy or
discharge the liabilities, obligations and commitments of the Station under all
its contracts, including time sales agreements and employment agreements.
(d) The Trustee shall retain and hold the Station Assets, and
assume the Station's obligations, only in accordance with, and subject to the
terms and conditions set forth in, this Trust Agreement.
3. Management and Other Actions by Trustee.
(a) During the term of this Trust Agreement, the right to
manage and direct the management of the business of the Station shall be solely
vested in the Trustee, subject to the TBA between American and ECI, which
agreement shall be assigned to Trustee on the date hereof, and subject to the
following:
(i) The Trustee shall conduct the operations of
Station as a radio broadcaster serving the
Sacramento, California, radio market in the
ordinary course of business consistent with
past operations of the Station. To the
extent possible, the Trustee shall maintain
the status quo of such operation as
currently operating with a view to
maximizing the value to be received by
American consistent with the Trustee's
duties as a licensee of the FCC and as a
fiduciary of American. With respect to so
conducting the operations and management of
the Station, Trustee shall within 15 days of
the end of each calendar month provide
American or its designee with such monthly
financial reports consisting of unaudited
balance sheets of the Station and related
statements of operations and cash flows for
the month and three-month period then ended
as shall be necessary for American to meet
its financial reporting requirements to its
accountants, lenders, the Securities and
Exchange Commission and any other
authorities of competent jurisdiction.
Trustee shall also provide American
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<PAGE>
or its designee with monthly budgets and
estimates (which shall be prepared
consistent with all budgets and estimates
previously prepared by American), setting
forth on an aggregate basis only and not on
a line item basis, the Station's monthly
expenses, including expenditures for
equipment or other capital assets, and
operating income anticipated to be incurred
or earned monthly during the next upcoming
three calendar months as well as on an
aggregate basis through the next upcoming
twelve calendar months. American shall not
use or attempt to use these financial
materials to limit or restrict the Trustee's
discretion to operate the Station in the
manner described in this subsection;
(ii) to the extent that the Station's operations
generate cash accumulations in excess of the
Station's actual and projected expenses as
determined by the Trustee in his sole
discretion ("Excess Cash Flow"), such Excess
Cash Flow shall first be applied to repay
amounts due to American under the line of
credit provided for in Section 3(a)(iii) of
this Trust Agreement, and thereafter shall
be remitted to American from time to time as
the Trustee shall determine;
(iii) to the extent that the Trustee determines in
his discretion that management and operation
of the Station consistent with past practice
or that payment of the charges and other
expenses set forth in Section 4(c) hereof
requires funds in excess of the ordinary
cash flow of the Station (as diminished by
any prior remittances of Excess Cash Flow),
American agrees to provide a line of credit
to Trustee in the amount of $500,000,
repayable from Excess Cash Flow with
interest at prime plus one percent. American
shall not communicate directly or indirectly
with the Trustee about, or participate with
the Trustee in making, any decision to draw
on the line of credit or as to when or how
the funds will be used. The Trustee may draw
on the line of credit by making a written
draft on American for a specific amount of
funds. American shall, within ten days of
receipt of such draft, provide such funds to
Trustee in the amount requested, up to the
limit of the line of credit; and
(iv) any employee hired by the Trustee who is not
employed at the Station as of the effective
date of this Trust Agreement shall not be a
1% or greater shareholder, director,
officer, or employee of American or its
affiliates, and may not have any business
and familial relationship (as defined in the
FCC Policy Statement in
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<PAGE>
MM Docket No. 85-218, FCC 86-67 (March 17,
1998)) with American or with any 1% or
greater shareholder, director, officer, or
employee of American or its affiliates.
(b) The Trustee shall cause any employee hired by him pursuant
to Section 3(a)(iv), and any person previously employed by American whom the
Trustee elects to retain, to execute and deliver to the Trustee an agreement, in
form and substance acceptable to the Trustee, pursuant to which such employee
agrees to comply with the rules, regulations and policies of the FCC, including
without limitation all rules, regulations and policies governing communications
among such employee and American or its officers, directors, employees, and
affiliates, regarding the Station and its management and operations.
(c) Subject to the terms of the TBA and this Trust Agreement,
no person other than the Trustee or managers designated by the Trustee shall
have any authority with respect to the management of the Station or the Station
Assets for so long as this Trust Agreement is in effect. The Trustee shall have
no beneficial interest in the Station Assets.
(d) Except as expressly provided in this Trust Agreement, the
Trustee shall not: incur any debt or guaranty obligation in favor of any other
person; engage in any business other than as necessary in Trustee's reasonable
opinion to meet his fiduciary duties with respect to the operation of the
Station as a broadcast licensee serving the Sacramento, California, radio
market; sell or otherwise transfer, assign or encumber all or any significant
Station Assets, or enter into any agreement to do so; or enter into any merger,
consolidation, or similar transaction or engage in any reclassification or
similar transaction.
(e) American has, prior to the execution of this Trust
Agreement, entered into a binding agreement for the sale of the Station Assets
to ECI. Upon FCC consent to that sale, and upon notification to the Trustee in
writing, provision to the Trustee with a copy of such binding agreement and
provision to the Trustee of a copy of the FCC consent, then the Trustee, acting
for the benefit of American, shall sell such Station Assets as soon as
practicable to ECI consistent with the terms of the binding agreement.
(f) In the event that the FCC does not consent to the
assignment of the Station Assets to ECI, American shall have the right to
request the Trustee to sell the Station Assets to any other unaffiliated third
party. Within 24 hours of receipt of such a request from American, Trustee shall
advise American whether he concurs in such a sale. In the event the Trustee so
concurs, the Trustee shall have the authority to take all actions necessary or
appropriate to effectuate the transfer of title to the Station Assets held by
the Trustee pursuant to this Trust Agreement to (and the assumption of the
liabilities, obligations and commitments of the Station by) an unaffiliated
third party. In this regard, Trustee shall enter into appropriate agreements,
submit and fully prosecute appropriate applications to the FCC requesting
approval to assign the Station Assets, and, following receipt of FCC consent,
transfer the Station Assets to the approved assignee. To facilitate any sale of
the Station
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<PAGE>
Assets to an unaffiliated third party, the Trustee may request in writing from
American such information, representations and warranties regarding operation of
the Station as may be needed to effectuate such sale.
(g) The Trustee shall have any and all such further powers and
shall take such further actions (including, but not limited to, taking legal
action) as may be necessary to fulfill the Trustee's obligations under this
Trust Agreement.
4. Concerning the Trustee.
(a) Subject to the provisions of this Trust Agreement, The
KXOA-FM Trust created hereby and the operations of the Station shall be managed
by the Trustee, who shall comply with all rules, regulations and policies of the
FCC.
(b) The Trustee shall be entitled to receive compensation for
his services hereunder at the rate of $10,000.00 per month, but shall receive a
minimum of $10,000.00 irrespective of the duration of The KXOA-FM Trust. The
Trustee agrees that in return for such compensation, he will devote such time to
The KXOA-FM Trust as is necessary in the proper exercise of his fiduciary duties
hereunder. Payment of Trustee's monthly compensation shall be made by American
within 20 days after receipt of appropriately detailed invoices therefor. Such
invoices shall be rendered on a monthly basis and upon the termination of this
Trust Agreement under any of the provisions of Section 5 hereof.
(c) The Trustee is expressly authorized to incur and pay, from
the Station Assets held in trust, all reasonable charges and other expenses
which the Trustee deems necessary and proper in the performance of his duties
under this Trust Agreement, including fees and charges for legal counsel of his
choosing and the cost of any necessary secretarial staff. American hereby agrees
to reimburse, indemnify, defend and hold harmless the Trustee against all
claims, costs and defense of claims (including reasonable attorneys' fees and
disbursements), expenses and liability incurred by the Trustee in connection
with the performance of his duties under this Trust Agreement, except those
incurred as a result of the Trustee's gross negligence, intentional wrongful
action or willful misconduct. Payments to the Trustee pursuant to this Section
4(c) shall be made within 20 days of submission by the Trustee of appropriately
detailed invoices therefor. The obligations of American to the Trustee under
this Section 4(c) shall survive the resignation, incapacity to act, death or
insolvency of the Trustee and the termination of this Trust Agreement.
(d) The Trustee shall be free from liability in acting upon
any paper, document or signature believed by the Trustee to be genuine and to
have been signed by the proper party. The Trustee shall not be liable for any
error of judgment in any act done or omitted, nor for any mistake of fact or
law, nor for anything which the Trustee may do or refrain from doing in good
faith. The Trustee may consult with legal counsel of his own choosing and any
action under this Trust Agreement taken or suffered in good faith by the
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<PAGE>
Trustee and in accordance with the opinion of the Trustee's counsel (if such
opinion shall have been obtained by Trustee) shall be conclusive on the parties
to this Trust Agreement, and the Trustee shall be fully protected and be subject
to no liability in respect thereto.
(e) Subject to Section 4(c) hereof, the rights and duties of
the Trustee hereunder shall terminate upon the Trustee's incapacity to act,
death or insolvency, and no interest in any of the Station Assets directly or
indirectly held by the Trustee nor any of the rights and duties of a deceased or
insolvent Trustee may be transferred by will, devise, succession or in any
manner except as provided in this Trust Agreement. The heirs, administrators,
executors or other representatives of an incapacitated, deceased or insolvent
Trustee shall, however, have the right and duty to convey any Station Assets
held by the Trustee to one or more successor Trustees designated by American
pursuant to Section 4(g) below.
(f) The Trustee may resign by giving not less than 60 days
advance written notice of resignation to American, provided that a successor
Trustee has been appointed, such appointment has received all necessary approval
from the FCC, and any order granting such approval has become a final order with
respect to which no action, request for stay, petition for hearing or
reconsideration, or appeal has been timely filed and is pending, and as to which
the time for filing any such request, petition or appeal has expired. American
shall cooperate fully prompt appointment of a successor Trustee and shall not
unreasonably interfere with or delay the effectiveness of such resignation.
(g) In the event of such resignation, incapacity to act, death
or insolvency of the Trustee, he shall be succeeded, subject to such prior
approval of the FCC as may be required, by a successor Trustee chosen by
American. Any successor Trustee shall succeed to all of the rights and
obligations of the Trustee replaced hereunder upon execution by such successor
Trustee of a counterpart of this Trust Agreement.
(h) The Trustee and any successor Trustee designated pursuant
to paragraphs (f) and (g) of this Section 4 shall not be a 1% or greater
shareholder, officer, employee, director, or affiliate of American, and may not
have any business or familial relationship (as defined in the FCC Policy
Statement in MM Docket No. 85-218, FCC 86-67 (March 17, 1986)) with any officer,
employee, director, or 1% or greater shareholder or affiliate of American. Nor
shall the Trustee or any successor Trustee serve as an officer, employee, or
director of American or its affiliates, or its successor companies following the
assignment specified in Section 3(e) or Section 3(f).
5. Termination of Trust Agreement; Distribution of Proceeds of Sale of
Assets.
(a) Subject to each FCC approval as may be required, and
following the receipt of such FCC approval, this Trust Agreement and The KXOA-FM
Trust created hereby shall terminate upon the first to occur of the following:
(i) the expiration of two
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<PAGE>
years from the date of this Trust Agreement; or (ii) the assignment of the
Station Assets as contemplated by Section 3(e) or Section 3(f) of this Trust
Agreement.
(b) Upon the termination of this Trust Agreement pursuant to
Section 5(a)(ii) hereof and consistent with the requirements of the FCC, the
Trustee shall deliver to the assignee those Station Assets contemplated by the
assignment transaction that has been approved by the FCC, and shall deliver all
other property held by the Trustee pursuant to this Trust Agreement to American
or its designee. In the case of a sale of all or substantially all of the
Station Assets to an unaffiliated third party, specifically including ECI,
pursuant to Section 3(e) or 3(f) of this Trust Agreement, the Trustee shall
receive the money, securities, rights or property which are distributed or are
distributable in respect of the Station Assets, and, after paying (or reserving
for payment thereof) any expenses or liability incurred pursuant to this Trust
Agreement, shall distribute or cause the distribution of such money, securities,
rights or property to American or its designee.
6. Communications.
(a) The Trustee may communicate with and provide reports
(including specifically the financial reports provided for in Section 3(a)(i) to
American concerning the implementation of The KXOA-FM Trust, but not concerning
the management and operations of the Station except as provided in Section
3(a)(i) above.
(b) The Trustee may engage in the communications contemplated
by Section 3(e) hereof to facilitate a sale of the Station Assets to an
unaffiliated third party.
(c) Neither American nor any of its officers, directors,
employees, shareholders or affiliates shall communicate with the Trustee
regarding the operation or management of the Station. American may communicate
with the Trustee as provided in Section 3(e) hereof, and concerning the
mechanics of implementing any sale of the Station Assets. Existing programming
contracts between American or the Station or any affiliate of American for
programming broadcast by the Station may continue in force until their
termination, or may be renewed if renewal on the same terms is automatic upon
notification. Ministerial written communications in connection with existing
contracts may continue.
(d) Any communications permitted by Section 6(a), 6(b) or 6(c)
shall be evidenced in writing, and shall be retained by the Trustee for
inspection upon request by the FCC.
(e) All notices and other communications given under this
Trust Agreement shall be deemed to have been duly given when delivered in person
or by overnight express, mailed by first-class, registered or certified mail,
postage prepaid, or transmitted by facsimile and addressed to the parties as
follows:
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<PAGE>
(i) If to American:
American Radio Systems Corporation
116 Huntington Avenue
Boston, Massachusetts 02116
(617) 375-7500
Attn: Mr. Steven B. Dodge
with a copy, which shall not constitute notice,
to:
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
(617) 338-2800
Attention: Norman A. Bikales
with a copy, which shall not constitute notice,
to:
Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036
(202) 776-2000
Attn: John R. Feore, Jr.
(ii) If to the Trustee:
Richard E. Oppenheimer
c/o Signature Broadcasting
2201 Northland Drive
Suite C
Austin, Texas 78756
(512) 451-7966
with a copy, which shall not constitute notice,
to:
Rosenman & Colin
1300 19th Street, N.W.
Suite 200
Washington, D.C. 20036
(202) 463-4650
Attn: Shelley Sadowsky
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<PAGE>
or to such other address as any of them by written notice to the others may from
time to time designate. Each notice or other communication which shall be
delivered, mailed or transmitted in the manner described above shall be deemed
sufficiently received for all purposes at such time as it is delivered to the
addressee (with any return receipt or deliver receipt being deemed conclusive
evidence of such delivery) or at such time as delivery is refused by the
addressee upon presentation, but in the case of a facsimile, only if a hard copy
is also sent by overnight courier.
7. Miscellaneous
(a) This Trust Agreement, together with the February 24, 1997
Engagement and Assignment Agreement, constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof and supersedes all
prior oral or other written agreements, commitments or understandings with
respect to the matters provided for herein. This Trust Agreement shall not be
amended, altered or modified except by an instrument in writing duly executed by
each of the parties hereto. Substantial changes in this Trust Agreement may be
made only as required or approved by FCC order. A copy of any substantial change
shall be filed by the Trustee with the FCC within ten days following the
execution thereof, with copies to the appropriate divisions and bureaus of the
FCC.
(b) This Trust Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective permitted successors
and permitted assigns. Subject to Section 4(g) hereof, this Trust Agreement
shall not be assignable by the Trustee.
(c) If any part of any provision of this Trust Agreement or
any other agreement, document or writing giving pursuant to or in connection
with this Trust Agreement shall be invalid or unenforceable under applicable
law, said part shall be ineffective to the extent of such invalidity only,
without in any way affecting the remaining part of said provision or the
remaining provisions of this Trust Agreement.
(d) The headings of the sections of this Trust Agreement are
inserted for convenience of reference only and do not form a part or affect the
meaning thereof.
(e) This Trust Agreement, the rights and obligations of the
parties hereto, and any claims and disputes relating thereto, shall be governed
by and construed in accordance with the laws of the State of ________ (not
including the choice of law rules thereof).
(f) This Trust Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
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<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Trust
Agreement or caused this Trust Agreement to be duly executed on their behalf as
of the date and year first herein above set forth.
AMERICAN RADIO SYSTEMS CORPORATION
By: ______________________________
AMERICAN RADIO SYSTEMS LICENSE CORP.
By: ______________________________
RICHARD E. OPPENHEIMER, TRUSTEE
By: ______________________________
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EXHIBIT 10.20
ASSET EXCHANGE AGREEMENT
By and Among
AMERICAN RADIO SYSTEMS CORPORATION
AMERICAN RADIO LICENSE SYSTEMS CORP.
LATIN COMMUNICATIONS GROUP INC.
EXCL COMMUNICATIONS, INC.
RADIO EXITO, INC.
and
PORTLAND RADIO, INC.
Dated as of
April 17, 1997
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <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 Exchange Schedule; Appraisals; Tax Reporting....................................................3
2.3 Assumption of Liabilities and Obligations. .....................................................4
2.4 Closing Date....................................................................................7
2.5 Accounts Receivable. ...........................................................................8
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE EXCL PARTIES..............................................9
3.1 Organization and Business; Power and Authority; Effect of Transaction...........................9
3.2 Financial and Other Information. .............................................................10
3.3 Changes in Condition...........................................................................11
3.4 Material Statements and Omissions; Absence of Events; Materiality..............................11
3.5 Title to Properties; Leases....................................................................11
3.6 Compliance with Private Authorizations.........................................................13
3.7 Compliance with Governmental Authorizations and Applicable Law.................................13
3.8 Intangible Assets..............................................................................14
3.9 Related Transactions...........................................................................15
3.10 Insurance......................................................................................15
3.11 Tax Matters....................................................................................15
3.12 Employee Benefit Plans; EXCL Station Employees.................................................15
3.13 Inapplicability of Specified Statutes..........................................................16
3.14 Material Agreements............................................................................16
3.15 Ordinary Course of Business....................................................................17
3.16 Broker or Finder...............................................................................18
3.17 Solvency.......................................................................................18
3.18 Environmental Matters..........................................................................18
3.20 Bulk Sales.....................................................................................19
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE AMERICAN PARTIES.................................................20
4.1 Organization and Business; Power and Authority; Effect of Transaction..........................20
4.2 Financial and Other Information. .............................................................21
4.3 Changes in Condition...........................................................................21
4.4 Material Statements and Omissions; Absence of Events; Materiality..............................22
4.5 Title to Properties; Leases....................................................................22
4.6 Compliance with Private Authorizations.........................................................23
4.7 Compliance with Governmental Authorizations and Applicable Law.................................24
4.8 Intangible Assets..............................................................................25
4.9 Related Transactions...........................................................................25
4.10 Insurance......................................................................................26
4.11 Tax Matters....................................................................................26
4.12 Employee Benefit Plans; American Station Employees.............................................26
4.13 Inapplicability of Specified Statutes..........................................................26
<PAGE>
4.14 Material Agreements............................................................................27
4.15 Ordinary Course of Business....................................................................27
4.16 Broker or Finder...............................................................................28
4.17 Solvency.......................................................................................28
4.18 Environmental Matters..........................................................................29
4.20 Bulk Sales.....................................................................................29
ARTICLE 5 COVENANTS......................................................................................31
5.1 Access to Information; Confidentiality.........................................................31
5.2 Agreement to Cooperate.........................................................................33
5.3 Public Announcements...........................................................................35
5.4 Notification of Certain Matters................................................................35
5.5 No Solicitation................................................................................36
5.6 Conduct of Business by the EXCL Parties Pending the Closing....................................36
5.7 Conduct of Business by American Pending the Closing............................................38
5.8 Risk of Loss...................................................................................39
5.9 KINK Employees.................................................................................40
ARTICLE 6 CLOSING CONDITIONS.............................................................................40
6.1 Conditions to Obligations of Each Party to Effect the Exchange.................................40
6.2 Conditions to Obligations of the American......................................................41
6.3 Conditions to Obligations of the EXCL Parties..................................................43
ARTICLE 7 TERMINATION, AMENDMENT AND WAIVER..............................................................46
7.1 Termination....................................................................................46
7.2 Effect of Termination..........................................................................47
ARTICLE 8 INDEMNIFICATION................................................................................47
8.1 Survival. .....................................................................................47
8.2 Indemnification................................................................................47
8.3 Limitation of Liability........................................................................48
8.4 Notice of Claims...............................................................................49
8.5 Defense of Third Party Claims..................................................................49
8.6 Exclusive Remedy...............................................................................49
ARTICLE 9 GENERAL PROVISIONS.............................................................................49
9.1 Amendment......................................................................................49
9.2 Waiver.........................................................................................49
9.3 Fees, Expenses and Other Payments..............................................................50
9.4 Notices........................................................................................50
9.5 Specific Performance; Other Rights and Remedies................................................51
9.6 Severability...................................................................................51
9.7 Counterparts...................................................................................52
9.8 Section Headings...............................................................................52
9.9 Governing Law..................................................................................52
9.10 Further Acts...................................................................................52
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<PAGE>
9.11 Entire Agreement...............................................................................52
9.12 Assignment.....................................................................................53
9.13 Parties in Interest............................................................................53
9.14 Mutual Drafting................................................................................53
9.15 American Agent for Other American Parties. ....................................................53
9.16 EXCL Agent for Other EXCL Parties. ...........................................................53
<CAPTION>
APPENDIX A: Definitions
EXHIBITS:
<S> <C>
EXHIBIT A-1: Form of American Stations LMA (Section 5.2(d))
EXHIBIT A-2: Form of EXCL Stations LMA (Section 5.2(d))
EXHIBIT B-1: Form of Opinion for Counsel of the EXCL Parties (Section 6.2(b))
EXHIBIT B-2: Form of Opinion for FCC Counsel of the EXCL Parties (Section
6.2(b))
EXHIBIT C-1: Form of Opinion for Counsel of the American Parties (Section 6.3(b))
EXHIBIT C-2: Form of Opinion for FCC Counsel of the American Parties (Section
6.3(b))
</TABLE>
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<PAGE>
ASSET EXCHANGE AGREEMENT
This Asset Exchange Agreement (this "Agreement") is dated as of April
17, 1997, by and among American Radio Systems Corporation, a Delaware
corporation ("American"), American Radio Systems License Corp., a Delaware
corporation and a wholly-owned subsidiary of American ("American License" or,
individually with American, an "American Party" and, collectively with American,
the "American Parties"), on the one hand, and Latin Communications Group, Inc.,
a Delaware corporation ("Latin"), EXCL Communications, Inc., an Illinois
corporation ("EXCL"), Radio Exito, Inc., a California corporation ("Exito"), and
Portland Radio, Inc., a Washington corporation ("Portland" or, individually with
Latin, EXCL and Exito, an "EXCL Party" and, collectively with Latin, EXCL and
Exito, the "EXCL Parties"), on the other hand.
WHEREAS, Exito owns, operates and is the licensee of radio station
KBRG(FM) ("KBRG"), Fremont, California and Portland owns, operates and is the
licensee of radio station KINK(FM) ("KINK"), Portland, Oregon (individually, an
"EXCL Station" and collectively, the "EXCL Stations") pursuant to licenses
issued by the FCC (the "KBRG FCC Licenses" and the "KINK FCC Licenses",
respectively, and collectively, the "EXCL FCC Licenses");
WHEREAS, American owns and operates and American License is the
licensee of radio stations KBAY(FM) ("KBAY"), San Jose, California and KSSJ(FM)
("KSSJ"), Shingle Springs, California (individually, an "American Station" and
collectively, the "American Stations") pursuant to licenses issued by the FCC
(the "KBAY FCC Licenses" and the "KSSJ FCC Licenses", respectively, and
collectively, "American FCC Licenses");
WHEREAS, (i) American License and Portland desire to exchange the KBAY
FCC Licenses for the KINK FCC Licenses and a portion of the EXCL Residual Group
Assets, (ii) American License and Exito desire to exchange the KSSJ FCC Licenses
for the KBRG FCC Licenses and a portion of the EXCL Residual Group Assets, (iii)
American and Portland desire to exchange the KBAY Assets (other than the KBAY
FCC Licenses) for the KINK Assets (other than the KINK FCC Licenses) and a
portion of the EXCL Residual Group Assets, and (iv) American and Exito desire to
exchange the KSSJ Assets (other than the KSSJ FCC Licenses) for the KBRG Assets
(other than the KBRG FCC Licenses) and a portion of the EXCL Residual Group
Assets (collectively, the "Exchange") on the terms and subject to the conditions
hereinafter set forth; and
WHEREAS, American has consented to the entry of a Final Judgment with
the United States Department of Justice, dated February 27, 1997, with respect
to the disposition of KSSJ (the "American Consent Decree"); 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, the American Parties and the EXCL
Parties, intending to be legally bound, do hereby covenant and agree as follows:
<PAGE>
ARTICLE 1
DEFINED TERMS
As used herein, unless the context otherwise requires, the terms
defined in Appendix A shall have the respective meanings set forth therein.
Terms defined in the singular shall have a comparable meaning when used in the
plural, and vice versa, and the reference to any gender shall be deemed to
include all genders. Unless otherwise defined or the context otherwise clearly
requires, terms for which meanings are provided in this Agreement shall have
such meanings when used in either Disclosure Schedule and each Collateral
Document executed or required to be executed pursuant hereto or thereto or
otherwise delivered, from time to time, pursuant hereto or thereto. 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, unless the context otherwise requires, refer to
American and EXCL, and shall include, any Subsidiary or other Affiliate of
either thereof which is or becomes a party to this Agreement.
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, the American Parties and the EXCL
Parties agree to cause the exchange, transfer and delivery on the Closing Date
of the EXCL Assets and the American Assets, free and clear of any Liens of any
nature whatsoever except Permitted Liens, on the terms and subject to the
conditions set forth in this Agreement as follows:
(a) the KBRG Assets (other than the KBRG FCC Licenses) and the
allocated portion of the EXCL Residual Group Assets will be exchanged
by Exito with American for the KSSJ Assets (other than the KSSJ FCC
Licenses), and the KINK Assets (other than the KINK FCC Licenses) and
the allocated portion of the EXCL Residual Group Assets will be
exchanged by Portland with American for the KBAY Assets (other than the
KBAY FCC Licenses) (the "Asset Exchange"); and
(b) the KBRG FCC Licenses and the allocated portion of the
EXCL Residual Group Assets will be exchanged by Exito with American
License for the KSSJ FCC Licenses, and the KINK FCC Licenses and the
allocated portion of the EXCL Residual Group Assets will be exchanged
by Portland with American License for the KBAY FCC Licenses (the
"License Exchange").
The Asset Exchange and the License Exchange insofar as they relate to (i) KBRG
and KSSJ is hereinafter sometimes referred to as the "KSSJ-KBRG Exchange", and
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<PAGE>
(ii) KBAY and KINK is hereinafter sometimes referred to as the "KBAY-KINK
Exchange". The parties agree that, for purposes of the foregoing, the EXCL
Residual Group Assets shall be allocated in their entirety to the KSSJ-KBRG
Exchange and none shall be allocated to the KBAY-KINK Exchange.
2.2 Exchange Schedule; Appraisals; Tax Reporting.
(a) The American Parties and the EXCL Parties agree that the fair
market value of each asset included in the American Assets and the EXCL Assets
will be determined on the basis of the appraisals (the "Appraisals"), prepared
by the firm of BIA Consulting, Inc., whose fee and expenses shall be equally
borne by American and EXCL. The parties shall direct BIA Consulting, Inc. to
commence the Appraisals after the expiration or earlier termination of the
Hart-Scott-Rodino Act waiting period, to deliver them as soon thereafter as
practicable and to set forth in the Appraisals the fair market value of each
asset included in the American Assets and the EXCL Assets. The EXCL Residual
Group Assets shall be valued as set forth in the definition thereof.
(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 EXCL 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 for
purposes of determining the gain, if any, that may be recognized pursuant to the
provisions of Treas. Reg. ss.1.1031(j)-1(b)(3), for purposes of determining the
basis of the properties received in the Exchange pursuant to the provisions of
Treas. Reg. ss.1.1031(j)-1(c), or for any other purpose, and will prepare and
file all Tax Returns and reports related to the Exchange, including without
limitation those required under Section 1031 or 1060 of the Code (and the
Treasury Regulations promulgated under each thereof) and all original and
amended federal, state and local income Tax Returns, on a basis consistent with
such valuations. Each asset included in the EXCL Assets and each 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) in a manner that is consistent with the valuations and descriptions
set forth in the Valuation Schedule.
(c) Each of the parties 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 Valuation Schedule. Each of the parties
shall cooperate with the other party in any and all respects necessary to
maximize the amount of gain that may be deferred in a like-kind exchange under
the rules set forth in Section 1031 of the Code and shall endeavor to give the
other party 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 under Section 1031 of
the Code, or to facilitate the Exchange (or any part thereof) as part of a
deferred like-kind exchange described in Section 1031(a)(3) of the Code, each of
the American Parties and each of the EXCL Parties (i) may at any time at or
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<PAGE>
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 the
EXCL Parties and the American Parties, respectively, and, in such event, (ii)
shall promptly provide written notice of such assignment to the other party. If
American or American Licensee shall have given notice of such assignment to a
qualified intermediary, the appropriate EXCL Party shall (i) promptly provide
American and American License with written acknowledgment of such notice and
(ii) at the Closing, convey the EXCL Assets and EXCL Residual Group Assets (or
such portion of them as shall have been designated in writing by American or
American License) to the "qualified intermediary" so designated rather than to
American and American License (which conveyance shall, to such extent, discharge
the obligation of the EXCL Parties to deliver the EXCL Assets and the EXCL
Stations hereunder). If any EXCL Party shall have given notice of such
assignment to a qualified intermediary, American and American License shall (i)
promptly provide such EXCL Party 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 any EXCL Parties) to the "qualified
intermediary" so designated rather than to such EXCL Party (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 EXCL Assumable Agreements
at the Closing or, to the extent provided in the EXCL Stations TBA, upon the TBA
Date of the EXCL Stations TBA. Except as expressly provided in this Agreement,
including without limitation Section 2.3(d), or in the EXCL Stations TBA, the
American Parties shall not assume or become obligated to perform any debt,
liability or obligation of any EXCL Party or relating to the ownership or
operation of the EXCL Assets or the conduct of the business of the EXCL Stations
prior to the Closing whatsoever, other than to the extent set forth in the
assumption of the EXCL Assumable Agreements. The parties acknowledge and agree
that the assumption of the EXCL Assumable Agreements shall not, except to the
extent of any proration pursuant to the provisions of Section 2.3(c), entail the
assumption by the American Parties of any obligation or liability of any EXCL
Party with respect to (i) any obligations or liabilities under the EXCL
Assumable Agreements relating to the period prior to the Cut-off Date; (ii) any
Claims to which any EXCL Party is a party or to which any of the EXCL Assets or
either of the EXCL Stations is subject relating to the ownership or operation of
the EXCL Assets or the conduct of the business of the EXCL Stations prior to the
Closing (other than as provided in the EXCL Stations TBA); (iii) any obligations
or liabilities for any Taxes attributable to the ownership or operation of the
EXCL Assets or the conduct of the business of the EXCL Stations on or prior to
the Closing Date; or (iv) any obligations or liabilities due to or because of
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any past service liability, vested benefits, retirement plan insolvencies or
other obligation under local, state or federal law (including ERISA) relating to
any EXCL Station Employees with respect to periods prior to the Closing Date (or
the Cut-Off Date with respect to EXCL Station Employees employed by American
under the EXCL Stations TBA), except for amounts covered by the prorations
provided for in Section 2.3(c). All such obligations and liabilities (the "EXCL
Nonassumed Liabilities") shall remain and be the obligations and liabilities
solely of the EXCL Parties (or one of them).
(b) The EXCL Parties agree to assume the American Assumable Agreements
at the Closing or, to the extent provided in the American Stations 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 EXCL
Stations TBA, the EXCL Parties 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(c), entail the assumption by the EXCL Parties 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 either 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 obligations or
liabilities for any Taxes attributable to the ownership or operation of the
American Assets or the American Stations on or prior to the Closing Date; or
(iv) any obligation or liability due to or because of any past service
liability, vested benefits, retirement plan insolvencies or other obligation
under local, state or federal law (including ERISA) relating to any American
Station Employees with respect to periods prior to the Closing Date (or the
Cut-Off Date with respect to American Station Employees employed by EXCL under
the American Stations TBA), except for amounts covered by the prorations
provided for in Section 2.3(c). All such obligations and liabilities (the
"American Nonassumed Liabilities") shall remain and be the obligations and
liabilities solely of the American Parties (or one of them).
(c) (i) Notwithstanding anything contained in this Agreement to the
contrary and except as otherwise provided in the American Stations TBA, all
items of income and expense (including without limitation with respect to rent,
utilities, Pro Ratable Taxes and items relating to the American Assumable
Agreements, but excluding wages, salaries and accrued but unused vacation for
employees) relating to the ownership or operation of the American Assets shall
be prorated between the American Parties and the EXCL Parties, in each case, as
of 12:01 a.m., local 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.
(ii) Notwithstanding anything contained in this Agreement to
the contrary and except as otherwise provided in the EXCL Stations TBA, all
items of income and expense (including without limitation with respect to rent,
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utilities, Pro Ratable Taxes and items relating to the EXCL Assumable
Agreements, and wages, salaries and accrued but unused vacation for KINK Station
Employees, but excluding wages, salaries and accrued but unused vacation for
KBRG Station Employees) relating to the ownership or operation of the EXCL
Assets or the conduct of the business of KINK shall be prorated between the
American Parties and the EXCL Parties, in each case, as of 12:01 a.m., local
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 EXCL 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 any EXCL Party pursuant to the provisions of Section
2.3(g) (the "San Jose-Sacramento Proration Schedule"). The San Jose-Sacramento
Proration Schedule shall be conclusive and binding upon the EXCL Parties unless
the EXCL provides American with written notice of objection (the "Notice of
Disagreement") within thirty (30) days after EXCL's receipt of the San
Jose-Sacramento Proration Schedule, which notice shall state the prorations
proposed by EXCL (the "EXCL Proration Schedule"). American shall have fifteen
(15) days from receipt of a Notice of Disagreement to accept or reject the EXCL
Proration Schedule. If American rejects the EXCL 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 the American Parties and the EXCL Parties. American
and EXCL 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 EXCL. Payment by any party
pursuant hereto 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) EXCL's
acceptance of the San Jose-Sacramento Proration Schedule or failure to give
American a timely Notice of Disagreement; (ii) American's acceptance of the EXCL
Proration Schedule or failure to reject the EXCL Proration Schedule within
fifteen (15) days of receipt of a timely Notice of Disagreement; (iii)
American's rejection of the EXCL 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 EXCL 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, EXCL shall deliver
to American a schedule of its proposed prorations with respect to the EXCL
Assets and the EXCL Stations which shall set forth in reasonable detail the
basis for those determinations, and which shall account for any amount owed by
EXCL to American pursuant to the provisions of Section 2.3(g) (the "Fremont-
Portland Proration Schedule"). The Fremont-Portland Proration Schedule shall be
conclusive and binding upon American unless American provides EXCL with a Notice
of Disagreement within thirty (30) days after American's receipt of the
Fremont-Portland Proration Schedule, which notice shall state the prorations
proposed by American (the "American Proration Schedule"). EXCL shall have
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fifteen (15) days from receipt of a Notice of Disagreement to accept or reject
the American Proration Schedule. If EXCL 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 EXCL and American.
American and EXCL 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 EXCL. Payment by American
or EXCL, 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 Fremont-Portland Proration Schedule or failure
to give EXCL a timely Notice of Disagreement; (ii) EXCL's 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)
EXCL's 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 EXCL 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).
(f) Any payment required by American to EXCL or by EXCL to American, as
the case may be, under Section 2.3(e) or 2.3(f) shall be paid by wire transfer
of immediately available federal funds to the account of the payee with a
financial institution in the United States as designated by such party in the
Fremont-Portland Proration Schedule or the San Jose-Sacramento 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 any party fails to
pay when due any amount under Section 2.3(e) or 2.3(f) 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 percentage points (2%), and such interest shall be
payable upon demand.
(g) With respect to assigned Trade Agreements the assigning party shall
be required to pay to the assuming party 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. local time
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. local time 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. local time 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.
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2.4 Closing Date. The closing of the Exchange (the "Closing") shall
take place at Sullivan & Worcester LLP, One Post Office Square, Boston,
Massachusetts 02109, at 10:00 a.m., local time, on the fifth (5th) business day
after the satisfaction or waiver by the American Parties and the EXCL Parties of
each of the conditions set forth in Section 6.1, 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 warranting against matters not covered by title insurance other than
Permitted Liens), 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) the EXCL
Parties shall (i) pay to American Two Million Dollars ($2,000,000) by wire
transfer of immediately available federal funds to such account of American with
a financial institution in the United States as is designated by American in
written instructions to EXCL not later than two (2) business days prior to the
Closing and (ii) issue and deliver to American one or more certificates (as is
designated by American in written instructions to EXCL not later than two (2)
business days prior to the Closing) representing 150,000 shares of Latin Common
Stock (which number is subject to adjustment as provided in the definition of
EXCL Residual Group Assets). The above payment of cash and delivery of Latin
Common Stock shall be allocated among the American Assets as set forth in a
schedule mutually agreed upon by the parties.
2.5 Accounts Receivable. Effective upon the earlier to occur of Closing
or the commencement of the effectiveness of the EXCL Station TBA, the EXCL
Parties hereby appoint American their agent for the purpose of collecting all
Accounts Receivable relating to KINK and KOTK-AM (other than Accounts Receivable
past due for more than one hundred and twenty (120) days). Portland shall
deliver to American on or as soon as practicable after the earlier to occur of
the 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 KINK and KOTK-AM. Subject to
and limited by the following, revenues relating to the KINK and KOTK-AM Accounts
Receivable will be for the account of Portland. American 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 commencing upon the earlier to occur of (a) the effectiveness of the
EXCL Stations TBA and (b) the Closing Date and continuing until the expiration
of one hundred and twenty (120) days after the Closing Date (the "Collection
Period"). Any payment received by American 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 independently indicates otherwise in writing.
During the Collection Period, American shall furnish Portland with a list of,
and pay over to Portland, 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. American shall provide
Portland with a final accounting on or before the fifteenth (15th) day following
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the end of the Collection Period. Upon the request of American at and after such
time, American and Portland 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 American desires to
retain such Accounts Receivable in the interest of maintaining an advertising
relationship. As to each such Accounts Receivable, American and Portland shall
in good faith attempt to negotiate the value of such Accounts Receivable, which
American shall pay to Portland if American, in its sole discretion, chooses to
retain such Accounts Receivable. Portland shall retain the right to collect any
of its Accounts Receivable as to which American and Portland are unable to reach
agreement as to such value, and American agrees to turn over to Portland any
payments received against any such Accounts Receivable. American 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 American shall not make any such referral or compromise, nor settle or
adjust the amount of any such Accounts Receivable, except with the approval of
Portland; provided, however, that, at the discretion of Portland, American shall
refer Accounts Receivable of KINK which are in excess of one hundred and twenty
(120) days past due to a collection agency or an attorney for collection,
whereupon Portland shall be responsible for the collection thereof. American
shall not incur any liability to Portland for any uncollected Accounts
Receivable unless American 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 American
with respect thereto to the contrary, neither Portland nor its agents shall make
any direct solicitation of the Accounts Receivable of KINK for collection
purposes, except for Accounts Receivable retained by Portland.
With respect to all Stations, other than KINK and KOTK-AM, the party
owning such Station shall be responsible for and shall collect the Accounts
Receivable of such Stations, and neither the other party nor any of its agents
shall make any direct solicitation of such Accounts Receivable for collection
purposes.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE EXCL PARTIES
Each of the EXCL Parties, jointly and severally, hereby represents,
warrants and covenants to, and agrees with, the American Parties as follows:
3.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) Each EXCL Party 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 EXCL Party 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 by it
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pursuant hereto or thereto have been duly authorized by all requisite corporate
or other action on the part of each EXCL Party. This Agreement has been duly
executed and delivered by each EXCL Party and constitutes, 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 will, when executed and
delivered by such EXCL Party, constitute, the legal, valid and binding
obligation of such EXCL Party, enforceable against such EXCL Party 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 EXCL Disclosure
Schedule, neither the execution and delivery by each EXCL Party of this
Agreement or any Collateral Document executed or required to be executed by it
pursuant hereto or thereto, nor the consummation by each EXCL Party of the
Exchange and the other Transactions, nor compliance with the terms, conditions
and provisions hereof or thereof by each EXCL Party:
(i) will conflict with, or result in a breach or violation of,
or constitute a default under, any Organic Document of any EXCL Party
or any Applicable Law on the part of any EXCL Party, 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 EXCL Material
Agreement; or
(ii) will require any EXCL Party to make or obtain any
Governmental Authorization, Governmental Filing or Private
Authorization, except for the FCC Consents and filings under the
Hart-Scott-Rodino Act and Private Authorizations, the failure of which
to be obtained or maintained would not, individually or in the
aggregate, have a material adverse effect on EXCL.
(d) Except as set forth on Section 3.1(d) of the EXCL Disclosure
Schedule, Latin does not have any direct or indirect Subsidiaries or other
Affiliates which own or have any interest in or are a party to any agreement,
arrangement or understanding relating to either of the EXCL Stations or any of
the EXCL Assets other than the other EXCL Parties. To the extent that any direct
or indirect Subsidiaries or other Affiliates of any EXCL Party (other than those
which are parties to this Agreement) has any interest in or are a party to any
agreement, arrangement or understanding relating to either of the EXCL Stations
or any of the EXCL Assets, the EXCL Parties shall cause such other direct or
indirect Subsidiaries or other Affiliates to convey such interest to the
American Parties as part of the EXCL Assets and will cause any such nonassumed
agreement, arrangement or understanding to be terminated or otherwise amended
prior to the Closing to the extent necessary to avoid any Lien or Claim against
any of the EXCL Assets or either of the EXCL Stations or any transferee
liability against either of the American Parties with respect thereto.
3.2 Financial and Other Information. EXCL has heretofore furnished to
American copies of the unaudited financial statements of KINK listed in Section
3.2 of the EXCL Disclosure Schedule (the "EXCL Station Financial Statements").
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The EXCL Station Financial Statements have been prepared in accordance with GAAP
applied on a consistent basis throughout the period, are true, accurate and
complete in all material respects, and fairly present the financial condition,
results of operations and cash flow of KINK, on the bases therein stated, as of
the respective dates thereof, and for the respective periods covered thereby,
except as set forth in Section 3.2 of the EXCL Disclosure Schedule or as
otherwise noted in the EXCL Station Financial Statements and except for year end
audit adjustments and accruals and the absence of notes. Except solely for the
obligations and liabilities to be assumed by the American Parties pursuant to
the EXCL Assumable Agreements, the Permitted Liens, items for which proration is
made pursuant to the provisions of Section 2.3, and changes and conditions
affecting the radio broadcasting industry generally, there will, at the time of
Closing, be no obligations or liabilities of any nature, whether accrued,
absolute, contingent or otherwise, relating to the EXCL Parties, any of the EXCL
Assets or either of the EXCL Stations which could, after the Closing, result in
any form of transferee liability against either American Party or subject any of
the EXCL Assets or either of the EXCL Stations to any Lien or otherwise
materially adversely affect the full, free and unencumbered ownership or
operations of the EXCL Assets and the conduct of the business of either of the
EXCL Stations by the American Parties. Notwithstanding anything herein contained
to the contrary, the American Parties acknowledge that (a) Portland has owned
and operated KINK and radio station KOTK-AM from a common facility and using
common sales personnel, (b) Portland has entered into a contract to sell and
time broker KOTK-AM, and (c) the allocation of income and expenses between KINK
and KOTK-AM on the EXCL Station Financial Statements was made by Portland
management prior to the acquisition of the capital stock of Portland by EXCL,
solely for Portland's internal purposes.
3.3 Changes in Condition. Since December 31, 1996, there has been no
material adverse change in EXCL, except (a) to the extent specifically described
in Section 3.3 of the EXCL Disclosure Schedule, (b) for changes due to general
business, market and economic conditions, and (c) changes due to matters
affecting the radio broadcasting industry generally. Except to the extent
specifically described in Section 3.3 of the EXCL Disclosure Schedule, there is
no Event known to EXCL which materially adversely affects, or (so far as EXCL
can now reasonably foresee) is likely to materially adversely affect, EXCL,
except (a) to the extent specifically described in Section 3.3 of the EXCL
Disclosure Schedule and (b) for general business, market and economic conditions
and matters affecting the radio broadcasting industry generally.
3.4 Material Statements and Omissions; Absence of Events; Materiality.
No representation or warranty made by EXCL contained in this Agreement, the EXCL
Disclosure Schedule or any certificate, document or other instrument furnished
or to be furnished by EXCL 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. Except as set forth in Section 3.4 of the EXCL Disclosure Schedule,
EXCL is not aware of any impending or contemplated Event (other than Events
affecting general business, market or economic conditions or the radio
broadcasting industry generally) 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. The representations and
warranties set forth in this Article would in the aggregate be true and correct
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even without the materiality exceptions or qualifications contained therein or
set forth in the EXCL Disclosure Schedule, except for such exceptions and
qualifications including without limitation those set forth in the EXCL
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 EXCL.
3.5 Title to Properties; Leases.
(a) Section 3.5(a) of the EXCL Disclosure Schedule lists all Real
Property owned by any EXCL Party (the "EXCL Owned Real Property") and describes
all Leases of Real Property (the "EXCL Leases") which is used or held for use in
the operation of either of the EXCL Stations (the EXCL Owned Real Property and
the real property subject to the EXCL Leases, being hereinafter referred to
collectively as the "EXCL Real Property"). One of the EXCL Parties has (and
American will upon Closing obtain) good and marketable title to the EXCL Owned
Real Property and valid and subsisting leasehold interests in the EXCL Leases,
in each case free and clear of all Liens, except (i) Permitted Liens and (ii)
Liens set forth on Section 3.5(a) of the EXCL Disclosure Schedule (which Liens,
to the extent they are not Permitted Liens, shall be released prior to Closing).
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 EXCL Disclosure Schedule), no financing
statements under the Uniform Commercial Code and no other filing which names any
EXCL Party as debtor or which covers or purports to cover any of the EXCL Assets
is on file in any state or other jurisdiction, and no EXCL Party has signed or
agreed to sign any such financing statement or filing or any agreement
authorizing any secured party thereunder to file any such financing statement or
filing. One of the EXCL Parties has full legal and practical access to all of
the EXCL Owned Real Property, except to the extent, if any, set forth in Section
3.5(a) of the EXCL Disclosure Schedule. The EXCL Owned Real Property, together
with the real property that is subject to the EXCL Leases, includes all the real
property, easements, rights of way, and other real property interests necessary
to conduct the business of each of the EXCL Stations as they are now conducted.
The buildings, structures, improvements or fixtures constructed on any EXCL
Owned Real Property and real property that is subject to the EXCL Leases,
including without limitation all towers, guy wires and guy anchors and ground
radials, do not, to EXCL's knowledge, encroach upon adjoining real property, 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 3.5(a) of the EXCL Disclosure Schedule. All buildings,
structures, towers, antennae, improvements and fixtures comprising the EXCL
Owned Real Property or real property that is subject to the EXCL 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 of each of the
EXCL Stations as presently conducted, except to the extent, if any, set forth in
Section 3.5(a) of the EXCL Disclosure Schedule. There is no pending or, to
EXCL's knowledge, threatened condemnation or other legal proceeding or action of
any kind relating to ant EXCL Real Property and/or title thereto.
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Except as otherwise set forth in Section 3.5(a) of the EXCL Disclosure
Schedule, each EXCL Lease included in the EXCL Real Property has been duly
authorized, executed and delivered by the appropriate EXCL Party and, to EXCL's
knowledge, each of the other parties thereto, and is a legal, valid and binding
obligation of the appropriate EXCL Party, and, to EXCL's knowledge, each of the
other parties thereto, enforceable in accordance with its terms. The appropriate
EXCL Party has a valid leasehold interest in and enjoys peaceful and undisturbed
possession under all EXCL Leases pursuant to which it holds any EXCL Real
Property. All EXCL Leases are valid and subsisting and in full force and effect;
neither any EXCL Party nor, to EXCL'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 EXCL Lease.
(b) Section 3.5(b) of the EXCL Disclosure Schedule contains a true,
accurate and complete description of all material items of Personal Property
(other than those constituting EXCL Excluded Assets) used or held for use in the
ownership, operation of conduct of the business of either of the EXCL Stations.
An EXCL Party owns and has good and merchantable title to all of the EXCL
Personal Property, free and clear of all Liens, except (i) Permitted Liens and
(ii) Liens set forth on Section 3.5(b) of the EXCL Disclosure Schedule (which
Liens shall, to the extent they are not Permitted Liens, be released prior to
Closing). Except as set forth in Section 3.5(b) of the EXCL Disclosure Schedule,
all material items of EXCL Personal Property are in good operating condition,
normal wear and tear excepted, have been maintained in a manner consistent with
generally accepted standards of good engineering practice and currently permit
the EXCL Stations to be operated in all material respects in accordance with the
terms and conditions of their respective FCC Licenses and all Applicable Laws.
3.6 Compliance with Private Authorizations. Section 3.6 of the EXCL
Disclosure Schedule sets forth a true, accurate and complete list and
description of each EXCL Private Authorization which, individually or when taken
together with other substantially similar EXCL Private Authorizations, is
material to the EXCL Assets or either of the EXCL Stations, all of which are in
full force and effect. One of the EXCL Parties has obtained all Private
Authorizations which are necessary for the ownership and operation by the EXCL
Parties of the EXCL Assets and the conduct of the business of each of the EXCL
Stations as now conducted or which, if not obtained and maintained, could,
individually or in the aggregate, materially adversely affect EXCL. No EXCL
Party is in breach or violation of, or in default in the performance, observance
or fulfillment of, any EXCL 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 EXCL Private Authorization, except for such defaults, breaches or
violations as do not and will not have, individually or in the aggregate, any
material adverse effect on EXCL. No EXCL Private Authorization is the subject of
any pending or, to EXCL's knowledge, threatened challenge, revocation or
termination.
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3.7 Compliance with Governmental Authorizations and Applicable Law.
(a) Section 3.7(a) of the EXCL Disclosure Schedule contains a
description of:
(i) all Claims and Legal Actions pending or, to EXCL's
knowledge, threatened against any EXCL Party with respect to the
operation or ownership of any of the EXCL Assets or the conduct of the
business of either of the EXCL 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 EXCL
FCC Licenses or the imposition of any restriction of such a nature as
would adversely affect the ownership or operations of any of the EXCL
Assets or the conduct of the business of either of the EXCL Stations;
in particular, but without limiting the generality of the foregoing,
Section 3.7(a) of the EXCL Disclosure Schedule contains a description
of any complaints or Claims pending or, to EXCL's knowledge, threatened
(x) before the FCC relating to the ownership or operations of any of
the EXCL Assets or the conduct of the business of either of the EXCL
Stations other than complaints or Claims which affect the radio
broadcasting industry generally, or (y) before any Authority involving
charges of illegal discrimination by either of the EXCL 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 each of the EXCL Stations, as currently conducted or proposed
to be conducted on or prior to the Closing Date, all of which are in
full force and effect (the "EXCL Governmental Authorizations").
Attached to the EXCL Disclosure Schedule are true, correct and complete copies
of the EXCL Governmental Authorizations (including without limitation any and
all amendments and other modifications thereto).
(b) One of the EXCL Parties is the authorized legal holder of the FCC
Licenses listed in Section 3.7(a) of the EXCL Disclosure Schedule, none of which
is subject to any restriction or condition which would limit in any material
respect the operations of the EXCL Stations as currently conducted, except for
such conditions as are set forth on the face of such FCC License or generally
applicable to the radio broadcasting industry. The EXCL FCC Licenses are valid
and in good standing, are in full force and effect and are not impaired in any
respect by any act or omission of any EXCL Party or its officers, directors,
employees or agents. The EXCL Stations are operating in all material respects in
accordance with the EXCL FCC Licenses, all underlying construction permits and
the FCA. Except as disclosed in Section 3.7(b) of the EXCL Disclosure Schedule,
no application, action or proceeding is pending for the renewal or modification
of any EXCL FCC Licenses and, to EXCL's knowledge, there is not as of the date
of this Agreement issued or outstanding any investigation or complaint against
any EXCL Party by or before the FCC relating to any of the EXCL Stations. Except
as disclosed in Section 3.7(b) of the EXCL 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 EXCL Stations. All fees payable
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to Authorities pursuant to the EXCL Station FCC Licenses, including FCC annual
regulatory fees, have been paid and no event has occurred which, individually or
in the aggregate, and with or 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 EXCL. Except (i) as set forth in Section 3.7(b) of the EXCL
Disclosure Schedule and (ii) for such reports, forms and statements the failure
of which to file would not, individually or in the aggregate, have a material
adverse effect on the EXCL Stations, all reports, forms and statements required
to be filed by any EXCL Party with the FCC with respect to the EXCL Stations
have been filed and are true, complete and accurate in all respects. To EXCL's
knowledge, under the FCA, there are no facts that would disqualify it as the
transferee of the control of the American Stations.
The EXCL Governmental Authorizations comprise all Governmental
Authorizations which are necessary for the lawful ownership or operation of the
EXCL Assets or the lawful conduct of the business of the EXCL Stations as now
conducted, except for Governmental Authorizations, the failure of which to
obtain and maintain, would not, individually or in the aggregate, have a
material adverse effect on the EXCL Assets or the EXCL Stations. No EXCL
Governmental Authorization is the subject of any pending or, to EXCL's
knowledge, threatened challenge or proceeding to revoke or terminate any EXCL
Governmental Authorization. To EXCL's knowledge, except as set forth in Section
3.7(b) of the EXCL Disclosure Schedule, no EXCL Party has any reason to believe
that any EXCL Governmental Authorization would not be renewed in the name of one
of the EXCL Parties by the granting Authority in the ordinary course.
3.8 Intangible Assets. Section 3.8 of the EXCL Disclosure Schedule sets
forth a true, accurate and complete description of all material Intangible
Assets held or used by the EXCL Parties (other than EXCL Governmental
Authorizations and EXCL Private Authorizations) relating to the ownership and
operation of the EXCL Assets (insofar as they relate to KINK) or the conduct of
the business of KINK (the "KINK Intangible Assets"), including without
limitation the nature of each EXCL Party's interest in each and the extent to
which the same have been duly registered in the offices as indicated therein.
Portland owns or possesses or otherwise has the right to use all such KINK
Intangible Assets necessary for the ownership and operation of the EXCL Assets
(insofar as they relate to KINK) and the conduct of the business of KINK as
currently conducted. Except as set forth in Section 3.8 of the EXCL Disclosure
Schedule, no material Intangible Assets (except EXCL Governmental Authorizations
or EXCL Private Authorizations and the KINK Intangible Assets so set forth) are
required for the ownership or operation of the EXCL Assets (insofar as they
relate to KINK) or the conduct of the business of either of KINK as currently
owned, operated and conducted or proposed to be owned, operated and conducted on
or prior to the Closing Date.
3.9 Related Transactions. No EXCL Party is a party or subject to any
Contractual Obligation relating to the ownership and operation of the EXCL
Assets or the conduct of the business of either of the EXCL Stations between any
EXCL Party and any of its officers, directors, stockholders, employees or, to
the knowledge of EXCL, 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
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requiring payments to or from, any such Person, other than (i) the EXCL Employee
Plans or EXCL Material Agreements constituting employment agreements, and (ii)
Contractual Obligations between any EXCL Party and its officers which constitute
EXCL Excluded Assets and EXCL Nonassumed Liabilities.
3.10 Insurance. One of the EXCL Parties maintains, with respect to the
EXCL Assets and the EXCL Stations, policies of fire and extended coverage and
casualty, liability and other forms of insurance in such amounts and against
such risks and losses as are in EXCL's reasonable business judgment prudent (a
true, complete and accurate description of which is set forth in Section 3.10 of
the EXCL Disclosure Schedule).
3.11 Tax Matters. Each EXCL Party has in respect of the EXCL Assets and
the EXCL 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 EXCL Assets or
either of the EXCL Stations or result in any transferee liability against either
of the American Parties. All Taxes in respect of the EXCL Assets and the EXCL
Stations which any EXCL Party 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. No EXCL Party has
executed any waiver to extend, or otherwise taken or failed to take any action
that would have the effect of extending, the applicable statute of limitations
in respect of any Tax associated with the EXCL Assets or the EXCL Stations for
the fiscal years prior to and including the most recent fiscal year.
3.12 Employee Benefit Plans; EXCL Station Employees.
(a) Section 3.12(a) of the EXCL 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 are applicable to the KINK Station
Employees (the "KINK Employee Plans"). Neither any EXCL Party nor its Affiliates
maintains any other employee benefit plan, as that term is defined in Section 3
of ERISA, applicable to the KINK Station Employees.
(b) Section 3.12(b) of the EXCL Disclosure Schedule contains a true,
accurate and complete list of all persons employed by any EXCL Party in the
ownership or operation of any of the EXCL Assets (insofar as they relate to
KINK) or the conduct of the business of KINK (the "KINK 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 KINK Employee Plans).
(c) No EXCL Party has received any notice that, and no EXCL Party is
aware of, any KINK Station Employee who shall or is likely to terminate his or
her employment relationship with KINK upon the execution of this Agreement or
after the Closing, except as set forth in Section 3.12(c) of the EXCL Disclosure
Schedule (which Section of the EXCL Disclosure Schedule shall be updated as of
Closing).
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(d) Except as described in Section 3.12(d) of the EXCL Disclosure
Schedule, (i) none of the employees employed by any EXCL Party in the ownership
or operation of any of the EXCL Assets or the conduct of the business of either
of the EXCL Stations (the "EXCL Station Employees") is now or, to EXCL's
knowledge, has been represented by any labor union or other employee collective
bargaining organization, and no EXCL Party is or has been a party to any labor
or other collective bargaining agreement with respect to any EXCL 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) no EXCL Party nor any of such employees is now or, to EXCL'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 EXCL Station Employee.
3.13 Inapplicability of Specified Statutes. EXCL 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.
3.14 Material Agreements. Listed on Section 3.14 of the EXCL Disclosure
Schedule are all Material Agreements relating to the ownership or operation of
the EXCL Assets or the conduct of the business of either of the EXCL Stations or
to which any EXCL Party is a party or to which any of them is bound or to which
any of the EXCL Assets is subject (the "EXCL Material Agreements"). True,
accurate and complete copies of each EXCL Material Agreement have been made
available by EXCL to American and EXCL has provided American with photocopies of
all EXCL Material Agreements requested by American (or true, accurate and
complete descriptions of the material terms thereof have been set forth in
Section 4.16 of the EXCL Disclosure Schedule, if any such Material Agreements
are oral). All of the EXCL Material Agreements are valid, binding and legally
enforceable obligations of an EXCL Party and, to EXCL's knowledge, all other
parties thereto (except to the extent that the invalidity or non-binding nature
of any EXCL Material Agreements, individually or in the aggregate, would not
have a material adverse effect on EXCL). Each EXCL Party has duly complied in
all material respects with all of the terms and conditions of each EXCL Material
Agreement and has not done or performed, or failed to do or perform (and there
is no pending or, to the knowledge of EXCL, threatened Claim that any EXCL Party
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 EXCL Material
Agreement or materially impair the rights or benefits, or materially increase
the costs, of any EXCL Party under any EXCL Material Agreement. No EXCL Party
has granted any material waivers or forbearance under any EXCL Material
Agreement and, to EXCL's knowledge, no third party is in material default in the
performance of any of its obligations under any EXCL Material Agreement. Except
for those consents or approvals listed in Section 3.14 of the EXCL Disclosure
Schedule, no consents or approvals of any third party are necessary to permit
the assignment by the EXCL Parties of the EXCL Material Agreements to the
American Parties and such assignment will not affect the validity or
enforceability of any EXCL Material Agreement or cause any material change in
the substantive terms of any of them.
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3.15 Ordinary Course of Business. Each EXCL Party, from the end of its
most recent fiscal quarter to the date hereof, except (i) as may be described on
Section 3.15 of the EXCL Disclosure Schedule, or (ii) as may be required or
expressly contemplated by the terms of this Agreement, with respect to the EXCL
Assets and each of the EXCL Stations:
(a) has operated its business in the normal, usual and
customary manner in the ordinary and regular course of business,
consistent with prior practice;
(b) except in each case in the ordinary course of business,
consistent with prior practice:
(i) has not incurred any obligations or liabilities
(fixed, contingent or other) which would obligate any American
Party after the Closing having a value in excess of $20,000
singly or $100,000 in the aggregate;
(ii) has not sold or otherwise disposed of or
contracted to sell or otherwise dispose of any EXCL Asset
having a value in excess of $20,000;
(iii) has not entered into any commitments which
would obligate any American Party after the Closing having a
value in excess of $20,000 singly or $100,000 in the
aggregate;
(iv) has not made or committed to make any material
additions to its property or any purchases of equipment,
except for normal maintenance and repairs and items covered by
the Station's capital budget; and
(v) has not entered into, amended or terminated any
EXCL Lease, EXCL Governmental Authorization, EXCL Private
Authorization, EXCL Material Agreement or Contractual
Obligation, or any transaction, agreement or arrangement
with any Affiliate of any EXCL Party;
(c) has not increased the compensation payable or to become
payable to any of the KINK Station Employees other than in the ordinary
course of business or otherwise materially altered, modified or changed
the terms of their employment;
(d) 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 which will not have been repaired, cured or
replaced prior to the Closing Date;
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(e) has not waived any rights of material value without fair
and adequate consideration;
(f) has not experienced any work stoppage with respect to
KINK; and
(g) has not entered into any Trade Agreement with respect to
KINK (i) which are outside the ordinary course of business or (ii)
otherwise than in accordance with Portland's prior policies and
practices.
3.16 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 any EXCL Party, other than Star Media Group, whose fees
and expenses shall be the sole responsibility of the EXCL Parties.
3.17 Solvency. As of the execution and delivery of this Agreement, each
EXCL Party is, and immediately prior to giving effect to the consummation of the
Exchange and the other Transactions will be, solvent.
3.18 Environmental Matters. Except as set forth in Section 3.18 of the
EXCL Disclosure Schedule, with respect to the EXCL Assets, each EXCL Party (to
the knowledge of each EXCL Party (other than Portland) with respect to KINK
relating to periods prior to the acquisition by EXCL of the capital stock of the
parent of Portland):
(a) to the knowledge of each EXCL Party, 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 any consent decree, compliance order
or administrative order issued pursuant to any applicable Environmental
Law;
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(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 applicable Environmental Law;
(d) is, to the knowledge of each EXCL Party, in compliance in
all material respects with all applicable Environmental Laws, has, to
EXCL's knowledge, obtained all Environmental Permits required under
applicable Environmental Laws, and is not the subject of or, to EXCL'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 applicable
Environmental Law; and
(e) 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 EXCL Assets or the EXCL Real Property in such manner so as to
require remediation, removal or cleanup or other liability under, any
Environmental Laws.
Notwithstanding any other provisions of this Agreement, the EXCL Parties make no
representation or warranty as to any matter relating to any Environmental Law
other than as set forth in this Section.
3.19 Trade or Barter. Section 3.19 of the EXCL Disclosure Schedule sets
forth a true, complete and accurate description (including of all obligations
and liabilities remaining thereunder) of all of KINK Trade Agreements currently
in effect 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.
3.20 Bulk Sales. The EXCL Parties believe that the provisions of the
Bulk Sales Laws of the States of California and Oregon do not apply to the
transfer of the EXCL Assets in accordance with the terms of this Agreement. To
the extent that such Bulk Sales Laws do apply, the sole recourse of the American
Parties with respect to breach of this representation and warranty and any
transferee liability due to noncompliance with such laws shall be the
indemnification provisions of Article 8.
3.21 Authorized and Outstanding Capital Stock. The authorized and
outstanding capital stock of Latin is as set forth in Section 3.21 of the EXCL
Disclosure Schedule. The shares of Common Stock of Latin to be issued to
American pursuant to the consummation of Exchange and the other Transactions
(the "Latin Common Stock") have been duly authorized and, when so issued, will
be validly issued, fully paid and nonassessable and not subject to any
preemptive or similar rights, other than restrictions set forth in the Latin
Stockholder Agreement and the Latin Registration Rights Agreement. All of the
outstanding capital stock of Latin is owned of record as of the date of this
Agreement by the stockholders as set forth in Section 3.21 of the EXCL
Disclosure Schedule. There is neither outstanding nor has Latin agreed to grant
or issue any shares of its capital stock or any Option Security or Convertible
Security, and Latin is not a party to and is not 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 Section 3.21 of EXCL Disclosure Schedule.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE AMERICAN PARTIES
Each American Party, jointly and severally, hereby represents, warrants
and covenants to, and agrees with, the EXCL Parties as follows:
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4.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) Each American Party 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 American Party 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 by it
pursuant hereto or thereto have been duly authorized by all requisite corporate
or other action on the part of each American Party. This Agreement has been duly
executed and delivered by each American Party and constitutes, 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 will, when
executed and delivered by such American Party, constitute, the legal, valid and
binding obligation of such American Party, enforceable against such American
Party 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 4.1(c) of the American Disclosure
Schedule, neither the execution and delivery by any American Party of this
Agreement or any Collateral Document executed or required to be executed by it
pursuant hereto or thereto, nor the consummation by each American Party of the
Exchange and the other Transactions, nor compliance with the terms, conditions
and provisions hereof or thereof by each American Party:
(i) will conflict with, or result in a breach or violation of,
or constitute a default under, any Organic Document of any American
Party or any Applicable Law on the part of any American Party, 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
American Material Agreement; or
(ii) will require any American Party to make or obtain any
Governmental Authorization, Governmental Filing or Private
Authorization, except for the FCC Consents and filings under the
Hart-Scott-Rodino Act 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.
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(d) American does not have any direct or indirect Subsidiaries which
own or have any interest in or are a party to any agreement, arrangement or
understanding relating to either of the American Stations or any of the American
Assets other than American License. To the extent that any direct or indirect
Subsidiaries or other Affiliates of any American Party (other than those which
are parties to this Agreement) has any interest in or are a party to any
agreement, arrangement or understanding relating to either of the American
Stations or any of the American Assets, the American Parties shall cause such
other direct or indirect Subsidiaries or other Affiliates to convey such
interest to the American Parties as part of the American Assets and will cause
any such nonassumed agreement, arrangement or understanding to be terminated or
otherwise amended prior to the Closing to the extent necessary to avoid any Lien
or Claim against any of the American Assets or either of the American Stations
or any transferee liability against any of the EXCL Parties with respect
thereto.
4.2 Financial and Other Information. American has heretofore furnished
to EXCL copies of the unaudited financial statements of the American Stations
listed in Section 4.2 of the American Disclosure Schedule (the "American Station
Financial Statements"). The American Station Financial Statements have been
prepared in accordance with GAAP applied on a consistent basis throughout the
period, are true, accurate and complete in all material respects, and fairly
present the financial condition, results of operations and cash flow of the
American Stations, on the bases therein stated, as of the respective dates
thereof, and for the respective periods covered thereby, except as set forth in
Section 4.2 of the American Disclosure Schedule or as otherwise noted in the
American Station Financial Statements and except for year end audit adjustments
and accruals and the absence of notes. Except solely for the obligations and
liabilities to be assumed by the American Parties pursuant to the American
Assumable Agreements, the Permitted Liens, items for which proration is made
pursuant to the provisions of Section 2.3, and changes and conditions affecting
the radio broadcasting industry generally, there will, at the time of Closing,
be no obligations or liabilities of any nature, whether accrued, absolute,
contingent or otherwise, relating to American, any of the American Assets or
either of the American Stations which could, after the Closing, result in any
form of transferee liability against any EXCL Party or subject any of the
American Assets or either of the American Stations to any Lien or otherwise
materially adversely affect the full, free and unencumbered ownership or
operations of the American Assets and the conduct of the business of either of
the American Stations by the EXCL Parties.
4.3 Changes in Condition. Since December 31, 1996, there has been no
material adverse change in American, except (a) to the extent specifically
described in Section 4.3 of the American Disclosure Schedule, (b) for changes
due to general business, market and economic conditions, and (c) changes due to
matters affecting the radio broadcasting industry generally. Except to the
extent specifically described in Section 4.3 of the American Disclosure
Schedule, there is no Event known to American which materially adversely
affects, or (so far as American can now reasonably foresee) is likely to
materially adversely affect, American, except (a) to the extent specifically
described in Section 4.3 of the American Disclosure Schedule and (b) for general
business, market and economic conditions and matters affecting the radio
broadcasting industry generally.
4.4 Material Statements and Omissions; Absence of Events; Materiality.
No representation or warranty made by American contained in this Agreement, the
American Disclosure Schedule or any certificate, document or other instrument
furnished or to be furnished by American pursuant to the provisions hereof
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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. American is not aware of any impending or
contemplated Event (other than Events affecting general business, market or
economic conditions or the radio broadcasting industry generally) 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. The representations and warranties set forth in this Article would in the
aggregate be true and correct even without the materiality exceptions or
qualifications contained therein or set forth in the EXCL Disclosure Schedule,
except for such exceptions and qualifications including without limitation those
set forth in the American Disclosure Schedule which, in the aggregate for all
such representations and warranties, are not and could not reasonably be
expected to be materially adverse to American.
4.5 Title to Properties; Leases.
(a) Section 4.5(a) of the American Disclosure Schedule lists all Real
Property owned by any American Party (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 either of the American Stations (the American
Owned Real Property and the real property subject to the American Leases, being
hereinafter referred to collectively as the "American Real Property"). American
has (and the EXCL Parties will upon Closing obtain) good and marketable title to
the American Owned Real Property and valid and subsisting leasehold interests in
the American Leases, 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, to the extent they are not Permitted Liens,
shall be released prior to Closing). Except for financing statements evidencing
Liens referred to in the preceding sentence (a true, accurate and complete list
and description of which is set forth in Section 4.5(a) of the American
Disclosure Schedule), no financing statements under the Uniform Commercial Code
and no other filing which names any American Party as debtor or which covers or
purports to cover any of the American Assets is on file in any state or other
jurisdiction, and no American Party has signed or agreed to sign any such
financing statement or filing or any agreement authorizing any secured party
thereunder to file any such financing statement or filing. American has full
legal and practical access to all of the American Owned Real Property, 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 of each of the American Stations as they are now conducted. 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, do not, to American's knowledge, encroach upon adjoining real property,
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. All buildings,
structures, towers, antennae, improvements and fixtures comprising the
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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 of
each 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 knowledge, threatened condemnation or other legal
proceeding or action of any kind relating to the American Real Property and/or
title thereto.
Except as otherwise set forth in Section 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 the American, and, to
American's knowledge, each of the other parties thereto, and is a legal, valid
and binding obligation of American, and, to American's knowledge, each of the
other parties thereto, enforceable in accordance with its terms. American has a
valid leasehold interest in and enjoys peaceful and undisturbed possession under
all American Leases pursuant to which it holds any American Real Property. All
American Leases are valid and subsisting and in full force and effect; neither
American nor, to American'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 American Lease.
(b) Section 4.5(b) of the American Disclosure Schedule contains a true,
accurate and complete description of all material items of Personal Property
(other than those constituting American Excluded Assets) used or held for use in
the ownership, operation or conduct of the business of either of the American
Stations. American owns and has 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 3.5(b) of the American Disclosure
Schedule (which Liens shall, to the extent they are not Permitted Liens, be
released prior to Closing). Except as set forth in Section 4.5(b) of the
American Disclosure Schedule, all material items of American Personal Property
are in good operating condition, normal wear and tear excepted, have been
maintained in a manner consistent with generally accepted standards of good
engineering practice and currently permit the American Stations to be operated
in accordance with the terms and conditions of their respective 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 either of the American Stations, all of
which are in full force and effect. One of the American Parties has obtained all
Private Authorizations which are necessary for the ownership and operation by
the American Parties of the American Assets and the conduct of the business of
each of the American Stations as now conducted or which, if not obtained and
maintained, could, individually or in the aggregate, materially adversely affect
American. No American Party is in 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
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Authorization, except for such defaults, breaches or violations as do not and
will not have, individually or in the aggregate, any material adverse effect on
American. No American Private Authorization is the subject of any pending or, to
American's knowledge, threatened challenge, revocation or termination.
4.7 Compliance with Governmental Authorizations and Applicable Law.
(a) Section 4.7(a) of the American Disclosure Schedule contains a
description of:
(i) all Claims and Legal Actions pending or, to American's
knowledge, threatened against any American Party with respect to the
operation or ownership of any of the American Assets or the conduct of
the business of either 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 any
of the American Assets or the conduct of the business of either of the
American Stations; in particular, but without limiting the generality
of the foregoing, Section 4.7(a) of the American Disclosure Schedule
contains a description of any complaints or Claims pending or, to
American's knowledge, threatened (x) before the FCC relating to the
ownership or operations of any of the American Assets or the conduct of
the business of either of the American Stations other than complaints
or Claims which affect the radio broadcasting industry generally, or
(y) before any Authority involving charges of illegal discrimination by
either of the American Stations under any federal or state employment
Laws; and
(ii) each Governmental Authorization (including without
limitation all FCC Licenses) required under Applicable Laws to own and
operate each of the American Stations, as currently conducted or
proposed to be conducted on or prior to the Closing Date, all of which
are in full force and effect (the "American Governmental
Authorizations").
Attached to the American Disclosure Schedule are true, correct and complete
copies of the American Governmental Authorizations (including without limitation
any and all amendments and other modifications thereto).
(b) One of the American Parties is the authorized legal holder of the
FCC Licenses listed in Section 4.7(a) of the American Disclosure Schedule, none
of which is subject to any restriction or condition which would limit in any
respect the operations of the American Stations as currently conducted, except
for such conditions as are set forth on the face of such FCC License or
generally applicable to the radio broadcasting industry. The American FCC
Licenses are valid and in good standing, are in full force and effect and are
not impaired in any respect by any act or omission of any American Party or its
officers, directors, employees or agents. The American Stations are operating in
all material respects in accordance with the American FCC Licenses, all
underlying construction permits and the FCA. Except as disclosed in Section
4.7(b) of the American Disclosure Schedule, 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 any American Party by or
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before 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 Station FCC Licenses, including FCC annual
regulatory fees, have been paid and no event has occurred which, individually or
in the aggregate, and with or 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 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 a
material adverse effect on the American Stations, all reports, forms and
statements required to be filed by any American Party 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 American Stations.
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 now conducted, except for Governmental Authorizations, the failure of which
to obtain and maintain, would not, individually or in the aggregate, have a
material 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, no American Party
has any reason to believe that any American Governmental Authorization would not
be renewed in the name of one of the American Parties 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 American (other than American Governmental Authorizations
or 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
American's interest in each and the extent to which the same have been duly
registered in the offices as indicated therein. One of the American Parties owns
or possesses or otherwise has the right to use all American Intangible Assets
necessary for the ownership and operation of the American Assets and the conduct
of the business of either the American Stations as currently conducted. Except
as set forth in Section 4.8 of the American Disclosure Schedule, no Intangible
Assets (except American Governmental Authorizations or American Private
Authorizations and the American Intangible Assets so set forth) are required for
the ownership or operation of the American Assets or the conduct of the business
of either of the American Stations as currently owned, operated and conducted or
proposed to be owned, operated and conducted on or prior to the Closing Date.
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4.9 Related Transactions. No American Party 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 either of the American
Stations between any American Party and any of its officers, directors,
stockholders, employees or, to the knowledge of American, any Affiliate of any
thereof, including without limitation any Contractual Obligation providing for
the furnishing of services to or by, providing for rental of property, real,
personal or mixed, to or from, or providing for the lending or borrowing of
money to or from or otherwise requiring payments to or from, any such Person,
other than (i) the American Employee Plans or American Material Agreements
constituting employment agreements, (ii) Contractual Obligations between
American and its officers which constitute American Excluded Assets and American
Nonassumed Liabilities, and (iii) a management agreement between American and
American License which constitutes an American Excluded Asset and an American
Nonassumed Liability.
4.10 Insurance. One of the American Parties maintains, with respect to
the American Assets and the American Stations , policies of fire and extended
coverage and casualty, liability and other forms of insurance in such amounts
and against such risks and losses as are in American's reasonable business
judgment prudent (a true, complete and accurate description of which is set
forth in Section 4.10 of the American Disclosure Schedule).
4.11 Tax Matters. Each American Party has in respect of the American
Assets and the American Stations filed all material Tax Returns which are
required to be filed, and has paid, or made adequate provision for the payment
of, all Taxes which have or may become due and payable pursuant to said Tax
Returns and all other governmental charges and assessments received to date
other than those Taxes being contested in good faith. 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 either of the EXCL Parties. All Taxes in respect of the American Assets
and the American Stations which American is required by law to withhold and
collect have been duly withheld and collected, and have been paid over, in a
timely manner, to the proper Authorities to the extent due and payable. No
American Party has executed any waiver to extend, or otherwise taken or failed
to take any action that would have the effect of extending, the applicable
statute of limitations in respect of any Tax associated with the American Assets
or the American Stations for the fiscal years prior to and including the most
recent fiscal year.
4.12 Employee Benefit Plans; American Station Employees. Except as
described in Section 4.12 of the American Disclosure Schedule, with respect to
the American Stations, (i) none of the persons employed by an American Party in
the ownership or operation of any of the American Assets or the conduct of the
business of either of the American Stations (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 no American Party 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) no American Party 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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4.13 Inapplicability of Specified Statutes. American is not a "holding
company", or a "subsidiary company" or an "affiliate" of a "holding company", as
such terms are defined in the Public Utility Holding Company Act of 1935, as
amended, or an "investment company" or a company "controlled" by or acting on
behalf of an "investment company", as defined in the Investment Company Act of
1940, as amended, or a "carrier" or a person which is in control of a "carrier",
as defined in section 11301 of Title 49, U.S.C.
4.14 Material Agreements. Listed on Section 4.14 of the American
Disclosure Schedule are all Material Agreements relating to the ownership or
operation of the American Assets or the conduct of the business of either of the
American Stations or to which any American Party is a party or to which either
of them is bound or to which any of the American Assets is subject (the
"American Material Agreements"). True, accurate and complete copies of each
American Material Agreement have been made available by American to EXCL and
American has provided EXCL with photocopies of all American Material Agreements
requested by EXCL (or true, accurate and complete descriptions of the material
terms thereof have been set forth in Section 4.14 of the American Disclosure
Schedule, if any such Material Agreements are oral). All of the American
Material Agreements are valid, binding and legally enforceable obligations of an
American Party and, to American's knowledge, all other parties thereto (except
to the extent that the invalidity or non-binding nature of any American Material
Agreements, individually or in the aggregate, would not have a material adverse
effect on American). Each American Party has duly complied in all material
respects with all of the terms and conditions of each American Material
Agreement and has not done or performed, or failed to do or perform (and there
is no pending or, to the knowledge of American, threatened Claim that any
American Party 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
American Material Agreement or materially impair the rights or benefits, or
materially increase the costs, of any American Party under any American Material
Agreement. No American Party has granted any material 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 4.16 of the American Disclosure Schedule, no consents or approvals of
any third party are necessary to permit the assignment by the American Parties
of the American Material Agreements to the EXCL Parties 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.
4.15 Ordinary Course of Business. Each American Party, from the end of
its most recent fiscal quarter to the date hereof, except (i) as may be
described on Section 4.15 of the American Disclosure Schedule, or (ii) as may be
required or expressly contemplated by the terms of this Agreement, with respect
to the American Assets and American:
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(a) has operated its business in the normal, usual and
customary manner in the ordinary and regular course of business,
consistent with prior practice;
(b) except in each case in the ordinary course of business,
consistent with prior practice:
(i) has not incurred any obligations or liabilities
(fixed, contingent or other) which would obligate any EXCL
Party after the Closing having a value in excess of $20,000
singly or $100,000 in the aggregate;
(ii) has not sold or otherwise disposed of or
contracted to sell or otherwise dispose of any American Asset
having a value in excess of $20,000;
(iii) has not entered into any commitments which
would obligate any EXCL Party after the Closing having a value
in excess of $20,000 singly or $100,000 in the aggregate;
(iv) has not made or committed to make any material
additions to its property or any purchases of equipment,
except for normal maintenance and repairs and items covered by
the Station's capital budget; and
(v) has not entered into, amended or terminated any
American Lease, American Governmental Authorization, American
Private Authorization, American Material Agreement or
Contractual Obligation, or any transaction, agreement or
arrangement with any Affiliate of any American Party;
(c) has not increased the compensation payable or to become
payable to any of the American Station Employees other than in the
ordinary course of business or otherwise materially altered, modified
or changed the terms of their employment;
(d) 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 which will not have been repaired, cured or
replaced prior to the Closing Date;
(e) has not waived any rights of material value without fair and
adequate consideration;
(f) has not experienced any work stoppage with respect to either
American Station; and
(g) has not entered into any Trade Agreement with respect to
either of the American Stations (i) which are outside the ordinary
course of business or (ii) otherwise than in accordance with American's
prior policies and practices
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4.16 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 any American Party, other than Media Venture Partners,
whose fees and expenses shall be the sole responsibility of the American
Parties..
4.17 Solvency. As of the execution and delivery of this Agreement, each
American Party is, and immediately prior to giving effect to the consummation of
the Exchange and the other Transactions will be, solvent.
4.18 Environmental Matters. Except as set forth in Section 4.18 of the
American Disclosure Schedule, with respect to the American Assets, any American
Party (to the knowledge of each American Party with respect to periods prior to
the acquisition of the American Stations by American):
(a) to the knowledge of American, 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 any consent decree, compliance order
or administrative order issued pursuant to any applicable 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 applicable Environmental Law;
(d) is, to the knowledge of American, in substantial
compliance in all material respects with all applicable Environmental
Laws, has, to American's knowledge, obtained all Environmental Permits
required under applicable Environmental Laws, and is not 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 material violations or material breaches of any
applicable Environmental Law; and
(e) 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 any other provisions of this Agreement, the EXCL Parties make no
representation or warranty as to any matter relating to any Environmental Law
other than as set forth in this Section.
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4.19 Trade or Barter. Section 4.19 of the American Disclosure Schedule
sets forth a true, complete and accurate description (including of all
obligations and liabilities remaining thereunder) of all American Trade
Agreements currently in effect 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.
4.20 Bulk Sales. The American Parties believe that the provisions of
the Bulk Sales Laws of the State of California do not apply to the transfer of
the American Assets in accordance with the terms of this Agreement. To the
extent that such Bulk Sales Laws do apply, the sole recourse of the EXCL Parties
with respect to breach of this representation and warranty and any transferee
liability due to noncompliance with such laws shall be the indemnification
provisions of Article 8.
4.21 Investment Representations.
(a) American is an "accredited investor" within the meaning of Rule 501
promulgated under the Securities Act. American has received all the information
American considers necessary or appropriate for deciding whether to acquire the
Latin Common Stock including without limitation, copies of the Certificate of
Incorporation and Bylaws of Latin, the Amended and Restated Stockholders
Agreement dated as of November 1, 1996 among Latin and certain stockholders of
Latin (the "Latin Stockholder Agreement"), the Registration Rights Agreement
dated as of February 28, 1997 among Latin and certain stockholders of Latin, as
amended as of March 14, 1997 (the "Latin Registration Rights Agreement"), the
Credit Agreement dated as of February 28, 1997 between Latin and the First
National Bank of Boston, and financial statements of Latin as requested by
American. American has had an opportunity to ask questions of and receive
answers from Latin regarding the business, properties, prospects, and financial
condition of Latin and to obtain additional information (to the extent the Latin
possessed such information or could acquire it without unreasonable effort or
expense) necessary to verify the accuracy of any information furnished to
American or to which American had access. American is acquiring the Latin Common
Stock for its own account for investment with no present intention of
distributing or reselling the same in violation of the Securities Act; provided,
however, that notwithstanding the foregoing, American may pledge any or all of
the Latin Common Stock to any bona fide lender to American. American covenants
and agrees that it will not sell, assign, transfer or otherwise dispose of any
of the Latin Common Stock in violation of the Securities Act. American does not
have any contract, undertaking, agreement or arrangement with any Person to
sell, transfer or grant participations to such Person or to any third Person
with respect to any of the Latin Common Stock, except for its obligation to
pledge the Latin Common Stock to the lenders under its credit agreements with
banks and other financial institutions.
(b) American understands that the Latin Common Stock is not registered
under the Securities Act on the ground that the offer and sale of the Latin
Common Stock under this Agreement is exempt from registration under the
Securities Act pursuant to Section 4(2) thereof, and that Latin's reliance on
such exemption is predicated on American's representations set forth herein.
American understands that Latin is not and will not be required to file a
registration statement under the Securities Act in connection with any sale,
transfer or other disposition of the Latin Common Stock, except as provided in
the Latin Registration Rights Agreement.
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(c) American is experienced in evaluating and investing in securities
of companies in the radio broadcasting business and acknowledges that American
can bear the economic risk of its investment, and has such knowledge and
experience in financial and business matters that American is capable of
evaluating the merits and risks of the investment in the Latin Common Stock.
(d) American understands that the Latin Common Stock may not be sold,
transferred, or otherwise disposed of without registration under the Securities
Act or an exemption therefrom, and that in the absence of an effective
registration statement covering the Latin Common Stock or an available exemption
from registration under the Securities Act, the Latin Common Stock must be held
indefinitely. Additionally, American is aware that the Latin Common Stock will
be subject to the terms and conditions of the Latin Shareholders Agreement.
ARTICLE 5
COVENANTS
5.1 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
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; provided, however, that neither party shall contact
the other party's employees (other than executive officers) or visit the other
party's facilities, without the prior written consent of the party whose
employees or facilities are involved. During such period, each party shall
furnish promptly upon request (i) a copy of each report, schedule and other
document filed or received by any of them pursuant to the requirements of any
Applicable Law (including without limitation the FCA) or filed by it or any of
its Subsidiaries with any Authority in connection with the Exchange and other
Transactions or which may have a material effect on their respective Assets or
Stations or their businesses, operations, properties, prospects, personnel,
condition, (financial or other), or results of operations, and (ii) financial
records, ledgers, work papers and other sources of financial information
possessed or controlled by either of the parties or their accountants and such
other information concerning any of the Assets or the Stations as American or
EXCL 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, 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,
without the prior written consent of the party disclosing such information, be
disclosed by the other party in any manner whatsoever, in whole or in part, and
shall not be used for any purposes, other than in connection with the Exchange
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and the other Transactions. Such information shall only be disclosed to and used
by employees of the receiving party on a need to know basis in connection with
the Exchange and the other Transactions; provided, however, that in no event
shall such information be disclosed to any general manager or sales personnel of
any station owned or operated by an American Party or Affiliate thereof or by an
EXCL Party or Affiliate thereof without the prior written consent of the party
whose information is being disclosed. In no event shall either party or any of
its Representatives use such information to the detriment of the other party.
Except as otherwise provided herein, 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 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 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. Without
limiting the generality of the foregoing, American shall make available to the
EXCL Parties, at their written request, any records in American's custody or
possession and American personnel or consultants with knowledge pertaining to
the modification of the KSSJ improvements, including without limitation all
reports of Hadfield & Dawson prepared in connection with the Agreement, dated
July 25, 1996, by and among, inter alia, American and Oscar and Beth Rothenberg.
(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. To the extent Applicable Law requires disclosure by a
party, such party shall give the other party an opportunity to review and
comment on such disclosure prior to publication. 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; provided, however, that
neither party shall have any rights to indemnification under Article 8 with
respect to any misrepresentation or breach of warranty of the other party
actually known to such party as of the date hereof, as of the applicable TBA
Date, or as of the Closing Date, unless such misrepresentation or breach of
warranty is disclosed in writing to the other party on or prior to the date
hereof, or on or prior to the applicable TBA Date, or on or prior to the Closing
Date, respectively.
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(d) The parties recognize that the American Parties and Portland are competitors
in the Portland, Oregon area, and, if the Exchange and other Transactions do not
close, the value of the business of Portland could be substantially diminished
if the American Parties or their Affiliates were to solicit certain employees of
Portland, or were to solicit the parties to or interfere with KINK's programming
agreements. Therefore, the American Parties agree that if this Agreement is
terminated or if the Exchange and other Transactions are not consummated by the
Termination Date (other than due to a misrepresentation, breach or default on
the part of any of the EXCL Parties), then for a period of six (6) months after
such termination or non-consummation (the "Non- Solicitation Period"), (i) they
will not directly or indirectly employ, or provide any compensation or
remuneration of any kind to, any employee of Portland, or any employee of EXCL
involved in any material way with KINK, or solicit or provide any inducement to
any of such persons for the purpose of obtaining for the American Parties or any
other Person the employment of such persons, (ii) they will cooperate with
Portland to achieve Portland's reemployment of any current employees of Portland
who were employed by American during the EXCL Stations TBA, and will not solicit
or induce such employees to remain with American, and (iii) they will not
directly or indirectly solicit any party to any programming agreement to which
Portland or any Affiliate thereof is a party which relates to KINK, or interfere
with the relationship between Portland and any such party; provided, however,
that notwithstanding the foregoing clause (iii) any American Party or any
Affiliate may transact business and enter into agreements with any such party
(not including any employees of Portland) (x) with which it has a business
relationship as of the date of this Agreement or (y) which was not directly or
indirectly solicited by any American Party or any of its Affiliates during the
Non-Solicitation Period. The American Parties recognize that a breach of any of
the provisions set forth in this Section 5.1(d) will cause irreparable harm to
the EXCL Parties and that actual damages may be difficult to ascertain and in
any event may be inadequate. Accordingly, the American Parties agree that in the
event of such breach, the EXCL Parties shall be entitled to injunctive relief in
addition to such other legal or equitable remedies as may be available, and the
other party, at its option, may seek to enforce its remedies in any court of
competent jurisdiction.
5.2 Agreement to Cooperate.
(a) Each of the parties hereto shall use its reasonable best 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 best 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 filings within ten (10) business days following the execution and
delivery of this Agreement under the Hart-Scott-Rodino Act and all filings
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necessary for the American Parties and the EXCL Parties to own and operate the
EXCL Stations and the American Stations, respectively), (iv) to lift any
injunction or other legal bar to the Exchange or any of the other Transactions
(and, in such case, to proceed with the Exchange and the other Transactions as
expeditiously as possible), and (v) to obtain the satisfaction of the conditions
specified in Article 6, including without 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. The EXCL Parties and the American Parties shall (i) within
ten (10) days following the execution and delivery of this Agreement, file with
the FCC appropriate applications for FCC Consents, and (ii) unless the Closing
has first occurred, file with the FCC on a timely basis applications for the
renewal of the FCC Licenses for their respective Stations. The parties shall
prosecute all of such applications with all reasonable diligence and otherwise
use its best efforts to obtain the grant of FCC Consents and, if appropriate,
grant of renewal applications, as expeditiously as practicable. If the FCC
Consents, or, if appropriate, the grant of renewal applications, or any of them,
imposes any condition on either 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 any FCC Consent or grant of a
renewal application, EXCL 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 and, if
appropriate, the grant of renewal applications with respect to the Stations,
without any condition which could materially adversely affect the Stations being
acquired by such party, other than conditions generally applicable to the radio
broadcasting industry or to stations of the same class and type as the Stations.
(b) The parties shall cooperate with one another in the preparation,
execution and filing of all Returns, questionnaires, applications, or other
documents regarding any real property transfer or gains, sales, use, transfer,
value added, stock transfer and stamp Taxes, any transfer, recording,
registration and other fees, and any similar Taxes which become payable in
connection with the Exchange and the other Transactions that are required or
permitted to be filed on or before the Closing Date.
(c) The EXCL Parties shall cooperate and use their reasonable best
efforts to cause their independent accountants to reasonably cooperate with
American, and at American's expense, in order to enable American to have its
independent accountants prepare audited financial statements for the EXCL
Stations for the three years ended December 31, 1996. Without limiting the
generality of the foregoing, the EXCL Parties agrees that they 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
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directors and officers to execute and deliver, such "representation" letters as
are customarily delivered in connection with audits and as American's
independent accountants may reasonably request under the circumstances. American
shall cooperate and use its reasonable best efforts to cause its independent
accountants to reasonably cooperate with the EXCL Parties. and at the EXCL
Parties' expense, in order to enable the EXCL Parties to have their independent
accountants prepare audited financial statements for the American Stations for
the three years ended December 31, 1996. Without limiting the generality of the
foregoing, American agrees that it will (i) consent to the use of such audited
financial statements in any registration statement or other document filed by
any of the EXCL Parties (or any of their Subsidiaries) under the Securities Act
or the Exchange Act and (ii) 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 the EXCL Parties'
independent accountants may reasonably request under the circumstances.
(d) The parties acknowledge and agree that they intend, at the time the
Hart-Scott-Rodino Act waiting period has expired or been terminated, if
appropriate in light of the then contemplated Closing Date, to execute and
deliver a time brokerage agreement with respect to each of (i) the American
Stations substantially in the form of Exhibit A-1 attached hereto and made a
part hereof (the "American TBA") and (ii) the EXCL Stations substantially in the
form of Exhibit A-2 attached hereto and made a part hereof (the "EXCL 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) the EXCL Parties shall not be liable in any respect to the extent any of
their representations and warranties contained in Article 3, and the American
Parties shall not be liable in any respect to the extent any of their
representations and warranties contained in Article 4, are not true and correct
in any material respect on and as of the Closing Date due to any acts or
omissions to act of the other party under, and following entry into, the EXCL
Stations TBA and the American Stations TBA, respectively, (ii) the EXCL Parties
and the American Parties shall not be liable in any respect to the extent any of
their covenants contained in Article 5 are breached in any material respect on
and as of the Closing Date due to any acts or omissions to act of the other
party under, and following entry into, the EXCL Stations TBA and the American
Stations TBA, respectively, (iii) the conditions set forth in Sections 6.2(e)
and 6.3(e) shall not be deemed to be not satisfied as a result of any act or
omission to act of American under, and following entry into, the EXCL Stations
TBA and of the EXCL Parties under, and following entry into, the American
Stations TBA, respectively, and (iv) the certificates to be delivered to
American and EXCL 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 any act or omission to act of the other party under, and following
entry into, the TBA Agreements.
(e) Each of the EXCL Parties agrees to use its reasonable best 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 enable American,
at its expense, (i) to complete its full upgrade of KSSJ and to receive program
test authority at the full authorized facilities, and affording coverages and
contours as set forth in the application for such upgrade filed by American with
the FCC, a copy of which has heretofore been furnished by American to EXCL (the
"American KSSJ Upgrade"), and (ii) to file an application to upgrade the signal
of KBRG and, to the extent applicable, otherwise cooperate with American to
enable it to so upgrade the signal.
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5.3 Public Announcements. Until the Closing, or in the event of
termination of this Agreement, the EXCL Parties and the American Parties 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 other's prior consent which consent shall not unreasonably
be withheld, delayed or conditioned. Notwithstanding the foregoing, each party
acknowledges and agrees that the EXCL Parties, on the one hand, and the American
Parties, on the other hand, may, without the other's prior consent, issue such
press releases or make such public statements as may be required by Applicable
Law, in which case, to the extent practicable, 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. EXCL and American 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 or any of its Subsidiaries or Affiliates
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 or any of its Subsidiaries or
Affiliates contained in this Agreement not to be complied with or satisfied, or
(iii) any change to be made in the EXCL Disclosure Schedule or the American
Disclosure Schedule, as the case may be, in any respect such that one or more of
the conditions of Closing might not be satisfied, and any failure made by it to
comply with or satisfy, or be able to comply with or satisfy, any covenant,
condition or agreement to be complied with or satisfied by it hereunder 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 the EXCL Parties nor the American Parties
shall, nor shall they permit any Subsidiary or Affiliate, or any of their
Representatives (including, without limitation, any investment banker, broker,
finder, attorney or accountant retained by it) to, initiate, solicit or
facilitate, directly or indirectly, any inquiries or the making of any proposal
with respect to any Alternative Transaction, engage in any discussions or
negotiations concerning, or provide to any other Person any information or data
relating to, it or any Subsidiary for the purposes of, or otherwise cooperate in
any way with or assist or participate in, or facilitate any inquiries or the
making of any proposal which constitutes, or may reasonably be expected to lead
to, a proposal to seek or effect any Alternative Transaction, or agree to or
endorse any Alternative Transaction. "Alternative Transaction" means a
transaction or series of related transactions (other than the Exchange and the
other Transactions) resulting in (i) any merger or consolidation of either,
regardless of whether it is the surviving Entity unless the surviving Entity
remains obligated under this Agreement to the same extent as it was, or (ii) any
sale or other disposition of all or any substantial part of the EXCL Assets or
either of the EXCL Stations or the American Assets or either of the American
Stations, as the case may be. The provisions of this Section shall apply to each
Subsidiary and Affiliate of either party.
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5.6 Conduct of Business by the EXCL Parties Pending the Closing. Except
as otherwise contemplated by this Agreement, and subject to American's time
brokering of the EXCL Stations pursuant to the provisions of the EXCL Stations
TBA, after the date hereof and prior to the Closing Date or earlier termination
of this Agreement, unless American shall otherwise agree in writing, to the
extent relating to either of the EXCL Stations or the EXCL Assets, Latin shall,
and shall cause its Subsidiaries and Affiliates to:
(a) conduct their respective businesses in the ordinary and
usual course of business and consistent with past practice;
(b) use commercially reasonable 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 (subject to the provisions of
Sections 5.6(m) and (n)), 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) 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;
(d) 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;
(e) maintain levels of advertising, marketing and promotion
efforts and expenditures of KINK at levels no less than those currently
budgeted in the 1997 business plan, a true, correct and complete in all
material respects description of which is set forth in Section 5.6(e)
of the EXCL Disclosure Schedule;
(f) (i) to operate each of the EXCL Stations in conformity
with the EXCL 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 either EXCL Station, and (ii) take all
actions necessary to maintain the EXCL FCC Licenses;
(g) refrain from changing the frequency of either EXCL Station
or making any material changes in either EXCL Station's studio or other
structures, except to the extent required by the FCA or the rules and
regulation of the FCC;
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(h) not make any material changes in the format or broadcast
hours or in the percentage or types of programming broadcast by the
EXCL Stations, or make any other material changes in either EXCL
Station's programming policies, except such changes as in the good
faith judgment of EXCL are required by the public interest;
(i) not (i) dispose of any of the EXCL Assets owned by any
EXCL Party or used in the operation of either EXCL Station (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 new Material Agreement relating
to the business of either EXCL Station, or (iii) fail to maintain the
EXCL Personal Property in a manner consistent with generally accepted
standards of good engineering practice, ordinary wear and tear
excepted;
(j) notify American promptly if either EXCL Station's normal
broadcast transmissions are interrupted or impaired for (i) a period of
thirty (30) consecutive minutes or more daily for a period of five (5)
consecutive days or during any seven (7) days within any period of
thirty (30) day period (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;
(k) not create, assume or permit to exist any Lien upon any of
the EXCL Assets or either of the EXCL Stations, except for (i)
Permitted Liens and (ii) other Liens, if any, set forth on Section
3.5(a) of the EXCL Disclosure Schedule (which Liens shall be released
prior to Closing);
(l) not waive any material right relating to the EXCL
Stations;
(m) not renew or enter into new employment agreements with any
KINK Station Employee without the consent of American which consent
shall not unreasonably be withheld, delayed or conditioned;
(n) not institute any general increase in the compensation of
the KINK Station Employees except as and to the extent set forth in the
current business plan or as required under any existing employment
agreement;
(o) (i) refrain from entering into new trade or barter
agreements obligating the EXCL Stations, and (ii) use its commercially
reasonable efforts to fulfill its obligations under all trade and
barter agreements currently in effect; and
(p) not enter into any new agreements providing for annual
payments by the EXCL Stations in excess of $25,000 per agreement or
$100,000 in the aggregate for all such agreements.
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5.7 Conduct of Business by American Pending the Closing. Except as
otherwise contemplated by this Agreement, and subject to the EXCL Parties' time
brokering of the American Stations pursuant to the American Stations TBA, after
the date hereof and prior to the Closing Date or earlier termination of this
Agreement, unless EXCL shall otherwise agree in writing, to the extent relating
to either of the American Stations or the American Assets, American shall, and
shall cause its Subsidiaries to:
(a) conduct their respective businesses in the ordinary and
usual course of business and consistent with past practice;
(b) use commercially reasonable 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) confer on a regular and frequent basis with one or more
representatives of EXCL to report material operational matters and the
general status of ongoing operations;
(d) 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;
(e) maintain levels of advertising, marketing and promotion
efforts and expenditures at levels no less than those currently
budgeted in the 1997 business plan, a true, correct and complete in all
material respects description of which is set forth in Section 5.7(e)
of the American Disclosure Schedule;
(f) (i) to operate 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 either American Station and (ii) take
all actions necessary to maintain the American FCC Licenses;
(g) refrain from changing the frequency 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;
(h) not make any material changes in the format, broadcast
hours or in the percentage or types of programming broadcast by
American, or make any other material changes in either American
Station's programming policies, except such changes as in the good
faith judgment of American are required by the public interest;
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(i) not (i) dispose of any of the American Assets owned by
American or used in the operation of either American Station (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 either American Station, or (iii) fail to
maintain the American Personal Property in a manner consistent with
generally accepted standards of good engineering practice, ordinary
wear and tear excepted;
(j) notify EXCL promptly if either American Station's normal
broadcast transmissions are interrupted or impaired for (i) a period of
thirty (30) consecutive minutes or more daily for a period of five (5)
consecutive days or during any seven (7) days within any period of
thirty (30) day period (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;
(k) not create, assume or permit to exist any Lien upon any of
the American Assets or either of the EXCL Stations, except for (i)
Permitted Liens and (ii) other Liens, if any, set forth on Section
4.5(a) of the American Disclosure Schedule (which Liens shall be
released prior to Closing);
(l) not waive any material rights relating to the American
Assets; and
(m) not enter into any agreements providing for annual
payments by the American Stations in excess of $25,000 per agreement or
$100,000 in the aggregate for all such agreements.
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, or in the event any Station shall
be off-the-air for more than seventy-two (72) consecutive hours, the
transferring party 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 provided that the transferring party is proceeding in good
faith to diligently repair or replace such loss or damage or effect such
operation) 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,
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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 and/or
restore the Station to operate on full licensed power; alternatively, at the
request of the acquiring party, the transferring party shall assign to the
acquiring party the insurance proceeds (and pay to the acquiring party the
applicable deductible relating to the loss or damage or loss of operation (or in
the event such proceeds and payment are not adequate 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.
5.9 KINK Employees. American will, during the effectiveness of the EXCL
Stations TBA, employ each KINK Station Employee described in Section 5.9 of the
EXCL Disclosure Schedule and, thereafter, if the performance of such KINK
Station Employee is, in American's reasonable business judgment, satisfactory,
offer employment to such KINK Station Employee, in each case on terms and
conditions which are not less favorable, in the aggregate with respect to each
employee, than the terms and conditions of such KINK Station Employee's current
employment (which are set forth in all material respects in Section 5.9 of the
EXCL Disclosure Schedule) or, in the event it does not so offer such employment
assume the salary continuation arrangements for such KINK Station Employee
described in Section 5.9 of the EXCL Disclosure Schedule.
ARTICLE 6
CLOSING CONDITIONS
6.1 Conditions to Obligations of Each Party to Effect the Exchange. The
respective obligations of each party to effect the Exchange shall, except as
hereinafter provided in this Section, be subject to the satisfaction at or prior
to the Closing Date of the following conditions, any or all of which may be
waived, in whole or in part, to the extent permitted by Applicable Law:
(a) 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 EXCL, based upon the advice of counsel, have a material
adverse effect on the Assets and Stations to be acquired by it, it
being understood and agreed that a written request by any Authority for
information with respect to the Exchange or any other Transaction,
which information could be used in connection with such Legal Action,
shall not in itself be deemed to be a threat of any such Legal Action;
and
(b) All authorizations, consents, waivers, orders or approvals
required to be obtained from all Authorities, and all Governmental
Filings required to be made by any American Party or any EXCL Party
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,
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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 material adverse effect upon the party acquiring such Stations, and
(ii) (A) a Final Judgment shall have been entered with respect to the
American Consent Decree and (B) the U.S. Department of Justice shall
have approved the Exchange pursuant to such Final Judgment.
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, in
whole or in part, to the extent permitted by Applicable Law:
(a) EXCL shall have delivered to caused to be delivered to
American all of the Collateral Documents required to be delivered to
the American Parties at or prior to the Closing pursuant to the
provisions 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, and American and its counsel
and American and its counsel shall have received all information and
copies of all documents, including records of corporate proceedings,
which they may reasonably request in connection therewith, such
documents where appropriate to be certified by proper corporate
officers;
(b) EXCL shall have furnished the American Parties and, at
American's request, any bank or other financial institution providing
credit to American or American or any Subsidiary of American or
American, with a favorable opinion, dated the Closing Date, of McBride,
Baker & Coles, counsel for the EXCL Parties, substantially in the form
set forth in Exhibit B-1 attached hereto and made a part hereof, and of
Leventhal, Senter & Lerman, FCC counsel for the EXCL Parties,
substantially in the form set forth in Exhibit B-2 attached hereto and
made a part hereof, and with respect to such other matters arising
after the date of this Agreement incident to the Exchange and the other
Transactions, 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 and warranties of each EXCL Party
contained in this Agreement or otherwise made in writing by it or on
its behalf pursuant hereto or otherwise made in connection with the
Exchange and the other Transactions shall be true and correct in all
material respects at and as of the Closing Date with the same force and
effect as though made on and as of such date except those which speak
as of a certain date which shall continue to be true and correct in all
material respects as of such date on the Closing Date (including
without limitation giving effect to any later obtained knowledge of
EXCL or American); each and all of the covenants, agreements and
conditions to be performed or satisfied by each EXCL Party hereunder at
or prior to the Closing Date shall have been duly performed or
satisfied in all material respects; and each EXCL Party shall have
furnished American with such certificates and other documents
evidencing the truth of such representations and warranties and the
performance or satisfaction of such covenants, agreements and
conditions as American or its counsel shall have reasonably requested;
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(d) All authorizations, consents, waivers, orders and
approvals and all modifications, if any, of Contractual Obligations,
all to the extent set forth in Schedule 6.2(d) of the American
Disclosure Schedule, shall have been obtained, without the imposition,
individually or in the aggregate, of any condition or requirement which
could materially adversely affect American;
(e) Between the date of this Agreement and the Closing Date,
there shall not have occurred and be continuing any material adverse
change in EXCL from that reflected in the most recent EXCL Station
Financial Statements, except for general business, market and economic
conditions and matters affecting the radio broadcasting industry
generally; as of the Closing Date, the EXCL FCC Licenses shall not have
been materially and adversely affected by any act, or failure to act,
of any EXCL Party;
(f) Latin shall have executed and delivered to American (i)
the Latin Registration Rights Agreement, as amended to reflect
inclusion of the Latin Common Stock and (ii) the Latin Stockholder
Agreement, as amended in a manner reasonably satisfactory both to the
senior lenders to American who will have a security interest in the
Latin Common Stock and to the stockholders of Latin who must consent
thereto;
(g) If American shall have obtained Phase I environmental
reports from reputable environmental consultants with respect to any or
all of the EXCL Real Property prior to the earlier of (i) sixty (60)
days from the date hereof or (ii) the commencement date of the EXCL
Stations TBA, such reports shall show no environmental conditions which
would materially adversely affect the operation by American of the EXCL
Assets or which would violate any of the representations and warranties
of the EXCL Parties set forth in Section 3.18 (without regard to the
knowledge qualification);
(h) A title company reasonably acceptable to American and its
lenders shall be willing and able to issue, upon payment of its
regularly scheduled premium by American, an ALTA or extended coverage
policy of leasehold title insurance, with such endorsements as American
and its lender may reasonably request, for the EXCL Real Property,
subject to the Permitted Liens and the standard printed conditions and
exceptions for an ALTA lender's policy; and
(i) If the Closing has not occurred (i) prior to August 1,
1997, the FCC shall have granted the application for renewal of the
KBRG FCC Licenses without material adverse conditions to EXCL or KBRG
for a license term to expire not sooner than December 1, 2005, and such
grant shall have become Final Order, and (ii) prior to October 1, 1997,
the FCC shall have granted the application for renewal of the KINK FCC
Licenses without material adverse conditions to EXCL or KINK for a
license term to expire not sooner than February 1, 2006, and such grant
shall have become Final Order. The parties acknowledge that the
imposition by the FCC of standard EEO reporting conditions for a term
not to exceed three (3) years shall not be deemed a material adverse
condition to the grant of such
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renewal applications. In the event that either such FCC Consent has
been obtained, but is not a Final Order by August 1, 1997 or October 1,
1997, as the case may be, American may at its option defer the Closing
until a date selected by it which is not later than fifteen (15)
business days after the last date on which the grant by the FCC of each
of the applications for renewal of the EXCL FCC Licenses has become a
Final Order, but in no event shall such deferral extend beyond the
Termination Date.
6.3 Conditions to Obligations of the EXCL Parties. The obligation of
the EXCL Parties to effect the Exchange shall be subject to the satisfaction of
the following conditions, any or all of which may be waived, in whole or in
part, to the extent permitted by Applicable Law:
(a) American shall have delivered to caused to be delivered to
EXCL all of the Collateral Documents required to be delivered to the
EXCL Parties at or prior to the Closing pursuant to the provisions of
this Agreement; such Collateral Documents shall be reasonably
satisfactory in form, scope and substance to EXCL and its counsel, and
EXCL 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 EXCL Parties and, at
EXCL's request, any bank of other financial institution providing
credit to the EXCL Parties or any Subsidiary, with favorable opinions,
dated the Closing Date of Sullivan & Worcester LLP, counsel for the
American Parties, substantially in the form of Exhibit C-1 attached
hereto and made a part hereof and of Dow, Lohnes & Albertson, FCC
counsel for the American Parties, substantially in the form of Exhibit
C-2 attached hereto and made a part hereof, and, in each case, with
respect to such other matters arising after the date of this Agreement
incident to the Exchange and the other Transactions, as EXCL 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 and warranties of each American Party
contained in this Agreement or otherwise made in writing by it or on
its behalf pursuant hereto or otherwise made in connection with the
Exchange and the other Transactions shall be true and correct in all
material respects at and as of the Closing Date with the same force and
effect as though made on and as of such date except those which speak
as of a certain date which shall continue to be true and correct in all
material respects as of such date on the Closing Date (including
without limitation giving effect to any later obtained knowledge of
American or EXCL); each and all of the covenants, agreements and
conditions to be performed or satisfied by each American Party
hereunder at or prior to the Closing Date shall have been duly
performed or satisfied in all material respects; and each American
Party shall have furnished EXCL with such certificates and other
documents evidencing the truth of such representations and warranties
and the performance or satisfaction of such covenants, agreements and
conditions as EXCL or its counsel shall have reasonably requested;
(d) All authorizations, consents, waivers, orders and
approvals and all modifications, if any, of Contractual Obligations,
all to the extent set forth in Schedule 6.3(d)
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of the EXCL Disclosure Schedule, shall have been obtained, without the
imposition, individually or in the aggregate, of any condition or
requirement which could materially adversely affect EXCL;
(e) Between the date of this Agreement and the Closing Date,
there shall not have occurred and be continuing any material adverse
change in American from that reflected in the most recent American
Station Financial Statements except for general business, market and
economic conditions and matters affecting the radio broadcast industry
generally; as of the Closing Date, the American FCC Licenses shall not
have been materially and adversely affected by any act, or failure to
act, of any American Party;
(f) American have executed and delivered to Latin (i) the
Latin Registration Agreement, as amended to reflect inclusion of the
Latin Common Stock and (ii) the Latin Stockholder Agreement, as amended
in a manner reasonably satisfactory both to the senior lenders to
American who will have a security interest in the Latin Common Stock
and to the stockholders of Latin who must consent thereto;
(g) American shall have completed the upgrade of KSSJ and
shall have received a grant of a license for KSSJ to operate in
accordance with the construction permit issued for the American KSSJ
Upgrade;
(h) If EXCL shall have obtained Phase I environmental reports
from reputable environmental consultants with respect to any or all of
the American Real Property prior to the earlier of (i) sixty (60) days
from the date hereof or (ii) the commencement date of the American
Stations TBA, such reports shall show no environmental conditions which
would materially adversely affect the operation by American of the
American Assets or which would violate any of the representations and
warranties of the American Parties set forth in Section 4.18 (without
regard to the knowledge qualification);
(i) A title company reasonably acceptable to EXCL and its
lenders shall be willing and able to issue, upon payment of its
regularly scheduled premium by EXCL, an ALTA or extended coverage
policy of leasehold title insurance, with such endorsements as EXCL and
its lender may reasonably request, for the American Real Property,
subject to the Permitted Liens and the standard printed conditions and
exceptions for an ALTA lender's policy;
(j) The new antenna for KBAY shall have been installed at the
KBAY tower site and such antenna shall (i) have resolved all complaints
regarding RFR interference at the tower site known to the American
Parties, (ii) have been certified by American to meet all Applicable
Laws (including without limitation the 1992 ANSI standards for
interference and for exposure to radio frequency radiation, whether or
not such standards shall have been fully implemented by the FCC), (iii)
be operating in conformance in all material respects with all
applicable standards under the tower site agreement and FCC rules, and
(iv) not have caused any material adverse effect on the coverage or
operation of KBAY;
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(k) The FCC shall have granted any construction permit or
other authorization, including program test authority, necessary in
connection with the installation of the new antenna now proposed for
use by KSSJ; the antenna shall have been installed and certified to be
operating in accordance with all FCC regulations; and KSSJ shall be
operating with coverage initially proposed in FCC File No.BPH-9602151E.
American shall have certified that the KSSJ facilities, as modified by
the new antenna, have met and comply in all material respects with (i)
the conditions of the Special Use Permit issued by El Dorado County,
(ii) all applicable conditions under the Agreement, dated July 25,
1996, by and among, inter alia, American and Oscar and Beth Rothenberg,
and (iii) all Applicable Laws (including without limitation the 1992
ANSI standards for interference and for exposure to radio frequency
radiation, whether or not such standards shall have been fully
implemented by the FCC) relating to the installation and operation of
broadcast transmitting facilities; and
(l) If the Closing has not occurred prior to August 1, 1997,
the FCC shall have granted each of the applications for renewal of the
American FCC Licenses without material adverse conditions to American
or the American Stations for a license term to expire not sooner than
December 1, 2005, and such grants shall have become Final Orders. The
parties acknowledge that the imposition by the FCC of standard EEO
reporting conditions for a term not to exceed three (3) years shall not
be deemed a material adverse condition to the grant of such renewal
applications. In the event that the FCC Consent has been obtained, but
is not a Final Order by August 1, 1997, EXCL may at its option defer
the Closing until a date selected by it which is not later than fifteen
(15) business days after the last date on which the grant by the FCC of
each of the applications for renewal of the American FCC Licenses has
become a Final Order, but in no event shall such deferral extend beyond
the Termination Date.
6.4 Consummation of KBAY-KINK Exchange. Anything in this Article 6 or
elsewhere in this Agreement to the contrary notwithstanding, the parties agree
that if either (i) a Final Judgment shall not have been entered with respect to
the American Consent Decree or (ii) the U.S. Department of Justice shall not
have approved the KSSJ-KBRG Exchange pursuant to such Final Judgement, then the
parties shall be obligated to and shall consummate the KBAY-KINK Exchange,
subject to all of the conditions of this Article 6 but only to the extent that
they apply to the KBAY- KINK Exchange and not the KSSJ-KBRG Exchange. Without
limiting the generality of the foregoing, in the event the KBAY-KINK Exchange is
to be consummated, (i) all of the certificates, opinions, and other
documentation referred to in Sections 6.1, 6.2 and 6.3 shall apply solely to
such Exchange, and (ii) the existence of one or more Legal Actions (or any other
failure of a condition) with respect to consummation of the KSSJ-KBRG Exchange
shall not affect the requirement of consummating the KBAY-KINK Exchange. In such
event, the parties will continue to cooperate in an effort to satisfy any
remaining conditions to the KSSJ-KBRG Exchange and, at the election of the EXCL
Parties, the EXCL Parties may designate another Person, reasonably acceptable to
the American Parties, to become the prospective transferee of the KSSJ Assets
and a party to the TBA with respect to KSSJ in order to satisfy the conditions
of the American Consent Decree or any other requirements of any Authority.
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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 the EXCL Parties and the American
Parties; or
(b) by either the American Parties or the EXCL Parties 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 U.S. Department of Justice shall have
provided written notice objecting to the transfer of KSSJ to EXCL
pursuant to the provisions of the American Consent Decree or otherwise
indicated that it does not intend to approve such transfer; provided,
however, notwithstanding the foregoing, neither the American Parties
nor the EXCL Parties may terminate this Agreement pursuant to this
paragraph (b) so long as the KBAY-KINK Exchange has not been
consummated unless the permanent injunction, decree or judgment
referred to in clause (i) refers to such Exchange; or
(c) by the EXCL Parties in the event no EXCL Party is in
material breach of its covenants and agreements 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 and the other Transactions have not been consummated
prior to the Termination Date, or (ii) one or more American Parties 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 a breach or untruth exists and is not capable of
being cured within the cure period specified in this Section; or
(d) by the American Parties in the event no American Party is
in material breach of its covenants and agreements 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 and the other Transactions have not been consummated
prior to the Termination Date, or (ii) one or more EXCL Parties 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 a breach or untruth exists and is not capable of
being cured within the cure period specified in this Section.
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; and provided further,
however, that nothing herein shall limit the cure period set forth in Section
5.8 which is not limited to the Termination Date.
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The term "Termination Date" shall mean March 31, 1998 or such other
date as the parties may, from time to time, mutually agree.
The right of the American Parties or the EXCL Parties 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, subject, however, to
the proviso in Section 5.1(c).
7.2 Effect of Termination.
(a) 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, or in the event the Exchange shall
not have 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 Affiliates (including its
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 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 (i) by the parties
pursuant to the provisions of Section 7.1(a) or (ii) by the EXCL Parties or the
American Parties pursuant to the provision of Section 7.1 (b), except as
provided in Section 7.2(a), neither of the parties shall have any further rights
or remedies.
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, 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) eighteen (18) months after the Closing Date, (b)
the applicable statute of limitations in the case of matters of a nature
referred to in Sections 3.1(b) and (c), 3.7(b), 3.11, 3.12, 3.20, 4.1(b) and
(c), 4.7(b), 4.11, 4.12 and 4.20, or (c) the applicable statute of limitations
in the case of obligations and liabilities assumed pursuant to the American
Assumable Agreements and the EXCL Assumable Agreements (the "Indemnity Period"),
regardless of any investigation or statement as to the results thereof made by
or on behalf of any party hereto. No claim for indemnification, other than with
respect to fraud, may be asserted after the expiration of the Indemnity Period.
Notwithstanding anything herein to the contrary, any representation, warranty,
covenant and agreement which is the subject of a Claim which is asserted in
writing prior to the expiration of the Indemnity Period shall survive with
respect to such Claim or any dispute with respect thereto until the final
resolution thereof.
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8.2 Indemnification. Each party (the "indemnifying party") agrees that
on and after the Closing it shall indemnify and hold harmless the other party
(which shall include its Affiliates, including without limitation its officers,
directors, employees, agents and other Representatives) (the "indemnified
party") from and against any and all damages, claims, losses, expenses, costs,
obligations and liabilities, including without limitation liabilities for all
reasonable attorneys', accountants' and experts' fees and expenses including
those incurred to enforce the terms of this Agreement or any Collateral Document
(collectively, "Loss and Expense"), suffered, directly or indirectly, by the
indemnified party by reason of, or arising out of:
(a) any breach of representation or warranty made by the
indemnifying party pursuant to this Agreement or any Collateral
Document or any failure by the indemnifying party to perform or fulfill
any of its respective covenants or agreements set forth in this
Agreement or any Collateral Document; or
(b) any Legal Action or other Claim by any third party
relating to the indemnifying party or the ownership or operations of
any of its Assets or the conduct of the business of its Stations to the
extent such Legal Action or other Claim has also resulted in a breach
of representation or warranty by the indemnifying party pursuant to
this Agreement or any Collateral Document; or
(c) the American Nonassumed Liabilities (in the case of the
American Parties being the indemnifying party) and the EXCL Nonassumed
Liabilities (in the case of the EXCL Parties 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 California (in the case of American being the indemnifying
party) or the States of California and Oregon (in the case of the EXCL
Parties being the indemnifying party).
The liability of each of the American Parties and each of the EXCL Parties under
this Article 8 shall, subject to the provisions of Section 8.3, be joint and
several. Without limiting the generality of any other provision of this
Agreement, the term "each indemnifying party" in this Article 8 shall mean the
American Parties as a group and the EXCL Parties as a group and not each member
thereof individually.
8.3 Limitation of Liability. Notwithstanding the provisions of Section
8.2, after the Closing, each indemnifying party's rights to indemnification
shall be subject to the following limitations: (i) the indemnified party shall
be entitled to recover its Loss and Expense in respect of any Claim only in the
event that the aggregate Loss and Expense for all Claims exceeds, in the
aggregate, $50,000 in which event the indemnified party shall be entitled to
recover all such Loss and Expense (including such $50,000 threshold), 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 $1,000,000, except for
any Loss or Expense arising out of matters of a nature referred to in Sections
3.1(b) and 4.1(b) and the first paragraph of Section 3.7(b) and 4.7(b) as to
which the limitations set forth in this clause (ii) shall not apply. The
provisions of the immediately preceding sentence of this
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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. Each party's indemnification rights shall
also be subject to the limitation set forth in the proviso in Section 5.1(c).
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 satisfactory
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 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.
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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 EXCL 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 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 EXCL insofar as they
relate to the EXCL Stations and the EXCL Assets. All filing and similar fees
(including without limitation Hart-Scott-Rodino filings and FCC filing fees)
shall be borne equally by American and EXCL. 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 (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) sent by recognized courier service, providing
evidence of delivery, postage prepaid (in which case notice shall be deemed
given when given to the service with postage prepaid unless evidence of delivery
or refusal of delivery is not obtained), (b) sent by telex, telegram, telecopy
or other form of rapid transmission (confirmed by sending as provided in
preceding clause (a)) (in which case notice shall be deemed given when the
transmission is complete and evidence thereof is obtained), 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) (in which case notice
shall be deemed given upon such personal delivery). All such notices and
communications shall be sent or delivered as follows:
(a) If to any American Party:
American Radio Systems Corporation
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 any EXCL Party:
Latin Communications Group, Inc.
143 Varick Street
New York, New York 10013
Attention: Peter Davidson, Chief Executive Officer
Telecopier No.: (212) 633-6201
with copies to:
EXCL Communications, Inc.
2905 South King Road
San Jose, California 95122
Attention: Christopher Marks, Chairman
Telecopier No.: (408) 270-5567
and
McBride, Baker & Coles
500 West Madison Street, 40th Floor
Chicago, Illinois 60661-2511
Attention: Elias N. Matsakis, Esq.
Telecopier No.: (312) 993-9350
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.
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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. This Agreement (together with the Disclosure
Schedules and the other Collateral Documents delivered in connection herewith),
constitutes the entire agreement of the parties and supersedes all prior
agreements and undertakings, both written and oral, between the parties, with
respect to the subject matter hereof, including without limitation that certain
letter of intent, dated February 20, 1997, between the parties.
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 (including without
limitation, in the case of American, American) 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 (a) any Affiliate
of any party who is a transferee of any Assets or any FCC Licenses on or prior
to the Closing Date and (b) 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 American and EXCL, 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 American Agent for Other American Parties. Anything in this
Agreement to the contrary notwithstanding, each of the American Parties (other
than American) 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 any EXCL Party, 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 each other American Party, whether or not it has
specifically approved such action or executed such extension, waiver,
termination or amendment.
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<PAGE>
9.16 EXCL Agent for Other EXCL Parties. Anything in this Agreement to
the contrary notwithstanding, each of the EXCL Parties (other than EXCL) hereby
grants EXCL an irrevocable power of attorney and hereby irrevocably appoints
EXCL 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 either American Party,
waivers, terminations or amendments, and any action taken by EXCL pursuant to
such power of attorney and agency, and any such extension, waiver, termination
or amendment executed and delivered by EXCL shall be binding upon each other
EXCL Party, whether or not it has specifically approved such action or executed
such extension, waiver, termination or amendment.
9.17 Preparation of Exhibits. The parties agree that they will, as
promptly as possible and in any event within ten (10) business days of the date
hereof, agree upon the form of all of the Exhibits, whereupon they shall be
deemed to be incorporated in and be a part of this Agreement.
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<PAGE>
IN WITNESS WHEREOF, the American Parties and the EXCL Parties 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:
Latin Communications Group, Inc.
By:______________________________________
Name:
Title:
EXCL Communications, Inc.
By:______________________________________
Name:
Title:
Radio Exito, Inc.
By:_____________________________________
Name:
Title:
Portland Radio, Inc.
By:_____________________________________
Name:
Title:
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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 either Disclosure Schedule, and each Collateral
Document executed or required to be executed pursuant hereto or thereto or
otherwise delivered, from time to time, pursuant hereto or thereto. References
to "hereof", "herein" or similar terms are intended to refer to the Agreement as
a whole and not a particular section, and references to "this Section" are
intended to refer to the entire section and not a particular subsection thereof.
The term "either party" shall, unless the context otherwise requires, refer to
EXCL and American and shall include any Subsidiary of either thereof which is or
becomes a party to this Agreement.
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 any American Party or any EXCL Party, as the case may
be, attributable to the sale of time or talent on one of its Stations (whether
classified under the Uniform Commercial Code of any state as accounts, contract
rights, chattel paper, general intangibles or otherwise), including without
limitation accounts receivable, letters of credit and the right to receive
payment thereunder, chattel paper, insurance proceeds, contract rights, notes,
drafts, instruments, documents, acceptances, and all other debts, obligations
and liabilities in whatever form now or hereafter owing from any other Person,
all guarantees, security and Liens for the payment of any thereof, and all of
any American Party's or any EXCL Party's, as the case may be, rights to goods,
now owned or hereafter acquired, sold (delivered, undelivered, in transit or
returned) which may be represented thereby; and (b) all proceeds of any of the
foregoing.
adverse, adversely, when used alone or in conjunction with other terms
(including without limitation "affect," "change" and "effect") shall mean any
Event which is reasonably likely, in the reasonable business judgment of
American or EXCL, as the case may be, to be expected to (a) adversely affect the
validity or enforceability of this Agreement or the likelihood of consummation
of the Exchange, or (b) adversely affect the ownership or operation of the
American Assets or the EXCL Assets or the conduct of the business of the
American Stations or the EXCL Stations, as the case may be, or (c) impair the
EXCL Parties' or the American Parties', as the case may be, ability to fulfill
their obligations under the terms of this Agreement, or (d) adversely affect the
aggregate rights and remedies of the American Parties or the EXCL Parties, 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 or any Event affecting the radio broadcasting
industry generally nor, from and after the effectiveness of the applicable TBA,
conditions in the market or markets to which such TBA relates shall be deemed to
constitute an adverse change, have an adverse effect or to adversely affect or
effect.
<PAGE>
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
American Disclosure Schedule, the EXCL 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 Accounts Receivable shall mean the Accounts Receivables of any
American Party arising in connection with the ownership or operation of any of
the American Assets or the conduct of the business of either of the American
Stations prior to the applicable Cut-off Date.
American Assets shall mean the KBAY Assets and the KSSJ Assets, but
excluding the American Excluded Assets. The KBAY Assets shall mean all assets
used or held for use in the ownership, operation or the conduct of the business
of KBAY by either American Party or any American Affiliate, including without
limitation (a) the KBAY Real Property, (b) the KBAY Personal Property, (c) the
KBAY Governmental Authorizations (including without limitation the KBAY FCC
Licenses), (d) the KBAY Assumable Agreements, and (e) the KBAY Intangible Assets
directly relating to the operation of the KBAY Personal Property or covered by
the KBAY Assumable Agreements, but excluding, in all cases, the American
Excluded Assets. The KSSJ Assets shall mean all assets used or held for use in
the ownership, operation or the conduct of the business of KSSJ by either
American Party or any American Affiliate, including without limitation (a) the
KSSJ Real Property, (b) the KSSJ Personal Property, (c) the KSSJ Governmental
Authorizations (including without limitation the KSSJ FCC Licenses), (d) the
KSSJ Assumable Agreements, (e) the call letters "KSSJ", and (f) the KSSJ
Intangible Assets directly relating to the operation of the KSSJ Personal
Property or covered by the KSSJ Assumable Agreements, but excluding, in all
cases, the American Excluded Assets.
American Assumable Agreements shall mean the KBAY Assumable Agreements
and the KSSJ Assumable Agreements. The KBAY Assumable Agreements shall mean (a)
the KBAY Leases, (b) the KBAY Material Agreements and (c) the KBAY Other
Contracts; in each case to the extent set forth in the Appendix--Assumable
Agreements section of the EXCL Disclosure Schedule. The KSSJ Assumable
Agreements shall mean the KBAY Leases and the KBAY Material Agreements, in each
case to the extent set forth in the Appendix--Assumable Agreements section of
the EXCL Disclosure Schedule.
American Consent Decree shall have the meaning given to it in the third
Whereas paragraph.
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American Disclosure Schedule shall mean the American Disclosure
Schedule dated as of the date of this Agreement delivered by American to EXCL.
American Employee Plans shall have the meaning given to it in Section
4.12(a). KBAY Employee Plans shall mean the American Employee Plans associated
with the ownership, operation and conduct of the business of KBAY. KSSJ Employee
Plans shall mean the American Employee Plans associated with the ownership,
operation and conduct of the business of KSSJ.
American Excluded Assets shall mean (i) all cash and cash equivalents
of any American Party, except as specifically provided in the definition of
American Assets, (ii) all American Accounts Receivable, (iii) all American
Intangible Assets (including without limitation the call letters "KBAY", but
excluding the call letters "KSSJ" and American Intangible Assets directly
relating to the operation of the American Personal Property or covered by the
American Assumable Agreements) (iv) the American Private Authorizations, (v) the
American Trade Agreements, (vi) all American Material Agreements and other
Contracts of KBAY, other than those listed in the Appendix--Assumable Agreements
section of the EXCL Disclosure Schedule, (vii) all rights and obligations,
including without limitation American KBAY Employee Plans, associated with the
American Station Employees, (viii) the corporate names of each American Party
and its books, records and other documents relating to its corporate existence,
organization and capitalization, (ix) all books and records of each American
Party relating to either American Station and which any American Party 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
to the extent relating to the American Assets, (x) all insurance policies
relating to the American Assets, (xi) software programs and other assets at the
principal executive offices of any American Party used to provide certain
financial and accounting services for either American Station, and (xii) any and
all products, profits and proceeds of, and including without limitation all
Claims, claims, causes of actions, rights, titles and interests, remedies and
instruments with respect to, any of the foregoing.
American FCC Licenses shall have the meaning given to it in the second
Whereas paragraph.
American Governmental Authorizations shall have the meaning given to it
in Section 4.7(a).
American Intangible Assets shall have the meaning given to it in
Section 4.8. KBAY Intangible Assets shall mean the American Intangible Assets
associated with the ownership, operation and conduct of the business of KBAY.
KSSJ Intangible Assets shall mean the American Intangible Assets associated with
the ownership, operation and conduct of the business of KSSJ.
American KSSJ Upgrade shall have the meaning given to it in Section
5.2(e).
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.
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American Material Agreement shall have the meaning given to it in
Section 4.16. KBAY Material Agreements shall mean the American Material
Agreements associated with the ownership, operation and conduct of the business
of KBAY. KSSJ Material Agreements shall mean the American Material Agreements
associated with the ownership, operation and conduct of the business of KSSJ.
American Other Contracts shall mean (a) all KSSJ Material Agreements
set forth on Section 4.12 of the American Disclosure Schedule, (b) all Contracts
of American for the sale of time on KSSJ for cash entered into in the ordinary
course of business consistent with prior practice, and (c) Contracts associated
with the ownership, operation and conduct of the business of KSSJ 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(a).
American Nonassumed Liabilities shall have the meaning given to it in
Section 2.3(b).
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, operation or conduct of the business of
either of the American Stations.
American Private Authorizations shall mean all Private Authorizations
used or held for use in the ownership, operation or conduct of the business of
either of the American Stations. KBAY Private Authorizations shall mean the
American Private Authorizations associated with the ownership, operation and
conduct of the business of KBAY. KSSJ Private Authorizations shall mean the
American Private Authorizations associated with the ownership, operation and
conduct of the business of KSSJ.
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 and American Stations shall have the meaning given to
them in the second Whereas paragraph.
American Station Employees shall have the meaning given to it in
Section 4.12. KBAY Station Employees shall mean the American Station Employees
associated with the ownership, operation and conduct of the business of KBAY.
KSSJ Station Employees shall mean the American Station Employees associated with
the ownership, operation and conduct of the business of KSSJ.
American Station Financial Statements shall have the meaning given to
it in Section 4.2(a).
American Station TBA shall have the meaning given to it in Section
5.2(d).
A-4
<PAGE>
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 any of the American Assets or the conduct of the
business of either of the American Stations. KBAY Trade Agreements shall mean
the American Trade Agreements associated with the ownership, operation and
conduct of the business of KBAY. KSSJ Trade Agreements shall mean the American
Trade Agreements associated with the ownership, operation and conduct of the
business of KSSJ.
American's knowledge (including the term "to the knowledge of
American") means the actual knowledge of any executive officer of either
American Party or any General Manager of either of the American Stations.
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).
Asset Exchange shall have the meaning given to it in Section 2.1.
Assets shall mean the American Assets in the case of the American
Parties and the EXCL Assets in the case of the EXCL Parties.
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.
Claims shall mean any and all debts, liabilities, obligations, losses,
damages, deficiencies, assessments and penalties, together with all Legal
Actions, pending or threatened, claims and judgments of whatever kind and nature
relating thereto, and all fees, costs, expenses and disbursements (including
without limitation reasonable attorneys' and other legal fees, costs and
expenses) relating to any of the foregoing.
Closing shall have the meaning given to it in Section 2.4.
Closing Date shall have the meaning given to it in Section 2.4.
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.
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Collateral Document shall mean American TBA, the EXCL Stations TBA, the
Latin Stockholder Agreement, the Latin Registration Rights Agreement, 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 EXCL 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 Assets or the
conduct of the business of any of the Stations.
Control (including the terms "controlled," "controlled by" and "under
common control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the management or
policies of a Person, or the disposition of such Person's assets or properties,
whether through the ownership of stock, equity or other ownership, by contract,
arrangement or understanding, or as trustee or executor, by contract or credit
arrangement or otherwise.
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.
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 that relate to such Contract), the applicable
TBA Date for such TBA and (ii) in all other cases, the Closing Date.
Disclosure Schedule shall mean the American Disclosure Schedule or the
EXCL 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.
A-6
<PAGE>
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.
Environmental Laws shall include without limitation the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. Section 6901
et seq.), the Hazardous Material Transportation Act (49 U.S.C. Section 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et
seq.), the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.),
the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances Control
Act (15 U.S.C. Section 2601 et seq.), the Occupational Safety and Health Act (29
U.S.C. Section 651 et seq.), the Federal Insecticide Fungicide and Rodenticide
Act (7 U.S.C. Section 136 et seq.), and the Surface Mining Control and
Reclamation Act of 1977 (30 U.S.C. Section 1201 et seq.), and any analogous
federal, state or local 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 and shall include the Asset Exchange and the License Exchange.
EXCL shall have the meaning given to it in the Preamble.
EXCL Accounts Receivable shall mean the Accounts Receivables of any
EXCL Party arising in connection with the ownership or operation of any of the
EXCL Assets or the conduct of the business of either of the EXCL Stations prior
to the applicable Cut-off Date.
EXCL Assets shall mean means the KBRG Assets and the KINK Assets, but
excluding, in all cases, the EXCL Excluded Assets. KBRG Assets shall mean (a)
the lease of the KBRG transmitter site described in Section 3.5(a) of the EXCL
Disclosure Schedule, (b) the KBRG transmission facility (including the
transmitter site, building, and related fixtures which are subject to the ground
lease) which is described in Section 3.5(a) of the EXCL Disclosure Schedule, (c)
a copy of all material in the possession of any EXCL Party of the nature
required to be maintained under the FCC rules in the KBRG public inspection
files, and (d) the KINK FCC Licenses, but excluding, in all cases, the EXCL
Excluded Assets. KINK Assets shall mean assets used or held for use in the
ownership, operation or the conduct of the business of KINK by an EXCL Party or
an EXCL Affiliate, including without limitation (a) the KINK Real Property, (b)
the KINK Personal Property, (c) the KINK Private Authorization, (d) the KINK
Governmental Authorizations (including without limitation the KINK FCC
Licenses), (e) the KINK Intangible Assets (including
A-7
<PAGE>
without limitation the call letters "KINK") directly relating to the operation
of the KINK Personal Property or the KINK Assumable Agreements, and (f) the KINK
Assumable Agreements, but excluding, in all cases, the EXCL Excluded Assets.
EXCL Assumable Agreements shall mean the KINK Private Authorizations,
the KINK Trade Agreements, the EXCL Leases and the EXCL Other Contracts.
EXCL Disclosure Schedule shall mean the EXCL Disclosure Schedule dated
as of the date of this Agreement delivered by EXCL to American.
EXCL Excluded Assets shall mean (i) all cash and cash equivalents of
any EXCL Party, except as specifically provided in the definition of EXCL
Assets, (ii) all EXCL Accounts Receivable, (iii) all assets used or held for use
in the ownership, operation or the conduct of the business of KBRG (except as
expressly included in the KBRG Assets), including without limitation the KBRG
Personal Property, the KBRG studio, the KBRG Employee Plans, the KBRG Intangible
Assets (including without limitation the call letters "KBRG"), the KBRG Private
Authorizations, the KBRG Trade Agreements, and all other contracts and
agreements and records relating to KBRG, (iv)the corporate names of each EXCL
Party and its books, records and other documents relating to its corporate
existence, organization and capitalization, (v) all books and records of each
EXCL Party relating to either EXCL Station and which any EXCL Party 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 to the
extent relating to the EXCL Assets, (vi) all insurance policies relating to the
EXCL Assets, (vii) software programs and other assets at the principal executive
offices of any EXCL Party used to provide certain financial and accounting
services for EXCL, (x) all KINK Assets used jointly by KINK and KOTK(AM) (a list
of such Assets which are material to KINK are listed on the EXCL Disclosure
Schedule as "Material KINK/KOTK Assets"), (xi) all EXCL Employee Plans, and
(xii) any and all products, profits and proceeds of, and including without
limitation any Claims, claims, causes of action, remedies, rights, titles and
interests and instruments with respect to, any of the foregoing.
EXCL FCC Licenses shall have the meaning given to it in the first
Whereas paragraph.
EXCL Governmental Authorizations shall have the meaning given to it in
Section 3.7(a).
EXCL Intangible Assets shall have the meaning given to it in Section
3.8. KBRG Intangible Assets shall mean the EXCL Intangible Assets associated
with the ownership, operation and conduct of the business of KBRG. KINK
Intangible Assets shall mean the EXCL Intangible Assets associated with the
ownership, operation and conduct of the business of KINK.
EXCL Leases shall have the meaning given to it in Section 3.5(a).
EXCL Material Agreement shall have the meaning given to it in Section
3.16. EXCL KINK Material Agreements shall mean the EXCL Material Agreements
associated with the ownership, operation and conduct of the business of KINK.
EXCL KBRG Material Agreements shall mean the EXCL Material Agreements associated
with the ownership, operation and conduct of the business of KBRG.
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EXCL Other Contracts shall mean (a) all KINK Material Agreements set
forth on Section 3.12 of the EXCL Disclosure Schedule, (b) all Contracts of EXCL
for the sale of time on KINK for cash entered into in the ordinary course of
business consistent with prior practice, and (c) Contracts associated with the
ownership, operation and conduct of the business of KINK not required to be
listed on Section 3.12 of the EXCL Disclosure Schedule that have been entered
into in the ordinary course of business.
EXCL Owned Real Property shall have the meaning given to it in Section
3.5(a).
EXCL Nonassumed Liabilities shall have the meaning given to it in
Section 2.3(a).
EXCL Parties shall have the meaning given to it in the Preamble.
EXCL Personal Property shall mean all Personal Property used or held
for use in the ownership, operation of conduct of the business of either of the
EXCL Stations. KBRG Personal Property shall mean the EXCL Personal Property
associated with the ownership, operation and conduct of the business of KBRG.
KINK Personal Property shall mean the EXCL Personal Property associated with the
ownership, operation and conduct of the business of KINK.
EXCL Private Authorizations shall mean all Private Authorizations used
or held for use in the ownership, operation of conduct of the business of either
of the EXCL Stations. KINK Private Authorizations shall mean the EXCL Private
Authorizations associated with the ownership, operation and conduct of the
business of KINK. KBRG Private Authorizations shall mean the EXCL Private
Authorizations associated with the ownership, operation and conduct of the
business of KBRG.
EXCL Proration Schedule shall have the meaning given to it in Section
2.2(d).
EXCL Real Property shall have the meaning given to it in Section
3.5(a).
EXCL Residual Group Assets shall mean (a) cash in the amount of Two
Million Dollars ($2,000,000), and (c) 150,000 shares of Latin Common Stock
(which the parties have agreed to value at Fifteen Dollars ($15.00) per share
for purposes of the allocation set forth in Section 2.4), and which number shall
be subject to adjustment in the event of any stock split, stock dividend, stock
combination, reorganization, recapitalization, merger or consolidation affecting
such Common Stock or any other event which would equitably require such an
adjustment, the record or effective date for which is on or prior to the Closing
Date.
EXCL Station and EXCL Stations shall have the meaning given to them in
the first Whereas paragraph.
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EXCL Station Employees shall have the meaning given to it in Section
3.12(d). KINK Employees shall mean the EXCL Station Employees associated with
the ownership, operation and conduct of the business of KINK. EXCL KBRG
Employees shall mean the EXCL Station Employees associated with the ownership,
operation and conduct of the business of KBRG.
EXCL Station Financial Statements shall have the meaning given to it in
Section 3.2(a).
EXCL Station TBA shall have the meaning given to it in Section 5.2(d).
EXCL 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 relates to the
ownership or operation of any of the American Assets or the conduct of the
business of either of the EXCL Stations. EXCL KINK Trade Agreements shall mean
the EXCL Trade Agreements associated with the ownership, operation and conduct
of the business of KINK. EXCL KBRG Trade Agreements shall mean the EXCL Trade
Agreements associated with the ownership, operation and conduct of the business
of KBRG.
EXCL's knowledge (including the term "to the knowledge of EXCL") means
the actual knowledge of any executive officer of any of the EXCL Parties or any
General Manager of either of the EXCL Stations.
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.
Exito shall have the meaning given to it in the Preamble.
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
EXCL FCC Licenses to American License and the American FCC Licenses to one of
the EXCL Parties.
FCC Licenses shall mean all Governmental Authorizations issued by the
FCC to one of the EXCL Parties or one of the American Parties in connection with
the ownership, operation and conduct of the business of the EXCL Stations and
the American Stations, as the case may be.
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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 review, 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 or taking any such appeal, review, stay, 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.
Fremont-Portland Proration Schedule shall have the meaning given to it
in Section 2.3(d).
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 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
the conduct of business of any of the Stations.
Governmental Filings shall mean all filings, including franchise and
similar Tax filings, and the payment of all fees, assessments, interest and
penalties associated with such filings, with all Authorities.
Hart-Scott-Rodino Act shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, and the rules and regulations thereunder, all as from
time to time in effect, or any successor law, rules or regulations, and any
reference to any such statutory or regulatory provision shall be deemed to be a
reference to any successor statutory or regulatory provision.
Hazardous Materials shall mean and include any substance, material,
waste, constituent, compound, industrial pollutant, 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", "hazardous substance", "solid waste",
"pollutant", or "contaminant" 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 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, radio frequency 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 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, franchises, licenses,
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, 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.
KBAY shall have the meaning given to it in the second Whereas
paragraph.
KBAY FCC License shall have the meaning given to it in the second
Whereas paragraph.
KBAY-KINK Exchange shall have the meaning given to it in Section 2.1.
KBRG shall have the meaning given to it in the first Whereas paragraph.
KBRG FCC License shall have the meaning given to it in the second
Whereas paragraph.
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KINK shall have the meaning given to it in the first Whereas paragraph.
KINK FCC License shall have the meaning given to it in the second
Whereas paragraph.
KINK Employee Plans shall have the meaning given to it in Section
3.12(a).
KSSJ shall have the meaning given to it in the second Whereas
paragraph.
KSSJ FCC License shall have the meaning given to it in the second
Whereas paragraph.
KSSJ-KBRG Exchange shall have the meaning given to it in Section 2.1.
Latin shall have the meaning given to it in the Preamble.
Latin Common Stock shall have the meaning given to it in Section 3.23.
Latin Registration Rights Agreement shall have the meaning given to it
in Section 4.21.
Latin Stockholder Agreement shall have the meaning given to it in
Section 4.21.
Law shall mean any (a) administrative, judicial, legislative or other
action, code, consent decree, constitution, decree, directive, enactment,
finding, guideline, law, injunction, interpretation, judgment, order, ordinance,
policy statement, proclamation, promulgation, regulation, requirement, rule,
rule of law, rule of public policy, settlement agreement, statute, or writ of
any Authority, domestic or foreign; (b) the common law, or other legal or
quasi-legal precedent; or (c) arbitrator's, mediator's or referee's award,
decision, finding or recommendation; including, in each such case or instance,
any interpretation, directive, guideline or request, whether or not having the
force of law including, in all cases, without limitation any particular section,
part or provision thereof.
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, in equity or in arbitration.
License Exchange shall have the meaning given to it in Section 2.1.
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 or capital 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
A-13
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jurisdiction; restriction on sale, transfer, assignment, disposition or other
alienation; or any option, equity, claim or right of or obligation to, any other
Person, of whatever kind and character.
Like-Kind Exchange shall mean an exchange of assets of the nature
contemplated by the provisions of Section 1031 of the Code.
Loss and Expense shall have the meaning given to it in Section 8.2.
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 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 and (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 continuing financial obligation, (c)
involves Indebtedness for Money Borrowed, (d) is an employment agreement, (e)
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 American or the
EXCL Stations in any of the last three fiscal years or is likely to account for
more than three percent (3%) of revenues of American or the EXCL Stations during
the current fiscal year.
Notice of Disagreement shall have the meaning given to it in Section
2.3(d).
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 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, (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,
and (d) liens and exceptions set forth in Section 4.5(a) of the American
Disclosure Schedule or Section 3.15(a) of the EXCL Disclosure Schedule,
respectively, it being understood that
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(x) any Permitted Liens of a nature referred to in clause (a), (b), (c) and (d)
shall, to the extent they may involve the payment of money, be taken into
account in preparing the San Jose-Sacramento Proration Schedule and the
Fremont-Portland Proration Schedule, and (y) to the extent any such Permitted
Liens are to be removed as of the Closing as indicated on the applicable
Disclosure Schedule, they shall be so removed as of the Closing.
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, plus such additions thereto
and deletions therefrom arising in the ordinary course of business between the
date hereof and the Closing Date.
Plan shall mean, with respect to any Person and at a particular time,
any employee benefit plan which is covered by ERISA and in respect of which such
Person or an ERISA Affiliate is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA, but only to the extent that it covers or relates to any
officer, employee or other Person involved in the ownership and operation of the
Assets or the conduct of the business of any of the Stations.
Portland shall have the meaning given to it in the first Whereas
paragraph.
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 and similar Taxes, but shall not include federal, state or local
gross receipts Taxes, 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, plus such additions thereto and
deletions therefrom arising in the ordinary course of business between the date
hereof and the Closing Date.
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.
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Representatives shall have the meaning given to it in Section 5.1(a).
San Jose-Sacramento 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.
Section 1031 Schedule shall have the meaning given to it in Section
2.2(a).
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 EXCL Stations and the American
Stations.
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 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 warranties or any
misrepresentation set forth in Section 3.11 or 4.11.
Tax Return or Returns shall mean all returns, consolidated or otherwise
(including without limitation information returns), required to be filed with
any Authority with respect to Taxes.
Taxing Authority shall mean any Authority responsible for the
imposition of any Tax.
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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 EXCL Station TBA, or
the applicable one of such agreements.
Termination Date shall have the meaning given to it in Section 7.1.
Trade Agreements shall mean any Contractual Obligation relating to any
of the Stations pursuant to which any American Party or any EXCL Party 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).
A-17
EXHIBIT 10.21
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated March 31, 1997 by and between
American Radio Systems Corp., a Delaware Corporation ("Buyer"), and Amaturo
Group of California, Ltd., a Florida limited partnership ("Seller") .
P R E M I S E S :
A. Seller is the licensee of and operates radio stations KFRG (FM), San
Bernardino, California, and KXFG (FM), Sun City, California (the "Stations"),
pursuant to licenses issued by the Federal Communications Commission (the
"FCC").
B. Seller desires to sell, and Buyer wishes to buy, substantially all
of Seller's assets used or useful in the operation of the Stations and the
broadcast business made possible thereby for the price and on the terms and
conditions hereafter set forth.
AGREEMENTS:
In consideration of the above premises and the covenants and agreements
contained herein, Buyer and Seller agree as follows:
SECTION 1
DEFINED TERMS
The following terms shall have the following meanings in this
Agreement:
1.1 "Accounts Receivable" means the rights of Seller to payment for
services rendered (including sale of time or talent on the Stations for cash) by
Seller prior to the Closing Date as reflected on the billing records of Seller
relating to the Stations.
1.2 "Assets" means the tangible and intangible assets 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.
<PAGE>
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 "Deposit" means the sum of Six Million Dollars ($6,000,000.00)
deposited by Buyer in escrow upon the execution of this Agreement.
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:
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(a) The Personal Property;
(b) The Real Property,
(c) The Licenses;
(d) The Assumed Contracts;
(e) All trademarks, trade names, service marks and all other
information and similar intangible assets relating to the Stations, including
those listed in Schedule 3.9 hereto;
(f) All of the Seller's proprietary information, which relate to the
Stations, including without limitation, technical information and data,
machinery and equipment warranties, maps, computer discs and tapes, plans,
diagrams, blueprints and schematics, including filings with the FCC which relate
to the Stations;
(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;
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<PAGE>
(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 Sixty Million Dollars
($60,000,000.00) payable by Buyer to Seller as follows:
A. Six Million Dollars ($6,000,000.00) to be deposited into escrow
pursuant to the Escrow Agreement in Schedule 2.3 upon the execution of this
Agreement to secure Buyers performance hereunder
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 Purchase Price, including the adjustment set forth in subsection
2.3B and any credit for funds drawn against the Deposit by Seller pursuant to
the Escrow Agreement, 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
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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. Buyer shall receive credit to the
extent of the value (as calculated in Seller's financial statements consistent
with past practice) of any and all advertising time to be run following the
Closing for which trade or barter consideration has been received by the Seller
prior to the closing ("Negative Trade Balance"), but only if and to the extent
the Negative Trade Balance exceeds Forty Thousand Dollars ($40,000.00)
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 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 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
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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 (l0) 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 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
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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 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
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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 al1 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 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 rates and which are not prepaid
and which may be cancelled by the Stations without penalty on not more than
thirty (30) days notice, (ii) employment contracts and miscellaneous service
contracts terminable at will without penalty and (iii) other contracts not
involving either aggregate liabilities under all such contacts exceeding Five
Thousand Dollars ($5,000.00) 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
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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 breach7 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, the Premerger Notification Requirements Under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976. and the other Consents indicated in Schedule
3.7 or described in Schedule 3.8, no consent, approval, permit or authorization
of, or declaration to or filing with any governmental or regulatory authority or
any other third party is required (i) to consummate this Agreement and the
transaction contemplated hereby, (ii) to permit Seller to assign or transfer the
Assets to Buyer or (iii) to enable Buyer to conduct the business or operations
of the Stations in essentially the same manner as such business or operations
are presently conducted.
3.9 Trademarks. Trade Names and Copyrights. Schedule 3.9 is a true and
complete list of all copyrights, trademarks, 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, 1994,1995 and 1996
(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
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income and financial condition of the Stations as of their respective dates and
the results of operations for the periods then ended.
3.11 Insurance. All of the tangible property included in the Assets is
insured against loss or damage in amounts generally customary in the broadcast
industry. Schedule 3.11 comprises a true and complete list of all insurance
policies of Seller which insure any part of the Assets. All policies of
insurance listed in Schedule 3.11 are in full force and effect. During the three
(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 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
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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, threatened7 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 Seller7 there is no union campaign being conducted to solicit cards
from employees to authorize a union to request a National Labor Relations Board
certification election with respect to any of Seller's employees at the
Stations.
3.15 Taxes. Seller has filed or caused to be filed all federal income
tax returns and all other federal, state, county, local or city tax returns
which are required to be filed, and it has paid or caused to be paid all taxes
shown on said returns or on any tax assessment received by it to the extent that
such taxes have become due, or has set aside on its books reserves (segregated
to the extent required by sound accounting practice) deemed by it to be adequate
with respect thereto. No events have occurred which could impose on Buyer any
transferee liability for any taxes, penalties or interest due or to become due
from Seller.
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
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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 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, 1996,
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.
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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 is and shall be, at Closing, qualified to conduct business in the
State of California. Buyer has all requisite corporate power and authority to
execute and deliver this Agreement and the documents contemplated hereby and to
perform and comply with all of the terms, covenants and conditions to be
performed and complied with by Buyer hereunder and thereunder.
4.2 Authorization and Binding Obligation. The execution, delivery and
performance of this Agreement by Buyer have been duly authorized by all
necessary corporate action on the part of Buyer. This Agreement has been duly
executed and delivered by Buyer and constitutes the legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms,
except as the enforceability hereof may be affected by bankruptcy, insolvency or
similar laws affecting creditors' rights generally, or by court-applied
equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents, the execution, delivery and performance of this Agreement and the
documents contemplated hereby (with or without the giving of notice, the lapse
of time, or both): (i) does not require the consent of any third party; (ii)
will not conflict with the Articles of Incorporation or Bylaws of Buyer; (iii)
will not conflict with, result in a breach of, or constitute a default under, or
accelerate or permit the acceleration of any performance required by the terms
of, any material agreement, instrument, licenses or permit to which Buyer is a
party or by which Buyer may be bound.
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.
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SECTION 5
COVENANTS OF SELLER
5.1 Pre-Closing Covenants. Except as contemplated by this Agreement or
with the prior written consent of Buyer, not to be unreasonably withheld,
between the date hereof and the Closing Date, Seller shall 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) 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) Programing. 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;
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(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 the
schedules hereto, provided that such notification shall not relieve Seller of
any obligations hereunder;
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(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 recommended 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.,, 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 (__) 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
nothing herein shall be construed to limit any party's right to terminate this
Agreement pursuant to Section 9 of this Agreement).
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B. Within days of the execution of this agreement, if required by law,
Buyer and Seller shall file the requisite forms with the Federal Trade
Commission pursuant to the Premerger Notification Requirements Under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976.
C. 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, and (iv) Notice of Termination of the waiting period provided by
Section 7A (b) (1) of the Clayton Act and Section 803.10 (B) of the Premerger
Notification Requirements under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976
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 and the Federal Trade Commission 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.
6. 5 Noncompetition Agreement. Buyer and Seller and Seller's principal
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
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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.
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
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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.
6.9 Employee Matters:.
A. Within thirty (30) business days after execution of this Agreement,
Seller shall provide to Buyer an accurate list of all current employees of the
Station together with a description of the terms and conditions of their
respective employment (including salary, bonus and other benefit arrangements)
and their duties as of the date of this Agreement, as well as the annual
salaries thereof. Seller shall promptly notify Buyer of any changes that occur
prior to Closing with respect to such information.
B. Nothing contained in this Agreement shall confer upon any employee
of Seller any right with respect to continued employment by Buyer, nor shall
anything herein interfere with any right the Buyer may have after the Closing
Date to (i) terminate the employment of any of the employees at any time, with
or without cause, or (ii) establish or modify any of the terms and conditions of
the employment of the employees in the exercise of its independent business
judgment.
C. Notwithstanding Paragraph 6.9B above, any of Seller's employees
whom Buyer chooses not to hire as of the Closing Date or whose employment is
continued at the Station by Buyer after Closing Date, but who are subsequently
terminated, with or without cause, within six (6) months of the Closing Date,
shall be paid three (3) months' severance by Buyer.
D. Except as otherwise set forth herein, Buyer will not incur any
liability on account of Seller's employees in connection with this transaction,
including, without limitation, any liability on account of employment insurance
contributions, termination payments, retirement, pension, profit-sharing, bonus,
severance pay, disability, health, accrued vacation or other employee benefit
plans, practices, agreements or understandings.
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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.,
shall have been duly obtained and delivered to Buyer with no material adverse
change to the terms of the License or Assumed Contract with respect to which
such Consent is obtained.
D. Licenses. Seller shall be the holder of the Licenses, and there
shall not have been any modification of any of such Licenses which has an
adverse effect on the Stations or the conduct of its business or operations. No
proceeding shall be pending the effect of which would be to revoke, cancel, fail
to renew, suspend or modify adversely any of the Licenses.
E. Deliveries. Seller shall have made or stand willing and able to make
all the deliveries to Buyer set forth in Section 8.2
F. Adverse Change. Between the date of this Agreement and the Closing
Date, there shall have been no Material Adverse Change (as such term is defined
below) in the Assets or t-h-e Station, including, without limitation, any
damage, destruction or loss (subject to the provisions of Section 6.8) affecting
the Assets. For purposes of this Agreement, "Material Adverse Change" shall be
deemed to have occurred only if the gross sales of the Station from the date
hereof until the Closing Date shall be more than twenty percent (20%) less than
the Station during the same period during the prior year. Notwithstanding the
previous sentence, if,
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during the period between the date hereof and the Closing Date, the total gross
radio sales in the San Bernardino market, as determined by Miller, Kaplan, Arase
and Co., shall be less than the total radio sales in the San Bernardino market
during the same period during the prior year, Material Adverse Change shall only
be deemed to have occurred if the gross sales of the Station, from the date
hereof until the Closing Date, shall have declined by more than (i) twenty
percent (20%) from the same period during the prior year plus (ii) the
percentage by which the gross radio sales have fallen in the San Bernardino
market from the date hereof until the Closing Date versus the prior year. Any
format attack on the Station or decline in ratings of the Station shall not be
considered a Material Adverse Change.
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.
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,
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Massachusetts or such other place as shall be mutually agreed to by Buyer and
Seller. In no event shall the closing take place prior to January , 1998.
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.,;
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.
E. Certificate of Good Standing. A certificate of good standing for
Amaturo Group of California, 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;
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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 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;
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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 , 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 the first
anniversary of this Agreement.
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 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
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 Deposit and all
interest earned thereon shall be retained by Seller as liquidated damages, it
being agreed that the Deposit 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
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ascertain and that the amount of the Deposit 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 Deposit 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 Nondefaulting 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 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
harrnless against and with respect to, and shall reimburse Buyer for:
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(a) Any and all losses, liabilities or damages resulting from any
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;
(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
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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 (3Q) 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 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
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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 Two Hundred-Thousand Dollars ($200,000.00).
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
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 of California, Ltd.
3101 North Federal Hwy.
Suite 601
Fort Lauderdale, Florida 33306-1042
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with a copy (which shall not constitute notice) to:
Cara Ebert Cameron, Esq.
3101 North Federal Hwy.
Suite 601
Fort Lauderdale, Florida 33306-1042
If to Buyer:
American Radio Systems Corp
116 Huntington Avenue
Boston, Massachusetts 02116
Attention: Mr. Steven B. Dodge, CEO
with a copy (which shall not constitute notice) to:
American Radio Systems Corp.
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.
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IN WITNESS WHEREOF, this Agreement has been executed by Buyer and
Seller as of the date first above written.
AMATURO GROUP OF CALIFORNIA, LTD.
By: Joseph C. Amaturo
General Partner
AMERICAN RADIO SYSTEMS CORP.
By: Steven B. Dodge
Chief Executive Officer
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ADDENDUM TO ASSET PURCHASE AGREEMENT
This Addendum to ASSET PURCHASE AGREEMENT is dated April__, 1997 by and
between American Radio Systems Corp., a Delaware Corporation ("Buyer") and
Amaturo Group of California, Ltd. a Florida limited partnership ("Seller").
P R E M I S I S
A. Seller is the licensee of and operates station KXEZ, Riverside,
California. Station KXEZ shares some common facilities with Station KFRG.
B. Following the closing of the assignment of license of KFRG and
KXFG from Seller to Buyer, Seller and Buyer agree that the two stations will
continue to share said facilities under 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
TRANSMITTER SITE
1. KXEZ and KFRG utilize a common generator at the transmitter site.
The generator shall be included in the Personal Property conveyed to Buyer.
Station KXEZ shall continue to utilize the generator or any replacement
generator so long as it is in service at the site. Seller or any successor
licensee of KXEZ shall pay its prorata share of the cost of fuel and maintenance
as may be billed from time to time by Seller.
2. The transmitter buildings of stations KXEZ and KFRG are cross
connected to the electrical service at the site. In the event that one station
loses its electrical service it can tap into the electrical service of the other
until power is restored.
3. Station KXEZ and KFRG utilize a single tower for their
transmitting and communications antennas. The easement for the tower site shall
be assigned to Buyer at Closing, however Seller or any successor licensee of
KXEZ shall pay 1/2 of the annual easement fee ($50.00) and 1/2 of the tower
maintenance costs as may be billed from time to time by Seller, for its
continued use of the tower.
At Closing Seller and Buyer shall enter into a mutual easement
agreement for the use of the generator, electrical service cross connection and
the tower.
<PAGE>
SECTION 2
STUDIO SlTE
Following the closing, Buyer and seller shall enter into an agreement
whereby Station KXEZ so long as it is licensed to Seller or Seller's affiliate
Amaturo Group of L. A., Ltd. may locate its Main Studios as defined by the FCC,
at the KFRG studios in Colton, Ca. without charge to Seller. It is specifically
understood that only KXEZ's General Manager will be assigned to that office and
that the programming for KXEZ will originate from another location, and any
utilization of the broadcast studios at the Colton location will only be in an
emergency. Seller shall provide its own phone lines, but Buyer's personnel will
answer incoming calls, if necessary.
IN WITNESS WHEREOF, this Addendum to Agreement has been executed by
Buyer and Seller as of the date first written.
AMATURO GROUP OF CALIFORNIA, LTD.
By:___________________________________
Joseph C Amaturo, General Partner
AMERICAN RADIO SYSTEMS CORP.
By:___________________________________
EXHIBIT 10.22
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated May 6, 1997, by and between
American Radio Systems Corporation, a Delaware corporation ("Buyer"), and
Stellar Communications, Inc., a Texas corporation ("Seller").
P R E M I S E S:.
A. Seller is the licensee and operator of radio station KKIK(FM)
Temple, Texas (the "Station") pursuant to licenses issued by the Federal
Communications Commission (the "FCC").
B. Seller desires to sell, and Buyer wishes to buy, Seller's assets as
described herein used in the operation of the Station and the broadcast business
made possible thereby for the price and on the terms and conditions hereafter
set forth.
AGREEMENTS:
In consideration of the above premises and the covenants and agreements
contained herein, Buyer and Seller agree as follows:
Section 1
DEFINED TERMS
The following terms shall have the following meanings in this
Agreement:
1.1 "Accounts Receivable" means the rights of Seller to payment for
services rendered (including sale of time or talent on the Station for cash) by
Seller prior to the Closing Date as reflected on the billing records of Seller
relating to the Station.
1.2 "Assets" means certain tangible and intangible assets owned and
used in connection with the conduct of the business or operations of the
Station, being only 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
and (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.
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 "Escrow Deposit" shall mean the sum of One Hundred and Eighty-Two
Thousand and Five Hundred Dollars ($182,500) held by Whitley Broadcast Media,
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 1.7 hereto.
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1.8 "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.
1.9 "FCC Consent" means action by the FCC granting its consent to the
assignment of the FCC Licenses to Buyer as contemplated by this Agreement.
1.10 "FCC Licenses" means all of the licenses, permits and other
authorizations issued by the FCC to Seller in connection with the conduct of the
business or operations of the Station.
1.11 "Final Order" means the FCC Consent (a) which has not been
reversed, stayed, enjoined, set aside, annulled or suspended, and (b) with
respect to which (i) no requests have been filed for administrative or judicial
review, reconsideration, appeal or stay, and the time for filing any such
requests and for the FCC to review the action on its own motion has expired, or
(ii) in the event of review, reconsideration or appeal that does not result in
the FCC consent being reversed, stayed, enjoined, set aside, annulled or
suspended, the time for further review, reconsideration or appeal has expired.
1.12 "Licenses" means all of the 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.
1.13 "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 listed in Schedule 3.6
hereto.
1.14 "Purchase Price" means the purchase price specified in Section
2.3.
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 (i) liens for
taxes not yet due and payable; (ii) minor defect and irregularities as long as
such defects and irregularities in the aggregate do not materially impact the
value, market ability or use of the Assets as a whole and (iii) for those
permitted in accordance with Section 2.5, 3.5 or 3.6 below) herein sometimes
collectively referred to as "Permitted Liens", more specifically described as
follows:
(a) The Personal Property;
(b) The Real Property;
(c) The Licenses;
(d) The Assumed Contracts;
(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
solely 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
insofar as they relate
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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 and cash equivalents 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, treasury bills, certificates of deposit and similar
investments.
(b) Any contracts other than the Assumed Contracts;
(c)The lease from Chaney & Williams Construction Company to
Seller dated June 9, 1995 covering the current office space of the
Station at 608 Moody Lane in Temple, Texas;
(d)Radio Tower License Agreement dated January 17, 1991
between KTEM Radio, Inc. and Central Texas College / KNCT, as amended,
under which Seller is the current licensee and pursuant to which the
Station's current antenna and communications equipment is located on a
tower in Bell County, Texas;
(e)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;
(f)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;
(g)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.
(h)The Accounts Receivable.
(i)All other assets, properties, rights, interests and claims
of Seller of every kind, nature and description whatsoever, real,
personal or mixed, tangible or intangible, owned or leased, and
wherever located, including all assets and rights acquired between the
date of this Agreement and the Closing.
2.3 Purchase Price. The Purchase Price shall be Three Million Six
Hundred and Fifty Thousand Dollars ($3,650,000). 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. The parties shall attempt to agree on an
allocation of the Purchase Price among the Assets prior to the Closing. If the
parties are unable to agree on an allocation prior to the Closing, Buyer shall
undertake, at its expense, an independent appraisal, the results of which Seller
may, but shall be under no obligation to adopt.
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), real and personal property taxes and assessments levied against the
Assets, and similar prepaid and deferred items, shall be prorated between Buyer
and Seller in accordance with
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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.
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. Any adjustments or prorations will,
insofar as feasible, be determined and paid on the Closing Date, with final
settlement and payment being made within sixty (60) days thereafter.
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.
2.6 Reimbursement of Capital Expenses. Buyer shall be responsible for
the construction and installation of a new transmitter facility for the Station,
including, without limitation, a transmission tower, antenna, transmitter and
associated buildings (the "New Tower Site") by a Contractor and at a location
reasonably satisfactory to Seller and according to the specification set forth
in Schedule 2.6 or as otherwise agreed upon by the parties. In the event the
Closing fails to occur and Buyer is entitled to receive the Escrow Deposit
pursuant to Section 9.1 herein, Seller shall reimburse to Buyer at such time any
amounts actually paid by Buyer toward the construction and installation of the
New Tower Site. In the event the Closing fails to occur and Buyer is not
entitled to receive the Escrow Deposit pursuant to Section 9.1 herein, Seller
shall not be required to reimburse Buyer for any amounts actually paid by Buyer
towards the construction and installation of the New Tower Site.
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
Texas 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. Seller has all requisite corporate power
and authority (i) to own, lease, and use the Assets as presently owned, leased,
and used, and (ii) to conduct the business or operations of the Station as
presently conducted. Seller has all requisite corporate power and authority to
execute and deliver this Agreement and the documents
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contemplated hereby, and to perform and comply with all of the terms, covenants
and conditions to be performed and complied with by Seller, hereunder and
thereunder. Seller is not a participant in any joint venture or partnership with
any other person or entity with respect to any part of the Station's operations
or the Assets.
3.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement by Seller have been duly authorized by all
necessary corporate action on the part of Seller. This Agreement has been duly
executed and delivered by Seller and constitutes the legal, valid, and binding
obligation of Seller, enforceable against Seller in accordance with its terms
except as the enforceability hereof may be affected by bankruptcy, insolvency,
or similar laws affecting creditors' rights generally, or by court-applied
equitable remedies.
3.3 Absence of Conflicting Agreements. To Seller's knowledge and
subject to obtaining the Consents, the execution, delivery, and performance of
this Agreement and the documents contemplated hereby (with or without the giving
of notice, the lapse of time, or both): (i) does not require the consent of any
third party; (ii) will not conflict with any provision of the articles of
incorporation or bylaws; (iii) will not conflict with, result in a breach of, or
constitute a default under, any law, judgment, order, ordinance, decree, rule,
regulation or ruling of any court or governmental instrumentality, which is
applicable to either Seller; (iv) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under, or accelerate
or permit the acceleration of any performance required by the terms of, any
material agreement, instrument, license or permit to which either Seller is a
party or by which either may be bound; or (v) will not create any claim,
liability, mortgage, lien, pledge, condition, charge, or encumbrance of any
nature whatsoever upon the Assets.
3.4 Licenses. Schedule 3.4 includes a true and complete list of the
Licenses. Seller has delivered to Buyer true and complete copies of the Licenses
(including any and all amendments and other modifications thereto). As described
in Schedule 3.4, the Licenses were validly issued with the Seller designated
thereon being the authorized legal holder thereof. The Licenses comprise all of
the licenses, permits and other authorizations required from any governmental or
regulatory authority for the lawful conduct of the business or operations of the
Station as presently operated. Seller has no reason to believe that the Licenses
will not be renewed by the FCC or other granting authority in the ordinary
course.
3.5 Title to and Condition of Real Property. Other than the New Tower
Site which may be acquired prior to the Closing pursuant to Section 6.10,
hereof, there will be no Real Property transferred to Buyer as part of the
Assets.
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 to be transferred to Buyer hereunder. Except as described in
Schedule 3.6, Seller owns and has good title to the Personal Property. None of
the Personal Property owned by Seller is subject to any security interest,
mortgage, pledge, conditional sales agreement, or other lien or encumbrance,
except for (i) liens for current taxes not yet due and payable, and (ii) any
other claims or encumbrances which are described in Schedule 3.6 and annotated
to indicate that such claims or encumbrances shall be removed prior to or at
Closing.
3.7 Contracts. To Seller's knowledge, all of the Assumed Contracts
listed in Schedule 3.7 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 or exception indicated
on Schedule 3.7. Seller is not in material breach, nor to Seller's knowledge is
any other party in
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material breach, of the terms of any such Assumed Contracts. Except as expressly
set forth in Schedule 3.7, the Seller is not aware of any intention by any party
to any Assumed Contract to terminate such contract or amend the terms thereof.
Except for the Consents, Seller has full legal power and authority to assign its
rights under the Assumed Contracts to Buyer in accordance with this Agreement,
and such assignment will not affect the validity, enforceability and
continuation of any of the Assumed Contracts.
3.8 Consents. To Seller's knowledge, except for the FCC Consent
provided for in Section 6.1 and the other Consents indicated in Schedule 3.7 or
described in Schedule 3.8, no consent, approval, permit or authorization of, or
declaration to or filing with any governmental or regulatory authority, or any
other third party is required (i) to consummate this Agreement and the
transaction contemplated hereby, (ii) to permit Seller to assign or transfer the
Assets to Buyer, or (iii) to enable Buyer to conduct the business or operations
of the Station in essentially the same manner as such business or operations are
presently conducted.
3.9 Trademarks, Trade Names and Copyrights. Schedule 3.9 is a true and
complete list of all copyrights, trademarks, trade names, licenses, patents,
permits, jingles, privileges and other similar intangible property rights and
interests (exclusive of those required to be listed in Schedule 3.4) applied
for, issued to or owned by Seller, or under which Seller is licensed or
franchised, and used in the conduct of the business or operations of the
Station, all of which are valid and in good standing and, to Seller's knowledge,
uncontested. Seller has delivered to Buyer copies of all documents establishing
such rights, licenses, or other authority. Seller is not aware that it is
infringing upon or otherwise acting adversely to any trademarks, trade names,
copyrights, patents, patent applications, know-how, methods, or processes owned
by any other person or persons, and there is no claim or action pending, or to
the knowledge of Seller threatened, with respect thereto.
3.10 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 3.10 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 3.10 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. Other than is set forth in Schedule 3.12,
there are no employee benefit plans or arrangements applicable to the employees
of Seller employed at the Stations. Seller shall make available to Buyer, if
requested by Buyer, true and complete copies of all pertinent 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 3.12 provided such
information is reasonably related to Buyer's acquisition of the Assets. 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.
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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. 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.
3.14 Taxes. 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 for (i) the application with the FCC
for renewal of the FCC licenses which will be filed by Seller this year; (ii)
the pending application with the FCC to move the site of the Stations'
transmitter and communications facility to a site near Taylor, Texas; (iii)
except as set forth in Schedule 3.15; and (iv) 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 that might adversely affect the Assets, the FCC
license or the operation of the Station or that would prevent the consummation
of this Agreement by Seller, nor does Seller know of any basis for the same. In
particular, except as set forth in Schedule 3.15, 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, 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 Full Disclosure. No representation or warranty made by Seller
herein nor any certificate, document or other instrument furnished or to be
furnished by Seller pursuant hereto contains or will contain any untrue
statement of a material fact made intentionally or in bad faith, or
intentionally or in bad faith omits or will omit to state any material fact
known to Seller and required to make the statements herein or therein not
misleading.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization, Standing and Authority. Buyer is a corporation duly
organized, validly
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existing, and in good standing under the laws of the State of Delaware, and is,
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.
4.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents, the execution, delivery, and performance of this Agreement and the
documents contemplated hereby (with or without the giving of notice, the lapse
of time, or both): (i) does not require the consent of any third party; (ii)
will not conflict with the Articles of Incorporation or Bylaws of Buyer; (iii)
will not conflict with, result in a breach of, or constitute a default under, or
accelerate or permit the acceleration of any performance required by the terms
of, any material agreement, instrument, licenses, or permit to which Buyer is a
party or by which Buyer may be bound.
4.4 FCC Qualification. Buyer has no knowledge of any facts which would,
under present law (including the Communications Act of 1934, as amended) and
present rules, regulations and practices of the FCC, disqualify Buyer as an
assignee of the licenses, permits and authorizations listed on Schedule 3.4
hereto, or as an owner and/or operator of the 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 (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,
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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 2.1, 2.5, 3.5 or 3.6 and (ii) mechanics' liens and
other similar liens which will be removed prior to the Closing Date;
(3)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;
(4)Rights. Waive any material right relating to the Station or
the Assets; or
(5)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
the FCC licenses for the purpose of inspection 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) 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 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
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any obligations hereunder;
(7) Compliance with Laws. Comply in all material respects with
all rules and regulations of the FCC, and all other laws, rules and
regulations to which Seller, the Station and the Assets are subject.
5.2 Post-Closing Covenants. After the Closing, Seller will take such
actions, and execute and deliver to Buyer such further deeds, bills of sale, or
other transfer documents as, in the reasonable opinion of counsel for Buyer and
Seller, may be necessary to ensure, complete and evidence the full and effective
transfer of the Assets to Buyer pursuant to this Agreement.
SECTION 6
SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent. The assignment of the FCC Licenses as contemplated by
this Agreement is subject to the prior consent and approval of the FCC.
A. Within ten (10) days after the execution of this Agreement,
Buyer and Seller shall file with the FCC an appropriate application for FCC
Consent. The parties shall prosecute said application with all reasonable
diligence and otherwise use their best efforts to obtain the grant of such
application as expeditiously as practicable. If the FCC Consent imposes any
condition on any party hereto, such party shall use its best efforts to comply
with such condition unless compliance would be unduly burdensome or would have a
material adverse effect upon it. If reconsideration or judicial review is sought
with respect to the FCC Consent, Buyer and Seller shall oppose such efforts to
obtain reconsideration or judicial review (but nothing herein shall be construed
to limit any party's right to terminate this Agreement pursuant to Section 9 of
this Agreement).
B. The transfer of the Assets hereunder is expressly
conditioned upon (i) the grant of the FCC Consent without any materially adverse
conditions on Buyer, (ii) compliance by the parties hereto with the condition
(if any) imposed in the FCC Consent, and (iii) the FCC
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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.
C. The transfer of the Assets hereunder is further expressly
conditioned up the grant by the FCC of a Construction Permit allowing the
Station to broadcast from the New Tower Site, the preparation of the application
for which Buyer shall be solely responsible. Seller shall cooperate fully,
however, and execute as necessary, any such applications or other filings
associated with such application.
6.2 Control of the Station. Buyer shall not, directly or indirectly,
control, supervise, direct, or attempt to control, supervise or direct, the
operations of the Station; such operations, including complete control and
supervision of all of the Station's programs, employees, and policies, shall be
the sole responsibility of Seller until the completion of the Closing hereunder.
6.3 Taxes, Fees and Expenses. Buyer shall pay 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, except for Whitley Broadcast Media, Inc., whose
fee shall be solely the responsibility of Seller.
6.5 Confidentiality. Except as necessary for the consummation of the
transaction
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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 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 neither Seller nor Buyer
shall have any 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. Except for the New Tower Site (as defined herein in Section
2.6), the risk of loss for which shall be borne by Buyer, 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 other than to
the New Tower Site,
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occurs which prevents signal transmission by the Station in the normal and usual
manner and Seller cannot restore or replace such 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,
other than to the New Tower Site, described above, if such Assets have not been
restored or replaced and the Station's normal and usual transmission resumed
(except due to a cause related to the New Tower Site) 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, other than an event related to the New
Tower Site, 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. 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
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any of the terms and conditions of the employment of the employees in the
exercise of its independent business judgment. 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. Any payment received by Buyer following the
Closing from any customer with an account which is an Account Receivable
attributable to Seller's ownership of the Station shall be remitted to Seller in
the ordinary course. 6.10 New Tower Site.
A.It shall be Buyer's responsibility to locate and arrange to
acquire the land for the New Tower Site. It is agreed, however, that if the land
for the New Tower Site is acquired prior to the Closing, whether by contract,
lease or in fee, it will be acquired in Seller's name at a price and under terms
and conditions satisfactory to Seller, with Buyer providing all funds and timely
bearing all of the costs of the acquisition. Prior to the acquisition, Buyer, at
its cost, shall furnish a Phase 1 Environmental Study to Seller and Seller must
be satisfied, in its sole discretion, that the land is environmentally sound
before it takes title to the land or to any interest therein. In addition, prior
to Seller's taking title to the land or any interest therein, Buyer, at its
expense, shall furnish to Seller a title commitment from a title insurance
company acceptable to Seller committing to insure the title in the amount of the
price for the acquisition of the land, insuring Seller against loss under the
provisions of the title policy , subject only to those title exceptions
acceptable to Buyer and the standard printed exceptions contained in the
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promulgated form of the title policy provided that (1) the exception as to the
area and boundaries shall be deleted except for any shortages in area, and (2)
the exception as to restrictive covenants shall be endorsed "None of record"
unless such restriction are approved by Seller. Still further, prior to the
acquisition, Buyer shall, at its expense, furnish to Seller a survey of the land
to be acquired for the New Tower Site made by a Registered Professional Land
Surveyor and acceptable to the title company (1) identifying the land by metes
and bounds or platted lot description, (2) showing that the survey was made and
staked on the ground with corners permanently marked, (3) setting forth the
dimension and the total area of the property, (4) showing the location of all
improvements, highways, streets, roads, railroads, rivers, creeks or other
waterways, fences, easements, and rights of way on the land with all easements
and rights of way referenced to their recording information, (5) showing any
discrepancies or conflicts in boundaries, any visible encroachments, and (6) any
portion of the property lying within the 100 year flood plane as shown on the
current Federal Emergency Management Agency map and containing the surveyor's
certificate that the survey is true and correct. At the Closing, Seller shall
convey or assign to Buyer all its right, title and interest in such land by
special warranty deed on a "AS IS, WHERE IS WITH ALL FAULTS" basis with no
warranty or representation as to fitness for any particular purpose. If the
Closing fails to occur and Buyer is entitled to receive the Escrow Deposit
pursuant to Section 9.1 herein, Seller shall reimburse to Buyer at such time any
amounts actually paid by Buyer up to that time towards the acquisition for the
land. In the event the Closing fails to occur and Buyer is not entitled to
receive the Escrow Deposit pursuant to Section 9.1 herein, Seller shall not be
required to reimburse Buyer for any amounts actually paid by Buyer towards the
acquisition of such land.
B.In the event such land for the New Tower Site is acquired in
Seller's name prior
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to Closing, Buyer is hereby granted full right to enter onto such land in order
to effectuate the construction of the New Tower Site during the period prior to
Closing, provided however, Buyer's right to enter onto such land and its
activities thereon shall be at the sole risk of Buyer. Buyer shall indemnify and
hold harmless Seller from any and all claims, causes of action, damages and
liabilities of any kind for personal injury (including death) or property
damage, arising directly or indirectly from any activity of Buyer or Buyer's
agents, employees or contractors in or about the New Tower Site.
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. The FCC consent shall
have been granted and become a Final Order.
E. Deliveries. Seller shall have made or stand willing and
able to make all the deliveries to Buyer set forth in Section 8.2
7.2 Conditions to Obligations of Seller. The obligations of Seller at
the Closing hereunder are subject to the fulfillment prior to and at the Closing
Date of each of the following conditions any of which may be waived by Seller in
whole or in part in its sole discretion in writing:
A. Representations and Warranties. The representations and
warranties of Buyer contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date, except for changes
contemplated by this Agreement, as though such representations and warranties
were made at and as of such time.
B. Covenants and Conditions. Buyer shall have in all material
respects performed and complied with the covenants, agreements, and conditions
required by this Agreement
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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 granted.
SECTION 8
CLOSING AND CLOSING DELIVERIES
8.1 Closing. The closing shall take place at 10:00am on a mutually
agreeable date, no later than ten (10) days following the date upon which both
(i) the FCC Consent has become a Final Order and (ii) the Construction Permit
for the New Tower site shall have been granted (the "Closing Date"), provided,
though, that Buyer may waive the requirement for a Final Order and schedule the
Closing Date, with five (5) days written notice to Seller, at any time after the
receipt of FCC Consent. Closing shall be held at the offices of Buyer or 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 substantially the same forms as set forth in
Schedules 8.2 (a) and (e):
(a) Transfer Documents. Duly executed warranty bills of sale,
assignments and other transfer documents in substantially the same
forms as set forth in Schedule 8.2(a), which shall be sufficient to
vest good and indefeasable 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 2.1, 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 an officer of Seller, certifying: (i) that
the representations and warranties of Seller contained in this
Agreement are true and complete in all material respects as of the
Closing Date, except for changes contemplated by this Agreement, as
though made on and as of that date; and (ii) that Seller has, in all
material respects, performed its obligations and complied with its
covenants set forth in this Agreement to be performed and complied with
prior to or on the Closing Date;
(d) Secretary's Certificate. A certificate, dated as of the
Closing Date, executed by Seller's Secretary: (i) certifying that the
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 Texas state official; as of
a date not more than fifteen (15) days before 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
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Buyer's lenders, substantially in the form of Schedule 8.2(e) 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:
(f) Purchase Price. The Purchase Price paid to Seller or
Seller's designee as provided in Section 2.3;
(g) Assumption Agreements. Appropriate assumption agreements
in substantially the same forms as set forth in Schedule 8.3(b)
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;
(h) 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;
(i) Secretary's Certificate. A certificate, dated as of the
Closing Date, executed by Buyer's Secretary, 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;
(j) Opinion of Counsel. An opinion of Buyer's General Counsel
dated as of the Closing Date, substantially in the form of Schedule
8.3(e) hereto.
SECTION 9
RIGHTS OF BUYER AND SELLER
ON TERMINATION OR BREACH
9.1 Termination Rights. This Agreement may be terminated by either
Buyer or Seller if the terminating party is not then in breach of any material
provision of this Agreement, upon written notice to the other party, upon the
occurrence of any of the following:
(a) If on the Closing Date (i) any of the conditions precedent
to the obligations of the terminating party set forth in Section 7 of
this Agreement shall not have been materially satisfied, and (ii)
satisfaction of such condition shall not have been waived by the
terminating party;
(b) If the Closing shall not have occurred on or before
October 31, 1997.
Upon termination: (i) if neither party hereto is in breach of any material
provision of this Agreement, the parties hereto shall not have any further
liability to each other; (ii) if Seller shall be
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in breach of any material provision of this Agreement, Buyer shall have only the
rights and remedies provided in Section 9.3 or (iii) if Buyer shall be in breach
of any material provision of this Agreement, Seller shall be entitled only to
liquidated damages as provided in Section 9.2 hereof. If, upon termination,
Buyer shall not be in breach of any material provision of this Agreement, the
Escrow Deposit, plus all interest or other proceeds from the investment thereof,
less any compensation due the Escrow Agent, shall be paid to Buyer.
9.2 Liquidated Damages. In the event this Agreement is terminated by
Seller due to a material breach by Buyer of its representations, warranties,
covenants and other obligations under this Agreement, then the Escrow Deposit
shall be paid to Seller as liquidated damages, it being agreed that the Escrow
Deposit shall constitute full payment for any and all damages suffered by Seller
by reason of Buyer's failure to close this Agreement. Buyer and Seller agree in
advance that actual damages would be difficult to ascertain and that the amount
of the Escrow Deposit is a fair and equitable amount to reimburse Seller for
damages sustained due to Buyer's failure to consummate this Agreement for the
above-stated reason. All interest or other proceeds from the investment of the
Escrow Deposit, less any compensation due the Escrow Agent, shall be paid to
Seller.
9.3 Specific Performance. The parties recognize that in the event
Seller should refuse to perform under the provisions of this Agreement, monetary
damages 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 of the Survival Period. A claim for indemnity by
Seller pursuant to Section 6.10(B) may be made at any time before or after the
expiration of the survival period. Any investigations by or on behalf of any
party hereto shall not constitute a waiver as to enforcement of any
representation or warranty contained herein, except that insofar as any party
has knowledge of any misrepresentation or breach of warranty at Closing and such
knowledge is documented in writing at Closing, such party shall be deemed to
have waived such misrepresentation or breach. As of the effective date of this
Agreement, neither party is aware of any misrepresentation or breach of warranty
under this Agreement on the part of the other party hereto.
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10.2 Indemnification by Seller. Seller shall indemnify and hold Buyer
harmless against and with respect to, and shall reimburse Buyer for:
(a) Any and all losses, liabilities or damages resulting from
any untrue representation, 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. In addition to other situations whereby
Buyer agrees to indemnify Seller hereunder, Buyer shall indemnify and hold
Seller harmless against and with respect to, and shall reimburse Seller for:
(a) Any and all losses, liabilities or damages resulting from
any untrue representation, breach of warranty or nonfulfillment of any
covenants by Buyer contained herein or in any certificate delivered to
Seller hereunder;
(b) Any and all losses, liabilities or damages resulting from
Buyer's operation or ownership of the Station on or after the Closing
Date, including any and all liabilities or obligations arising under
the Licenses or the Assumed Contracts which relate to events occurring
after the Closing Date or otherwise assumed by Buyer under this
Agreement; and
(c) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, and reasonable costs and expenses, including
reasonable legal fees and expenses, incident to any of the foregoing or
incurred in investigating or attempting to avoid the same or to oppose
the imposition thereof.
10.4 Procedures for Indemnification. The procedures for indemnification
shall be as follows:
A. The party claiming the indemnification (the "Claimant")
shall promptly give notice to the party from whom indemnification is claimed
(the "Indemnifying Party") of any claim, whether between the parties or brought
by a third party, specifying (i) the factual basis for such claim, and (ii) the
amount of the claim. If the claim relates to an action, suit or proceeding filed
by a third party against Claimant, such notice shall be given by Claimant within
five (5) days after written notice of such action, suit or proceeding was given
to Claimant.
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B. Following receipt of notice from the Claimant of a claim,
the Indemnifying Party shall have thirty (30) days to make such investigation of
the claim as the Indemnifying Party deems necessary or desirable. For the
purposes of such investigation, the Claimant agrees to make available to the
Indemnifying Party and/or its authorized representative(s) the information
relied upon by the Claimant to substantiate the claim. If the Claimant and the
Indemnifying Party agree at or prior to the expiration of said thirty (30) day
period (or any mutually agreed upon extension thereof) to the validity and
amount of such claim, or if the Indemnifying Party does not respond to such
notice, the Indemnifying Party shall immediately pay to the Claimant the full
amount of the claim. If the Claimant and the Indemnifying Party do not agree
within said period (or any mutually agreed upon extension thereof), the Claimant
may seek appropriate legal remedy.
C. With respect to any claim by a third party as to which the
Claimant is entitled to indemnification hereunder, the Indemnifying Party shall
have the right at its own expense, to participate in or assume control of the
defense of such claim, and the Claimant shall cooperate fully with the
Indemnifying Party, subject to reimbursement for reasonable actual out-of-pocket
expenses incurred by the Claimant as the result of a request by the Indemnifying
Party. If the Indemnifying Party elects to assume control of the defense of any
third-party claim, the Claimant shall have the right to participate in the
defense of such claim at its own expense.
D. If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make all reasonable efforts
to reach a decision with respect thereto as expeditiously as possible.
E. If the Indemnifying Party does not elect to assume control
or otherwise participate in the defense of any third party claim, it shall be
bound by the results obtained in good faith by the Claimant with respect to such
claim.
F. The indemnification rights provided in Sections 10.2 and
10.3 shall extend to the shareholders, directors, officers, partners employees
and representatives of the Claimant although for the purpose of the procedures
set forth in this Section 10.4, any indemnification claims by such parties shall
be made by and through the Claimant.
10.5 Floor, Ceiling, Offsets.
1.Floor. Neither Buyer nor Seller shall be entitled
to indemnification under this Agreement until the aggregate losses,
damages and expenses suffered by such party for which the other party
has agreed to indemnify such party under this Agreement exceeds
$25,000.00, whereupon, such party shall be entitled to indemnification
by the other party for losses, damages, and expenses suffered by such
party in excess of that amount, provided however, a claim or claims
for indemnity by Seller pursuant to section 6.10(B) hereof shall not
be counted in aggregating the amount of losses, damages or expenses
suffered by Seller for purposes of this section.
2.Ceiling. Neither party shall be entitled to
indemnification hereunder for that amount of its aggregate
indemnification claims against such party in excess of $1,750,000.00,
provided however, a claim or claims for indemnity by Seller pursuant to
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section 6.10(B) hereof shall not be counted in aggregating the amount
of its indemnification for purposes of this section.
3.Offsets. In any event occurs that would entitle
either party to a right of indemnification hereunder, no loss, damages
or expense shall be deemed to have been sustained by such party to the
extent of any future tax savings realized or insurance proceeds
recovered by such party or any of its affiliates as a result of the
event giving rise to such right of indemnification. Each party, on
behalf of itself and its affiliates, waives any rights of subrogation
with respect to any and all insurance proceeds.
SECTION 11
MISCELLANEOUS
11.1 Notices. All notices, demands, and requests required or permitted
to be given under the provisions of this Agreement shall be (i) in writing, (ii)
delivered by personal delivery, or sent by commercial delivery service or
registered or certified mail, return receipt requested, or by facsimile
transmission, with receipt confirmation, (iii) deemed to have been given on the
date of personal delivery or the date set forth in the records of the delivery
service or on the return receipt, and (iv) addressed as follows:
If to Seller: Stellar Communications, Inc.
3502-I S. Broadway
Tyler, Texas 75701
Attn: Mr. Don Chaney, President
Fax (903) 509-4152
with a copy
(which shall
not constitute notice) to: Randall L. Robert, Esq.
Potter, Minton, Roberts, Davis & Jones
P.O. Box 359
110 North College Street, 500 Plaza Tower
Tyler, Texas 75710
Fax: (903) 593-0846
If to Buyer: American Radio Systems Corporation
116 Huntington Avenue
Boston, MA 02116
Attention: Steven B. Dodge, President
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Fax: (617) 375-7575
with a copy
(which shall not
constitute notice) to: Michael B. Milsom, Vice President & General Counsel
American Radio Systems Corporation
116 Huntington Avenue
Boston, MA 02116
Fax: (617) 375-7575
or to such other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
11.1.
11.2 Benefit and Binding Effect. Neither party hereto may assign this
Agreement without the prior written consent of the other party hereto, except
that Buyer may assign its rights and obligations under this Agreement to any
affiliated or unaffiliated entity, provided, however, that such assignment does
not delay the Closing and that following which assignment Buyer shall remain
liable to Seller for all of Buyer's obligations hereunder. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
11.3 Governing Law. This Agreement shall be governed, construed, and
enforced in accordance with the laws of the State of Texas.
11.4 Headings. The headings herein are included for ease of reference
only and shall not control or affect the meaning or construction of the
provisions of this Agreement.
11.5 Gender and Number. Words used herein, regardless of the gender and
number specifically used, shall be deemed and construed to include any other
gender, masculine, feminine or neuter, and any other number, singular or plural,
as the context required.
11.6 Entire Agreement. This Agreement, all schedules hereto, and all
documents and certificates to be delivered by the parties pursuant hereto
collectively represent the entire understanding and agreement between Buyer and
Seller with respect to the subject matter hereof. All schedules attached to this
Agreement shall be deemed part of this Agreement and incorporated herein, where
applicable, as if fully set forth herein. This Agreement supersedes all prior
negotiations between Buyer and Seller, and all letters of intent and other
writings related to such negotiations, and cannot be amended, supplemented or
modified except by an agreement in writing which makes specific reference to
this Agreement or an agreement delivered pursuant hereto, as the case may be,
and which is signed by the party against which enforcement of any such
amendment, supplement or modification is sought.
11.7 Waiver of Compliance; Consents. Except as otherwise provided in
this Agreement, any failure of any of the parties to comply with any obligation,
representation, warranty, covenant, agreement or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, representation, warranty, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party hereto, such consent shall be given
in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 11.7.
11.8 Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable or any extent, the remainder of this
23
<PAGE>
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.
11.10 Time of Essence. Time is of the essence with respect to all of
the provisions of this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed by Buyer and
Seller as of the date first above written.
SELLER: STELLAR COMMUNICATIONS, INC.
By: _______________________________
Don Chaney, President
BUYER: AMERICAN RADIO SYSTEMS CORPORATION
By: _______________________________
Title:
24
<PAGE>
SCHEDULES TO ASSET PURCHASE AGREEMENT
1.7 Escrow Agreement
2.6 Specifications for New Tower Site
3.4 Licenses
3.6 Personal property
3.7 Assumed Contracts
3.8 Consents required
3.9 Trademarks; trade names; copyrights
3.10 Insurance Policy Covering Assets
31 Employee Benefit Plans
3.15 Claims; legal actions
8.2(a) Forms of Transfer Documents
8.2(e) Opinion of Seller's General and FCC Counsels
8.3(b) Buyer's Assumption Agreement
8.3(e) Opinion of Buyer's General Counsel
25
<TABLE>
<CAPTION>
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
AMERICAN RADIO SYSTEMS CORPORATION
EXHIBIT 11
In thousands, except per share data
Three Months Three Months
Ended March 31, Ended March 31,
1996 1997
------------ -------------
<S> <C> <C>
PRIMARY:
Weighted average shares of common stock 16,997 21,095
Add common stock equivalents in the form of stock
options and warrants (using treasury stock method) 904
Weighted average common stock and common stock -------- --------
equivalents 17,901 21,095
======== ========
Net income (loss):
Loss before extraordinary loss after
dividends $ (456) $ (8,923)
Extraordinary loss (1,639)
-------- --------
Net loss applicable to common stockholders $ (456) $(10,562)
======== ========
Primary per common share amounts:
Loss before extraordinary loss $ (.03) $ (.42)
Extraordinary loss (.08)
Net loss applicable to common stockholders $ (.03) $ (.50)
FULLY DILUTED (Not presented due to anti-dilution):
Weighted average shares of common stock 16,997 21,095
Add common stock equivalents in the form of stock
options and warrants (using treasury stock method) 904 1,067
-------- --------
Assumed conversion of preferred stock 3,235
Weighted average common stock and common stock -------- --------
equivalents 17,901 25,397
Net income (loss): ======== ========
Loss before extraordinary loss after dividends $ (456) $ (8,923)
Add convertible preferred dividends 2,406
Loss after redeemable stock dividends before -------- --------
extraordinary loss (456) (6,517)
Extraordinary loss (1,639)
-------- --------
Net loss applicable to common stockholders $ (456) $ (8,156)
======== ========
Fully diluted per common share amounts:
Loss before extraordinary loss $ (.03) $ (.26)
Extraordinary loss (.06)
Net loss applicable to common stockholders $ (.03) $ (.32)
</TABLE>
STATEMENT RE COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
AMERICAN RADIO SYSTEMS CORPORATION
EXHIBIT 12
The following table reflects the computation of the ratio of earnings
to combined fixed charges and preferred stock dividends for the years indicated.
(In thousands, except ratio data)
Three Months Three Months
Ended March 31, Ended March 31,
1996 1997
-------------- ---------------
Computation of Earnings:
Loss from continuing operations before
extraordinary loss and income taxes $ (827) $ (4,410)
Add:
Interest expense (1) 4,702 7,504
Rent expense (2) 285 494
-------- --------
Earnings as adjusted 4,160 3,588
======== ========
Computation of Fixed Charges:
Interest expense (1) 4,702 7,504
Rent expense (2) 285 494
Preferred dividends (3) 6,198
-------- --------
Fixed charges 4,987 14,196
======== ========
Ratio of earnings to combined fixed charges and
preferred stock dividends -- --
Deficiency in earnings required to cover
combined fixed charges and preferred stock
dividends 827 10,608
- -----------------------------------
(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 preferred stock.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 6,282
<SECURITIES> 0
<RECEIVABLES> 45,620
<ALLOWANCES> 5,383
<INVENTORY> 0
<CURRENT-ASSETS> 60,581
<PP&E> 111,675
<DEPRECIATION> 10,617
<TOTAL-ASSETS> 1,019,385
<CURRENT-LIABILITIES> 26,168
<BONDS> 376,491
204
1
<COMMON> 211
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,019,385
<SALES> 0
<TOTAL-REVENUES> 54,237
<CGS> 0
<TOTAL-COSTS> 40,884
<OTHER-EXPENSES> 11,133
<LOSS-PROVISION> 779
<INTEREST-EXPENSE> 7,504
<INCOME-PRETAX> (4,410)
<INCOME-TAX> 1,685
<INCOME-CONTINUING> (2,725)
<DISCONTINUED> 0
<EXTRAORDINARY> (1,639)
<CHANGES> 0
<NET-INCOME> (10,562)
<EPS-PRIMARY> (.50)
<EPS-DILUTED> (.50)
</TABLE>
